Nonproliferation: U.S. Efforts to Combat Nuclear Networks Need Better Data on Proliferation Risks and Program Results
Published: 2007-10-31T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: For decades, the United States has tried to impede nuclear proliferation networks that provide equipment to nuclear weapons development programs in countries such as Pakistan and Iran. GAO was asked to examine U.S. efforts to counter nuclear proliferation networks, specifically the (1) status of U.S. efforts to strengthen multilateral controls, (2) impact of U.S. assistance to help other countries improve their legal and regulatory controls, and (3) impact of U.S. efforts to strengthen its enforcement activities. GAO's findings focused on seven countries where network activities reportedly occurred.
section_title: What GAO Found
paragraphs: The United States has advocated several multilateral actions to counter nuclear proliferation networks. Although multilateral bodies have adopted some U.S. proposals, they have not adopted others. For example, the United States negotiated passage of a United Nations Security Council resolution that obligated all member states to adopt laws and regulations prohibiting the proliferation of weapons of mass destruction. It also led the development of watch lists of nuclear technologies that are not formally controlled by states and formation of a multilateral unit intended to analyze covert nuclear trade activities. However, one multilateral body has not adopted two key U.S. proposals made in 2004 to commit its members to add new restrictions on exporting sensitive nuclear technologies. Also, one multilateral organization has not adopted a recommendation for member states to provide it with more export data that would allow it to better detect covert nuclear activities. The impact of U.S. bilateral assistance to strengthen countries' abilities to counter nuclear networks is uncertain because U.S. agencies do not consistently assess the results of this assistance. The impact of this assistance is difficult to determine because the Department of State did not evaluate either (1) the proliferation risk for all of the countries in which network activities are alleged to have occurred or (2) the results of its assistance efforts. Between 2003 and 2006, State and the Department of Energy provided about $9 million to improve the export controls of seven countries in which nuclear proliferation network activities reportedly occurred. State did not evaluate either (1) the proliferation risk for all of the countries in which network activities are alleged to have occurred or (2) the results of its assistance efforts. State did not perform risk analyses for 11 of the 56 countries in its program for those years and did not document the basis for each country's proliferation threat level or explain how the risk analyses were done. Of the six countries in our study to which State provided assistance, State performed risk analyses for five. Also, State did not conduct program assessments for about 60 percent of its participating countries and for two of the six countries in our study that received assistance. Moreover, while State's program assessments characterize a country's export control system and its weaknesses, they do not assess how U.S. training efforts contributed to correcting weaknesses. Relevant U.S. agencies are impaired from judging their progress in preventing nuclear networks because they cannot readily identify basic information on the number, nature, or details of all their enforcement activities involving nuclear proliferation. The U.S. government identified the prevention of nuclear proliferation as a high priority. U.S. agencies collect information, maintain lists of companies and individuals that they sanction, and maintain case files on investigations of suspected violations of U.S. law. However, most of these agencies cannot readily identify which enforcement activities involve nuclear proliferation as they cannot ensure that searching their case file databases for words, such as nuclear, would reveal all relevant cases.

section_title: Letter
paragraphs: For decades, the United States has tried to impede the efforts of state-run  nuclear proliferation networks that provide equipment or components to  nuclear weapons development programs in countries such as Pakistan,  India, Iraq, and more recently, North Korea and Iran. These networks use  business and commercial practices to circumvent national and  international restrictions against procuring the technologies necessary for  developing nuclear weapons programs. The A.Q. Khan nuclear  proliferation network, operated by the former head of Pakistan’s nuclear  weapons program, was the first private network to be run for profit rather  than state purposes. The exposure of the network in 2003 illustrated how  determined proliferators can effectively avoid export controls to acquire  sensitive nuclear-related and dual-use technologies, which are  technologies that can have both commercial and military applications. The  network also highlighted the role that companies in several countries  unwittingly played in facilitating sales as suppliers of technology or points  of transit. In February 2004, the President announced the breakup of the  A.Q. Khan network and the initiation of several programs and activities to  strengthen nonproliferation actions.
