Earlier this afternoon, the State Department issued a press release announcing a settlement it had reached with Interturbine Aviation Logistics GmbH, Germany, and its Texas branch office, Interturbine Aviation Logistics GmbH, LLC, for alleged violatons of the Arms Export Control Act and the International Traffic in Arms Regulations (“ITAR”). Under the agreement Interturbine agreed to a $1 million dollar fine, $900,000 of which would be suspended provided that these amounts were applied to Interturbine’s ITAR-related compliance programs and measures.

One part of the press release deserves particular attention:

$400,000 [of the suspended $900,000] will be suspended on the condition that Interturbine maintains its self-initiated exclusion from all ITAR regulated activities.

I suspect that I am not alone here in wondering how voluntary or “self-initiated” Interturbine’s self-debarment was. Although I’m certain that the State Department’s Directorate of Defense Trade Controls (“DDTC”) didn’t resort to rubber truncheons, heavy volumes of the phone book, bright lights and sleep deprivation, it wouldn’t surprise me if this self-debarment was strongly urged by DDTC officials while asking Interturbine officials how they thought they would look in orange. This is, after all, the first time I’ve seen a company adopt a lengthy self-debarment as the result of export violations.

The best part of the press release, however, is this:

The Department has determined that an administrative debarment of Interturbine is not appropriate at this time.

That seems to me not far removed from saying that, in light of the defendant’s suicide, the prosecution has decided not to seek the death penalty.

UPDATE: A source for Interturbine contacted me and said that the State Department’s reference to “self-initiated exclusion from ITAR activities” isn’t entirely accurate. The company says that none of its products are ITAR-controlled and that the company was simply continuing its existing policy of not dealing in ITAR-controlled products. The re-sale of the Dow Corning product was atypical and not a result of any intention by the company to deal in ITAR-controlled products.

On Tuesday, the website of the Directorate of Defense Trade Controls announced that it had updated its “Guidelines for the Permanent Export, Temporary Export and Temporary Import of Firearms and Ammunitions.” Although DDTC did not identify or explain the changes in the guidelines, the changes appear to be restricted to one paragraph marked in red. That paragraph, which can be found on page 7, reads:

Where the exporter uses an in–transit point (or points) in a country other than that of the ultimate destination, an authorization issued by the foreign government of the transit country authorizing the transit of the specified items must also accompany each application to export. Where items are temporarily imported into the U.S. for the purposes of transit or transshipment to other OAS countries, an Import Authorization, comprised of either a permit or a certificate issued by the foreign government authorizing the import of specified items, must accompany each application to import.

This paragraph requires that temporary import of firearms through the United States for another member of the Organization of the American States (“OAS”) be accompanied by an import authorization from the destination state. This is clearly an effort to conform to the requirement of Article IX(2) of the OAS Firearms Convention.

The other requirement, that an export license application for firearms that transit another country prior to the ultimate destination must be accompanied by a transit permit from the transiting country, is not restricted to OAS members, although that requirement conforms to Article IX(3) of the OAS convention. It also conforms to the requirement of Article 10(2)(b) of the U.N. Firearms Protocol which hasn’t been signed or ratified by the United States, largely based on fears, unfounded by the text of the Protocol, that the Protocol is an effort by the U.N. to regulate purely domestic sales of firearms in the United States.

Even so, it’s a sensible requirement because failure to obtain a transit license for countries that have signed the U.N. Protocol or which otherwise require transit permits can result in seizures of the firearms as they transit those countries. For other countries that have not signed the U.N. Protocol and which don’t require transit licenses, the provision is a bit more problematic in that it would appear to require obtaining a transit license from countries that don’t issue them. In the case of exports to countries that don’t require import authorizations, the guidelines permit the applicant to submit a statement from the end user or the country of import that no import authorization is required. It’s not clear why a similar procedure doesn’t appear to be available in the case of countries without transit license requirements.

ABOVE: Andrew Shapiro testifying
today before Senate Foreign
Relations Committee

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The Senate Foreign Relations Committee today held a hearing on the Defense Trade Cooperation Treaties between the United States and the United Kingdom and between the United States and Australia. Both treaties, the text of which can be found here, would permit certain defense items to be exported without a license from the United States to certain users in the United Kingdom and Australia. Signed in June and September 2007, the two treaties have since languished in the Senate approval process.

Senator Kerry, the Chairman of the committee, indicated in his opening statement his intent to draft and pass a resolution of advice and consent to the ratification of both treaties, although no time frame was given. Senator Lugar, the Ranking Member, used his opening statement to whine about the Implementing Arrangements for the treaty which, he said, weren’t subject to the advice and consent of the Senate and could be changed at any time by the White House and its counterparts in the United Kingdom and Australia. So much for our special relationship with those countries. Whether Lugar’s vote will ultimately be needed for an advice and consent resolution remains to be seen.

