VZCZCXYZ0001
PP RUEHWEB

DE RUEHYE #0565/01 2261219
ZNR UUUUU ZZH
P 141219Z AUG 09
FM AMEMBASSY YEREVAN
TO RUEHC/SECSTATE WASHDC PRIORITY 9383
RUEKJCS/SECDEF WASHDC PRIORITY

UNCLAS YEREVAN 000565 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETTC PARM PREL KSTC AM
SUBJECT: LEGAL CONSULTATIONS ON MUNITIONS AND DUAL-USE EXPORT 
CONTROL SYSTEMS, YEREVAN, ARMENIA, JULY 27 - 31, 2009 
 
¶1.  SUMMARY: The U.S. Department of State dispatched two export 
control legal experts (Jane Dalton and Rochelle Woodard) to Yerevan 
to consult with Government of Armenia (GOAM) officials during July 
27-31, 2009 regarding possible changes to laws and regulations that 
would enable the GOAM to produce an effective export control system 
for munitions and related dual-use items.  These consultations were 
arranged to provide the U.S. experts an opportunity to conduct a 
technical review of the munitions export control legal and 
regulatory system proposed by the Armenian Ministry of Defense 
(MOD), and to discuss with GOAM participants possible ways to 
strengthen and enhance that system.  The objective was to encourage 
the GOAM to adopt a system that incorporates an independent, 
transparent process and meets international obligations and 
commitments.  The meetings with GOAM officials took place in a 
cooperative, team-based atmosphere.  By the conclusion of the 
consultations, MOD and MFA officials had identified five laws to be 
amended and six regulatory decrees or resolutions to be created or 
amended, in order to establish the legal and regulatory 
underpinnings for a munitions export control system.  The MOD and 
MFA officials immediately submitted for interagency review the five 
proposed amendments to existing laws in order to have them cleared 
in time for submission to the current legislative session of the 
National Assembly.  Once that is accomplished, the GOAM will take up 
the six regulatory decrees/resolutions for action. 
 
¶2. SUMMARY CONTINUED: The U.S. legal experts also sought to engage 
GOAM officials on the interrelationship between munitions and WMD 
dual-use export control regimes, but clearly the focus of MOD 
officials was on the munitions export control system.  The U.S. 
experts did have a useful meeting on this topic with the head of the 
State and Legal Affairs Department.  They provided him with proposed 
edits to the current Armenian dual-use export control law that would 
strengthen its provisions regarding transits, brokering, end-use 
checks, and enforcement. 
 
Initial Consultation Meeting 
---------------------------- 
 
¶3. The initial consultation meeting held on July 27 was attended by 
participants from MOD, Ministry of Foreign Affairs (MFA), the 
National Security Service (NSS), the Ministry of Economy, the State 
Revenue Committee (Customs), and the Dual-Use Export Control 
Committee.  The United States side included Embassy Yerevan officers 
and the legal experts. 
 
¶A. GOAM Participants: 
 
- Colonel Davit Tonoyan, MOD, Head of Defense Policy Department 
- Sasun Simonyan, MOD, Deputy Head of Legal Department 
- Virab Khachataryan, MOD, Attorney in Defense Policy Department 
- Levon Amirjanyan, Ministry of Foreign Affairs (MFA), - Acting Head 
of Legal Department 
- Ashot Vahanyan, Head of State and Legal Affairs Department (member 
of WMD Dual- Use Export Control Committee) 
- Tigran Petrossyan, Ministry of Economy, Head of Defense Industry 
Division 
- Artem Karapetyan, State Revenue Committee, Chief Customs 
Inspector 
- Major Vahan Mirzoyan, National Security Service (NSS) 
¶B. U.S. Participants 
- William M. Draxler, Political-Economics Officer, Embassy Yerevan 
- Steven Kessler, Resident Legal Advisor, Embassy Yerevan 
- Paul J. Shott, EXBS Advisor, U.S. Embassy, Yerevan 
- Davit Khachaturyan, Legal Assistant, U.S. Embassy, Yerevan 
- Jane G. Dalton, Defense Trade Consultant to the U.S. Department of 
State 
- Rochelle Woodard, Senior Counsel, Office of Chief Counsel for 
Industry and Security, U.S. Department of Commerce 
 
¶4.  Initial consultations addressed the Armenian legal system, the 
legal and regulatory basis for the Armenian dual-use export control 
system, and comparisons between the GOAM dual-use system and the MOD 
proposal for a munitions export control system.  Note: The dual-use 
export control system in Armenia is not technically a "licensing" 
system, as it was enacted through stand-alone legislation outside 
the Armenian Licensing Law. Despite the suggestion made by U.S. 
experts that a similar, stand-alone munitions export control law 
would be the simplest and quickest way for the GOAM to establish a 
munitions export control system, MOD participants countered that 
establishing the munitions export control system as a part of the 
Licensing Law regime would strengthen the force and impact of the 
system and would enhance its enforcement.  Such an approach, they 
argued, takes advantage of an existing, functioning regime that 
already contains many of the essential elements of an effective 
system.  Only experience implementing the desired GOAM approach will 
determine the efficacy of this approach - e.g., if it holds 
together, if there are loopholes, or if there are any areas open to 
legal challenges. 
 