The United States has addressed nuclear proliferation and networks  through three means. First, the United States has conducted activities with  multilateral bodies such as the United Nations (UN), the Nuclear  Suppliers Group (NSG), the International Atomic Energy Agency (IAEA),  and the Proliferation Security Initiative (PSI) to help curtail nuclear  proliferation. Second, it has provided bilateral assistance in the form of  training and equipment to foreign governments to help them establish or  strengthen laws and regulations to control exports of technology that  could be used to develop nuclear weapons. Principal U.S. programs  include the Export Control and Related Border Security Assistance  Program (EXBS) and the International Nonproliferation Export Control  Program (INECP), which are managed by the Departments of State and  Energy, respectively. Third, on the national level, U.S. laws control the  export of dual-use items from the United States to other countries. The  U.S. government enforces these laws through activities such as  inspections and investigations that may result in criminal or administrative  penalties.
We examined the (1) status of U.S. efforts to strengthen multilateral  controls to counter nuclear proliferation networks, (2) impact of U.S.  bilateral assistance to help other countries improve their legal and  regulatory controls against nuclear proliferation networks, and (3) impact  of U.S. efforts to strengthen its national enforcement activities to combat  nuclear proliferation networks.
To meet these objectives, we reviewed program documentation and  interviewed knowledgeable officials from key U.S. agencies: the  Departments of Commerce, Defense (DOD), Energy, Homeland Security  (DHS), Justice, State, and Treasury. We focused our review on countries  where, according to open-source reporting, A.Q. Khan network activities  occurred. These include Malaysia, Pakistan, Republic of Korea, Singapore,  South Africa, Turkey, and Dubai in the United Arab Emirates (UAE). We  did not travel to these countries because State cited foreign policy  sensitivities of ongoing diplomatic discussions in these countries. It is  important to note that the level of cooperation State provided on this  review was erratic and resulted in a delay of several months in completing  our work. Nonetheless, with information available from other sources, we  were able to address the review’s objectives. For the purposes of this  report, we reviewed U.S. programs and activities that involved export  controls and their enforcement, as nuclear networks typically engage in  acts that violate or circumvent national and international export controls.  Appendix I contains a detailed description of our scope and methodology.  We conducted our review from September 2006 through August 2007 in  accordance with generally accepted government auditing standards.
subsections: section_title: Background
paragraphs: Proliferation networks use commercial and business practices to obtain  materials, technology, and knowledge to further nuclear, chemical,  biological, and radiological programs. Nuclear proliferation networks seek  to circumvent national and international restrictions against procuring the  technologies necessary for developing nuclear weapons programs. These  networks exploit weak export control systems, procure dual-use goods  with both nuclear and common industrial uses, and employ deceptive  tactics such as front companies and falsified documents, according to the  Department of Energy.
The A.Q. Khan network, established by the former head of Pakistan’s  nuclear weapons program, supplied Pakistan with nuclear technology for  its national weapons program. However, it became a network that  provided nuclear technology to any state for profit. The development of  this network illustrates how determined proliferators can effectively  circumvent existing export controls to acquire sensitive nuclear-related  and dual-use technologies. According to Energy, the A.Q. Khan case  illustrates the scope and magnitude of the threat of nuclear networks— how both weak export control systems and system gaps allowed a  network to procure sensitive materials from states worldwide. The  network also highlighted the role that companies in several countries,  such as Malaysia, played in unwittingly facilitating sales as suppliers of  technology or points of transit. According to open-source reporting,  countries where A.Q. Khan proliferation network activities occurred  included Germany, Japan, Malaysia, the Netherlands, Pakistan, Republic of  Korea, Singapore, South Africa, Turkey, United Arab Emirates (UAE), and  United Kingdom.
The multilateral nonproliferation regime, which, among other purposes,  attempts to counter nuclear networks, consists of the Non-Proliferation  Treaty (NPT), International Atomic Energy Agency (IAEA) inspection  regime, United Nations (UN) Security Council Resolution 1540, Nuclear  Suppliers Group (NSG), and the Proliferation Security Initiative (PSI). The  regime also includes multilateral and national assistance programs and  national export controls and laws.
