Report to the Chairman, Subcommittee 

on National Security, Emerging 

Threats, and International Relations, 

Committee on Government Reform, 

House of Representatives 

United States General Accounting Office 

GAO 

January 2004 NONPROLIFERATION 

Improvements Needed 

to Better Control 

Technology Exports 

for Cruise Missiles 

and Unmanned Aerial 

Vehicles 

GAO-04-175 
www.gao.gov/cgi-bin/getrpt?GAO-04-175.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Joseph A. 

Christoff at (202) 512-8979 or 

christoffj@gao.gov. 

Highlights of GAO-04-175, a report to 

Chairman, Subcommittee on National 

Security, Emerging Threats, and 

International Relations, Committee on 

Government Reform, House of 

Representatives 

January 2004

NONPROLIFERATION 

Improvements Needed to Better Control 

Technology Exports for Cruise Missiles 

and Unmanned Aerial Vehicles 

The growing threat to U.S. national security of cruise missile and UAV 

proliferation is challenging the tools the United States has traditionally used. 

Multilateral export control regimes have expanded their lists of controlled 

technologies, but key countries of concern are not members. U.S. export control 

authorities find it increasingly difficult to limit or track unlisted dual-use items 

that can be acquired without an export license. Moreover, a gap in U.S. export 

control authority enables American companies to export certain dual-use items 

to recipients that are not associated with missile projects or countries listed in 

the regulations, even if the exporter knows the items might be used to develop 

cruise missiles or UAVs. American companies have in fact legally exported dualuse items with no U.S. government review to a New Zealand resident who 

bought the items to build a cruise missile. 

The U.S. government seldom uses its end-use monitoring programs to verify 

compliance with conditions placed on the use of cruise missile, UAV, or related 

technology exports. For example, State officials do not monitor exports to verify 

compliance with license conditions on missiles or other items, despite legal and 

regulatory requirements to do so. Defense has not used its end-use monitoring 

program initiated in 2002 to check the compliance of users of more than 500 

cruise missiles exported between fiscal years 1998 and 2002. Commerce 

conducted visits to assess the end use of items for about 1 percent of the 2,490 

missile-related licenses we reviewed. Thus, the U.S. government cannot be 

confident that recipients are effectively safeguarding equipment in ways that 

protect U.S. national security and nonproliferation interests. 

A Chinese SILKWORM Cruise Missile in Iraq 

Cruise missiles and unmanned 

aerial vehicles (UAV) pose a 

growing threat to U.S. national 

security interests as accurate, 

inexpensive delivery systems for 

conventional, chemical, and 

biological weapons. GAO 

assessed (1) the tools the U.S. 

and foreign governments use to 

address proliferation risks posed 

by the sale of these items and (2) 

efforts to verify the end use of 

exported cruise missiles, UAVs, 

and related technology. 

The Secretary of Commerce 

should assess and report to the 

Committee on Government 

Reform on the adequacy of an 

export administration regulation 

provision to address missile 

proliferation by nonstate actors 

and on ways the provision might 

be modified. 

The Secretaries of State, 

Commerce, and Defense each 

should complete a 

comprehensive assessment of 

cruise missile, UAV, and related 

dual-use transfers to determine if 

U.S. exporters and foreign end 

users comply with conditions 

related to the transfers. 

Commerce and Defense partially 

agreed with the 

recommendations. State 

disagreed to complete an 

assessment, but said it would pay 

special attention to the need for 

more checks on cruise missile 

and UAV transfers. 
Page i GAO-04-175 Nonproliferation 

Letter 1

Results in Brief 2

Background 5

Proliferation of Cruise Missiles and UAVs Poses a Growing Threat 

to U.S. National Security Interests 9

Key Nonproliferation Tools Have Limitations Addressing Cruise 

Missile and UAV Proliferation 14

Compliance with Conditions on Exports of Cruise Missiles, UAVs, 

and Related Dual-use Items Seldom Verified through End-use 

Monitoring 23

Conclusions 32

Recommendations for Executive Action 33

Agency Comments and Our Evaluation 33

Appendix I Scope and Methodology 37 

Appendix II Comments from the Department of Commerce 40 

GAO Comments 47

Appendix III Comments from the Department of Defense 50 

Appendix IV Comments from the Department of State 52 

GAO Comments 56

Appendix V GAO Contact and Staff Acknowledgments 58 

GAO Contact 58

Acknowledgments 58

Figures 

Figure 1: Diagram of a Cruise Missile 6

Figure 2: Examples of UAVs 7

Figure 3: Chinese SILKWORM Cruise Missile in Iraq 16

Figure 4: Black Shaheen Cruise Missile 17

Figure 5: Predator B UAV 24

Contents 
Page ii GAO-04-175 Nonproliferation 

Figure 6: Destinations of Transferred Cruise Missiles, Fiscal Years 

1998-2002 27

Figure 7: Destinations of Dual-use Approved Licenses for 

Chokepoint Technologies, Fiscal Years 1998–2002, by 

Country 30

Abbreviations 

DOD Department of Defense 

EAR Export Administration Regulations 

ICE Bureau of Immigration and Customs Enforcement 

MTCR Missile Technology Control Regime 

PSV post-shipment verification 

UAV unmanned aerial vehicle 

WMD weapons of mass destruction 

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page 1 GAO-04-175 Nonproliferation 

January 23, 2004 

The Honorable Christopher Shays 

Chairman 

Subcommittee on National Security, 

 Emerging Threats, and International Relations 

Committee on Government Reform 

House of Representatives 

Dear Mr. Chairman: 

Efforts to limit the proliferation of cruise missiles and unmanned aerial 

vehicles (UAV) are complicated by the availability of these items among 

countries of concern.1

 An unmanned aerial vehicle, a pilotless vehicle that 

operates like an airplane, can be used for a variety of military and 

commercial purposes. A cruise missile is an unmanned aerial vehicle with 

the airframe designed for one-time use, which travels through the air like 

an airplane before delivering its payload. The U.S. government faces tradeoffs when making decisions about transfers of cruise missiles, UAVs, or 

related technology. U.S. policy aims to prevent the proliferation of these 

weapons systems to countries of concern and terrorists. At the same time, 

the U.S. government has an interest in encouraging transfers of cruise 

missiles and UAVs to U.S. allies to support regional security and bilateral 

relations. The U.S. government also wants to use these sales to help 

maintain the health of the U.S. defense industrial base. To accomplish 

these goals, the U.S. government regulates the export of cruise missiles, 

UAVs, or related technology through three agencies: the Departments of 

State, Commerce, and Defense. 

You asked us to assess U.S. and international efforts to limit the 

proliferation of cruise missiles, unmanned aerial vehicles, and related 

technology. Specifically, this report (1) describes the nature and extent of 

cruise missile and UAV proliferation; (2) assesses the nonproliferation 

tools that the United States and other governments use to address the 

proliferation risks posed by the sale of these items; and (3) assesses U.S. 

 1

Countries of missile proliferation concern listed in the Export Administration Regulations 

are Bahrain, China, Egypt, India, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Libya, Macau, 

North Korea, Oman, Pakistan, Qatar, Saudi Arabia, Syria, United Arab Emirates, and 

Yemen. 

United States General Accounting Office

Washington, DC 20548 
Page 2 GAO-04-175 Nonproliferation 

and other governments’ efforts to verify the end use of exported cruise 

missiles, UAVs, and related technology. 

To address these issues, we reviewed analyses prepared by the 

Departments of State, Commerce, Defense, and Homeland Security, and 

the U.S. intelligence community, as well as studies prepared by 

nonproliferation experts. We also reviewed multilateral export control 

regime documentation; met with representatives of the Missile Technology 

Control Regime (MTCR) in Paris, France; and interviewed government 

officials in France, Italy, and the United Kingdom. Furthermore, we 

analyzed export licensing information from the Departments of State, 

Commerce, and Defense on exports of cruise missiles, UAVs, and related 

dual-use technology that have both military and civilian applications. For 

more on our scope and methodology, see appendix I. 

Cruise missiles and UAVs pose a growing threat to U.S. national security 

interests as accurate and inexpensive delivery systems for conventional, 

chemical, and biological weapons. Conventional anti-ship cruise missiles 

pose an immediate threat to U.S. naval vessels because of the widespread 

availability of these weapons worldwide. In addition, land-attack cruise 

missiles pose a future threat to the U.S. homeland because of the 

anticipated growth in the availability of these more accurate, longer-range 

systems between 2005 and 2015. U.S. government projections show that 

the numbers of producers of cruise missiles and UAVs will increase to 

include countries where the United States is concerned about missile 

proliferation activities. At least 70 nations currently possess some type of 

anti-ship missiles armed with conventional, high explosive warheads. 

Currently, at least 32 nations are developing or manufacturing more than 

250 models of UAVs. The widespread availability of commercial items, 

such as global positioning systems and lightweight engines, has made it 

easier for countries and terrorists to acquire or build at least rudimentary 

cruise missile or UAV systems. 

The United States and other governments use multilateral export control 

regimes and national export controls to address the threat associated with 

cruise missile and UAV proliferation. The United States has made some 

advances using the regimes to address the threat of cruise missile and UAV 

proliferation, but both tools have limitations. For example, between 1997 

and 2002, the United States and other governments successfully revised 

the MTCR’s control lists of sensitive missile-related equipment and 

technology to include six of eight U.S.-proposed items related to cruise 

missile and UAV technology. Adding items to the control lists commits 

Results in Brief 
Page 3 GAO-04-175 Nonproliferation 

regime members to provide greater scrutiny when deciding whether to 

license the items for export. Despite the efforts of these regimes, 

nonmembers such as China and Israel continue to acquire, develop, and 

export cruise missile or UAV technology. This growing capability of 

nonmember supplier countries to develop technologies used for weapons 

of mass destruction and trade them with other countries of proliferation 

concern undermines the regimes’ ability to impede proliferation. In 

addition, the United States faces limitations in applying national export 

controls. First, the U.S. government finds it difficult to identify and track 

widely available dual-use items that are not on control lists but that can be 

used for cruise missile and UAV proliferation purposes. Second, a gap in 

U.S. export control authority enabled American companies to legally 

export dual-use items to a New Zealand resident who bought the items to 

show how a terrorist could legally build a cruise missile. The gap results 

from current catch-all2

 regulations that restrict the sale of unlisted dualuse items to certain national missile proliferation projects or countries of 

concern, but not to nonstate actors such as certain terrorist organizations 

or individuals. 

The U.S. government applies conditions to exports of cruise missile and 

UAV technology to specify how items can be used and by whom, but 

performs little end-use monitoring to verify that exporters and foreign 

recipients comply with conditions.3

 The U.S. government uses postshipment verification visits to confirm that the recipients of sensitive U.S. 

technologies are using them in accordance with license conditions. 

However, State’s verification is limited to confirming that the item is 

delivered to its designated destination and does not confirm other export 

license conditions. Of 786 licenses for cruise missile and UAV technology 

that State issued between fiscal years 1998 and 2002, State conducted 

verification visits on only four licenses and reported unfavorable results 

for three. Defense conducted no monitoring over more than 500 cruise 

missiles that it transferred to other countries between fiscal years 1998 

and 2002. However, Defense’s program director stated that Defense may 

 2

Catch-all controls are controls that authorize a government to require an export license for 

items that are not on control lists but that are known or suspected of being intended for 

use in a missile or WMD program. 

