This record is a partial extract of the original cable. The full text of the original cable is not available.

S E C R E T SECTION 01 OF 02 ROME 001748 
 
SIPDIS 
 
NP/CBM FOR ROE 
TREASURY FOR OFAC 
PASS DOC FOR BXA/CBC/SEEVARATNAM AND BROWN 
 
E.O. 12958: DECL: XI, X5 
TAGS: ETRD ETTC IT PARM ETTC IT PARM PREL PRELETRD
SUBJECT: ITALY MAY LET PHARMACEUTICAL COMPANY ENTER LIBYA 
                          SECRET 
 
 
PAGE 02        ROME  01748  01 OF 02  081729Z 
 
REF: (A) STATE 57323 (B) 01 ROME 6495 
 
CLASSIFIED BY: ECMIN MARGARET DEAN; REASONS 1.5 B/D,X5. 
 
¶1. (S) SUMMARY.  THE ITALIAN OFFICIAL CHAIRING AN 
INTERMINISTERIAL LICENSING COMMITTEE IS "INCLINED TO SUPPORT" 
THE APPLICATION OF AN ITALIAN PHARMACEUTICAL COMPANY FOR A 
LICENSE TO CONTRACT WITH THE GOVERNMENT OF LIBYA TO REFURBISH 
FACILITIES AT RABTA, LIBYA IN ORDER TO ALLOW THEIR PRODUCTION 
OF MEDICINES.  THE APPLICATION, FIRST SUBMITTED IN FEBRUARY 
2002, WILL NEXT BE CONSIDERED AT THE COMMITTEE'S 16 APRIL 
MEETING AND MAY BE READY FOR DISPOSITION IN MAY.  PER REF A, 
POST CONVEYED THE USG'S EXTREME CONCERN THAT LIBYA REMAINS 
DETERMINED TO DEVELOP CHEMICAL AND BIOLOGICAL WEAPONS USING 
JUST THIS KIND OF CIVILIAN COVER.  MFA OFFICIALS, HOWEVER, 
SEE THE CONTRACT -- PROBABLY SUPPORTED BY A PARALLEL 
GOVERNMENT-TO-GOVERNMENT EXCHANGE OF LETTERS AND LIBYAN 
ACCESSION TO THE CHEMICAL WEAPONS CONVENTION -- AS A MEANS OF 
ENSURING THAT LIBYA USES RABTA ONLY FOR LICIT PURPOSES. 
GIVEN MFA'S INCLINATION TO APPROVE THE APPLICATION, POST 
ADVISES THAT A SERIOUS EFFORT TO DERAIL THE LICENSE WOULD 
DEMAND VERY HIGH-LEVEL WASHINGTON ATTENTION.  END SUMMARY. 
 
¶2. (S) AS FORESEEN IN DECEMBER WHEN THE GOI FIRST ASKED FOR 
THE USG'S POSITION, AN ITALIAN COMPANY, PHARMACHIM OF MILAN, 
HAS APPLIED FOR A GOI LICENSE TO CONTRACT WITH THE GOVERNMENT 
OF LIBYA TO REFURBISH CHEMICAL PRODUCTION FACILITIES AT 
RABTA, ACCORDING TO MFA'S MIDDLE EAST DEPUTY DIRCTOR GENERAL 
FRANCESCO CERULLI AND NONPROLIFERATION ISSUES COORDINATOR UGO 
DEMOHR.  DISPLAYING GENERAL FAMILIARITY WITH THE CASE, 
                          SECRET 
 
PAGE 03        ROME  01748  01 OF 02  081729Z 
CERULLI RESPONDED TO ECONOFF'S MARCH 29 PRESENTATION OF REF A 
DEMARCHE BY URGING WASHINGTON TO APPRECIATE THAT THE COMPANY 
IS NOT APPLYING MERELY TO EXPORT CHEMICALS TO LIBYA (HE 
DOUBTED THE GOI WOULD APPROVE SIMPLE EXPORTS) BUT WOULD 
REMAIN IN LIBYA FOR TEN YEARS TO MANAGE THE PLANT, PRESENTING 
AN ONGOING OPPORTUNITY FOR ITALY TO SHAPE AND MONITOR EVENTS. 
 HE DEFERRED TO DE MOHR, WHO CHAIRS THE INTERMINISTERIAL 
COMMITTEE CHARGED WITH RULING ON THE APPLICATION, FOR 
SPECIFICS OF THE STATUS OF THE CASE. 
 
