VZCZCXRO3124
PP RUEHDE
DE RUEHRL #0879/01 2021423
ZNR UUUUU ZZH
P 211423Z JUL 09
FM AMEMBASSY BERLIN
TO RUEHC/SECSTATE WASHDC PRIORITY 4655
INFO RUCNMEU/EU INTEREST
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCNFRG/FRG COLLECTIVE
RUCNNSG/NUCLEAR SUPPLIERS GROUP
RUCNWSN/THE WASSENAAR ARRANGEMENT
RUEHII/VIENNA IAEA POSTS COLLECTIVE
RUEHBR/AMEMBASSY BRASILIA 0312
RUEHLO/AMEMBASSY LONDON 0043
RUEHDE/AMCONSUL DUBAI 0110
RUEHBS/USEU BRUSSELS
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHMFIUU/DEPT OF ENERGY WASHINGTON DC

UNCLAS SECTION 01 OF 03 BERLIN 000879 
 
SENSITIVE 
 
SIPDIS 
STATE FOR ISN 
 
E.O. 12958: N/A 
TAGS: ETTC ETRD KOMC PARM PGOV PINR BR UK IR GM
SUBJECT: STAYING AHEAD OF PROLIFERATORS REVOLVES AROUND 
BETTER COMMUNICATION 
 
BERLIN 00000879  001.2 OF 003 
 
 
¶1.  (SBU) SUMMARY: As the global financial crisis adds 
pressure to stimulate growth through increased exports 
despite the ever increasing threat from 
proliferation/terrorism, the question of how to effectively 
administer national export control measures has never been 
more important or for that matter; more challenging.  At the 
June 15-16 Berlin Export Control Seminar on Risk Assessment 
in Licensing, international export control and 
nonproliferation experts discussed ways to prevent 
proliferation without harming legitimate trade.  To combat 
the threat posed by increasingly sophisticated proliferators, 
conference presenters emphasized the importance of 
establishing collective export control synergy both 
internationally; through information sharing within export 
control regimes, and within country; through improved 
interagency communication and outreach to industry.  USG 
participation included presentations from Department of State 
ISN/MTR and DTCC offices and from the Department of Commerce. 
 END SUMMARY 
 
 
FIGHTING NON-PROLIFERATION IN TIMES OF RECESSION 
--------------------------------------------- --- 
 
¶2.  (SBU) The global financial meltdown has severely 
diminished worldwide exports of technical goods and created 
pressure from industry and governments to ease export control 
restrictions to stimulate economic growth and jobs.  Hartmut 
Schauerte, German Ministry of Economics (BMWi) Parliamentary 
Secretary, opened the German-hosted seminar on Risk 
Assessment in Licensing by stressing the need for the EU "to 
not neglect export control" given the effects of the 
financial crisis and noted Germany's 28 percent plunge of 
their 6.3 billion euro export industry from the previous 
year.  Schauerte said future success combating 
nonproliferation in the EU rests squarely with their ability 
to work with industry and make their export control policies 
transparent.  French and Australian export control officials 
reiterated Schauerte's sentiment to strive for a balance 
between trade and proliferation concerns. 
 
 
BRAZIL SAYS TO THINK GLOBALLY NOT LOCALLY 
----------------------------------------- 
 
¶3.  (SBU) Brazilian State Minister for Export Control, 
Santiago Mourao, encouraged nations to "think globally and 
not locally" and proposed creating an overarching structure 
to bring together the four export control regimes; Wassenaar 
Arrangement (WA), Missile Technology Control Regime (MTCR), 
Australia Group (AG), and Nuclear Suppliers Group (NSG). 
Mourao said the export control regimes are "good, but not 
enough" and the international community must find a way to 
work together in a cohesive way to close loopholes.  Mourao 
made the point that the regimes are already loosely linked 
and urged further cooperation and communication.  He also 
cited United Nations Security Council Resolutions (UNSCRs) on 
Iran and North Korea, which utilize the regime lists to 
define where action should be taken. 
 
 
PROLIFERATORS EXPLOITING EXPORT CONTROL WEAKNESSES 
--------------------------------------------- ----- 
 
¶4.  (SBU) A number of presenters noted that as proliferators 
evolve their tactics, they are finding increasingly 
sophisticated evasive ways to take advantage of export 
control loopholes and are primarily targeting communication 
deficiencies among worldwide export control systems. 
Proliferators are privileged to vast resources of open source 
information about export controls and enforcement efforts, 
which they leverage to conceal the goods and/or the actual 
end-use, and end-users of items of proliferation concern so 
as to avoid setting off proliferation flags.  Seminar 
presenters shared examples of cases where proliferators have 
become particularly adept at gaming export control systems to 
achieve their goals.  The primary tactic discussed was 
 
BERLIN 00000879  002.2 OF 003 
 
 
multi-pronged procurement efforts through networks of 
suppliers/brokers attempting to acquire dual-use/weapons- 
related items.  This "shotgun approach" works by requesting 
similar items through several export control systems 
simultaneously to procure a desired technology, which 
inherently increases the odds of the illicit procurement 
slipping through at least one system. 
 