3

End-use monitoring refers to the procedures used to verify that foreign recipients of 

controlled U.S. exports use such items according to U.S. terms and conditions of transfer. 

Verification measures, referred to as end-use checks, range from contacting the 

appropriate government or company representative to physical inspection by U.S. 

personnel. 
Page 4 GAO-04-175 Nonproliferation 

conduct more frequent monitoring of cruise missiles and UAVs in the 

future. Finally, Commerce conducted verification visits on 1 percent of 

nearly 2,500 missile-related licenses issued between fiscal years 1998 to 

2002. Similarly, other supplier countries place conditions on cruise missile 

and UAV-related transfers, but few reported conducting end-use 

monitoring once they exported the items. 

We are recommending that the Secretary of Commerce assess and report 

to the Committee on Government Reform on the adequacy of the export 

control regulations’ catch-all provision to address missile proliferation by 

nonstate actors and on ways the provision might be modified. We are also 

recommending that the Secretaries of State, Commerce, and Defense each 

complete a comprehensive assessment of the nature and extent of 

compliance with license conditions on cruise missiles, UAVs, and related 

dual-use technology. As part of the assessment, the departments should 

also conduct additional PSV visits on a sample of cruise missile and UAV 

licenses. This assessment would allow the departments to gain critical 

information that would allow them to better balance potential 

proliferation risks of various technologies with available resources for 

conducting future PSV visits. 

Commerce did not agree that the limited scope of the current catch-all 

provision should be called a gap in U.S. regulations and noted that our 

draft report was ambiguous as to whether the gap relates to items listed on 

the control list or to items that are not listed because they are not 

considered as sensitive for missile proliferation reasons. Commerce 

agreed to review whether the existing catch-all provision sufficiently 

protects U.S. national security interests. Our references to the gap in the 

regulations refer to dual-use items that are not listed on the Commerce 

Control List, and we have made changes to the draft to clarify this point. 

We also modified our recommendation to specify the need to include 

nonstate actors among the entities considered under the Department’s 

assessment of its catch-all provisions. State said that our report was 

inaccurate in suggesting that State does not monitor exports to verify 

compliance with export authorizations and noted that we did not discuss 

the importance of pre-license checks to verify end use and end user 

restrictions. We added pre-license check information to the report and 

found that State conducted such checks for only 6 of the 786 licenses for 

cruise missile and UAV-related items that State issued between fiscal years 

1998 and 2002. 

DOD generally agreed with our findings and recommendations but 

suggested that a sample would yield the same results as a comprehensive 
Page 5 GAO-04-175 Nonproliferation 

assessment. Similarly, Commerce said that it has limited resources for 

compliance monitoring and wants greater precision on the scope of 

transactions that may need increased scrutiny. We modified the 

recommendation to allow for sampling techniques when conducting the 

assessment and to recognize that critical information from this assessment 

would help the departments better balance potential proliferation risks of 

various exported technologies with available resources for conducting 

future post-shipment visits. State disagreed with the recommendation to 

conduct a comprehensive assessment. Nonetheless, State said that in 

conjunction with steps taken to improve the targeting of Blue Lantern 

checks and increase the number conducted annually, it would pay special 

attention to the need for additional pre- and post-shipment checks for 

cruise missile- and UAV-related technologies. 

Distinctions between cruise missiles and UAVs are becoming blurred as 

the militaries of many nations, in particular the United States, add missiles 

to traditional reconnaissance UAVs and develop UAVs dedicated to 

combat missions. A cruise missile consists of four major components: a 

propulsion system, a guidance and control system, an airframe, and a 

payload. The technology for the engine, the autopilot, and the airframe 

could be similar for both cruise missiles and UAVs, according to a 2000 

U.S. government study of cruise missiles. Figure 1 shows the major 

components of a cruise missile. 

Background 
Page 6 GAO-04-175 Nonproliferation 

Figure 1: Diagram of a Cruise Missile 

Cruise missiles provide a number of military capabilities. For example, 

they present significant challenges for air and missile defenses. Cruise 

missiles can fly at low altitudes to stay below radar and, in some cases, 

hide behind terrain features. Newer missiles are incorporating stealth 

features to make them less visible to radars and infrared detectors. 

Modern cruise missiles can also be programmed to approach and attack a 

target in the most efficient manner. For example, multiple missiles can 

attack instantaneously from different directions. Furthermore, land attack 

cruise missiles may fly circuitous routes to get to their targets, thereby 

avoiding radar and air defense installations. 

UAVs are available in a variety of sizes and shapes, propeller-driven or jet 

propelled, and can be straight-wing aircraft or have tilt-rotors like 

helicopters. They can be as small as a model aircraft or as large as a U-2 

manned reconnaissance aircraft (see fig. 2). 
Page 7 GAO-04-175 Nonproliferation 

Figure 2: Examples of UAVs 

U.S. policy on the proliferation of cruise missiles and UAVs is expressed in 

U.S. commitments to the MTCR and Wassenaar Arrangement. These 

multilateral export control regimes4

 are voluntary, nonbinding 

 4

Multilateral export control regimes are referred to as either regimes or “arrangements,” 

and the countries invited to participate in them are variously referred to as “members,” 

“participants,” or “participating states.” In this report, we use the term “regimes” and refer 

to participating countries as members. For more information, see our report, U.S. General 

Accounting Office, Nonproliferation: Strategy Needed to Strengthen Multilateral Export 

Control Regimes, GAO-03-43 (Washington, D.C.: Oct. 25, 2002). 
Page 8 GAO-04-175 Nonproliferation 

arrangements among like-minded supplier countries that aim to restrict 

trade in sensitive technologies. Regime members agree to restrict such 

trade through their national laws and regulations, which set up systems to 

license the exports of sensitive items. The four principal regimes are the 

MTCR; the Wassenaar Arrangement, which focuses on trade in 

conventional weapons and related items with both civilian and military 

(dual-use) applications; the Australia Group, which focuses on chemical 

and biological technologies; and the Nuclear Suppliers Group, which 

focuses on nuclear technologies. The United States is a member of all four 

regimes. Regime members conduct a number of activities in support of the 

regimes, including (1) sharing information about each others’ export 

licensing decisions, including certain export denials and, in some cases, 

approvals and (2) adopting common export control practices and control 

lists of sensitive equipment and technology into national laws or 

regulations. 

Exports of commercially supplied American-made cruise missiles, military 

UAVs, and related technology are transferred pursuant to the Arms Export 

Control Act, as amended,5

 and the International Trafficking in Arms 

Regulations,6

 implemented by State. Government-to-government transfers 

are made pursuant to the Foreign Assistance Act of 1961, as amended,7

 and 

subject to DOD guidance. Exports of dual-use technologies related to 

cruise missiles and UAVs8

 are transferred pursuant to the Export 

Administration Act of 1979, as amended,9

 and the Export Administration 

Regulations,10 implemented by Commerce. 

Bureaus in two U.S. agencies are responsible for the initial enforcement of 

export control laws. The Bureau of Immigration and Customs 

Enforcement (ICE) in the Department of Homeland Security conducts 

investigations enforcing the Arms Export Control Act, which is 

 5

22 U.S.C. §§ 2751 and following. 

6

22 C.F.R. §§ 120 and following. 

7

22 U.S.C. §§ 2311 and following. 

8

Related items include technical data, subcomponents, and spare parts. 

9

50 U.S.C. app. §§ 2401 and following. Executive Order 13222, 66 Fed. Reg. 44025 and 

subsequent presidential notices continue the export control regime established under the 

act and the Export Administration Regulations. 

1015 C.F.R. §§ 730-774. 
Page 9 GAO-04-175 Nonproliferation 

administered by the State Department. ICE combines the enforcement and 

investigative arms of the Customs Service, the investigative and 

enforcement functions of the former Immigration and Naturalization 

Service, and the Federal Protective Service as part of the Department of 

Homeland Security. ICE shares responsibility with Commerce’s Bureau of 

Industry and Security for enforcing the Export Administration Act. ICE 

and the Bureau of Industry and Security use enforcement tools such as 

investigations of purported violations of law and regulation and 

interdictions11 of suspected illicit shipments of goods. Investigations can 

result in criminal prosecutions, fines, or imprisonment or in export denial 

orders, which bar a party from exporting any U.S. items for a specified 

period of time. 

The Arms Export Control Act, as amended in 1996, requires the President 

to establish a program for end-use monitoring of defense articles and 

services sold or exported under the provisions of the act and the Foreign 

Assistance Act.12 This requirement states that, to the extent practicable, 

end-use monitoring programs should provide reasonable assurance that 

recipients comply with the requirements imposed by the U.S. government 

on the use, transfer, and security of defense articles and services. In 

addition, monitoring programs, to the extent practicable, are to provide 

assurances that defense articles and services are used for the purposes for 

which they are provided. The President delegated this authority to the 

Secretaries of State and Defense. 

The proliferation of cruise missiles and UAVs poses a growing threat to 

U.S. national security. Both can be used to attack U.S. naval interests, the 

U.S. homeland, and forces deployed overseas. Cruise missiles and UAVs 

have significant military capabilities, including surveillance and attack, 

which the United States has demonstrated during military engagements in 

Afghanistan and Iraq. In addition, U.S. government projections show that 

the numbers of producers and exporters of cruise missiles and UAVs will 

increase and that more countries of concern will possess and begin to 

export them. The growing availability of these weapons, and of related 

components and technology that are not readily controllable, makes it 

 11Interdiction is the action of law enforcement agencies physically preventing the export of 

certain items from their country. 

1222 U.S.C. § 2785. 

Proliferation of Cruise 

Missiles and UAVs 

Poses a Growing 

Threat to U.S. 

National Security 

Interests 
Page 10 GAO-04-175 Nonproliferation 

easier for countries of concern and terrorists to acquire or build at least 

rudimentary cruise missile or UAV systems. 

Although cruise missiles and UAVs provide important capabilities for the 

United States and its friends and allies, in the hands of U.S. adversaries 

they pose substantial threats to U.S. interests. First, anti-ship cruise 

missiles threaten U.S. naval forces deployed globally. Second, land-attack 

cruise missiles have a potential in the long-term to threaten the continental 

United States and U.S. forces deployed overseas. Finally, UAVs represent 

an inexpensive means of launching chemical and biological attacks against 

the United States and allied forces and territory. 

Cruise missiles pose a current and increasing threat to U.S. naval vessels. 

For example, there are more than 100 existing and projected missile 

varieties (including sub- and supersonic, high and low altitude, and seaskimming models) with ranges up to about 185 miles or more. We reported 

in 2000 that the next generation of anti-ship cruise missiles—most of 

which are now expected to be fielded by 2007—will be equipped with 

advanced target seekers and stealthy design.13 These features will make 

them even more difficult to detect and defeat. 

Land-attack cruise missiles pose a long-term threat to the U.S. homeland 

and U.S. forces deployed overseas. Because land attack cruise missiles 

suitable for long-range missions require sophisticated guidance and 

complicated support infrastructures, they have historically been found 

almost exclusively in superpower arsenals. According to an unclassified 

summary of a national intelligence estimate14 from December 2001, several 

countries are technically capable of developing a missile launch 

mechanism to station on forward-based ships or other platforms so that 

they can launch land-attack cruise missiles against the United States. 