¶3. (S) IN AN APRIL 4 MEETING WITH ECONOFF, DE MOHR IDENTIFIED 
THE COMPANY AS PHARMACHIM OF MILAN AND SAID ITS FEBRUARY 2002 
APPLICATION TO CONTRACT WITH THE LIBYAN GOVERNMENT WOULD BE 
CONSIDERED AT HIS COMMITTEE'S 16 APRIL MEETING.  HE SAID 
ITALY IS ABOUT TO CRIMINALIZE UNLICENSED DUAL USE TECHNOLOGY 
TRANSFERS, EFFECTIVELY STRENGTHENING HIS COMMITTEE. 
PHARMACHIM CANNOT EXPORT CHEMICALS TO LIBYA UNDER EXISTING 
LAW AND SOON, HE EXPLAINED, WOULD BE UNABLE TO EXPORT 
KNOW-HOW EITHER.  THE COMPANY IS EXPECTED TO SUBMIT CERTAIN 
SUPPLEMENTAL INFORMATION BY THE 16 APRIL MEETING AND DE MOHR 
SPECULATED THE APPLICATION COULD BE RIPE FOR A COMMITTEE 
RULING BY ITS MAY MEETING.  HE SAID THAT NONE OF THE 
COMMITTEE MEMBERS -- WHICH INCLUDE REPRESENTATIVES FROM THE 
MINISTRIES OF DEFENSE, PRODUCTIVE ACTIVITIES, ECONOMY AND 
FINANCE, THE DEPUTY MINISTRY OF FOREIGN TRADE, AND THE 
ITALIAN INTELLIGENCE AGENCY -- HAS TO DATE INDICATED 
PARTICULAR CONCERN ABOUT THE APPLICATION. 
 
¶4. (S) DE MOHR AND CERULLI EXPLAINED HOW THE APPLICATION CAME 
ABOUT AND OUTLINED SOME FACTORS TO BE CONSIDERED IN ITS 
DISPOSITION.  DE MOHR SAID THERE WAS NO FORMAL TENDER; 
                          SECRET 
 
PAGE 04        ROME  01748  01 OF 02  081729Z 
RATHER, LIBYAN OFFICIALS APPROACHED PHARMACHIM AND THE 
BRITISH COMPANY GLAXOSMITH TO GAUGE INTEREST.  HE SUGGESTED 
THAT THE COMMITTEE, IF OTHERWISE DISPOSED TO GRANT THE 
APPLICATION, WOULD LIKELY INSIST THAT PHARMACHIM'S LICENSE BE 
CONTINGENT UPON A GOVERNMENT-TO-GOVERNMENT EXCHANGE OF 
LETTERS GUARANTEEING TO THE GOI THE RIGHT TO SEND INSPECTORS 
FROM THE MINISTRY OF HEALTH AND ELSEWHERE TO RABTA THROUGHOUT 
THE LIFE OF THE CONTRACT. 
 
¶5. (S) CERULLI SAID THE GOI IS PUSHING HARD IN TRIPOLI FOR 
LIBYA TO ACCEDE TO THE CHEMICAL WEAPONS CONVENTION AND 
SUGGESTED THAT LIBYAN ACCESSION SHOULD ALLAY USG FEARS ABOUT 
RABTA.  DE MOHR INSISTED THAT LIBYA HAD AGREED TO SIGN THE 
CWC, ALTHOUGH HE PREDICTED THAT THE RATIFICATION PROCESS 
WOULD BE SLOW.  HE SAID THAT LIBYAN ACCESSION TO THE CWC 
WOULD BE A POSITIVE DEVELOPMENT BUT ADDED THAT THE COMMITTEE 
WOULD VALUE MUCH MORE THE KIND OF BILATERAL INSPECTION 
GUARANTEES LIBYA ACCEPTS.  "AFTERALL," HE SAID, "CWC MEMBERS 
HAVE BEEN KNOWN TO CHEAT." 
 
