VZCZCXYZ0025
PP RUEHWEB

DE RUEHC #8635 3502010
ZNY SSSSS ZZH
P R 162008Z DEC 09
FM SECSTATE WASHDC
TO RUEHKV/AMEMBASSY KYIV PRIORITY 0000
INFO MISSILE TECHNOLOGY CONTROL REGIME COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0000

S E C R E T STATE 128635 
 
SIPDIS 
 
E.O. 12958: DECL: 12/16/2034 
TAGS: ETTC PARM PREL MTCRE MNUC UP CH
SUBJECT: UKRAINIAN FIRM ARSENAL CONTINUES TO NEGOTIATE 
WITH CHINESE MISSILE/SLV END-USER TO SUPPLY GYROTHEODOLITE 
(S) 
 
REF: A. 2007 STATE 161304 
     ¶B. 2007 KYIV 2928 
     ¶C. 2008 KYIV 706 
     ¶D. 2008 STATE 111716 
     ¶E. 2008 STATE 126516 
     ¶F. KYIV 108 
     ¶G. STATE 7146 
     ¶H. KYIV 314 
     ¶I. STATE 77663 
     ¶J. KYIV 1376 
     ¶K. KYIV 1942 
     ¶L. GOU-PROVIDED NON-PAPER SEP 23-24 2009 
 
Classified By: ISN/MTR DIRECTOR PAM DURHAM FOR REASONS 1.4 
(B), (C), AND (D). 
 
¶1.  (U) This is an action request.  Embassy Kyiv 
please see para 5. 
 
¶2.  (S) Background: Since November 2007, we have 
discussed with Ukrainian officials a case involving the 
sale of high-accuracy gyrotheodolites by the Ukrainian 
firm Arsenal to entities associated with China's 
Sanjiang Space Group (CSSG) (Refs).  CSSG produces 
short-range ballistic missiles that exceed Missile 
Technology Control Regime (MTCR) Category I range and 
payload thresholds.  Gyrotheodolites can be used to 
align guidance systems for mobile ballistic missiles, 
and can be controlled under the MTCR if designed or 
modified for use with Category I or II space launch 
vehicles or ballistic missiles.  In April 2008, the GOU 
responded that Arsenal was not involved in the transfer 
of gyrotheodolites to CSSG-associated entities (Ref C). 
Subsequently, however, during late July/early August 
2008 U.S.-Ukraine nonproliferation discussions in Kyiv, 
we provided Ukraine information indicating that as of 
July 2008, Arsenal was in the final stages of a 
gyrotheodolite contract with China's Wuhan Sanjiang 
Import-Export Corporation, an entity subordinate to 
CSSG, and asked the GOU to look into this matter (Refs D 
& E).  In response, GOU officials in January 2009 
indicated that Arsenal had not applied for a license to 
export gyrotheodolites to China, had not been engaged in 
efforts to export gyrotheodolites to China, did not have 
any relationship with China's Wuhan Sanjiang Import- 
Export Corporation, and did not engage in any 
cooperation with Chinese companies (Ref F). 
 
¶3.  (S) Despite the assurances provided by Ukrainian 
officials, we now have information indicating that as of 
late October 2009, Arsenal was working with the China 
Precision Machinery Import/Export Corporation (CPMIEC) 
to finalize a contract related to the delivery of a UGT-A 
high-accuracy gyrotheodolite to the Beijing Institute 
of Control and Electronics Technology (BICET).  It 
appears that this activity is related to the cooperation 
the USG previously raised with the GOU involving Arsenal 
and CSSG: BICET - like CSSG - is affiliated with CASIC, 
and the UGT-A gyrotheodolite sought by CPMIEC on behalf 
of BICET is the same model as that sought earlier by 
CSSG.  We want to alert Ukrainian officials to this new 
information, urge them to conduct further inquiries into 
this matter, and take measures to ensure that Arsenal is 
not acting as a source of goods or technologies to 
China's MTCR Category I programs. 
 
¶4.  (S) Comment:  Earlier in 2009, we raised with the 
GOU two possibly separate cases involving Arsenal and 
gyrotheodolite cooperation with Chinese entities of 
proliferation concern.  In the first case, we provided 
Ukraine with information in January 2009 indicating that 
Arsenal was holding discussions with officials from the 
China Great Wall Industry Corporation (CGWIC) concerning 
a malfunctioning UGT-S high-accuracy gyrotheodolite 
previously sold by Arsenal to a Chinese customer (Ref 
G).  During the September 23-24, 2009 Nonproliferation 
Working Group Talks in Kyiv, Ukrainian officials 
provided a non-paper confirming that Arsenal had 
conducted negotiations with the CGWIC concerning the 
warranty repair of a UGT-S gyrotheodolite previously 
sold to China, and that GOU authorities had approved a 
license for said warranty repair.  In the second case 
(first raised by the U.S. during the September NPWG 
talks), we provided information indicating that Arsenal 
was working to establish a partnership related to the 
production of gyrotheodolites with China's Shaanxi 
Cangsong Machinery Plant (Ref K).  Ukraine has not yet 
responded on this case.  End comment. 
 