Technically, cruise missiles can be launched from fighter, bomber, or even 

commercial transport aircraft outside U.S. airspace. According to the 

National Air Intelligence Center, defending against land attack cruise 

missiles will strain air defense systems. Moreover, cruise missiles are 

 13Defense Acquisitions: Comprehensive Strategy Needed to Improve Ship Cruise Missile 

Defense, GAO-NSIAD-00-149 (Washington, D.C.: July 2000). 

14Foreign Missile Developments and the Ballistic Missile Threat Through 2015, 

Unclassified Summary of a National Intelligence Estimate, National Intelligence Council 

(Washington, D.C.: December 2001). 

Military Capabilities of 

Cruise Missiles and UAVs 

Threaten U.S. Interests 
Page 11 GAO-04-175 Nonproliferation 

capable of breaking through U.S. defenses and inflicting significant 

damage and casualties on U.S. forces, according to the Institute for 

Foreign Policy Analysis’ October 2000 study. 

UAVs pose a longer-term threat as accurate and inexpensive delivery 

systems for chemical and biological weapons and are increasingly sought 

by nonstate actors, according to U.S. government and other 

nonproliferation experts. For example, the U.S. government reported its 

concern over this threat in various meetings and studies. The Acting 

Deputy Assistant Secretary of State for Nonproliferation testified in June 

2002 that UAVs are potential delivery systems for WMD, and are ideally 

suited for the delivery of chemical and biological weapons given their 

ability to disseminate aerosols in appropriate locations at appropriate 

altitudes. He added that, although the primary concern has been that 

nation-states would use UAVs to launch WMD attacks, there is potential 

for terrorist groups to produce or acquire small UAVs and use them for 

chemical or biological weapons delivery. 

At least 70 nations possess some type of cruise missile, mostly short-range, 

anti-ship missiles armed with conventional, high-explosive warheads, 

according to a U.S. government study. Estimates of the total number of 

cruise missiles place the world inventory at a minimum of 75,000. 

Countries that export cruise missiles currently include China, France, 

Germany, Israel, Italy, Norway, Russia, Sweden, United Kingdom, and the 

United States. Nations that manufacture but do not yet export cruise 

missiles currently include Brazil, India, Iran, Iraq, North Korea, South 

Africa, and Taiwan. None of these nonexporting manufacturing countries 

is a member of the Wassenaar Arrangement, and only Brazil and South 

Africa are in the MTCR.15 The number of cruise missile exporters is 

expected to grow with producers such as India and Taiwan making their 

missiles available for export. 

Currently, at least 12 countries are believed to be developing land-attack 

cruise missiles; some of these new systems will be exported. France, for 

example, signed a deal with the United Arab Emirates (UAE) to export a 

type of cruise missile. By 2005, six countries of concern will have acquired 

land-attack capabilities, up from only three in 2000, according to the 

 15China and Israel are not MTCR members, although Israel has declared that it adheres to 

the MTCR guidelines and control list. 

Cruise Missiles and UAVs 

Continue to Proliferate 
Page 12 GAO-04-175 Nonproliferation 

National Air Intelligence Center.16 Furthermore, cruise missile inventories 

are projected to increase through 2015 and one to two dozen countries 

probably will possess a land-attack cruise missile capability by this date, 

according to an unclassified National Intelligence Estimate. While both 

land-attack and anti-ship cruise missile inventories are projected to 

increase, land-attack cruise missile inventories are expected to experience 

a significantly higher percentage of growth.17

According to defense industry sources, interest has picked up dramatically 

from countries all over the world for acquiring and developing even the 

simplest UAV technology and is expected to continue, further diffusing 

this technology. Forty-one countries operate about 80 types of UAV, 

primarily for reconnaissance. Currently, some 32 nations are developing or 

manufacturing 250 models of UAVs. Several countries involved in key 

aspects of the UAV industry are not members of the MTCR. For example, 

13 non-MTCR countries develop and manufacture UAVs.18 Countries that 

pose a threat of WMD proliferation concern, such as China, Russia, and 

Pakistan, are among the 32 countries developing and expected to export 

UAVs. 

Cruise missiles and UAVs can be acquired in several ways, including 

purchase of complete systems and conversion of existing systems into 

more capable weapons. Acquisition of commercially available dual-use 

technologies has made development of new systems and conversion of 

existing systems more feasible. 

Purchasing complete missile systems provides the immediate capability of 

fielding a proven weapon. Complete cruise missiles can be acquired from a 

variety of sources. For example, China and Russia have sold cruise 

missiles to Iran, Iraq, Libya, North Korea, and Syria. In addition, France 

has widely exported the Exocet, now in service in more than 29 countries. 

 16Information on specific countries is classified. 

17Information on specific countries and inventories is classified. 

18This number does not include Iraq, which had a program to develop military UAVs until 

Operation Iraqi Freedom, according to the Iraq Survey Group. The Iraq Survey Group was 

tasked to find WMD after Operation Iraqi Freedom. Statement by David Kay on the 

Interim Progress Report on the Activities of the Iraq Survey Group Before the House 

Permanent Select Committee on Intelligence, House Committee on Appropriations, 

Subcommittee on Defense and the Senate Select Committee on Intelligence, October 2, 

2003. 

Cruise Missile and UAV 

Proliferation Is Facilitated 

by the Ease of Acquiring 

Systems and Technologies 
Page 13 GAO-04-175 Nonproliferation 

Israel, Italy, Norway, Sweden, the United Kingdom, and the United States 

have also exported anti-ship cruise missiles. 

Various government and academic studies have raised concerns that the 

wide availability of commercial items, such as global positioning system 

receivers and lightweight engines, allows both countries and nonstate 

actors to enhance the accuracy of their systems, upgrade to greater range 

or payload capabilities, and convert certain anti-ship cruise missiles into 

land-attack cruise missiles.19 Thus, less capable and expensive systems 

could be more easily improved to attack targets not currently accessible, 

especially on land. Although not all cruise missiles can be modified into 

land-attack cruise missiles because of technical barriers, specific cruise 

missiles can and have been. For example, a 1999 study outlined how the 

Chinese Silkworm anti-ship cruise missile had been converted into a landattack cruise missile.20 Furthermore, the Iraq Survey Group reported in 

October 2003 that it had discovered 10 Silkworm anti-ship cruise missiles 

modified to become land-attack cruise missiles and that Iraq had fired 2 of 

these missiles at Kuwait. 

Many issues concerning modification of cruise missiles also apply to 

UAVs, according to one industry group. Larger UAVs are more adaptable 

to change. Although several experts said that it is more expensive and 

difficult to modify an existing aircraft into a UAV than to develop one from 

scratch, some countries, such as Iraq, developed programs to convert 

manned aircraft into UAVs. Some experts also expressed concerns over 

adding autopilots to small aircraft to turn them into unmanned UAVs that 

could deliver chemical or biological weapons. 

 19Upgrades have to fit within the weight, space, electrical, and cooling capacities of the 

individual cruise missile or UAV for which they are attended. Typically, changes to the 

outer dimensional lines of either are limited so that the aerodynamics are not adversely 

affected. In a well-engineered upgrade, the new components would take up no more space 

or weight than those they are replacing. 

20Feasibility of Third World Advanced Ballistic and Cruise Missile Threat, Volume 2: 

Emerging Cruise Missile Threat, Systems Assessment Group; National Defense Industrial 

Association Strike, Land-Attack and Air Defense Committee (Washington, D.C.: August 

1999). 
Page 14 GAO-04-175 Nonproliferation 

The U.S. government generally uses two key nonproliferation tools—-

multilateral export control regimes and national export controls—to 

address cruise missile and UAV proliferation, but both tools have 

limitations. The United States and other governments have traditionally 

used multilateral export control regimes, principally the MTCR, to address 

missile proliferation. However, despite successes in strengthening 

controls, the growing capability of countries of concern to develop and 

trade technologies used for WMD limits the regime’s ability to impede 

proliferation. The U.S. government uses its national export control 

authorities to address missile proliferation but finds it difficult to identify 

and track commercially available items not covered by control lists. 

Moreover, a gap in U.S. export control regulations could allow subnational 

actors to acquire American cruise missile or UAV technology for missile 

proliferation or terrorist purposes without violating U.S. export control 

laws or regulations. The United States has other nonproliferation tools to 

address cruise missile and UAV proliferation—diplomacy, sanctions, and 

interdiction of illicit shipments of items—but these tools have had unclear 

results or have been little used. 

The United States and other governments have used the MTCR, and, to 

some extent, the Wassenaar Arrangement, as the key tools to address the 

proliferation of cruise missiles and UAVs. While the United States has had 

some success in urging these regimes to focus on cruise missiles and 

UAVs, new suppliers who do not share regime goals limit the regimes’ 

ability to impede proliferation. In addition, there has been less consensus 

among members to restrict cruise missiles and UAVs than to restrict 

ballistic missiles. 

The MTCR is principally concerned with controlling the proliferation of 

missiles with a range of 300 kilometers and a payload of 500 kilograms or 

with any payload capable of delivering chemical or biological warheads. 

MTCR members seek to restrict exports of sensitive technologies by 

periodically reviewing and revising a commonly accepted list of controlled 

items, such as lightweight turbojet and turbofan engines, or materials and 

devices for stealth technology usable in missiles. The Wassenaar 

Arrangement seeks to limit transfers of conventional arms and dual-use 

goods and technologies that could contribute to regional conflict. Military 

UAVs below MTCR capability levels of 300 kilometers range and 500 

kilograms payload are included on the Wassenaar Munitions List. DOD 

officials noted that MTCR attempts to impede the proliferation of UAVs 

capable of delivering WMD, while Wassenaar covers conventional 

weapons and items with a military function. 

Key Nonproliferation 

Tools Have 

Limitations 

Addressing Cruise 

Missile and UAV 

Proliferation 

Multilateral Export 

Control Regimes Increased 

Focus on Cruise Missiles 

and UAVs, but Are Limited 

in Their Effectiveness 
Page 15 GAO-04-175 Nonproliferation 

In recent years, the increased awareness of the threat of chemical and 

biological weapons and terrorists has increased members’ interest in 

cruise missile and UAV controls, according to State. MTCR control lists 

were revised between 1997 and 2002 to adopt six of eight U.S. proposals to 

include additional items related to cruise and UAV technologies. Members 

agreed in 2002 to adopt (1) expanded controls on small, fuel-efficient gas 

turbine engines, (2) a new control on integrated navigation systems, and 

(3) a new control on UAVs designed or modified for aerosol dispensing.21

At the September 2003 MTCR Annual Plenary, members agreed to add to 

the control list complete UAVs designed or modified to deliver aerosol 

payloads greater than 20 liters. In the Wassenaar Arrangement, the United 

States and other members during 2003 made several proposals for new 

controls related to UAVs and short-range cruise missiles and their 

payloads. Once changes are officially accepted, MTCR and Wassenaar 

members are expected to incorporate the changed control lists into their 

own national export control laws and regulations. While including an item 

on a control list does not preclude its export, members are expected to 

more carefully scrutinize listed items pending decisions on their export. 

They are also expected to notify other members when denying certain 

export licenses for listed items. 

