[House Document 108-41]
[From the U.S. Government Publishing Office]



                                     

108th Congress, 1st Session - - - - - - - - - - - - - House Document 108-41


 
                   EMERGENCY REGARDING PROLIFERATION


                    OF WEAPONS OF MASS DESTRUCTION

                               __________

                                MESSAGE

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

A 6-MONTH PERIODIC REPORT ON THE NATIONAL EMERGENCY WITH RESPECT TO THE 
   PROLIFERATION OF WEAPONS OF MASS DESTRUCTION THAT WAS DECLARED IN 
   EXECUTIVE ORDER 12938 OF NOVEMBER 14, 1994, PURSUANT TO 50 U.S.C. 
                     1703(c) AND 50 U.S.C. 1641(c)




  February 26, 2003.--Message and accompanying papers referred to the 
     Committee on International Relations and ordered to be printed
To the Congress of the United States:
    As required by section 204(c) of the International 
Emergency Economic Powers Act, 50 U.S.C. 1703(c), and section 
401(c) of the National Emergencies Act, 50 U.S.C. 1641(c), I 
transmit herewith a 6-month periodic report prepared by my 
Administration on the national emergency with respect to the 
proliferation of weapons of mass destruction that was declared 
in Executive Order 12938 of November 14, 1994.

                                                    George W. Bush.
    The White House, February 25, 2003.
    Periodic Report to Congress on the National Emergency Regarding 
              Proliferation of Weapons of Mass Destruction

    This report to the Congress addresses the developments over 
the past 6 months concerning the national emergency with 
respect to the proliferation of weapons of mass destruction 
(WMD)--nuclear, chemical, and biological weapons--and the means 
of delivering such weapons, that was declared in Executive 
Order 12938 on November 14, 1994, as amended by Executive Order 
13094 of July 28, 1998. This report is submitted pursuant to 
section 204(c) of the International Emergency Economic Powers 
Act (IEEPA), 50 U.S.C. 1703(c) and section 401(c) of the 
National Emergencies Act, 50 U.S.C. 1641(c). It reports actions 
taken and expenditures incurred pursuant to the emergency 
declaration only during the period of May 15, 2002 through 
November 12, 2002.
    To address the dangers posed by the proliferation of WMD 
and their delivery systems, on November 14, 1994, President 
Clinton issued Executive Order 12938, declaring a national 
emergency under the International Emergency Economic Powers Act 
(50 U.S.C. 1701 et seq.). On July 28, 1998, President Clinton, 
pursuant to the provisions of IEEPA, issued E.O. 13094 to amend 
E.O. 12938 in order to respond more effectively to the 
worldwide threat of WMD proliferation. Under section 202(d) of 
the National Emergencies Act (50 U.S.C. 1622(d)), the national 
emergency terminates on the anniversary date of its declaration 
unless, within the ninety-day period prior to each anniversary 
date, the President publishes a Continuation of Emergency 
Regarding Weapons of Mass Destruction in the Federal Register 
and transmits the notice to the Congress. The national 
emergency was extended on November 14, 1995; November 12, 1996; 
November 13, 1997; November 12, 1998; November 10, 1999; 
November 12, 2000; November 9, 2001; and November 12, 2002.
    Weapons of mass destruction--nuclear, chemical, and 
biological weapons--and their missile delivery systems in the 
hands of potential adversary states and terrorists are among 
the top threats to U.S. security in the post-Cold War world. In 
the hands of countries like those on the U.S. list of 
terrorist-supporting states, these weapons would pose direct 
threats to the United States and its forces, friends and 
allies. Some of these rogue states are already working on 
intercontinental-range missiles that would be able to deliver 
WMD against our homeland directly.
    This Administration has given high priority to dealing with 
the threat of WMD and missile proliferation. The September 11, 
2001 terrorist attacks in New York and Washington and 
subsequent anthrax crimes reinforce the importance of efforts 
to prevent the proliferation of these weapons, especially to 
terrorists and countries that harbor terrorists.
    Additional information on nuclear, missile and/or chemical 
and biological weapons nonproliferation efforts may be found in 
the following reports: (a) the most recent annual Report on the 
Proliferation of Missiles and Essential Components of Nuclear, 
Biological and Chemical Weapons, provided to Congress pursuant 
to Section 1097 of the National Defense Authorization Act for 
Fiscal Years 1992 and 1993 (Public Law 102-190), also known as 
the ``Nonproliferation Report;'' (b) the most recent semi-
annual Report to Congress on the Acquisition of Technology 
Relating to Weapons of Mass Destruction and Advanced 
Conventional Munitions, provided to Congress pursuant to 
Section 721 of the Intelligence Authorization Act for Fiscal 
Year 1997; (c) the most recent annual report entitled 
``Adherence to and Compliance with Arms Control Agreements,'' 
provided pursuant to section 403 of the Arms Control and 
Disarmament Act, 22 U.S.C. 2593a; (d) the most recent report on 
the Democratic People's Republic of Korea, provided pursuant to 
Section 585 of the Foreign Operations, Export, Financing, and 
Related Programs Appropriations Act of 1997 (Public Law 104-
208); (e) the most recent report on Nuclear Nonproliferation 
Policy in South Asia, provided pursuant to Public Law 102-391, 
Section 585; (f) the most recent Report on Regional 
Nonproliferation in South Asia, submitted pursuant to Section 
620F(c) of Foreign Assistance Act; (g) the most recent Nuclear 
Nonproliferation Report known as the ``section 601 Report,'' 
submitted pursuant to Section 601 of the Nuclear 
Nonproliferation Act of 1978 (Public Law 95-242), as amended by 
the Nuclear Proliferation Prevention Act of 1994; (h) the most 
recent semiannual report on Proliferation-Related Transfers to 
Iran, submitted pursuant to Iran Nonproliferation Act of 2000; 
(i) the most recent report on the Iran-Iraq Arms 
Nonproliferation Act of 1992, sections 1604-1608; and (j) the 
most recent report on Libya sanctions, provided pursuant to 
Iran and Libya Sanctions Act of 1996, section 5(b).

