Nonproliferation: Improvements Needed to Better Control
Technology Exports for Cruise Missiles and Unmanned Aerial
Vehicles (23-JAN-04, GAO-04-175).
Cruise missiles and unmanned aerial vehicles (UAV) pose a growing
threat to U.S. national security interests as accurate,
inexpensive delivery systems for conventional, chemical, and
biological weapons. GAO assessed (1) the tools the U.S. and
foreign governments use to address proliferation risks posed by
the sale of these items and (2) efforts to verify the end use of
exported cruise missiles, UAVs, and related technology.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-04-175
ACCNO: A09153
TITLE: Nonproliferation: Improvements Needed to Better Control
Technology Exports for Cruise Missiles and Unmanned Aerial
Vehicles
DATE: 01/23/2004
SUBJECT: Arms control agreements
Dual-use technologies
Exporting
Foreign trade policies
Missiles
Monitoring
National preparedness
Unmanned aerial vehicles
Missile Technology Control Regime
Wassenaar Arrangement
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GAO-04-175
United States General Accounting Office
GAO Report to the Chairman, Subcommittee on National Security, Emerging
Threats, and International Relations, Committee on Government Reform, House of
Representatives
January 2004
NONPROLIFERATION
Improvements Needed to Better Control Technology Exports for Cruise Missiles and
Unmanned Aerial Vehicles
GAO-04-175
Highlights of GAO-04-175, a report to Chairman, Subcommittee on National
Security, Emerging Threats, and International Relations, Committee on
Government Reform, House of Representatives
Cruise missiles and unmanned aerial vehicles (UAV) pose a growing threat
to U.S. national security interests as accurate, inexpensive delivery
systems for conventional, chemical, and biological weapons. GAO assessed
(1) the tools the U.S. and foreign governments use to address
proliferation risks posed by the sale of these items and (2) efforts to
verify the end use of exported cruise missiles, UAVs, and related
technology.
The Secretary of Commerce should assess and report to the Committee on
Government Reform on the adequacy of an export administration regulation
provision to address missile proliferation by nonstate actors and on ways
the provision might be modified.
The Secretaries of State, Commerce, and Defense each should complete a
comprehensive assessment of cruise missile, UAV, and related dual-use
transfers to determine if U.S. exporters and foreign end users comply with
conditions related to the transfers.
Commerce and Defense partially agreed with the recommendations. State
disagreed to complete an assessment, but said it would pay special
attention to the need for more checks on cruise missile and UAV transfers.
January 2004
NONPROLIFERATION
Improvements Needed to Better Control Technology Exports for Cruise Missiles and
Unmanned Aerial Vehicles
The growing threat to U.S. national security of cruise missile and UAV
proliferation is challenging the tools the United States has traditionally
used. Multilateral export control regimes have expanded their lists of
controlled technologies, but key countries of concern are not members.
U.S. export control authorities find it increasingly difficult to limit or
track unlisted dual-use items that can be acquired without an export
license. Moreover, a gap in U.S. export control authority enables American
companies to export certain dual-use items to recipients that are not
associated with missile projects or countries listed in the regulations,
even if the exporter knows the items might be used to develop cruise
missiles or UAVs. American companies have in fact legally exported dualuse
items with no U.S. government review to a New Zealand resident who bought
the items to build a cruise missile.
The U.S. government seldom uses its end-use monitoring programs to verify
compliance with conditions placed on the use of cruise missile, UAV, or
related technology exports. For example, State officials do not monitor
exports to verify compliance with license conditions on missiles or other
items, despite legal and regulatory requirements to do so. Defense has not
used its end-use monitoring program initiated in 2002 to check the
compliance of users of more than 500 cruise missiles exported between
fiscal years 1998 and 2002. Commerce conducted visits to assess the end
use of items for about 1 percent of the 2,490 missile-related licenses we
reviewed. Thus, the U.S. government cannot be confident that recipients
are effectively safeguarding equipment in ways that protect U.S. national
security and nonproliferation interests.
A Chinese SILKWORM Cruise Missile in Iraq
www.gao.gov/cgi-bin/getrpt?GAO-04-175.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Joseph A. Christoff at (202)
512-8979 or christoffj@gao.gov.
Contents
Letter
Results in Brief
Background
Proliferation of Cruise Missiles and UAVs Poses a Growing Threat
to U.S. National Security Interests Key Nonproliferation Tools Have
Limitations Addressing Cruise Missile and UAV Proliferation
Compliance with Conditions on Exports of Cruise Missiles, UAVs, and
Related Dual-use Items Seldom Verified through End-use Monitoring
Conclusions
Recommendations for Executive Action
Agency Comments and Our Evaluation
1
2 5
9
14
23 32 33 33
Appendix I Scope and Methodology
Appendix II Comments from the Department of Commerce 40 GAO Comments 47
Appendix III Comments from the Department of Defense
Appendix IV Comments from the Department of State 52
GAO Comments 56
Appendix V GAO Contact and Staff Acknowledgments 58
GAO Contact 58
Acknowledgments 58
Figures
Figure 1: Diagram of a Cruise Missile 6
Figure 2: Examples of UAVs 7
Figure 3: Chinese SILKWORM Cruise Missile in Iraq 16
Figure 4: Black Shaheen Cruise Missile 17
Figure 5: Predator B UAV 24
Figure 6: Destinations of Transferred Cruise Missiles, Fiscal Years
1998-2002 27
Figure 7: Destinations of Dual-use Approved Licenses for Chokepoint
Technologies, Fiscal Years 1998-2002, by Country 30
Abbreviations
DOD Department of Defense
EAR Export Administration Regulations
ICE Bureau of Immigration and Customs Enforcement
MTCR Missile Technology Control Regime
PSV post-shipment verification
UAV unmanned aerial vehicle
WMD weapons of mass destruction
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separately.
United States General Accounting Office Washington, DC 20548
January 23, 2004
The Honorable Christopher Shays
Chairman
Subcommittee on National Security, Emerging Threats, and International
Relations Committee on Government Reform House of Representatives
Dear Mr. Chairman:
Efforts to limit the proliferation of cruise missiles and unmanned aerial
vehicles (UAV) are complicated by the availability of these items among
countries of concern.1 An unmanned aerial vehicle, a pilotless vehicle
that operates like an airplane, can be used for a variety of military and
commercial purposes. A cruise missile is an unmanned aerial vehicle with
the airframe designed for one-time use, which travels through the air like
an airplane before delivering its payload. The U.S. government faces
tradeoffs when making decisions about transfers of cruise missiles, UAVs,
or related technology. U.S. policy aims to prevent the proliferation of
these weapons systems to countries of concern and terrorists. At the same
time, the U.S. government has an interest in encouraging transfers of
cruise missiles and UAVs to U.S. allies to support regional security and
bilateral relations. The U.S. government also wants to use these sales to
help maintain the health of the U.S. defense industrial base. To
accomplish these goals, the U.S. government regulates the export of cruise
missiles, UAVs, or related technology through three agencies: the
Departments of State, Commerce, and Defense.
You asked us to assess U.S. and international efforts to limit the
proliferation of cruise missiles, unmanned aerial vehicles, and related
technology. Specifically, this report (1) describes the nature and extent
of cruise missile and UAV proliferation; (2) assesses the nonproliferation
tools that the United States and other governments use to address the
proliferation risks posed by the sale of these items; and (3) assesses
U.S.
1Countries of missile proliferation concern listed in the Export
Administration Regulations are Bahrain, China, Egypt, India, Iran, Iraq,
Israel, Jordan, Kuwait, Lebanon, Libya, Macau, North Korea, Oman,
Pakistan, Qatar, Saudi Arabia, Syria, United Arab Emirates, and Yemen.
Results in Brief
and other governments' efforts to verify the end use of exported cruise
missiles, UAVs, and related technology.
To address these issues, we reviewed analyses prepared by the Departments
of State, Commerce, Defense, and Homeland Security, and the U.S.
intelligence community, as well as studies prepared by nonproliferation
experts. We also reviewed multilateral export control regime
documentation; met with representatives of the Missile Technology Control
Regime (MTCR) in Paris, France; and interviewed government officials in
France, Italy, and the United Kingdom. Furthermore, we analyzed export
licensing information from the Departments of State, Commerce, and Defense
on exports of cruise missiles, UAVs, and related dual-use technology that
have both military and civilian applications. For more on our scope and
methodology, see appendix I.
Cruise missiles and UAVs pose a growing threat to U.S. national security
interests as accurate and inexpensive delivery systems for conventional,
chemical, and biological weapons. Conventional anti-ship cruise missiles
pose an immediate threat to U.S. naval vessels because of the widespread
availability of these weapons worldwide. In addition, land-attack cruise
missiles pose a future threat to the U.S. homeland because of the
anticipated growth in the availability of these more accurate,
longer-range systems between 2005 and 2015. U.S. government projections
show that the numbers of producers of cruise missiles and UAVs will
increase to include countries where the United States is concerned about
missile proliferation activities. At least 70 nations currently possess
some type of anti-ship missiles armed with conventional, high explosive
warheads. Currently, at least 32 nations are developing or manufacturing
more than 250 models of UAVs. The widespread availability of commercial
items, such as global positioning systems and lightweight engines, has
made it easier for countries and terrorists to acquire or build at least
rudimentary cruise missile or UAV systems.
The United States and other governments use multilateral export control
regimes and national export controls to address the threat associated with
cruise missile and UAV proliferation. The United States has made some
advances using the regimes to address the threat of cruise missile and UAV
proliferation, but both tools have limitations. For example, between 1997
and 2002, the United States and other governments successfully revised the
MTCR's control lists of sensitive missile-related equipment and technology
to include six of eight U.S.-proposed items related to cruise missile and
UAV technology. Adding items to the control lists commits
regime members to provide greater scrutiny when deciding whether to
license the items for export. Despite the efforts of these regimes,
nonmembers such as China and Israel continue to acquire, develop, and
export cruise missile or UAV technology. This growing capability of
nonmember supplier countries to develop technologies used for weapons of
mass destruction and trade them with other countries of proliferation
concern undermines the regimes' ability to impede proliferation. In
addition, the United States faces limitations in applying national export
controls. First, the U.S. government finds it difficult to identify and
track widely available dual-use items that are not on control lists but
that can be used for cruise missile and UAV proliferation purposes.