Entered into force on March 5, 1970, NPT obligates nuclear weapon states  not to transfer nuclear weapons or other nuclear explosive devices to any  recipient, and not to assist, encourage, or induce any nonnuclear weapon  state to manufacture or otherwise acquire nuclear weapons or other  nuclear explosive devices. Under the treaty, each nonnuclear weapon state  pledges not to receive, manufacture, or otherwise acquire nuclear  weapons or other nuclear explosive devices, and not to seek or receive  assistance in their manufacture. NPT also obliges each nonnuclear  weapon state to accept comprehensive international safeguards, including  inspection, through agreements negotiated with IAEA. The intent of these  safeguards is to deter and detect the diversion of nuclear material for  nuclear explosive purposes.
Relevant U.S. assistance programs on export and border controls include  EXBS and INECP. State’s EXBS program assists foreign governments in  strengthening their export controls by improving their legal and regulatory  frameworks, licensing processes, border control and other enforcement  capabilities, outreach to industry, and interagency coordination. The  mission of Energy’s INECP is to prevent the proliferation of WMD and  WMD-related material, equipment, and technology by helping other  countries develop effective national export control systems. Total EXBS  funding for fiscal years 2003 through 2006 was about $175 million and for  INECP was about $30 million.
Since the terrorist attacks of September 11, 2001, and the exposure of the  A.Q. Khan nuclear proliferation network, the President and U.S.  government agencies involved in national enforcement activities have  emphasized the importance of preventing WMD proliferation, including  nuclear proliferation. On a national level, the United States endeavors to  counter nuclear proliferation by enforcing laws that control the export of  materials—including dual-use items—that could be used to make a  nuclear weapon and by applying criminal or administrative penalties to  proliferators. The Departments of Commerce, Homeland Security, Justice,  State, and Treasury have responsibilities for enforcing various laws that  relate to nuclear proliferation. The U.S. government’s control over the  export of defense nuclear and dual-use items is primarily divided between  two departments—State and Commerce, respectively. Support for  enforcement activities comes primarily from Commerce, through its  Bureau of Industry and Security’s Office of Export Enforcement; DHS,  through its Customs and Border Protection (CBP) and Immigration and  Customs Enforcement (ICE); and Justice, through the Federal Bureau of  Investigation (FBI) and the United States Attorneys Office. Export  enforcement involves inspecting items to be shipped, investigating  potential violations of export control laws, and punishing export control  violators.
section_title: United States Supported Several Multilateral Efforts to Address Nuclear Networks, but Some Proposals Have Not Been Adopted
paragraphs: The United States has initiated a range of multilateral efforts and  proposals to counter nuclear proliferation networks. Although multilateral  organizations have adopted some U.S. proposals that would help address  illicit nuclear proliferation networks, they have not adopted others. First,  the United States negotiated the passage of UN Security Council  Resolution 1540 that obligated all member states to adopt laws and  regulations prohibiting the proliferation of WMD. Second, the U.S.  government led NSG to conduct several activities aimed at combating  proliferation networks, including development of watch lists; however,  two U.S. proposals to NSG have not been adopted. Third, with U.S.  support, IAEA has taken several actions to address proliferation networks,  such as establishing a unit intended to analyze covert nuclear trade  activities. However, IAEA has not yet adopted a recommendation drafted  in June 2005 that calls on member states to provide IAEA with information  on their exports to improve the agency’s ability to detect possible  clandestine nuclear activities. Finally, the U.S. government has led efforts  to establish the Proliferation Security Initiative (PSI).
subsections: section_title: The United States Negotiated Passage of UN Resolution 1540 to Combat WMD Proliferation
paragraphs: The United States negotiated the passage of a UN Security Council  resolution that obligated all member states to adopt laws and regulations  prohibiting the proliferation of WMD. The UN Security Council adopted  Resolution 1540 in April 2004, obligating all member states to adopt laws  prohibiting proliferation of WMD as well as to maintain and enforce  adequate export controls. Under UN Security Council Resolution 1540, all  states have three primary obligations relating to nuclear, chemical, and  biological weapons, and their delivery systems. They are to (1) refrain  from providing support to nonstate actors seeking such items; (2) prohibit  nonstate actors from acquiring, using, and attempting to acquire and use  such items; and prohibiting nonstate actors from participating in, assisting,  or financing such activities; and (3) put in place and enforce effective  measures to control these items and related material to prevent their  proliferation. Member states have begun implementing its provisions by  submitting required reports on their export control laws to a committee  designated the 1540 committee. The committee also has been tasked with  identifying the assistance needs of countries and coordinating their  requests for assistance with offers from other countries.
