Nonproliferation: Improvements Needed for Controls on Exports of Cruise Missile and Unmanned Aerial Vehicle Technology
Published: 2004-03-09T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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.
section_title: What GAO Found
paragraphs: 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 that include cruise missile and UAV items, 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 dual-use 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.

section_title: Letter
paragraphs: I am pleased to be here today to discuss GAO’s report on U.S. efforts to  limit the proliferation of cruise missiles and unmanned aerial vehicles  (UAV). These efforts are complicated by the widespread availability of  these items among countries of concern. The U.S. government faces trade- offs when making decisions about transfers of cruise missiles, UAVs, or  related technology. The United States wants 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.
You asked us to assess U.S. and international efforts to limit the  proliferation of cruise missiles, unmanned aerial vehicles, and related  technology. Specifically, we assessed (1) the nature and extent of cruise  missile and UAV proliferation; (2) the nonproliferation tools that the  United States uses to address the proliferation risks posed by the sale of  these items; and (3) U.S. 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.
subsections: section_title: Background
paragraphs: Distinctions between cruise missiles and UAVs are becoming blurred as  the militaries of many nations, in particular the United States, attach  missiles to traditional reconnaissance UAVs and develop UAVs dedicated  to combat missions. A UAV, a pilotless vehicle that operates like an  airplane, can be used for a variety of military and commercial purposes.  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. A cruise missile is an unmanned aerial  vehicle designed for one-time use, which travels through the air like an  airplane before delivering its payload. 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.
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.  Furthermore, land-attack cruise missiles may fly circuitous routes to get to  their targets, thereby avoiding radar and air defense installations.
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 regimes are voluntary, nonbinding  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, and the International Trafficking in Arms  Regulations, implemented by State. Government-to-government transfers  are made pursuant to the Foreign Assistance Act of 1961, as amended, and  are subject to DOD guidance. Exports of dual-use technologies related to  cruise missiles and UAVs are transferred pursuant to the Export  Administration Act of 1979, as amended, and the Export Administration  Regulations, implemented by Commerce.
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. 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 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.
section_title: Proliferation of Cruise Missiles and UAVs Poses a Growing Threat to U.S. National Security Interests
paragraphs: 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. 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. These features will make them more  difficult to detect and defeat. 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. Countries that export cruise missiles currently include China,  France, Germany, Israel, Italy, Norway, Russia, Sweden, United Kingdom,  and the United States. China and Russia have sold cruise missiles to Iran,  Iraq, Libya, North Korea, and Syria. 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.
Second, land-attack cruise missiles have a potential in the long-term to  threaten the continental United States and U.S. forces deployed overseas.  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. 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 land-attack cruise missile. 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. According to an  unclassified national intelligence estimate, several countries are  technically capable of developing a missile launch mechanism to station  on forward-based ships or other platforms to launch land-attack cruise  missiles against the United States.
Finally, UAVs represent an inexpensive means of launching chemical and  biological attacks against the United States and allied forces and territory.  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.
section_title: Key Nonproliferation Tools Have Limitations Addressing Cruise Missile and UAV Proliferation
paragraphs: 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. 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 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.  The growing capability of nonmember supplier countries to develop  technologies that could be used for WMD and trade them with other  countries of proliferation concern undermines the regimes’ ability to  prevent proliferation.
In October 2002, we reported on other limitations that impede the ability  of the multilateral export control regimes, including the MTCR and  Wassenaar Arrangement, to achieve their nonproliferation goals. 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-based process that makes decision-making difficult. The  regimes also 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  decisions, and (4) evaluating means for encouraging greater adherence to  regime commitments. However, State has not been responsive in  implementing the recommendation to establish a strategy to enhance the  effectiveness of the regimes. State officials said that the recommendation  is under consideration in a review by the National Security Council that  has been ongoing for over a year.