 
FIXING THE COMMUNICATION LOOPHOLE REMAINS A CHALLENGE 
--------------------------------------------- -------- 
 
¶5.  (SBU) Conference presenters emphasized the critical role 
intelligence information plays in evaluating risk in the 
export control decision making process and noted difficulties 
disseminating this information to foreign partners.  This 
creates an information gap that can result in proliferators 
not being monitored or tracked as closely as needed and even 
&falling through the cracks.8  In this context, some 
presenters stressed the need for increased information 
sharing among countries on export denial case details.  For 
example, Juergen Boehler from the Swiss Export Control Office 
(EVD) emphasized the value his agency places on export 
denials from regime partners and  encouraged all regime 
members to file denials within the nonproliferation regimes. 
 
 
PROBLEMS WITH LEGAL TERMS/DEFINITIONS 
------------------------------------- 
 
¶6.  (SBU) A great deal of discussion centered around 
interpretation of terms defined in international export 
control policy and how this effects resultant action taken 
against proliferators.  Specifically, the legal definitions 
of what a &broker8 are, who "state actors" are, and what 
constitutes "dual-use" resonated strongly with the presenters 
and audience.  Mourao pointed out that UNSCR 1540 calls for 
nations to "take action" on "state actors", which he said was 
subject to interpretation and could lead to irregularities in 
implementation.  He called for nations to universally define 
(1) what a state actor is and (2) what is illegal.  Some 
conference presenters complained that weak definitions of a 
&broker8 are sometimes a limiting factor for export control 
authorities to take action. 
 
 
PROBLEMS WITH BROKERS AND TRANSSHIPMENT POINTS 
--------------------------------------------- - 
 
¶7.  (SBU) Several  presenters discussed how proliferators are 
using brokers and transshipment points to create layers of 
complexities making it difficult for export control systems 
to assess risk and track dual-use goods from the producer to 
the final end-user.  Licensing and enforcement officials in 
many countries rely heavily  on information gleaned from the 
original export application, end-use statement, intermediary 
signatures, and final end-user certificate of receipt to 
obtain a level of confidence that  sensitive items are not 
diverted.  However, once the export leaves the producer and 
the legal territoriality of the producer's host country, 
ensuring export control non-proliferation compliance becomes 
extremely difficult for many countries. 
 
¶8.  (SBU) Boehler stated, "You can never stop proliferation, 
but you can make it more expensive and slow it down."  He 
centered his presentation on the role trading companies and 
brokers play in the overall risk of diversion for dual-use 
items.  He said under Swiss law, brokers and trading 
companies are not subject to the same export restrictions as 
the original exporter, financial institutions, and shipping 
companies, which exposes a weakness in the overall export 
control system.  Klaas Leenman, of the Dutch Customs 
Authority, and Steven Goodinson, a trade specialist within 
the Canadian MFA, reiterated Boehler's point that identifying 
brokers and transshipment points is the primary challenge to 
their respective export control systems. 
 
 
BERLIN 00000879  003.2 OF 003 
 
 
¶9.  (SBU) Karl Wendling, BMWi State Secretary, emphasized the 
proliferation risk involved with custom free zones such as in 
Dubai.  Wendling said that the  risk associated with the 
transport of dual-use goods through export free zones needs 
to be addressed and that export control-related outreach 
activities would be of particular value to these areas. 
 
 
TREND: AUTOMATED RISK ASSESSMENT TO SAVE RESOURCES 
--------------------------------------------- ----- 
 
¶10.  (SBU) A number of presenters noted that for countries 
with significant export industries, a robust export control 
system puts a significant strain on labor and financial 
resources,  Several  also indicated desire for an 
increasingly automated and paperless export control system to 
evaluate risk.  John Doddrell, Director of the UK Export 
Control Organization, explained that the UK's export control 
processing efficiency improved after having adopted a 
completely paperless system called SPIRE in an effort to 
lessen the burden on labor and financial resources.  In 
addition, Doddrell said the UK developed general and open 
licenses to enable exporters to use a single license for a 
range of exports to a range of countries.  Doddrell said 
these new approaches have led to improvements from 2003 to 
2008 (before/after SPIRE) of over 50 percent in total 
resource efficiency while maintaining the same license 
issuance turn-around time.  Doddrell said the UK is now 
advocating for the adoption of SPIRE in all of Europe. 
 
¶11.  (SBU) Although the paradigm shift to more automation for 
efficiency reasons made sense to many, questions were voiced 
about the level of quality assurance and opportunities for 
proliferators to game the rules governing automated systems 
to further their proliferation goals.  An Australian export 
control official also warned that automation is not the 
complete answer that some claim and brings about its own 
problems. 
Bradtke