Despite the efforts of these regimes, nonmembers such as China and Israel 

continue to acquire, develop, and export cruise missile or UAV technology. 

The growing capability of nonmember supplier countries to develop 

technologies used for WMD and trade them with other countries of 

proliferation concern undermines the regimes’ ability to impede 

proliferation. For example, China has sold anti-ship cruise missiles to Iran 

and Iraq (see fig. 3). Israel also reportedly sold the Harpy UAV to India, 

according to a Director of Central Intelligence report in 2003.22

 21In addition, since 1998, the United States has presented two white papers and five 

briefings to MTCR members to share information on cruise missile or UAV-related issues. 

22Unclassified Report to Congress on the Acquisition of Technology Relating to Weapons 

of Mass Destruction and Advanced Conventional Munitions, 1 January through 30 June 

2002, Central Intelligence Agency (Washington, D.C.: April 2003). 
Page 16 GAO-04-175 Nonproliferation 

Figure 3: Chinese SILKWORM Cruise Missile in Iraq 

In addition to the limitations posed by non-member suppliers, some 

nonproliferation experts and foreign government officials noted that 

MTCR’s effectiveness has been limited because there has been less 

consensus among MTCR and Wassenaar members to restrict cruise 

missiles and UAVs than to restrict ballistic missiles. MTCR members have 

not always agreed with each others’ interpretation of the MTCR guidelines 

and control lists concerning cruise missiles. Specifically, members have 

had different views on how to measure the range and payload of cruise 

missiles and UAVs, making it difficult to determine when a system has the 

technical characteristics that require more stringent export controls to 

apply under MTCR guidelines. For example, cruise missiles can take 

advantage of more fuel-efficient flight at higher altitudes to gain 

substantially longer ranges than manufacturers and exporting countries 

advertise. Even with the new definition of range that the MTCR adopted in 

2002, different interpretations remain among members over whether 

particular cruise missiles could be modified to achieve greater range. In 

one case, the United States and France disagreed about France’s proposed 

sale of its Black Shaheen cruise missile to the United Arab Emirates, 

according to French and U.S. government officials and nonproliferation 

experts (see fig. 4). In a second case, members have raised questions 

about Russia’s assistance to India, a nonmember, to develop the Brahmos 

cruise missile project and called for further discussion of the system’s 

technical capabilities. 
Page 17 GAO-04-175 Nonproliferation 

Figure 4: Black Shaheen Cruise Missile 

In October 2002, we reported on other limitations that impede the ability 

of the multilateral export control regimes, including MTCR and the 

Wassenaar Arrangement, to achieve their nonproliferation goals. For 

example, we found that MTCR members may not share complete and 

timely information, such as members’ denied export licenses, in part 

because the regime lacks an electronic data system to send and retrieve 

such information. The Wassenaar Arrangement members share export 

license approval information but collect and aggregate it to a degree that it 

cannot be used constructively. Both MTCR and the Wassenaar 

Arrangement use a consensus process that makes decision-making 

difficult and lack a means to enforce compliance with members’ political 

commitments to regime principles. We recommended that the Secretary of 

State establish a strategy to work with other regime members to enhance 

the effectiveness of the regimes by implementing a number of steps, 

including (1) adopting an automated information-sharing system in MTCR 

to facilitate more timely information exchanges, (2) sharing greater and 

more detailed information on approved exports of sensitive transfers to 

nonmember countries, (3) assessing alternative processes for reaching 
Page 18 GAO-04-175 Nonproliferation 

decisions, and (4) evaluating means for encouraging greater adherence to 

regime commitments.23

U.S. ICE and Commerce authorities have had difficulty identifying and 

tracking dual-use exports in transit that could be useful for cruise missiles 

and UAV development because such exports have legitimate civilian uses. 

As a result, U.S. enforcement tools have been limited in conducting 

investigations of suspected exports of illicit cruise missile and UAV dualuse items. Moreover, a gap in U.S. export control regulations could allow 

missile proliferators to acquire unlisted American cruise missile or UAV 

dual-use technology without violating the regulations.24

ICE officials said that it is difficult to conduct Customs enforcement 

investigations of possible export violations concerning certain cruise 

missile or UAV dual-use technologies. First, parts or components that are 

not on control lists are often similar to controlled parts or components, 

enabling exporters to circumvent the controls entirely, according to ICE 

officials. Because ICE inspectors are not engineers and shipping 

documents do not indicate the end product for the component being 

shipped, determining what the components can do is problematic. Second, 

countries seek smaller UAVs than those controlled. ICE officials said that 

buyers who cannot get advanced UAVs instead try to obtain model 

airplanes and model airplane parts, which might substitute for UAVs and 

their components. Third, ICE officials noted that circumventing the export 

control law is easy because the U.S. government has to prove both the 

exporter’s knowledge of the law and the intent to violate it.25 As of October 

2003, Customs had completed two investigations related to UAVs, and had 

nine others open, as well as one open case related to cruise missiles. The 

two cases related to UAVs, both involving suspected diversions of items to 

Pakistan, resulted in one finding of no violation and one guilty plea. As a 

 23U.S. General Accounting Office, Nonproliferation: Strategy Needed to Strengthen 

Multilateral Export Control Regimes, GAO-03-43 (Washington, D.C.: Oct. 25, 2002). 

24Although several criminal laws might apply to these acquisitions, the laws do not 

specifically apply to the export control process. Thus, bringing prosecutions under these 

criminal laws might be difficult. 

25Knowledge and intent are elements of criminal violations of the Export Administration 

Regulations, but are not necessary elements of most administrative violations of the 

regulations, according to Commerce. 

U.S. Government 

Authorities Have Had 

Difficulty Restricting Dualuse Missile Technology 

Exports 

Investigations Challenged by 

Nature of Cruise Missile and 

UAV Dual-use Technology and 

Regulatory Limitations 
Page 19 GAO-04-175 Nonproliferation 

result, two defendants received prison terms of 24 and 30 months, 

respectively, with 2 years of supervised release. 

Commerce officials also indicated that there are challenges to enforcing 

export controls on dual-use goods related to cruise missile or UAV 

development. They stated that some investigations were not pursued 

because the technical parameters of the items exported were below the 

export control thresholds for missile technology. Nonetheless, Commerce 

officials noted that exported items below these parameters could be 

changed after export by adding components to improve the technology. 

For example, software exported without a license could receive an 

upgrade card that would make it an MTCR-controlled item. As of October 

2003, Commerce had completed 116 investigations related to missile 

proliferation, but not specifically to cruise missiles or UAVs.26

Furthermore, the Secretary of Commerce in 200327 identified other 

challenges for the enforcement of controls on dual-use goods related to 

missile development. First, it is difficult to detect and investigate cases 

under the “knowledge” standard28 set by the “catch-all” provision.29 Second, 

some countries do not yet have catch-all laws or have different standards 

for catch-all, which complicates law enforcement cooperation. Third, 

identifying illegal exports and re-exports of missile-related goods requires 

significant resources. Nonetheless, the Secretary stated that United States 

has the ability to effectively enforce end-use and end-user controls on 

missile technology and that multilateral controls provide a strong 

framework for cooperative enforcement efforts overseas. 

 26It is Department of Commerce policy to provide no public information on open 

investigations. 

272003 Foreign Policy Report, Department of Commerce. 

28According to the Export Administration Regulations, 15 C.F.R. § 772.1, knowledge of a 

circumstance includes either positive knowledge that the circumstance exists or is 

substantially certain to occur, or an awareness that its existence or future occurrence is 

highly probable. The conscious disregard of facts or willful avoidance of facts is evidence 

that the person was aware of the circumstance. 

29Catch-all controls are controls that authorize a government to require an export license 

for items that are not on control lists but that are known or suspected of being intended for 

use in a missile or WMD program. 
Page 20 GAO-04-175 Nonproliferation 

A gap in U.S. export control regulations could allow missile proliferators 

or terrorists to acquire U.S. cruise missile or UAV dual-use technology 

without violating U.S. export control laws or regulations. The Export 

Administration Regulations (EAR) establish license requirements for items 

not listed in the regulations on the Commerce Control List, as well as for 

items that are listed.30 License requirements for items not listed are based 

on the exporter’s knowledge of the end user or end uses to which the item 

would be applied. For missile controls, an exporter may not export or reexport an item if the exporter knows that the item (1) is destined to or for 

a missile project listed in the regulations31 or (2) will be used in the design, 

development, production or use of missiles in or by a country listed in the 

regulations, whether or not that use involves a listed project.32 However, 

this condition on exports does not apply to activities that are unrelated to 

the 12 projects or 20 countries listed in the regulation. This section of the 

regulations was intended to apply to national missile proliferation 

programs, according to Commerce officials, and not to nonstate actors 

such as certain terrorist organizations or individuals.33 Finally, this section 

of the regulations does not apply to exports of dual-use items for missiles 

with less than 300 kilometers range and 500 kilograms payload because 

the regulatory definition of a missile excludes missiles below MTCR range 

and payload thresholds. However, such missiles with lesser range or 

payload could be sufficient for terrorist purposes. 

The case of a New Zealand citizen obtaining unlisted dual-use items to 

develop a cruise missile illustrates this gap in U.S. export controls. In June 

2003 this individual reported that he purchased American components 

necessary to construct a cruise missile to illustrate how a terrorist could 

do so. Because the New Zealand citizen is not on a list of prohibited 

missile projects, terrorist countries, or terrorists, there is no specific 

export control requirement that an American exporter apply to the U.S. 

government for a review of the items before export, according to 

 30“Items subject to the EAR” consist of the items listed on the Commerce Control List in 

part 774 of the EAR and all other items subject to the EAR. For ease of reference and 

classification purposes, items subject to the EAR that are not listed on the Commerce 

Control List are designated as “EAR99.” 

3115 C.F.R. § 744.3(a). 

32Such projects include the Indian Agni and Prithvi missile projects and the Iranian Surfaceto-Surface Missile Project. 

33Although the EAR restricts exports to terrorist organizations and individuals that are 

listed in the regulations, the regulations do not apply to those that are not listed. 

Gap in U.S. Export Controls 

Could Allow Proliferators to 

Gain U.S. Dual-use Technology 

for Cruise Missile or UAV 

Purposes 
Page 21 GAO-04-175 Nonproliferation 

Commerce officials. According to Commerce licensing and enforcement 

officials, they have no legal recourse in this or similar cases, as there is no 

violation of U.S. export control law or regulations. The Commerce officials 

said that they would need to wait until the New Zealander used the 

weapon improperly before action under export control law or regulations 

could be taken. It would be the New Zealand government’s responsibility 

to address any illicit action resulting from such transfers of U.S. items, 

according to other Commerce officials. One department official stated that 

not all export control loopholes can be closed and that U.S. export 

controls cannot fix defects in other countries’ laws. Another Commerce 

official explained that current catch-all controls assume that terrorists 

would not attempt to acquire illicit arms in friendly countries, such as 

NATO allies. 

Commerce officials explained that proliferators seeking a rudimentary, 

rather than state-of-the-art cruise missile, would be able to construct such 

a weapon of components not listed on the Commerce Control List. For 

these items, Commerce must directly link the items to a WMD program to 

apply the catch-all controls; otherwise, no action can be taken, according 

to the officials. They remarked that catch-all controls were added to give 

licensing officers more flexibility in reviewing items. However, exporters 

adept in covering up direct links to a WMD program could continue to 

divert dual-use missile-related items, according to the Commerce officials. 

