Nonproliferation
U.S. Efforts to Combat Nuclear Networks Need Better Data on Proliferation Risks and Program Results Gao ID: GAO-08-21 October 31, 2007For decades, the United States has tried to impede nuclear proliferation networks that provide equipment to nuclear weapons development programs in countries such as Pakistan and Iran. GAO was asked to examine U.S. efforts to counter nuclear proliferation networks, specifically the (1) status of U.S. efforts to strengthen multilateral controls, (2) impact of U.S. assistance to help other countries improve their legal and regulatory controls, and (3) impact of U.S. efforts to strengthen its enforcement activities. GAO's findings focused on seven countries where network activities reportedly occurred.
The United States has advocated several multilateral actions to counter nuclear proliferation networks. Although multilateral bodies have adopted some U.S. proposals, they have not adopted others. For example, the United States negotiated passage of a United Nations Security Council resolution that obligated all member states to adopt laws and regulations prohibiting the proliferation of weapons of mass destruction. It also led the development of watch lists of nuclear technologies that are not formally controlled by states and formation of a multilateral unit intended to analyze covert nuclear trade activities. However, one multilateral body has not adopted two key U.S. proposals made in 2004 to commit its members to add new restrictions on exporting sensitive nuclear technologies. Also, one multilateral organization has not adopted a recommendation for member states to provide it with more export data that would allow it to better detect covert nuclear activities. The impact of U.S. bilateral assistance to strengthen countries' abilities to counter nuclear networks is uncertain because U.S. agencies do not consistently assess the results of this assistance. The impact of this assistance is difficult to determine because the Department of State did not evaluate either (1) the proliferation risk for all of the countries in which network activities are alleged to have occurred or (2) the results of its assistance efforts. Between 2003 and 2006, State and the Department of Energy provided about $9 million to improve the export controls of seven countries in which nuclear proliferation network activities reportedly occurred. State did not evaluate either (1) the proliferation risk for all of the countries in which network activities are alleged to have occurred or (2) the results of its assistance efforts. State did not perform risk analyses for 11 of the 56 countries in its program for those years and did not document the basis for each country's proliferation threat level or explain how the risk analyses were done. Of the six countries in our study to which State provided assistance, State performed risk analyses for five. Also, State did not conduct program assessments for about 60 percent of its participating countries and for two of the six countries in our study that received assistance. Moreover, while State's program assessments characterize a country's export control system and its weaknesses, they do not assess how U.S. training efforts contributed to correcting weaknesses. Relevant U.S. agencies are impaired from judging their progress in preventing nuclear networks because they cannot readily identify basic information on the number, nature, or details of all their enforcement activities involving nuclear proliferation. The U.S. government identified the prevention of nuclear proliferation as a high priority. U.S. agencies collect information, maintain lists of companies and individuals that they sanction, and maintain case files on investigations of suspected violations of U.S. law. However, most of these agencies cannot readily identify which enforcement activities involve nuclear proliferation as they cannot ensure that searching their case file databases for words, such as nuclear, would reveal all relevant cases.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-08-21, Nonproliferation: U.S. Efforts to Combat Nuclear Networks Need Better Data on Proliferation Risks and Program Results
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Report to Ranking Member, Committee on Banking, Housing, and Urban
Affairs, U.S. Senate:
United States Government Accountability Office:
GAO:
October 2007:
Nonproliferation:
U.S. Efforts to Combat Nuclear Networks Need Better Data on
Proliferation Risks and Program Results:
Nonproliferation:
GAO-08-21:
GAO Highlights:
Highlights of GAO-08-21, a report to Ranking Member, Committee on
Banking, Housing, and Urban Affairs, U.S. Senate.
Why GAO Did This Study:
For decades, the United States has tried to impede nuclear
proliferation networks that provide equipment to nuclear weapons
development programs in countries such as Pakistan and Iran.
GAO was asked to examine U.S. efforts to counter nuclear proliferation
networks, specifically the (1) status of U.S. efforts to strengthen
multilateral controls, (2) impact of U.S. assistance to help other
countries improve their legal and regulatory controls, and (3) impact
of U.S. efforts to strengthen its enforcement activities.
GAO‘s findings focused on seven countries where network activities
reportedly occurred.
What GAO Found:
The United States has advocated several multilateral actions to counter
nuclear proliferation networks. Although multilateral bodies have
adopted some U.S. proposals, they have not adopted others. For example,
the United States negotiated passage of a United Nations Security
Council resolution that obligated all member states to adopt laws and
regulations prohibiting the proliferation of weapons of mass
destruction. It also led the development of watch lists of nuclear
technologies that are not formally controlled by states and formation
of a multilateral unit intended to analyze covert nuclear trade
activities. However, one multilateral body has not adopted two key U.S.
proposals made in 2004 to commit its members to add new restrictions on
exporting sensitive nuclear technologies. Also, one multilateral
organization has not adopted a recommendation for member states to
provide it with more export data that would allow it to better detect
covert nuclear activities.
The impact of U.S. bilateral assistance to strengthen countries‘
abilities to counter nuclear networks is uncertain because U.S.
agencies do not consistently assess the results of this assistance. The
impact of this assistance is difficult to determine because the
Department of State did not evaluate either (1) the proliferation risk
for all of the countries in which network activities are alleged to
have occurred or (2) the results of its assistance efforts. Between
2003 and 2006, State and the Department of Energy provided about $9
million to improve the export controls of seven countries in which
nuclear proliferation network activities reportedly occurred. State did
not evaluate either (1) the proliferation risk for all of the countries
in which network activities are alleged to have occurred or (2) the
results of its assistance efforts. State did not perform risk analyses
for 11 of the 56 countries in its program for those years and did not
document the basis for each country‘s proliferation threat level or
explain how the risk analyses were done. Of the six countries in our
study to which State provided assistance, State performed risk analyses
for five. Also, State did not conduct program assessments for about 60
percent of its participating countries and for two of the six countries
in our study that received assistance. Moreover, while State‘s program
assessments characterize a country‘s export control system and its
weaknesses, they do not assess how U.S. training efforts contributed to
correcting weaknesses.
Relevant U.S. agencies are impaired from judging their progress in
preventing nuclear networks because they cannot readily identify basic
information on the number, nature, or details of all their enforcement
activities involving nuclear proliferation. The U.S. government
identified the prevention of nuclear proliferation as a high priority.
U.S. agencies collect information, maintain lists of companies and
individuals that they sanction, and maintain case files on
investigations of suspected violations of U.S. law. However, most of
these agencies cannot readily identify which enforcement activities
involve nuclear proliferation as they cannot ensure that searching
their case file databases for words, such as nuclear, would reveal all
relevant cases.
What GAO Recommends:
To assess the impact of the U.S. response to nuclear proliferation
networks, GAO recommends that State assess countries receiving U.S.
funding and document its risk analyses.
To assess U.S. agencies‘ progress in combating nuclear proliferation,
GAO recommends that each agency modify its data collection processes to
identify when enforcement actions involve nuclear proliferation.
Homeland Security and State generally concurred with our
recommendations. Commerce and Treasury said recommendations should not
be directed to them. We disagree as they cannot identify when certain
enforcement actions involved nuclear proliferation.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.GAO-08-21]. For more information, contact Joseph
A. Christoff at (202) 512-8979 or christoffj@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
United States Supported Several Multilateral Efforts to Address Nuclear
Networks, but Some Proposals Have Not Been Adopted:
Impact of U.S. Export Control Assistance Is Uncertain Because Agencies
Do Not Consistently Assess Programs:
Agencies Cannot Identify Information to Assess Whether Their Ability to
Combat Nuclear Proliferation Networks Has Improved:
Conclusion:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Department of Commerce:
GAO Comments:
Appendix III: Comments from the Department of Homeland Security:
Appendix IV: Comments from the Department of State:
GAO Comments:
Appendix V: Comments from the Department of Treasury:
GAO Comments:
Appendix VI: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: EXBS Risk Analysis Categories:
Table 2: INECP Risk Analysis Categories:
Figures:
Figure 1: U.S. Export Control Assistance (All Countries), Fiscal Years
2003 to 2006:
Figure 2: U.S. Export Control Assistance to Selected Countries, Fiscal
Years 2003 to 2006:
Abbreviations:
CBP: Customs and Border Protection:
DHS: Department of Homeland Security:
DOD: Department of Defense:
EAA: Export Administration Act:
EXBS: Export Control and Related Border Security Assistance:
Program:
FBI: Federal Bureau of Investigation:
G8: Group of Eight:
IAEA: International Atomic Energy Agency:
ICE: Immigration and Customs Enforcement:
ICP: International Counterproliferation Program:
INECP: International Nonproliferation Export Control Program:
NPT: Non-Proliferation Treaty:
NSG: Nuclear Suppliers Group:
OFAC: Office of Foreign Assets Control:
PSI: Proliferation Security Initiative:
UAE: United Arab Emirates:
UN: United Nations:
WMD: weapons of mass destruction:
United States Government Accountability Office:
Washington, DC 20548:
October 31, 2007:
The Honorable Richard C. Shelby:
Ranking Member:
Committee on Banking, Housing, and Urban Affairs:
United States Senate:
For decades, the United States has tried to impede the efforts of state-
run nuclear proliferation networks that provide equipment or components
to nuclear weapons development programs in countries such as Pakistan,
India, Iraq, and more recently, North Korea and Iran. These networks
use business and commercial practices to circumvent national and
international restrictions against procuring the technologies necessary
for developing nuclear weapons programs. The A.Q. Khan nuclear
proliferation network, operated by the former head of Pakistan's
nuclear weapons program, was the first private network to be run for
profit rather than state purposes. The exposure of the network in 2003
illustrated how determined proliferators can effectively avoid export
controls to acquire sensitive nuclear-related and dual-use
technologies, which are technologies that can have both commercial and
military applications. The network also highlighted the role that
companies in several countries unwittingly played in facilitating sales
as suppliers of technology or points of transit. In February 2004, the
President announced the breakup of the A.Q. Khan network and the
initiation of several programs and activities to strengthen
nonproliferation actions.
The United States has addressed nuclear proliferation and networks
through three means. First, the United States has conducted activities
with multilateral bodies[Footnote 1] such as the United Nations (UN),
the Nuclear Suppliers Group (NSG),[Footnote 2] the International Atomic
Energy Agency (IAEA), and the Proliferation Security Initiative
(PSI)[Footnote 3] to help curtail nuclear proliferation. Second, it has
provided bilateral assistance in the form of training and equipment to
foreign governments to help them establish or strengthen laws and
regulations to control exports of technology that could be used to
develop nuclear weapons. Principal U.S. programs include the Export
Control and Related Border Security Assistance Program (EXBS) and the
International Nonproliferation Export Control Program (INECP), which
are managed by the Departments of State and Energy, respectively.
Third, on the national level, U.S. laws control the export of dual-use
items from the United States to other countries. The U.S. government
enforces these laws through activities such as inspections and
investigations that may result in criminal or administrative penalties.
We examined the (1) status of U.S. efforts to strengthen multilateral
controls to counter nuclear proliferation networks, (2) impact of U.S.
bilateral assistance to help other countries improve their legal and
regulatory controls against nuclear proliferation networks, and (3)
impact of U.S. efforts to strengthen its national enforcement
activities to combat nuclear proliferation networks.
To meet these objectives, we reviewed program documentation and
interviewed knowledgeable officials from key U.S. agencies: the
Departments of Commerce, Defense (DOD), Energy, Homeland Security
(DHS), Justice, State, and Treasury. We focused our review on countries
where, according to open-source reporting, A.Q. Khan network activities
occurred. These include Malaysia, Pakistan, Republic of Korea,
Singapore, South Africa, Turkey, and Dubai in the United Arab Emirates
(UAE). We did not travel to these countries because State cited foreign
policy sensitivities of ongoing diplomatic discussions in these
countries. It is important to note that the level of cooperation State
provided on this review was erratic and resulted in a delay of several
months in completing our work. Nonetheless, with information available
from other sources, we were able to address the review's objectives.
For the purposes of this report, we reviewed U.S. programs and
activities that involved export controls and their enforcement, as
nuclear networks typically engage in acts that violate or circumvent
national and international export controls. Appendix I contains a
detailed description of our scope and methodology. We conducted our
review from September 2006 through August 2007 in accordance with
generally accepted government auditing standards.
Results in Brief:
The United States has initiated a range of multilateral efforts and
proposals to counter nuclear proliferation networks. Although
multilateral bodies have adopted some U.S. proposals, they have not
adopted others. First, the United States negotiated the passage of a UN
Security Council resolution that obligated all member states to adopt
laws and regulations prohibiting the proliferation of weapons of mass
destruction. Second, the U.S. government led NSG, among other actions,
to develop watch lists of nuclear technologies that are not formally
controlled by member states. NSG has not adopted two other proposals.
The first proposal would commit members not to export nuclear
technology to states that lack the capability to develop the material
necessary to make nuclear fuel or nuclear weapons. The second proposal
would commit NSG members to refrain from providing nuclear-related
technologies to countries that have not agreed to allow IAEA additional
rights to inspect facilities suspected of covert nuclear activities.
Third, IAEA addressed proliferation networks through several actions,
such as forming a unit intended to analyze covert nuclear trade
activities. However, IAEA has not yet adopted a U.S-supported
recommendation for member states to provide IAEA with export data that
would allow the agency to better detect covert nuclear activities.
The U.S. government has focused on bilateral export control assistance
to foreign countries to combat the sale of illicit nuclear-related
technology through proliferation networks. Programs operated by State
and Energy provide most of this assistance. Between 2003 and 2006,
these programs provided about $9 million in assistance[Footnote 4] to
improve the export controls of seven countries in which nuclear
proliferation network activities reportedly occurred.[Footnote 5]
However, the impact of this assistance is difficult to determine
because State did not evaluate either (1) the proliferation risk for
all of the countries in which network activities are alleged to have
occurred or (2) the results of its assistance efforts. State did not
perform risk analyses for 11 of the 56 countries in its program for
those years and did not document the basis for each country's
proliferation threat level or explain how the risk analyses were done.