Second, a gap in U.S. export control authority enabled American companies
to legally export dual-use items to a New Zealand resident who bought the
items to show how a terrorist could legally build a cruise missile. The
gap results from current catch-all2 regulations that restrict the sale of
unlisted dualuse items to certain national missile proliferation projects
or countries of concern, but not to nonstate actors such as certain
terrorist organizations or individuals.
The U.S. government applies conditions to exports of cruise missile and
UAV technology to specify how items can be used and by whom, but performs
little end-use monitoring to verify that exporters and foreign recipients
comply with conditions.3 The U.S. government uses postshipment
verification visits to confirm that the recipients of sensitive U.S.
technologies are using them in accordance with license conditions.
However, State's verification is limited to confirming that the item is
delivered to its designated destination and does not confirm other export
license conditions. Of 786 licenses for cruise missile and UAV technology
that State issued between fiscal years 1998 and 2002, State conducted
verification visits on only four licenses and reported unfavorable results
for three. Defense conducted no monitoring over more than 500 cruise
missiles that it transferred to other countries between fiscal years 1998
and 2002. However, Defense's program director stated that Defense may
2Catch-all controls are controls that authorize a government to require an
export license for items that are not on control lists but that are known
or suspected of being intended for use in a missile or WMD program.
3End-use monitoring refers to the procedures used to verify that foreign
recipients of controlled U.S. exports use such items according to U.S.
terms and conditions of transfer. Verification measures, referred to as
end-use checks, range from contacting the appropriate government or
company representative to physical inspection by U.S. personnel.
conduct more frequent monitoring of cruise missiles and UAVs in the
future. Finally, Commerce conducted verification visits on 1 percent of
nearly 2,500 missile-related licenses issued between fiscal years 1998 to
2002. Similarly, other supplier countries place conditions on cruise
missile and UAV-related transfers, but few reported conducting end-use
monitoring once they exported the items.
We are recommending that the Secretary of Commerce assess and report to
the Committee on Government Reform on the adequacy of the export control
regulations' catch-all provision to address missile proliferation by
nonstate actors and on ways the provision might be modified. We are also
recommending that the Secretaries of State, Commerce, and Defense each
complete a comprehensive assessment of the nature and extent of compliance
with license conditions on cruise missiles, UAVs, and related dual-use
technology. As part of the assessment, the departments should also conduct
additional PSV visits on a sample of cruise missile and UAV licenses. This
assessment would allow the departments to gain critical information that
would allow them to better balance potential proliferation risks of
various technologies with available resources for conducting future PSV
visits.
Commerce did not agree that the limited scope of the current catch-all
provision should be called a gap in U.S. regulations and noted that our
draft report was ambiguous as to whether the gap relates to items listed
on the control list or to items that are not listed because they are not
considered as sensitive for missile proliferation reasons. Commerce agreed
to review whether the existing catch-all provision sufficiently protects
U.S. national security interests. Our references to the gap in the
regulations refer to dual-use items that are not listed on the Commerce
Control List, and we have made changes to the draft to clarify this point.
We also modified our recommendation to specify the need to include
nonstate actors among the entities considered under the Department's
assessment of its catch-all provisions. State said that our report was
inaccurate in suggesting that State does not monitor exports to verify
compliance with export authorizations and noted that we did not discuss
the importance of pre-license checks to verify end use and end user
restrictions. We added pre-license check information to the report and
found that State conducted such checks for only 6 of the 786 licenses for
cruise missile and UAV-related items that State issued between fiscal
years 1998 and 2002.
DOD generally agreed with our findings and recommendations but suggested
that a sample would yield the same results as a comprehensive
assessment. Similarly, Commerce said that it has limited resources for
compliance monitoring and wants greater precision on the scope of
transactions that may need increased scrutiny. We modified the
recommendation to allow for sampling techniques when conducting the
assessment and to recognize that critical information from this assessment
would help the departments better balance potential proliferation risks of
various exported technologies with available resources for conducting
future post-shipment visits. State disagreed with the recommendation to
conduct a comprehensive assessment. Nonetheless, State said that in
conjunction with steps taken to improve the targeting of Blue Lantern
checks and increase the number conducted annually, it would pay special
attention to the need for additional pre- and post-shipment checks for
cruise missile- and UAV-related technologies.
Background Distinctions between cruise missiles and UAVs are becoming
blurred as the militaries of many nations, in particular the United
States, add missiles to traditional reconnaissance UAVs and develop UAVs
dedicated to combat missions. A cruise missile consists of four major
components: a propulsion system, a guidance and control system, an
airframe, and a payload. The technology for the engine, the autopilot, and
the airframe could be similar for both cruise missiles and UAVs, according
to a 2000 U.S. government study of cruise missiles. Figure 1 shows the
major components of a cruise missile.
Figure 1: Diagram of a Cruise Missile
Cruise missiles provide a number of military capabilities. For example,
they present significant challenges for air and missile defenses. Cruise
missiles can fly at low altitudes to stay below radar and, in some cases,
hide behind terrain features. Newer missiles are incorporating stealth
features to make them less visible to radars and infrared detectors.
Modern cruise missiles can also be programmed to approach and attack a
target in the most efficient manner. For example, multiple missiles can
attack instantaneously from different directions. Furthermore, land attack
cruise missiles may fly circuitous routes to get to their targets, thereby
avoiding radar and air defense installations.
UAVs are available in a variety of sizes and shapes, propeller-driven or
jet propelled, and can be straight-wing aircraft or have tilt-rotors like
helicopters. They can be as small as a model aircraft or as large as a U-2
manned reconnaissance aircraft (see fig. 2).
Figure 2: Examples of UAVs
U.S. policy on the proliferation of cruise missiles and UAVs is expressed
in U.S. commitments to the MTCR and Wassenaar Arrangement. These
multilateral export control regimes4 are voluntary, nonbinding
4Multilateral export control regimes are referred to as either regimes or
"arrangements," and the countries invited to participate in them are
variously referred to as "members," "participants," or "participating
states." In this report, we use the term "regimes" and refer to
participating countries as members. For more information, see our report,
U.S. General Accounting Office, Nonproliferation: Strategy Needed to
Strengthen Multilateral Export Control Regimes, GAO-03-43 (Washington,
D.C.: Oct. 25, 2002).
arrangements among like-minded supplier countries that aim to restrict
trade in sensitive technologies. Regime members agree to restrict such
trade through their national laws and regulations, which set up systems to
license the exports of sensitive items. The four principal regimes are the
MTCR; the Wassenaar Arrangement, which focuses on trade in conventional
weapons and related items with both civilian and military (dual-use)
applications; the Australia Group, which focuses on chemical and
biological technologies; and the Nuclear Suppliers Group, which focuses on
nuclear technologies. The United States is a member of all four regimes.
Regime members conduct a number of activities in support of the regimes,
including (1) sharing information about each others' export licensing
decisions, including certain export denials and, in some cases, approvals
and (2) adopting common export control practices and control lists of
sensitive equipment and technology into national laws or regulations.
Exports of commercially supplied American-made cruise missiles, military
UAVs, and related technology are transferred pursuant to the Arms Export
Control Act, as amended,5 and the International Trafficking in Arms
Regulations,6 implemented by State. Government-to-government transfers are
made pursuant to the Foreign Assistance Act of 1961, as amended,7 and
subject to DOD guidance. Exports of dual-use technologies related to
cruise missiles and UAVs8 are transferred pursuant to the Export
Administration Act of 1979, as amended,9 and the Export Administration
Regulations,10 implemented by Commerce.
Bureaus in two U.S. agencies are responsible for the initial enforcement
of export control laws. The Bureau of Immigration and Customs Enforcement
(ICE) in the Department of Homeland Security conducts investigations
enforcing the Arms Export Control Act, which is
522 U.S.C. S:S: 2751 and following.
622 C.F.R. S:S: 120 and following.
722 U.S.C. S:S: 2311 and following.
8Related items include technical data, subcomponents, and spare parts.
950 U.S.C. app. S:S: 2401 and following. Executive Order 13222, 66 Fed.
Reg. 44025 and subsequent presidential notices continue the export control
regime established under the act and the Export Administration
Regulations.
1015 C.F.R. S:S: 730-774.
administered by the State Department. ICE combines the enforcement and
investigative arms of the Customs Service, the investigative and
enforcement functions of the former Immigration and Naturalization
Service, and the Federal Protective Service as part of the Department of
Homeland Security. ICE shares responsibility with Commerce's Bureau of
Industry and Security for enforcing the Export Administration Act. ICE and
the Bureau of Industry and Security use enforcement tools such as
investigations of purported violations of law and regulation and
interdictions11 of suspected illicit shipments of goods. Investigations
can result in criminal prosecutions, fines, or imprisonment or in export
denial orders, which bar a party from exporting any U.S. items for a
specified period of time.
The Arms Export Control Act, as amended in 1996, requires the President to
establish a program for end-use monitoring of defense articles and
services sold or exported under the provisions of the act and the Foreign
Assistance Act.12 This requirement states that, to the extent practicable,
end-use monitoring programs should provide reasonable assurance that
recipients comply with the requirements imposed by the U.S. government on
the use, transfer, and security of defense articles and services. In
addition, monitoring programs, to the extent practicable, are to provide
assurances that defense articles and services are used for the purposes
for which they are provided. The President delegated this authority to the
Secretaries of State and Defense.
The proliferation of cruise missiles and UAVs poses a growing threat to
U.S. national security. Both can be used to attack U.S. naval interests,
the U.S. homeland, and forces deployed overseas. Cruise missiles and UAVs
have significant military capabilities, including surveillance and attack,
which the United States has demonstrated during military engagements in
Afghanistan and Iraq. In addition, U.S. government projections show that
the numbers of producers and exporters of cruise missiles and UAVs will
increase and that more countries of concern will possess and begin to
export them. The growing availability of these weapons, and of related
components and technology that are not readily controllable, makes it
11Interdiction is the action of law enforcement agencies physically
preventing the export of certain items from their country.
1222 U.S.C. S: 2785.
Proliferation of Cruise Missiles and UAVs Poses a Growing Threat to U.S.
National Security Interests
easier for countries of concern and terrorists to acquire or build at
least rudimentary cruise missile or UAV systems.
Military Capabilities of Cruise Missiles and UAVs Threaten U.S. Interests
Although cruise missiles and UAVs provide important capabilities for the
United States and its friends and allies, in the hands of U.S. adversaries
they pose substantial threats to U.S. interests. First, anti-ship cruise
missiles threaten U.S. naval forces deployed globally. Second, land-attack
cruise missiles have a potential in the long-term to threaten the
continental United States and U.S. forces deployed overseas. Finally, UAVs
represent an inexpensive means of launching chemical and biological
attacks against the United States and allied forces and territory.