Key Elements of Munitions Export Control Licensing System 
--------------------------- ----------------------------- 
 
¶5.  The first day of consultations also consisted of identifying the 
key elements that GOAM desires to incorporate into its munitions 
export control licensing system.  This system must: 
 
- Entail a transparent process that includes all relevant GOAM 
agencies. 
- Effectively control imports, exports, re-exports, transits and 
brokering of conventional munitions and technical data, to include 
intangible transfers. 
- Be based on the Wassenaar Arrangement Munitions List. 
- Require thorough case-by-case licensing determinations. 
- Require end-use and end-user certifications. 
- Include enforcement mechanisms to deter/deal with violators. 
- Specify reporting and paperwork retention requirements. 
- Require industry internal compliance programs. 
- Enable GOAM to comply with its international obligations and 
commitments. 
 
Further Consultations 
--------------------- 
 
¶6.  The remainder of the consultations was conducted by a smaller 
working group attended by MOD and MFA participants.  By the end of 
the week, the GOAM participants had identified five laws and five 
regulatory documents (decrees and resolutions) that need to be 
amended, and one new Procedural Decree to be promulgated, to 
establish the legal and regulatory framework for an effective 
munitions export control licensing system.  Participants from both 
sides reviewed the proposed legal and regulatory amendments and 
discussed in detail the new draft decree establishing the procedures 
for the munitions export control licensing system.  Although time 
did not permit a comprehensive and detailed review, it appeared that 
the total legislative and regulatory package developed by the GOAM, 
while complex and not without its deficiencies, could, if properly 
implemented, be a first step in fulfilling the key elements 
described in para 6 above. 
 
Munitions Export Control Licensing System 
----------------------------------------- 
 
¶7.  The munitions export control licensing system is envisioned by 
GOAM to operate as follows. 
 
¶A. The Licensing Law will be amended to add a new licensing 
requirement for the import, export, transit and brokering of 
"military products."  The Licensing Law, by its terms, mandates a 
six-month delay in the implementation of any new licensing 
requirements.  Accordingly, the proposed amendments to the Licensing 
Law also will include a provision that the six-month delay will not 
apply in cases where necessary to implement Armenia's international 
security obligations. 
 
¶B. The new Procedural Decree will identify MOD as the licensing 
authority for military products. It will adopt the Wassenaar 
Arrangement munitions list verbatim as an appendix, thus identifying 
"military products" as all munitions, including technical data and 
software related to munitions, on the Wassenaar Arrangement 
munitions list.  The term "military products" was chosen by MOD to 
reflect that the munitions list covers not only tangible hardware 
and technical data, but also technical data in an intangible (oral, 
visual, electronic) form. 
 
¶C. The new Procedural Decree also will establish the procedures for 
obtaining a license for the import, export, transit or brokering of 
military products.  The license application will be coordinated by 
MOD with all relevant GOAM agencies, particularly MFA and NSS.  The 
applicant will be vetted for, among other criteria, ownership by 
sanctioned entities and the ability to properly control munitions 
list items.  MOD will have the authority to disapprove a license if 
granting it would be inconsistent with Armenia's national security 
and/or international obligations. If licensed, an entity will have 
to comply with reporting and paperwork retention requirements, 
maintain an internal compliance system, and submit for GOAM 
inspection its facilities and documentation. 
 
¶D. Once licensed, an entity will be required to secure approval from 
the MOD Licensing Committee before entering into a specific contract 
to import, export, transit or broker military products.  It also 
will be required to secure approval from the Licensing Committee 
before actually importing, exporting, transiting or brokering any 
specific munitions list items or technical data.  At various stages 
in the process, the licensed entity will have to provide end-use and 
end-user certificates, including assurances that the items will not 
be re-exported without permission, and identify the shippers/freight 
forwarders. 
 
¶E. To obtain an affirmative conclusion for a specific import, 
export, or transit, the request first will have to be reviewed by 
the Military Technical Commission, which includes representative 
from other GOAM agencies, such as MFA and NSS.  The Military 
Technical Commission will offer an opinion as to whether the 
specific transaction under consideration would be consistent with 
 
Armenia's international obligations.  If it determines it is not, 
then MOD would have the authority to disapprove a specific import, 
export, or transit on these grounds.  An analogous process will 
apply to a request to broker specific munitions list items. 
 