Of the six countries in our study to which State provided assistance,
State performed risk analyses for five. State did not conduct program
assessments for about 60 percent of its participating countries or for
two of the six countries in our study that received assistance.
Moreover, while State's program assessments characterize a country's
export control system and its weaknesses, they do not assess how U.S.
training efforts contributed to correcting weaknesses. In contrast,
Energy performed risk analyses and program assessments for all of its
45 participating countries between 2003 and 2006, which assess the
contributions of the program's efforts toward strengthening the
recipient country's export system. Despite the limitations of these
assessments, State and Energy officials cited some positive changes in
countries' export and border control systems as a result of U.S.
assistance. For example, in 2006, Pakistan strengthened its export
control laws by expanding the list of items for which it requires
exporters to obtain licenses.
U.S. agencies engaged in export control enforcement activities are
impaired from judging their progress in preventing nuclear
proliferation networks because they cannot readily identify basic
information on the number, nature, or details of all their enforcement
activities involving nuclear proliferation. The Departments of Homeland
Security, Justice, and Treasury cannot readily identify which of their
enforcement activities involve nuclear proliferation because they do
not categorize their activities in a way that would allow them to do
so. Furthermore, some agencies that maintain lists of individuals and
companies that have violated export control laws or engaged in weapons
of mass destruction (WMD) proliferation could not identify all listed
parties that engaged in nuclear proliferation. For example, none of the
entities publicly identified in relation to the A.Q. Khan nuclear
proliferation network appears on Treasury's specially designated
nationals list.[Footnote 6] While facing this limitation, the U.S.
government since 2003 has made several changes to its policies and
procedures related to national enforcement activities that may
strengthen its ability to prevent nuclear proliferation networks. The
United States has created new sanctions programs to target and restrict
the assets of WMD proliferators and their supporters,[Footnote 7]
increased penalties for export control violations,[Footnote 8] and
created a new WMD directorate in Justice in 2006 to coordinate
investigations aimed at preventing foreign nations from obtaining WMD
technologies.
To help assess the impact of the U.S. response to the threat of nuclear
proliferation networks, we recommend that State take the following two
actions: (1) comply with State's guidance on assessing proliferation
risk and the export control system for each country receiving EXBS
funding and (2) document each risk analysis conducted to evaluate the
progress made in alleviating those risks. To help assess how U.S.
government agencies that engage in export control enforcement
activities are accomplishing their stated goal of combating nuclear
proliferation, we also recommend that the Departments of Commerce,
Homeland Security, Justice, and Treasury modify their data collection
processes to clearly identify when enforcement activities involve
nuclear proliferation.
In comments on a draft of this report, DHS stated that it concurred
with the substance and recommendations of the report. State said that
it partially concurred with the recommendation to comply with its
guidance on assessing proliferation risk and document risk analyses and
planned to implement it. State disagreed with our findings that it had
not conducted program assessments for 11 of 56 countries receiving EXBS
assistance and not conducted and documented risk analyses for all
countries. Nonetheless, as we stated in our draft, those program
assessments that State conducted using its assessment tool did not
evaluate the extent to which training and development efforts
contribute to improved performance and results in the country, pursuant
to federal guidance for human capital training. Moreover, State
provided no evidence of other assessments.
In comments on a draft of this report, Commerce stated that the
recommendation to modify its data collection processes to clearly
identify when enforcement activities involve nuclear proliferation
should not be directed to it. Commerce stated that the report
recognized that it already has this capability. However, we directed
this recommendation to Commerce because its various lists used for
enforcement purposes cannot identify when names are listed for nuclear
proliferation purposes. Commerce acknowledged this deficiency when it
was unable to provide this type of information when we requested it.
Treasury did not comment on our recommendations but stated that it can
and does identify which entities have been designated for nuclear
proliferation reasons at the time of designation. However, Treasury
could not readily retrieve this information when we requested it and
did not provide us with a complete list of entities designated for
nuclear proliferation reasons.
Background:
Proliferation networks use commercial and business practices to obtain
materials, technology, and knowledge to further nuclear, chemical,
biological, and radiological programs. Nuclear proliferation networks
seek to circumvent national and international restrictions against
procuring the technologies necessary for developing nuclear weapons
programs. These networks exploit weak export control systems, procure
dual-use goods with both nuclear and common industrial uses, and employ
deceptive tactics such as front companies and falsified documents,
according to the Department of Energy.
The A.Q. Khan network, established by the former head of Pakistan's
nuclear weapons program, supplied Pakistan with nuclear technology for
its national weapons program. However, it became a network that
provided nuclear technology to any state for profit. The development of
this network illustrates how determined proliferators can effectively
circumvent existing export controls to acquire sensitive nuclear-
related and dual-use technologies. According to Energy, the A.Q. Khan
case illustrates the scope and magnitude of the threat of nuclear
networks--how both weak export control systems and system gaps allowed
a network to procure sensitive materials from states worldwide. The
network also highlighted the role that companies in several countries,
such as Malaysia, played in unwittingly facilitating sales as suppliers
of technology or points of transit. According to open-source reporting,
countries where A.Q. Khan proliferation network activities occurred
included Germany, Japan, Malaysia, the Netherlands, Pakistan, Republic
of Korea, Singapore, South Africa, Turkey, United Arab Emirates (UAE),
and United Kingdom.
The multilateral nonproliferation regime, which, among other purposes,
attempts to counter nuclear networks, consists of the Non-Proliferation
Treaty (NPT), International Atomic Energy Agency (IAEA) inspection
regime, United Nations (UN) Security Council Resolution 1540, Nuclear
Suppliers Group (NSG), and the Proliferation Security Initiative (PSI).
The regime also includes multilateral and national assistance programs
and national export controls and laws.
Entered into force on March 5, 1970, NPT obligates nuclear weapon
states not to transfer nuclear weapons or other nuclear explosive
devices to any recipient, and not to assist, encourage, or induce any
nonnuclear weapon state to manufacture or otherwise acquire nuclear
weapons or other nuclear explosive devices. Under the treaty, each
nonnuclear weapon state pledges not to receive, manufacture, or
otherwise acquire nuclear weapons or other nuclear explosive devices,
and not to seek or receive assistance in their manufacture. NPT also
obliges each nonnuclear weapon state to accept comprehensive
international safeguards, including inspection, through agreements
negotiated with IAEA. The intent of these safeguards is to deter and
detect the diversion of nuclear material for nuclear explosive
purposes.
Relevant U.S. assistance programs on export and border controls include
EXBS and INECP. State's EXBS program assists foreign governments in
strengthening their export controls by improving their legal and
regulatory frameworks, licensing processes, border control and other
enforcement capabilities, outreach to industry, and interagency
coordination. The mission of Energy's INECP is to prevent the
proliferation of WMD and WMD-related material, equipment, and
technology by helping other countries develop effective national export
control systems. Total EXBS funding for fiscal years 2003 through 2006
was about $175 million and for INECP was about $30 million.
Since the terrorist attacks of September 11, 2001, and the exposure of
the A.Q. Khan nuclear proliferation network, the President and U.S.
government agencies involved in national enforcement activities have
emphasized the importance of preventing WMD proliferation, including
nuclear proliferation. On a national level, the United States endeavors
to counter nuclear proliferation by enforcing laws that control the
export of materials--including dual-use items--that could be used to
make a nuclear weapon and by applying criminal or administrative
penalties to proliferators. The Departments of Commerce, Homeland
Security, Justice, State, and Treasury have responsibilities for
enforcing various laws that relate to nuclear proliferation. The U.S.
government's control over the export of defense nuclear and dual-use
items is primarily divided between two departments--State and Commerce,
respectively. Support for enforcement activities comes primarily from
Commerce, through its Bureau of Industry and Security's Office of
Export Enforcement; DHS, through its Customs and Border Protection
(CBP) and Immigration and Customs Enforcement (ICE); and Justice,
through the Federal Bureau of Investigation (FBI) and the United States
Attorneys Office. Export enforcement involves inspecting items to be
shipped, investigating potential violations of export control laws, and
punishing export control violators.
United States Supported Several Multilateral Efforts to Address Nuclear
Networks, but Some Proposals Have Not Been Adopted:
The United States has initiated a range of multilateral efforts and
proposals to counter nuclear proliferation networks. Although
multilateral organizations have adopted some U.S. proposals that would
help address illicit nuclear proliferation networks, they have not
adopted others. First, the United States negotiated the passage of UN
Security Council Resolution 1540 that obligated all member states to
adopt laws and regulations prohibiting the proliferation of WMD.
Second, the U.S. government led NSG to conduct several activities aimed
at combating proliferation networks, including development of watch
lists; however, two U.S. proposals to NSG have not been adopted. Third,
with U.S. support, IAEA has taken several actions to address
proliferation networks, such as establishing a unit intended to analyze
covert nuclear trade activities. However, IAEA has not yet adopted a
recommendation drafted in June 2005 that calls on member states to
provide IAEA with information on their exports to improve the agency's
ability to detect possible clandestine nuclear activities. Finally, the
U.S. government has led efforts to establish the Proliferation Security
Initiative (PSI).
The United States Negotiated Passage of UN Resolution 1540 to Combat
WMD Proliferation:
The United States negotiated the passage of a UN Security Council
resolution that obligated all member states to adopt laws and
regulations prohibiting the proliferation of WMD. The UN Security
Council adopted Resolution 1540 in April 2004, obligating all member
states to adopt laws prohibiting proliferation of WMD as well as to
maintain and enforce adequate export controls. Under UN Security
Council Resolution 1540, all states have three primary obligations
relating to nuclear, chemical, and biological weapons, and their
delivery systems. They are to (1) refrain from providing support to
nonstate actors seeking such items; (2) prohibit nonstate actors from
acquiring, using, and attempting to acquire and use such items; and
prohibiting nonstate actors from participating in, assisting, or
financing such activities; and (3) put in place and enforce effective
measures to control these items and related material to prevent their
proliferation. Member states have begun implementing its provisions by
submitting required reports on their export control laws to a committee
designated the 1540 committee.[Footnote 9] The committee also has been
tasked with identifying the assistance needs of countries and
coordinating their requests for assistance with offers from other
countries.
The United States Led NSG to Carry Out Several Activities to Help
Combat Proliferation Networks, but Two U.S. Proposals Are Not Yet
Adopted:
The U.S. government led NSG in several activities to combat
proliferation networks, including the development of watch lists.
However, NSG has not adopted two U.S. proposals that would commit
members to refrain from exporting certain technologies to states that
do not already have the capability to use them and to countries that
have not agreed to allow IAEA additional rights to inspect any
facilities suspected of covert nuclear activities.
NSG, established in 1975, is a multilateral export control regime with
45 participating governments.[Footnote 10] The purpose of NSG is to
prevent the proliferation of nuclear weapons through export controls of
nuclear and nuclear-related material, equipment, and technology,
without hindering international cooperation on peaceful uses of nuclear
energy. NSG periodically updates and strengthens its guidelines on how
member states should control and license sensitive technologies and
maintain lists of the technologies to be controlled. However, NSG, like
other multilateral export control regimes, is a consensus-based
organization and depends on the like-mindedness or cohesion of its
members to be effective.
NSG has undertaken several activities to help shut down proliferation
networks. For example, in May 2004, NSG noted its concern over the
discovery of a covert international proliferation trafficking network,
through which sensitive nuclear-related equipment had found its way to
Libya. To address this concern, the United States developed national
procurement watch lists for all supplier states as a means to help
block further procurement of nuclear-relevant items that are not
formally controlled by placement on export control lists. To slow down
North Korea's and Iran's work on their nuclear programs, the watch
lists focus on items of interest to those countries, according to
Energy. The lists include items that could be used to enrich uranium,
reprocess spent nuclear reactor fuel, and fabricate fuel for nuclear
reactors. Both NSG members and nonmembers use the lists.
Through U.S. leadership, NSG also has conducted outreach to non-NSG
members, creating awareness of issues related to the supply of
sensitive technology, and pressing for adherence to NSG guidelines. For
example, NSG worked with existing international organizations, such as
IAEA and the UN Security Council Resolution 1540 committee, and with
nonmembers to help close gaps in the nonproliferation regime that
proliferation networks seek to exploit.
NSG has not adopted two U.S. proposals announced by the President in
2004.[Footnote 11] The first proposal would commit members to not
export certain nuclear technology to states that do not have the
capability to develop material for nuclear fuel or nuclear weapons.
Also, NSG has not adopted a second proposal under which NSG members
would refrain from providing nuclear-related technologies to countries
that have not agreed to allow IAEA additional rights to inspect any
facilities suspected of covert nuclear activities. The President
announced that NSG members should refuse to sell enrichment and
reprocessing equipment and technologies to any state that does not
already possess full-scale, functioning enrichment and reprocessing
plants. This step, according to the President, would prevent new states
from developing the means to produce fissile material for nuclear
bombs.
State and Energy officials stated that the first proposal has not yet
been adopted within NSG because it favors states that already have
enrichment and reprocessing capability[Footnote 12] over those that do
not. According to State officials, states in the European Union (EU)
are opposed to this proposal because it violates EU internal free trade
policies. However, we could not independently determine why NSG has not
adopted these proposals because State did not facilitate our travel to
meet with representatives of NSG members in Vienna, Austria.
NSG also has not yet adopted the second U.S. proposal announced in 2004
to restrict exports of nuclear-related technology to countries that
have not adopted IAEA's more stringent safeguards inspection
agreements. In 2004, the President proposed that by the next year, only
states that have signed the Additional Protocol would be allowed to
import equipment for their civilian nuclear programs. However, other
countries have been hesitant to implement the Additional Protocol for
various reasons, including an unwillingness to submit to intrusive
inspections.
