February 13, 1991

Renato RUGGIERO, Minister of Foreign Trade.

Honourable colleagues, I am glad to have this occasion to trace an outline, within the limits of my competence, on an important and topical matter such as the implementation and enforcement of the recent bill on the import, export and transit of armament material.

As you perhaps know, I have for my part tried to give a positive contribution to the passage of the above mentioned bill, favouring, among other things, the passage of the competences from the Ministry of Foreign Trade to the Ministry of Foreign Affairs.

I remember there was a reaction of surprise at seeing that a minister not only did not oppose, but even favoured the passage of an important competence from his own ministry to another one. I favoured such passage, which had been requested by Parliament, because I was aware - Mr Andreis will certainly remember our conversations on the matter - of the increasing difficulties facing the Ministry of Foreign Trade's fragile administrative structure in the management of the licences for the armament materials.

In fact, we greatly depended on the Defence Ministry for technical matters and on the Ministry of Foreign Affairs for political matters: I therefore fully approve of the provisions established by the new bill as regards competences.

In this same spirit, I am doing all that is possible to accelerate the passage of the competences to the Ministry of Foreign Affairs.

In fact, this is a matter which the Ministry of Foreign Affairs will illustrate with far greater competence. As for me, I will certainly not shirk the task to illustrate, in agreement with the Ministry of Foreign Affairs, the progress in the implementation of the recent bill and the forecasts for the future on such matter.

Fully understanding the legitimate expectations on the part of the Foreign Affairs Commission to receive assurances from the Government concerning the respect of the national and international commitments relative to the embargo toward Iraq, I will try to trace an outline of the situation, bearing in mind the different resolutions presented by members of Parliament Cicciomessere, Andreis and Crippa.

I will do so with the purpose of honouring the request addressed to me in such sense on 6 February 1991 by President Flaminio Piccoli, who stated, in a letter to me, that "the authors of the resolutions have urged Government to give information also on the matters contained in such resolutions, if necessary including them in the agenda of another hearing".

In the same sense, I will also try to provide the information I have concerning the interrogations of members of Parliament Cipriani and Mattioli, on the transfer in the Italian territory of steam generators of the Ansaldo Company manufactured upon an order of the German KWU Company and blocked by the Azzolini resolution in October 1987 passed by the Chamber and accepted by Government.

The first point concerns the implementation of the bill on the import, export and transit of armament material.

I wish to recall the fact that the bill provides several major requirements, such as an implementation regulation, a list of the armament materials, the institution of a national register of the companies and syndicates operating in the sector of the planning, manufacture, import, export, maintenance and processing; the decree containing the conditions to be included in the above Register, the institution of the Commission charged with keeping of the national Register, the decree on the operation of the aforementioned Commission; the decree establishing the annual contribution for the inscription of the companies in the national Register, the institution of the consultive committee. I also wish to recall that this regulation is divided into distinct provisions which depend on the initiative of different ministries and call for the cooperation with other administrations, as well as, in some cases, the opinion of the State Council. The problem is also that of acquiring elements of knowledge from the categories

concerned. The passage of competences from the Ministry of Foreign Trade to the Ministry of Foreign Affairs implies the preparation of structures and human and material means which is objectively difficult and complex. Lastly, the passage from the old to the new regime raises serious problems of transition, especially for that which concerns the procedures of such passage. These are the reasons, which have been stressed by the Foreign Minister, that explain the prorogation of the terms of the implementation of the bill decided by the deliberation of the interdepartmental committee for the exchange of armament and defence material of 21 December 1990, a deliberation which has also been forwarded to Parliament.

As you know, on 3 August 1990 the interdepartmental Committee for the exchange of armament and defence material passed a deliberation, forwarded to the Presidents of Chamber and Senate, concerning the general directives of the control activity and the initiatives to be taken by the Premier, the Defence Ministry and the Ministry of Foreign Affairs for the implementation of the bill.

Furthermore, such deliberation established - and this is extremely important - that "during the transitory stage, the regulations in force at the date of the entry in effect of bill No. 185 of 1990 will continue to be applied, in the respect of the principles of the law and according to the directives of the interdepartmental Committee for the exchange of armament and defence material; this confirms the procedural and certificatory conditions regulated by such norms, as well as the directives issued by the Prime Minister on 10 November 1989" (NATO and Extra-NATO countries).

In any case, the deliberation specified that all procedures for the issue of authorizations and licenses were to be carried out "in agreement with the Ministry of Foreign Affairs". Such disposition, which has been enforced, clearly aims at ensuring the respect, during the stage of transition, of the general principles and prohibitions established by bill No.185 of 1990.

Lastly, the deliberation of the interdepartmental Committee for the exchange of armament and defence material established that "as far as the authorizations for export and transit operations are concerned, the competent authority remains the Ministry of Foreign Trade, in agreement with the Ministry of Foreign Affairs, according to the procedures in force at the date in which the law concerning such operations and for the armament material listed in the export table takes effect.

Such procedures will continue to be regulated by the dispositions of article 28, second comma, of the single text of the bills on public security passed with royal decree No. 773 of 18 June 1931, the one concerning the transit on the national territory for which the authorization of the Interior Ministry is required.