The United States has other nonproliferation tools to address cruise 

missile and UAV proliferation: diplomacy, sanctions, and interdiction of 

illicit shipments of items. The United States used diplomacy to address 

suspected cases of proliferation of cruise missiles and UAVs in at least 14 

cases.34 U.S. efforts to forestall transfers of items succeeded in about onethird of these cases. The United States issued diplomatic action in at least 

14 cases to inform foreign governments of proposed or actual transfers of 

cruise missile or UAV items. The U.S. government successfully halted 

transfers in five cases, did not successfully halt a transfer in two cases, did 

not know the results of its actions or action was still in process in six 

cases, and claimed partial success in one other case. Of nine cases 

involving MTCR items, six of the nine countries demarched were MTCR 

members and three were not. 

 34Details of these cases are not publicly available. 

Other Nonproliferation 

Tools Had Unclear Results 

or Were Little Used 
Page 22 GAO-04-175 Nonproliferation 

Under several U.S. laws that authorize the use of sanctions when the U.S. 

government determines that missile proliferation has occurred, the U.S. 

government used sanctions twice between 1996 and 2002 for violations 

related to exports of cruise missiles. In these two cases, the United States 

sanctioned a total of 18 entities in 5 countries. However, a State official did 

not know whether the entities ceased their proliferation activities as a 

result. 

Although the Acting Deputy Assistant Secretary of State for 

Nonproliferation identified interdiction as one tool used to address 

proliferation of cruise missile and UAV technology, U.S. and foreign 

government officials knew of few cases of governments’ interdicting such 

shipments. To date, the United States reported using interdiction once to 

stop illicit shipments of cruise missile or UAV technology. ICE officials 

referred to only one case of an interdiction of a propeller for a Predator 

UAV destined for Afghanistan. Commerce officials knew of no cases 

where Commerce had been involved in interdiction of cruise missile or 

UAV dual-use technology. Foreign governments reported no known cases 

of interdiction of suspect cruise missile or UAV technology exports. 

The U.S. government announced discussions in June 2003 with 11 foreign 

governments to increase the use of interdiction against all forms of WMD 

and missile proliferation. A meeting in Paris of these governments 

participating in the Proliferation Security Initiative announced a statement 

of interdiction principles on September 4, 2003.35 These principles include 

a commitment to 

• undertake effective measures for interdicting the transfer or transport of 

WMD, delivery systems, and related materials to and from states and 

nonstate actors of proliferation concern; 

• adopt streamlined procedures for rapid exchange of relevant information 

concerning suspected proliferation activity; and 

• review and work to strengthen relevant national legal authorities and 

international law and frameworks to accomplish these objectives. 

 35The participating countries are Australia, Britain, France, Germany, Italy, Japan, The 

Netherlands, Poland, Portugal, Spain, and the United States. 
Page 23 GAO-04-175 Nonproliferation 

Post-shipment verification (PSV) is a key end-use monitoring tool used by 

U.S. agencies to confirm that authorized recipients of U.S. technology both 

received transferred items and used them in accordance with conditions 

of the transfer. However, State and Commerce seldom conduct PSVs of 

transferred cruise missiles, UAVs, and related items; State’s program does 

not monitor compliance with conditions when checks are made. 

Furthermore, Defense officials were not aware of any end-use monitoring 

for more than 500 cruise missiles transferred through government-togovernment channels, although officials are considering conducting such 

checks in the future. Similarly, other supplier countries place conditions 

on transfers, but few reported conducting end-use monitoring once items 

were exported. 

The Arms Control Export Act, as amended in 1996,36 requires, to the extent 

practicable, that end-use monitoring programs provide reasonable 

assurance that recipients comply with the requirements imposed by the 

U.S. government in the use, transfer, and security of defense articles and 

services. In addition, monitoring programs are to provide assurances that 

defense articles and services are used for the purposes for which they are 

provided. Accordingly, under State’s monitoring effort, known as the Blue 

Lantern program, State conducts end-use monitoring of direct commercial 

sales of defense articles and services, including cruise missiles, UAVs, and 

related technology. According to Blue Lantern program guidance, a PSV is 

the only means available to verify compliance with license conditions once 

an item is exported. Specifically, a PSV is used (1) to confirm whether 

licensed defense goods or services exported from the United States 

actually have been received by the party named on the license and (2) to 

determine whether those goods have been or are being used in accordance 

with the provisions of that license. 

Despite these requirements, we found that State did not use PSVs to assess 

compliance with cruise missile or UAV licenses having conditions limiting 

how the item may be used. These licenses included items deemed 

significant by State regulations.37 Based on State licensing data, we 

 3622 U.S.C. § 2785. 

37The International Trafficking in Arms Regulations defines significant military equipment 

as articles for which special export controls are warranted because of their capacity for 

substantial military utility or capability. 22 C.F.R. § 120.7. 

Compliance with 

Conditions on 

Exports of Cruise 

Missiles, UAVs, and 

Related Dual-use 

Items Seldom Verified 

through End-use 

Monitoring 

State Did Not Assess 

Compliance and 

Infrequently Monitored 

Cruise Missile and UAV 

Exports 
Page 24 GAO-04-175 Nonproliferation 

identified 786 licenses for cruise missiles, UAVs, or related items38 from 

fiscal years 1998 through 2002. Of these, 480 (61 percent) were licenses 

with conditions, while 306 (39 percent) were licenses without conditions. 

These 786 licenses included one for a complete state-of-the-art Predator B 

UAV (see fig. 5), and 27 for supporting Predator technical data, defense 

services, and parts. The licenses also included 7 for supporting technical 

data, defense services, and parts for the highly advanced Global Hawk 

UAV. 

Figure 5: Predator B UAV 

We found that State did not conduct PSVs for any of the 480 licenses with 

conditions and conducted PSVs on only 4 of 306 licenses approved without 

conditions. Each license reviewed through the post-shipment checks 

involved transferred UAV-related components and equipment. Three of the 

licenses receiving checks resulted in unfavorable determinations because 

a company made inappropriate end-use declarations or the end user could 

not confirm that it had received or ordered the items. State added that it 

has many other sources of information besides PSV checks on the misuse 

and diversion of exported articles. These sources include intelligence 

 38Related items may include spare parts, software, or technical data. 
Page 25 GAO-04-175 Nonproliferation 

reporting, law enforcement actions, embassy reporting, and disclosures of 

U.S. companies. 

A State licensing official stated that few post-shipment Blue Lantern 

checks have been conducted for cruise missiles, UAVs, and related items 

because many are destined for well-known end users in friendly countries. 

However, over fiscal years 1998 through 2002, 129 of the 786 licenses 

authorized the transfer of cruise missile and UAV-related items to 

countries such as Egypt, Israel, and India. These countries are not MTCR 

members, which indicates that they might pose a higher risk of diversion. 

In addition, over the last 4 years, State’s annual end-use monitoring reports 

to Congress39 recognized an increase in the incidence of West Europeanbased intermediaries involved in suspicious transactions. State noted in its 

2001 and 2002 reports that 23 and 26 percent, respectively, of unfavorable 

Blue Lantern checks for all munitions items involved possible 

transshipments through allied countries in Europe. 

In contrast to State’s guidance, State officials said that the Blue Lantern 

program was never intended to verify license condition provisions on the 

transfer of munitions such as cruise missile and UAV-related items. 

Instead, State officials explained that the program seeks to make certain 

only that licensed items are being used at the proper destination and by 

the proper end user. A State official further said that the compliance office 

is not staffed to assess compliance with license conditions and has not 

been managed to accomplish such a task. 

In commenting on a draft of this report, State emphasized the importance 

of Blue Lantern pre-license checks in verifying controls over the end user 

and end use of exported items and said that we did not include such 

checks in our analysis. We reviewed the 786 cruise missile and UAV 

licenses to determine how many had received Blue Lantern pre-license 

checks, a possible mitigating factor reducing the need to conduct a PSV. 

We found that only 6 of the 786 licenses from fiscal years 1998 through 

2002 that State provided us had been selected for pre-license checks. Of 

these, four received favorable results, one received an unfavorable result, 

and one had no action taken. 

 39End-Use Monitoring Report for FY 2001: Commercial Exports, Department of State 

(Washington, D.C.: 2002) and End-Use Monitoring Report for FY 2002: Commercial 

Exports, Department of State (Washington, D.C.: 2003). 
Page 26 GAO-04-175 Nonproliferation 

Under the Arms Control Export Act, as amended in 1996,40 the Department 

of Defense also is required to monitor defense exports to verify that 

foreign entities use and control U.S. items in accordance with conditions. 

The amended law requires an end-use monitoring program for defense 

articles and services transferred through the Foreign Military Sales 

program. Monitoring programs, to the extent practicable, are required to 

provide reasonable assurances that defense articles and services are being 

used for the purposes for which they are provided. 

The Defense Security Cooperation Agency (DSCA) is the principal 

organization through which Defense carries out its security assistance 

responsibilities, including administering the Foreign Military Sales 

program. Under this program, the United States transfers complete 

weapons systems, defense services, and related technology to eligible 

foreign governments and international organizations from Defense stocks 

or through Defense-managed contracts. Bilateral agreements contain the 

terms and conditions of the sale and serve as the equivalent of an export 

license issued by State or Commerce. 

From fiscal years 1998 through 2002, DSCA approved 37 agreements for 

the transfer of more than 500 cruise missiles and related items, as well as 

one transfer of UAV training software. The agreements authorized the 

transfer of Tomahawk land-attack cruise missiles, Standoff land-attack 

missiles, and Harpoon anti-ship cruise missiles, as well as supporting 

equipment such as launch tubes, training missiles, and spare parts. 

Approximately 30 percent of cruise missile transfers were destined for 

non-MTCR countries. Figure 6 shows the destinations of transferred cruise 

missiles. 

 4022 U.S.C. § 2785. 

Department of Defense 

Conducted Little 

Monitoring of Transferred 

Cruise Missiles 
Page 27 GAO-04-175 Nonproliferation 

Figure 6: Destinations of Transferred Cruise Missiles, Fiscal Years 1998-2002 

Note: Numbers may not total due to rounding. 

Defense’s end-use monitoring program, called Golden Sentry, has 

conducted no end-use checks related to cruise missile or UAV transfers, 

according to the program director. DSCA guidance states that governmentto-government transfers of defense items, including cruise missiles, are to 

receive routine end-use monitoring. Under routine monitoring, Security 

Assistance Officers and/or military department representatives account for 

the end use of defense articles through personal observation in the course 

of other assigned duties. However, the program director stated that he was 

unaware of any end-use monitoring checks, routine or otherwise, for 

transferred U.S. cruise missiles over the period of our review. In addition, 
Page 28 GAO-04-175 Nonproliferation 

a past GAO report41 found problems with monitoring of defense items and 

recommended that DSCA issue specific guidance to field personnel on 

activities that need to be performed for the routine observation of defense 

items. Nonetheless, Defense’s Golden Sentry monitoring program is not 

yet fully implemented, despite the 1996 legal requirement to create such an 

end-use monitoring program. DSCA issued program guidance in December 

2002 that identified the specific responsibilities for new end-use 

monitoring activities. In addition, as of November 2003, DSCA was 

conducting visits to Foreign Military Sales recipient countries to determine 

the level of monitoring needed and was identifying weapons and 

technologies that may require more stringent end-use monitoring. The 

program director stated that he is considering adding cruise missiles and 

UAVs to a list of weapon systems that receive more comprehensive 

monitoring. 

