Commission to Assess the Ballistic Missile Threat to the United States
Appendix III: Unclassified Working Papers


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System Planning Corporation: "Non-Proliferation Issues" Germany Executive Summary Germany does not pose a direct ballistic missile threat to the United States. Germany does not possess ICBM's, and there is no evidence in the unclassified literature suggesting that it plans to acquire an intercontinental capability by 2015. Germany possesses, however, an indigenously developed aerodynamic missile, the AS 34 Kormoran 1 & 2, which could pose a threat to the United States if launch from air-borne or sea-borne platforms. In addition, the unclassified literature suggests that Daimler-Benz aerospace, the nation's largest aerospace firm, is developing the ASS 500, a missile that can carry a 500 kg payload to a range of 500 km. Reports suggest that this missile will be fielded by 2015. Like the AS 34 Kormoran, it will only present a threat to the United States if launched from airborne or seaborne platform. This does not suggest, however, that Germany's behavior has not threatened U.S. national security interests. Germany's export policies have been extremely problematic. German equipment, technology and technical know-how were used in Iraq's nuclear, chemical and biological weapons programs as well as ballistic missile programs prior to the Gulf War. Furthermore, German companies helped Libya construct several chemical weapons facilities during the 1980's, illustrating the willingness of German industry to assist foreign WMD programs during the 1980's. While Germany has attempted to strengthen its export control system since the Gulf War, reports suggest that German companies continue to supply material and technology to Syria, Iraq and Iran for use in their ballistic missile programs. These nations continue to obtain dual-use equipment from German companies, and frequently apply them for military purposes. Nations like Iran have attempted to exploit weaknesses in Germany's export control system by setting up international procurement networks throughout Western Europe in order to obtain equipment for its ballistic missile programs. Although the German government has taken steps to abolish such activity, its efforts have proved largely ineffective. Arms Expenditures, Sales and Cooperation With other European Nations Germany's defense industry, like the defense industries of other Western European nations, has experienced a rapid mutation since the end of the Cold War. European economic integration has forced significant changes in the structure and activities of Germany's defense firms. A falling domestic defense budget, defense production overcapacity and shrinking defense exports have catalyzed profound structural reorganization of Germany's defense industry. Although Germany has reduced the total manpower strength of its armed forces to 340,000 (a drop of 40 percent since 1990), and domestic military expenditures have fallen consistently in recent years, Germany still ranked sixth worldwide in military expenditures in 1995, spending more than $41 billion on total defense operations. Germany exported more than $1.2 billion in armaments and related military technologies in 1995. While this figure is $235 million less than in 1994, and 55 percent lower than in 1991, it still places Germany as the fifth largest arms exporter in the world, accounting for 12 percent of Western European and 4 percent of world sales. 1 Between 1993-1995, Germany exported 38 percent, or $1.6 billion worth of arms to East Asia (virtually all of which went to South Korea), 27 percent or $1.1 billion to Western Europe, and 11 percent or $500 million to Australia. Consolidation in the German Aerospace Industry: The Creation of Daimler-Benz Aerospace Since 1990, there has been considerable consolidation within Europe's defense and aerospace sectors. The process of consolidation is typified by mergers in Germany's aerospace industry. Messerschmitt-Bolkow-Blohm (MBB), the product of previous mergers, was combined with Dornier to form Deutsche Aerospace, which in turn was united with Daimler Benz Aerospace. The activities of the Daimler-Benz Group in the fields of aircraft, space, defense systems and aircraft engines have been concentrated in Daimler-Benz Aerospace AG (DASA, Munich) ever since the latter's foundation on May 19, 1989. Daimler-Benz has asserted itself in recent years as one of the world's most preeminent actors in the aerospace industry. Daimler-Benz Aerospace operates on a worldwide basis. It is an equal partner in a large number of international alliances such as Airbus, Ariane, Eurocopter, and several engine programs like the V2500, Eurojet, and ADP. Daimler-Benz Aerospace makes 75 percent of its total turnover by means of international cooperative programs. The know-how and activities of the original companies have been assigned to Dasa's six Business Units: Civil Aircraft, Military Aircraft, Space Infrastructure, Satellites, Defense and Civil Systems, and Aero-Engines. Civil Aircraft In the field of large passenger aircraft, Daimler-Benz Aerospace holds a share of 37.9 percent in the European Airbus Industrie consortium through Daimler-Benz Aerospace Airbus GmbH (Hamburg) and is the principal partner together with Aerospatiale (France). British Aerospace holds 20 percent and Casa of Spain 4.2 percent. Daimler-Benz Aerospace Airbus supplies major assemblies for the Airbus family and is also in charge of the entire interior equipment of these aircraft. Military Aircraft Currently, the focal point of the activities in the Military Aircraft business unit lies in the development of the European fighter aircraft, Eurofighter, and the preparations for this aircraft to go into series production. The first prototype successfully completed its maiden flight in March 1994. In February 1997, the second German prototype commenced test flights powered by the EJ 200 engine and equipped with the ECR90 radar, this being the status as yet closest to that of the final series aircraft. Since 1997, all seven Eurofighter prototypes have been