Economic Warfare Powers of the U. S. President, by Eric Terzuolo “

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Economic Warfare Powers of the US President

by Eric R. Terzuolo

The United States is in a condition of national emergency. More precisely, multiple national emergencies, involving what the US president considers potential threats, deriving from conditions in or policies of individual foreign states, or from transnational phenomena. Ironically, on 8 November 2016 (Election Day), when some might argue a different national emergency was developing, President Obama confirmed the continuation for another year of the emergency with respect to the proliferation of weapons of mass destruction.1 He extended the operation of then-president Bill Clinton’s executive order of November 1994, confirming that the «proliferation of weapons of mass destruction and the means of delivering them continues to pose an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States.» A few days earlier, Obama had reconfirmed a state of emergency with Sudan that dated back to 1997.2 Other countries deemed to create national emergencies for the United States include Burma (reconfirmed in May 2016), the Democratic Republic of the Congo (reconfirmed October 2016), not surprisingly North Korea (June 2016), and Iran (November 2016, despite the 2015 nuclear deal).

Such declarations of national emergency are in fact so numerous and frequent that they attract little general notice, other than from foreign governments that are targeted. But, while their effect is clearly limited in time (generally one year, hence the need for numerous renewals), they are a foundation of the US president’s power to conduct economic warfare. In essence, an emergency situation allows the president to employ economic warfare authorities included in multiple legislative acts. The US system of

1 The White House, Office of the Press Secretary, «Notice – Continuation of the National

Emergency with Respect to Weapons of Mass Destruction», 8 November 2016. 2 The White House, Office of the Press Secretary, «Notice – Continuation of National Emergency with Respect to Sudan», 31 October 2016.

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export controls, sanctions, and embargoes is highly specific, and rooted in the distinctive historical experience of the United States. The legislation regarding such authorities and the practice of emergency declarations have distinct histories, which require separate discussion before one can understand fully how they intersect.

Evolution of the President’s Statutory Authority for Economic Warfare

Until the 20th century, the US had no legislation specifically devoted to the economic warfare powers of the president. Article II, section 1 of the Constitution, however, vests executive power in the president, including the conduct of foreign affairs and by implication authority to impose economic sanctions.3 While power to regulate commerce with foreign countries, under article I, section 8 of the Constitution, rests with Congress, legislators have a history of broadly delegating said power to the president.

Presidents’ views on their latitude in exercising such authority admittedly have differed. Abraham Lincoln, still today widely considered the greatest US president, was inaugurated in March 1861, after seven states in the South already had announced their secession, created a government, and begun raising an army. With the Congress not yet in session, Lincoln declared a naval blockade of the ports of the secessionist states and enlarged the Navy. Despite the incursion on its prerogatives, the Congress subsequently rubber-stamped these and other emergency actions.4 Another president who took an expansive view of his powers was Theodore Roosevelt (1901-1909), who argued that only specific restrictions and prohibitions in the Constitution or in legislative acts limited presidential power. (His successor, William Howard Taft, much less of an activist president, took the opposite view, i.e. that presidents needed explicit grants of authority.)

Not surprisingly, however, it was US entry into the First World War in April 1917 that led to a crystallization of the economic warfare powers of

3 See the discussion in John P. Giraudo, «Waging Economic Warfare: The Sanctions Power

Under the Constitution», NYU Journal of International Law and Politics, 19, 1986-87, pp. 935-957. 4 Harold C. Relyea, C[ongressional] R[esearch] S[ervice} Report for Congress: National

Emergency Powers, 30 August 2007, pp. 5-6.

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the presidency. On 6 October 1917, Congress approved the Trading with the Enemy Act (50 U.S.C. App. §§ 1—44). It embodied the concept of “total war,” treating entire national populations and assets as contributing to the war effort, hence turning civilian populations into enemies. The Act: (1) prohibited all trade and communication with the enemy or its allies; (2) allowed the president to regulate currency and exchange transactions with foreign countries; (3) allowed the president to appoint a custodian to hold and administer money and property belonging to an enemy or its allies. No comprehensive regulations accompanied the Trading with the Enemy Act, but Woodrow Wilson made ample use of its provisions against Germany, including selling off seized German property to finance the US war effort.

The Trading with the Enemy Act provided the legal basis for several presidential acts of economic warfare during the Second World War as well, both before and after the US fully entered the conflict. In April 1940, for example, Franklin D. Roosevelt froze the US assets of German-occupied Denmark and Norway. Shortly thereafter, Congress amended the Trading with the Enemy Act to make it absolutely clear that it allowed the freezing of assets of friendly countries. On 18 December 1941, shortly after the Pearl Harbor attack and US entry into the war, Congress further amended the Act, expanding the US president’s power to take title to foreign-owned property and dispose of it for the benefit of the United States. As the president’s agent, the Department of the Treasury conducted numerous asset freezes during the war. It also moved vigorously to block transactions between US companies and countries friendly to the Axis Powers that hypothetically could serve as conduits for US goods and services to reach the enemy.

In sum, the Second World War led to expansion and consolidation of the US president’s economic warfare powers, and wide latitude in their employment. Economic measures were not solely punitive, including also support to friendly states. Assistance to the United Kingdom under the Lend-Lease Program is well known, but the program also included assistance to China, in a state of all-out war with Japan as of July 1937. The United States was the main supplier of oil, steel, iron, and other commodities to Japan, and, in the attempt to pressure the Tokyo government, Roosevelt ultimately imposed a full embargo on exports and a freeze on Japanese assets in the United States, basing his action on the Trading with

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the Enemy Act as amended. 5 This contributed directly to the Japanese decision to attack the United States on 7 December 1941.