Cruise missiles pose a current and increasing threat to U.S. naval
vessels. For example, there are more than 100 existing and projected
missile varieties (including sub-and supersonic, high and low altitude,
and seaskimming models) with ranges up to about 185 miles or more. We
reported in 2000 that the next generation of anti-ship cruise
missiles-most of which are now expected to be fielded by 2007-will be
equipped with advanced target seekers and stealthy design.13 These
features will make them even more difficult to detect and defeat.
Land-attack cruise missiles pose a long-term threat to the U.S. homeland
and U.S. forces deployed overseas. Because land attack cruise missiles
suitable for long-range missions require sophisticated guidance and
complicated support infrastructures, they have historically been found
almost exclusively in superpower arsenals. According to an unclassified
summary of a national intelligence estimate14 from December 2001, several
countries are technically capable of developing a missile launch mechanism
to station on forward-based ships or other platforms so that they can
launch land-attack cruise missiles against the United States. Technically,
cruise missiles can be launched from fighter, bomber, or even commercial
transport aircraft outside U.S. airspace. According to the National Air
Intelligence Center, defending against land attack cruise missiles will
strain air defense systems. Moreover, cruise missiles are
13Defense Acquisitions: Comprehensive Strategy Needed to Improve Ship
Cruise Missile Defense, GAO-NSIAD-00-149 (Washington, D.C.: July 2000).
14Foreign Missile Developments and the Ballistic Missile Threat Through
2015, Unclassified Summary of a National Intelligence Estimate, National
Intelligence Council (Washington, D.C.: December 2001).
capable of breaking through U.S. defenses and inflicting significant
damage and casualties on U.S. forces, according to the Institute for
Foreign Policy Analysis' October 2000 study.
UAVs pose a longer-term threat as accurate and inexpensive delivery
systems for chemical and biological weapons and are increasingly sought by
nonstate actors, according to U.S. government and other nonproliferation
experts. For example, the U.S. government reported its concern over this
threat in various meetings and studies. The Acting Deputy Assistant
Secretary of State for Nonproliferation testified in June 2002 that UAVs
are potential delivery systems for WMD, and are ideally suited for the
delivery of chemical and biological weapons given their ability to
disseminate aerosols in appropriate locations at appropriate altitudes. He
added that, although the primary concern has been that nation-states would
use UAVs to launch WMD attacks, there is potential for terrorist groups to
produce or acquire small UAVs and use them for chemical or biological
weapons delivery.
Cruise Missiles and UAVs Continue to Proliferate
At least 70 nations possess some type of cruise missile, mostly
short-range, anti-ship missiles armed with conventional, high-explosive
warheads, according to a U.S. government study. Estimates of the total
number of cruise missiles place the world inventory at a minimum of
75,000. Countries that export cruise missiles currently include China,
France, Germany, Israel, Italy, Norway, Russia, Sweden, United Kingdom,
and the United States. Nations that manufacture but do not yet export
cruise missiles currently include Brazil, India, Iran, Iraq, North Korea,
South Africa, and Taiwan. None of these nonexporting manufacturing
countries is a member of the Wassenaar Arrangement, and only Brazil and
South Africa are in the MTCR.15 The number of cruise missile exporters is
expected to grow with producers such as India and Taiwan making their
missiles available for export.
Currently, at least 12 countries are believed to be developing land-attack
cruise missiles; some of these new systems will be exported. France, for
example, signed a deal with the United Arab Emirates (UAE) to export a
type of cruise missile. By 2005, six countries of concern will have
acquired land-attack capabilities, up from only three in 2000, according
to the
15China and Israel are not MTCR members, although Israel has declared that
it adheres to the MTCR guidelines and control list.
National Air Intelligence Center.16 Furthermore, cruise missile
inventories are projected to increase through 2015 and one to two dozen
countries probably will possess a land-attack cruise missile capability by
this date, according to an unclassified National Intelligence Estimate.
While both land-attack and anti-ship cruise missile inventories are
projected to increase, land-attack cruise missile inventories are expected
to experience a significantly higher percentage of growth.17
According to defense industry sources, interest has picked up dramatically
from countries all over the world for acquiring and developing even the
simplest UAV technology and is expected to continue, further diffusing
this technology. Forty-one countries operate about 80 types of UAV,
primarily for reconnaissance. Currently, some 32 nations are developing or
manufacturing 250 models of UAVs. Several countries involved in key
aspects of the UAV industry are not members of the MTCR. For example, 13
non-MTCR countries develop and manufacture UAVs.18 Countries that pose a
threat of WMD proliferation concern, such as China, Russia, and Pakistan,
are among the 32 countries developing and expected to export UAVs.
Cruise Missile and UAV Proliferation Is Facilitated by the Ease of Acquiring
Systems and Technologies
Cruise missiles and UAVs can be acquired in several ways, including
purchase of complete systems and conversion of existing systems into more
capable weapons. Acquisition of commercially available dual-use
technologies has made development of new systems and conversion of
existing systems more feasible.
Purchasing complete missile systems provides the immediate capability of
fielding a proven weapon. Complete cruise missiles can be acquired from a
variety of sources. For example, China and Russia have sold cruise
missiles to Iran, Iraq, Libya, North Korea, and Syria. In addition, France
has widely exported the Exocet, now in service in more than 29 countries.
16Information on specific countries is classified.
17Information on specific countries and inventories is classified.
18This number does not include Iraq, which had a program to develop
military UAVs until Operation Iraqi Freedom, according to the Iraq Survey
Group. The Iraq Survey Group was tasked to find WMD after Operation Iraqi
Freedom. Statement by David Kay on the Interim Progress Report on the
Activities of the Iraq Survey Group Before the House Permanent Select
Committee on Intelligence, House Committee on Appropriations, Subcommittee
on Defense and the Senate Select Committee on Intelligence, October 2,
2003.
Israel, Italy, Norway, Sweden, the United Kingdom, and the United States
have also exported anti-ship cruise missiles.
Various government and academic studies have raised concerns that the wide
availability of commercial items, such as global positioning system
receivers and lightweight engines, allows both countries and nonstate
actors to enhance the accuracy of their systems, upgrade to greater range
or payload capabilities, and convert certain anti-ship cruise missiles
into land-attack cruise missiles.19 Thus, less capable and expensive
systems could be more easily improved to attack targets not currently
accessible, especially on land. Although not all cruise missiles can be
modified into land-attack cruise missiles because of technical barriers,
specific cruise missiles can and have been. For example, a 1999 study
outlined how the Chinese Silkworm anti-ship cruise missile had been
converted into a landattack cruise missile.20 Furthermore, the Iraq Survey
Group reported in October 2003 that it had discovered 10 Silkworm
anti-ship cruise missiles modified to become land-attack cruise missiles
and that Iraq had fired 2 of these missiles at Kuwait.
Many issues concerning modification of cruise missiles also apply to UAVs,
according to one industry group. Larger UAVs are more adaptable to change.
Although several experts said that it is more expensive and difficult to
modify an existing aircraft into a UAV than to develop one from scratch,
some countries, such as Iraq, developed programs to convert manned
aircraft into UAVs. Some experts also expressed concerns over adding
autopilots to small aircraft to turn them into unmanned UAVs that could
deliver chemical or biological weapons.
19Upgrades have to fit within the weight, space, electrical, and cooling
capacities of the individual cruise missile or UAV for which they are
attended. Typically, changes to the outer dimensional lines of either are
limited so that the aerodynamics are not adversely affected. In a
well-engineered upgrade, the new components would take up no more space or
weight than those they are replacing.
20Feasibility of Third World Advanced Ballistic and Cruise Missile Threat,
Volume 2: Emerging Cruise Missile Threat, Systems Assessment Group;
National Defense Industrial Association Strike, Land-Attack and Air
Defense Committee (Washington, D.C.: August 1999).
Key Nonproliferation Tools Have Limitations Addressing Cruise Missile and UAV
Proliferation
The U.S. government generally uses two key nonproliferation
tools-multilateral export control regimes and national export controls-to
address cruise missile and UAV proliferation, but both tools have
limitations. The United States and other governments have traditionally
used multilateral export control regimes, principally the MTCR, to address
missile proliferation. However, despite successes in strengthening
controls, the growing capability of countries of concern to develop and
trade technologies used for WMD limits the regime's ability to impede
proliferation. The U.S. government uses its national export control
authorities to address missile proliferation but finds it difficult to
identify and track commercially available items not covered by control
lists. Moreover, a gap in U.S. export control regulations could allow
subnational actors to acquire American cruise missile or UAV technology
for missile proliferation or terrorist purposes without violating U.S.
export control laws or regulations. The United States has other
nonproliferation tools to address cruise missile and UAV
proliferation-diplomacy, sanctions, and interdiction of illicit shipments
of items-but these tools have had unclear results or have been little
used.
Multilateral Export Control Regimes Increased Focus on Cruise Missiles and
UAVs, but Are Limited in Their Effectiveness
The United States and other governments have used the MTCR, and, to some
extent, the Wassenaar Arrangement, as the key tools to address the
proliferation of cruise missiles and UAVs. While the United States has had
some success in urging these regimes to focus on cruise missiles and UAVs,
new suppliers who do not share regime goals limit the regimes' ability to
impede proliferation. In addition, there has been less consensus among
members to restrict cruise missiles and UAVs than to restrict ballistic
missiles.
The MTCR is principally concerned with controlling the proliferation of
missiles with a range of 300 kilometers and a payload of 500 kilograms or
with any payload capable of delivering chemical or biological warheads.
MTCR members seek to restrict exports of sensitive technologies by
periodically reviewing and revising a commonly accepted list of controlled
items, such as lightweight turbojet and turbofan engines, or materials and
devices for stealth technology usable in missiles. The Wassenaar
Arrangement seeks to limit transfers of conventional arms and dual-use
goods and technologies that could contribute to regional conflict.
Military UAVs below MTCR capability levels of 300 kilometers range and 500
kilograms payload are included on the Wassenaar Munitions List. DOD
officials noted that MTCR attempts to impede the proliferation of UAVs
capable of delivering WMD, while Wassenaar covers conventional weapons and
items with a military function.