participating in the practical demonstrations given in all four partner countries to prove that the aircraft is ready to go into production. Confirmation was then given on December 22, 1997 when the Memorandum of Understanding was signed giving the go-ahead for the Production Investment and Production phases, participants in the program being DASA, British Aerospace (Great Britain), Alenia (Italy) and Casa (Spain). The Military Aircraft Business Unit is also involved in the tri-national Tornado program (Germany, Britain, Italy). Series production has now been completed, DASA having been responsible for the complete center sections of the fuselage and for final assembly of the Tornadoes destined for the German Air Force including 35 ECR Tornadoes, a special electronic warfare and reconnaissance version of the aircraft. Currently, the company is responsible for maintenance and repair work as well as carrying out combat efficiency improvement on these aircraft. Aero-Engines The Aeroengines Business Unit is synonymous with the Dasa subsidiary MTU Motoren- und Turbinen-Union München. MTU has the leading position in this branch in Germany, developing, producing and maintaining engines for passenger and transport aircraft, helicopters, turboprop aircraft and combat and training aircraft. Within the framework of international cooperation, MTU is active in all essential areas of technology for an engine such as compressors, combustion chambers, high- and low-pressure turbines or control. MTU is systems integrator for the military programs of the German Armed Forces. In the field of engines for passenger and business aircraft, MTU particularly cooperates with the renowned American engine manufacturer Pratt & Whitney and with the U.S. General Electric corporation. Since March 1991, an agreement has been in effect with Pratt & Whitney, in which the companies classify one another as "preferred partners" in commercial programs. MTU cooperates with European partners on military aeroengines. Defense and Civil Systems The Defense and Civil Systems Business Unit offers a wide range of defense electronics and is involved in a whole host of European and transatlantic guided missile programs. The main area of effort comprises radar, communication, command and reconnaissance systems. Dasa is further engaged as a service enterprise in the areas of munitions disposal and logistics. This business unit is utilizing the expertise gained in defense technology also in new civil products and systems. In the course of its strategic orientation in the defense technology field, Dasa has acquired the Siemens Defense Electronics Unit based in Munich-Unterschleissheim. As a key subsidiary, LFK-Lenkflugkörpersysteme GmbH (LFK GmbH) develops and manufactures guided missile systems, primarily within the framework of international collaborative programs. Such systems encompass firing units, missiles and peripheral equipment. Providing corporate authorities and government regulators give their assent, Matra BAe Dynamics will acquire a 30% minority holding in LFK GmbH. This represents an important step in the direction of European restructuring, which is essential to increasing competitiveness in the world's markets. The existing European and transatlantic collaborative projects of LFK GmbH will continue unaffected. Germany's Space Programs German space endeavors have always been a part of wider European and international activities. The nation has never attempted to develop an independent space program. After France, Germany is the largest contributor to the European Space Agency (ESA), accounting for over 20 percent of the organization's total annual funding. 2 Although budgetary restrictions related to German reunification have forced Germany to scale back its ESA contributions, Germany has still managed to increase its ESA payments by 2.5 percent annually for much of the decade. The DARA space agency holds sole authority over Germany's space plans, with the exception of the hypersonic technology program that falls under the jurisdiction of the Ministry of Research & Technology's aeronautics activities. Germany does not possess an independent space launch capability. Although its has been one of the largest contributors to the development of the Ariane family of SLV's (Germany has provided 22 percent of the funding for Ariane 5), and has played a leading role in the development of the Sanger-Horus spaceplane that will serve as the successor to the Hermes craft, it has focused its space activities in recent years almost exclusively on improving its Earth observation capabilities. Daimler-Benz Satellite Systems Daimler-Benz's Satellite Systems Business Unit has virtually total control over Germany's satellite development programs. The unit comprises Dornier Satellitensysteme GmbH (DSS), with production facilities in Friedrichshafen and Ottobrunn, and also the Operation and Services sector. The company is responsible for the development, construction and marketing of satellite systems, payloads, instruments, subsystems and components for civil, security and defense operations in the fields of science, Earth observation, meteorology, communications and navigation. DSS is also active in the field of satellite data utilization and offers its own customer data service. The activities of DSS also embrace the ERS-1 and ERS-2 remote sensing satellites and the SIR-C/X-SAR multi-frequency radar instrument. As a systems integrator, DSS also develops and constructs instruments for the scientific exploration of space such as the Ulysses solar probe, the Rosat X-ray satellite or the Huygens Titan probe. For the German Aerospace Center (DLR), DSS has also developed the re-usable scientific satellite Astro-Spas, which has already completed four missions successfully. Management competence and extensive know-how in large-scale satellite projects for science and observation of the Earth led to DSS being commissioned in 1996 to build the XMM European X-ray satellites and to carry out the Envisat-1 environmental mission. Germany's Ballistic and Aerodynamic Missile Capabilities Germany derives a significant amount of its civilian