                            NUCLEAR WEAPONS

    Nuclear Non-Proliferation Treaty: The Treaty on the Non-
Proliferation of Nuclear Weapons (NPT) is the cornerstone of 
the global effort to halt nuclear proliferation. The first 
meeting of the Preparatory Committee (PrepCom) for the 2005 NPT 
Review Conference (RevCon) took place April 8-19, 2002, at U.N. 
headquarters in New York. The PrepCom successfully completed 
its work by issuing the Chairman's report--a factual summary 
for transmission to PrepCom II, which will take place in Geneva 
from April 28 to May 9, 2003, under the Chairmanship of 
Hungarian Ambassador Laszlo Molnar.
    The United States engaged in consultations with Ambassador 
Molnar in June, August, and October of 2002. These 
consultations focused on key procedural and substantive issues 
relevant to PrepCom II. Wide-ranging bilateral discussions with 
several key NPT parties were also held in Washington, Budapest, 
Geneva, London, and New York. The five Nuclear Weapons States 
of the NPT (U.S., U.K., France, Russia, and China) also met in 
New York to discuss their approach to PrepCom II.
    The United States continues to emphasize the importance of 
compliance with the NPT and looks forward to PrepCom II as an 
opportunity for further discussion of ways and means to 
implement the Treaty. The United States will continue to meet 
all of its obligations under the NPT and notes that the signing 
on May 21, 2002 of the Moscow Treaty for the reduction of 
deployed strategic offensive nuclear weapons demonstrates that 
the United States continues to meet its obligations under the 
nuclear disarmament-related provisions of Article VI of the 
NPT.
    Iraq's and North Korea's noncompliance with the NPT remains 
of primary concern as set forth below. North Korea's admission 
in October 2002 of a secret uranium enrichment project further 
underscored the requirement to bring North Korea into 
compliance with the NPT. Iran's nuclear program is also aimed 
at the acquisition of nuclear weapons in violation of its NPT 
undertakings.
    Another significant development during the reporting period 
was Cuba's announcement on September 14, 2002, that it intends 
to become a party to the NPT.
    International Atomic Energy Agency: The International 
Atomic Energy Agency (IAEA), inter alia, verifies the 
compliance of non-nuclear weapons states with their NPT 
safeguards obligations. The IAEA safeguards system helps deter 
diversion of nuclear materials and provides a means to detect 
diversions in a timely manner should any occur. During this 
reporting period, the United States continued to provide 
significant technical and financial resources to support IAEA 
safeguards activities.
    The discovery of Iraq's extensive covert nuclear activities 
after the Persian Gulf War led to an effort to strengthen the 
IAEA safeguards system's ability to detect undeclared nuclear 
material and activities. The United States, along with a large 
number of other IAEA members, negotiated in the mid-1990s 
substantial safeguards strengthening measures, including the 
use of environmental sampling techniques, expansion of the 
information related to nuclear activities which States are 
required to declare, and expansion of IAEA access rights. Those 
measures are embodied in a Model Additional Protocol, approved 
in 1997. With these tools, the IAEA's capability to detect and 
assess a state's undeclared nuclear activity is substantially 
enhanced. This Protocol has now been signed by 61 states and 
has entered into force for 24 countries.
    On May 9, 2002, the President submitted the U.S.-IAEA 
Additional Protocol to the Senate for advice and consent to 
ratification. In doing so, he emphasized that entry into force 
of the U.S.-IAEA Additional Protocol will bolster U.S. efforts 
to strengthen nuclear safeguards and therefore promote the 
nonproliferation of nuclear weapons, which is a cornerstone of 
U.S. foreign and national security policy.
    At the September 16-20, 2002 IAEA General Conference, the 
IAEA's Director General reiterated the Agency's strong 
commitment to stemming the proliferation of nuclear and 
radiological weapons. He explained the Agency's continued 
efforts in combating the threat of nuclear terrorism. A 
resolution on countering nuclear terrorism, proposed by the 
European Union (EU), was adopted, praising the IAEA for its 
significantly greater efforts in nuclear security and urging 
Member States to improve their national programs to secure 
radioactive materials. A resolution was adopted charging the 
IAEA to ascertain whether Iraq's nuclear activities and 
capabilities had changed since December 1998. A resolution on 
the strengthening of the Agency's safeguards system was 
adopted, urging States that have not yet done so to sign and 
ratify Additional Protocols. A resolution on the Democratic 
People's Republic of Korea (DPRK) NPT safeguards agreement was 
adopted by consensus. More states cosponsored the resolution 
than last year, indicating increased international concern over 
the DPRK's non-compliance with its safeguards agreement.
    The Zangger Committee: The purpose of the 35-nation NPT 
Exporters (Zangger) Committee is to harmonize implementation of 
the NPT's requirement to apply IAEA safeguards to nuclear 
exports. Article III.2 of the Treaty requires parties to ensure 
that IAEA safeguards are applied to exports to non-nuclear 
weapons states of (a) source or special fissionable material, 
or (b) equipment or material especially designed or prepared 
for the processing, use or production of special fissionable 
material. The Committee maintains and updates a list of 
equipment and materials that may only be exported if safeguards 
are applied to the recipient facility (called the ``Trigger 
List'' because such exports trigger the requirement for 
safeguards).
    The Zangger Committee is informal and its decisions are not 
legally binding upon its members. The relative informality of 