The U.S. Government Supported IAEA Actions Against Proliferation
Networks, but IAEA Has Not Yet Adopted a Recommendation to Better
Detect Covert Nuclear Activities:
The U.S. government supported IAEA's establishment of several
activities over the past several years to help combat nuclear
proliferation trafficking and network activities. However, IAEA has not
yet adopted a recommendation that calls for member states to provide it
with export data that would allow the agency to better detect covert
nuclear activities.
IAEA is responsible for inspecting civilian nuclear facilities
worldwide to ensure they are used exclusively for peaceful purposes. In
1997, IAEA adopted a new arrangement, called the Additional Protocol,
for existing safeguards agreements under NPT that is designed to give
IAEA a stronger role and more effective tools for conducting worldwide
inspections.
IAEA established several activities supported by the Unites States to
help combat nuclear proliferation trafficking and network activities.
These included the following:
* Nuclear Trade and Technology Analysis Unit. Following the revelations
about extensive covert networks procuring and supplying sensitive
nuclear technology, IAEA established a new unit in November 2004. It
was intended to help analyze patterns and trends in nuclear trade to
identify covert nuclear trade activities.[Footnote 13]
* Illicit Trafficking Database. IAEA established IAEA Illicit
Trafficking Database in 1995 to facilitate exchange of authoritative
information on incidents of illicit trafficking and other related
unauthorized activities involving nuclear and other radioactive
materials among states. It contains information, which has been
confirmed by the states involved, about incidents of illicit
trafficking and related unauthorized activities involving nuclear and
other radioactive materials.
* Nuclear Security Fund. IAEA established a fund in March 2002 to
support its expanded nuclear security program, including developing
international standards and providing training and assistance to combat
nuclear smuggling. Through 2006, pledges from IAEA members totaled
nearly $74 million, with about $34 million from the United States.
IAEA has not yet implemented a draft recommendation[Footnote 14] that
member states provide it with relevant information on their exports so
IAEA can improve its ability to detect possible undeclared nuclear
activities. Under this recommendation, members would provide
information on their exports of specified equipment and nonnuclear
material, procurement enquiries, export denials, and relevant
information from commercial suppliers, according to State officials.
However, there is no current mandate to do this, according to State
officials.
U.S. Government Led Efforts to Establish and Gain Support for PSI:
The United States established and gained support for PSI, a U.S.-led
effort to work with other countries to interrupt the transfers of
sensitive items to proliferators.[Footnote 15]
PSI is a global effort to stop trafficking of WMD, their delivery
systems, and related materials to and from states and nonstate actors
of proliferation concern worldwide. Launched by the President on May
31, 2003, PSI is a set of voluntary activities, not a formal treaty-
based organization, to stop proliferation-related shipments of WMD
technologies. PSI interdiction training exercises and other operational
efforts are intended to help participating states work together in a
coordinated and effective manner to stop, search, and seize shipments.
In September 2003, the countries participating in PSI at that time
agreed to its statement of interdiction principles. The statement
identifies specific steps participants can take to effectively
interdict WMD-related trafficking and prevent proliferation. As of July
2007, PSI participants conducted 28 exercises (maritime, air, land, or
combined) to practice interdictions, held 15 operational experts group
meetings to discuss proliferation concerns and plan future exercises,
and hosted 4 workshops to acquaint industries with PSI goals and
principles.
State lists several countries as PSI participants that open-source
reporting also names as locations of nuclear proliferation network
activity. Listed PSI participants are Germany, Japan, Singapore,
Turkey, UAE, and United Kingdom. PSI nonparticipants are Malaysia,
Pakistan, Republic of Korea, and South Africa. (See our September 2006
classified report on PSI.[Footnote 16]):
Impact of U.S. Export Control Assistance Is Uncertain Because Agencies
Do Not Consistently Assess Programs:
The U.S. government has focused on bilateral export control assistance
to foreign countries to combat the sale of illicit nuclear-related
technology through proliferation networks. Three programs, operated by
State, Energy, and Defense provide this assistance. However, the impact
of this assistance is difficult to determine because State did not
evaluate either the proliferation risk for all of the countries in
which network activities are alleged to have occurred or the results of
its assistance efforts. In contrast, Energy performed risk analyses and
program assessments for all of its 45 participating countries. Although
there were limitations in the assessments of the programs, officials
from Energy and State said that some positive changes occurred as a
result of U.S. export and border control assistance.
United States Provided Export Control Assistance to Address Nuclear
Networks:
To combat nuclear networks, State officials said they focused on
addressing export control problems in other countries. State's EXBS
assists foreign governments in strengthening their export controls by
improving their legal and regulatory frameworks, licensing processes,
border control and other enforcement capabilities, outreach to
industry, and interagency coordination. EXBS partners with a number of
U.S. agencies and the private sector to provide capacity-building
training, technical exchanges and workshops, regional conferences and
seminars, and inspection and interdiction equipment. For example, EXBS
completed an advanced workshop on regulations in July 2006 with
Pakistani officials and sponsored a forum on technical aspects of
regulations in September 2006 through a private contractor. In
Malaysia, EXBS sponsored a workshop on legal aspects of regulations in
August 2005 and another workshop with Malaysian officials in
Washington, D.C., on export licensing in February 2007. Commerce
conducted these workshops. In addition, DHS stated that ICE is the
primary law enforcement partner to EXBS for training its counterpart
agencies to investigate, conduct surveillance and undercover
operations, detect, and interdict unauthorized transfers of WMD-related
items. During 2007 and 2008, according to DHS, ICE conducted or planned
to conduct training in several countries where A.Q. Khan network
activities reportedly occurred, including Malaysia, Pakistan,
Singapore, Republic of Korea, Turkey, and UAE.
Energy's INECP provides bilateral assistance to governments to prevent
the proliferation of WMD and WMD-related material, equipment, and
technology by working with governments worldwide to develop effective
national export control systems. INECP receives funding from and
collaborates with the EXBS and Homeland Security's CBP and also works
with other agencies such as the Coast Guard. For example, in Turkey,
INECP conducted training to help customs inspectors identify nuclear-
related commodities[Footnote 17] in March 2004 and September 2005.
INECP has conducted similar training in Pakistan, Singapore, and
Republic of Korea.
In addition, DOD's International Counterproliferation Program (ICP)
offers equipment, training, and advice to help countries prevent and
counter WMD proliferation, including border control assistance. The
majority of ICP's programs have been in countries in the former Soviet
Union, the Balkans, and the Baltics, with total funding of about $29
million for fiscal years 2003 through 2006. ICP provided about $86,000
for training in Singapore in fiscal year 2006.[Footnote 18]
Overall, the U.S. provided about $234 million dollars in export control
assistance to 66 countries between fiscal years 2003 and 2006 through
these three programs, with EXBS as the largest contributor to U.S.
export control assistance (see fig. 1).
Figure 1: U.S. Export Control Assistance (All Countries), Fiscal Years
2003 to 2006:
This figure is a bar chart showing U.S. export control assistance (all
countries) between fiscal years 2003 to 2006. The X axis is the fiscal
year, and the Y axis is dollars in millions.
[See PDF for image]
Source: GAO analysis of State, Energy, and DOD data.
[End of figure]
From fiscal years 2003 through 2006, the U.S. government provided about
$9 million, or 4 percent of the overall total, to seven countries in
which A.Q. Khan network activities reportedly occurred: Malaysia,
Pakistan, Republic of Korea, Singapore, South Africa, Turkey, and the
UAE. From fiscal years 2003 to 2006, EXBS provided about $7 million to
six of these countries,[Footnote 19] while INECP provided nearly $2
million to the seven countries in our study. Turkey was the largest
recipient of assistance among the countries in our study, and Pakistan
was the second largest (see fig. 2).
Figure 2: U.S. Export Control Assistance to Selected Countries, Fiscal
Years 2003 to 2006:
This figure is a shaded bar chart showing U.S. export control
assistance to selected countries, between fiscal years 2003 to 2006.
The X axis represents the country, and the Y axis represents the
dollars in thousands.
[See PDF for image]
Source: GAO analysis of State, Energy, and DOD data.
[End of figure]
Impact of U.S. Assistance Is Difficult to Determine Because U.S.
Agencies Do Not Consistently Assess Their Programs:
Despite U.S. government efforts to provide bilateral assistance to
countries to help them improve their export control systems, it is
difficult to determine the impact of these programs because State did
not consistently conduct or document risk analyses as a basis for
countries to receive assistance and has not assessed the program
performance. Although Energy and State officials said they are unable
to systematically establish that their assistance has effected positive
change in countries that received U.S. assistance, they said some
positive change occurred during the period in which assistance was
provided.
State's Risk Analyses Are Undocumented and Incomplete:
While both State's and Energy's assistance programs conduct risk
analyses on a country-by-country basis to prioritize assistance
efforts, State did not conduct one such analysis for each country in
its program and did not document the ones it conducted. The EXBS
strategic plan indicates EXBS prioritizes assistance in accordance with
five proliferation threat categories for which most, but not all, EXBS
countries are assessed (see table 1).
Table 1: EXBS Risk Analysis Categories:
Category 1;
Countries that are a potential WMD source (which would include
countries that have a production capability and those that are believed
to have stocks).
Category 2;
Countries that produce WMD-related dual-use items (countries with
industries that can be expected to be seeking licenses for transfer and
where there is an ongoing risk of unauthorized transfer from outgoing
production, and risk of contributing to WMD programs).
Category 3;
Countries that are significant transit or transshipment routes for WMD
and related items.
Category 4;
Countries that are producers of advanced conventional weapons/man-
portable air-defense systems and related dual-use items.
Category 5;
Countries that represent less significant threats for
transit/transshipment and threats for retransfer of munitions stocks.
Source: State.
[End of table]
The EXBS strategic plan, which provides guidance for EXBS, provided a
risk analysis summary for five of the six countries in our study to
which it provided assistance, but did not provide a risk assessment for
one country. The strategic plan indicated that two of the countries in
our study are at risk in all five categories, and a third country is at
risk in all but category 1. A fourth country is at risk in categories
2, 4, and 5, and a fifth country is at risk in categories 3 and 5.
State did not respond to our request for a risk assessment for the
sixth country. Overall, the EXBS strategic plan did not provide a risk
analysis for 11 of the 56 countries to which it provided assistance
between fiscal years 2003 and 2006. Furthermore, EXBS officials could
not provide us with documentation showing the basis for which they
determined the risk categories for the countries that appear in the
strategic report and said the risk analyses are not updated annually.
INECP assesses country risk by measuring proliferation threat based on
the capacity of the recipient country to supply or be a conduit for WMD-
related goods. The assessment also takes into consideration the
vulnerability of the recipient country's export control system to
illicit procurement. INECP places the countries receiving assistance
into one of four categories based on that countries' production
capacity and export control system (see table 2).
Table 2: INECP Risk Analysis Categories:
Category 1: Low-commodity production capacity, no export control
system:
Category 2: High-commodity production base, no export control system.
Category 3: Low-commodity production capacity, perfect export control
system.
Category 4: High-commodity production base, perfect export control
system.
Source: Energy.
[End of table]
All of the countries in our study to which INECP provided assistance
fell into category 2: having potentially weak export control systems
and high commodity production capacity. While we did not evaluate the
methodology that EXBS and INECP use to perform risk assessments or
prioritize their assistance, we observed that each INECP risk analysis
we reviewed was more thoroughly documented than the EXBS risk analyses.
For example, INECP provided us with country plans for each of the
countries in our scope, which document and identify the sources of
information used to determine the status of the country's export
control system and its potential to supply or be a conduit for nuclear-
related materials. In addition, an INECP official noted that one of the
purposes of the country plans is to document the data that inform their
risk analyses.
State Did Not Perform Many of Its Program Assessments:
Despite U.S. government efforts to provide bilateral assistance to
countries to help them improve their export control systems, it is
difficult to determine the impact of these programs because State has
not assessed their performance. Specifically, State's EXBS has not
performed annual program assessments for all countries receiving EXBS
assistance, as required by program guidance, and has not received
required data for some assessments that were conducted. INECP also
requires annual program assessments, which it conducted for all of its
45 assistance recipients for fiscal years 2003 through 2006.
EXBS program assessments characterize features of a country's export
control system but do not evaluate the impact of U.S. training on the
country. EXBS guidance specifies that recipient countries should be
assessed using a revised assessment tool, which contains questions
intended to determine whether the country is committed to developing an
effective export control system and identify the weaknesses in the
country's current system.[Footnote 20] Categories in the EXBS
assessment tool, which was implemented by contractors, include an
examination of various aspects of the recipient country's dual-use and
munitions licensing, the country's ability to enforce its regulations,
and a review of industry-government relations. In contrast, federal
guidance for evaluating human capital training calls for assessing the
extent to which training and development efforts contribute to improved
performance and results.[Footnote 21]
State contractors performed assessments in 2004 for only two of the six
countries in the scope of our review that received EXBS funding, Turkey
and UAE. According to a State official, these assessments were not
useful for State's purposes because the contractor provided the results
of the evaluations but not the data that EXBS officials said would be
necessary to measure the progress of these countries in improving their
export control systems. The official said the data were omitted because
State did not require them in the contract. Therefore, EXBS did not
receive the information it needed to construct a baseline against which
to evaluate the progress of these countries. State has contracted for
future assessments to be used as a baseline for determining countries'
future progress. Overall, State received assessments for 34 countries-
-about 60 percent of the countries that received EXBS funding between
2003 and 2006--though none of these contained baseline data, according
to State officials. In commenting on a draft of this report, State said
that EXBS program planning takes into account other information,
including open source information, diplomatic reporting from posts,
intelligence community products, and assessments and information from
other U.S. government agencies. As State commented, however, these and
other information sources are intended to substitute for the assessment
tool only when State determines it is infeasible or impractical to use
it.