The enhanced Trading with the Enemy Act is still in effect, and remained the cornerstone of presidential economic warfare powers until passage in 1977 of the International Emergency Economic Powers Act (IEEPA). That said, the Cold War resulted in a number of other legislative acts with far-reaching implications. The Second Decontrol Act of 1947, while largely lifting wartime controls over US exports, still allowed the US government to control, via a licensing procedure, exports related to metals, fuels, and food. US trade restrictions, in fact, became a hot issue in the deteriorating US/Soviet relationship, and the Soviet freeze on manganese and platinum exports to the US in late 1948 helped prompt the Congress to approve the far-reaching Export Control Act in February 1949. It required US Department of Commerce licenses for all exports, and established control lists to block or limit severely the sale of important commodities to adversaries.6 The so-called “Battle Act,” more formally the Mutual Defense Assistance Control Act of 1951, prohibited US assistance to countries that exported to communist states any goods that the US itself would not export.

The 1950 Defense Production Act,7 enacted at the beginning of the Korean War and still in effect, addressed a different dimension of the economic warfare powers of the US president. It granted the president extensive powers to mobilize national economic resources for the country’s defense. The president can require US businesses to sign contracts or fulfill orders necessary for national defense, allocate materials and resources to ensure

5 «The President Freezes Japanese and Chinese Assets in the United States. White House

Statement and Executive Order No. 8832, July 26, 1941», in The Public Papers and Addresses of Franklin D. Roosevelt, Compiled with Special Material and Explanatory Notes by Samuel I. Rosenman. 1941 Volume – The Call to Battle Stations, New York, Harper &

Brothers Publishers, 1950, pp. 281-3. 6 James K. Libbey, «CoCom, Comecon, and the Economic Cold War», Russian History 37, 2010, pp. 144-6. For a detailed explanation of the Export Control Act, see Paul H. Silverstone, «The Export Control Act of 1949: Extraterritorial Enforcement», University of

Pennsylvania Law Review 107, 3, January 1959, pp. 331-62. 7 Described in detail by Department of Defense legal adviser Alfred L. Scanlan, «The Defense Production Act of 1950», Rutgers Law Review, 5, 5, 1950-1, pp. 518-29.

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that scarce or critical items remain available, and exercise other powers related to defense mobilization of the economy, including controlling wages, prices, and credit, and even settling labor disputes. The effects are strictly internal, and do not involve authorities to take actions directly against other countries.

Returning to externally oriented instruments of economic warfare, it is worth noting that US presidents have not been uniform in their approach to, or enthusiasm for, export controls. As compared to his predecessors, John F. Kennedy, though still limited by domestic political concerns, was interested in relaxing the embargo against communist countries, and initiated a policy review in 1963. Limited liberalization did take place during the subsequent Johnson presidency, and the political impetus behind trade restrictions did not really resurface until the late 1970s, in response to the Soviet invasion of Afghanistan.8

The relevant legal framework, however, did not change dramatically. After seven renewals in the 1950s and 60s, the Export Control Act gave way in 1969 to the Export Administration Act, replaced in turn by the Export Administration Act of 1979, but «the basic system of controls and the theory implicit in the system . . . remained substantially the same.»9 Unlike the 1949 legislation, the 1969 and 1979 acts did contain some language suggesting that the president’s power to impose a total embargo on exports to a given country was not absolute, although it remained far from clear that there would be any way of stopping the president from doing so.10

The IEEPA of 1977 deals specifically with the international economic warfare powers the president can deploy in the event of an emergency

8 Alan P. Dobson, «The Kennedy Administration and Economic Warfare Against Communism», International Affairs, 64, 4, Autumn 1988, pp. 599-616. 9 Arthur T. Downey and Harold J. Berman, «The Export Administration Act: International

Aspects», Proceedings of the Annual Meeting (American Society of International Law), 74, 17-19 April 1980, pp. 83. 10 It is important to bear in mind, however, that this legislation deals with the export of non-military items and dual-use technology, under the control of the US Department of

Commerce. Exports of military items have been controlled by the Department of State under different legislation, e.g. the Mutual Security Act of 1954 and more recently the Arms Export Control Act (AECA) of 1976 and the International Traffic in Arms Regulations (ITAR), which implement the AECA.

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short of war. The legislation containing the IEEPA also modified the Trading with the Enemy Act, restricting the president’s power to regulate domestic and international finance, while the IEEPA itself allowed the president to control future international economic transactions. The president’s powers under IEEPA in declared cases of national emergency are broad, including the powers to freeze foreign assets and to impose controls on banking transactions involving foreign interests. As compared, however, with the Trading with the Enemy Act, the IEEPA includes a number of limitations on presidential authority. The IEEPA, for example, does not expressly grant the president the power to take ownership of («vest in») foreign interests, though the president can dispose quite flexibly of foreign assets in other ways. Consultation with Congress before taking action under IEEPA is perhaps more a request than an obligation, since the president can decide what constitutes «consultation.» The IEEPA is truly central to current legislation providing the US president with economic warfare authority. Presidents George W. Bush and Barack Obama, for example, invoked the IEEPA in measures to keep the 1979 Export Administration Act in effect following its expiration in 2001.11