¶6. (S) ECONOFF READ OR PARAPHRASED REFTEL TALKING POINTS TO 
BOTH CERULLI AND DE MOHR IN THEIR ENTIRETY, EMPHASIZING USG 
SKEPTICISM ABOUT ANY FORWARD MOVEMENT, NO MATTER HOW 
CHARACTERIZED, ON CHEMICAL FACILITIES IN LIBYA AND ESPECIALLY 
AT RABTA.  TO DE MOHR, A PRIMARY GOI REPRESENTATIVE TO THE 
AUSTRALIA GROUP, ECONOFF FLAGGED IN PARTICULAR THE TALKING 
 
                          SECRET 
 
                              SECRET        PTQ8681 
 
PAGE 01        ROME  01748  02 OF 02  081729Z 
ACTION NP-00 
 
INFO  LOG-00   AID-00   AMAD-00  ACQ-00   CEA-01   CIAE-00  CIP-00 
      COME-00  CTME-00  DODE-00  DOEE-00  SRPP-00  DS-00    EB-00 
      EUR-00   EXIM-01  E-00     VC-00    FRB-00   HHS-01   H-01 
      TEDE-00  INR-00   ITC-01   LAB-01   L-00     VCE-00   AC-01 
      NEA-00   NRRC-00  NSAE-00  NSCE-00  OES-01   OMB-01   OPIC-01 
      PM-00    ACE-00   P-00     SCT-00   SP-00    SSO-00   SS-00 
      STR-00   T-00     USIE-00  BBG-00   SSD-00   PMB-00   DSCC-00 
      PRM-00   DRL-02   G-00     NFAT-00  SAS-00     /012W 
                  ------------------80CA93  081729Z /38 
O 081638Z APR 02 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC IMMEDIATE 3158 
INFO AMEMBASSY LONDON IMMEDIATE 
DEPT OF TREASURY WASHDC IMMEDIATE 
AMCONSUL FLORENCE 
AMCONSUL MILAN 
AMCONSUL NAPLES 
 
S E C R E T SECTION 02 OF 02 ROME 001748 
 
SIPDIS 
 
NP/CBM FOR ROE 
TREASURY FOR OFAC 
PASS DOC FOR BXA/CBC/SEEVARATNAM AND BROWN 
 
E.O. 12958: DECL: XI, X5 
TAGS: ETRD ETTC IT PARM ETTC IT PARM PREL PRELETRD
SUBJECT: ITALY MAY LET PHARMACEUTICAL COMPANY ENTER LIBYA 
                          SECRET 
 
PAGE 02        ROME  01748  02 OF 02  081729Z 
 
POINT SUMMARIZING AG EVIDENCE THAT LIBYA HAS ALREADY 
RESTARTED ITS CHEMICAL WEAPONS PROGRAM.  AGREEING FULLY THAT 
RABTA WAS IN THE PAST A CW FACILITY, DE MOHR ARGUED IN REPLY 
THAT A GOI LICENSE TO PHARMACHIM COMBINED WITH A 
GOVERNMENT-TO-GOVERNMENT AGREEMENT COULD LESSEN THE 
LIKELIHOOD OF LIBYA REALIZING ANY LINGERING CW AMBITIONS. 
 
¶7. (S) DE MOHR UNDERSTANDS THE LIBYANS HAVE GIVEN THE NOD TO 
PHARMACHIM OVER GLAXOSMITH BUT ALSO HEARS THAT GLAXOSMITH, 
ALREADY A DOMINANT PLAYER IN THE AFRICAN MARKET, HAS NOT 
GIVEN UP.  HIS COMMITTEE, THEREFORE, IS NOT INCLINED TO 
LINGER OVER THE APPLICATION. 
 
¶8. (S) COMMENT.  THE ITALIANS ARE VERY WILLING TO DISCUSS 
THIS MATTER WITH US.  CERULLI WAS PIQUED THAT THE FORMAL USG 
MESSAGE DID NOT ACKNOWLEDGE WHAT TO HIM ARE OBVIOUS 
INTELLIGENCE ADVANTAGES IN ALLOWING PHARMACHIM TO PROCEED. 
HIS RESPONSE, COMBINED WITH DE MOHR'S PRELIMINARY INCLINATION 
TO SUPPORT THE APPLICATION, PERSUADE US THAT THE GOI WILL 
VERY LIKELY APPROVE THIS APPLICATION.  TO HAVE ANY PROSPECT 
OF SUCCESS, A USG EFFORT TO DERAIL THE LICENSE WOULD HAVE TO 
ORIGINATE AT A VERY HIGH USG LEVEL AND, ENGAGING THE GOI AT A 
SIMILAR LEVEL, AND SPECIFICALLY ADDRESS THE GOI VIEW THAT 
ITALIAN PARTICIPATION WOULD BE THE BEST WAY TO PREVENT USE OF 
RABTA FOR ILLICIT B/CW PRODUCTION. 
SEMBLER 
 
                          SECRET 
 
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 2002ROME01748 - Classification: SECRET