the Zangger Committee has enabled it to take the lead on 
certain nonproliferation issues that would be more difficult to 
resolve in the Nuclear Suppliers Group (NSG). The Zangger 
Committee, by virtue of its link to the NPT, is in a better 
position to represent the nuclear nonproliferation regimes in 
dialogue with non-members critical of these regimes in NPT 
meetings.
    All of the NPT Nuclear Weapons States, including China, are 
members of the Zangger Committee. However, China is the only 
member of the Zangger Committee that is not also a member of 
the NSG, which requires full-scope safeguards (FSS) as a 
condition of nuclear supply to non-nuclear weapons states. 
China has not been willing to accept the FSS policy, but its 
export control lists are comparable, if not virtually 
identical, to the NSG's.
    At the October 2002 meeting, the Committee again discussed 
the application of Belarus for membership. The United States is 
still not prepared to join a consensus for acceptance of 
Belarus because of concern regarding that Government's 
commitment to nonproliferation.
    The Committee also continued discussion of possible 
outreach activities with non-member NPT Party countries, 
particularly Non-Aligned Movement countries. The Committee also 
considered proposals by the Chairman to engage in new areas of 
activity in the post-9/11 environment, including: (1) serving 
as a technical resource for non-member NPT Parties; (2) 
encouraging early ratification by states of the Additional 
Protocol to strengthen IAEA safeguards; and (3) adopting anti-
terrorism measures. Efforts will continue to reach agreement on 
inclusion of plutonium isotope separation equipment on the 
Trigger List, through technology-holders meetings chaired by 
Sweden.
    The Nuclear Suppliers Group: The NSG was formed in 1974 
following the Indian nuclear explosion, which demonstrated how 
nuclear technology and materials transferred for peaceful 
purposes could be misused. With 40 member states, the NSG is a 
widely accepted, mature, and effective export control 
arrangement that contributes to the nonproliferation of nuclear 
weapons through implementation of guidelines for control of 
nuclear and nuclear-related exports. Members pursue the aims of 
the NSG through voluntary adherence to the NSG Guidelines, 
which are adopted by consensus, and through exchanges of 
information on developments of nuclear proliferation concern.
    Nuclear suppliers took note when the 1990 NPT RevCon 
committee on implementation of Article III recommended that NPT 
Parties: (a) consider further improvements in measures to 
prevent diversion of nuclear technology for nuclear weapons; 
(b) coordinate controls of exports of significant nuclear-
related items; and (c) require full-scope safeguards as a 
condition of nuclear supply to non-nuclear weapons states. 
Shortly thereafter, it became apparent that nuclear export 
controls had not prevented Iraq, a Party to the NPT, from 
aiding its clandestine nuclear weapons program through 
acquisition of significant dual-use items. In response to these 
developments, the NSG decided in 1992 to: (a) establish 
guidelines for control of transfers of nuclear-related dual-use 
equipment, materials, and technology which could make a 
significant contribution to unsafeguarded nuclear fuel cycle or 
nuclear explosive activities; and (b) adopt a policy of 
requiring full scope IAEA safeguards as a condition of supply 
for nuclear Trigger List items to non-nuclear weapons states.
    The NSG Guidelines, first published in 1978, established 
requirements for: (1) formal recipient government assurances 
confirming safeguards and no nuclear explosive use; (2) 
adequate physical protection; and (3) particular caution in the 
transfer of sensitive facilities, technology, and weapons-
useable materials. The Guidelines also strengthened retransfer 
conditions. The first set of NSG Guidelines (Part 1) cover the 
``Trigger List'' of nuclear materials and equipment whose 
export requires the application of full-scope IAEA safeguards 
in the recipient country. The second set of NSG Guidelines 
(Part 2) governs exports of nuclear-related dual-use equipment 
and materials. The NSG Guidelines also control technology 
related to both nuclear and nuclear-related dual-use exports. 
Both Parts 1 and 2 of the NSG Guidelines aim to ensure that 
nuclear trade for peaceful purposes does not contribute to the 
proliferation of nuclear weapons or explosive devices while not 
hindering such trade.
    Chairmanship of the NSG rotates on an annual basis with the 
host of the annual Plenary meetings assuming the Chair for that 
year. As mandated by the 2001 Plenary, the NSG Consultative 
Group (CG) meets at least twice a year to coordinate both Part 
1 and Part 2 issues such as review of the Guidelines and 
control lists, procedures, information sharing, transparency, 
and outreach activities. The Permanent Mission of Japan in 
Vienna serves as the NSG Point of Contact in providing 
administrative support, including provision of meeting space 
and distribution of documents.
    The Czech Republic hosted the 2002 NSG Plenary and related 
meetings in Prague, May 13-17, 2002. On May 13, the first 
Licensing and Enforcement Exports Meeting (LEEM) was held as a 
trial run under the chairmanship of the U.K. and under the 
aegis of the Information Exchange Meeting (IEM). LEEM 
participants made presentations on licensing and enforcement 
infrastructure and coordination as well as case studies. NSG 
members agreed that the LEEM was successful and should become a 
regular part of Plenary week. The IEM was also very successful, 
with 18 presentations by nine Participating Governments on 
nuclear activities of concern, analyses of export denials, and 
technical briefings.
    The CG met on May 14 and 15, 2002 and discussed U.S. anti-
terrorism proposals, including amendments to the Guidelines and 
expanded information sharing. There was broad support in 
principle for addressing the issue of nuclear terrorism, 