power production from nuclear reactors. Despite its reliance on nuclear power, Germany does not possess nuclear weapons. There is no evidence in the unclassified literature suggesting that Germany will renege its NPT commitments, however, and pursue a nuclear option even in the face of a changing European security environment. The unclassified literature also suggests that Germany has never possessed, nor has ever attempted to develop, long range and short range ballistic missiles that can strike the United States. Although it appears that Daimler-Benz aerospace possesses the technical know-how to develop such missiles, German defense planners have never pursued this option. Germany possesses, however, the AS 34 Kormoran aerodynamic missile. This missile could threaten the United States if launched from either sea-borne or air-borne platforms by countries or non-state actors with hostile intentions towards the United States. Reports have also recently surfaced that Germany has conducted wind tunnel tests on a supersonic aerodynamic missile, the ASS 500, that may be able to carry a 500 kg payload to a range of 500 km. AS 34 Kormoran 1 and 2 The AS 34 Kormoran anti-ship, air to surface program was begun in 1962. The AS 34 Kormoran 1 is a short-range, radar guided, ASM powered by a solid propellant motor and armed with a HE warhead. This missile is 4.4 meters long, has a launch weight of 600 kg, and is fitted with a 160 kg semi-armor-piercing warhead. The missile has cruise speed of about MO.9 and has a maximum effective range of 30 km. The missile must be launched at speeds greater than MO.6. The missile entered service in 1977, and about 350 missiles were delivered to the German Navy for use with their Tornados. 3 In 1982, Germany began development of the Kormoran 2. The missile has the same basic air-frame and propulsion system as its predecessor, but can carry a warhead of 225 kg, and can be used to ranges of up to 35 km. The missile entered service in 1991, and approximately 140 have been delivered to the German Navy. There are no known exports of either version of the missile. ASS 500 LFK, a subsidiary of Daimler-Benz aerospace, has reportedly conducted wind-tunnel tests on a supersonic missile called the ASS 500, which could be fielded by 2015. According to assessments in the July 1997 issue of Flight Magazine, the missile could carry a 500 kg kinetic energy penetrator warhead up to a range of 500 km. The missile will be delivered by the Panvia Tornado, and will reach a flight speed between Mach 2.5 - 4.0. Like the Kormoran 34, this missile may present a future threat to the United States if launched by airborne platform. Unclassified assessments suggest that the missile's guidance system will comprise a number of navigation systems including, intertial/satellite, infra-red sensor, and phased-array radar. LFK has designed this guidance system in order to achieve high kill probabilities against masked targets or targets with few surface features. Although there is limited information on this missile, the preliminary estimates on its range/payload specifications suggest that it could be used to carry a WMD warhead to a range of 500 km. If these preliminary range/payload specifications prove accurate, the transfer of the ASS 500 and its associated technology will violate the parameters of the MTCR. Germany and Nonproliferation Although Germany does not present a direct ballistic or aerodynamic missile threat to the United States, its past export policies have been extremely problematic. German equipment, technology and know-how were used by Iraq to develop WMD and ballistic missile delivery systems prior to the Gulf War. Since the end of the Gulf War, however, Germany has attempted to strengthen its export control system to ensure that German equipment and technology is not used to produce WMD or ballistic missile delivery systems. The following sections outline Germany's past assistance to Iraqi WMD programs, examines Germany's current export control system, and reports how Germany may continue to assist ballistic missile programs in Syria, Iraq and Iran. Germany and Iraq: Prior to the Gulf War For thirty years prior to the Gulf War, Germany refused to authorize the export of arms to Iraq. Following the Gulf War, however, it was revealed that Germany had offered extensive assistance to Iraq's WMD and ballistic missile programs. Some scholars, like Michael Ledeen, have asserted that hundreds, and perhaps thousands, of German scientists, businessmen and middlemen played an integral role in Iraq's $50 billion effort to develop nuclear, chemical and biological weapons, as well as ballistic missile delivery systems. 4 As many as 80 German companies, including companies like MBB and Karl Zeiss were implicated as suppliers for Iraq's WMD programs after the Gulf War. Ballistic Missile Program Beginning in the early 1980's, Germany provided fundamental assistance to Iraq's ballistic missile programs. In 1984, Iraq's Saad General Establishment signed a contract with Gildemeister Projecta of Bielefld, West Germany, a wholly owned subsidiary of the German machine tool manufacturer Gildemeister AG or GIPRO. Under the terms of the contract, Germany agreed to design, construct and fit a complete missile research, development and test center near the Iraqi city of Mosul that included, advanced wind tunnels, electronics workshops, manufacturing facilities for missile parts, and missile assembly plants. German companies such as MBB, BP, Carl Zeiss, Degussa, Rhinemetall and Tesa also won contracts to supply the Iraqi facility which later became known as Saad 16. In order to hide the true nature of the facility from the international community, GIPRO disguised the complex as a university research facility, insisting in German export licensing documents that the facility would comprise laboratories and workshops similar to those German universities. In all, more than 38 West German companies supplied equipment to this facility, including, MBB, Siemens, and Thyssen. In his book, The Death Lobby: How the West Armed Iraq, Kenneth Timmerman asserts that the German government asked no questions about the proposed contract. It was worth far too much money for German industry. 