¶5.  (S) Action Request: Request Embassy Kyiv approach 
appropriate Ukrainian government officials to deliver 
talking points in paragraph 6 below and report response. 
Talking points also may be provided as a non-paper. 
Post can note that this issue could be separate from the 
gyrotheodolite cooperation Arsenal has engaged in with 
Chinese entities outlined in para 4. 
 
¶6.  (SECRET//REL UKRAINE) BEGIN TALKING POINTS/NON- 
PAPER: 
 
-- We would like to follow-up with you on a matter of 
proliferation concern and request your government's 
continued assistance in investigating and stopping this 
activity. 
 
-- In November 2007, we provided you with information 
indicating that the Ukrainian firm Arsenal Design Bureau 
was finalizing the sale of a UGT-A high accuracy 
gyrotheodolite to entities associated with China's 
Sanjiang Space Group (CSSG). 
 
-- CSSG produces short-range ballistic missile systems 
that exceed Missile Technology Control Regime (MTCR) 
Category I range and payload thresholds and is affiliated 
with the China Aerospace Science and Industry Corporation 
(CASIC), a designer and developer of space launch 
vehicles and ballistic missiles. 
 
-- We noted that gyrotheodolites can be used in the 
alignment of ballistic missile guidance systems, and if 
designed or modified for use with MTCR Category I or II 
systems, they are controlled under Item 12.A.1 of the 
MTCR Annex. 
 
-- We were therefore concerned that this gyrotheodolite 
could be used to support China's MTCR Category I missile 
programs. 
 
-- Your April 2008 response indicated that Arsenal was 
not transferring gyrotheodolites to CSSG-associated 
entities. 
 
-- However, during the 2008 U.S.-Ukraine 
nonproliferation talks in Kyiv on July 31-August 1, we 
provided further information indicating that in early 
July 2008, Arsenal was finalizing a contract with 
China's Wuhan Sanjiang Import-Export Corporation on 
behalf of CSSG. 
 
-- In response, you indicated that Arsenal did not 
request a license/permit from Ukraine's State Service of 
Export Control related to the transfer of UGT-A high 
accuracy gyrotheodolites to China. 
 
-- You also told us that Arsenal had not been engaged in 
efforts to export gyrotheodolites to China, did not have 
any relationship with China's Wuhan Sanjiang Import 
Export Corporation, and did not engage in cooperation 
with Chinese companies. 
 
-- We now have additional information indicating that in 
late October 2009, Arsenal Design Bureau was working 
with the China Precision Machinery Import/Export 
Corporation (CPMIEC) to finalize a contract related to 
the delivery of a UGT-A high-accuracy gyrotheodolite to 
China. 
 
-- We understand that the ultimate end-user of this item 
is the Beijing Institute of Control and Electronics 
Technology (BICET), an entity that - like CSSG - is 
affiliated with CASIC. 
 
-- This activity appears similar to the cooperation we 
previously raised with you involving Arsenal and CSSG. 
 
-- Additionally, the UGT-A gyrotheodolite sought by 
CPMIEC on behalf of BICET is the same model as that 
previously sought by CSSG, according to our information. 
 
-- Although Arsenal may not have applied to Ukrainian 
authorities for a license related to the transfer of 
gyrotheodolites to China, it appears that negotiations 
are occurring nonetheless. 
 
-- We urge you to investigate the possibility that 
Arsenal may be involved in these negotiations without 
having applied for the necessary licenses from Ukrainian 
authorities, and to take measures to ensure that Arsenal 
is not serving as a source of goods or technologies for 
China's MTCR Category I programs. 
 
-- We look forward to hearing of any updates on the 
progress of your investigation of this case. 
 
¶7.  (U) Please contact ISN/MTR's John Paul Herrmann with 
any questions or follow-up related to this case (202-647 
1430 - herrmannjp2@state.gov or 
herrmannjp@state.sgov.gov) and slug reporting on this 
issue for ISN/MTR, EUR/UMB and EUR/PRA. 
 
¶8.  (U) A word version of this document will be posted at 
www.state.sgov.gov/demarche. 
CLINTON