INECP also produces country plans that serve as program assessments for
all of the 47 countries to which it provided assistance in this
period.[Footnote 22] An INECP official said that the country plans are
updated on an annual basis in order to track the history of assistance
with each partner country and to enforce a standard process for
tracking and reviewing the combined results of assistance efforts and
of countries' independent efforts to implement system reforms. INECP
officials provided us with updated annual assessments for all seven
countries, which contain an analysis of each country's export control
system, and proposals for future assistance. While we did not evaluate
the quality of Energy's assessments, INECP has updated assessments for
all of its program participants, and the assessments contain the
baseline data necessary for measuring future progress and are updated
on an annual basis. In addition, we noted that the INECP country plans
we reviewed assess the country's progress in improving its export
control systems and contain recommendations for future activities.
Energy and State officials said they are unable to systematically
establish that their assistance has effected positive change in
countries to which they provided assistance, because actions such as
changing laws and implementing new regulations are undertaken by
sovereign governments and are not always directly attributable to
assistance efforts. However, officials from both programs said some
positive change occurred during this period. For example, officials
from both EXBS and INECP cited some improvements in assistance
recipients' export controls that occurred after training or other types
of assistance were provided. In 2006, after exchanges and consultations
regarding licensing and regulations with EXBS program officers,
Pakistan strengthened its export controls by further expanding its
control lists, according to State officials. In addition, officials
reported that Malaysia, UAE, and Pakistan drafted export control
legislation during the period of EXBS engagement in each of these
countries. Pakistan passed its export control law in 2004.
Furthermore, INECP officials reported that their engagement with
Singapore has led its government to amend its control list to adhere to
all the multilateral control lists, and INECP also helped Pakistan
complete adoption of the European Union control list. In addition, they
said that the Republic of Korea has reported that INECP training led to
several high-level investigations of illegal transfers and greater
industry awareness of dual-use items.
Agencies Cannot Identify Information to Assess Whether Their Ability to
Combat Nuclear Proliferation Networks Has Improved:
U.S. agencies engaged in export control enforcement activities are
impaired from judging their progress in preventing nuclear
proliferation networks because they cannot readily identify basic
information on the number, nature, or details of all their enforcement
activities involving nuclear proliferation. While facing this
limitation, the U.S. government since 2003 has made several changes to
its policies and procedures related to national enforcement activities
that may strengthen its ability to prevent nuclear proliferation
networks.
Agencies' Ability to Judge Progress Against Nuclear Proliferation Is
Impaired by Constraints on Information:
U.S. agencies engaged in export control enforcement activities are
impaired from judging their progress in preventing nuclear
proliferation networks because they cannot readily identify basic
information on the number, nature, or details of all their enforcement
activities involving nuclear proliferation. Most of these agencies do
not collect or store their data in a manner that would allow them to
reliably identify which of their enforcement actions involved nuclear
proliferation. This makes it difficult for agencies to determine the
level of resources expended in countering nuclear proliferation
networks, as well as the results obtained from these efforts. Since
2005, Commerce and ICE have taken steps to facilitate more reliable
identification of their enforcement activities involving nuclear
proliferation.
Most of the agencies engaged in export control enforcement activities-
-DHS, Justice, and Treasury--could not readily produce reliable data
representing their respective agency's enforcement actions related to
nuclear proliferation. Enforcement data, such as data collected on
inspections, seizures, investigations, arrests, indictments, and
penalties applied, were often stored according to the law that had been
violated or by a category or code describing the item corresponding to
the enforcement action, such as the type of good seized. Consequently,
agencies compiling enforcement data related to nuclear proliferation
often depended on conducting searches of agency databases using key
words (e.g., "nuclear") or key codes (e.g., the ICE code for dual-use
items is "06"). An accurate compilation of such data depends on several
factors, including (1) selecting appropriate key words or key codes for
searching the database, (2) use of appropriate words or codes to
describe the nature of the enforcement action when agency officials
record it in the database, and (3) mandatory completion of the data
fields that would identify the enforcement action as being related to
nuclear proliferation. For example, we asked agencies engaged in export
control enforcement activities for data on their activities related to
nuclear proliferation, with the following results:
* CBP compiled data on enforcement activities (seizures) related to
nuclear proliferation by engaging in keyword searches of its database.
However, a CBP official noted there is not a specific category for dual-
use seizures, so these seizures would not be included in the
statistics. Moreover, the official stated that one would need to look
beyond seizures, for example to inspections, to get a complete picture
of CBP activities conducted to combat nuclear proliferation. However,
CBP does not have data on inspections conducted for nuclear or WMD
proliferation purposes unless the inspection led to a seizure of goods
or involved nuclear material, according to DHS officials.
* ICE performed a key-code search of its database to produce statistics
on closed investigations involving nuclear proliferation. An ICE
official said the statistics that ICE compiled likely undercounted the
number of investigations involving nuclear proliferation because there
is not one single code agents can use to represent nuclear
proliferation cases. Rather, there are multiple codes that represent
nuclear proliferation, but agents are not required to enter all of
them. The ICE official concluded that it would be difficult to
correctly identify all nuclear proliferation-related ICE
investigations.
* In response to our request for enforcement statistics, FBI produced
two conflicting sets of statistics on open investigations related to
nuclear proliferation. One Bureau official noted that identifying
enforcement actions related to nuclear proliferation is not
straightforward; rather, it requires Bureau analysts to interpret
information about the enforcement action to judge whether it involves
nuclear proliferation. In technical comments on a draft of this report,
Justice stated that FBI has a classification which defines
proliferation investigative activities. This classification can be used
to search the FBI's automated case system to determine the exact number
of investigative activities and obtain a report on the nature and
details of these activities, according to Justice. However, two FBI
officials told us that it is not possible to search the database to
identify all cases related to nuclear proliferation. Compiling data
such as the number of cases involving nuclear proliferation and
deciding whether cases are related to WMD or nuclear proliferation
requires an interpretation of the data.
* Finally, Justice (Executive Office for United States Attorneys)
stated its case management database could not sort cases according to
nuclear proliferation networks, nuclear proliferation, or WMD
proliferation, due to the way the data are stored, but can sort export
enforcement data.
Furthermore, some agencies that maintain lists of individuals and
companies that have violated export control laws or engaged in WMD
proliferation could not identify which parties were placed on the lists
for nuclear proliferation reasons. For example, Treasury, which
maintains a specially designated nationals list containing the
individuals and entities that have been designated under its Office of
Foreign Assets Control's (OFAC) various sanctions programs,[Footnote
23] reported it cannot identify all entities that have been placed on
the list for nuclear proliferation reasons. Treasury officials said
that they maintain records on the rationale for placing an entity on
the list, but do not necessarily denote the type of WMD proliferation
entities are engaged in or support. In addition, Treasury confirmed
that none of the entities publicly identified in relation to the A.Q.
Khan nuclear proliferation network appears on the specially designated
nationals list or in the Annex to Executive Order 13382. Commerce
stated that it does not maintain readily available information that
would allow it to identify individuals or entities placed on its denied
persons list for nuclear proliferation reasons. This list includes
individuals and entities that have been denied export privileges. In
contrast, State reported periodically to Congress that, between 2003
and 2006, it had sanctioned foreign persons for engaging in nuclear
proliferation activities with Iran or Syria.[Footnote 24]
Several agencies stated they use their enforcement data to make
resource allocation decisions. However, without enforcement data that
accurately reflect actions taken to prevent nuclear proliferation,
agencies would not be able to make informed resource decisions. Without
the ability to reliably identify their enforcement activities involving
nuclear proliferation, it is difficult for agencies to accurately track
the amount of time and resources expended in countering nuclear
proliferation networks, as well as the results obtained from these
efforts. Most of these agencies lack performance metrics for assessing
the results obtained from their efforts to prevent nuclear
proliferation.[Footnote 25] In contrast, federal standards for internal
control state that management should have procedures in place to create
performance indicators, monitor results, track achievements in relation
to agency plans, and ensure adequate communications with external
stakeholders that may significantly impact achieving the agency's
goals.[Footnote 26]
Since 2005, two agencies have taken steps to facilitate more reliable
identification of their enforcement activities involving nuclear
proliferation. In fiscal year 2005, Commerce began classifying
enforcement data to identify enforcement actions involving nuclear
proliferation. In June 2007, an ICE official proposed modifying ICE's
case data collection process to more precisely identify investigations
involving nuclear proliferation. Thus, the official stated, if
implemented, this proposal would allow ICE to better track its
performance in combating nuclear proliferation, as well as respond to
congressional inquiries for information.
Changes to Policies and Procedures May Strengthen U.S. Agencies'
Ability to Combat Nuclear Proliferation Networks:
Since 2003, the U.S. government has made several changes to the
policies and procedures governing national enforcement activities that
may strengthen agencies' ability to combat nuclear proliferation
networks. On a national level, the United States endeavors to counter
nuclear proliferation by enforcing laws that control the export of
materials that could be used to make a nuclear weapon, including dual-
use items, and applying criminal or administrative penalties to
proliferators. Commerce, DHS, Justice, State, and Treasury carry out
these enforcement activities, often in collaboration.
Executive Order, New Law, and Proposed Legislation Create New Penalties
and Enhance Existing Penalties:
Two changes to policies and procedures governing national enforcement
activities created new penalties and increased existing penalties for
export control violations. In addition, draft legislation developed by
the executive branch is intended to further increase penalties and
provide some new authorities for one enforcement organization.
First, Executive Order 13382, announced in 2005, created an additional
nonproliferation sanction program that allows Treasury and State to
target the assets of proliferators and those who assist them.[Footnote
27] Under the executive order, Treasury and State designate individuals
or entities that are WMD proliferators, deny them access to the U.S.
financial system, and have all their property or interests in property
blocked. Initially, the sanction program applied to eight organizations
in Iran, North Korea, and Syria. As additional WMD proliferators are
designated, they are added to Treasury's specially designated nationals
list, which contains the names of individuals and entities that have
been sanctioned under OFAC's various sanctions programs. U.S. persons
and entities are prohibited from providing support to these
proliferators and can be punished with criminal or civil penalties if
they are found to be in violation of this prohibition. The executive
order is designed to cut off support to proliferators from front
companies, financiers, logistical supporters, and suppliers. As of June
15, 2007, 43 persons or entities were on Treasury's specially
designated nationals list pursuant to the executive order.
Second, the USA Patriot Improvement and Reauthorization Act of
2005[Footnote 28] increased the maximum penalties that can be imposed
on certain export control violations from $10,000 to $50,000 per
violation. Maximum prison sentences increased from 10 years to 20
years. However, according to Commerce statements, these increased
penalties are not high enough to deter violators or to provide
incentives for violators to cooperate with law enforcement. The
Assistant Secretary of Commerce for Export Enforcement recently noted
that significantly increased penalty provisions are needed.
Third, the congress enacted a law that that increased penalties and the
executive branch drafted a legislative proposal intended to further
increase penalties and provide some new authorities for one enforcement
organization. The International Emergency Economic Powers Enhancement
Act was enacted into law on October 16, 2007, and increased the civil
and criminal penalties applicable to the violation of OFAC
sanctions.[Footnote 29] In addition, the executive branch drafted a
legislative proposal, the Export Enforcement Act of 2007, to revise and
enhance the Export Administration Act (EAA)[Footnote 30] and be in
effect for 5 years after the date of its enactment. The legislative
proposal would increase penalties for export control violations while
enhancing Commerce's law enforcement authorities to combat illicit
exports of dual-use items. For example, criminal penalty amounts in the
proposal would be increased to $1,000,000 per violation or a fine and
imprisonment for not more than 10 years, for each violation by an
individual, and $5,000,000 or up to 10 times the value of the exports
involved, whichever is greater, per violation by a person other than an
individual. The civil penalty amounts would be increased to $500,000
for each violation of EAA or any regulation, license, or order issued
under that act. According to Commerce, the increased penalty amounts
would provide an enhanced deterrent effect. The proposal also would
provide Commerce's special agents with statutory overseas investigative
authority and expanded undercover authorities and expand the list of
criminal violations upon which a denial of export privileges may be
based.
FBI Created a WMD Directorate and WMD-Related Initiatives but Provided
No Information on Impact of These Changes:
In 2006, the FBI created a WMD directorate to support and consolidate
FBI's WMD components. The directorate was designed to prevent and
disrupt foreign nations or individuals from obtaining WMD capabilities
and technologies and using them against the United States, according to
FBI documents. In addition, FBI officials reported the initiation of
several initiatives designed to prevent WMD proliferation. These
initiatives include a program focused on dual-use nuclear technology,
as well as country-specific WMD counterproliferation efforts in
national labs and other U.S. entities. However, FBI did not provide
information on the impact of these activities on FBI's ability to
counter WMD and nuclear proliferation.
In technical comments on a draft of this report, Justice stated that
FBI has information to provide but was not given the opportunity to do
so. FBI's WMD Directorate can provide information on this impact by
providing limited information on accomplishments and statistics on a
number of proliferation investigations and operations, according to
Justice. However, on June 15, 2007, we asked FBI officials about the
impact of either the establishment of the WMD directorate or the WMD
initiatives on FBI's ability to counter WMD and nuclear proliferation,
but they provided no answer nor would they meet with us to discuss
related issues. In late June, FBI provided us with a written response
that included no specific information that answered our request.
Department of Justice Has Made Initial Plans for Improving Prosecution
of Export Control Violations:
To respond to the threat of nuclear proliferation, Justice is preparing
a national export enforcement initiative that department officials
stated is intended to improve the investigation and prosecution of
persons and corporations violating U.S. export control laws. The
initiative follows the 2006 creation of the National Security Division
within Justice to strengthen the effectiveness of its national security
efforts and, according to a Justice official, to respond to the threat
of WMD proliferation.