5 In fact, Gildemeister applied for and received a blanket permit to export whatever it desired to Saad 16, and did not require any further licensing requirements. According to Germany's Federal Economic Agency which supplied the permit to Gildemeister, constructing a ballistic missile design and testing center was considered legitimate business for German companies. After Saad 16 had become operational, German scientists, technicians and researchers continued work conducted in Argentina and Egypt on the Condor I and II projects. 6 Some assessments of Germany's involvement in Saad 16 assert that German technical assistance was integral in enabling Iraq to increase the range of the Tamuz-1, an Iraqi missile that resembles the Condor-2, to 1000 km. 7 Others suggest that without German assistance, Iraq's Al-Huseyn missiles would never have been able to reach Israel during the Gulf War. German laxity in enforcing its export controls allowed German industry to transfer compressors to Iraq that were used to improve the range of Scud missiles. 8 Chemical Weapons Program German involvement in Iraq's chemical weapons program began in 1977. In 1980, Germany began construction on what the Iraqis labeled a "pesticide plant" at Samarra, despite its extreme security measures, barbed wire fences and armed guards. Four years later, the facility became operational. The key technologies for Samarra came from four German companies for a number of years: Kolb and its subsidiary, Pilot Plant; Walter Engineering Trading (WET); and Preussag AG. In the early 1990's, a Swiss Chemical Weapons expert, Werner Richarz, was hired by the German government to determine whether Samarra had been built to construct chemical weapons. Richarz bluntly concluded that German technology and assistance greatly enhanced Iraq's ability to manufacture poison gas and prussic acid. 9 He also noted that Samarra was probably one of the largest chemical weapons facilities in the world. In addition to aiding the development of Iraq's Samarra chemical weapons facility, German assistance was integral to the creation of Iraq's other main chemical weapons facility at Salman Pak. The German firm Thyssen Rheinstahl Technology (TRT) headed the development of this facility. In addition to supplying technologies for the development of chemical weapons, Thyssen helped Iraq construct an array of biological weapons such as anthrax, cholera, and typhoid agents in large quantities in TRT built laboratories. 10 Although not related directly to the Samarra or Salman Pak facilities, German companies also helped Libya construct chemical weapons facilities at Rabta and the Sabba military base, further illustrating the willingness of German companies to assist foreign WMD programs during the 1980's. 11 Nuclear Weapons Program On January 13, 1992, experts from the Iraqi centrifuge program at the Tuwaitha Nuclear Research Center gave IAEA inspectors their most comprehensive description of Iraq's centrifuge program to date. The Iraqis announced that they had imported German technology and material needed to manufacture centrifuge components. It appears however, that neither the German government nor German industry intentionally supported Iraq's nuclear weapons program. While Iraq had little success in obtaining controlled items from German companies, it was highly successful in acquiring technology and material with dual-use applications; equipment which has numerous civilian uses and thus is subject to less regulations. Iraq's import permit applications always stated that the equipment would be used for civilian industrial use. In order to disguise Iraq's intentions as thoroughly as possible, Iraqi officials broke down their German orders into inconspicuous subcategories. Iraq used an intricate web of middlemen to obtain German equipment for its gas centrifuge program. These individuals disguised the destination of dual-use imports to assure German suppliers that the equipment would be used for peaceful purposes. Scholars have concluded that German companies such as Interatom (a subsidiary of Siemens AG) and H&H Metalform were therefore unaware that their exports were being used in Iraq's gas centrifuge enrichment program. 12 According to Michael Ledeen's article "Iraq's German connection," some German firms continued to supply materials for Iraq's nuclear program even after Iraq's annexation of Kuwait in August 1990. He also concludes that German companies may have continued to ship nuclear technology to Iraqi contacts in Pakistan three weeks into the Gulf War. 13 Germany's International Arms Control Commitments Germany is party to virtually every international arms control agreement. It is a signatory of the Nonproliferation Treaty (NPT), is a member of the Zangger Committee, Nuclear Suppliers Group (NSG) and Australia Group (AG). Furthermore, Germany adheres to the principals of the Missile Technology Control Regime (MTCR). After it was learned in 1991 that German material and technology were used in Iraq's WMD programs, Germany attempted to strengthen its export control system by introducing new legislation and enforcement mechanisms in order to prevent any further damage to its international reputation. Despite these measures, questions still remain about the effectiveness of Germany's export control system and its ability to halt the spread of dual-use goods and technologies that are used in WMD applications. Germany's Export Controls: Statutory Requirements Germany's export control system is based on two statutes, government principles, international agreements and implementing regulations. The Weapons of War Control Act and Foreign Trade and Payments Act, both enacted in 1961, set the statutory groundwork for Germany's export control system, and set the guidelines which regulate the control of weapons and military and civilian equipment and technologies. Weapons of War Control Act The Weapons of War Act (KWKG) regulates the export, sale and transport of weapons and munitions. Although the KWKG does not have any implementing regulations, it includes