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UNCLAS STATE 014503 
 
SIPDIS 
FOR CHRISTOPHER P. CURRAN 
 
E.O. 12958: N/A 
TAGS: ETTC IT KOMC
SUBJECT: BLUE LANTERN POST-SHIPMENT END USE CHECK ON 
SATELLITE COMPONENTS 
 
REF: A. IAP20030219000077 19 FEB 03: IRAN AND ITALY 
        ANNOUNCE DEAL TO BUILD AND LAUNCH NEW 
        SATELLITE 
     ¶B. EUP20090721177002 10 JUL 09: IRANIAN SATELLITE 
        REPORTEDLY DISAPPEARS 
     ¶C. IAP20091110950080 10 NOV 09: IRAN TO LAUNCH 
        MESBAH SATELLITE BY MARCH 2011 
 
¶1.  This is an action message.  See paragraphs 2-10. 
 
¶2.  The Department's Office of Defense Trade Controls 
Compliance (PM/DTCC) requests post assistance in conducting a 
post-shipment check on the export of satellite components to 
Italy.  Post is requested to complete this Blue Lantern check 
within 45 days.  Lack of response to a Blue Lantern check 
will affect pending and future licenses involving parties to 
this license. 
 
¶3.  Reason for request: the Directorate of Defense Trade 
Controls (DDTC), in accordance with the Arms Export Control 
Act (AECA) and the International Traffic in Arms Regulations 
(ITAR), is charged with controlling the export of defense 
articles and defense services covered by the United States 
Munitions List (USML).  U.S.-origin commercial satellites, 
and military-grade satellite components, are ITAR-controlled 
and require a DDTC license for export.  USML commodities 
exported to one country cannot be transferred to another 
party or re-exported without express USG authorization.  The 
export of all USML commodities is prohibited to certain 
countries, such as China, Cuba, Iran, and North Korea. 
 
¶4.  Press reporting (for example, Ref A-C) indicates that the 
Italian company, Carlo Gavazzi Space SpA (CGS), manufactured 
the Mesbah satellite for Iran on contract.  Since 1997 CGS 
has appeared on over 70 DDTC licenses (as Foreign 
Intermediate Consignee, Foreign Consignee, and Foreign End 
User), and has received thousands of U.S.-origin 
ITAR-controlled satellite components and technical data on 
account of its involvement in various satellite programs, 
acting both as primary contractor and subcontractor company. 
 
¶5.  Most foreign companies who purchase U.S.-origin satellite 
components, including CGS, routinely request extra (or spare) 
components beyond what is needed for the project, in case of 
component failure or manufacturing mishaps (requests for 
spare components is usually labeled as attrition).  Thus 
companies can have variable quantities, sometimes sizable 
stockpiles, of unused ITAR-controlled components on hand. 
Although companies are required to obtain Department 
authorization if they wish to re-transfer or re-export unused 
components to a different end-user or utilize them on a 
different project, there is no requirement that companies 
must submit status reports about components never used, 
re-transferred, or re-exported.  Thus these new but unused 
spare satellite components basically disappear and can be 
considered lost. 
 
¶6.  More recently, some European satellite manufacturing 
contractors now advertise the availability of "ITAR-free" 
versions of their satellites and satellite sub-systems. 
Without U.S.-origin ITAR content, a foreign company is 
unrestricted by USG export policy and can therefore offer to 
sell their satellites to any country, including China, Iran, 
and Venezuela.  However, no reporting has ever been found 
where CGS has claimed that the Mesbah satellite was 
"ITAR-free". 
 
¶7.  Given CGS access to significant quantities of 
ITAR-controlled satellite components, the Department seeks to 
determine if the company utilized any in its manufacture of 
the Mesbah satellite.  The use of ITAR-controlled parts on 
the Mesbah, or the use of any U.S.-origin export-controlled 
components without USG authorization, would be an export 
violation.  Thus the Department wishes to conduct a Blue 
Lantern check to query CGS about its production of the Mesbah 
satellite. 
 
¶8.  ACTION: Please visit Carlo Gavazzi Space.  Request that 
CGS provide post with copies of any relevant documents 
regarding its construction of the Mesbah satellite. 
Specifically, these CGS documents should identify all 
U.S.-origin parts that were used in the manufacture of the 
Mesbah satellite, whether these items were ITAR-controlled or 
not ITAR-controlled.  CGS information about any U.S.-origin 
parts utilized in the Mesbah satellite should identify the 
part name/description, stock number, all supply chain 
sources, and the U.S. company of manufacture.  If CGS denies 
that the Mesbah has any U.S.-origin content, CGS should be 
able to substantiate this claim with documentation which 
shows the country of origin for all components and 
sub-systems utilized in the Mesbah. 
 
¶9.  In addition, CGS should be asked about the stockpile it 
currently has of ITAR-controlled components obtained via any 
DDTC licenses.  Request that CGS provide a complete 
accounting of all ITAR-controlled components and technical 
data, now held by CGS, whether these items are intended for 
pending projects, spares from previous projects, or 
components designated for destructive or other testing.  CGS 
should identify the specific DDTC licenses (by license 
number) through which it obtained the ITAR-controlled parts 
and technical data it currently has in storage.  The list 
provided by CGS will be checked and verified against DDTC's 
licensing database.  Also ask CGS if it has ever 
re-transferred or re-exported any U.S.-origin ITAR-controlled 
components without DDTC authorization; and ask CGS if it 
understands the restrictions on U.S.-origin ITAR-controlled 
commodities, particularly the prohibition against 
re-transfers or re-exports without express USG authorization. 
 
¶10.  Finally, ask CGS if it is currently involved in any 
other satellite projects intended for Iran, China, or 
Venezuela. 
 
END ACTION. 
 
¶11.  CONTACT INFORMATION: 
 
Carlo Gavazzi Space SpA 
Via Gallarate 150 
20151 Milan 
ITALY 
Tel:  39.02.380481 
 
Via Nomentana 60 
00161 Rome 
ITALY 
Tel:  39.06.44259901 
 
¶12.  Please slug reply for PM/DTCC - BLUE LANTERN COORDINATOR 
and include the words "Blue Lantern" in the subject line. 
POC on this case is Peter Sabatini, PM/DTCC, phone: 
202-663-2819; email: sabatinipj@state.gov, 
sabtinipj@state.sgov.gov, psabatini@state.ic.gov.  The most 
current Blue Lantern Guide Book is available at 
http://fsi.state.gov/fsi/spas/default.asp?ID= 1588. 
Department thanks Post for its assistance in this matter. 
CLINTON