Not all legislation on economic sanctions is focused on providing powers to the president. Congress also can force the president’s hand with sanctions laws that compel executive branch action, once they are signed into law. In the 1970s, 80s, and 90s, for example, Congress passed 24 sanctions bills. Among the most widely known of these is the Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996, also referred to as the Helms-Burton Act, after its principal sponsors in the Senate and House of Representatives respectively. The intention was to tighten a series of existing sanctions against Castro’s Cuba and allow for extraterritorial action against foreign companies that invested in US property in Cuba that the state had expropriated. Business circles in the US and abroad opposed the legislation and unsuccessfully pressured US president Clinton not to sign it into law.12 It remained in effect, however, some 20 years later, and the

11 The White House, Office of the Press Secretary, «Executive Order -- Continuation of Export Control Regulations», 17 August 2001, and «Notice – Continuation of the National

Emergency with Respect to Export Control Regulations», 15 August 2012. 12 Emre Hatipoglu, «A Story of Institutional Misfit: Congress and US Economic Sanctions»,

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Obama Administration had to take its effects into account during efforts to “normalize” relations with Cuba.

Sanctions legislation is inherently less flexible than the exercise of presidential authority. Once it acquires the force of law, changes require further legislative action, a process in which well-organized lobbying efforts can create high barriers. Presidents, on the other hand, can impose sanctions readily and easily cancel them, e.g. should the cancellation provide useful leverage in a negotiation, or if sanctions prove ineffective. Clinton for example rescinded an executive order allowing for sanctions against China after eight months, precisely for the latter reason.13

Declarations of National Emergency

The aforementioned IEEPA not only empowers the president to take certain actions in the event of an emergency, but also regulates how a president can declare an emergency to exercise said powers. The first declared US national emergency, however, had come 60 years before the IEEPA. In February 1917, two months before announcing US entry into war, Wilson announced an emergency stemming from insufficiency of ship tonnage to transport US products “to their consumers abroad and within the United States,”14 an emergency that remained in effect until 1921. (The phrasing illustrates, among other things, that invocations of national emergency can reflect both international and domestic concerns.) Franklin D. Roosevelt later would make considerable use of emergency declarations, the first in March 1933, almost immediately upon assuming office, to help stop a run on US banks in connection with the economic crisis. He based this declaration on the Trading with the Enemy Act of 1917, which Congress amended to make it applicable to any time of declared national emergency, not just wartime. On 27 May 1941, more than six months before the US fully entered the war, Roosevelt declared a state of «unlimited» national emer-

Foreign Policy Analysis, 10, 2014, pp. 432, 435. 13 Ibid., pp. 432-6. 14 See «Proclamation 1354—Emergency in Water Transportation of the United States», 5

February 1917. Available from the American Presidency Project online, presidency. ucsb. edu.

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gency, which would persist until 1947.15 It was based on the 8 September 1939 declaration of a «limited» national emergency, which Roosevelt had justified as necessary to invoke powers required for protecting US neutrality16 following the outbreak of war in Europe. In 1970, Richard Nixon declared a national emergency in connection with a postal strike, and then again in 1971, temporarily terminating some trade agreement provisions.

The Roosevelt and Nixon emergency declarations were still in effect as the Vietnam War was winding down. Tension between the executive and legislative branches of government is a recurring feature of US politics, and at that point the Congress was in a mood to restrain and constrain presidential authority, having come to believe that the White House had trampled on its prerogatives, notably on matters of war and peace. The Senate’s Special Committee on the Termination of the National Emergency began its work in 1973, finding inter alia that the four proclamations of national emergency gave force to some 470 provisions of US federal law.17

After a lengthy legislative process, Congress produced two key laws: The National Emergencies Act of 1976 and the International Emergency Economic Powers Act (IEEPA) of 1977 discussed above. The National Emergencies Act put all delegations of emergency powers stemming from the four then current emergency proclamations into dormancy. New emergency proclamations would be required to obtain emergency powers, and the law laid out a detailed procedure for presidential proclamations and legislative oversight. Importantly, under the law, emergency proclamations terminate after one year, and the president must explicitly renew them in order to conserve the relevant statutory emergency authority. (A joint resolution of the Senate and House of Representatives can rescind a presidential emergency declaration.) The president must specify what powers and authorities the emergency declaration is intended to activate,

15 Relyea, op. cit., p. 7. 16 The Public Papers and Addresses of Franklin D. Roosevelt, with a Special Introduction and Explanatory Notes by President Roosevelt. 1939 Volume: War – and Neutrality, New

York, The Macmillan Company, 1941, pp. 482-4. 17 Emergency Powers Statutes: Provisions of Federal Law Now in Effect Delegating to the

Executive Extraordinary Authority in Time of National Emergency, a report of the Special

Committee on the Termination of the National Emergency, United States Senate, 19 November 1973, p. iii.

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and is subject to accountability measures and reporting requirements.

The IEEPA allowed the president to control future international economic transactions during a declared national emergency, and established procedures for activating IEEPA, including close presidential consultation with Congress when declaring an emergency. The system of congressional regulation established under the National Emergencies Act also applies in such cases.18

Declaring an IEEPA-triggering emergency requires «an unusual and extraordinary threat» to the «national security, foreign policy, or economy of the United States.»19 But there is reason to view declarations of emergency as political acts falling within the president’s purview, and hence not subject to judicial review. Emergencies with respect to foreign countries are specific to individual countries. Thus an emergency associated with country A cannot be used to sanction country B. Also, the president only can use the powers granted under the IEEPA against the specific threat identified in invoking the statute.20