a War Weapons List. The first part of this list asserts that the manufacture, acquisition, transport and possession of nuclear, chemical and biological weapons is prohibited, while the second part specifies the other weapons and munitions that are subject to KWKG regulations. A government license is required to produce, possess or transport any weapon on the second part of this list. This statute prohibits the trade of war weapons, allowing their export only under limited circumstances. In general, the law asserts that the government has the right to withhold an export license if the weapons and munitions could disrupt international peace and stability. Foreign Trade and Payments Act The Foreign Trade and Payments Act (AWG) regulates the export of dual-use goods and technologies, and the export of military-related technology that is not covered by the KWKG. This law also contains nonproliferation export controls. The principle of "freedom of economic activity" is the first priority of the AWG, and thus, restrictions on exports are allowed only under limited circumstances. Under this law, the government may deny licenses only: to ensure the security of Germany, to prevent international disturbances, to prevent disturbances in German foreign relations, or to fulfill international agreements. In 1992, however, the AWG was amended to empower the Minister of Economics to issue orders barring the export of goods and technologies under certain circumstances, even if the goods are not on a specific control list. Regulations The Foreign Trade and Payments Regulation (AWV) implements the AWG and identifies the goods and technologies subject to control under that statute. Under the nonproliferation rules that were adopted in March 1991, the AWV includes two "catch-all" provisions that impose licensing requirements on exports of goods and technologies to projects in nations of proliferation concern. In addition, in August 1993, the regulation was modified to cover the transfers of tangible and intangible technologies such as computers and telefaxes. In this regard, computer software, patent licenses, construction drawings, models and any instructional advice that can be used for the development of WMD can be subject to licensing requirements. Executive Pronouncements The German government has issued policy statements and guidelines for private industry on export control initiatives. Such guidelines have included the Arms Control Export Act of 1982 and its related principals, as well as Foreign Trade Circular Directives from the Ministry of Economics. Administrative Agencies The 1992 modifications of the KWKG, the AWG and the AWV altered the administrative structure of Germany's export control system. Most notably, the government established an independent Federal Export Office (BAFA) and granted this office responsibility under the AWG for the legal and technical examination of export license applications for dual-use goods and technologies and the granting of export licenses. The Federal Security Council (BSR) must approve all controversial or highly sensitive items. The BSR is an inter-agency committee, comprised of the ministers of Defense, Economics, Foreign Affairs, Justice and the Interior, and is not an autonomous or independent agency. The Finance Ministry's Customs Control Institute (ZKI or FRG Customs) is Germany's central export control investigating authority. In the early 1990's, this office was raised to federal authority level, and grew from 94 employees in 1988 to nearly 370 by 1994. This office coordinates the activities of over 2,600 customs officials responsible for German trade. Increased Cooperation Among Government Agencies Prior to the early 1990's, the Federal Data Protection Act imposed limits on the sharing of sensitive information among government agencies. Following the Gulf War, however, these secrecy restrictions have been eased in order to allow German ministries to exchange information on export control related issues. In recent years, the AWG has adopted a provision authorizing the establishment of an automated data processing system between the Federal Export Office and German Customs. In addition, the government has dedicated funds to improve the computer processing system for licensing applications and develop an information exchange database. Furthermore, German customs has developed a KOBRA computer program to supervise all elements of export licensing through the accumulation of pertinent information. All federal government agencies are required to submit relevant information to the Customs Office for submission into KOBRA. Since the Gulf War, the Customs Office has also cooperated more closely with German intelligence and other government agencies that collect information on illegal export behavior by German companies. Export Control Lists Since the Gulf War, Germany has modified its export control lists in order to strengthen its control over the export of sensitive goods and technologies. Commodity-Based Controls Commodity-based controls are imposed under two lists, the War Weapons List and the Export List. Section A of the War Weapons List outlines the nuclear, chemical and biological weapons that may not be produced in Germany under the agreement establishing the Western European Union. Section B of this list controls the export of conventional weapons and munitions. The Export List of the AWV controls the export of five categories of goods and technologies. Part A lists the weapons and armaments that are not covered by the KWKG; Part B lists the materials and technologies controlled for nuclear purposes; Part C outlines dual-use goods and technologies that are of strategic significance; Part D lists chemical plants and chemicals that are subject to control; and Part E lists the biological plants and agents that are subject to control. In general, sections A-C correspond to the former CoCom lists, while sections D-E are based on the lists adopted by the AG. Destination-Based Controls Both the AWG and the AWV include "Country Lists" designed to impose destination-based controls. Lists A and B comprise all of the nations of the former