As we have previously reported, U.S. Attorneys Offices have many
competing priorities, including prosecuting cases involving terrorism,
counterterrorism, and government contractor fraud, and the level of
interest and knowledge of export control laws varies among assistant
U.S. Attorneys.[Footnote 31] According to the U.S. Attorney General,
one of the key elements of the initiative will be to provide federal
prosecutors with the assistance, training, and expertise they need to
undertake export control prosecutions.[Footnote 32] For example,
Justice held a national export control conference in May 2007. The
following month, Justice appointed its first National Export Control
Coordinator, who will be responsible for coordinating with other U.S.
agencies the enforcement of export controls and development of training
materials for prosecutors in an effort to enhance their capacity and
expertise. The impact of the export enforcement initiative on Justice's
ability to prosecute export control cases is yet to be demonstrated as
the initiative has just begun.
Conclusion:
Although the U.S. government has announced that countering nuclear
proliferation and nuclear networks is a high priority, it lacks the
necessary information to assess the impact of its multiple efforts to
do so. While U.S. assistance to foreign governments to help them
strengthen their laws and regulations against nuclear proliferation
networks has the potential for positive impact, U.S. agencies are not
sufficiently monitoring aid recipients' actions to assess what U.S.
assistance is accomplishing. State's assistance program is not
completing and documenting risk analyses or program assessments, as
required by program guidance. In addition, U.S. government agencies
that engage in enforcement activities to counter nuclear proliferation
networks are impaired from judging their progress in this effort
because they cannot readily identify basic information on the number,
nature, or details of their enforcement activities involving nuclear
proliferation. Without such information, agencies cannot identify what
their efforts are, assess how their efforts are working, or determine
what resources are necessary to improve their effectiveness. Developing
such information would be a necessary first step for U.S. agencies in
beginning to assess how well their efforts to combat nuclear
proliferation networks are working. As of October 2007, these agencies
may not know whether their capabilities for addressing the problem of
nuclear proliferation networks have improved.
Recommendations for Executive Action:
To help assess the impact of the U.S. response to the threat of nuclear
proliferation networks, we recommend that the Secretary of State take
the following two actions: (1) comply with its guidance to conduct
periodic assessments of proliferation risk and the export control
system for each country receiving EXBS funding and (2) document each
risk analysis conducted to evaluate the progress made in alleviating
those risks.
To help assess how U.S. government agencies that engage in export
control enforcement activities are accomplishing their stated goal of
combating nuclear proliferation, we recommend that the Secretaries of
Commerce, Homeland Security, and Treasury, and the U.S. Attorney
General individually direct that their respective agency's data
collection processes be modified to support the collection and analysis
of data that clearly identify when enforcement activities involve
nuclear proliferation. For example, each agency could consider:
* designating appropriate categories or codes for nuclear proliferation
for staff to use when recording information in the databases and:
* mandating completion of relevant data fields that would identify an
enforcement action as related to nuclear proliferation.
Agency Comments and Our Evaluation:
We provided copies of this report to Commerce, Defense, DHS, Energy,
Justice, State, and Treasury. Commerce, DHS, State, and Treasury
provided written comments. Justice provided us with technical comments
that we incorporated in the report, as appropriate. Defense and Energy
did not comment on the draft.
In its comments on a draft of this report, Commerce stated, first, that
the report did not identify what it means by enforcement activities
involving nuclear proliferation. Second, Commerce stated that the
report should present the President's 2004 nonproliferation proposals
to NSG exactly as stated. Finally, Commerce stated that the
recommendation to modify relevant databases to support the collection
and analysis of data that clearly identify when enforcement activities
involve nuclear proliferation should not be directed to it because the
report recognizes that it already has this capability. Moreover, it
said that Commerce officials could take names from its denied persons
list, which does not indicate the reason for listing the name, and
query the relevant database to identify whether the name was listed for
nuclear proliferation reasons. First, we did identify what is meant by
enforcement activities on page 8 of this report to include inspecting
items to be shipped, investigating potential violations of export
control laws, and punishing export control violators. We asked Commerce
officials to identify when such activities involved nuclear
proliferation but they indicated certain actions for which they could
not. Second, we shortened the description of the President's 2004
proposals for brevity and clarity. Moreover, Commerce's description of
the proposals does not match the text of the proposals as originally
presented in the President's speech. Finally, while our report
recognized that Commerce had developed the capability that we recommend
for its database, we included Commerce in the recommendation because
its various lists, such as the denied persons list, cannot identify
names included for nuclear proliferation reasons. Commerce indicated to
us that because the database and denied persons list were not linked,
providing such information would have been difficult and require a case-
by-case analysis. As a result, Commerce did not provide us with this
requested data.
In its comments, DHS agreed with the substance of the report and
concurred with the overall recommendations. DHS described specific
actions that it took in September 2007 to identify seizures in the
relevant database that involve nuclear proliferation. It also described
modifications that it intends to make by the end of 2007 to identify
examinations of cargo involving nuclear proliferation issues.
In commenting on a draft of this report, State partially concurred with
our recommendation that it should (1) comply with its guidance to
conduct periodic assessments of proliferation risk and the export
control system for each country receiving EXBS funding and (2) document
each risk analysis conducted to evaluate the progress made in
alleviating those risks. State commented that it recognizes the value
of taking a more standardized approach to assessing program countries
on a regular basis as a means of refining assistance efforts and
evaluating progress. Therefore, State said that it will set clear
guidelines for when assessments and reassessments should occur. State
also said that it recognizes the value in documenting in one place all
risk analyses and the process by which they are reached and will do so
in a revised publication of its EXBS program strategic plan.
State disagreed with our finding that it did not conduct program
assessments for about 60 percent of its participating countries,
asserting that it conducted program assessments for all six of the
countries in the scope of our review that received EXBS funding. State
said that it used various means to assess its program other than its
revised assessment tool designed for this purpose. We reiterate our
finding that State did not conduct program assessments using its
designated tool for two of the six countries in our study that received
EXBS assistance. More importantly, these assessments do not evaluate
the impact of U.S. training on the country, as recommended by federal
guidance for evaluating human capital training. This guidance calls for
assessing the extent to which training and development efforts
contribute to improved performance and results. State also disagreed
with our finding that it did not perform risk analyses for 11 of the 56
countries in its program for fiscal years 2003 through 2006. It stated
that the country risk assessment summary in its program strategic plan
included only those countries for which funds were requested at the
time the plan was prepared and the summary was never intended as a
comprehensive source of all risk analyses. However, the State official
responsible for EXBS did not provide this explanation and said the risk
summary does not change unless there is new information. Furthermore,
we found that this explanation of the risk assessment summary is not
consistent. At least one country was included in the summary even
though it received no EXBS funding throughout this period and at least
four other countries were not listed although they did receive EXBS
funding.
Treasury did not comment on our recommendations. However, Treasury
stated that it can and does identify which entities have been
designated for nuclear proliferation reasons at the time of
designation. However, this statement misses our point. As our report
stated, U.S. government agencies that engage in enforcement activities
to counter nuclear proliferation networks are impaired from judging
their progress in this effort because they cannot readily identify
basic information on the number, nature, or details of their
enforcement activities involving nuclear proliferation. If Treasury
cannot readily retrieve this information, then the information is not
useful for assessing the impact of its sanctions specifically on
nuclear proliferators. Despite its assertion, Treasury did not provide
us with a list of all listed entities designated for nuclear
proliferation reasons, as we had requested. In commenting on our
finding that Treasury did not designate any entities publicly
identified with the A.Q. Khan network, Treasury stated that its
designation decisions involve an interagency process that identifies,
assesses, and prioritizes targets. Therefore, it appears that Treasury
did not designate any A.Q. Khan network entities because an interagency
process did not identify and assess them as priority targets.
We are sending copies of this report to interested congressional
committees and the Secretaries of Commerce, Defense, Energy, Homeland
Security, Justice, State, and Treasury. We will also make copies
available to others upon request. In addition, this report will be
available at no charge on the GAO Web site at [hyperlink,
http://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. Staff
acknowledgments are listed in appendix VI.
Sincerely yours,
Signed by:
Joseph A. Christoff:
Director, International Affairs and Trade:
[End of section]
Appendix I: Scope and Methodology:
To meet our objectives, we reviewed program documentation and
interviewed knowledgeable officials from key U.S. agencies: the
Departments of Commerce, Defense (DOD), Energy, Homeland Security
(DHS), Justice, State, and Treasury.
To identify the status of U.S. efforts to strengthen multilateral
controls to counter nuclear proliferation networks, we reviewed program
documentation and interviewed knowledgeable officials from key U.S.
agencies: DOD, Energy, and State. We also met with acknowledged
nonproliferation experts to discuss U.S. proposals announced in 2004
and their applicability to addressing nuclear proliferation networks.
The experts included two former Assistant Secretaries of State for
Nonproliferation and experts from the following institutions: Center
for Contemporary Conflict, National Security Affairs Department, Naval
Postgraduate School in Monterey, California; Center for International
Trade and Security at the University of Georgia, Athens, Georgia;
Center for Nonproliferation Studies at The Monterey Institute of
International Studies, Washington, D.C; Center for Strategic and
International Studies, Washington, D.C; Georgetown University, Edmund
A. Walsh School of Foreign Service, Washington, D.C; Heritage
Foundation, Washington, D.C; Nuclear Threat Initiative, Washington,
D.C; and Wisconsin Project on Nuclear Arms Control, Washington, D.C.
We tried to visit the U.S. Mission to the International Atomic Energy
Agency, officials of the International Atomic Energy Agency, and
foreign government representatives to the Nuclear Suppliers Group, all
in Vienna, Austria, to discuss various U.S. proposals and other efforts
to strengthen activities to combat nuclear proliferation networks.
While State agreed after months of negotiation to facilitate our
proposed travel to Vienna, it did not do so within any acceptable time
frames. Furthermore, citing diplomatic sensitivities, State proposed
restrictions on which U.S. and foreign officials we could meet and on
what subjects we could discuss, thus causing considerable delays in
completing our work.
To assess the impact of U.S. bilateral assistance to help other
countries improve their legal and regulatory controls against nuclear
proliferation networks, we reviewed program documentation and
interviewed knowledgeable officials from key U.S. agencies: DOD,
Energy, and State. To evaluate the amount of assistance provided
overall and to the seven countries associated with nuclear networks in
our study (Malaysia, Pakistan, Republic of Korea, Singapore, South
Africa, Turkey, and United Arab Emirates), we obtained and reviewed
financial data from DOD, Energy, and State, and interviewed agency
officials about these data. We determined that these data were
sufficiently reliable for the purposes of this report. Therefore, we
reviewed program assessment documentation to the extent that it was
available in Washington, D.C. We interviewed knowledgeable DOD, Energy,
and State officials about the impact and outcomes of these programs. We
also contacted the embassies in Washington, D.C., of the governments of
Malaysia, Pakistan, Republic of Korea, Singapore, South Africa, Turkey,
and United Arab Emirates to obtain their perspectives on U.S.
assistance. However, only the government of Singapore responded to our
request for information.
To assess the impact of U.S. efforts to strengthen its national
enforcement activities to combat nuclear proliferation networks, we
reviewed documentation and met with officials of the Departments of
Commerce, DHS, Justice, State, and Treasury in Washington, D.C. We also
spoke by phone with DHS/Immigration and Customs Enforcement attaches
stationed in Bern, Switzerland, and Vienna, Austria, regarding their
roles in enforcing U.S. export control laws for cases related to
nuclear proliferation. Also, we reviewed statistical data and
descriptions of enforcement cases from Commerce, DHS, and Justice, when
available, to try to determine how many cases involved nuclear
proliferation and how such information was used to assess agencies'
activities. We also reviewed data on Commerce, State, and Treasury
sanctions against identified WMD proliferators. The information on
foreign law in this report does not reflect our independent legal
analysis, but is based on interviews and secondary sources.
We focused our review on countries that, according to open-source
reporting, are involved in the A.Q. Khan network. These include
Malaysia, Pakistan, Republic of Korea, Singapore, South Africa, Turkey,
and Dubai in UAE. We did not travel to these countries because State
cited foreign policy sensitivities of ongoing diplomatic discussions in
these countries. It is important to note that the level of cooperation
State provided on this review was erratic and resulted in a delay of
several months in completing our work. Nonetheless, with information
available from other sources, we were able to address the review's
objectives. For the purposes of this report, we reviewed U.S. programs
and activities that involved export controls and their enforcement, as
nuclear networks typically engage in acts that violate or circumvent
national and international export controls.
We conducted our review from September 2006 through August 2007 in
accordance with generally accepted government auditing standards.
[End of section]
Appendix II: Comments from the Department of Commerce:
Note: GAO comments supplementing those in the report text appear at the
end of this appendix.
United States Department Of Commerce:
Under Secretary for Industry and Security:
Washington, D.C. 20230:
October 15, 2007:
Mr. Joseph Christoff:
Director, International Affairs and Trade:
International Affairs and Trade Division:
Government Accountability Office:
441 G Street, NW, 4T55:
Washington, DC 20548:
Dear Mr. Christoff:
Enclosed are comments from the Department of Commerce's Bureau of
Industry on the Government Accountability Office's Draft Report
entitled Nonproliferation: U.S. Efforts to Combat Nuclear Networks Need
Better Data on Proliferation Risks and Program Results, GAO-08-21.
If you have any questions regarding our submission, you may contact
Julissa Hurtado at 202- 482-8093.