In October 2014, national daily USA Today tallied at least 53 presidential declarations of national emergency following passage of the National Emergencies Act in 1976, with many of these remaining in effect for protracted periods.21 The US Export Administration, as of 6 January 2016, included in its compendium of documents actively relevant to its work some 34 items with «continuation of emergency» in the title. Document titles in the compendium also offer a quick guide to issues and countries that have been of sanctions concern. Weapons of mass destruction, Iran, Iraq, and North Korea feature prominently, as do, at varying points, Cuba, China and Hong Kong, Serbia and Montenegro, Syria, Lebanon, the Taliban, India, Pakistan, Rwanda, and persons connected with the situation in Ukraine and the Crimean Peninsula.22

18 Relyea, op. cit., p. 17. 19 50 USC1701(a) (1982). 20 See Giraudo, op. cit, 952-6. 21 Gregory Korte, «Special Report: America’s Perpetual State of Emergency», USA Today, 23 October 2014. 22 Export Administration, Office of the Chief Counsel for Industry and Security, Legal Authority: Export Administration Regulations, 6 January 2016.

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What Good is All That Presidential Power?

Beyond the matter of the president’s legal authority to conduct economic warfare via sanctions is the separate issue of how useful, and hence, in a sense, justifiable, sanctions have been as tools of US policy. In an influential analysis, Hufbauer et al. examined 174 cases of economic sanctions from the First World War to the Organization of American States sanctions against Ecuador in 2000. They found sanctions to have been at least partially effective in 34% of the cases, though not surprisingly more successful in engendering «modest policy changes» than in promoting regime change or major policy shifts.23 A study of US unilateral economic sanctions, using 1980-1998 data, supported broadly negative conclusions regarding the effectiveness of sanctions in compelling changes in behavior in the targeted states. The study also found a relatively high cost to the US economy. While comprehensive sanctions resulted in significant reductions in US trade with target countries, Japan and the countries of the European Union were ready to step in.24 Bryan Early, in a study of US sanctions between 1950 and 2000, concluded in fact that US policy makers had few ways of convincing US allies to avoid sanctions busting when the latter had strong economic motivations to circumvent sanctions.25 Indeed, the ability or inability of targeted states to find replacements for what sending states are attempting to deny them26 is an important determinant of sanctions effectiveness.

And yet, despite ample reason to question the effectiveness of economic sanctions, they remain popular, and often are presented starkly as the natural alternative to military action. There has been a certain evolution in thinking about sanctions. Until the 1990s, their potential humanitarian impacts simply did not receive much attention. The 1980s sanctions against

23 Gary Clyde Hufbauer, Jeffrey J. Schott, Kimberly Ann Elliott, and Barbara Oegg, Economic Sanctions Reconsidered, 3d ed., Washington, DC, Peterson Institute for International Economics, 2007. 24 Jiawen Yang, Hossein Askari, John Forrer, and Hildy Teegen, «US Economic Sanctions:

An Empirical Study», The International Trade Journal, 18, 1, Spring 2004, pp. 23-62. 25 Bryan R. Early, «Alliances and Trade with Sanctioned States: A Study of US Economic

Sanctions, 1950-2000», Journal of Conflict Resolution, 56, 3, June 2012, p. 569. 26 The model in Hamid Beladi and Reza Oladi, «On Smart Sanctions», Economic Letters, 130, 2015, pp. 24-27, for example, addresses the question of «elasticity of substitution.»

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President Woodrow Wilson

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apartheid South Africa, even if they did worsen economic conditions for the black population, seemed like a success story in peaceful promotion of fundamental political change. On the other hand, the humanitarian impact of sanctions against Saddam Hussein’s Iraq after the liberation of Kuwait attracted very considerable negative international attention. Consequently the concept of targeted or “smart” sanctions gained increasing traction during the 1990s. The objective is to force policy change via measures directly targeting national decision makers and those in a position to influence them, while minimizing damage to broad populations.27

The US has been in smart sanctions mode ever since, and the Obama Administration, which tended to treat “smart” and “effective” as synonyms, was deeply devoted to such targeted measures. The Administration attributed the Iran nuclear deal, which it considered a signal accomplishment, in significant part to the impact on Iran of intelligently targeted sanctions. It was much more difficult, however, to spin two other cases of targeted sanctions – those against Russia and those against North Korea – as success stories.

At the end of 2016, it was frankly difficult to imagine how and to what degree the incoming US president would deploy economic warfare tools. With respect to Russia specifically, Trump’s evident sympathy for Russian president Putin seemed likely to generate significant tension within the president-elect’s own party. What was not changing from one presidential administration to the next, however, was the highly significant, even though not total, economic warfare power that presidents can wield, if they decide that such tools are not in fact overrated.

27 On the origins of smart sanctions, and intrinsic problems in implementing them, see Joy

Gordon, «Smart Sanctions Revisited», Ethics & International Affairs, 25, 3, Fall 2011, pp. 315-335.

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After the Cold War: Multilateral Export Control Regimes in the Second Nuclear Age

by Emanuele Farruggia

The current multilateral export control regime is deeply rooted in the Cold War era. This is especially true of the Wassenaar Arrangement which, albeit in a totally different geopolitical context, inherited some of the features of the Co.Com, which controlled exports of strategic items to Communist countries. The other arrangements, the Zangger Committee, the Nuclear Suppliers Group the Australia Group and the MTCR are part of the global non-proliferation regime of weapons of mass destruction, grown out of the Non Proliferation Treaty and of subsequent WMD related Treaties such as the Biological Weapons Convention (BWC) and the Chemical Weapons Convention (CWC). The regimes, therefore, although established during the First Nuclear Age, shaped by the global competition between the United States and the Soviet Union, are operating now in the geopolitical context of the Second Nuclear Age, characterized by a multiplicity of powers in possession of – or striving to – acquire weapons of mass destruction. Moreover, the potential threat of WMD or CBRN terrorism, took a new dimension after the Twin Towers attack of 9/11/2001 and the subsequent discovery, in Afghanistan, of plans by Al Qaida to develop non-conventional weapons. Stemming the spread of Weapons of Mass Destruction (Chemical, Biological, Radiological or Nuclear) among States, remains the main challenge of the global non-proliferation regime but, increasingly, the focus is shifting on the threat posed by non-state actors.