Soviet Bloc, while List C includes former Soviet States, China, and other nations formerly proscribed by CoCom. In December 1990, Germany created List H that identified 54 nations that were "sensitive" because of WMD proliferation concerns. This list was reduced to 33 nations in 1993. In addition to these lists, Country List I controls the export of goods and technologies to the nations that have not signed the Nonproliferation Treaty. "Catch-All Controls" In 1991, several "catch-all" provisions were added to the AWV. These controls authorize the Minister of Economics to restrict the export of goods and technologies, "where the peaceful coexistence of peoples and the foreign relations of Germany are endangered." Under section 5c of the AWV, any good or production document is subject to licensing requirements if the exporter has knowledge that it will be used by any nation on List H for either weapons manufacture or the construction or operation of a weapons armament plant. Goods are covered if they are considered "functional elements of the production process." Section 5d of the AWV focuses on the nuclear end-use of exported items. Under this section, any dual-use good or production document is subject to licensing requirements if the exporter has positive knowledge of its intended end-use in a facility in any of the countries listed in Section B of the export list. Extra-Territorial Controls In 1991, the German Government initiated legislation requiring government approval for the participation of German citizens in chemical, biological and missile programs abroad. Although the legislation is not binding for non-German citizens, it covers a variety of international activities by German citizens which may relate to the proliferation of WMD and their delivery systems by broadly defining "proliferation activities." German Export Controls and Private Industry Licensing Requirements The KWKG requires that any company which seeks to export weapons and armaments must apply for an export permit from Germany's Export Office. Under this law, the export of such equipment to NATO members and certain other countries is permitted preferential licensing treatment. Exports of such equipment to non-NATO nations is permitted only if the importing nations' "internal situation" is stable; the delivery does not "increase existing tensions," and the arms are intended exclusively for defensive purposes. The Export Office issues several different types of licenses to German companies: General, single export, simplified and collective. If a license application is required, the Export office makes licensing decisions on a case by case basis. Although the German government typically issues licenses for exports that have been licensed in the past, applications for unusual exports are transferred to the FRG Security Council for its decision. Export Declarations If an exporter seeks a license under the KWKG or the AWG, the company's Designated Export Officer must submit an license application to Germany's export office as well as an end-use declaration signed by the designated recipient of the export and a certificate of reliability signed by the company itself. The Export Office often accepts an international end-use certificate (IEC) issued by importing entities' government. This certificate guarantees that the exported goods and technologies will not be used for military applications. The Export Office examines the IEC and its issuer and then determines whether to approve the license application. In addition, any nation that receives a German export under an IEC is prohibited from re-exporting any of the transferred goods and technologies without the specific consent of the German government. FRG Involvement in Private Industry Since the Gulf War, the German government has attempted to strengthen its export control system by increasing cooperation between government agencies and between government and industry. After learning of Germany's involvement in Iraq's nuclear, chemical and ballistic missile programs, the FRG adopted strict corporate compliance procedures. In November 1990, Germany issued "Political Principles Governing the Reliability of Exporters of War Weapons and Armament-Related Goods." Exporters of any item on the KWKG control lists or any item covered by Section A, B, C, D, and E of the AWG are subject to these principles. These principles outline the necessary actions to be taken where corporate compliance procedures have not been implemented and where existing compliance procedures have been violated. The principles require that each company assign a high level manager to the position of "Designated Export Officer". This individual is responsible for ensuring that the exporter adopt, implement, and enforce internal procedures which comply with federal export control standards. In creating more rigid internal compliance requirements, the FRG government has shifted a significant amount of responsibility onto German exporters for monitoring compliance with federal export control standards. These enforcement practices reflect Germany's desire to strengthen its export control system to ensure the responsible use of German products in the international arena. It does not appear that German industry has been a cooperative partner in this endeavor, however. On numerous occasions, German firms have lobbied the FRG to relax the measures that were implemented during the early 1990's. But more problematic, reports have surfaced that German companies have continued to supply dual-use goods and technologies to WMD and ballistic missile programs in Syria, Iraq and Iran, thus suggesting that the government's nonproliferation initiatives have been imperfect since the end of the Gulf War. The Diversion of German Dual-Use Material and Technology: Syrian, Iraqi and Iranian "Spin-On" Efforts A report released by the Central Intelligence Agency in September 1997 entitled "The Acquisition of Technology Relating to Weapons of Mass Destruction and Advanced Conventional Munitions" stated that Germany was the principal target of nations who want to advance their WMD capabilities. The CIA concluded that German companies have maintained close commercial ties with Syria, Iraq and Iran, despite the vocal disapproval of the German Government. The following sections outlines specific examples of Syrian, Iraqi, and Iranian cooperation with German firms, and assesses their importance for the Rumsfeld Commission. 