section_title: The United States Led NSG to Carry Out Several Activities to Help Combat Proliferation Networks, but Two U.S. Proposals Are Not Yet Adopted
paragraphs: The U.S. government led NSG in several activities to combat proliferation  networks, including the development of watch lists. However, NSG has not  adopted two U.S. proposals that would commit members to refrain from  exporting certain technologies to states that do not already have the  capability to use them and to countries that have not agreed to allow IAEA  additional rights to inspect any facilities suspected of covert nuclear  activities.
NSG, established in 1975, is a multilateral export control regime with 45  participating governments. The purpose of NSG is to prevent the  proliferation of nuclear weapons through export controls of nuclear and  nuclear-related material, equipment, and technology, without hindering  international cooperation on peaceful uses of nuclear energy. NSG  periodically updates and strengthens its guidelines on how member states  should control and license sensitive technologies and maintain lists of the  technologies to be controlled. However, NSG, like other multilateral  export control regimes, is a consensus-based organization and depends on  the like-mindedness or cohesion of its members to be effective.
NSG has undertaken several activities to help shut down proliferation  networks. For example, in May 2004, NSG noted its concern over the  discovery of a covert international proliferation trafficking network,  through which sensitive nuclear-related equipment had found its way to  Libya. To address this concern, the United States developed national  procurement watch lists for all supplier states as a means to help block  further procurement of nuclear-relevant items that are not formally  controlled by placement on export control lists. To slow down North  Korea’s and Iran’s work on their nuclear programs, the watch lists focus  on items of interest to those countries, according to Energy. The lists  include items that could be used to enrich uranium, reprocess spent  nuclear reactor fuel, and fabricate fuel for nuclear reactors. Both NSG  members and nonmembers use the lists.
Through U.S. leadership, NSG also has conducted outreach to non-NSG  members, creating awareness of issues related to the supply of sensitive  technology, and pressing for adherence to NSG guidelines. For example,  NSG worked with existing international organizations, such as IAEA and  the UN Security Council Resolution 1540 committee, and with  nonmembers to help close gaps in the nonproliferation regime that  proliferation networks seek to exploit.
NSG has not adopted two U.S. proposals announced by the President in  2004. The first proposal would commit members to not export certain  nuclear technology to states that do not have the capability to develop  material for nuclear fuel or nuclear weapons. Also, NSG has not adopted a  second proposal under which NSG members would refrain from providing  nuclear-related technologies to countries that have not agreed to allow  IAEA additional rights to inspect any facilities suspected of covert nuclear  activities. The President announced that NSG members should refuse to  sell enrichment and reprocessing equipment and technologies to any state  that does not already possess full-scale, functioning enrichment and  reprocessing plants. This step, according to the President, would prevent  new states from developing the means to produce fissile material for  nuclear bombs.
State and Energy officials stated that the first proposal has not yet been  adopted within NSG because it favors states that already have enrichment  and reprocessing capability over those that do not. According to State  officials, states in the European Union (EU) are opposed to this proposal  because it violates EU internal free trade policies. However, we could not  independently determine why NSG has not adopted these proposals  because State did not facilitate our travel to meet with representatives of  NSG members in Vienna, Austria.
NSG also has not yet adopted the second U.S. proposal announced in 2004  to restrict exports of nuclear-related technology to countries that have not  adopted IAEA’s more stringent safeguards inspection agreements. In 2004,  the President proposed that by the next year, only states that have signed  the Additional Protocol would be allowed to import equipment for their  civilian nuclear programs. However, other countries have been hesitant to  implement the Additional Protocol for various reasons, including an  unwillingness to submit to intrusive inspections.
section_title: The U.S. Government Supported IAEA Actions Against Proliferation Networks, but IAEA Has Not Yet Adopted a Recommendation to Better Detect Covert Nuclear Activities
paragraphs: The U.S. government supported IAEA’s establishment of several activities  over the past several years to help combat nuclear proliferation trafficking  and network activities. However, IAEA has not yet adopted a  recommendation that calls for member states to provide it with export  data that would allow the agency to better detect covert nuclear activities.