The Export Administration Act, as amended, provides the Department of 

Commerce with the authority to enforce dual-use controls. Under the act, 

Commerce is authorized to conduct PSV visits outside the United States of 

dual-use exports.42 The Export Administration Regulations indicate that a 

transaction authorized under an export license may be further limited by 

conditions that appear on the license, including a condition that stipulates 

the need to conduct a PSV.43 Commerce can conduct a PSV by applying a 

condition to a license that requires U.S. mission staff residing in the 

recipient country to conduct a PSV, or it can send a safeguards verification 

team from Commerce headquarters to the country to conduct a PSV. 

Based on Commerce licensing data, we found that Commerce issued 2,490 

dual-use licenses between fiscal years 1998 and 2002 for items that could 

 41See General Accounting Office, Foreign Military Sales: Changes Needed to Correct 

Weaknesses in End-Use Monitoring Program, GAO-00-208 (Washington, D.C.: August 

2000). 

4250 U.S.C. app § 2411(a)(1). 

43See 15 C.F.R. § 744.1, § 732.4(b)(3). 

Commerce Conducted 

Little Monitoring of Cruise 

Missile and UAV-related 

Dual-use Exports 
Page 29 GAO-04-175 Nonproliferation 

be useful in developing cruise missiles or UAVs.44 Of these, Commerce 

selected 2 percent of the licenses, or 52 cases, for a PSV visit and 

completed visits to 1 percent of the licenses. Specifically, Commerce 

designated PSVs as a license condition for 28 licenses, and completed 5. 

Commerce designated PSVs as part of a safeguards team for 24 cases, and 

completed all of them. Of these 24 checks, 23 resulted in favorable 

determinations, while 1 was unfavorable. 

Commerce guidance for selecting PSVs and pre-license checks establish 

criteria based on technologies and countries that require a higher priority 

for conducting PSVs and pre-license checks. The guidance identifies 19 

specific missile technology categories from the Commerce Control List 

involving particularly sensitive commodities as choke points for the 

development of missiles and indicating a priority for PSV or pre-license 

selection. For example, items such as software and source code to 

improve inertial navigation systems, as well as lightweight turbojet and 

turbofan engines, are included as choke point missile technologies. In 

addition, the guidance identifies 20 countries of missile diversion concern 

that may also warrant a pre-license check or PSV. The guidance further 

identifies 12 specific countries or destinations that have been used 

repeatedly, and are likely to be used again, as conduits for diversions of 

sensitive dual-use commodities or technology.45 The guidance states that 

other factors might mitigate the need to select a license for a PSV. 

We applied Commerce’s guidelines to the 2,490 cruise missile or UAVrelated licenses and identified 20 that met the criteria to receive a PSV or a 

pre-license check. However, Commerce selected only 2 of these 20 

licenses. All 20 licenses were for choke point missile technology useful for 

cruise missile or UAV development. Some of these licenses were for 

countries of missile diversion concern, such as India, while others were 

for transshipment countries, such as Singapore. Figure 7 shows the 

 44The Commerce Control List does not designate whether an item is useful for ballistic 

missiles or cruise missiles, according to Commerce officials, but identifies only that an item 

is useful for missile technology. Commerce identified 102 of 130 dual-use missile-related 

categories in the Export Administration Regulations that contain items that could be used 

either for cruise missile or ballistic missile purposes, and 9 categories that could be used 

“primarily” for cruise missile purposes. Three categories of items relate to UAVs or their 

components. The 2,490 cruise missile or UAV-related licenses that we reviewed were in 

these categories of items. 

45Two countries are listed on both the list of missile technology diversion concern and the 

list of conduit countries. 
Page 30 GAO-04-175 Nonproliferation 

destinations for items in the 20 licenses and the percentage of licenses for 

each destination. 

Figure 7: Destinations of Dual-use Approved Licenses for Chokepoint 

Technologies, Fiscal Years 1998–2002, by Country 

We found that Commerce selected 2 of the 20 licenses for a PSV. One PSV 

resulted in a favorable determination, while the other had not been 

completed at the time of our review. Even though the 20 licenses met 

guidance criteria, few of these licenses had been selected for PSVs. A 

Commerce official explained that licenses might not be selected for a PSV 

because many factors might mitigate the need for a PSV for a particular 

license even though it meets the selection criteria. However, Commerce 

officials could not explain which factors lessened the need for a PSV for 

the remaining 18 licenses. 

Other supplier countries have established export control laws and 

regulations, which also place conditions on transfers and can authorize 

agencies to conduct end-use monitoring of sensitive items. For example, 

government officials from the United Kingdom, France, and Italy stated 

that their respective governments might add conditions for cruise missile 

and UAV-related items, as well as for other exports. While national export 

Few International 

Suppliers Verify End-use 

Controls 
Page 31 GAO-04-175 Nonproliferation 

laws authorize end-use monitoring, none of the foreign government 

officials reported any PSV visits for cruise missile or UAV-related items. 

The national export control systems of other cruise missile and UAV 

supplier countries that responded to our request for information apply 

controls differently from the United States for missile-related transfers. 

Government officials in France, Italy, and the United Kingdom stated that 

their respective governments generally do not verify conditions on cruise 

missile and UAV transfers and conduct few post-shipment verification 

visits of such exports. The South African government was the only 

additional supplier country responding to a written request for 

information46 that reported it regularly requires and conducts PSVs on 

cruise missile and UAV transfers. 

• Officials in the United Kingdom stated that the U.K. government seeks to 

ensure compliance with license conditions, but it has no institutional 

system for conducting PSVs for British exports. Although defense attaches 

keep their eyes open for cases of misuse of an item, the officials did not 

know whether any PSV visits had been done for transfers of British cruise 

missiles or UAVs. A U.K. government official said that occasionally 

embassy officials may conduct PSVs on other British equipment. For 

example, a PSV may be undertaken to confirm that British tanks are not 

being used by Israel to conduct operations in Gaza. However, the official 

added that such actions are neither required nor routine. 

• Italian government officials stated that all armament transfers include 

conditions that the end user cannot retransfer to other countries or users 

without prior permission from the government. Additionally, some export 

licenses require an import delivery certificate as a condition to certify that 

an item has been imported. For those licenses, the government of Italy 

allows firms fixed periods of time to provide required documents. If the 

recipient does not send a required delivery certificate, then a PSV would 

be conducted to verify whether the end user received the items. 

• According to French officials, France does not conduct explicit PSV visits. 

Instead, its officials observe end-use conditions during technical or 

military-to-military contacts. Specifically, French officials stated that when 

missiles or any other highly technological goods are sold contact between 

 46Governments responding to our request were Israel, Japan, South Africa, and Switzerland. 

Russia’s and Canada’s responses were provided too late to be included in this report. Other 

countries that we queried provided no information on end-use monitoring. 
Page 32 GAO-04-175 Nonproliferation 

the government and the recipient provides opportunities to ensure the 

disposition of the exported item. 

• According to South African government officials, requirements for PSV 

visits may be applied to licenses for cruise missile and UAV-related 

technology. Furthermore, South Africa conducts regular end-use 

verifications to selected end users of non-MTCR countries and may initiate 

other ad hoc visits as required by the South African control authorities. In 

addition, government-to-government agreements require end-use 

certificates containing delivery verification information and include 

authorizations for end-use verification visits, as well as non-retransfer, 

non-modification, and non-reproduction clauses. South African 

government officials also stated that each clause must be fully verified and 

authenticated. 

The continued proliferation of cruise missiles and UAVs poses a growing 

threat to the United States, its forces overseas, and its allies. Most 

countries already possess cruise missiles, UAVs, or related technology, 

and many are expected to develop or obtain more sophisticated systems in 

the future. The dual-use nature of many of the components of cruise 

missiles and UAVs also raises the prospect that terrorists could develop 

rudimentary systems that could pose additional security threats to the 

United States. Since this technology is already widely available throughout 

the world, the United States works in concert with other countries through 

multilateral export control regimes to better control the sale of cruise 

missiles, UAVs, and related technologies. Even though the effectiveness of 

these regimes is limited in what they can accomplish, the United States 

could achieve additional success in this area by adopting our previous 

recommendations to improve the regimes’ effectiveness. 

U.S. export controls may not be sufficient to prevent cruise missile and 

UAV proliferation and ensure compliance with license conditions. Because 

some key dual-use components can be acquired without an export license, 

it is difficult for the export control system to limit or even track their use. 

Moreover, current U.S. export controls may not prevent proliferation by 

nonstate actors, such as certain terrorists, who operate in countries that 

are not currently restricted under missile proliferation regulations. 

Furthermore, the U.S. government seldom uses its end-use monitoring 

programs to verify compliance with the conditions placed on items that 

could be used to develop cruise missiles or UAVs. Thus, the U.S. 

government does not have sufficient information to know whether 

recipients of these exports are effectively safeguarding equipment and 

Conclusions 
Page 33 GAO-04-175 Nonproliferation 

technology in ways that protect U.S. national security and nonproliferation 

interests. The challenges to U.S. nonproliferation efforts in this area, 

coupled with the absence of end-use monitoring programs by several 

foreign governments for their exports of cruise missiles or UAVs, raise 

questions about how nonproliferation tools are keeping pace with the 

changing threat. 

A gap in dual-use export control regulations could enable individuals in 

most countries of the world to legally obtain without any U.S. government 

review U.S. dual-use items not on the Commerce Control List to help make 

a cruise missile or UAV. Consequently, we recommend that the Secretary 

of Commerce assess and report to the Committee on Government Reform 

on the adequacy of the Export Administration Regulations’ catch-all 

provision to address missile proliferation by nonstate actors. This 

assessment should indicate ways the provision might be modified. 

Because the departments have conducted so few PSV visits to monitor 

compliance with U.S. government export conditions on transfers of cruise 

missiles, UAVs and related dual-use technology, the extent of the 

compliance problem is unknown. While we recognize that there is no 

established or required number of PSV visits that should be completed, the 

small number completed does not allow the United States to determine the 

nature and extent of compliance with these conditions. Thus, we 

recommend that the Secretaries of State, Commerce, and Defense, as a 

first step, each complete a comprehensive assessment of cruise missile, 

UAV, and related dual-use technology transfers to determine whether U.S. 

exporters and foreign end users are complying with the conditions on the 

transfers. As part of the assessment, the departments should also conduct 

additional PSV visits on a sample of cruise missile and UAV licenses. This 

assessment would allow the departments to gain critical information that 

would allow them to better balance potential proliferation risks of various 

technologies with available resources for conducting future PSV visits. 

We provided a draft of this report to the Secretaries of Commerce, 

Defense, and State for their review and comment. We received written 

comments from Commerce, Defense, and State that are reprinted in 

appendixes II, III, and IV. DOD and State also provided us with technical 

comments, which we incorporated as appropriate. 