14 Syrian-German Cooperation German firms must receive permission to export dual-use goods to Syria. Germany's export control watch lists include Syria's Centre d'Etudes de Recherches Scientifiques (CERS), and its Higher Institute of Applied Science and Technology (HIAST). CERS is classified as a government agency, but has since become the center of Syria's state R&D network. CERS is identified as an organization of concern in Germany's national trade law. All German products exported to the Center Require a license. In recent years, it appears that CERS has purchased dual-use technology from Germany. In November 1992, CERS sent a delegation to Germany to purchase electronics goods and "connectors" that can be used in ballistic missile separation. 15 Six months earlier, CERS representatives signed contracts with German companies to obtained advanced technology equipment. 16 In the early 1990's, it was reported that CERS attempted to establish ballistic missile manufacturing facilities by soliciting German companies. In August 1992, Mednews reported that fifteen German companies had supplied CERS with dual-use materials to produce solid rocket fuel, including, hot isostatic presses and high temperature ovens. 17 Several months later in January 1993, Italian authorities stopped a German ship en route to Syria that was loaded with dual-use equipment that could be used to extent the range of Syrian Scud's from 300 to 700 km. 18 Furthermore, in August 1993, the Simon Wiesenthal Center issued a study revealing that as many as 100 German companies were both intentionally and unintentionally aiding Syria construct two underground ballistic missile factories. The report also revealed that German rocket engineers were helping Libya develop its ballistic missile program. 19 In addition, there is considerable speculation that German firms have helped Syria develop cruise missiles since the Gulf War. Jane's Defence Weekly reported in December 1993 that Syria and Iran were using German dual-use technology to jointly develop a new cruise missile. 20 Iraqi-German Cooperation In an October 11,1995 report to the U.N. Security Council, UNSCOM chief Rolf Ekeus noted that, "new revelations (about Iraq's secret procurement network) cast into doubt the veracity of Iraq's previous declaration in the missile area, including the material balance for proscribed weapons and items." In the fall of 1995, United Nations and U.S. officials accused Iraq of covertly purchasing missile components from Russian and German firms. Ekeus accused Iraq of obtaining accelerometers and gyroscopes, special metals and machine tools in order to manufacture missile engine parts and guidance equipment. Ekeus also claimed that Iraq had placed orders for other related missile technology and material with German and Russian industrial firms. While Ekeus and other U.N. officials conceded that Iraq has probably not assembled any new ballistic missiles since the Gulf War, they asserted that Iraq has stockpiled and concealed German materials and technologies in order to resume the manufacture of ballistic missiles sometime in the future. These officials asserted that Iraq could ultimately increase the range of its Scud missile in the future with these components through reverse engineering 21 Nearly a year after the UN's report, in September 1996, the International Atomic Energy Agency (IAEA) confiscated an Iraqi carbon-fiber-filament winding machine in Jordan. This machine can be used in production of both rocket motor cases and high speed gas centrifuges for uranium enrichment. This machine was allegedly built for Iraq by Karl-Heinz Schaab, a former employee of Germany's MAN Technology AG. Schaab planned to send the equipment to Iraq through a Swiss company and a middleman in Singapore. Schaab allegedly built another filament winding machine at his German company, Rosch GmbH, that was designed to wind about 50 carbon-fiber rotor tubes. The tubes were sold to Iraq around 1989. 22 These reports suggest that Iraq has continued to attempt to obtain German dual-use equipment and technology, as well as technical know-how, for its ballistic missile programs from German companies behind the back of UNSCOM inspection efforts. Whether intentionally or indirectly, German companies have continued to supply Iraq with dual-use materials that can be used in its ballistic missile programs despite a revamped domestic export control system. So long as German companies continue to do business with Iraqi entities, the possibility exists that dual-use equipment may be diverted to Iraq's ballistic missile program. In addition, the unclassified literature suggests that Iraq has attempted to set up a supplier network through other nations like Jordan. It appears that Iraq has placed fronts in other nations between Germany and Iraq so that German companies do not know that they are actually delivering material and technology to Iraq. Iranian-German Cooperation In June 1995, German Chancellor Helmut Kohl said in Jerusalem that Germany could not break its commercial ties with Iran in order to ensure debt repayment. Since this announcement, the United States has been troubled by Germany's insistence to maintain commercial ties with Iran. Although Germany has attempted to restructure its export control system since the Gulf War in order to ensure that dual-use items are not used for military purposes, there is considerable speculation that German companies have supported Iran's ballistic missile development efforts. In addition to reports that Germany supplied solid fuel technology to Iran's Shehab-3 program during the early and mid 1990's, 23 some believe that the Iranians have set up an extensive procurement network within Germany in order to obtain German material and technology for its ballistic missile program. According to an April 1997 report in the German Newspaper Hamburg Stern, German authorities believe that Iran has centered its procurement network in Germany. Iranian companies have set up German "front" companies which in turn send material and technologies to Iran via Austria or Switzerland. These companies have allegedly obtained dual-use goods such as milling cutters, sheet rolling machines and presses, which can be used to construct missile casings. 