In recent years, the increased awareness of the threat of chemical and
biological weapons and terrorists has increased members' interest in
cruise missile and UAV controls, according to State. MTCR control lists
were revised between 1997 and 2002 to adopt six of eight U.S. proposals to
include additional items related to cruise and UAV technologies. Members
agreed in 2002 to adopt (1) expanded controls on small, fuel-efficient gas
turbine engines, (2) a new control on integrated navigation systems, and
(3) a new control on UAVs designed or modified for aerosol dispensing.21
At the September 2003 MTCR Annual Plenary, members agreed to add to the
control list complete UAVs designed or modified to deliver aerosol
payloads greater than 20 liters. In the Wassenaar Arrangement, the United
States and other members during 2003 made several proposals for new
controls related to UAVs and short-range cruise missiles and their
payloads. Once changes are officially accepted, MTCR and Wassenaar members
are expected to incorporate the changed control lists into their own
national export control laws and regulations. While including an item on a
control list does not preclude its export, members are expected to more
carefully scrutinize listed items pending decisions on their export. They
are also expected to notify other members when denying certain export
licenses for listed items.
Despite the efforts of these regimes, nonmembers such as China and Israel
continue to acquire, develop, and export cruise missile or UAV technology.
The growing capability of nonmember supplier countries to develop
technologies used for WMD and trade them with other countries of
proliferation concern undermines the regimes' ability to impede
proliferation. For example, China has sold anti-ship cruise missiles to
Iran and Iraq (see fig. 3). Israel also reportedly sold the Harpy UAV to
India, according to a Director of Central Intelligence report in 2003.22
21In addition, since 1998, the United States has presented two white
papers and five briefings to MTCR members to share information on cruise
missile or UAV-related issues.
22Unclassified Report to Congress on the Acquisition of Technology
Relating to Weapons of Mass Destruction and Advanced Conventional
Munitions, 1 January through 30 June 2002, Central Intelligence Agency
(Washington, D.C.: April 2003).
Figure 3: Chinese SILKWORM Cruise Missile in Iraq
In addition to the limitations posed by non-member suppliers, some
nonproliferation experts and foreign government officials noted that
MTCR's effectiveness has been limited because there has been less
consensus among MTCR and Wassenaar members to restrict cruise missiles and
UAVs than to restrict ballistic missiles. MTCR members have not always
agreed with each others' interpretation of the MTCR guidelines and control
lists concerning cruise missiles. Specifically, members have had different
views on how to measure the range and payload of cruise missiles and UAVs,
making it difficult to determine when a system has the technical
characteristics that require more stringent export controls to apply under
MTCR guidelines. For example, cruise missiles can take advantage of more
fuel-efficient flight at higher altitudes to gain substantially longer
ranges than manufacturers and exporting countries advertise. Even with the
new definition of range that the MTCR adopted in 2002, different
interpretations remain among members over whether particular cruise
missiles could be modified to achieve greater range. In one case, the
United States and France disagreed about France's proposed sale of its
Black Shaheen cruise missile to the United Arab Emirates, according to
French and U.S. government officials and nonproliferation experts (see
fig. 4). In a second case, members have raised questions about Russia's
assistance to India, a nonmember, to develop the Brahmos cruise missile
project and called for further discussion of the system's technical
capabilities.
Figure 4: Black Shaheen Cruise Missile
In October 2002, we reported on other limitations that impede the ability
of the multilateral export control regimes, including MTCR and the
Wassenaar Arrangement, to achieve their nonproliferation goals. For
example, we found that MTCR members may not share complete and timely
information, such as members' denied export licenses, in part because the
regime lacks an electronic data system to send and retrieve such
information. The Wassenaar Arrangement members share export license
approval information but collect and aggregate it to a degree that it
cannot be used constructively. Both MTCR and the Wassenaar Arrangement use
a consensus process that makes decision-making difficult and lack a means
to enforce compliance with members' political commitments to regime
principles. We recommended that the Secretary of State establish a
strategy to work with other regime members to enhance the effectiveness of
the regimes by implementing a number of steps, including (1) adopting an
automated information-sharing system in MTCR to facilitate more timely
information exchanges, (2) sharing greater and more detailed information
on approved exports of sensitive transfers to nonmember countries, (3)
assessing alternative processes for reaching
decisions, and (4) evaluating means for encouraging greater adherence to
regime commitments.23
U.S. Government Authorities Have Had Difficulty Restricting Dualuse Missile
Technology Exports
Investigations Challenged by Nature of Cruise Missile and UAV Dual-use
Technology and Regulatory Limitations
U.S. ICE and Commerce authorities have had difficulty identifying and
tracking dual-use exports in transit that could be useful for cruise
missiles and UAV development because such exports have legitimate civilian
uses. As a result, U.S. enforcement tools have been limited in conducting
investigations of suspected exports of illicit cruise missile and UAV
dualuse items. Moreover, a gap in U.S. export control regulations could
allow missile proliferators to acquire unlisted American cruise missile or
UAV dual-use technology without violating the regulations.24
ICE officials said that it is difficult to conduct Customs enforcement
investigations of possible export violations concerning certain cruise
missile or UAV dual-use technologies. First, parts or components that are
not on control lists are often similar to controlled parts or components,
enabling exporters to circumvent the controls entirely, according to ICE
officials. Because ICE inspectors are not engineers and shipping documents
do not indicate the end product for the component being shipped,
determining what the components can do is problematic. Second, countries
seek smaller UAVs than those controlled. ICE officials said that buyers
who cannot get advanced UAVs instead try to obtain model airplanes and
model airplane parts, which might substitute for UAVs and their
components. Third, ICE officials noted that circumventing the export
control law is easy because the U.S. government has to prove both the
exporter's knowledge of the law and the intent to violate it.25 As of
October 2003, Customs had completed two investigations related to UAVs,
and had nine others open, as well as one open case related to cruise
missiles. The two cases related to UAVs, both involving suspected
diversions of items to Pakistan, resulted in one finding of no violation
and one guilty plea. As a
23U.S. General Accounting Office, Nonproliferation: Strategy Needed to
Strengthen Multilateral Export Control Regimes, GAO-03-43 (Washington,
D.C.: Oct. 25, 2002).
24Although several criminal laws might apply to these acquisitions, the
laws do not specifically apply to the export control process. Thus,
bringing prosecutions under these criminal laws might be difficult.
25Knowledge and intent are elements of criminal violations of the Export
Administration Regulations, but are not necessary elements of most
administrative violations of the regulations, according to Commerce.
result, two defendants received prison terms of 24 and 30 months,
respectively, with 2 years of supervised release.
Commerce officials also indicated that there are challenges to enforcing
export controls on dual-use goods related to cruise missile or UAV
development. They stated that some investigations were not pursued because
the technical parameters of the items exported were below the export
control thresholds for missile technology. Nonetheless, Commerce officials
noted that exported items below these parameters could be changed after
export by adding components to improve the technology. For example,
software exported without a license could receive an upgrade card that
would make it an MTCR-controlled item. As of October 2003, Commerce had
completed 116 investigations related to missile proliferation, but not
specifically to cruise missiles or UAVs.26 Furthermore, the Secretary of
Commerce in 200327 identified other challenges for the enforcement of
controls on dual-use goods related to missile development. First, it is
difficult to detect and investigate cases under the "knowledge" standard28
set by the "catch-all" provision.29 Second, some countries do not yet have
catch-all laws or have different standards for catch-all, which
complicates law enforcement cooperation. Third, identifying illegal
exports and re-exports of missile-related goods requires significant
resources. Nonetheless, the Secretary stated that United States has the
ability to effectively enforce end-use and end-user controls on missile
technology and that multilateral controls provide a strong framework for
cooperative enforcement efforts overseas.
26It is Department of Commerce policy to provide no public information on
open investigations.
272003 Foreign Policy Report, Department of Commerce.
28According to the Export Administration Regulations, 15 C.F.R. S: 772.1,
knowledge of a circumstance includes either positive knowledge that the
circumstance exists or is substantially certain to occur, or an awareness
that its existence or future occurrence is highly probable. The conscious
disregard of facts or willful avoidance of facts is evidence that the
person was aware of the circumstance.
29Catch-all controls are controls that authorize a government to require
an export license for items that are not on control lists but that are
known or suspected of being intended for use in a missile or WMD program.
Gap in U.S. Export Controls Could Allow Proliferators to Gain U.S.
Dual-use Technology for Cruise Missile or UAV Purposes
A gap in U.S. export control regulations could allow missile proliferators
or terrorists to acquire U.S. cruise missile or UAV dual-use technology
without violating U.S. export control laws or regulations. The Export
Administration Regulations (EAR) establish license requirements for items
not listed in the regulations on the Commerce Control List, as well as for
items that are listed.30 License requirements for items not listed are
based on the exporter's knowledge of the end user or end uses to which the
item would be applied. For missile controls, an exporter may not export or
reexport an item if the exporter knows that the item (1) is destined to or
for a missile project listed in the regulations31 or (2) will be used in
the design, development, production or use of missiles in or by a country
listed in the regulations, whether or not that use involves a listed
project.32 However, this condition on exports does not apply to activities
that are unrelated to the 12 projects or 20 countries listed in the
regulation. This section of the regulations was intended to apply to
national missile proliferation programs, according to Commerce officials,
and not to nonstate actors such as certain terrorist organizations or
individuals.33 Finally, this section of the regulations does not apply to
exports of dual-use items for missiles with less than 300 kilometers range
and 500 kilograms payload because the regulatory definition of a missile
excludes missiles below MTCR range and payload thresholds. However, such
missiles with lesser range or payload could be sufficient for terrorist
purposes.
The case of a New Zealand citizen obtaining unlisted dual-use items to
develop a cruise missile illustrates this gap in U.S. export controls. In
June 2003 this individual reported that he purchased American components
necessary to construct a cruise missile to illustrate how a terrorist
could do so. Because the New Zealand citizen is not on a list of
prohibited missile projects, terrorist countries, or terrorists, there is
no specific export control requirement that an American exporter apply to
the U.S. government for a review of the items before export, according to
30"Items subject to the EAR" consist of the items listed on the Commerce
Control List in part 774 of the EAR and all other items subject to the
EAR. For ease of reference and classification purposes, items subject to
the EAR that are not listed on the Commerce Control List are designated as
"EAR99."
3115 C.F.R. S: 744.3(a).
32Such projects include the Indian Agni and Prithvi missile projects and
the Iranian Surfaceto-Surface Missile Project.
33Although the EAR restricts exports to terrorist organizations and
individuals that are listed in the regulations, the regulations do not
apply to those that are not listed.