¶F. The system will be enforced through the Armenian Criminal Code, 
which contains prohibitions on smuggling/contraband, on conducting 
licensed activities without a license or while a license is 
suspended, and on disclosing state secrets. 
 
¶G. In addition to the changes to the Licensing Law, a number of 
conforming changes must be made to the Criminal Code, the Customs 
Code, the Weapons Law and the Stamp Law, as well as several decrees 
and resolutions. 
 
Potential Weaknesses 
-------------------- 
 
¶8. U.S. legal experts identified the following potential weaknesses 
in the GOAM's proposed munitions export control licensing system: 
absence of a comprehensive list of definitions; lack of provisions 
concerning post shipment inspections/verifications; limited GOAM 
ability to monitor and enforce internal compliance programs for 
industries; limited capability of the GOAM to control transfers 
within the borders of Armenia; and the lack of explicit controls on 
intangible transfers.  It also is unclear the extent to which the 
GOAM may deny licenses or specific shipments based on foreign policy 
considerations other than binding legal obligations. 
 
¶9.  The munitions export control licensing system envisioned by the 
GOAM is complex.  Its effectiveness will depend on the seamless 
interrelationship of numerous laws and decrees; the ability of the 
GOAM to implement the application, review, and approval/denial 
process and to maintain oversight of the licensed entities; the 
competence of the customs system to identify and prevent unlicensed 
shipments; and the willingness of the criminal justice system to 
prosecute violators. 
 
Dual-Use Export Control System 
------------------------------ 
 
¶10.  The U.S. legal experts met separately with Ashot Vahanyan, head 
of the State and Legal Affairs Department, to discuss Armenia's 
dual-use export control system.  Mr. Vahanyan sits on the dual-use 
Export Control Committee that reviews export license applications. 
The U.S. experts suggested that GOAM consider a comprehensive 
overhaul of its existing dual-use export control system, to 
incorporate some of the enhancements that had been discussed for the 
munitions export control system.  The U.S. experts provided an 
edited version, in English, of the existing GOAM dual-use export 
control law.  (Note: Embassy Yerevan subsequently provided a 
translated version to Mr. Vahanyan.)  Suggestions made in the edited 
dual-use law include developing a more rigorous process for 
monitoring and licensing the transit of dual-use exports through the 
Republic of Armenia; defining "transit" within the law;  including 
brokering as a licensable activity, as envisioned by the European 
Union Commission regulation on dual-use exports; including the 
concept of end-use in export licensing considerations; reevaluating 
the "expert inspection" process associated with dual-use licensing; 
and strengthening the enforcement provisions of the dual-use law. 
 
¶11.  Mr. Vahanyan was receptive to the suggestions of the U.S. 
experts, but also used the meeting to voice concerns about the 
structure and operation of the munitions law.  He suggested that a 
stand-alone law along the lines of the dual-use law would allow the 
two systems to complement each other more effectively.  The U.S. 
experts offered to continue via e-mail the dialogue on strengthening 
the dual-use export control law after the Head of Department 
received a translated version of the suggested edits to the Armenian 
dual-use law. 
 
Next Steps on Munitions Export Control Licensing System 
--------------------------------------------- ---------- 
 
¶11.  At the close of the consultations, the lead MOD participant 
expressed his view that the process of creating an effective 
munitions export control licensing regime is complex and does not 
easily lend itself to deadlines or to compressed timelines.  He 
opined that it is possible that, as the package proceeds through the 
interagency process, contradictions or omissions or oversights will 
be identified and adjustments will be necessary.  Nevertheless, he 
reaffirmed the GOAM commitment to have the new laws, decrees and 
resolutions in place by an internal deadline of late September 2009. 
 He identified the next steps as follows: 
 
¶A. MOD immediately will submit the proposed amendments to the laws 
for interagency review (Licensing Law, Criminal Code, Customs Code, 
Weapons Law, Stamp Law).  Once that process is complete, GOAM will 
submit the amendments to the National Assembly for action. 
 
¶B. Subsequently, the proposed revisions to the GOAM decrees and 
resolutions, and the new Procedural Decree, will be submitted for 
 
interagency review. 
 
¶C. After the laws, decrees and resolutions are in place, MOD will 
begin implementing the munitions export control licensing system. 
 
¶12.  The U.S. legal experts offered to be available via e-mail for 
additional consultations as the laws and decrees proceed through 
interagency review.  They did not anticipate additional in-person 
consultations would be necessary, unless the package meets 
significant interagency resistance. 
 
¶13.  Embassy points of contact for this effort are Political Officer 
Barton J. Putney (PutneyBJ@state.gov) and EXBS Advisor Paul J. Shott 
at ShottPJ@state.gov. 
 
YOVANOVITCH