This, honourable colleagues, is the outline of the situation for that which concerns the transitory procedures. As you can see, the role of the Ministry of Foreign Affairs is enhanced, whereas the role of the Ministry of Foreign Trade is considerably weakened.

The normative and administrative requirements - and I believe this is the part the Commission is most interested in - as they have been described to me by the Ministry of Foreign Affairs, are the following: the implementation regulation provided by article 29 of the aforementioned bill, including the dispositions on the command of the personnel, examined in the following article 30, has been drafted and forwarded to the State Council, which has already expressed its opinion; the list of armament materials has been prepared by the Defence Ministry and interdepartmental consultations are under way; the decree establishing the conditions for the inclusion in the register of companies and the one on the operation of the Commission charged with keeping such register (unified) have been forwarded to the State Council, which has expressed its opinion; the decree establishing the annual contribution for the inscription in the register of companies is being examined by the Ministry of Defence and the Ministry of the

Treasury jointly; the decree instituting the register of companies (for which the Ministry of Foreign Affairs is competent) is being completed and about to be signed.

We can reasonably calculate that the major requirements for the entry into effect of the bill will be ready of perfectioned within the date scheduled to the be the end of the transition period (28 February 1991).

In any case, the Ministry which depends on my competence has guarantied the incoming Foreign Minister of every form of material and juridical cooperation for the implementation of the final passage of competences without any major inconvenience in the fulfilment of the authorization procedure. A few practical solutions have been specially developed in order to avoid the material transfer of unprocessed documents, and several officials of the sector will give their assistance at the Ministry of Foreign Affairs. In other words, the processing of the dossiers will continue to be materially carried out by the Ministry of Foreign Trade, so as to avoid the passage of dossiers and any interruption in the activity, but with the presence of a structure of the Ministry of Foreign Affairs and with the signature of the Minister in charge of that ministry.

Giuseppe ZAMBERLETTI: Does this mean that the investigation will in practice be carried out by the personnel of the Ministry of Foreign Trade?

Renato RUGGIERO: Yes, but this staff will in practice depend on a new structure: this is a practical solution we have developed in order to avoid any problems as regards offices, staff and archives.

As far as the respect of the embargo toward Iraq is concerned, as I already said at the beginning complying with the request of President Piccoli, and fully understanding the legitimate expectations of the members of Parliament to have explanations on the respect of the embargo toward Iraq (I am referring to the resolution presented by Mr Cicciomessere and others), I will briefly trace an outline of the progress of our commercial relations with this country as far as weapons are concerned.

As you know, already back in 1984 (there were no bans previously) as a consequence of the aggravation of the Iran-Iraq conflict, the Government decided to adopt "restrictive political criteria" for arms export toward that country. As far as that period is concerned, until November 1986, I cannot but confirm my statements at this Chamber during the hearings of 2 and 22 October 1987, that is, that 39 authorizations have been issued for Iran and Iraq, 8 of which toward Iran and 31 toward Iraq. Of these 39 authorizations, 21 are extensions or modifications of previous authorizations (5 for Iran, 16 for Iraq), and 18 are new authorizations (3 for Iran and 15 for Iraq). The new authorizations amounted to approximately L.76 billion (slightly exceeding the value of a Tornado), L.1 billion and 297 million for Iran, 74 billion and 771 million for Iraq, but of this sum only about L.2,5 billion have been used, of which only 5 million for Iran. On 14 November 1986, with a telex, the then Minister of Foreign Trade, Mr For

mica, ordered the suspension of the customs operations relative to the export of armament material toward Iran, Iraq and Syria. Appointed minister, on 27 August 1987 I confirmed such suspension with a personal note to the Minister of Finance. The end of the Iran-Iraq conflict and the complex legal and financial procedures of the naval contract lead to the De Mita-Ramadan agreement of 26 January 1989 (Ramadan was the Iranian vice Prime Minister), aimed at revoking the suspension of military supplies and especially of the naval contract.

On 10 November 1989, the Cabinet confirmed the decision adopted on the occasion of the visit to Rome of the Iranian Vice Prime Minister. On 28 October 1989, the CIPES expressed a favourable opinion, supporting the decision to confirm and issue the export licences relative to the contract for the supply of eleven ships: all this has always been communicated to the press and reported by the latter. Despite such decisions, I deemed it necessary to wait a few months, until April 1990, before officially informing the Fincantieri of the decisions adopted. However, in that same communication - I repeat, in that same communication - I subordinated the actual delivery and departure of the ships to an updated political evaluation. Following my request, in June 1990, the Foreign Minister, De Michelis, expressed his unfavorable opinion as regards delivering the material included in the naval contract to Iraq.