although some delegations suggested a cautious approach on any 
amendments to the Guidelines. The CG recommended and the 
Plenary agreed to continue discussion of the anti-terrorism 
proposal.
    The Plenary met on May 16 and 17, 2002. The Czech Republic 
acceded to the Chair of the NSG. Kazakhstan was welcomed as a 
newly admitted member. The U.S. Acting Outgoing NSG Chair 
reported on activities and work of the NSG since May 2001, 
including outreach contacts with non-member governments. The 
Plenary authorized the new NSG Chair to continue outreach 
contacts with China, Egypt, India, Iran, and Pakistan and 
initiate contacts with Malaysia, Mexico, Indonesia, and Israel. 
Many delegations expressed continued concern over differing 
interpretations within the NSG of the NSG Guidelines, 
particularly if such interpretations undermine the credibility 
of the NSG and the objectives of the NPT (e.g., the situation 
created by Russian nuclear supply to India). This issue will 
continue to be discussed at future NSG meetings. The Plenary 
welcomed the offer of the Republic of Korea to host the 2003 
Plenary in May 2003.
    In September 2002, the NSG held an informal Plenary meeting 
in Vienna to discuss U.S. proposals to add anti-terrorism 
language to the Guidelines. During its October 2002 meeting in 
Vienna, the NSG CG continued discussion of the U.S. anti-
terrorism proposal and considered U.S. proposals to enhance 
information sharing. The issue of differing interpretations 
within the NSG of the full-scope safeguards provisions of the 
Guidelines also was discussed. The NSG Chair reported on his 
September 2002 outreach meetings with non-NSG members.
    South Asia Nuclear: Since their May 1998 nuclear tests, 
India and Pakistan have openly pursued their respective nuclear 
weapon programs and have continued to increase their stockpiles 
of fissile material. Both maintain active ballistic missile 
programs and have flight-tested short- and medium-range 
ballistic missiles. Each could deploy nuclear weapons in a 
short period of time. The United States has raised its WMD and 
missile proliferation-related concerns with Indian and 
Pakistani officials on many occasions, calling on them to: 
maintain their nuclear testing moratoria; not assemble nuclear 
weapons; bring an end to the production of fissile material; 
return any missiles deployed during the current crisis to pre-
crisis status as soon as possible; limit flight-tests of 
ballistic missiles; resume their bilateral dialogue; bring 
their export controls in line with international standards; 
prevent transfers to other countries related to missiles, 
nuclear, chemical, or biological weapons; and help prevent 
proliferation globally. We seek a dialogue with both countries 
on these issues that is collaborative and constructive.
    Some progress has been achieved in bringing Indian and 
Pakistani export controls into closer conformity with 
international standards. In April 2000, India instituted new, 
more specific regulations on many categories of sensitive non-
nuclear equipment and technology and has said that nuclear-
related regulations will be forthcoming; in September 2000 it 
agreed to strengthen its export control laws and practices. In 
July 2001, Pakistan publicly announced regulations restricting 
nuclear exports and has indicated that further measures are 
being prepared. Even so, we are concerned about the potential 
for Pakistani nuclear assistance to rogue nations. Both 
countries' controls fall short of international standards. We 
have offered to both India and Pakistan technical cooperation 
activities designed to improve the effectiveness of their 
export controls, and encourage further steps to bring controls 
in line with international standards. In August of 2001 the 
United States began such talks with India; Pakistan has 
indicated interest in the U.S. offer.
    U.S.-DPRK Agreed Framework: In October 2002, Assistant 
Secretary of State James Kelly advised the North Koreans that 
we had recently acquired information that indicated North Korea 
had embarked on a secret nuclear weapons program based on 
uranium enrichment, which the DPRK then acknowledged. This 
nuclear weapons program is a violation of the Agreed Framework, 
the NPT, North Korea's IAEA Safeguards Agreement, and the Joint 
North-South Declaration on the Denuclearization of the Korean 
Peninsula. The United States has called on the DPRK to take 
immediate steps to eliminate verifiably its enrichment program 
and is consulting closely with Congress, friends, and allies on 
next steps to address this grave violation of North Korea's 
international commitments.
    In October 1994, the United States and North Korea signed 
the Agreed Framework in an effort to resolve concerns about 
North Korea's nuclear weapons program and bring the DPRK into 
compliance with its NPT commitments. As part of the Agreed 
Framework, North Korea undertook to freeze and dismantle its 
graphite-moderated nuclear reactors and related facilities at 
Yongbyon and Taechon. It also undertook to remain party to the 
NPT and come into full compliance with its IAEA safeguards 
agreement, including taking all steps deemed necessary by the 
IAEA when a significant portion of the light-water reactor is 
completed, but before delivery of key nuclear components.
    During the reporting period, the freeze at the declared 
facilities remained in place, but North Korea had not begun 
safeguards cooperation with the IAEA despite knowing the IAEA's 
estimate of 3-4 years to complete the process to verify North 
Korea's nuclear past and the new target date for ``significant 
portion'' completion of May 2005. Canning of all accessible 
spent fuel rods and rod fragments from the DPRK's 5-megawatt 
graphite-moderated nuclear reactor was completed in April 2000. 
During the reporting period, the IAEA continued to monitor the 
canned fuel pending its ultimate removal from the DPRK once key 
nuclear components began to be delivered. A U.S. spent fuel 