The NPT and the nuclear export control regimes (ZAC/NSG)

In 1958, originating from an Irish proposal, the negotiations on a Treaty on the Non-Proliferation of Nuclear Weapons started in Geneva. The Treaty, based on a joint US-Soviet draft, was signed on June 12th, 1968, adopted by the UN General Assembly and opened to signature on July 1st, 1968.

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The Treaty entered into force on March 5th, 1970. On May 18th 1974, the first Indian nuclear test («Smiling Buddha») took place. The test was the first challenge to the NPT which recognizes (Art IX, 3) as a Nuclear-Weapon State «one which has manufactured and exploded a nuclear weapon or other nuclear explosive device prior to 1 January 1967».

The Zangger Committee (ZAC).1 In March 1971, an informal group of major suppliers of nuclear materials and technology – some already party to the NPT, some intending to join – started to meet in Vienna, under the Chairmanship of Professor Claude Zangger of Switzerland to look after actual implementation of Art III.2 of the Treaty which states that: «Each State Party to the Treaty undertakes not to provide: a) source or special fissionable material, or b) equipment or material especially designed or prepared for the processing, use or production of special fissionable material, to any non-nuclear–weapon State for peaceful purposes, unless the source or special fissionable material shall be subject to the safeguards required by this Article».

The informal and confidential meetings began after the International Atomic Energy Agency (IAEA, the «watchdog of the NPT») had already drafted a model Safeguards Agreement (INFCIRC/153) that would meet the obligations of Article II.1 of the Treaty «Each non-nuclear-weapon State Party to the Treaty undertakes to accept safeguards, as set forth in an agreement to be negotiated and concluded with the International Atomic Energy Agency».

On August 22, 1974, ten Member States of the Agency (Australia, Denmark, Canada, Finland, Norway, the USSR, the UK and the US, the Federal Republic of Germany and the Netherlands) sent letters to the Director General of the IAEA informing him of the understandings they had reached on the implementation of their commitments under Art III.2 of the Treaty.

The understandings among the ZAC Members consisted of two Memoranda. The first covered exports of «source and special fissionable materials» and the second of «equipment or material especially designed or prepared for the processing, use or production of special fissionable material». Since the export of such materials and equipment to a non-nuclear-

1 Fritz W. Schmidt, «The Zangger Committee: Its History and Future Role», The Nonproliferation Review, Fall 1994, pp. 38-44.

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weapon State would «trigger» a requirement for IAEA safeguards, the lists of such items included in the two Memoranda were referred to collectively as «Trigger Lists». Each item on the list, however should have a specific nuclear end-use rather than a «dual use» suitable for other industrial use. The «Trigger List», with successive amendments, has regularly been published by the IAEA as an information circular (INFCIRC/2009). Since then, the Zangger Committee, has expanded to include 39 members and meets regularly in Vienna. Its role, however, as a global point of reference for export control authorities and for the nuclear industry, has been largely overtaken by the Nuclear Suppliers Group.

The Nuclear Suppliers Group (NSG).2 In the aftermath of the Indian Nuclear Test, a group of seven nuclear suppliers (Canada, France, the US, the Soviet Union, the United Kingdom, the German Federal Republic, Japan), held, in November 1975, the first meeting of the «London Club». The Group was a «cartel» of the main nuclear industry players, including France, which at the time was not a party to the NPT. Its goal was to define requirements for nuclear supply additional to those enshrined in the Zangger Committee «Trigger List». In 1976 the «London Club» agreed on a set of guidelines, incorporating basically the «ZAC Trigger List» and adding further conditions of supply, such as: the application of physical protection measures which had been in the meantime developed by the IAEA; the application of safeguards also to facilities built with supplied technology («know how clause»).

The London Club guidelines (INFCIRC/254), that were duly reported to the IAEA in 1978 , aimed at strengthening re-transfer provisions and

2 Information Circular INFCIRC/539/Rev.6 – Communication Received from the Permanent Mission of Argentina to the International Atomic Energy Agency on Behalf of the

Participating Governments of the Nuclear Suppliers Group. Tadeusz Strulak, «The Nuclear Suppliers Group», The Nonproliferation Review, Fall 1993, pp. 2-10. Ian Anthony,

Christer Ahlström and Vitaly Fedchenko, Reforming Nuclear Export Controls. The Future of Nuclear Suppliers Group, SIPI Research Report 22, Oxford U. P. 2007. Nuclear Trade

Outside the Nuclear Suppliers Group, Briefing paper prepared by the Australian Safeguards and Non-Proliferation Office (ASNO), with input from DFAT and other government agencies, January 2009. Mark Hibbs, The Future of Nuclear Suppliers Group, Carnegie Endowment for International Peace, 2011. Center for Security Studies (CSS), ETH

Zurich, «The Nuclear Suppliers Group at the Crossroads», CSS Analysis in Security Policy, No. 127, February 2013.