IAEA is responsible for inspecting civilian nuclear facilities worldwide to  ensure they are used exclusively for peaceful purposes. In 1997, IAEA  adopted a new arrangement, called the Additional Protocol, for existing  safeguards agreements under NPT that is designed to give IAEA a stronger  role and more effective tools for conducting worldwide inspections.
IAEA established several activities supported by the Unites States to help  combat nuclear proliferation trafficking and network activities. These  included the following:    Nuclear Trade and Technology Analysis Unit. Following the revelations  about extensive covert networks procuring and supplying sensitive  nuclear technology, IAEA established a new unit in November 2004. It was  intended to help analyze patterns and trends in nuclear trade to identify  covert nuclear trade activities.
Illicit Trafficking Database. IAEA established IAEA Illicit Trafficking  Database in 1995 to facilitate exchange of authoritative information on  incidents of illicit trafficking and other related unauthorized activities  involving nuclear and other radioactive materials among states. It contains  information, which has been confirmed by the states involved, about  incidents of illicit trafficking and related unauthorized activities involving  nuclear and other radioactive materials.
Nuclear Security Fund. IAEA established a fund in March 2002 to support  its expanded nuclear security program, including developing international  standards and providing training and assistance to combat nuclear  smuggling. Through 2006, pledges from IAEA members totaled nearly $74  million, with about $34 million from the United States.
IAEA has not yet implemented a draft recommendation that member  states provide it with relevant information on their exports so IAEA can  improve its ability to detect possible undeclared nuclear activities. Under  this recommendation, members would provide information on their  exports of specified equipment and nonnuclear material, procurement  enquiries, export denials, and relevant information from commercial  suppliers, according to State officials. However, there is no current  mandate to do this, according to State officials.
section_title: U.S. Government Led Efforts to Establish and Gain Support for PSI
paragraphs: The United States established and gained support for PSI, a U.S.-led effort  to work with other countries to interrupt the transfers of sensitive items to  proliferators.
PSI is a global effort to stop trafficking of WMD, their delivery systems,  and related materials to and from states and nonstate actors of  proliferation concern worldwide. Launched by the President on May 31,  2003, PSI is a set of voluntary activities, not a formal treaty-based  organization, to stop proliferation-related shipments of WMD technologies.  PSI interdiction training exercises and other operational efforts are  intended to help participating states work together in a coordinated and  effective manner to stop, search, and seize shipments. In September 2003,  the countries participating in PSI at that time agreed to its statement of  interdiction principles. The statement identifies specific steps participants  can take to effectively interdict WMD-related trafficking and prevent  proliferation. As of July 2007, PSI participants conducted 28 exercises  (maritime, air, land, or combined) to practice interdictions, held 15  operational experts group meetings to discuss proliferation concerns and  plan future exercises, and hosted 4 workshops to acquaint industries with  PSI goals and principles.
State lists several countries as PSI participants that open-source reporting  also names as locations of nuclear proliferation network activity. Listed  PSI participants are Germany, Japan, Singapore, Turkey, UAE, and United  Kingdom. PSI nonparticipants are Malaysia, Pakistan, Republic of Korea,  and South Africa. (See our September 2006 classified report on PSI.)
section_title: Impact of U.S. Export Control Assistance Is Uncertain Because Agencies Do Not Consistently Assess Programs
paragraphs: The U.S. government has focused on bilateral export control assistance to  foreign countries to combat the sale of illicit nuclear-related technology  through proliferation networks. Three programs, operated by State,  Energy, and Defense provide this assistance. However, the impact of this  assistance is difficult to determine because State did not evaluate either  the proliferation risk for all of the countries in which network activities  are alleged to have occurred or the results of its assistance efforts. In  contrast, Energy performed risk analyses and program assessments for all  of its 45 participating countries. Although there were limitations in the  assessments of the programs, officials from Energy and State said that  some positive changes occurred as a result of U.S. export and border  control assistance.