team has periodically visited the DPRK to perform routine 
maintenance operations and repair suspected leaking canisters.
    Because of several concerns, including over North Korea's 
lack of cooperation with the IAEA in coming into compliance 
with the DPRK's full-scope safeguards agreement, President Bush 
waived the Congressional certification requirements for FY 2002 
U.S. assistance (used primarily for heavy fuel oil (HFO) 
shipments) to the Korean Peninsula Energy Development 
Organization [KEDO]). Under the Agreed Framework, North Korea 
is to receive 500,000 tons of HFO annually, purchased through 
KEDO. The U.S. contribution covers HFO and KEDO's 
administrative expenses. The United States and other members of 
the KEDO board decided in November 2002 to suspend shipments of 
HFO in light of North Korea's violation of the Agreed 
Framework. The administration has requested $3.5 million for 
contingency funds to cover some administrative costs for KEDO, 
but is seeking no funds for HFO in 2003. The United States 
continues consultations with other KEDO board members with 
respect to the light water reactor project and the future of 
KEDO.
    After the reporting period, the DPRK announced it was 
lifting the freeze on its nuclear facilities. It then began to 
cut IAEA seals and disable IAEA cameras at the sites, and 
expelled the IAEA inspectors. Subsequently, in January 2003, 
the DPRK announced it was withdrawing from the NPT.
    Iran Nuclear: Despite its status as an NPT party, Iran 
maintains an active nuclear weapons development program. Among 
the persistent indicators that Iran is pursuing nuclear weapons 
is the fact that Iran is attempting to obtain capabilities to 
enrich uranium and to produce plutonium--both critical 
materials for a nuclear weapon. Neither of these capabilities 
is necessary to meet Iran's declared desire to have a civil 
nuclear power program to generate electricity, which is itself 
suspicious in light of Iran's abundant oil and natural gas 
resources.
    For the time being, Iran's nuclear program remains 
dependent on external sources of supply. The United States has 
played the leading role in developing and maintaining a broad 
international consensus against assisting Iran's foreign 
procurement efforts. The United States denies Iran access to 
U.S. nuclear technology and material, and all major Western 
suppliers have agreed not to provide nuclear technology to 
Iran. A number of supplier states have abandoned potentially 
lucrative sales to Iran's nuclear program. Russia remains the 
most significant, but not only, exception to this virtual 
embargo on nuclear cooperation with Iran. The Administration is 
actively engaged with Russia in an attempt to resolve 
differences over the nature and scope of Russian cooperation 
with Iran's nuclear programs.
    In August 2002, an Iranian opposition group asserted 
publicly that Iran is building a heavy water plant and a ``fuel 
production plant.'' A review of commercially available imagery 
adds credibility to the group's charge and suggests the ``fuel 
production plant'' is actually a uranium enrichment facility. 
Iran would not build a heavy water plant unless it had plans to 
build a heavy water reactor. Iran's nuclear power program, 
currently limited to the one reactor at Bushehr that Russia is 
supplying, is based on light-water reactor design. Thus, a 
heavy water production capability would be inconsistent with 
such a program, but would be a critical element in Iran's 
efforts to build and operate a reactor designed to maximize 
plutonium production. Iran also does not need an indigenous 
capability to produce enriched uranium for its power program; 
Russia has contracts to supply the low-enriched uranium fuel 
for Bushehr for the life of the reactor. An indigenous uranium 
enrichment capability, however, would enable Iran to produce 
highly enriched uranium for use in nuclear weapons.
    Iraq Nuclear: President Bush, in his September 12, 2002 
speech to the United Nations General Assembly, challenged the 
international community to enforce a decade's worth of Security 
Council resolutions and eliminate WMD, long-range missiles and 
all related materials from Saddam Hussein's Iraq. The 
Administration has successfully sought authorization from both 
Houses of Congress to use force, if necessary, to defend U.S. 
national security against the threat posed by Iraq and enforce 
all relevant United Nations Security Council Resolutions 
(UNSCR) regarding Iraq.
    We continue to judge that Iraq retains its objective of 
acquiring nuclear weapons. We believe that Iraq increased its 
efforts to pursue some nuclear activity after U.N. inspections 
stopped in December 1998. Iraq's recent aggressive attempts to 
obtain proscribed high-strength aluminum tubes and other dual-
use equipment and materials are of significant concern. Iraq 
also retains its cadre of nuclear scientists and technicians, 
program documentation, and dual-use manufacturing capabilities 
that could support a reconstituted nuclear weapons program. The 
acquisition of highly-enriched uranium or weapons-grade 
plutonium remains Iraq's biggest obstacle to a nuclear weapons 
capability.
    On November 8, 2002, the U.N. Security Council unanimously 
passed UNSCR 1441, which gave Iraq a final opportunity to 
comply with its disarmament obligations. UNSCR 1441 called for 
Iraq to file a ``currently accurate, full, and complete'' 
declaration of its WMD and missile programs, and for ``full and 
immediate'' cooperation by Iraq with weapons inspectors. 
Finally, the resolution warned of ``serious consequences'' 
should Iraq fail to comply with its disarmament obligations. 
Thus, UNSCR 1441 was designed to test the regime's commitment 
to abandon WMD and illegal missile efforts. The activities 
under UNSCR 1441 have occurred after the period of this report. 
However, Iraq clearly has made no decision to disarm and is in 
material breach of its UNSCR obligations.