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preventing the transfer of enrichment and reprocessing technologies as they can lead to the production of material usable for the manufacture of nuclear weapons. The Club, which other relevant nuclear supplier countries (Australia, Belgium, Czechoslovakia, Italy, the Netherlands, Poland, Sweden, and Switzerland) joined in 1978, did not meet until 1991 when it was revitalized as the Nuclear Suppliers Group. The 1990 Gulf War and the discovery of the Iraqi clandestine nuclear programme, were landmark events in the world of Non-Proliferation. The IAEA began to review its approach to the verification of compliance with the so called «full scope safeguards agreement” (INFCIRC/153) – which Iraq had circumvented – and elaborated the Additional Protocol. The Iraqis had indeed succeeded in procuring dual use items not covered by the NSG guidelines in order to manufacture «Trigger list» items. Therefore, the NSG, at its 1992 Warsaw Plenary, added a Part 2 to its guidelines which included dual-use equipment, material and technology that could make a significant contribution to an unsafeguarded nuclear fuel cycle or nuclear explosive activity. Operationally, the NSG developed a framework for consultation and exchange of information (Joint Information Exchange-JIE) on procurement activities by potential proliferators as well as of notifications not to authorize transfers (denials). The «no undercutting» principle, by which NSG participants committed not to authorise transfers of dual use equipment or technology to a specific country that another participant had previously denied without first consulting with that participant, was also introduced in 1992. At the same time, the NSG adopted the US policy of requiring «full scope safeguards» for the supply of Trigger List items to all non-nuclear weapon States. A further measure to strengthen export controls was the inclusion in the NSG guidelines, in 1994 of the so called «Non Proliferation Principle» whereby a supplier authorizes the transfer only if it would not contribute to the proliferation of nuclear weapons. Another important addition to the Guidelines was the adoption of the «catch all» mechanism in 2004, in order to control the export of nuclear related items that are not included in the control lists. The mechanism, also adopted by other export control regimes, was introduced after the discovery of the Abdul Qadeer Khan illicit procurement network. The NSG guidelines have become the gold standard for nuclear export controls and they have been included in the text of several UN Security Council Resolutions which, since 2007,

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have imposed restrictive measures on nuclear trade with Iran and North Korea. 3

The main political issue nowadays on the agenda of the NSG is the Indian application for membership. It is paradoxical that the NSG, established as a reaction to the first Indian Nuclear Tests, is seriously considering the admission of New Delhi. In 2008, the NSG Participating Governments adopted a «Statement on Civil Nuclear Cooperation with India». This followed the conclusion by India of a new safeguards agreement with the IAEA on India’s civil nuclear facilities, the commitment to sign and adhere to an Additional Protocol to that agreement and to support efforts to limit the spread of enrichment and reprocessing technologies and, among other commitments, to continue the moratorium on nuclear testing. The policy statement permits the transfers of Trigger List and dual-use items and related technology to India for use in IAEA safeguarded nuclear facilities. Since then, India’s push for full membership, as a Participating Government in the NSG, gained momentum, with the full endorsement of the US, France, Canada, the United Kingdom, the Russian Federation and Japan, i.e. the original members of the London Club. India’s bid for admission is facing opposition by China – for obvious geopolitical reasons – and by some NSG Participating Governments more keen to preserve the integrity of the NPT. This prompted the concurring candidacy by Pakistan. At the same time China is currently defending its supply of nuclear power reactors to Pakistan under the so called «grandfather clause». The debate inside the NSG is thus reflecting the major shift in the balance of nuclear power. The membership of the NSG has nowadays reached the number of 48 Participating Governments.

3 Michael Beck, «Reforming the Multilateral Export Control Regimes», The Nonproliferation Review, Summer 2000.

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The Australia Group (AG)4

In 1984, the findings that Chemical Weapons had been used by Iraq against Iran and subsequent revelations that those weapons had been developed with the active involvement of Western corporations, prompted the Australian Government to launch an initiative aimed at reinforcing export controls on chemical materials and equipment.

The first meeting of a group of western States (Australia, the 12 Member of the European Community, the US, Canada, New Zealand, Japan) took place at the Australian Embassy in Paris in June 1985. The goal of the meeting was to harmonize national licensing measures and enhance cooperation in order to prevent further proliferation. At the meeting, the Group adopted a core list of five chemical substances while at a follow-through meeting in September a «Warning List» of dual-use CW precursors and bulk chemicals was also adopted. In 1989, intelligence related to the Rabta Chemical Weapons plant in Libya, built with the assistance of western firms, further highlighted the need of stronger export controls. Notification of denials was introduced and Biological Weapons were put on the agenda. The dissolution of the Warsaw Pact drew attention to the risk of proliferation of Chemical Weapons from the stockpiles of former WP member States. In the same year, the first guidelines on Biological Weapons were adopted.

The signature, in January 1993 of the Chemical Weapons Convention (CWCprompted AG Member States to consider the interaction between the AGs’ list of chemicals and the CWC. The CWC contains a number of provisions related to the transfer of chemicals and impose specific restrictions on the trade in chemicals listed in the Convention. The entry into force of the CWC, which all AG Member States signed and ratified, further strengthened the AG. Moreover, the establishment by the AG of an effective export licensing system covering biological agents and toxins, significantly reinforced the implementation of the pre-existent (1972) Biological Weapons Convention - which lacks of any verification mechanism – and

4 treaties and regimes - Australia group (ag), online at nti site. Nineta Barbulescu (Ed.),

Twenty Years of Australia Group Cooperations, AG, 2005, Made by Romania National

Agency for Export Controls. Australia Group, Fighting the spread of chemical and biological weapons, Strengthening global security, AG, July 2007.