subsections: section_title: United States Provided Export Control Assistance to Address Nuclear Networks
paragraphs: To combat nuclear networks, State officials said they focused on  addressing export control problems in other countries. State’s EXBS  assists foreign governments in strengthening their export controls by  improving their legal and regulatory frameworks, licensing processes,  border control and other enforcement capabilities, outreach to industry,  and interagency coordination. EXBS partners with a number of U.S.  agencies and the private sector to provide capacity-building training,  technical exchanges and workshops, regional conferences and seminars,  and inspection and interdiction equipment. For example, EXBS completed  an advanced workshop on regulations in July 2006 with Pakistani officials  and sponsored a forum on technical aspects of regulations in September  2006 through a private contractor. In Malaysia, EXBS sponsored a  workshop on legal aspects of regulations in August 2005 and another  workshop with Malaysian officials in Washington, D.C., on export  licensing in February 2007. Commerce conducted these workshops. In  addition, DHS stated that ICE is the primary law enforcement partner to  EXBS for training its counterpart agencies to investigate, conduct  surveillance and undercover operations, detect, and interdict unauthorized  transfers of WMD-related items. During 2007 and 2008, according to DHS,  ICE conducted or planned to conduct training in several countries where  A.Q. Khan network activities reportedly occurred, including Malaysia,  Pakistan, Singapore, Republic of Korea, Turkey, and UAE.
Energy’s INECP provides bilateral assistance to governments to prevent  the proliferation of WMD and WMD-related material, equipment, and  technology by working with governments worldwide to develop effective  national export control systems. INECP receives funding from and  collaborates with the EXBS and Homeland Security’s CBP and also works  with other agencies such as the Coast Guard. For example, in Turkey,  INECP conducted training to help customs inspectors identify nuclear- related commodities in March 2004 and September 2005. INECP has  conducted similar training in Pakistan, Singapore, and Republic of Korea.
In addition, DOD’s International Counterproliferation Program (ICP)  offers equipment, training, and advice to help countries prevent and  counter WMD proliferation, including border control assistance. The  majority of ICP’s programs have been in countries in the former Soviet  Union, the Balkans, and the Baltics, with total funding of about $29 million  for fiscal years 2003 through 2006. ICP provided about $86,000 for training  in Singapore in fiscal year 2006.
Overall, the U.S. provided about $234 million dollars in export control  assistance to 66 countries between fiscal years 2003 and 2006 through  these three programs, with EXBS as the largest contributor to U.S. export  control assistance (see fig. 1).
From fiscal years 2003 through 2006, the U.S. government provided about  $9 million, or 4 percent of the overall total, to seven countries in which  A.Q. Khan network activities reportedly occurred: Malaysia, Pakistan,  Republic of Korea, Singapore, South Africa, Turkey, and the UAE. From  fiscal years 2003 to 2006, EXBS provided about $7 million to six of these  countries, while INECP provided nearly $2 million to the seven countries  in our study. Turkey was the largest recipient of assistance among the  countries in our study, and Pakistan was the second largest (see fig. 2).
section_title: Impact of U.S. Assistance Is Difficult to Determine Because U.S. Agencies Do Not Consistently Assess Their Programs
paragraphs: Despite U.S. government efforts to provide bilateral assistance to  countries to help them improve their export control systems, it is difficult  to determine the impact of these programs because State did not  consistently conduct or document risk analyses as a basis for countries to  receive assistance and has not assessed the program performance.  Although Energy and State officials said they are unable to systematically  establish that their assistance has effected positive change in countries  that received U.S. assistance, they said some positive change occurred  during the period in which assistance was provided.
subsections: section_title: State’s Risk Analyses Are Undocumented and Incomplete
paragraphs: While both State’s and Energy’s assistance programs conduct risk analyses  on a country-by-country basis to prioritize assistance efforts, State did not  conduct one such analysis for each country in its program and did not  document the ones it conducted. The EXBS strategic plan indicates EXBS  prioritizes assistance in accordance with five proliferation threat  categories for which most, but not all, EXBS countries are assessed (see  table 1).
