Countering Nuclear CNS Commodity Smuggling: OCCASIONAL PAPER #20 MARCH 2014 A System of Systems Leonard S. Spector and Egle Murauskaite James Martin Center for Nonproliferation Studies Monterey Institute of International Studies CNS Washington, DC, Office 1400 K Street, NW, Suite 1225 Tel: 202-842-3100 Fax: 202-842-0556 http://nonproliferation.org ISBN 978-0-9892361-7-1 © The President and Trustees of Middlebury College, March 2014 Cover image: gettyimages.com “Gears” by Marilyn Nieves / Vetta / Getty Images Countering Nuclear Commodity Smuggling: A System of Systems By Leonard S. Spector and Egle Murauskaite March 2014 Washington, DC Table of Contents Acknowledgments and Disclaimers ........................................................................................... i! List of Acronyms and Abbreviations ........................................................................................ ii! List of Figures .............................................................................................................................. iv! About the Authors ....................................................................................................................... v! EXECUTIVE SUMMARY ......................................................................................................... vii! Overview - Purpose and Scope of Study ............................................................................ vii! System 1: Measures against Originating Parties ............................................................. ix! System 2: Export Licensing and Control Lists .................................................................. x! System 3: Customs Controls and Inspections ................................................................. xi! System 4: Supplier State Private Sector Internal Compliance Programs ................... xii! System 5: Financial Measures .......................................................................................... xiii! System 6: Enforcement Measures .................................................................................... xv! System 7: International Outreach and Capacity Building ........................................... xvi! System 8: Transportation and Interdictions ................................................................ xviii! Conclusions and Recommendations .................................................................................. xix! CHAPTER 1: INTRODUCTION AND OVERVIEW ............................................................... 1! Study Purpose and Scope ........................................................................................................ 1! Organizing Principles: Elements of Transactions; Modes of Intervention; National, Multi-State, and International Measures ............................................................................... 5! Elements of Nuclear Commodity Smuggling Transactions ........................................... 5! Modes of Counterproliferation Intervention .................................................................... 7! International, Multi-State, and National Measures ........................................................ 10! Elements of Transactions; Modes of Intervention; and National, Multi-State, and International Measures: Overlapping, Intertwined, and Simultaneous ......................... 19! CHAPTER 2: CURRENT PATTERNS AND TRENDS IN NUCLEAR COMMODITY SMUGGLING .............................................................................................................................. 21! The Scale of Illicit Nuclear Procurement Efforts ................................................................ 21! Expanding Programs .......................................................................................................... 21! Evidence of Procurement Efforts ...................................................................................... 23! Commodities Being Sought ................................................................................................... 25! UN Security Council Resolutions Sanctioning North Korea ........................................ 26! June 2013 Reports of Panels of Experts Supporting Security Council Iran and North Korea Sanctions Resolutions .............................................................................................. 26! Action by the Nuclear Suppliers Group .......................................................................... 29! U.S. and Other National Enforcement Actions ............................................................... 29! Target Countries and Transshipment Points ...................................................................... 30! Procurement Stratagems ........................................................................................................ 31! CHAPTER 3: MAPPING THE SYSTEM OF SYSTEMS ......................................................... 35! Background: Overarching Issues .......................................................................................... 35! System 1: Measures against Originating Parties ................................................................ 43! Basic Framework ................................................................................................................. 43! UN Security Council Resolutions ..................................................................................... 44! Multi-state EU Measures .................................................................................................... 48! Unilateral U.S. Measures .................................................................................................... 54! Recent Developments ......................................................................................................... 62! Gaps and Challenges .......................................................................................................... 64! System 2: Export Licensing and Control Lists .................................................................... 65! Basic Framework ................................................................................................................. 65! International Obligations ................................................................................................... 69! Nuclear Suppliers Group Control Lists ........................................................................... 70! Recent Developments ......................................................................................................... 71! Gaps and Challenges .......................................................................................................... 74! Post-Export Inspections and Verification ............................................................................ 75! Recent Developments ......................................................................................................... 78! Gaps and Challenges .......................................................................................................... 79! System 3: Customs Controls and Inspections ..................................................................... 81! Basic Framework ................................................................................................................. 81! International Measures ....................................................................................................... 83! Multi-State Measures .......................................................................................................... 88! U.S. Measures ...................................................................................................................... 90! Recent Developments ......................................................................................................... 92! Gaps and Challenges .......................................................................................................... 93! System 4: Supplier-State Private Sector Internal Compliance Programs ........................ 95! Basic Framework ................................................................................................................. 95! International and Multi-State Measures .......................................................................... 99! National Enforcement Activities ..................................................................................... 101! Interconnectedness with Other Systems ........................................................................ 102! Recent Developments ....................................................................................................... 103! Gaps and Challenges ........................................................................................................ 106! System 5: Financial Measures .............................................................................................. 109! Basic Framework ............................................................................................................... 109! International Measures ..................................................................................................... 112! Multi-State Measures ........................................................................................................ 115! U.S. Measures .................................................................................................................... 118! Recent Developments