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in particular of its Article III which obliges States Parties

«not to transfer to any recipient whatsoever, directly or indirectly, ..... or otherwise acquire any of the agents, toxins, weapons, equipment or means of delivery specified in Article I of the Convention.»

The Australia Group has established six Common Control Lists5 which cover: CW precursors; dual-use chemical manufacturing facilities and equipment and related technology; dual-use biological equipment; biological agents; plant pathogens; animal pathogens. The «no undercutting principle» and «the catch-all clause» are also envisaged by AG procedures. The AG Group has been quite effective in raising the awareness of the chemical and pharmaceutical industries as well as in raising the costs for proliferators. The «like-mindedness» of its members, now numbering 42, and the verification measures established by the Chemical Weapons Convention are among the AG advantages. The main political challenge is the continuing exclusion of the Russian Federation, due to US opposition, linked to the ambiguities of the former Soviet bio-defence programme (Biopreparat) and the ongoing effort by the US and other partners to let India join the Group.

5 Conference report: The Australia Group: challenges and future directions; Wilton Park, 29-31 March 2012.

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The Missile Technology Control Regime (MTCR) 6

The link between Space Launch Vehicle technology and missile proliferation was the reason behind the US policy directive NSDM-187 – issued in 1972 – banning the export of SLV technology. Attempts by some States to develop ballistic missiles (South Korea in 1978, India’s test of a Space Launch Vehicle-SLV 3-in 1980, testing of a rocket by the German firm OTRAG in Libya in 1980) convinced the Reagan Administration to adopt, in November 1982, National Security Council Decision Directive 70. Soon after, in 1982, the US initiated bilateral talks with Britain on missile proliferation. The circle was expanded to France, West Germany, Italy and shortly after, to Canada and Japan. The seven western industrialized nations, coinciding with the G-7, agreed, in 1985, on a common set of national export control rules. On April 16, 1987 the seven nations, with an exchange of diplomatic notes, gave birth to the Missile Technology Control Regime and issued the Guidelines and the Equipment and Technology Annex. In the meantime, the Iran-Iraq war had seen the first, massive employment of ballistic missiles («war of the cities») after World War Two.

The Policy Group of the MTCR met for the first time in Rome in September 19887. Soon after the US approached the Soviet Union, looking forward to its cooperation with the MTCR. US outreach efforts towards the Soviet Union went through several stages, including the Joint Statement on Non–Proliferation at the Washington Summit of 1990 but it was only in 1995 that the Successor State, the Russian Federation, was finally admitted to the regime. China’s application is still pending since 2004 although it has pledged to observe the MTCR guidelines. India has become, in June 2016, the 35th member of the MTCR. Membership in the MTCR allows India not only to import cryogenic engines for its Space Launch

6 Deborah Ozga, «A Chronology of the Missile Technology Control Regime», The Nonproliferation Review, Winter 1994, pp. 66-93. «The Missile Technology Control Regime at a Glance», ACA Fact Sheet, Arms Control Association, September 2004; Federation of

American Scientists (FAS), The Missile Technology Control Regime. Annex Handbook, s. d.. Greg Rasmussen and Arthur Stein, «Non-Proliferation Regimes», in Richard Rosecrance (Ed.), New Great Power Coalition: Toward a World Concert of Nations, New York, Rowman & Littlefield, 2001.

7 leran / treaties and regimes / missile technology control regime (sito nti).

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Vehicles but it also could extend the range of its Brahmos cruise missiles, jointly developed with Russia, changing the nuclear balance of power in South Asia. 8Like the other regimes, MTCR does not envisage any sanction for transfers of controlled items. US legislation, however, adopted in 1990 (Missile Technology Control Act), imposes penalties on entities, companies, persons or governments exporting MTCR controlled items to certain countries. US policy also requires that new MTCR candidates, if they are not recognized nuclear weapon states, should get rid or should not develop ballistic missiles able to deliver a 500 kilogram payload and with a range of at least 300 km. Exceptions, however, were made to the rule. Ukraine was permitted, in 1998, to retain its SCUD missiles and South Korea, admitted in 2001, was allowed by the US to extend the range of its missiles to 300 Km 8 within the limits) and later, in 2012, up to 800 km. The MTCR policy document, the guidelines, requests members to refrain from exporting controlled items. Category I items are, in particular subject to «a strong presumption of denial» even if a member deems that a missile, whether or not listed in the Annex, is ‘intended’ for use in Weapons of Mass Destruction. The first definition of a nuclear capable missile referred to the above-mentioned parameters of 500 kg payload (typical of a rudimentary nuclear warhead) and of 300 km Range (the range of a SCUD 1 B) reflected the proliferation concern of the founding members. Cruise missile, UAV’s are also included in the Annex. For Category II dual-use items may be exported under strong end-user guarantees. The MTCR was quite successful in curtailing would be proliferators such as Argentina and Iraq, with the dismantlement of the Condor II programme, Brazil (with the cancellation of the Avibras’s SS and Orbita SS series) and in delaying, for some years, India’s missile programme. It had less impact on the Israeli programme but nowadays Israel observes MTCR export control rules. It couldn’t stop mature missile programme, such as the Pakistani, the North Korean and the Iranian ones but it definitely slowed down their pace. 9

8 The Missile Technology Control Regime at a Glance, (sito armscontrol). 9 «Reforming the Multilateral Export Control Regimes», the Nonproliferation Review,