Commerce officials. According to Commerce licensing and enforcement
officials, they have no legal recourse in this or similar cases, as there
is no violation of U.S. export control law or regulations. The Commerce
officials said that they would need to wait until the New Zealander used
the weapon improperly before action under export control law or
regulations could be taken. It would be the New Zealand government's
responsibility to address any illicit action resulting from such transfers
of U.S. items, according to other Commerce officials. One department
official stated that not all export control loopholes can be closed and
that U.S. export controls cannot fix defects in other countries' laws.
Another Commerce official explained that current catch-all controls assume
that terrorists would not attempt to acquire illicit arms in friendly
countries, such as NATO allies.
Commerce officials explained that proliferators seeking a rudimentary,
rather than state-of-the-art cruise missile, would be able to construct
such a weapon of components not listed on the Commerce Control List. For
these items, Commerce must directly link the items to a WMD program to
apply the catch-all controls; otherwise, no action can be taken, according
to the officials. They remarked that catch-all controls were added to give
licensing officers more flexibility in reviewing items. However, exporters
adept in covering up direct links to a WMD program could continue to
divert dual-use missile-related items, according to the Commerce
officials.
Other Nonproliferation Tools Had Unclear Results or Were Little Used
The United States has other nonproliferation tools to address cruise
missile and UAV proliferation: diplomacy, sanctions, and interdiction of
illicit shipments of items. The United States used diplomacy to address
suspected cases of proliferation of cruise missiles and UAVs in at least
14 cases.34 U.S. efforts to forestall transfers of items succeeded in
about onethird of these cases. The United States issued diplomatic action
in at least 14 cases to inform foreign governments of proposed or actual
transfers of cruise missile or UAV items. The U.S. government successfully
halted transfers in five cases, did not successfully halt a transfer in
two cases, did not know the results of its actions or action was still in
process in six cases, and claimed partial success in one other case. Of
nine cases involving MTCR items, six of the nine countries demarched were
MTCR members and three were not.
34Details of these cases are not publicly available.
Under several U.S. laws that authorize the use of sanctions when the U.S.
government determines that missile proliferation has occurred, the U.S.
government used sanctions twice between 1996 and 2002 for violations
related to exports of cruise missiles. In these two cases, the United
States sanctioned a total of 18 entities in 5 countries. However, a State
official did not know whether the entities ceased their proliferation
activities as a result.
Although the Acting Deputy Assistant Secretary of State for
Nonproliferation identified interdiction as one tool used to address
proliferation of cruise missile and UAV technology, U.S. and foreign
government officials knew of few cases of governments' interdicting such
shipments. To date, the United States reported using interdiction once to
stop illicit shipments of cruise missile or UAV technology. ICE officials
referred to only one case of an interdiction of a propeller for a Predator
UAV destined for Afghanistan. Commerce officials knew of no cases where
Commerce had been involved in interdiction of cruise missile or UAV
dual-use technology. Foreign governments reported no known cases of
interdiction of suspect cruise missile or UAV technology exports.
The U.S. government announced discussions in June 2003 with 11 foreign
governments to increase the use of interdiction against all forms of WMD
and missile proliferation. A meeting in Paris of these governments
participating in the Proliferation Security Initiative announced a
statement of interdiction principles on September 4, 2003.35 These
principles include a commitment to
o undertake effective measures for interdicting the transfer or
transport of WMD, delivery systems, and related materials to and from
states and nonstate actors of proliferation concern;
o adopt streamlined procedures for rapid exchange of relevant
information concerning suspected proliferation activity; and
o review and work to strengthen relevant national legal authorities and
international law and frameworks to accomplish these objectives.
35The participating countries are Australia, Britain, France, Germany,
Italy, Japan, The Netherlands, Poland, Portugal, Spain, and the United
States.
Compliance with Post-shipment verification (PSV) is a key end-use
monitoring tool used by
U.S. agencies to confirm that authorized recipients of U.S. technology
both Conditions on received transferred items and used them in accordance
with conditions Exports of Cruise of the transfer. However, State and
Commerce seldom conduct PSVs of
transferred cruise missiles, UAVs, and related items; State's program
doesMissiles, UAVs, and not monitor compliance with conditions when checks
are made. Related Dual-use Furthermore, Defense officials were not aware
of any end-use monitoring
for more than 500 cruise missiles transferred through government-to-Items
Seldom Verified government channels, although officials are considering
conducting such through End-use checks in the future. Similarly, other
supplier countries place conditions
on transfers, but few reported conducting end-use monitoring once
itemsMonitoring were exported.
State Did Not Assess The Arms Control Export Act, as amended in 1996,36
requires, to the extent Compliance and practicable, that end-use
monitoring programs provide reasonable Infrequently Monitored assurance
that recipients comply with the requirements imposed by the Cruise Missile
and UAV U.S. government in the use, transfer, and security of defense
articles and
services. In addition, monitoring programs are to provide assurances
thatExports defense articles and services are used for the purposes for
which they are provided. Accordingly, under State's monitoring effort,
known as the Blue Lantern program, State conducts end-use monitoring of
direct commercial sales of defense articles and services, including cruise
missiles, UAVs, and related technology. According to Blue Lantern program
guidance, a PSV is the only means available to verify compliance with
license conditions once an item is exported. Specifically, a PSV is used
(1) to confirm whether licensed defense goods or services exported from
the United States actually have been received by the party named on the
license and (2) to determine whether those goods have been or are being
used in accordance with the provisions of that license.
Despite these requirements, we found that State did not use PSVs to assess
compliance with cruise missile or UAV licenses having conditions limiting
how the item may be used. These licenses included items deemed significant
by State regulations.37 Based on State licensing data, we
3622 U.S.C. S: 2785.
37The International Trafficking in Arms Regulations defines significant
military equipment as articles for which special export controls are
warranted because of their capacity for substantial military utility or
capability. 22 C.F.R. S: 120.7.
identified 786 licenses for cruise missiles, UAVs, or related items38 from
fiscal years 1998 through 2002. Of these, 480 (61 percent) were licenses
with conditions, while 306 (39 percent) were licenses without conditions.
These 786 licenses included one for a complete state-of-the-art Predator B
UAV (see fig. 5), and 27 for supporting Predator technical data, defense
services, and parts. The licenses also included 7 for supporting technical
data, defense services, and parts for the highly advanced Global Hawk UAV.
Figure 5: Predator B UAV
We found that State did not conduct PSVs for any of the 480 licenses with
conditions and conducted PSVs on only 4 of 306 licenses approved without
conditions. Each license reviewed through the post-shipment checks
involved transferred UAV-related components and equipment. Three of the
licenses receiving checks resulted in unfavorable determinations because a
company made inappropriate end-use declarations or the end user could not
confirm that it had received or ordered the items. State added that it has
many other sources of information besides PSV checks on the misuse and
diversion of exported articles. These sources include intelligence
38Related items may include spare parts, software, or technical data.
reporting, law enforcement actions, embassy reporting, and disclosures of
U.S. companies.
A State licensing official stated that few post-shipment Blue Lantern
checks have been conducted for cruise missiles, UAVs, and related items
because many are destined for well-known end users in friendly countries.
However, over fiscal years 1998 through 2002, 129 of the 786 licenses
authorized the transfer of cruise missile and UAV-related items to
countries such as Egypt, Israel, and India. These countries are not MTCR
members, which indicates that they might pose a higher risk of diversion.
In addition, over the last 4 years, State's annual end-use monitoring
reports to Congress39 recognized an increase in the incidence of West
Europeanbased intermediaries involved in suspicious transactions. State
noted in its 2001 and 2002 reports that 23 and 26 percent, respectively,
of unfavorable Blue Lantern checks for all munitions items involved
possible transshipments through allied countries in Europe.
In contrast to State's guidance, State officials said that the Blue
Lantern program was never intended to verify license condition provisions
on the transfer of munitions such as cruise missile and UAV-related items.
Instead, State officials explained that the program seeks to make certain
only that licensed items are being used at the proper destination and by
the proper end user. A State official further said that the compliance
office is not staffed to assess compliance with license conditions and has
not been managed to accomplish such a task.
In commenting on a draft of this report, State emphasized the importance
of Blue Lantern pre-license checks in verifying controls over the end user
and end use of exported items and said that we did not include such checks
in our analysis. We reviewed the 786 cruise missile and UAV licenses to
determine how many had received Blue Lantern pre-license checks, a
possible mitigating factor reducing the need to conduct a PSV. We found
that only 6 of the 786 licenses from fiscal years 1998 through 2002 that
State provided us had been selected for pre-license checks. Of these, four
received favorable results, one received an unfavorable result, and one
had no action taken.
39End-Use Monitoring Report for FY 2001: Commercial Exports, Department of
State (Washington, D.C.: 2002) and End-Use Monitoring Report for FY 2002:
Commercial Exports, Department of State (Washington, D.C.: 2003).
Department of Defense Under the Arms Control Export Act, as amended in
1996,40 the Department Conducted Little of Defense also is required to
monitor defense exports to verify that Monitoring of Transferred foreign
entities use and control U.S. items in accordance with conditions. Cruise
Missiles The amended law requires an end-use monitoring program for
defense
articles and services transferred through the Foreign Military Sales
program. Monitoring programs, to the extent practicable, are required to
provide reasonable assurances that defense articles and services are being
used for the purposes for which they are provided.
The Defense Security Cooperation Agency (DSCA) is the principal
organization through which Defense carries out its security assistance
responsibilities, including administering the Foreign Military Sales
program. Under this program, the United States transfers complete weapons
systems, defense services, and related technology to eligible foreign
governments and international organizations from Defense stocks or through
Defense-managed contracts. Bilateral agreements contain the terms and
conditions of the sale and serve as the equivalent of an export license
issued by State or Commerce.
From fiscal years 1998 through 2002, DSCA approved 37 agreements for the
transfer of more than 500 cruise missiles and related items, as well as
one transfer of UAV training software. The agreements authorized the
transfer of Tomahawk land-attack cruise missiles, Standoff land-attack
missiles, and Harpoon anti-ship cruise missiles, as well as supporting
equipment such as launch tubes, training missiles, and spare parts.
Approximately 30 percent of cruise missile transfers were destined for
non-MTCR countries. Figure 6 shows the destinations of transferred cruise
missiles.
4022 U.S.C. S: 2785.
Figure 6: Destinations of Transferred Cruise Missiles, Fiscal Years
1998-2002
Note: Numbers may not total due to rounding.