Sincerely,
Signed by:
Mario Mancuso:
Enclosure:
Department of Commerce, Bureau of Industry and Security Comments on
Draft GAO Report Nonproliferation: U.S. Efforts to Combat Nuclear
Networks Need Better Data on Proliferation Risks and Program Results,
GAO-08-21 General Comments:
The report does not identify what it means by "enforcement activities
involving nuclear proliferation." This shortcoming is important when
referring to record keeping. For example, if records show two illegal
exports of aluminum bar controlled under ECCN 1C202 for nuclear
proliferation, and if in one case the material was illegally exported
to produce fighter aircraft parts, and in the other instance it was
illegally exported to produce gas centrifuge rotors, how should these
cases be recorded? Should both or only the case with the centrifuge end
use be counted as an enforcement activity involving nuclear
proliferation? NPTC notes that the vast majority or exports either
legal or illegal of items controlled for nuclear proliferation reasons
are destined for non-nuclear end uses.
(See comment 1.):
With respect to the President's Nuclear Non Proliferation Initiatives
of 2004 that were introduced to the Nuclear Suppliers Group (NSG), the
report should simply list the proposal in the way it was presented to
the NSG. The President proposed:
(See comment 2.):
(1) that nuclear suppliers only transfer Trigger List items to a non-
nuclear weapons state when the receiving state has signed an Additional
Protocol Agreement and is pursuing it in good faith with the
International Atomic Energy Agency (IAEA);
(2) that nuclear suppliers consider when transferring a dual-use item
whether a state has implemented a binding IAEA Full-Scope Safeguards
Agreement and an Additional Protocol Agreement;
(3) that nuclear suppliers can transfer enrichment or processing
facilities, equipment, or technology to a non-nuclear weapons state
only if, as of December 31, 2003, it was a Nuclear Non-Proliferation
Treaty (NPT) Party and had an enrichment or reprocessing plant being
safeguarded by the IAEA;
(4) that nuclear fuel exporters should consider ways to ensure that
such states have reliable access to fuel at reasonable cost for their
civilian reactors; and:
(5) that nuclear suppliers suspend nuclear cooperation with states
under investigation by the IAEA for non-compliance with their
safeguards obligations, until such time as the IAEA determines that the
state is back in full compliance with its Safeguards Agreement.
The GAO report's description is not clear as to what the President
actually proposed. On Page 24, the statement, "Commerce stated that it
does not maintain readily available information that would allow it to
identify individuals or entities placed on its Denied Persons List for
nuclear proliferation reasons." By way of clarification, as stated this
sentence may be true, but is misleading. The purpose of the Denied
Person List is to readily identify denied persons or entities with
respect to export privileges – not to delineate those factors
responsible for their inclusion on the list. BIS Office of Export
Enforcement (OEE) Special Agents can select a name from the Denied
Persons List, query it in the Investigative Management System (IMS)
database, and determine whether or not the individual or entity was
denied export privileges for reasons relating to nuclear proliferation.
(See comment 3.):
On page 30, GAO makes two recommendations to the Secretaries of
Commerce, Homeland Security, and Treasury, "To help assess how U.S.
government agencies that engage in export control enforcement
activities are accomplishing their stated goal of combating nuclear
proliferation, we recommend that the Secretaries of Commerce, Homeland
Security, and Treasury, and the U.S. Attorney General individually
direct that each agency's data collection processes be modified to
support the collection and analysis of data that clearly identify when
enforcement activities involve nuclear proliferation. For example, each
agency could consider."
Recommendation 1: Designating appropriate categories or codes for
nuclear proliferation for staff to use when recording information in
the databases.
(See comment 4.):
BIS Response: The Investigative Management System (IMS) database of the
Department of Commerce's Office of Export Enforcement provides a field
entitled "primary case focus." BIS Agents can identify nuclear
proliferation cases in the IMS by selection "WMD-Nuclear" as the
primary case focus. Making the appropriate entry in this field for each
investigation is mandatory for all BIS special agents.
Recommendation 2: Mandating completion of relevant data fields that
would identify an enforcement action as related to nuclear
proliferation.
BIS Response: As stated above, the BIS IMS database provides a field
for "primary case focus" which must be completed when a case is entered
in the IMS database. Choices for this field include "WMD-Nuclear" to
indicate a nuclear proliferation case. A query of the IMS database for
all cases with a WMD-Nuclear focus will identify all investigations and
associated enforcement actions related to nuclear proliferation.
With respect to these two recommendations, BIS capability to associate
investigations and enforcement activity within its IMS database with a
particular focus such as nuclear proliferation is reflected on page 22
of the draft report where it states "Since 2005, Commerce and ICE have
taken steps to facilitate more reliable identification of their
enforcement activities involving nuclear proliferation. Most of the
agencies engaged in export control enforcement activities – DHS,
Justice, and Treasury – could not readily produce reliable data
representing the agency's enforcement actions related to nuclear
proliferation."
Furthermore, on pages 25-26 of the draft report it states, "Since 2005,
two agencies have taken steps to facilitate more reliable
identification of their enforcement activities involving nuclear
proliferation. In fiscal year 2005, Commerce began classifying
enforcement data to identify enforcement actions involving nuclear
proliferation."
In summary, the recommendations to the Commerce Department in the draft
report have already been enacted prior to commencement of the study.
Furthermore, these measures have been referenced in various portions of
the draft report cited above. As such, it is requested that the
Department of Commerce be removed from the recommendations portion of
the final report.
The following are GAO's comments on the Department of Commerce's letter
dated October 15, 2007.
GAO Comments:
1. We agree with Commerce's statement that the draft report did not
identify what it means by "enforcement activities involving nuclear
proliferation." First, we did identify what is meant by enforcement
activities on page 8 of this report to include inspecting items to be
shipped, investigating potential violations of export control laws, and
punishing export control violators. We asked Commerce officials to
identify when such activities involved nuclear proliferation but they
indicated certain actions for which they could not.
2. We disagree with Commerce's comment that our description of the
President's proposal to the NSG was not clear. We had simplified and
shortened the proposals to make them clear and free from jargon.
3. We disagree with Commerce's comment that our draft is true but
misleading in stating that Commerce does not maintain readily available
information that would allow it to identify individuals or entities
placed on its denied parties list for nuclear proliferation reasons.
Commerce said the purpose of this list is to readily identify persons
who are denied export privileges and it further explained that its
agents can query names from the list to determine the reason
individuals were denied export privileges. However, when we requested
that Commerce provide such a list, Commerce indicated that it had not
previously conducted such a review, did not maintain readily available
information, and it could not readily create a list of individuals who
have been denied export privileges for nuclear proliferation reasons.
4. In comments on a draft of this report, Commerce stated that the
recommendation to modify its data collection processes to clearly
identify when enforcement activities involve nuclear proliferation
should not be directed to it. Commerce stated that the report
recognized that it already has appropriate categories or codes for
nuclear proliferation staff to use when recording information in the
databases and already mandates completion of relevant data fields that
would identify an enforcement action as related to nuclear
proliferation. However, we directed the recommendation to Commerce
because its various lists, including the denied persons list, cannot
identify when names are listed for nuclear proliferation purposes.
Commerce acknowledged this deficiency when it was unable to provide
this type of information when we requested it.
[End of section]
Appendix III: Comments from the Department of Homeland Security:
U.S. Department of Homeland Security:
Washington, DC 20528:
October 17, 2007:
Mr. Joseph A. Christoff:
Director, International Affairs and Trade:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Christoff:
Re: Draft Report GAO-08-21, Nonproliferation: U.S. Efforts to Combat
Nuclear Networks Need Better Data on Proliferation Risks and Program
Results (GAO Job Code 320443)
The Department of Homeland Security (DHS) appreciates the opportunity
to review and comment on the draft report referenced above. The U.S.
Government Accountability Office (GAO) concludes that although the U.S.
government has announced that countering nuclear proliferation and
nuclear networks is a high priority, it lacks the necessary information
to assess the impact of its multiple efforts to- do so. While United
States assistance to foreign governments to help them strengthen their
laws and regulations against nuclear proliferation networks has the
potential for positive impact, GAO found that U.S. agencies are not
sufficiently monitoring aid recipients' actions to assess what the
assistance is accomplishing. U.S. Customs and Border Protection (CBP)
officials agree with the substance of the report.
GAO recommends in part that several agencies, including DHS, modify
data collection processes to support the collection and analysis of
data that clearly identify when enforcement activities involve nuclear
proliferation. GAO further recommends that DHS consider designating
appropriate categories or codes for nuclear proliferation for staff to
use when recording information in the databases and mandating
completion of relevant data fields that would identify an enforcement
action as related to nuclear proliferation.
CBP officials concur with the overall recommendation. CBP added a new
"special operation" code for nuclear proliferation to its Seized Asset
and Case Tracking System incident module on September 26, 2007. This
new code will enable CBP officers who are initiating seizure records to
identify any seizure known to involve nuclear proliferation by the new
special operation code. In addition, CBP personnel intend to add a new
inspection finding code to the examination findings module in the
Automated Commercial System and Cargo Enforcement Tracking System to
denote examinations that are determined to involve nuclear
proliferation issues by the end of 2007. CBP officials will issue
instructions to field officers to direct them to begin using the new
codes once the new codes are available.
DHS believes that the U.S. Immigration and Customs Enforcement's
(ICE's) involvement with the Department of State's Export Controls and
Border Security Program is not sufficiently discussed in the draft
report. We are separately providing technical comments reflecting ICE's
work that we trust will be considered for inclusion in the final
report.
Sincerely,
Signed by:
Steven J. Pecinovsky:
Director:
Departmental GAO/OIG Liaison Office:
[End of section]
Appendix IV: Comments from the Department of State:
Note: GAO comments supplementing those in the report text appear at the
end of this appendix.
United States Department of State:
Assistant Secretary for Resource Management:
and Chief Financial Officer:
Washington, D.C. 20520:
October 17, 2001:
Ms. Jacquelyn Williams-Bridgers:
Managing Director:
International Affairs and Trade:
Government Accountability Office:
441 G Street, N.W.:
Washington, D.C. 20548-0001:
Dear Ms. Williams-Bridgers:
We appreciate the opportunity to review your draft report,
"Nonproliferation: U.S. Efforts to Combat Nuclear Networks Need Better
Data on Proliferation Risks and Program Results," GAO Job Code 320443.
The enclosed Department of State comments are provided for
incorporation with this letter as an appendix to the final report.
If you have any questions concerning this response, please contact
Chris Herrington, Foreign Affairs Officer, Bureau of International
Security and Nonproliferation at (202) 647-5035.
Sincerely,
Signed by:
Bradford R. Higgins:
cc: GAO ” Jeffrey Phillips:
ISN ” Donald Mahley:
State/OIG ” Mark Duda:
U.S. Department of State Comments on GAO Draft Report:
Nonproliferation: U.S. Efforts to Combat Nuclear Networks Need Better
Data on Proliferation Risks and Program Results (GAO-08-21, GAO Code
320443):
The Department of State appreciates the opportunity to review and
comment on the Government Accountability Office draft report entitled,
"U S. Efforts to Combat Nuclear Networks Need Better Data on
Proliferation Risks and Program Results." The Department believes it is
already fulfilling, for the most part, the two relevant
recommendations, but acknowledges room for improvement.
Department Response to Draft Report Recommendations:
To help assess the impact of the U.S. response to the threat of nuclear
proliferation networks, GAO recommends that the Secretary of State take
the following two actions:
Recommendation 1: Comply with its guidance to conduct periodic
assessments of proliferation risk and the export control systems for
each country receiving EXBS funding.
State Response: Partially concur. Program assessments were conducted
for all six of the countries in the GAO's study that received Export
Controls and Border Security Program (EXBS) assistance. One of the
seven countries has never been a participant in, or recipient of
assistance under, the EXBS program. While modest funding was indeed
requested for this country during the timeframe covered by this study,
engagement has been generally limited to diplomatic activity and
assistance funds were reprogrammed for other countries.
We do not concur with the draft statement's assertion that, "State did
not conduct program assessments for about 60 percent of its
participating countries . . . ." Initially, the Department assessed
program countries using the "Export Control System Standards"
questionnaire, for which we requested input from in-country EXBS
advisors, embassies, and interagency partners. In 2004, the Department
awarded a contract to one of the companies participating in its
Integrated Support Services Contract to perform assessments for the
majority of the countries receiving EXBS program assistance at the
time, and these assessments were conducted by one of that company's sub-
contractors. Given funding constraints and the differing stages of
engagement with various countries, priority was given to those
countries with which the EXBS program had been involved for longer
periods of time. This approach was aimed at helping to assess whether
any countries were ready to "graduate," and the degree of progress that
had been made since engagement began with given countries. It was not
considered a good use of resources to conduct expensive outside
assessments of countries with which engagement was either nascent or
merely anticipated. Nor was it deemed prudent to request what might be
considered intrusive assessments by contractors in countries with which
we were hoping to establish cooperative engagement under EXBS.
(See comment 1.):
The absence of an in-country EXBS-funded assessment by the sub-
contractor does not indicate that no assessment has been made and that
there is no basis for planning assistance or assessing progress.
General practice has been to conduct an interagency assessment of a
country at the very early stages of engagement, both to help nurture
government-to-government cooperation in improving strategic trade and
border controls, and to develop plans for targeting assistance. In some
instances in which it is not considered appropriate or when resources
are not available for comprehensive outside assessments, the office of
Export Controls and Cooperation (ECC) has funded "table-top"
assessments, which are conducted using available open source
information and do not involve in-country interviews.
(See comment 2.):
In addition to the previously-described questionnaires and table-top
assessments, EXBS program planning takes into account other
information, which can include open source information, diplomatic
reporting from posts, intelligence community products, assessments and
information from other USG agencies, interagency visits, research
studies by other non-governmental organizations, and the results of and
discussions at EXBS program activities involving individual countries.
When comprehensive outside assessments are infeasible or impractical
(e.g., because of political or security situations), these additional
sources of information continue to provide a good basis for the
interagency determination on how to prioritize EXBS bilateral
assistance and assess progress.