Commerce did not agree that the limited scope of the current catch-all 

provision should be called a gap in U.S. regulations but agreed to review 

Recommendations for 

Executive Action 

Agency Comments 

and Our Evaluation 
Page 34 GAO-04-175 Nonproliferation 

whether the existing catch-all provision sufficiently protects U.S. national 

security interests. Commerce said that it believes that the export control 

system effectively controls items of greatest significance for cruise 

missiles and UAVs and are on the Commerce Control List. It stated that 

our report is ambiguous as to whether the gap relates to items listed on the 

control list or to items that are not listed, as they are not considered as 

sensitive for missile proliferation reasons. Commerce also stated that we 

should explain the basis for suggesting that noncontrolled items are 

sensitive and should be placed on the MTCR control list, if that is our 

position. Our references to the gap in the regulations refer to dual-use 

items that are not listed on the Commerce Control List and we have made 

changes to the draft to clarify this point. Furthermore, we are not 

suggesting that unlisted items should be added to the MTCR control list to 

deal with the issue we identified in the New Zealand example. As we 

recommend, the vehicle to address this gap would be an expansion of 

Commerce’s catch-all provision whereby license reviews would be 

required when the exporter knows or has reason to know that the items 

might be used by nonstate actors for missile proliferation purposes. In 

commenting on our draft report’s recommendation to require an export 

license review for any item that an exporter knows or has reason to know 

would be used to develop or design a cruise missile or UAV of any range, 

Commerce agreed to review whether the existing provision sufficiently 

protects U.S. national security interests. We have modified our 

recommendation to reflect the need for an assessment of the catch-all 

provision’s scope and possible ways to modify the provision to address the 

gap. 

State disagreed with our findings and conclusions concerning its end-use 

monitoring program. State said that our report was inaccurate in 

suggesting that State does not monitor exports to verify compliance with 

export authorizations and noted that we did not discuss the importance of 

pre-license checks to verify end use and end user restrictions. It said that 

our report was misleading and inaccurate to suggest that State does not 

monitor exports to verify compliance with export authorizations. State 

said that the most important restrictions placed on export authorizations 

involve controls over the end user and the end use of the article being 

exported. State also said that it uses many tools in the export licensing 

process to verify these restrictions and that the Blue Lantern program’s 

pre- and post-license checks are only one of these tools. State said that 

pre-license checks verify the bond fides of end users, as well as the receipt 

and appropriate end use of defense articles and services, including UAVand missile-related technologies. It also questioned why our analysis did 
Page 35 GAO-04-175 Nonproliferation 

not include pre-license checks as part of State’s efforts to ensure 

compliance with arms export regulations. 

We agree that pre-license checks are critical to ensure that licenses are 

issued to legitimate, reliable entities and for specified programs or end 

uses in accordance with national security and foreign policy goals. We also 

agree that they augment controls and checks used during the licensing 

process to determine the legitimacy of the parties involved and the 

appropriate end use of the export prior to license approval. However, such 

checks cannot confirm the appropriate end user or end use of an item 

after it has been shipped and received by the recipient. Regarding other 

tools in the export licensing process to verify conditions, we asked State 

for additional information that would indicate what other actions, besides 

PSV checks, State took. State officials said that some license conditions 

required follow-up action—such as forms or reports—either by State 

officials, exporters, or end users. We asked for examples of such follow-up 

action related to licenses for cruise missiles, UAVs, or related technology. 

A State official said that, after querying the relevant licensing teams, State 

officials did not identify any licenses requiring follow-up action and that 

there is no system, formal or otherwise, that would document follow-up 

actions that had been taken. In response to State’s comments, we added 

information on Blue Lantern pre-license checks to the report, information 

that further demonstrates the limited monitoring that State conducts on 

cruise missile and UAV-related transfers. We reviewed the 786 cruise 

missile and UAV licenses to determine how many had received Blue 

Lantern pre-license checks, a possible mitigating factor reducing the need 

to conduct a PSV. These included 129 licenses to non-MTCR countries, 

such as Egypt, Israel, and India, which present a higher risk of misuse or 

diversion. We found that only 6 of the 786 licenses that State provided us 

had been selected for pre-license checks. Of these, 4 received favorable 

results, 1 received an unfavorable result, and 1 had no action taken. 

Commerce and DOD partially agreed with our second recommendation to 

complete a comprehensive assessment of cruise missile, UAV and related 

dual-use technology transfers. However, both departments raised 

concerns over the resources needed to conduct such a comprehensive 

assessment and sought further definition of the scope of the transfers to 

be assessed as the basis for interagency action and additional resources 

for monitoring. DOD suggested that a random sample of cases could 

achieve results equivalent to that of a comprehensive assessment. It 

agreed to conduct a greater number of PSVs in order to (1) provide the 

U.S. government with a high level of confidence over time that exporters 

and end users are complying with export license conditions and (2) allow 
Page 36 GAO-04-175 Nonproliferation 

the U.S. government to determine whether adequate resources are devoted 

to license compliance issues. We clarified our recommendation so that a 

comprehensive assessment could include a sampling methodology so long 

as it provided each agency with a high level of confidence that the sample 

selected accurately demonstrated the nature and extent of compliance 

with conditions. State disagreed with our recommendation and said that 

the absence of evidence in our report of misuse or diversion does not 

warrant such an extensive effort. Nonetheless, State said that in 

conjunction with steps taken to improve the targeting of Blue Lantern 

checks and increase the number conducted annually, it would pay special 

attention to the need for additional pre- and post-shipment checks for 

cruise missile- and UAV-related technologies. Since State conducted no 

PSV checks for any of the 480 licenses for cruise missile or UAV-related 

licenses with conditions that we reviewed and only 6 pre-license checks 

for the 786 licenses, the need for State to assess its monitoring over cruise 

missile and UAV licenses is a recommendation we strongly reaffirm. 

As arranged with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days after the 

date of this letter. At that time, we will send copies of this report to 

appropriate congressional committees and to the Secretaries of 

Commerce, Defense, and State. Copies will be made available to others 

upon request. In addition, this report will be available at no charge on the 

GAO Web site at http://www.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. A GAO contact and 

staff acknowledgments are listed in appendix V. 

Sincerely yours, 

Joseph A. Christoff 

Director, International Affairs and Trade 
Appendix I: Scope and Methodology 

Page 37 GAO-04-175 Nonproliferation 

To determine the nature and extent of cruise missile and UAV 

proliferation, we reviewed documents and studies of the Departments of 

Commerce, Defense, Homeland Security, and State, the intelligence 

community, and nonproliferation and export controls specialists in 

academia and the defense industry. These included the Unclassified 

Report to Congress on the Acquisition of Technology Relating to Weapons 

of Mass Destruction and Advanced Conventional Munitions, 1 January 

through 30 June 2002; the Director of Central Intelligence worldwide 

threat briefing on The Worldwide Threat in 2003: Evolving Dangers in a 

Complex World 11 February 2003; and the DOD UAV Roadmap for 2000 to 

2025 and 2002 to 2025. We also reviewed databases of the UAV Forum and 

UVONLINE. Also, we reviewed plenary, working group, and information 

exchange documents of the MTCR. We met with officials of the 

Departments of Commerce, Defense, Homeland Security, and State, the 

intelligence community, and with nonproliferation and export controls 

specialists in academia in Washington, D.C., and officials of the National 

Air Intelligence Center in Dayton, Ohio. We also met with representatives 

of private companies Adroit Systems Inc., EDO, Boeing, MBDA, Lockheed 

Martin, and with the industry associations National Defense Industrial 

Association (NDIA) and the Aerospace Industries Association in 

Washington, D.C. In addition, we received a written response from NDIA 

to a list of detailed questions. Also, we met with representatives of the 

Defense Manufacturing Association, SBAC, Goodrich, BAE Systems, and 

MBDA in London, United Kingdom; and of the European Unmanned 

Vehicle Systems Association (EURO UVS) in Paris, France. In addition, we 

attended two conferences of the Association for Unmanned Vehicle 

Systems International (AUVSI) in Washington, D.C., and Baltimore, 

Maryland. 

To examine how the U.S. and other governments have addressed 

proliferation of cruise missile and UAV risks, we analyzed the documents 

and studies noted above and met with officials and representatives of the 

previously mentioned governments and nonproliferation and export 

controls specialists in academia. We also reviewed relevant documents 

and data to determine how the U.S. and other governments have used 

export controls, diplomacy, interdiction, and other policy tools. Based on 

this information, we conducted analyses to determine how each tool had 

been employed and with what results. 

To evaluate the end-use controls used by the U.S. and other governments, 

we obtained documents and met with officials from the Departments of 

Commerce, Defense, and State. We also reviewed arms transfer data from 

DOD and export licensing data from State and Commerce databases to 

Appendix I: Scope and Methodology 
Appendix I: Scope and Methodology 

Page 38 GAO-04-175 Nonproliferation 

assess what cruise missile and UAV technology the United States 

exported, how the U.S. government selected licenses to receive postshipment monitoring, and how it applied end-use post-shipment controls. 

Moreover, we reviewed applicable U.S. export control laws and 

regulations. We performed qualitative and quantitative analyses of selected 

export licenses to determine the extent and frequency of applied license 

conditions and end-use checks related to cruise missile and UAV transfers. 

To determine the completeness and accuracy of the Defense and State 

data sets, we reviewed related documentation, interviewed knowledgeable 

agency officials, and reviewed internal controls. The State database 

system is not designed to identify all cruise missile or UAV commodities 

transferred. Therefore, the team developed a list of search terms based on 

consultations with State officials concerning which terms would likely 

capture all transfers involving cruise missiles, UAVs, and related 

technology. State provided the criteria we used to determine what Statelicensed exports were cruise missile or UAV-related. State officials queried 

their licensing database to search for specific category codes and 12 

keywords.1

 The resulting report that State provided to us contained 400 

pages with 1,300 entries. While we have high confidence that our analysis 

allowed us to capture most of the relevant cases, it is possible that a few 

relevant State cases might have been missed. We also assessed the 

reliability of the Commerce data by performing electronic testing of 

required data elements and by interviewing agency officials 

knowledgeable about the data. We determined that the data elements were 

sufficiently reliable for the purposes of this engagement. 

We also interviewed officials of the governments of France, Italy, and the 

United Kingdom, and met with representatives of the point of contact for 

the MTCR in Paris, France. In addition, we received written responses to 

questions we provided to the governments of Israel, Japan, South Africa, 

and Switzerland. Russia and Canada provided a response too late to be 

included in this report. We requested the same information from the 

government of Germany, but received no response. Our ability to address 

two objectives was impaired by a Department of State delay in assisting 

our efforts to collect responses to written questions from foreign 

governments. State agreed to facilitate this effort 4 months after our initial 

request for assistance and only after we reduced the number of countries 

 1

State reported that the keywords were (1) UAV, (2) RPV, (3) Cruise Missile, (4) Harpoon, 

(5) Tomahawk, (6) Slam, (7) Drone, (8) Prowler, (9) GNAT, (10) Predator, (11) Altus, and 

(12) *UNMAN* and *VEHIC*. 
Appendix I: Scope and Methodology 

Page 39 GAO-04-175 Nonproliferation 

to receive our questions from 16 to 7 and reduced the number of 

questions. Given this delay, governments had less time to respond to our 

questions than we had originally planned. Thus, we could not fully assess 

how other governments address the proliferation risks of cruise missiles, 

UAVs, and related technology and apply end-use controls on their exports 

of these items. 