                    CHEMICAL AND BIOLOGICAL WEAPONS

    Enhanced Proliferation Control Initiative (EPCI) 
Regulations: The export control regulations issued under the 
EPCI remain fully in force and continue to be administered by 
the Department of Commerce, in consultation with other 
agencies, in order to control the export of items with 
potential use in WMD or missile programs. In particular, EPCI 
is being applied to items with potential use in chemical or 
biological weapons or unmanned delivery systems for WMD.
    Chemical Weapons Convention: Chemical weapons continue to 
pose a serious threat to the security of the United States and 
our allies. On April 29, 1997, the Convention on the 
Prohibition of the Development, Production, Stockpiling and Use 
of Chemical Weapons and on Their Destruction (known as the 
Chemical Weapons Convention or CWC) entered into force, with 87 
of the CWC's 165 signatories as original States Parties--
including the United States, which ratified the Convention on 
April 25, 1997. As of the end of this reporting period, 147 
countries have become States Parties.
    The implementing body for the CWC--the Organization for the 
Prohibition of Chemical Weapons (OPCW)--carries out the 
verification provisions of the CWC, and its Technical 
Secretariat presently has a staff of approximately 500 
international civil servants, including about 200 inspectors 
trained and equipped to inspect military and industrial 
facilities throughout the world. To date, the OPCW has 
conducted over 1,200 routine inspections at over 460 sites in 
some 50 countries. No challenge inspections have yet taken 
place. The OPCW maintains an inspector presence at operational 
chemical weapon destruction facilities. United States 
facilities have hosted approximately one-third of OPCW 
inspections and two-thirds of total inspection days, due to the 
significant level of chemical weapon destruction activity in 
the United States.
    The United States is determined to seek full implementation 
of and compliance with the CWC. This includes submission of 
accurate and complete declarations for all States Parties and 
compliance with the CWC's inspection provisions. The United 
States pursues compliance with the Convention through several 
means, including bilateral consultations and site visits under 
Article IX, with the State Parties that it believes may not be 
meeting their commitments. In addition, the United States is 
actively taking steps to strengthen the OPCW's ability to 
implement effectively the CWC, including making a $2 million 
voluntary contribution to the OPCW as a follow-up to the recent 
much needed change in OPCW leadership.
    We are continuing our work to ensure that countries that 
refuse to become party to the CWC are increasingly isolated 
politically. Under the CWC, such countries are denied access to 
certain key chemicals from States Parties. The relevant treaty 
provisions are specifically designed to penalize countries that 
refuse to become party to the CWC.
    Biological Weapons Convention: The United States agreed in 
1994 to participate in an Ad Hoc Group to negotiate a Protocol 
to the 1972 Biological Weapons Convention (BWC) that would 
``strengthen the effectiveness and improve the implementation 
of the Convention.'' On July 25, 2001, after a thorough United 
States Government Policy review, the United States announced 
that the draft Protocol test was unacceptable and unfixable. At 
the opening of the Fifth BWC Review Conference in November 
2001, the Administration offered a number of alternative 
approaches that would be effective in combating the threat of 
biological weapons proliferation and in strengthening the BWC. 
The resumed RevCon in November 2002 adopted a work program for 
the period until the next RevCon in 2006. Under that work 
program, the BWC States Parties will discuss, and promote 
effective action on, several of the practical measures proposed 
by the President.
    Australia Group: The United States continues to be a 
leading participant in the 33-member Australia Group (AG) 
chemical and biological weapons nonproliferation regime. At the 
most recent annual AG Plenary Session June 3-6 in Paris, the 
Group significantly expanded its export controls and 
strengthened its ability to counter both nation-state and 
terrorist chemical and biological weapons efforts. Responding 
to the terrorist events of September 11, 2001, AG participants 
adopted common export control guidelines that include chemical 
and biological terrorism as an explicit focus of the regime.
    Participants also adopted the U.S.-proposed gameplan on 
regional nonproliferation and the Group agreed to require its 
members to have ``catch-all'' controls, the first multilateral 
nonproliferation regime to do so. The AG control lists were 
amended to include technology for the development and 
production of listed biological agents and equipment, and to 
add eight new biological toxins. To better combat biological 
weapons proliferation, the Group reduced the control level for 
listed fermenters from 100 to 20 liters and to require licenses 
for exports of biological agents to all countries, including 
other AG members (except for intra-EU trade).
    Participants also continued to agree that full adherence to 
the CWC and BWC by all governments will be a key to achieving a 
permanent global ban on chemical and biological weapons, and 
that the states adhering to these Conventions must take steps 
to ensure that their national activities support these goals. 
The Group reaffirmed its commitment to continue its active 
outreach program of briefings for non-AG countries, and to 
promote regional consultations on export controls and 
nonproliferation to further raise awareness and understanding 
of national policies in these areas. No new members were 
admitted to the AG during the reporting period.
    Sanctions/Interdictions: During the reporting period, we 
continued to examine closely intelligence and other information 
concerning trade in material and technology, related to 
chemical and biological weapons. In July 2002, pursuant to the 
Iran-Iraq Arms Nonproliferation Act of 1992 and the Chemical 
and Biological Weapons Control and Warfare Elimination Act of 
1991, the United States impose mandatory sanctions on eight 
Chinese companies, one Chinese citizen, and one Indian citizen 
for knowingly and materially contributing to a foreign chemical 
weapons program. Also, penalties were imposed in June 2001, 
January 2002, and May 2002, pursuant to the Iran 
Nonproliferation Act of 2000, on a total of nine Chinese and 
two Armenian entities for their involvement in the transfer of 
AG-controlled items to Iran. The United States continues to 
cooperate with its AG partners and other countries in stopping 
shipments of chemical and biological weapons proliferation 
concern.
    Country Issues: Iran continues to seek precursors and 
production technology to create a more advanced and self-
sufficient CW infrastructure, and continues actively to pursue 
BW capabilities. Iraq is reconstituting its chemical and 
biological weapons programs. Syria and Libya continue to make 
improvements to their chemical weapons infrastructure and both 
are pursuing offensive biological weapons research and 
development. North Korea has a dedicated, national-level effort 
to achieve a biological weapons capability and has developed 
and produced, and may have weaponized, biological weapons 
agents. North Korea is also assessed as having a long-standing 
offensive chemical weapons program, which includes the ability 
to produce bulk quantities of nerve, blister, blood, and 
choking agents. Sudan has received foreign assistance in the 
development of a chemical weapons program and may be actively 
pursuing a more advanced capability.