(See comment 3.):
It should be emphasized that the International Security and
Nonproliferation Bureau (ISN), as the manager of the interagency EXBS
program, has access to and factors into its planning process
assessments conducted by other agencies, particularly those that
receive EXBS program funding. The draft report comments favorably on
the assessments prepared by the Department of Energy's International
Nonproliferation Export Control Program (DOE/INECP), but does not 3
acknowledge that these assessments are routinely shared with the
Department and factored into the EXBS program planning process.
(See comment 4.):
That said, the Department recognizes the value of taking a more
standardized approach to assessing program countries on a regular basis
as a means of refining assistance efforts and evaluating progress, and
will set clear guidelines for when assessments and reassessments should
occur.
Recommendation 2: Document each risk analysis conducted to evaluate the
progress made in alleviating those risks.
State Response: Partially concur. Risk analyses have indeed been
conducted and documented for each country that has received or is
receiving assistance under the EXBS program. It is our impression that
the drafters of the GAO report may have based their conclusions solely
on the the "EXBS Country Risk Assessment Summary" within the Export
Control and Related Border Security Program Strategic Plan dated
September 1, 2006, which included only those countries for which funds
were being requested at the time the document was prepared. This Risk
Assessment Summary was 'never intended as a comprehensive source of all
risk analyses. In addition, the Department's view is that the Export
Control and Related Border Security Program Strategic Plan, as an
interagency-cleared document, does provide a form of documentation for
the basis for each country's proliferation threat level by assigning
each to a descriptive category. For example, if a country is a known
producer of controlled, dual-use items that could be used for Weapons
of Mass Destruction (WMD), the country is included in Category 2.
Nevertheless, the Department recognizes the value in documenting in one
place all risk analyses and the process by which they were reached, and
will do so in a revised publication of the Export Control and Related
Border Security Program Strategic Plan.
(See comment 5.):
Additional Comments:
Scope of the GAO Report: The draft report states that "GAO focused on
seven countries where network activities reportedly occurred."
State Response: The Department finds the report to be inconsistent in
its treatment of the subject under review. Despite the stated focus,
the draft report includes comments and statistics based on a program-
wide review of State Department activity involving 56 countries,
including many for which State Department cooperation is in very early
stages and for which there has been no reported involvement in nuclear
proliferation activity. However, the report does not take the same
approach in addressing performances by all relevant agencies and
programs. For example, one program is not included in the draft report
because it provided funding for only one of the seven countries covered
by the scope of the report and does not conduct any program
assessments, as explained by a footnote on page 15. This omission is
perplexing given that one of the two recommendations for the State
Department is to conduct regular program assessments.
(See comment 6.):
Risk Analyses: The draft report states that "State did not evaluate
.the proliferation risk for all the countries in which network
activities are alleged to have occurred..." It also states that,
"[b]etween 2003 and 2006...State did not perform risk analyses for 11
of the 56 countries in its program for those years..."
State Response: Both statements are clearly based on information in the
"EXBS Country Risk Assessment Summary" within the Export Control and
Related Border Security Program Strategic Plan dated September 1, 2006.
Regarding the first statement, it would be more accurate to state: "The
EXBS Country Risk Assessment Summary within the Export Control and
Related Border Security Program Strategic Plan dated September 1, 2006,
does not include two of the countries in which network activities are
alleged to have occurred." The Department provided clarifying
information in response to the Statement of Facts for this draft report
noting that one country was not included because the Department never
provided assistance to it under the EXBS program and the other country
was not included, even though a risk analysis was conducted, because
the Department did not seek EXBS funding for it at the time the EXBS
Program Strategic Plan was being published.
{See comment 7.):
Regarding the second statement, in addition to going beyond the stated
focus ("on seven countries where network activities reportedly
occurred"), the eleven countries are almost certainly those for which
no new EXBS program funds were being requested, and were, therefore,
not included in the table. As noted in response to the Statement of
Facts for this draft report, this list includes nine countries that had
"graduated" from the program, one for which funds had previously been
allocated, but subsequently reprogrammed for other countries given a
lack of engagement, and one for which new funds were not being sought
pending an indication of the political will to adopt and enforce
meaningful controls. The absence of a country from the table does not
mean a risk analysis was not done. Rather, the EXBS program assesses
and categorizes the risk posed by countries for which it seeks funding
and routinely refers to such assessments in justifying its budget
requests and in notifications to Congress.
(See comment 8.):
Assessments not Useful: On page 20, the draft report attributes to a
State official comments that program assessments conducted by a
contractor, "were not useful for their purposes because the contractor
provided the results of the evaluations but not the data that EXBS
officials said would be necessary to measure the progress of these
countries in improving their export control systems."
State Response: This statement is not entirely accurate. While it is
true that the contractor did not initially provide the supporting data
with the assessment results, the Department subsequently requested the
data and received it in December 2006.
(See comment 9.):
Program Assessments Do Not Assess Training Efforts: The draft report
states that EXBS program assessments characterize features of a
country's export control system but do not evaluate the impact of U.S.
training on the country.
State Response: In general, program assessments do highlight the
relationship between assistance efforts and progress in specific
countries. However, formal reassessments of countries are needed to
more accurately and regularly measure progress. Funding has been a
factor, but the Department plans to implement a less expensive process
for reassessing countries should funding for outside assessments
continue to be an issue.
(See comment 10.):
State's Level of Cooperation: The draft report states that, "the level
of cooperation State provided on this review was erratic and resulted
in a delay of several months in completing our work."
State Response: State made a sincere and good faith effort to cooperate
with GAO's investigation of nuclear proliferation networks by meeting
with GAO, providing it information and facilitating its travel
requests; however, some of GAO's requests touched upon sensitive issues
associated with the A.Q. Khan network. With regard to travel, State
proposed several dates for GAO to travel to Vienna, Austria; however,
the GAO found these dates to be unacceptable. In addition, State helped
facilitate GAO contact with embassy officials in Washington, D.C. and
would have provided similar assistance to the GAO with regard to NSG
States had the GAO requested this assistance.
(See comment 11.):
U.S. Agencies are Impaired from Judging Progress: The draft report
states that, "Relevant U.S. agencies are impaired from judging their
progress in preventing nuclear proliferation networks because they
cannot readily identify basic information on the number, nature, or
details of all their enforcement activities involving nuclear
proliferation. [and that] most of these agencies cannot readily
identify which enforcement activities involve nuclear proliferation as
they cannot ensure that searching their case file databases for words,
such as nuclear, would reveal all relevant cases".
State Response: As explained to GAO, relevant U.S. agencies working on
nuclear-related issues have access to classified information that
indicates which cases are related to nuclear-related transfers. Given
the classified nature of this information it often cannot be disclosed,
or is shared on a restricted need-to-know basis only. In other cases,
such distinctions can be misleading since items often have more than
one use, e.g., they can be used in both nuclear and missile programs.
(See comment 12):
Pakistan's Export Control Efforts: The draft report states that
Pakistan had strengthened its export control laws by expanding the list
of items for which it requires exporters to obtain licenses.
State Response: GAO should note that Pakistan passed its export control
law in 2004.
(See comment 13):
GAO's Reference to the PSI as a "multilateral body:"
State Response: This ascribes a formality to the PSI that does not
exist and that the U.S. has never sought to create. The description of
the PSI on page 13 is more accurate: it is a "global effort," and "is a
set of voluntary activities, not a formal treaty-based organization."
(See comment 14):
GAO's Assertion that PSI participant countries are also associated with
proliferation network activity:
State Response: These states or their governments were not involved in
proliferation network activities; only private entities in these
countries were reported to have been allegedly involved in
proliferation network activities in open sources. Part of our
diplomatic effort in addressing these networks has been to seek greater
cooperation from states that have been abused by such proliferation
networks, in order to build successful partnerships to prevent and
impede proliferation activities.
(See comment 15.):
GAO's statement that State lists about 80 countries as PSI
participants:
State Response: More than 80 countries are PSI participants.
(See comment 16.):
The following are GAO's comments on the Department of State's letter
dated October 17, 2007.
GAO Comments:
1. We disagree with State's comment explaining why it did not conduct
program assessments for about 60 percent of its participating
countries. State said that it also relies on an interagency assessment
of a country at the early stages of engagement with the program and on
a variety of open source information, studies by nongovernmental
research organizations, and information from other U.S. agencies. State
did not indicate in its comments what percentage of contractor program
assessments have been completed and produced no documentation of these
other assessments. Moreover, in earlier documents State explicitly
informed us that the contractor assessment tool is the current survey
tool EXBS uses to provide a formal and full assessment.
2. We disagree with State's comments that it assesses program progress
despite the absence of a contractor assessment. State's EXBS strategic
plan, written responses to our questions, and discussions with the key
EXBS official who State designated to meet with us emphasized the
contractor program assessments as the tool to be used for a full
assessment of a country's progress, as well as for planning purposes
and establishing a baseline of a country's capabilities and needs. The
strategic plan describes the contractor's assessment tool as compiling
data and analysis from all sources to assist State to measure
performance broadly by evaluating progress made between assessments.
State's written response to us stated that EXBS tracks the performance
of the foreign government in its development of strategic trade
controls using the assessment tool.
3. We agree with State's comment that its program planning takes into
account other information, including open source information,
diplomatic reporting from posts, intelligence community products, and
assessments and information from other U.S. government agencies. We
have added language to the report to reflect this.
4. State commented that EXBS officials have access to and factor into
their planning process assessments by other U.S. agencies, such as
Energy's INECP which receives some EXBS funding. While we commend such
interagency collaboration, we note that any Energy program assessments
are relevant only to its training and courses provided in support of
EXBS, not to the EXBS program as a whole. Furthermore, the evidence
that State provided in its meetings with us, its written response to
our questions, and its EXBS strategic plan discusses interagency
coordination in planning, but not in assessing the contributions made
by the EXBS program to particular countries.
5. We disagree with State's comment that risk analyses have been
conducted and documented for each country that received or is receiving
assistance under EXBS and that we based our findings solely on the EXBS
strategic plan. In addition to the strategic plan, we relied on State's
written response to questions we posed on the subject and meetings with
State EXBS officials. As we stated in our report, the EXBS strategic
plan did not identify a risk level for 11 of the 56 countries to which
it provided assistance between fiscal years 2003 and 2006.
6. We disagree with State's comment that our report was inconsistent
because it included information on EXBS assistance to six of the seven
countries where A.Q. Khan network activity was reported to have
occurred as well as other countries receiving EXBS assistance. We
included statistical information on the total number of EXBS program
assessments to place the data on the seven countries into an overall
perspective.
7. We partially agree with State's comment that it would be more clear
to say that the EXBS country risk assessment summary did not include
two of the countries in which network activities are alleged to have
occurred. We cannot confirm State's assertion that a risk analysis was
done for one of these countries. State provided no documentation to
support this point.
8. We disagree with State's comment that the absence of a country from
the risk summary table in the EXBS strategic plan does not mean a risk
analysis was not done. State provided no evidence that it had conducted
a risk analysis for this country, and the State official designated to
speak for the program said there was no documentation for the analyses.
9. We disagree with State's comment that State subsequently requested
and received missing program assessment data in December 2006 that the
contractor had not initially provided to support assessment results.
State provided no evidence to support this comment and it directly
contradicts information provided to us by the cognizant State official.
10. We disagree with State's comment that its EXBS program assessments
generally highlight the relationship between assistance efforts and
progress in specific countries. In a written response to our questions
in February 2007, State highlighted the difficulties in doing so. Also,
during the course of our review, State said that EXBS does not
systematically track information on changes to a country's laws for the
purpose of showing the effectiveness of the EXBS program because it is
difficult analytically to create a good design for doing so.
Nonetheless, State said in its comments on a draft of this report that
formal reassessments of countries are needed to more accurately and
regularly measure progress.
11. We disagree that State made a sincere and good faith effort to
cooperate with our review of nuclear proliferation networks. The level
of cooperation State provided on this review was erratic and resulted
in a delay of several months in completing our work. While State agreed
after months of negotiation to facilitate our proposed travel to
Vienna, it did not do so within any acceptable time frames and delayed
providing some requested documents for several months. Nonetheless,
with information available from other sources, we were able to address
the review's objectives.
12. These findings were not directed to State. The agencies to which
they were directed did not raise a concern about access to classified
information and none of these agencies disagreed with our
recommendation.
13. State commented that our draft should note that Pakistan passed its
export control law in 2004. We have added this language to the report.
14. We disagree with State's comment that referring to PSI as a
multilateral body ascribes a formality to the PSI that does not exist
and that the U.S. has never sought to create. Given our previous
classified report on PSI, we would not ascribe any more formality to
PSI than appropriate. We recognized that this lack of formality
contributed to management deficiencies in U.S. PSI activities, and
congress legislated in Public Law 110-53 that corrective action be
taken.
15. We agree with State's statement that certain states or their
governments were not involved in proliferation network activities; only
private entities in these countries were reported to have been
allegedly involved in proliferation network activities in open sources.
We included clarifying language, accordingly.
16. We disagree with State's comment that we should report that more
than 80 countries are PSI participants. As we reported in an
unclassified section of our report on PSI, State did not provide us
with documentation to demonstrate any precise number of countries that
expressed support for PSI.
[End of section]
Appendix V: Comments from the Department of Treasury:
Note: GAO comments supplementing those in the report text appear at the
end of this appendix.
Department Of The Treasury:
October 24, 2007:
Mr. Joseph Christoff:
Director, International Affairs and Trade:
Government Accountability Office:
441 G. St. NW:
Washington, D.C. 20548:
Thank you for the opportunity to review the draft Government
Accountability Office (GAO) report entitled. Nonproliferation- U.S.