Defense's end-use monitoring program, called Golden Sentry, has conducted
no end-use checks related to cruise missile or UAV transfers, according to
the program director. DSCA guidance states that governmentto-government
transfers of defense items, including cruise missiles, are to receive
routine end-use monitoring. Under routine monitoring, Security Assistance
Officers and/or military department representatives account for the end
use of defense articles through personal observation in the course of
other assigned duties. However, the program director stated that he was
unaware of any end-use monitoring checks, routine or otherwise, for
transferred U.S. cruise missiles over the period of our review. In
addition,
a past GAO report41 found problems with monitoring of defense items and
recommended that DSCA issue specific guidance to field personnel on
activities that need to be performed for the routine observation of
defense items. Nonetheless, Defense's Golden Sentry monitoring program is
not yet fully implemented, despite the 1996 legal requirement to create
such an end-use monitoring program. DSCA issued program guidance in
December 2002 that identified the specific responsibilities for new
end-use monitoring activities. In addition, as of November 2003, DSCA was
conducting visits to Foreign Military Sales recipient countries to
determine the level of monitoring needed and was identifying weapons and
technologies that may require more stringent end-use monitoring. The
program director stated that he is considering adding cruise missiles and
UAVs to a list of weapon systems that receive more comprehensive
monitoring.
Commerce Conducted Little Monitoring of Cruise Missile and UAV-related
Dual-use Exports
The Export Administration Act, as amended, provides the Department of
Commerce with the authority to enforce dual-use controls. Under the act,
Commerce is authorized to conduct PSV visits outside the United States of
dual-use exports.42 The Export Administration Regulations indicate that a
transaction authorized under an export license may be further limited by
conditions that appear on the license, including a condition that
stipulates the need to conduct a PSV.43 Commerce can conduct a PSV by
applying a condition to a license that requires U.S. mission staff
residing in the recipient country to conduct a PSV, or it can send a
safeguards verification team from Commerce headquarters to the country to
conduct a PSV. Based on Commerce licensing data, we found that Commerce
issued 2,490 dual-use licenses between fiscal years 1998 and 2002 for
items that could
41See General Accounting Office, Foreign Military Sales: Changes Needed to
Correct Weaknesses in End-Use Monitoring Program, GAO-00-208 (Washington,
D.C.: August 2000).
4250 U.S.C. app S: 2411(a)(1).
43See 15 C.F.R. S: 744.1, S: 732.4(b)(3).
be useful in developing cruise missiles or UAVs.44 Of these, Commerce
selected 2 percent of the licenses, or 52 cases, for a PSV visit and
completed visits to 1 percent of the licenses. Specifically, Commerce
designated PSVs as a license condition for 28 licenses, and completed 5.
Commerce designated PSVs as part of a safeguards team for 24 cases, and
completed all of them. Of these 24 checks, 23 resulted in favorable
determinations, while 1 was unfavorable.
Commerce guidance for selecting PSVs and pre-license checks establish
criteria based on technologies and countries that require a higher
priority for conducting PSVs and pre-license checks. The guidance
identifies 19 specific missile technology categories from the Commerce
Control List involving particularly sensitive commodities as choke points
for the development of missiles and indicating a priority for PSV or
pre-license selection. For example, items such as software and source code
to improve inertial navigation systems, as well as lightweight turbojet
and turbofan engines, are included as choke point missile technologies. In
addition, the guidance identifies 20 countries of missile diversion
concern that may also warrant a pre-license check or PSV. The guidance
further identifies 12 specific countries or destinations that have been
used repeatedly, and are likely to be used again, as conduits for
diversions of sensitive dual-use commodities or technology.45 The guidance
states that other factors might mitigate the need to select a license for
a PSV.
We applied Commerce's guidelines to the 2,490 cruise missile or UAVrelated
licenses and identified 20 that met the criteria to receive a PSV or a
pre-license check. However, Commerce selected only 2 of these 20 licenses.
All 20 licenses were for choke point missile technology useful for cruise
missile or UAV development. Some of these licenses were for countries of
missile diversion concern, such as India, while others were for
transshipment countries, such as Singapore. Figure 7 shows the
44The Commerce Control List does not designate whether an item is useful
for ballistic missiles or cruise missiles, according to Commerce
officials, but identifies only that an item is useful for missile
technology. Commerce identified 102 of 130 dual-use missile-related
categories in the Export Administration Regulations that contain items
that could be used either for cruise missile or ballistic missile
purposes, and 9 categories that could be used "primarily" for cruise
missile purposes. Three categories of items relate to UAVs or their
components. The 2,490 cruise missile or UAV-related licenses that we
reviewed were in these categories of items.
45Two countries are listed on both the list of missile technology
diversion concern and the list of conduit countries.
destinations for items in the 20 licenses and the percentage of licenses
for each destination.
Figure 7: Destinations of Dual-use Approved Licenses for Chokepoint
Technologies, Fiscal Years 1998-2002, by Country
We found that Commerce selected 2 of the 20 licenses for a PSV. One PSV
resulted in a favorable determination, while the other had not been
completed at the time of our review. Even though the 20 licenses met
guidance criteria, few of these licenses had been selected for PSVs. A
Commerce official explained that licenses might not be selected for a PSV
because many factors might mitigate the need for a PSV for a particular
license even though it meets the selection criteria. However, Commerce
officials could not explain which factors lessened the need for a PSV for
the remaining 18 licenses.
Few International Other supplier countries have established export control
laws and Suppliers Verify End-use regulations, which also place conditions
on transfers and can authorize Controls agencies to conduct end-use
monitoring of sensitive items. For example,
government officials from the United Kingdom, France, and Italy stated
that their respective governments might add conditions for cruise missile
and UAV-related items, as well as for other exports. While national export
laws authorize end-use monitoring, none of the foreign government
officials reported any PSV visits for cruise missile or UAV-related items.
The national export control systems of other cruise missile and UAV
supplier countries that responded to our request for information apply
controls differently from the United States for missile-related transfers.
Government officials in France, Italy, and the United Kingdom stated that
their respective governments generally do not verify conditions on cruise
missile and UAV transfers and conduct few post-shipment verification
visits of such exports. The South African government was the only
additional supplier country responding to a written request for
information46 that reported it regularly requires and conducts PSVs on
cruise missile and UAV transfers.
o Officials in the United Kingdom stated that the U.K. government seeks
to ensure compliance with license conditions, but it has no institutional
system for conducting PSVs for British exports. Although defense attaches
keep their eyes open for cases of misuse of an item, the officials did not
know whether any PSV visits had been done for transfers of British cruise
missiles or UAVs. A U.K. government official said that occasionally
embassy officials may conduct PSVs on other British equipment. For
example, a PSV may be undertaken to confirm that British tanks are not
being used by Israel to conduct operations in Gaza. However, the official
added that such actions are neither required nor routine.
o Italian government officials stated that all armament transfers
include conditions that the end user cannot retransfer to other countries
or users without prior permission from the government. Additionally, some
export licenses require an import delivery certificate as a condition to
certify that an item has been imported. For those licenses, the government
of Italy allows firms fixed periods of time to provide required documents.
If the recipient does not send a required delivery certificate, then a PSV
would be conducted to verify whether the end user received the items.
o According to French officials, France does not conduct explicit PSV
visits. Instead, its officials observe end-use conditions during technical
or military-to-military contacts. Specifically, French officials stated
that when missiles or any other highly technological goods are sold
contact between
46Governments responding to our request were Israel, Japan, South Africa,
and Switzerland. Russia's and Canada's responses were provided too late to
be included in this report. Other countries that we queried provided no
information on end-use monitoring.
the government and the recipient provides opportunities to ensure the
disposition of the exported item.
o According to South African government officials, requirements for PSV
Conclusions
visits may be applied to licenses for cruise missile and UAV-related
technology. Furthermore, South Africa conducts regular end-use
verifications to selected end users of non-MTCR countries and may initiate
other ad hoc visits as required by the South African control authorities.
In addition, government-to-government agreements require end-use
certificates containing delivery verification information and include
authorizations for end-use verification visits, as well as non-retransfer,
non-modification, and non-reproduction clauses. South African government
officials also stated that each clause must be fully verified and
authenticated.
The continued proliferation of cruise missiles and UAVs poses a growing
threat to the United States, its forces overseas, and its allies. Most
countries already possess cruise missiles, UAVs, or related technology,
and many are expected to develop or obtain more sophisticated systems in
the future. The dual-use nature of many of the components of cruise
missiles and UAVs also raises the prospect that terrorists could develop
rudimentary systems that could pose additional security threats to the
United States. Since this technology is already widely available
throughout the world, the United States works in concert with other
countries through multilateral export control regimes to better control
the sale of cruise missiles, UAVs, and related technologies. Even though
the effectiveness of these regimes is limited in what they can accomplish,
the United States could achieve additional success in this area by
adopting our previous recommendations to improve the regimes'
effectiveness.
U.S. export controls may not be sufficient to prevent cruise missile and
UAV proliferation and ensure compliance with license conditions. Because
some key dual-use components can be acquired without an export license, it
is difficult for the export control system to limit or even track their
use. Moreover, current U.S. export controls may not prevent proliferation
by nonstate actors, such as certain terrorists, who operate in countries
that are not currently restricted under missile proliferation regulations.
Furthermore, the U.S. government seldom uses its end-use monitoring
programs to verify compliance with the conditions placed on items that
could be used to develop cruise missiles or UAVs. Thus, the U.S.
government does not have sufficient information to know whether recipients
of these exports are effectively safeguarding equipment and
Recommendations for Executive Action
technology in ways that protect U.S. national security and
nonproliferation interests. The challenges to U.S. nonproliferation
efforts in this area, coupled with the absence of end-use monitoring
programs by several foreign governments for their exports of cruise
missiles or UAVs, raise questions about how nonproliferation tools are
keeping pace with the changing threat.
A gap in dual-use export control regulations could enable individuals in
most countries of the world to legally obtain without any U.S. government
review U.S. dual-use items not on the Commerce Control List to help make a
cruise missile or UAV. Consequently, we recommend that the Secretary of
Commerce assess and report to the Committee on Government Reform on the
adequacy of the Export Administration Regulations' catch-all provision to
address missile proliferation by nonstate actors. This assessment should
indicate ways the provision might be modified.