Andrew J. Shapiro, Assistant Secretary for Political-Military Affairs at the State Department testified in favor of ratification of the treaties signifying that the Obama administration will take the same position on the treaties as did his predecessor in the White House. Perhaps to allay the concerns of Lugar and others on the Committee, Shapiro emphasized that items exported under the treaties would be subject to stringent controls on their use and export from the United Kingdom and Australia. He also cited two examples of areas in which cooperation among the U.S, the U.K, and Australia would be useful: forensic technology to investigate IED explosions and development of “non-lethal capabilities for counter-piracy and maritime counter-terrorism.” Frankly these seem odd areas to highlight but perhaps Shapiro was responding to some specific Committee concerns

Associate Deputy Attorney General James Baker ended the hearing with testimony underlining the Department of Justice’s belief that the two treaties would not need implementing legislation. Baker argued that because the treaties were “self-executing” they could legally be put into force by the current administration through minor amendments to the International Traffic in Arms Regulations (the “ITAR”).

An article in Defense Industry Daily today highlighted a previous report by a watchdog group on Triple Canopy’s activities in Iraq. Triple Canopy is one of the major private military contractors in Iraq and has taken over many of the security contracts once held there by Blackwater (now Xe). One of the issues highlighted was the purchase by Triple Canopy and other private military contractors of arms from black market dealers in Iraq, which has led to more than a little tsk-tsking from some fronts.

But as both articles point out, there’s a relatively simple explanation for what military contractors were buying AK-47s on the streets of Baghdad:

The U.S. awarded Triple Canopy a contract to protect more than a dozen sites across Iraq. At the time, the company had only a handful of employees. More serious, it didn’t have licenses to import the hundreds of weapons needed to guard sites across Iraq.

The company immediately applied for licenses after winning the contract, according to documents provided by Triple Canopy. Yet the government took months to approve the deal, not authorizing the company to collect the weapons until June 2004. In essence, the U.S. had awarded the company a lucrative contract, but then provided it little ability to arm for the job.

To get the firepower it needed in the meantime, the company turned to the unregulated and unlicensed Iraqi market, purchasing AK-47s and other weapons from local dealers, according to company officials and court records.

There was, however, another obstacle thrown in the way of export licenses for arms need by privately-contracted security forces in Iraq that wasn’t mentioned by the articles. This obstacle was thrown by Congress in the Iraq and Afghanistan Supplemental Appropriations Act of 2004. Section 2205 of that Act required that any shipment of small arms, even a shipment of one rifle, to U.S. private contractors in Iraq be notified by DDTC to Congress with all the delays that this would entail. And if Congress was in recess, add even more time, since notifications to the House can only be made when it’s in session. What did Congress expect American contractors on the streets of Baghdad in 2004 to defend themselves with while waiting? Spitballs?

Another unintended consequence of the delays imposed by Congress and the State Department on allowing exports of small arms to private contractors in Iraq can be seen in an anecdote that was related to me at the time. An employee of a security company needed to visit his company’s operations in Iraq on an expedited basis. On arrival in Iraq, he naturally acquired a weapon in country. (You would have too at the time.) So far, so good. But when he left Iraq, what to do with the weapon? Since it hadn’t been lawfully exported from the United States he would need an ATF permit, which he didn’t have and had no way to get, to bring it back into the United States.   So, he left the weapon in his hotel room — as a tip of sorts, I suppose, for the housekeeping staff.

ABOVE: Tbilsi, Georgia

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Worldnet Daily, a highly partisan and potentially unreliable source, reports that the Obama administration

placed a hold on all U.S. military exports to Georgia due to a “policy review,” with no indication as to when it will be completed or what defensive military items will be allowed to be exported ….

U.S. sources [said] that such a review has been so “close-hold” that even the Defense Department, which also reviews license applications for national security reasons, was unaware of the action. DOD has been recommending approval of munitions license applications for Georgia

The whiff or partisanship, however, is ripe. The article claims that the Obama administration was “bowing to Russian pressure” and cited an un-named U.S. official saying this:

“The Obama administration is caving to the Russians,” one official said. “It means that we’re letting the Russians control U.S. foreign policy interests.”

Leaving aside that Worldnet Daily, which is still claiming that Obama isn’t a U.S. citizen, may have a partisan axe to grind with the Obama administration, the notion that the U.S is caving to Russia on the Georgia issue isn’t terribly consistent with recent statements from Secretary of State Clinton, who has continued to emphasize in public that the U.S. and Russia don’t see eye-to-eye on Georgia. In her joint statement with Russian Foreign Policy Minister Sergey Lavrov on May 7, Secretary Clinton emphasized that Georgia was an issue on which U.S. and Russian “views may diverge” and on which the countries have a disagreement. More recently, Secretary Clinton said in an interview with Russian television outlet RTR that Georgia remained an “area of disagreement” between the two countries.

So my vote is for rumor. But I’d be interested to hear from any readers who have licenses for exports to Georgia held up.