                      MISSILES FOR DELIVERY OF WMD

    Export Controls: The United States rigorously controls 
exports that could contribute to unmanned delivery systems for 
WMD, and monitors closely activities of potential missile 
proliferation concern.
    Missile Technology Control Regime: The Missile Technology 
Control Regime (MTCR) Partners continued to share information 
about proliferation problems with each other and with other 
potential supplies, consumer, and transshipment states. 
Partners also emphasized the need for implementing effective 
export control systems. This cooperation has resulted in the 
interdiction of missile-related materials intended for use in 
missile programs of concern.
    The MTCR held its annual Plenary in Warsaw, September 24-
27, 2002. At the Plenary, the MTCR Partners shared information 
about activities and programs of missile proliferation concern 
and reiterated that the proliferation of WMD and their means of 
delivery poses a serious threat to international and regional 
peace and security. In addition, the Plenary re-emphasized the 
important role played by export controls, the need for their 
strict implementation and enforcement, and the importance of 
strengthening existing controls to respond to technological 
developments and the evolving security environment. To this 
end, the Plenary agreed to a number of substantive changes to 
the Regime's Annex (control list). The Partners also agreed to 
a range of continuing contacts with non-members concerning MTCR 
goals and activities. The Partners also adopted a Joint Action 
that stressed the need for further efforts to limit the risk of 
controlled items and their technologies falling into the hands 
of terrorist groups and individuals.
    International Code of Conduct Against Ballistic Missile 
Proliferation: The United States was one of 99 counties that 
participated in a meeting hosted by Spain June 17-18, 2002 on 
the draft International Code of Conduct Against Ballistic 
Missile Proliferation (ICOC). The meeting resulted in a 
productive exchange of views, which helped the 
multilateralization of the ICOC. In September 2002, The 
Netherlands, on behalf of the EU, distributed the final ICOC 
text to all counties and invited them to subscribe to the ICOC. 
The ICOC entered into effect at a ``Launching Conference'' in 
The Hague on November 25-26, 2002.
    The ICOC is intended to create a widely-subscribed 
international predisposition against ballistic missile 
proliferation. It consists of a broad set of principles, 
general commitments, and modest confidence building measures. 
It is intended to be a voluntary political commitment, not a 
treaty, and will be open for subscription by all counties. The 
ICOC will supplement, not supplant, the important work of the 
MTCR.
    Sanctions: In May 2002, the United Stated imposed penalties 
on two Armenian, two Moldovan, and seven Chinese entities 
pursuant to the Iran Nonproliferation Act of 2000, for the 
transfer of MTCR-controlled items to Iran. In August 2002, the 
United States imposed Category II missile sanctions on a North 
Korean entity.
    South Asia Missile: India has an extensive, largely 
indigenous ballistic missile development and production 
program. Nevertheless, India's ballistic missile programs have 
benefited from the acquisition of foreign equipment and 
technology, which it continues to seek.
    Pakistan has an active ballistic missile program and, 
during the last several years, has received considerable 
assistance from Chinese and North Korean entities in these 
efforts. Continued development of nuclear-capable ballistic 
missiles by both India and Pakistan raises the prospect that 
more sophisticated and possibly destabilizing capabilities will 
be fielded in the coming years. Such a race constitutes a 
threat to regional and international security. After three 
years of not conducting a flight test of a ballistic missile, 
Pakistan conducted five ballistic missile tests during the 
reporting period.
    DPRK Missile: Although the DPRK has maintained its 
September 1999, self-imposed, long-range missile flight test 
moratorium, it has, during the last several years, been 
extremely active in the research, development, testing, 
deployment, and export of ballistic missiles and related 
materials, equipment, and technology. The DPRK also is working 
to increase the capability of its missile systems. During a 
September 2002 meeting with Japanese Prime Minister Junichiro 
Koizumi, DPRK President Kim Jong-il stated that North Korea 
would maintain its missile flight test moratorium until after 
2003. We are concerned, however, that North Korea may try to 
circumvent its promise by cooperating in testing and 
development with foreign missile programs.
    During his October 2002 visit to North Korea, Assistant 
Secretary of State James Kelly expressed serious U.S. concerns 
about the negative impact of the DPRK's missile- and WMD-
related activities on regional and global peace and stability, 
for the North's relations with the United States and its 
neighbors, and for its own future.
    Iran Missile: Iran has substantial missile inventories and 
an indigenous ballistic missile production capability. In 
recent years, North Korean, Russian, and Chinese entities have 
continued to supply Iran with a wide variety of missile-related 
goods, technology, and expertise. In response to Iranian 
efforts to acquire sensitive items from Russian entities for 
use in Iran's missile and nuclear development programs, the 
United States has pursued a high-level dialogue with Russia 
aimed at finding ways to cut off the flow of sensitive goods 
and expertise to Iran's ballistic missile development and 
nuclear weapons programs. Russia's Government has created 
institutional foundations to implement its nonproliferation 
commitments and passed laws to punish wrongdoers. It also has 
passed new export control legislation and adopted implementing 
regulations to tighten government control over sensitive 
technologies and continued a dialogue with the United States 
aimed at strengthening export control practices at Russian 
aerospace firms. However, while there has been some movement, 
we remain concerned that Russian entities continue to supply 
missile technology and equipment to Iran.
    Other Countries: Other countries, in addition to the above, 
are pursuing missile programs. Iraq has exceeded the U.N. range 
limit of 150 km with its existing ballistic missiles and is 
developing specialized facilities, which would suggest that it 
intends to develop a medium-range ballistic missile capability, 
largely through foreign assistance in rebuilding its missile 
production capability. Iraq is also developing its unmanned 
aerial vehicle capability as a delivery system for biological 
and, less likely, chemical agents. Libya's limited success with 
its indigenous missile production effort may renew its focus on 
purchasing a complete ballistic missile system. Syria continues 
to acquire missile-related equipment and materials and has 
received considerable foreign production assistance.