24 German officials have attempted to unveil Iran's German procurement structure, although the Cologne-based Customs Criminal Investigation Agency (ZKA) has asserted that the investigations are very difficult to conduct because Iran has used small firms, that are often directed by "low profile," Iranians that have lived in Germany for a considerable length of time. According to this report, the Iranian network is discreet and effective. It is centered in the German states of Schleswig-Holstein, Rhine-Main, and Cologne Dusseldorf, and often uses Austria as the transit country. In recent months, the ZKA has enlarged its investigation of German companies suspected of illegally exporting arms to Iran's arms industry. The ZKA has targeted companies such as Krupp, the Mannesmann Corporation, Siemens and an unnamed Duisburg company in order to determine if they have illegally supplied dual-use equipment to Iran's ballistic missile program. 25 It appears that these investigations were sparked in part by the signing of a letter of intent by Iran's Minister for Mines and Metals in January 1997 to purchase the German firm Sket Magdeburg GmbH, a collapsing machine-tool manufacturer. Reports indicate that the German government has been extremely concerned about the potential applications of the company's materials and technology, fearing that its materials and technologies could be used in Iranian military applications. 26 ------------------------------------------------------------------------ 1. U.S. Arms Control and Disarmament Agency, World Military Expenditures and Arms Transfers 1996, Washington D.C., p. 22. 2. Interavia, Space Directory 1992-93, ed. Andrew Wilson, pp. 56-57. 3. For a description of both the Kormoran 1 and 2, see Duncan Lennox, ed. Jane's Strategic Weapons Systems, September 1997, JSWS-Issue 25. 4. Michael Ledeen, "Iraq's German Connection," Commentary, April 1991, p. 27. 5. For a detailed analysis of Germany's involvement in Iraq's Condor program, see Kenneth Timmerman, The Death Lobby: How the West Armed Iraq (Hughton Mifflin, 1991) pp. 157-160. 6. See Timmerman, also see International Defense Review, "UN Discovers More Evidence Of Iraqi Links To Condor Missile Project," November 1993, p, 842. In November 1993, Argentinian Defense Minister Oscar Camilion stated that Argentina never transferred Condor "elements" to Iraq via Egypt prior to the Gulf War, but admitted that German technicians had worked on the Condor II project. 7. Somos (Buenos Aires), "Iraq's Involvement in Condor II Project Viewed Nuclear Developments," January 28, 1991, pp. 1-4. 8. Marc Fisher, "Germany Pledges $5.5 Billion More Toward Gulf War," The Washington Post, January 30, 1991, A 23. 9. Michael Ledeen, "Iraq's German Connection," Commentary, April 1991, p. 27. 10. Ibid., pp. 27-28. 11. See Louise Lief and Michael Wise, "Inside Bonn's Middle East Arms Bazaar," U.S. News and World Report, May 28, 1990, p. 41. 12. See David Albright and Mark Hibbs, "Iraq's Shop-Till-You-Drop Nuclear Program," Bulletin of the Atomic Scientists, Apil 1992, pp. 27-32. According to Albright and Hibbs, there is speculation that H&H may have intentionally aided Iraq's centrifuge program even after learning that the material it supplied was being used for military applications. 13. Ledeen, p. 28. 14. There also appears to be some evidence of recent German-Libyan ballistic missile cooperation. According to the publication Munich Focus, Swiss and Australian authorities have banned the entry of German space technology scientist Lutz Kayser into their nations out of concern that he will attempt to gain access to materials and equipment for Libya's ballistic missile program. A Swiss intelligence report stated that Kayser promised in a written report to offer Libya help with its ballistic missile program. Kayser's former firm OTRAG managed a missile test site in the Libyan Sahara until Bonn forced it to abandon operations. Former German scientists reportedly still work for the German government. See Munich Focus, "Scientist Linked To Supplying Missile Know-How to Libya," September 2, 1997, in FBIS-TAC-97-245, September 2, 1997. 15. Mednews, "CERS Continues French Purchases," December 7, 1992, p. 5 16. Ibid., p. 5. The article does not specify what type of materials Syria attempted to obtain. 17. Mednews, "Syria's High Tech Networks," August 17, 1992, pp. 5-6. 18. Yediot Aharonot, "Equipment For Improving Scuds On Its Way To Syria," January 10, 1993, p. 7. 19. Nonproliferation Network News, "Western Technology Diverted to Mideast Weapons Use, Report Says," August 3, 1992. 20. Jane's Defense Weekly, "Flashpoints," December 11, 1993, p. 18. 21. R. Jeffrey Smith, "Iraq Buying Missile Parts Covertly," The Washington Post, October 14, 1995, pp. A1 and A 20. Also see James Bruce, "Playing hide and seek with Saddam," Jane's Defence Weekly, January 3, 1996, pp. 15, 18-19. Ekeus also said that Iran was attempting to obtain missile related technology while claiming that it was for use in its missile programs with ranges less than 150 km, missiles that are permitted by U.N. resolution. 22. See Mark Hibbs, "IAEA Recovers Gear In Jordan Sold To Iraq By German Fugitive," Nucleonics Week, September 19, 1996 pp. 1, 11-12. 23. Iran Brief, "Special Report: The Zelzal Missile Program," September 9, 1996, pp. 1-2. 24. Rudolf Lambrecht, Leo Mueller and Tilman Mueller, "A Roaring Trade With Tehran," The Hamburg Stern, April 17, 1997, FBIS-WEU-97-108, April 18, 1997. 25. Hamburg Stern, "Export of Dual-Use Goods To Iran Investigated," September 11, 1997, FBIS-TAC-97-254, September 11, 1997. 26. Iran Brief, "Tehran to Buy German M-Tool Maker," January 6, 1997, p. 8.


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