To be absolutely precise, I wish to specify that following the De Mita-Ramadan, which eliminated the suspension, only two authorizations for a temporary export were cleared by my offices, namely an authorization for an Aermacchi two-seat MB 339 training aircraft, which was to participate in the Baghdad Aircraft Show from 28 April 1989 to 2 May 1989; the aircraft then returned to Italy as scheduled. The second authorization for temporary export concerns six Beretta rifles and six Beretta guns, these too to be displayed at the Baghdad Show; the latter authorization was never used. Moreover, I wish to specify that a few days ago, L'Unità published some official U.N. statistic surveys referring to 1987, which reported the export of weapons and ammunition from Italy toward Iraq. After having checked the facts, I ascertained that the matter concerns customs entry No. 951.04 relative to side arms, which corresponds to entry No. 93.01 in our customs tariff. I checked this export toward Iraq, which is reported in our

ISTAT statistic reports; they are dutiable commodities, and can therefore be freely exported. No authorizations are therefore issued by this Ministry; the amount of such exportation is approximately L.3 billion.

This is the situation until 3 August 1990, when, upon my request, the Council of Ministers, following Iraq's invasion of Kuwait, deliberated to restore the immediate suspension of all exports of armament material toward Iraq.

In the following Council of Ministers of 5 August 1990, it was decided to adopt the freeze of all commodities and relations with Iraq, as had been done the previous day for occupied Kuwait. In the meanwhile, U.N. Resolution No.661 of 6 August had been issued, and with it the embargo of the community toward Iraq and Kuwait. Subsequently, decree No. 247 of 23 August 1990 banned any activity aimed at favouring or carrying out, even indirectly, sales, supplies, export or transports of any commodity toward Iraq and Kuwait or from these countries, in that the sanctions provided in the previous decrees No.216 and 220 of 1990 applied to the violation of the embargo.

Following the tightening up of the embargo deliberated by the United Nations with Resolution No. 670, the Community extended the bans already established to air space and ships.

It must be clear, therefore, that the embargo against Iraq is no longer restricted to weapons, but concerns all commodities with rare exceptions (medicines, food aid). Replying in particular to the resolution presented by Mr Cicciomessere, I can therefore ensure that no authorization was issued as of 1 January 1990 for the export of armament material toward Iraq, Iran and Syria, and no manufacturing licences.

Concerning the possible violations of embargo: qs you know, my ministry disposes of an extremely limited staff, and in any case has no inspection powers, or particular responsibilities for the repression of the violations; however it is logically concerned about the respect of the regulations in force. For example, my ministry has forwarded the Timmerman Report to the Presidency of the Council and to several other competent administrations, to have an evaluation of the statements reported.

At the same time, all the notifications received through the Ministry of Foreign affairs have been forwarded by my Ministry to the Ministry of Finance for any verifications, as well as to the Italian Exchange Office and to the judicial police, that is, to the bodies charged with ascertaining possible violations of the embargo on the basis of the above decrees (bill No.220 and 247). According to the information I have, some companies have been denounced to the judicial police forces for the necessary investigation. I must refrain from any further comment since judicial investigations are under way.

As far as the Ansaldo generators are concerned, I cannot give an exhaustive answer to the interrogations presented by member of Parliament Cipriani and others; however I deem it necessary to immediately give you the elements I have.

I wish to ensure you that there has been no change in the Governments' position concerning the commitment assumed on 22 October 1987 in relation to the Azzolini Resolution No. 6-00013 on the steam generators manufactured by the Ansaldo Company upon the order of the German KWU company (now Siemens-KWU). Considering also the dispositions contained in article B034 of the new Export Table (published on 5 November 1990), such material is now subjected, as a rule, to an export licence and cannot therefore be exported in the absence of a Governmental authorization. Such measure did not exist when the Chamber passed the Azzolini Resolution; at the time, such commodities could be exported through customs. The Chamber ensured that the material would not be transferred elsewhere, because there was the danger that once transferred, it could have been exported abroad without an authorization. As of 5 November 1990, such risk no longer exists, because, according to a recommendation I received from Parliament, I ordered to

include all such material in the Export table, in conformity with the new law. As a consequence, all the material we are handling can be exportable only with a licence.

As far as I know, the Ansaldo attributed the transfer of the generators from Milan to Porto Marghera and partly to Sant'Ilario d'Ensa, to a deposit owned by the Fagioli Spa Company the Ansaldo to the realization of some roadworks in the Milan outer belt, which would have made it impossible to transport such material owing to its enormous size. The Ansaldo allegedly complied with a request of the Siemens-KWU, and in any case guarantied that it would have informed my ministry of any other transfers, well aware of the Government's commitments on the matter. For my part, in order to avoid any doubt on the commitments assumed by Government with the Chamber of Deputies, I forwarded the request to the Ministry of Finance, the Customs Office and the other competent administrations (on the basis also of the regulation I mentioned above) to block any further export operations of the above mentioned generators without the necessary ministerial authorization. I repeat the commitment to preventively inform Parliament on

the matter.

I will not examine the problem relative to the contacts between the Italian and the German company, nor the one concerning the relations with the Federal Republic of Germany, which have been kept especially by our embassy in Bonn: the problem is so complex that I think the Ministry of Foreign Affairs is more competent to refer on it, as it carried out such contacts itself. As the commissioners may ascertain, my report dealt both with the subject of the implementation of the bill and with the two problems of the embargo toward Iraq and of the Ansaldo generators.