               VALUE OF NONPROLIFERATION EXPORT CONTROLS

    U.S. national export controls--both those implemented 
pursuant to multilateral nonproliferation regimes and those 
implemented unilaterally--play an important part in impeding 
the proliferation of WMD and missiles.
    As noted in this report, however, export controls are one 
of a number of tools the United States uses to achieve its 
nonproliferation objectives. Global nonproliferation treaties 
and norms, multilateral nonproliferation regimes, interdiction 
of shipments of proliferation concern, sanctions, export 
control assistance, redirection and elimination efforts, and 
robust U.S. military, intelligence, and diplomatic capabilities 
all work in conjunction with export controls as part of our 
overall nonproliferation strategy.
    Export controls are a critical part of nonproliferation 
because every emerging WMD and missile program seeks equipment 
and technology from other countries. Proliferators look to 
other sources because needed items are unavailable within their 
country, because indigenously produced items are of substandard 
quality or insufficient quantity, and/or because imported items 
can be obtained more quickly and cheaply than domestically-
produced ones.
    It is important to note that proliferators seek for their 
WMD and missile programs both items on multilateral lists (like 
gyroscopes controlled on the MTCR Annex and nerve gas 
precursors controlled on the AG list) and unlisted items (like 
lower-level machine tools and very basic chemicals). In 
addition, many of the items of interest to proliferators are 
inherently dual-use. For example, key precursors and 
technologies used in the production of fertilizers or 
pesticides also can be used to make missile propellant and 
chemical weapons; vaccine production technology can be used to 
produce biological weapons.
    The most obvious value of export controls is in impeding or 
denying proliferators and terrorists access to key pieces of 
equipment or technology for use in their WMD and/or missile 
programs. In large part, U.S. national export controls--and 
similar controls of our partners in the AG, MTCR, and NSG--
strive to deny proliferators and terrorists access to the 
largest sources of the best equipment and technology. If 
denied, proliferators might then turn to non-regime suppliers 
to seek less capable items. Moreover, in many instances, U.S. 
and regime controls and associated efforts have forced 
proliferators to engage in complex clandestine procurements, 
taking time and money away from their WMD and missile programs.
    United States national export controls and those of our 
regime partners also have played an important role in 
increasing over time the critical mass of countries applying 
nonproliferation export controls. For example: the seven-member 
MTCR of 1987 has grown to 33 member countries; the NSG adopted 
full-scope safeguards as a condition of supply and extended new 
controls to nuclear-related dual-use items; several non-member 
countries have committed unilaterally to apply export controls 
consistent with one or more of the regimes; and most of the 
members of the nonproliferation regimes have applied national 
``catch-all'' controls similar to those under the U.S. EPCI. 
(Export controls normally are tied to a specific list of items, 
such as the MTCR Annex. ``Catch-all'' controls provide a legal 
basis to control exports of items not on a list, when it is 
believed that those items could be destined for WMD and/or 
missile programs.)
    The United States maintains a global program to assist some 
30 countries to strengthen their export control systems. 
Assistance is focused on helping weapons-source countries and 
countries along potential smuggling routes to develop effective 
export control regimes, including effective capabilities to 
control illicit weapons trafficking across their borders; to 
establish the necessary legal and regulatory basis for 
effective export controls; to improve licensing procedures and 
practices; to coordinate, train, and equip export enforcement 
agencies, including customs agents and border security and 
enforcement authorities; to develop and install automated 
information systems for licensing and enforcement; and to 
foster effective interaction between government and industry on 
export controls.
    This program has placed 21 advisors in countries around the 
world to coordinate export control/border security activities. 
The program continues to register successes: new cooperative 
relationships have been established with key transshipment and 
potential supplier states; a number of countries have adopted, 
or are adopting, export and transshipment control laws and 
regulations, including ``catch-all'' controls and controls on 
arms brokering, largely based on U.S. advice; the program has 
contributed to a significant strengthening of border security 
capabilities in former Soviet states, notable Central Asia, the 
Caucasus, and in Eastern Europe; and various countries' 
enforcement agencies have used U.S. equipment and training to 
interdict the movement of arms, related items, and radioactive 
materials across the borders.
    Finally, export controls play an important role in enabling 
and enhancing legitimate trade. They provide a means to permit 
duel-use exports to proceed under circumstances where, without 
export control scrutiny, the only prudent course would be to 
prohibit them. They help build confidence between countries 
applying similar controls that, in turn, results in increased 
trade. Each of the WMD and missile nonproliferation regimes, 
for example, has a ``no undercut'' policy committing each 
member not to make an export that another has denied for 
nonproliferation reasons and notified to the rest--unless it 
first consults with the original denying country. Not only does 
this policy make it more difficult for proliferators to get 
items from regime members, it also establishes a ``level 
playing field'' for exporters.

 THREAT REDUCTION AND NONPROLIFERATION ASSISTANCE TO THE FORMER SOVIET 
                                 STATES

    The President has made clear repeatedly that his 
Administration is committed to strong, effective cooperation 
with Russia and the other former Soviet states to reduce WMD 
and prevent their proliferation. To ensure that the promise of 
these programs is fully realized, the Administration undertook 
in 2001 a detailed review of U.S. nonproliferation and threat 
reduction assistance to the Russian Federation. The review was 
completed in December 2001. It found that most U.S. programs in 
this area work well, are focused on priority tasks, and are 
well managed. The review further identified some programs for 
expansion and others for adjustment. In keeping with the 
President's commitment, and the results of the review, the 
President's FY 2003 budget included historically high requests 
to the Congress for nonproliferation and threat reduction 
assistance to the former Soviet states.
    On June 27, 2002, the President and his G-8 colleagues 
launched a new major effort to expand threat reduction and 
nonproliferation assistance. Under the G-8 Global Partnership 
Against the Spread of Weapons and Material of Mass Destruction, 
the G-8 will commit up to $20 billion for this purpose over the 
next ten years. The United States intends to provide half of 
that total. The initial focus will be on projects in Russia, 
but the initiative is also open to other states, including 
other former Soviet states.

                              EXPENDITURES

    Pursuant to Section 401(c) of the National Emergencies Act 
(50 U.S.C. 1641(c)), there was no specific expenditures 
incurred, which are directly attributable to the exercise of 
authorities conferred by the declaration of the national 
emergency in Executive Order 12938, as amended, during the 
reporting period from May 15, 2002 through November 12, 2002.

                                
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