Summer 2000

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The Wassenaar Arrangement (WA).10

The transformation of the Coordinating Committee (Co.Com.) into the Wassenaar Arrangement epitomizes the transition from the Cold War to the post-Cold War environment. 11The evolution of a tool of economic warfare into a loose non-proliferation arrangement followed the dissolution of the Warsaw Treaty Organization. Having already helped Central and Eastern European countries to establish export controls on conventional weapons, the Co.Com. Cooperation Forum met in Paris in November 1992, with the participation of 42 States. Following the 1993 US-Russian Vancouver summit, where the two Presidents, Clinton and Yeltsin, agreed on removing obstacles to Russia’s access to the global market in high technology, the 17 member States of the Co.Com decided, at the High Level Meeting of the Hague on November 16th,, to terminate Co.Com. and to establish a temporary arrangement: the «New Forum». After the official dissolution of the Co.Com, on March, 31 1994, the former Co.Com. Cooperating countries – Australia, Finland, Ireland, New Zealand, Sweden and Switzerland – joined the «New Forum». Three Working Groups were created with the goal of establishing a new multilateral arrangement. At the last HLM meeting of the «New Forum», held in the Wittenburg Castle at Wassenaar (near the Hague) on 11-12 September 1995, the Russian Federation, the Czech Republic, Slovakia, Hungary and Poland were welcomed as participating States. The final HLM meeting took place in Wassenaar on December 1995 and the formal announcement of the establishment of the new arrangement was issue at the Peace Palace in The Hague. The seat of the Wassenaar Arrangement, however, was located in Vienna. While the WA inherited, in a different format, the Co.Com. International Munitions

10 «about-us», online at the wassenaar site. Treaties and regimes: wassenaar arrangement (at nti site). Kenneth A. Dursht, «From Containment to Cooperation: Collective and the Wassenaar Arrangement», Cardozo Law Review, vol. 19, No. 3, December 1997, pp. 10791123. U. S., 106th Congress, Senate, The Wassenaar Arrangement and the Future of multilateral export controls: hearings before the Committee on Governmental Affairs, April 12, 2000, vol. 74-79 (106-613 S. hgs). Samuel Ashley Evans, Technological Ambiguity and the Wassenaar Arrangement, University of Oxford, 2009. Wassenaar Arrangement,

Guidelines and Procedures, Including the Initial Elements, July 2014. 11 Michael Lipson, «The Reincarnation of COCOM: explaining post-cold war export controls», The Nonproliferation Review, vol. 6, 1999, No. 2, pp. 33-51.

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List (covering Small Arms and Light Weapons, Tanks and Military Armed Vehicles; Armoured/Protective Equipment), the old Atomic Energy Control List was transferred to the NSG and the International Industrial List was replaced by a «List of Dual Use Goods and Technology» with 9 Category of items and two Annexes of Sensitive and Very Sensitive items. Contrary to the Co.Com, the regime is, in principle, nondiscriminatory, and its membership has now reached 41 countries, compared to the Co.Com. 17 members. Another relevant difference is the possibility for Participating States to adhere or not to the revision of the lists. The negotiations on the policy document of the WA, went through 1996 and consensus was reached on the Initial Elements at the Plenary Meeting on 12-13 December 1996. The expectations of the 1990’s of a certain degree of «like-mindedness» between the western partners and the Russian Federation did not come true in the year 2000’s and Plenary meetings, especially after the Georgian conflict of 2008, became the theater for the usual rhetoric exchanges. The main challenges today are the accession of India, as usual sponsored by the US, and the controversy about the 2013 amendment to the Dual Use and Technology list, which introduced export controls surveillance and intelligence gathering tools and on Internet Protocol (IP) network surveillance systems and equipment, so called «intrusion software» It seems that the new export controls, introduced as a measure against human rights violations by law enforcement agencies of some countries, are actually harming the development of cyber security countermeasures. The US, therefore, has asked for the renegotiation of the amendment.

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The History of the NSG Logo

At the time of the 1999 Nuclear Suppliers Group (NSG) Plenary, hosted by the Italian government in the city of Florence, the city government honoured the NSG with the rights to use one of Michelangelo Buonarroti’s architectural designs. The Campidoglio pattern has been part of the NSG logo since. Working between 1536 and 1546, Michelangelo designed the Piazza del Campidoglio as a civic centre and a grand symbol of Rome. The 1568 engraving by Étienne Dúperac was an early depiction of Michelangelo’s solution to unifying the irregular shape of the Capitoline hilltop and to provide harmony to the piazza. The new Piazza del Campidoglio included three palazzi that did not face each other squarely. The piazza is best approached by the staircase called the Cordonata, which brings visitors skyward up a long and steep slope to reach the centre of city government. Michelangelo’s design for the piazza successfully accommodates the unevenness of the hilltop and trapezoidal arrangement of buildings and is slightly egg-shaped and not oval, narrower at the northwest end nearest the Cordonata. The design itself is a variation of common Renaissance geometric designs featuring circles and squares. The twelve-pointed star of inter-laced lines reminded many viewers of constellations revolving around a space called Caput mundi, Latin for «head of the world.» Accordingly, Michelangelo’s Campidoglio design was not welcomed by the Church, which might have detected a less-than-Christian context. Little was completed before Michelangelo’s death in 1564. The final paving was only completed in 1940. Michelangelo’s design was used to bring harmony and order to the irregularly-shaped Capitoline hilltop. For the NSG it symbolizes the Participating Governments’ continuing effort to bring order to a sometimes uneven export control system and non-proliferation landscape.