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. For example,  Bureau of Immigration and Customs Enforcement agents upon inspecting  an item to be exported might identify that the item is a circuit board, but  not that it is part of a guidance system and that the guidance system is  intended for a cruise missile. Moreover, a gap in the catch-all provision of  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. This 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 regulations that restrict the sale of  certain dual-use items to national missile proliferation projects and  countries of concern, but not to nonstate actors such as certain terrorist  organizations or individuals. 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.
section_title: Compliance with Conditions on Exports of Cruise Missiles, UAVs, and Dual-use Items Seldom Verified through End-use Monitoring
paragraphs: 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. A post-shipment verification visit is a key  end-use monitoring tool for 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.
State is responsible for conducting PSVs on direct commercial sales of  cruise missiles, UAVs, and related technology. 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. Based on State licensing  data, we identified 786 licenses for cruise missiles, UAVs, or related items  from fiscal years 1998 through 2002. Of these, 480 (61 percent) were  licenses with conditions, while 306 (39 percent) were licenses without  conditions. We found that State did not conduct PSVs for any of the 480  licenses with conditions and conducted PSVs on 4 of 306 licenses  approved without conditions. A State licensing official stated that few  post-shipment 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 commenting on a draft of our report, State emphasized the importance  of 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 therefore reviewed the original 786 cruise missile and UAV  licenses to determine how many had received 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.
Defense is responsible for monitoring transfers of cruise missiles, UAVs,  and related technology provided under government-to-government  agreements through the Foreign Military Sales program. Defense’s end-use  monitoring program has conducted no end-use checks related to cruise  missile or UAV transfers, according to the program director. From fiscal  years 1998 through 2002, DOD 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. Despite  the 1996 legal requirement to create an end-use monitoring program,  Defense’s Golden Sentry monitoring program is not yet fully implemented.  DOD issued program guidance in December 2002 that identified the  specific responsibilities for new end-use monitoring activities. In addition,  as of February 2004, DOD 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 Commerce Department is responsible for conducting PSVs on exports  of dual-use technology that might have military applications for cruise  missiles and UAVs. 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 be useful in developing cruise missiles or UAVs.  These licenses were for items to countries including India, Israel, Poland,  Switzerland, Turkey, and the United Arab Emirates. Of these, Commerce  selected 2 percent of the licenses, or 52 cases, for a PSV visit and  completed visits for about 1 percent of the licenses, or 29 cases.
Other supplier countries place conditions on cruise missile and UAV- related transfers, but few reported conducting end-use monitoring once  they exported the items. While national export laws authorize end-use  monitoring, none of the foreign government officials reported to us any  PSV visits for cruise missile or UAV-related items. 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 PSV visits of such exports. The South African  government was the only additional supplier country responding to a  written request for information that reported it regularly requires and  conducts PSVs on cruise missile and UAV transfers.
section_title: Conclusion
paragraphs: 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. Because this technology is widely available throughout the  world, the United States works in concert with other countries through  multilateral export control regimes whose limited effectiveness could be  enhanced by adopting recommendations we have made in previous  reports. U.S. export controls may not be sufficient to prevent cruise  missile and UAV proliferation and to 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 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. As  a result, the U.S. government does not have sufficient information to know  whether recipients of these exports are effectively safeguarding equipment  and technology and, thus, protecting 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.
section_title: Recommendations for Executive Action
paragraphs: We recommended that the Secretary of Commerce assess and report to  Congress 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 also recommended 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 and Defense partially concurred with our recommendations,  which we modified to address their comments. State disagreed with the  need to conduct a comprehensive assessment of the nature and extent of  compliance with license conditions for cruise missile and UAV technology  transfers. However, State said that it would consider conducting more  PSVs on such technology transfers as it improves its monitoring program.
Mr. Chairman and Members of the Subcommittee, this concludes my  prepared statement. I will be happy to answer any questions you may have.
section_title: Contact and Acknowledgments
paragraphs: For future contacts regarding this testimony, please contact Joseph  Christoff at (202) 512-8979. David C. Maurer, Jeffrey D. Phillips, Claude  Adrien, W. William Russell IV, Lynn Cothern, Stephen M. Lord, and  Richard Seldin made key contributions to this statement.
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