Efforts to Combat Nuclear Networks Need Better Data on Proliferation
Data on Proliferation Risks and Program Results (GAO-08-21). Please
find attached our comments as well as some recommended clarifications.
Thank you for your efforts and should you have any additional questions
please do not hesitate to contact me or my staff.
Sincerely,
Signed by:
Stuart A. Levey:
Attachment:
Comments Matrix:
GAO Draft Report:
Nonproliferation - U.S. Efforts to Combat Nuclear Networks Need Better
Data on Proliferation Risks and Program Results:
GAO-08-21:
Department of the Treasury Comments:
1;
Page/Paragraph: 2/3;
Recommended Change or Comment: To be fair to all organizations covered
in the study, the scope of the study covered only countries where A. Q.
Khan operated, which likely skewed the results. The countries listed
represent only a small subset of areas where nuclear-related
proliferation activities occur.
(See comment 1.):
2;
Page/Paragraph: 4/2, 5/2, 22-23, 30/3;
Recommended Change or Comment: Treasury Department actions involve the
designation of proliferators and their supporters and subsequent
"enforcement" actions that impose civil penalties for violation of OFAC
sanctions. Treasury is able to identify which of its designations are
related to nuclear proliferation, and could similarly identify any
civil penalties imposed based on the violation of those sanctions.
(See comment 2.):
3;
Page/Paragraph: 24/3;
Recommended Change or Comment: Entities or individuals designated under
E.O. 13382 are listed on OFAC's website and SDN List with the specific
identification of "NPWMD." Treasury can and does identify which
entities have been designated for nuclear proliferation reasons at the
time of designation.
(See comment 3.):
4;
Page/Paragraph: 24/3;
Recommended Change or Comment: In reference to the point about
Treasury's failure to designate entities publicly identified with the
A. Q. Khan network, designation decisions involve an interagency
process that identifies, assesses and prioritizes targets.
(See comment 4.):
5;
Page/Paragraph: 24;
Recommended Change or Comment: The footnote on page 24, which states
that three of Treasury's sanctions programs relate to WMD, should be
deleted or rephrased for reasons of clarity. Presumably, the two
programs referenced in addition to E.O. 13382 are an import ban,
implemented pursuant to E.O. 13094, and the Highly Enriched Uranium
(HEU) blocking program, implemented pursuant to E.O. 13159. The import
ban provides for State to name certain foreign persons from whom U.S.
persons cannot import goods, services or technology. The focus of the
HEU program is to protect highly enriched uranium from attachment by
third parties.
(See comment 5.):
6;
Page/Paragraph: 27/1;
Recommended Change or Comment: The phrase "and blocked from any U.S.
property interest" should be changed to read "and have all of their
property or interests in property that are or come into the United
States or the possession of a U.S. person blocked.".
(See comment 6.):
7;
Page/Paragraph: 26/27;
Recommended Change or Comment:
The reference to "or penalty" at the bottom of page 26 should be
deleted and the phrase "have been penalized" at the top of page 27
should be changed to "have been sanctioned" as the imposition of
sanctions is not a penal act.
(See comment 7.):
8;
Page/Paragraph: 27/1;
Recommended Change or Comment: The phrase "prohibited from providing
support to these proliferators" should be replaced with the phrase
"prohibited, among other things, from providing funds, goods, or
services to designated WMD entities, or dealing in the blocked property
interests of such entities."
(See comment 8.):
9;
Page/Paragraph: 5,27;
Recommended Change or Comment: The recently enacted International
Emergency Economic Powers Enhancement Act increased the civil and
criminal penalties applicable to the violation of OFAC sanctions
imposed under the International Emergency Economic Powers Act.
(See comment 9.):
The following are GAO comments on the Department of Treasury's letter
dated October 24, 2007.
GAO Comments:
1. We disagree with Treasury's statement that because the scope of our
study covered countries where A.Q. Khan operated, it likely skewed the
results. The request for our review directly asked us to assess the
U.S. government response to the A.Q. Khan network. Therefore, it was
methodologically appropriate to focus on countries where such network
activities reportedly occurred and would have been fruitless to focus a
review of the U.S. response to nuclear networks on countries where such
activity has not occurred.
2. We disagree with Treasury's assertion that it is able to identify
which of its designations are related to nuclear proliferation and
could similarly identify any civil penalties imposed based on the
violation of OFAC sanctions. Treasury officials stated to us that they
could not conduct a keyword search to identify entities that had been
designated for nuclear proliferation reasons. One official emphasized
that Treasury lacks the ability to definitively identify whether a
given entity was designated for nuclear proliferation reasons. Treasury
officials noted that they keep records on the rationale for an entity's
designation, but they do not necessarily record what type of WMD
proliferation the entity is involved in, if any. Despite its assertion,
Treasury could not readily retrieve this information when we requested
it and did not provide us with a complete list of entities designated
for nuclear proliferation reasons.
3. Treasury's statement that it can and does identify which entities
have been designated for nuclear proliferation reasons at the time of
designation misses our point. It stated that entities or individuals
designated under Executive Order 13382 are listed on OFAC's web site
and specially designated nationals' list with the specific
identification of "NPWMD." During our review, Treasury could not
readily retrieve this information specifically for nuclear
proliferation designations.
4. In commenting on our finding that Treasury did not designate
entities publicly identified with the A.Q. Khan network, Treasury
stated that its designation decisions involve an interagency process
that identifies, assesses, and prioritizes targets. Given the absence
of these names, Treasury's statement suggests that the interagency
process did not identify and assess entities of the A.Q. Khan network
as priority targets.
5. We agree with Treasury's comment on the footnote on OFAC's sanctions
programs and have added clarifying language, accordingly.
6. We have modified the language in the draft to reflect Treasury's
comment.
7. We have changed this language, accordingly.
8. We believe that the language of our draft accurately reflects the
meaning of Treasury's proposed rewording in a more concise fashion.
Thus, we have not modified the language of our report.
9. We have modified language in the report to reflect Treasury's
updated information on enactment of the International Emergency
Economic Powers Enhancement Act.
[End of section]
Appendix VI: GAO Contact and Staff Acknowledgments:
GAO Contact:
Joseph A. Christoff at (202) 512-8979 or christoffj@gao.gov:
Staff Acknowledgments:
Muriel J. Forster, Assistant Director; Jeffrey D. Phillips; Leah
DeWolf; Jennifer L. Young; Lynn Cothern; Mark B. Dowling; Mark C.
Speight; and Martin De Alteriis made key contributions to this report.
[End of section]
Footnotes:
[1] Multilateral bodies include formal treaty-based organizations, like
the United Nations and International Atomic Energy Agency, and
informal, nonbinding arrangements of like-minded countries, like the
Nuclear Suppliers Group and the Proliferation Security Initiative.
[2] NSG comprises 45 countries that are suppliers of nuclear-related
technology.
[3] State lists about 80 countries as PSI participants.
[4] This assistance provided training such as workshops to help
countries improve their export control laws and regulations, and
equipment, such as radiation detectors, that help export control
officers locate illicit radioactive material.
[5] These countries were Malaysia, Pakistan, Republic of Korea,
Singapore, South Africa, Turkey, and UAE. State provided export control
assistance to six of these countries, while Energy provided assistance
to all seven.
[6] Treasury maintains a specially designated nationals list that
contains the names of individuals and entities that are subject to
penalties under its various sanctions programs.
[7] Executive Order 13382, "Blocking Property of WMD Proliferations and
Their Supporters," July 1, 2005.
[8] Public Law 109-177, USA Patriot Improvement and Reauthorization Act
of 2005, March 9, 2006, and Public Law 110-96, International Emergency
Economic Powers Enhancement Act, October 16, 2007.
[9] Resolution 1673, adopted on April 27, 2006, renewed the 1540
committee for 2 years, and re-emphasized the steps each state must take
to implement its 1540 obligations. The Security Council requested
states to report to the 1540 committee on steps they have taken or
intend to take to implement resolution 1540. Resolution 1673 calls upon
states that have not yet presented a report to the committee to do so
without delay and encourages all states that have submitted such
reports to provide, at any time or upon the committee's request,
additional information on their implementation of resolution 1540.
[10] Current NSG members are Argentina, Australia, Austria, Belarus,
Belgium, Brazil, Bulgaria, Canada, China, Croatia, Cyprus, Czech
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary,
Ireland, Italy, Japan, Kazakhstan, Republic of Korea, Latvia,
Lithuania, Luxembourg, Malta, Netherlands, New Zealand, Norway, Poland,
Portugal, Romania, Russian Federation, Slovakia, Slovenia, South
Africa, Spain, Sweden, Switzerland, Turkey, Ukraine, United Kingdom,
and United States.
[11] Office of the President, "President Announces New Measures to
Counter the Threat of WMD," Remarks by the President on Weapons of Mass
Destruction Proliferation (Washington, D.C.: Feb. 11, 2004).
[12] Enrichment is the process of increasing the amount of uranium
usable in a nuclear reactor or nuclear weapon. Reprocessing is the
chemical process of removing impurities from plutonium, the byproduct
of burning uranium in a nuclear reactor, so that it can be reused in a
nuclear reactor or nuclear weapon.
[13] The unit was formerly named the Nuclear Trade Analysis Unit .
[14] Recommendations to be Considered by the Advisory Committee on
Safeguards and Verification within the Framework of the IAEA Statute to
Further Improve the Effectiveness and Efficiency of the Safeguards
System.
[15] The United States also established and gained support for the
Group of Eight (G8) global partnership against proliferation, which
pledges funds to train and equip countries to deter the spread of WMD.
However, limited G8 assistance was pledged for export and border
controls and none of the G8 assistance was pledged to the countries in
the scope of our review.
[16] GAO, Nonproliferation: Better Controls Needed to Plan and Manage
Proliferation Security Initiative Activities, GAO-06-937C (Washington,
D.C.: Sept. 28, 2006).
[17] INECP's Commodity Identification Training familiarizes customs
inspectors with the materials, components, and equipment sought by WMD
procurement programs. It simplifies export control lists by grouping
items into categories and aids recognition through a focus on physical
appearance using pictures and demonstration kits.
[18] We did not include DOD's ICP in our evaluation of program
assessments or comment on the results of its assistance efforts because
only one ICP country, Singapore, is in the scope of our review. Also,
ICP is currently under reorganization and performs no program
assessments and produces no annual report.
[19] One country accepted the U.S. offer of export control assistance
on condition that all U.S. government agencies refrain from publicly
mentioning its participation in any EXBS-funded activity, according to
State.
[20] The EXBS strategic plan states that the program continuously
reevaluates the effectiveness of recipient countries' strategic trade
controls, remaining deficiencies, and the contributions made by EXBS.
[21] GAO, Human Capital: A Guide for Assessing Strategic Training and
Development Efforts in the Federal Government, GAO-04-546G (Washington,
D.C.: March 2004).
[22] Energy developed 34 country plans for its 47 INECP assistance
recipients, according to Energy officials. One plan covers 15 European
Union countries and one plan--for Uzbekistan--has not been updated
because, according to the officials, Energy has been unable to work
with Uzbekistan since that government stopped cooperating with the
United States.
[23] Treasury's OFAC administers two distinct sanctions programs
designed to combat WMD proliferation in addition to the program under
Executive Order 13382. According to Treasury, these are (1) an import
ban that provides for State to name certain foreign persons from whom
U.S. persons cannot import goods, services, or technology; and (2) a
highly enriched uranium blocking program intended to protect highly
enriched uranium from attachment by third parties.
[24] State imposed sanctions under the Iran Nonproliferation Act (as
amended, the Iran and Syria Nonproliferation Act) from 2003 through
2006 for the transfer to, or acquisition from, Iran or Syria of goods,
services, and technology controlled under multilateral export control
lists or otherwise having the potential to make a material contribution
to the development of WMD or cruise or ballistic missile systems.
Entities involved in conventional arms transfers were the most widely
sanctioned, followed by the chemical-biological, missile, and nuclear
areas.
[25] ICE stated that many of the components which may be sought by
procurement networks for a developing nuclear program are categorized
as dual-use technologies, having both nuclear and nonnuclear,
commercial and military applications. Unless the true ultimate
application of the dual-use components is known, according to ICE, it
is difficult to accurately apply metrics to assess export enforcement
activities involving nuclear proliferation.
[26] GAO, Standards for Internal Control in the Federal Government,
GAO/ AIMD-00-21.3.1 (Washington, D.C.: November 1999). Federal
standards for internal control state that management should (1) have
effective procedures to monitor results; (2) track major agency
achievement in relation to its plans; (3) establish and monitor
performance measures and indicators; (4) have documentation, whether in
paper or electronic form, useful to managers in controlling their
operations and to auditors and others involved in analyzing operations;
and (5) ensure there are adequate means of communicating with, and
obtaining information from, external stakeholders that may have a
significant impact on the agency achieving its goals.
[27] Executive Order 13382, "Blocking Property of WMD Proliferators and
Their Supporters," July 1, 2005.
[28] Public Law 109-177, March 9, 2006.
[29] Public Law 110-96, the International Emergency Economic Powers
Enhancement Act, October 16, 2007.
[30] 50 U.S.C. App. § 2401 et seq. Authority granted under the act
lapsed in August 2001. However, Executive Order 13222, Continuation of
Export Control Regulations, which was issued in August 2001 under the
authority provided by the International Emergency Economic Powers Act
(50 U.S.C. §§1701 et seq.), continues the controls established under
the act, and the implementing Export Administration Regulations.
[31] GAO, Export Controls: Challenges Exist in Enforcement of an
Inherently Complex System, GAO-07-265 (Washington, D.C.: Dec. 20,
2006).
[32] Prepared Remarks of Attorney General Alberto R. Gonzales at the
Global Initiative to Combat Nuclear Terrorism Law Enforcement Summit;
Miami, Florida; June 11, 2007.
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