Because the departments have conducted so few PSV visits to monitor
compliance with U.S. government export conditions on transfers of cruise
missiles, UAVs and related dual-use technology, the extent of the
compliance problem is unknown. While we recognize that there is no
established or required number of PSV visits that should be completed, the
small number completed does not allow the United States to determine the
nature and extent of compliance with these conditions. Thus, we recommend
that the Secretaries of State, Commerce, and Defense, as a first step,
each complete a comprehensive assessment of cruise missile, UAV, and
related dual-use technology transfers to determine whether U.S. exporters
and foreign end users are complying with the conditions on the transfers.
As part of the assessment, the departments should also conduct additional
PSV visits on a sample of cruise missile and UAV licenses. This assessment
would allow the departments to gain critical information that would allow
them to better balance potential proliferation risks of various
technologies with available resources for conducting future PSV visits.
Agency Comments We provided a draft of this report to the Secretaries of
Commerce, Defense, and State for their review and comment. We received
written
and Our Evaluation comments from Commerce, Defense, and State that are
reprinted in appendixes II, III, and IV. DOD and State also provided us
with technical comments, which we incorporated as appropriate.
Commerce did not agree that the limited scope of the current catch-all
provision should be called a gap in U.S. regulations but agreed to review
whether the existing catch-all provision sufficiently protects U.S.
national security interests. Commerce said that it believes that the
export control system effectively controls items of greatest significance
for cruise missiles and UAVs and are on the Commerce Control List. It
stated that our report is ambiguous as to whether the gap relates to items
listed on the control list or to items that are not listed, as they are
not considered as sensitive for missile proliferation reasons. Commerce
also stated that we should explain the basis for suggesting that
noncontrolled items are sensitive and should be placed on the MTCR control
list, if that is our position. Our references to the gap in the
regulations refer to dual-use items that are not listed on the Commerce
Control List and we have made changes to the draft to clarify this point.
Furthermore, we are not suggesting that unlisted items should be added to
the MTCR control list to deal with the issue we identified in the New
Zealand example. As we recommend, the vehicle to address this gap would be
an expansion of Commerce's catch-all provision whereby license reviews
would be required when the exporter knows or has reason to know that the
items might be used by nonstate actors for missile proliferation purposes.
In commenting on our draft report's recommendation to require an export
license review for any item that an exporter knows or has reason to know
would be used to develop or design a cruise missile or UAV of any range,
Commerce agreed to review whether the existing provision sufficiently
protects U.S. national security interests. We have modified our
recommendation to reflect the need for an assessment of the catch-all
provision's scope and possible ways to modify the provision to address the
gap.
State disagreed with our findings and conclusions concerning its end-use
monitoring program. State said that our report was inaccurate in
suggesting that State does not monitor exports to verify compliance with
export authorizations and noted that we did not discuss the importance of
pre-license checks to verify end use and end user restrictions. It said
that our report was misleading and inaccurate to suggest that State does
not monitor exports to verify compliance with export authorizations. State
said that the most important restrictions placed on export authorizations
involve controls over the end user and the end use of the article being
exported. State also said that it uses many tools in the export licensing
process to verify these restrictions and that the Blue Lantern program's
pre- and post-license checks are only one of these tools. State said that
pre-license checks verify the bond fides of end users, as well as the
receipt and appropriate end use of defense articles and services,
including UAVand missile-related technologies. It also questioned why our
analysis did
not include pre-license checks as part of State's efforts to ensure
compliance with arms export regulations.
We agree that pre-license checks are critical to ensure that licenses are
issued to legitimate, reliable entities and for specified programs or end
uses in accordance with national security and foreign policy goals. We
also agree that they augment controls and checks used during the licensing
process to determine the legitimacy of the parties involved and the
appropriate end use of the export prior to license approval. However, such
checks cannot confirm the appropriate end user or end use of an item after
it has been shipped and received by the recipient. Regarding other tools
in the export licensing process to verify conditions, we asked State for
additional information that would indicate what other actions, besides PSV
checks, State took. State officials said that some license conditions
required follow-up action-such as forms or reports-either by State
officials, exporters, or end users. We asked for examples of such
follow-up action related to licenses for cruise missiles, UAVs, or related
technology. A State official said that, after querying the relevant
licensing teams, State officials did not identify any licenses requiring
follow-up action and that there is no system, formal or otherwise, that
would document follow-up actions that had been taken. In response to
State's comments, we added information on Blue Lantern pre-license checks
to the report, information that further demonstrates the limited
monitoring that State conducts on cruise missile and UAV-related
transfers. We reviewed the 786 cruise missile and UAV licenses to
determine how many had received Blue Lantern pre-license checks, a
possible mitigating factor reducing the need to conduct a PSV. These
included 129 licenses to non-MTCR countries, such as Egypt, Israel, and
India, which present a higher risk of misuse or diversion. We found that
only 6 of the 786 licenses that State provided us had been selected for
pre-license checks. Of these, 4 received favorable results, 1 received an
unfavorable result, and 1 had no action taken.
Commerce and DOD partially agreed with our second recommendation to
complete a comprehensive assessment of cruise missile, UAV and related
dual-use technology transfers. However, both departments raised concerns
over the resources needed to conduct such a comprehensive assessment and
sought further definition of the scope of the transfers to be assessed as
the basis for interagency action and additional resources for monitoring.
DOD suggested that a random sample of cases could achieve results
equivalent to that of a comprehensive assessment. It agreed to conduct a
greater number of PSVs in order to (1) provide the U.S. government with a
high level of confidence over time that exporters and end users are
complying with export license conditions and (2) allow
the U.S. government to determine whether adequate resources are devoted to
license compliance issues. We clarified our recommendation so that a
comprehensive assessment could include a sampling methodology so long as
it provided each agency with a high level of confidence that the sample
selected accurately demonstrated the nature and extent of compliance with
conditions. State disagreed with our recommendation and said that the
absence of evidence in our report of misuse or diversion does not warrant
such an extensive effort. Nonetheless, State said that in conjunction with
steps taken to improve the targeting of Blue Lantern checks and increase
the number conducted annually, it would pay special attention to the need
for additional pre- and post-shipment checks for cruise missile- and
UAV-related technologies. Since State conducted no PSV checks for any of
the 480 licenses for cruise missile or UAV-related licenses with
conditions that we reviewed and only 6 pre-license checks for the 786
licenses, the need for State to assess its monitoring over cruise missile
and UAV licenses is a recommendation we strongly reaffirm.
As arranged with your office, unless you publicly announce the contents of
this report earlier, we plan no further distribution until 30 days after
the
date of this letter. At that time, we will send copies of this report to
appropriate congressional committees and to the Secretaries of
Commerce, Defense, and State. Copies will be made available to others
upon request. In addition, this report will be available at no charge on
the
GAO Web site at http://www.gao.gov.
If you or your staff have any questions concerning this report, please
contact me at (202) 512-8979 or at christoffj@gao.gov. A GAO contact and
staff acknowledgments are listed in appendix V.
Sincerely yours,
Joseph A. Christoff
Director, International Affairs and Trade
Appendix I: Scope and Methodology
To determine the nature and extent of cruise missile and UAV
proliferation, we reviewed documents and studies of the Departments of
Commerce, Defense, Homeland Security, and State, the intelligence
community, and nonproliferation and export controls specialists in
academia and the defense industry. These included the Unclassified Report
to Congress on the Acquisition of Technology Relating to Weapons of Mass
Destruction and Advanced Conventional Munitions, 1 January through 30 June
2002; the Director of Central Intelligence worldwide threat briefing on
The Worldwide Threat in 2003: Evolving Dangers in a Complex World 11
February 2003; and the DOD UAV Roadmap for 2000 to 2025 and 2002 to 2025.
We also reviewed databases of the UAV Forum and UVONLINE. Also, we
reviewed plenary, working group, and information exchange documents of the
MTCR. We met with officials of the Departments of Commerce, Defense,
Homeland Security, and State, the intelligence community, and with
nonproliferation and export controls specialists in academia in
Washington, D.C., and officials of the National Air Intelligence Center in
Dayton, Ohio. We also met with representatives of private companies Adroit
Systems Inc., EDO, Boeing, MBDA, Lockheed Martin, and with the industry
associations National Defense Industrial Association (NDIA) and the
Aerospace Industries Association in Washington, D.C. In addition, we
received a written response from NDIA to a list of detailed questions.
Also, we met with representatives of the Defense Manufacturing
Association, SBAC, Goodrich, BAE Systems, and MBDA in London, United
Kingdom; and of the European Unmanned Vehicle Systems Association (EURO
UVS) in Paris, France. In addition, we attended two conferences of the
Association for Unmanned Vehicle Systems International (AUVSI) in
Washington, D.C., and Baltimore, Maryland.
To examine how the U.S. and other governments have addressed proliferation
of cruise missile and UAV risks, we analyzed the documents and studies
noted above and met with officials and representatives of the previously
mentioned governments and nonproliferation and export controls specialists
in academia. We also reviewed relevant documents and data to determine how
the U.S. and other governments have used export controls, diplomacy,
interdiction, and other policy tools. Based on this information, we
conducted analyses to determine how each tool had been employed and with
what results.
To evaluate the end-use controls used by the U.S. and other governments,
we obtained documents and met with officials from the Departments of
Commerce, Defense, and State. We also reviewed arms transfer data from DOD
and export licensing data from State and Commerce databases to
Appendix I: Scope and Methodology
assess what cruise missile and UAV technology the United States exported,
how the U.S. government selected licenses to receive postshipment
monitoring, and how it applied end-use post-shipment controls. Moreover,
we reviewed applicable U.S. export control laws and regulations. We
performed qualitative and quantitative analyses of selected export
licenses to determine the extent and frequency of applied license
conditions and end-use checks related to cruise missile and UAV transfers.
To determine the completeness and accuracy of the Defense and State data
sets, we reviewed related documentation, interviewed knowledgeable agency
officials, and reviewed internal controls. The State database system is
not designed to identify all cruise missile or UAV commodities
transferred. Therefore, the team developed a list of search terms based on
consultations with State officials concerning which terms would likely
capture all transfers involving cruise missiles, UAVs, and related
technology. State provided the criteria we used to determine what
Statelicensed exports were cruise missile or UAV-related. State officials
queried their licensing database to search for specific category codes and
12 keywords.1 The resulting report that State provided to us contained 400
pages with 1,300 entries. While we have high confidence that our analysis
allowed us to capture most of the relevant cases, it is possible that a
few relevant State cases might have been missed. We also assessed the
reliability of the Commerce data by performing electronic testing of
required data elements and by interviewing agency officials knowledgeable
about the data. We determined that the data elements were sufficiently
reliable for the purposes of this engagement.
