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Archive for January, 2011

Jan

19

Iran Sanctions Update

Posted by Clif Burns at 9:23 pm on January 19, 2011

Iranian proliferation Iran sanctions seem to be all in the news this week, particularly with respect to who is and who isn’t selling stuff to Iran.

The Wall Street Journal ran an opinion piece that suggested that although Germany talks a good talk about Iran sanctions, it’s just that: talk. German exports to Iran increased by 5 percent between January and October 2010. In 2009, German authorized 16 exports of dual-use items to Iran, including protective suits that could be used in chemical weapons manufacture.
The Swiss have imposed additional sanctions on Iran, now finally prohibiting military exports in accord with UNSCR 1747. The new sanctions also target items that could be used in nuclear proliferation. Additionally, financial transactions with Iran are limited by requiring approval for transfers over a certain amount, imposing new restrictions on insurance and reinsurance for Iranian companies, and requiring additional due diligence in dealings with Iranian banks
Norwegian daily Aftenposten published a Wikileaks cable expressing concern by the State Department over Chinese exports to Iran of items that could be used in its missile program. The cable suggested that although the Chinese were doing a better job of controlling problematic exports to Iran, these efforts were being undermined by the Chinese federal government delegating some export decisions to provincial authorities which were more likely to put local economic interests ahead of interests in impeding Iran’s missile program.
A fascinating article in Sunday’s New York Times details the likely participation of the United States and Israel in the Stuxnet worm which crippled around 900 centrifuges used by Iran in uranium enrichment. The worm targeted a Siemens device that controlled the centrifuges, causing them to spin at a high rate that destroyed the equipment while sending a “man in the middle” message to the control panel indicating that the centrifuges were operating normally, thereby preventing the Iranians from shutting the centrifuges down until it was too late. Sources that examined the code of the worm indicated that the attack would only occur if 984 controllers were linked together, thereby limiting the worm from hitting the wrong target.

Moral of the story: a well-targeted cyber attack probably has done more damage to Iran’s nuclear program than economic sanctions and export controls.

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Jan

13

Man Accused of Attempting to Export F-5 to Iran Pleads Guilty

Posted by Clif Burns at 9:36 pm on January 13, 2011

F-5 Freedom Fighter In a previous post on the prosecution of Mark Knapp for his efforts to export a military surplus F-5 fighter jet to Iran, I criticized the apparent defense offered by Knapp’s attorney — that the F-5 could be shot down by U.S. fighter jets. Well, apparently Knapp and his attorney have come to their senses, and Knapp has now pleaded guilty to the charge relating to the fighter jet and other defense items that Knapp was attempting to export, including an ejection seat and a military radio.

Today’s news report indicates that Knapp was turned in by one of his customers who was caught attempting to export an ejection seat which he had bought from Knapp. Knapp’s attorney further added that Knapp began to sell his private collection of military gear after he was unable to find a job. Some of the items charged in the indictment, according to Knapp’s attorney, had been purchased by Knapp on eBay.

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Jan

12

Hey Big Brother

Posted by Clif Burns at 10:18 pm on January 12, 2011

Category: BIS • China • Foreign Export Controls • Wassenaar

ABOVE: Johan Gadolin,
discoverer of yttrium

China Daily is a great source of unintentional humor, and I really wish I had more time to peruse it. I did stumble across a recent opinion piece in China Daily on the rare earth export issue and, not surprisingly, there is much to snicker about in it, unless, of course, your business depends on the availabilities of the lanthanides, known to us non-technical sorts as the rare earth elements.

China initially justified its restrictions on exports of the lanthanides as a measure to encourage companies using lanthanides to relocate to China. Article XI of the General Agreement on Trade and Tariffs generally prohibits export quotas unless they fall within the exceptions set forth in Section 2 of Article XI or Article XX. Not surprisingly, efforts to distort international trade by forcing companies to relocate to the country imposing the quota is not within the exceptions set forth in GATT.

Somewhat later China began to cite the environmental impact of rare earth mining as a justification for the quotas. That argument was easily dismissed as a transparent ruse because China imposed no restrictions on rare earth mining for domestic use, no matter how loudly they complained the foreign exports of rare earths were killing Chinese workers.

Now, the article referenced by this post attempts to concoct another justification for its export quotas: national security. The article starts with a slam at the Wassenaar Arrangement which it claims is some kind of anti-socialist conspiracy by capitalist Western nations and a broad-based justification for China to impose any export controls it can dream up:

Export regulation was originally introduced for security issues. After World War II, the United States and other countries established the Coordinating Committee for Multilateral Export Controls (COCOM) against socialist countries; its successor, in effect today, is the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies.

In recent years the restrictions have become ever tighter. On June 19, 2007, the US Ministry [sic] of Commerce listed more than 2,500 kinds of technologies, devices, and materials banned [sic] for export to China.

Those familiar with the 2007 rule cited by China Daily, may wonder where the author came up with the idea that 2,500 kinds of technologies were banned for export. The rule imposed certain new license requirements for dual use items destined for use by the Chinese military but did not ban those exports. There were bans on items controlled for nuclear proliferation, missile technology, or chemical and biological warfare that would contribute to major Chinese weapons systems, but the 2,500 number is more than a little high as an estimate of the number of technologies involved.

More importantly, China’s claim that these restrictions are premised on national security would be more convincing if it had been its initial justification. And, of course, the Wassenaar list, which represents not a capitalist conspiracy but a multilateral consensus of strategic goods that require export controls, would permit China to exert export controls on the items on that list, items that don’t include the lanthanides.

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Jan

10

Sixth Circuit Dismisses Professor Roth’s Appeal

Posted by Clif Burns at 8:45 pm on January 6, 2011

Category: Arms Export • Criminal Penalties

ABOVE: Professor Reece Roth

On Wednesday, January 5, the Sixth Circuit dismissed the appeal of Professor J. Reece Roth, a professor emeritus at the University of Tennessee who had been convicted of violating the Arms Export Control Act (“AECA”). The conviction was based on, among other things, Professor Roth permitting access by a foreign graduate student to technical data relating to an Air Force military drone project.

Professor Roth argued in his appeal that the technical data was not export-controlled under the International Traffic in Arms Regulations because the next phase of the project involved testing his research on commercial aircraft. The Sixth Circuit dismissed this by noting that the project ultimately contemplated a military application of the research.

In reaching this result, the Sixth Circuit cited the Seventh Circuit’s decision in United States v. Pulungan, 569 F.3d 326, 328 (7th Cir. 2009). That decision held that although the AECA banned judicial review of a decision to place a category of items on the United States Munitions List {“USML”), it did not prohibit judicial review of the question as to whether a particular item fell within a category of items designated by the USML.

In addition, Roth argued that the lower court’s jury instruction on the “wilfulness” standard required for a conviction under the AECA was incorrect. According to Roth, the court should have given the jury an instruction that he could only be convicted if he was aware that the controlled technology was on the USML. The Sixth Circuit rejected this contention and held that the lower court properly instructed the jury that Roth could be convicted simply if he was aware that his conduct was unlawful. Although the Eight Circuit in United States v. Gregg, 829 F.2d 1430, 1437 & n.14 (8th Cir. 1987) appeared to hold that the defendant needed to be aware that the exported item was on the USML, the Sixth Circuit followed the looser rules of the First, Second, Third and Fourth Circuits which only require that the defendant knew that the export was unlawful.

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