We performed our work from October 2002 to November 2003 in 

accordance with generally accepted government auditing standards. 
Appendix II: Comments from the Department 

of Commerce 

Page 40 GAO-04-175 Nonproliferation 

Appendix II: Comments from the Department 

of Commerce 

Note: GAO comments 

supplementing those in 

the report text appear at 

the end of this appendix. 

See comment 1. 
Appendix II: Comments from the Department 

of Commerce 

Page 41 GAO-04-175 Nonproliferation 

See comment 3. 

See comment 2. 
Appendix II: Comments from the Department 

of Commerce 

Page 42 GAO-04-175 Nonproliferation 

See comment 5. 

See comment 4. 

See footnote 23. 
Appendix II: Comments from the Department 

of Commerce 

Page 43 GAO-04-175 Nonproliferation 

See comment 8. 

See comment 7. 

See comment 6. 
Appendix II: Comments from the Department 

of Commerce 

Page 44 GAO-04-175 Nonproliferation 

See comment 9. 
Appendix II: Comments from the Department 

of Commerce 

Page 45 GAO-04-175 Nonproliferation 

See comment 10 
Appendix II: Comments from the Department 

of Commerce 

Page 46 GAO-04-175 Nonproliferation 
Appendix II: Comments from the Department 

of Commerce 

Page 47 GAO-04-175 Nonproliferation 

The following are GAO’s comments on the Department of Commerce letter 

dated November 14, 2003. 

1. Commerce said that our report does not distinguish among the varying 

threats posed by different types of cruise missiles and UAVs. Our 

report does make distinctions between the threats posed by anti-ship 

cruise missiles to U.S. naval forces, land-attack cruise missiles to the 

U.S. homeland and forces deployed overseas, and UAVs as potential 

delivery systems for chemical and biological weapons. As our report 

stated, the potential for terrorist groups to produce or acquire 

rudimentary cruise missiles or small UAVs using unlisted dual-use 

items is an emerging threat that needs to be better addressed. 

2. Commerce said that agreement was finalized at the September 2003 

MTCR Plenary to add a new category of UAVs to the MTCR control 

list. We have added information to the report to take this into account. 

3. Commerce said that our report does not discuss action taken at the 

September 2003 MTCR Plenary to include a catch-all provision in the 

regime guidelines that could strengthen MTCR disciplines and address 

some of the concerns of our report. While helpful, the practical impact 

of this change is negligible. Nearly all MTCR members currently have 

catch-all controls in their national export control authority. 

Furthermore, as Commerce pointed out, the U.S. catch-all controls 

have limited scope and do not address the type of situation presented 

in the New Zealand example. 

4. We believe that our explanation was clear as to how we applied 

Commerce’s guidance to select licenses that met Commerce’s listed 

criteria for receiving a PSV. As clearly noted in our report, we first 

started with the 2,490 dual-use licenses with commodity categories 

that Commerce had identified as relevant to cruise missile and UAV 

items. Second, we selected those licenses having only commodity 

categories identified in Commerce guidance as chokepoint 

technologies. Third, we matched these licenses to a recipient country 

identified as a country of missile proliferation concern or as a conduit 

country. This analysis resulted in 20 licenses. When we found that two 

of the 20 licenses we identified had been selected for a PSV, we asked 

Commerce officials to explain which of the other variables 

(information about the parties to the transaction, proposed end use, 

previous licensing history, etc.) mitigated the need for a PSV. As we 

reported, Commerce officials could not explain which factors lessened 

the need for a PSV for the remaining 18 licenses. 

GAO Comments 
Appendix II: Comments from the Department 

of Commerce 

Page 48 GAO-04-175 Nonproliferation 

5. Commerce stated that there is ambiguity in our report as to whether 

the gap relates to items listed on the Commerce Control List or to 

items that are not listed because they are not considered as sensitive 

for missile proliferation reasons. Our references to the gap in the 

regulations refer to dual-use items that are not listed on the Commerce 

Control List. We have made changes to the draft to clarify this point. 

6. Commerce stated that if it is GAO’s position that noncontrolled items 

are sensitive and should be placed on the MTCR control list, then we 

should explain the basis for this position. We are not suggesting that 

unlisted items should be added to the MTCR control list to deal with 

the issue we identified in the New Zealand example. As indicated in 

our recommendation, the vehicle to address this gap would be an 

expansion of Commerce’s catch-all provision whereby license reviews 

would be required when the exporter knows or has reason to know 

that items not on the Commerce Control List might be used by 

nonstate actors for missile proliferation purposes. 

7. Commerce states that the United States and MTCR members 

effectively control the items of greatest significance for cruise missiles 

and UAVs that pose concerns for U.S. national security. We agree that 

MTCR covers items of greatest significance for cruise missiles and 

UAVs that pose concerns posed by national missile programs. 

However, Commerce needs to recognize the potential for nonstate 

actors, particularly terrorists, to legally acquire unlisted items for use 

in missile proliferation. 

8. Commerce acknowledges that its enforcement authority is limited 

concerning items not listed on the Commerce Control List and entities 

not named on the terrorist lists. Nonetheless, it asserts that it could 

take specific actions if it learned that U.S. items had been shipped to 

proliferators or terrorists that were developing weapons with these 

components. However, it is not clear how this information would come 

to Commerce’s attention because current regulations do not require, or 

inform, an exporter to seek a license review in this type of situation. 

9. Commerce agrees to consider whether the catch-all provision 

sufficiently protects U.S. national security interests. We agree that 

such a review in consultation with the Technical Advisory Committees 

and interagency community would be an important first step in 

identifying the sufficiency of the provision to cover nonstate actors 

and ways to modify it to address the gap. Consequently, we have 

modified our recommendation accordingly. 
Appendix II: Comments from the Department 

of Commerce 

Page 49 GAO-04-175 Nonproliferation 

10. The gap that we identified in our report is in the catch-all provisions. 

We are not suggesting that additional items be added to the control 

lists. Currently, the catch-all regulations require an exporter to submit 

a license application when he knows or has reason to know that an 

unlisted item would be used for missile proliferation purposes. 

However, this provision applies only to specific missile proliferation 

projects or countries identified on a narrow list in the regulations. The 

New Zealand citizen was not covered under the catch-all provisions. 
Appendix III: Comments from the Department 

of Defense 

Page 50 GAO-04-175 Nonproliferation 

Appendix III: Comments from the 

Department of Defense 
Appendix III: Comments from the Department 

of Defense 

Page 51 GAO-04-175 Nonproliferation 
Appendix IV: Comments from the Department 

of State 

Page 52 GAO-04-175 Nonproliferation 

Appendix IV: Comments from the 

Department of State 

Note: GAO comments 

supplementing those in 

the report text appear at 

the end of this appendix. 
Appendix IV: Comments from the Department 

of State 

Page 53 GAO-04-175 Nonproliferation 

See comment 2. 

See comment 1. 
Appendix IV: Comments from the Department 

of State 

Page 54 GAO-04-175 Nonproliferation 

See comment 4. 

See comment 3. 

See comment 2. 
Appendix IV: Comments from the Department 

of State 

Page 55 GAO-04-175 Nonproliferation 
Appendix IV: Comments from the Department 

of State 

Page 56 GAO-04-175 Nonproliferation 

The following are GAO’s comments on the Department of State letter 

dated November 19, 2003. 

1. State said that it has conducted over 1,200 Blue Lantern checks on 

exports of all types and developed derogatory information in almost 

200 cases over the past 3 years. However, these checks and cases 

involved both pre-license checks and PSVs and included more than 

cruise missile or UAV items, according to State’s most recent end-use 

monitoring report.1

 For example, 428 checks initiated by State in fiscal 

year 2002—of which 50 checks resulted in unfavorable 

determinations—included firearms and ammunition, electronics and 

communications equipment, aircraft spare parts, bombs, spare parts 

for tanks and military vehicles, and night vision equipment. 

2. State also said that the Blue Lantern program (1) effectively verifies 

the end use and end users of export applications when questions arise, 

(2) has deterred diversions, (3) helped disrupt illicit supply networks, 

(4) helped State make informed licensing decisions, and (5) ensured 

exporter compliance with law and regulations. State added that the 

historical context of assessing the parties to the export weighs into 

every licensing decision and its importance cannot be discounted. We 

agree that the Blue Lantern program can have a positive impact when 

State has the information needed to allow it to act. This statement 

affirms our point that it is important to obtain such information 

through improved monitoring, particularly PSVs. However, given the 

limited number of either pre- or post-shipment Blue Lantern checks 

focused to date on cruise missile and UAV-related transfers, we 

question whether sufficient information has been obtained in this area. 

3. State said that it was unclear why our report’s analysis excluded prelicense checks as part of State’s efforts to ensure compliance with 

arms export regulations. As noted above, we did ask for such 

information and learned that State conducted few pre-license checks 

for its cruise missile and UAV transfers. While we agree with State that 

pre-license checks are critical to providing assurances that licenses are 

issued to legitimate, reliable entities and for specified programs or end 

uses, they obviously cannot verify that exports are received by the 

legitimate end user or used in accordance with the terms of the license 

after shipment. We agree that seeking and receiving assurances prior 

 1

End-Use Monitoring Report for FY 2002: Commercial Exports, Department of State 

(Washington, D.C.: 2003) 

GAO Comments 
Appendix IV: Comments from the Department 

of State 

Page 57 GAO-04-175 Nonproliferation 

to licensing and shipment is a critical function that might mitigate the 

need for a PSV check in many cases. However, State implies that prelicense and other actions of the licensing process mitigated the need to 

conduct PSV checks for all but 4 of its 786 licenses for cruise missile, 

UAV, or related technology. These included 129 licenses to non-MTCR 

countries, such as Egypt, Israel, and India. 

4. State said that our report did not articulate the criteria we used to 

determine what exports are UAV-related. State provided the criteria 

we used to determine what State-licensed exports were cruise missile 

or UAV-related. State officials queried their licensing database to 

search for specific category codes and 12 keywords.2

 The resulting 

report that State provided to us contained 400 pages with 1,300 entries. 

We have added this information to our Scope and Methodology section 

to clarify that State provided us with these criteria, the data generated 

from applying the criteria, and information on Blue Lantern pre-license 

and PSV checks for these licenses. 

 2

State reported that the keywords were (1) UAV, (2) RPV, (3) Cruise Missile, (4) Harpoon, 

(5) Tomahawk, (6) Slam, (7) Drone, (8) Prowler, (9) GNAT, (10) Predator, (11) Altus, and 

(12) *UNMAN* and *VEHIC*. 
Appendix V: GAO Contact and Staff 

Acknowledgments 

Page 58 GAO-04-175 Nonproliferation 

David Maurer (202) 512-9627 

In addition to the individual named above, Jeffrey D. Phillips, Stephen M. 

Lord, Claude Adrien, W. William Russell IV, Lynn Cothern, and Richard 

Seldin made key contributions to this report. 

Appendix V: GAO Contact and Staff 

Acknowledgments 

GAO Contact 

Acknowledgments 

(320165) 
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