We also interviewed officials of the governments of France, Italy, and the
United Kingdom, and met with representatives of the point of contact for
the MTCR in Paris, France. In addition, we received written responses to
questions we provided to the governments of Israel, Japan, South Africa,
and Switzerland. Russia and Canada provided a response too late to be
included in this report. We requested the same information from the
government of Germany, but received no response. Our ability to address
two objectives was impaired by a Department of State delay in assisting
our efforts to collect responses to written questions from foreign
governments. State agreed to facilitate this effort 4 months after our
initial request for assistance and only after we reduced the number of
countries
1State reported that the keywords were (1) UAV, (2) RPV, (3) Cruise
Missile, (4) Harpoon, (5) Tomahawk, (6) Slam, (7) Drone, (8) Prowler, (9)
GNAT, (10) Predator, (11) Altus, and (12) *UNMAN* and *VEHIC*.
Appendix I: Scope and Methodology
to receive our questions from 16 to 7 and reduced the number of questions.
Given this delay, governments had less time to respond to our questions
than we had originally planned. Thus, we could not fully assess how other
governments address the proliferation risks of cruise missiles, UAVs, and
related technology and apply end-use controls on their exports of these
items.
We performed our work from October 2002 to November 2003 in accordance
with generally accepted government auditing standards.
Appendix II: Comments from the Department of Commerce
Note: GAO comments supplementing those in the report text appear at the
end of this appendix.
See comment 1.
Appendix II: Comments from the Department of Commerce
See comment 2.
See comment 3.
Appendix II: Comments from the Department of Commerce
See footnote 23.
See comment 4.
See comment 5.
Appendix II: Comments from the Department of Commerce
See comment 6.
See comment 7.
See comment 8.
Appendix II: Comments from the Department of Commerce
See comment 9.
Appendix II: Comments from the Department of Commerce
See comment 10
Appendix II: Comments from the Department of Commerce
Appendix II: Comments from the Department of Commerce
GAO Comments
The following are GAO's comments on the Department of Commerce letter
dated November 14, 2003.
1. Commerce said that our report does not distinguish among the varying
threats posed by different types of cruise missiles and UAVs. Our report
does make distinctions between the threats posed by anti-ship cruise
missiles to U.S. naval forces, land-attack cruise missiles to the U.S.
homeland and forces deployed overseas, and UAVs as potential delivery
systems for chemical and biological weapons. As our report stated, the
potential for terrorist groups to produce or acquire rudimentary cruise
missiles or small UAVs using unlisted dual-use items is an emerging threat
that needs to be better addressed.
2. Commerce said that agreement was finalized at the September 2003 MTCR
Plenary to add a new category of UAVs to the MTCR control list. We have
added information to the report to take this into account.
3. Commerce said that our report does not discuss action taken at the
September 2003 MTCR Plenary to include a catch-all provision in the regime
guidelines that could strengthen MTCR disciplines and address some of the
concerns of our report. While helpful, the practical impact of this change
is negligible. Nearly all MTCR members currently have catch-all controls
in their national export control authority. Furthermore, as Commerce
pointed out, the U.S. catch-all controls have limited scope and do not
address the type of situation presented in the New Zealand example.
4. We believe that our explanation was clear as to how we applied
Commerce's guidance to select licenses that met Commerce's listed criteria
for receiving a PSV. As clearly noted in our report, we first started with
the 2,490 dual-use licenses with commodity categories that Commerce had
identified as relevant to cruise missile and UAV items. Second, we
selected those licenses having only commodity categories identified in
Commerce guidance as chokepoint technologies. Third, we matched these
licenses to a recipient country identified as a country of missile
proliferation concern or as a conduit country. This analysis resulted in
20 licenses. When we found that two of the 20 licenses we identified had
been selected for a PSV, we asked Commerce officials to explain which of
the other variables (information about the parties to the transaction,
proposed end use, previous licensing history, etc.) mitigated the need for
a PSV. As we reported, Commerce officials could not explain which factors
lessened the need for a PSV for the remaining 18 licenses.
Appendix II: Comments from the Department of Commerce
5. Commerce stated that there is ambiguity in our report as to whether
the gap relates to items listed on the Commerce Control List or to items
that are not listed because they are not considered as sensitive for
missile proliferation reasons. Our references to the gap in the
regulations refer to dual-use items that are not listed on the Commerce
Control List. We have made changes to the draft to clarify this point.
6. Commerce stated that if it is GAO's position that noncontrolled items
are sensitive and should be placed on the MTCR control list, then we
should explain the basis for this position. We are not suggesting that
unlisted items should be added to the MTCR control list to deal with the
issue we identified in the New Zealand example. As indicated in our
recommendation, the vehicle to address this gap would be an expansion of
Commerce's catch-all provision whereby license reviews would be required
when the exporter knows or has reason to know that items not on the
Commerce Control List might be used by nonstate actors for missile
proliferation purposes.
7. Commerce states that the United States and MTCR members effectively
control the items of greatest significance for cruise missiles and UAVs
that pose concerns for U.S. national security. We agree that MTCR covers
items of greatest significance for cruise missiles and UAVs that pose
concerns posed by national missile programs. However, Commerce needs to
recognize the potential for nonstate actors, particularly terrorists, to
legally acquire unlisted items for use in missile proliferation.
8. Commerce acknowledges that its enforcement authority is limited
concerning items not listed on the Commerce Control List and entities not
named on the terrorist lists. Nonetheless, it asserts that it could take
specific actions if it learned that U.S. items had been shipped to
proliferators or terrorists that were developing weapons with these
components. However, it is not clear how this information would come to
Commerce's attention because current regulations do not require, or
inform, an exporter to seek a license review in this type of situation.
9. Commerce agrees to consider whether the catch-all provision
sufficiently protects U.S. national security interests. We agree that such
a review in consultation with the Technical Advisory Committees and
interagency community would be an important first step in identifying the
sufficiency of the provision to cover nonstate actors and ways to modify
it to address the gap. Consequently, we have modified our recommendation
accordingly.
Appendix II: Comments from the Department of Commerce
10. The gap that we identified in our report is in the catch-all
provisions. We are not suggesting that additional items be added to the
control lists. Currently, the catch-all regulations require an exporter to
submit a license application when he knows or has reason to know that an
unlisted item would be used for missile proliferation purposes. However,
this provision applies only to specific missile proliferation projects or
countries identified on a narrow list in the regulations. The New Zealand
citizen was not covered under the catch-all provisions.
Appendix III: Comments from the Department of Defense
Appendix III: Comments from the Department of Defense
Appendix IV: Comments from the Department of State
Note: GAO comments supplementing those in the report text appear at the
end of this appendix.
Appendix IV: Comments from the Department of State
See comment 1.
See comment 2.
Appendix IV: Comments from the Department of State
See comment 2.
See comment 3.
See comment 4.
Appendix IV: Comments from the Department of State
Appendix IV: Comments from the Department of State
GAO Comments
The following are GAO's comments on the Department of State letter dated
November 19, 2003.
1. State said that it has conducted over 1,200 Blue Lantern checks on
exports of all types and developed derogatory information in almost 200
cases over the past 3 years. However, these checks and cases involved both
pre-license checks and PSVs and included more than cruise missile or UAV
items, according to State's most recent end-use monitoring report.1 For
example, 428 checks initiated by State in fiscal
year 2002-of which 50 checks resulted in unfavorable
determinations-included firearms and ammunition, electronics and
communications equipment, aircraft spare parts, bombs, spare parts for
tanks and military vehicles, and night vision equipment.
2. State also said that the Blue Lantern program (1) effectively verifies
the end use and end users of export applications when questions arise, (2)
has deterred diversions, (3) helped disrupt illicit supply networks, (4)
helped State make informed licensing decisions, and (5) ensured exporter
compliance with law and regulations. State added that the historical
context of assessing the parties to the export weighs into every licensing
decision and its importance cannot be discounted. We agree that the Blue
Lantern program can have a positive impact when State has the information
needed to allow it to act. This statement affirms our point that it is
important to obtain such information through improved monitoring,
particularly PSVs. However, given the limited number of either pre- or
post-shipment Blue Lantern checks focused to date on cruise missile and
UAV-related transfers, we question whether sufficient information has been
obtained in this area.
3. State said that it was unclear why our report's analysis excluded
prelicense checks as part of State's efforts to ensure compliance with
arms export regulations. As noted above, we did ask for such information
and learned that State conducted few pre-license checks for its cruise
missile and UAV transfers. While we agree with State that pre-license
checks are critical to providing assurances that licenses are issued to
legitimate, reliable entities and for specified programs or end uses, they
obviously cannot verify that exports are received by the legitimate end
user or used in accordance with the terms of the license after shipment.
We agree that seeking and receiving assurances prior
1End-Use Monitoring Report for FY 2002: Commercial Exports, Department of
State (Washington, D.C.: 2003)
Appendix IV: Comments from the Department of State
to licensing and shipment is a critical function that might mitigate the
need for a PSV check in many cases. However, State implies that prelicense
and other actions of the licensing process mitigated the need to conduct
PSV checks for all but 4 of its 786 licenses for cruise missile, UAV, or
related technology. These included 129 licenses to non-MTCR countries,
such as Egypt, Israel, and India.
4. State said that our report did not articulate the criteria we used to
determine what exports are UAV-related. State provided the criteria we
used to determine what State-licensed exports were cruise missile or
UAV-related. State officials queried their licensing database to search
for specific category codes and 12 keywords.2 The resulting report that
State provided to us contained 400 pages with 1,300 entries. We have added
this information to our Scope and Methodology section to clarify that
State provided us with these criteria, the data generated from applying
the criteria, and information on Blue Lantern pre-license and PSV checks
for these licenses.
2State reported that the keywords were (1) UAV, (2) RPV, (3) Cruise
Missile, (4) Harpoon, (5) Tomahawk, (6) Slam, (7) Drone, (8) Prowler, (9)
GNAT, (10) Predator, (11) Altus, and (12) *UNMAN* and *VEHIC*.
Appendix V: GAO Contact and Staff Acknowledgments
GAO Contact David Maurer (202) 512-9627
Acknowledgments In addition to the individual named above, Jeffrey D.
Phillips, Stephen M. Lord, Claude Adrien, W. William Russell IV, Lynn
Cothern, and Richard Seldin made key contributions to this report.
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