The EXBS strategic plan, which provides guidance for EXBS, provided a  risk analysis summary for five of the six countries in our study to which it  provided assistance, but did not provide a risk assessment for one country.  The strategic plan indicated that two of the countries in our study are at  risk in all five categories, and a third country is at risk in all but category 1.  A fourth country is at risk in categories 2, 4, and 5, and a fifth country is at  risk in categories 3 and 5. State did not respond to our request for a risk  assessment for the sixth country. Overall, the EXBS strategic plan did not  provide a risk analysis for 11 of the 56 countries to which it provided  assistance between fiscal years 2003 and 2006. Furthermore, EXBS  officials could not provide us with documentation showing the basis for  which they determined the risk categories for the countries that appear in  the strategic report and said the risk analyses are not updated annually.
INECP assesses country risk by measuring proliferation threat based on  the capacity of the recipient country to supply or be a conduit for WMD- related goods. The assessment also takes into consideration the  vulnerability of the recipient country’s export control system to illicit  procurement. INECP places the countries receiving assistance into one of  four categories based on that countries’ production capacity and export  control system (see table 2).
All of the countries in our study to which INECP provided assistance fell  into category 2: having potentially weak export control systems and high  commodity production capacity. While we did not evaluate the  methodology that EXBS and INECP use to perform risk assessments or  prioritize their assistance, we observed that each INECP risk analysis we  reviewed was more thoroughly documented than the EXBS risk analyses.  For example, INECP provided us with country plans for each of the  countries in our scope, which document and identify the sources of  information used to determine the status of the country’s export control  system and its potential to supply or be a conduit for nuclear-related  materials. In addition, an INECP official noted that one of the purposes of  the country plans is to document the data that inform their risk analyses.
section_title: State Did Not Perform Many of Its Program Assessments
paragraphs: Despite U.S. government efforts to provide bilateral assistance to  countries to help them improve their export control systems, it is difficult  to determine the impact of these programs because State has not assessed  their performance. Specifically, State’s EXBS has not performed annual  program assessments for all countries receiving EXBS assistance, as  required by program guidance, and has not received required data for  some assessments that were conducted. INECP also requires annual  program assessments, which it conducted for all of its 45 assistance  recipients for fiscal years 2003 through 2006.
EXBS program assessments characterize features of a country’s export  control system but do not evaluate the impact of U.S. training on the  country. EXBS guidance specifies that recipient countries should be  assessed using a revised assessment tool, which contains questions  intended to determine whether the country is committed to developing an  effective export control system and identify the weaknesses in the  country’s current system. Categories in the EXBS assessment tool, which  was implemented by contractors, include an examination of various  aspects of the recipient country’s dual-use and munitions licensing, the  country’s ability to enforce its regulations, and a review of industry- government relations. In contrast, federal guidance for evaluating human  capital training calls for assessing the extent to which training and  development efforts contribute to improved performance and results.
State contractors performed assessments in 2004 for only two of the six  countries in the scope of our review that received EXBS funding, Turkey  and UAE. According to a State official, these assessments were not useful  for State’s purposes because the contractor provided the results of the  evaluations but not the data that EXBS officials said would be necessary  to measure the progress of these countries in improving their export  control systems. The official said the data were omitted because State did  not require them in the contract. Therefore, EXBS did not receive the  information it needed to construct a baseline against which to evaluate the  progress of these countries. State has contracted for future assessments to  be used as a baseline for determining countries’ future progress. Overall,  State received assessments for 34 countries—about 60 percent of the  countries that received EXBS funding between 2003 and 2006—though  none of these contained baseline data, according to State officials. In  commenting on a draft of this report, State said that EXBS program  planning takes into account other information, including open source  information, diplomatic reporting from posts, intelligence community  products, and assessments and information from other U.S. government  agencies. As State commented, however, these and other information  sources are intended to substitute for the assessment tool only when State  determines it is infeasible or impractical to use it.
INECP also produces country plans that serve as program assessments for  all of the 47 countries to which it provided assistance in this period. An  INECP official said that the country plans are updated on an annual basis  in order to track the history of assistance with each partner country and to  enforce a standard process for tracking and reviewing the combined  results of assistance efforts and of countries’ independent efforts to  implement system reforms. INECP officials provided us with updated  annual assessments for all seven countries, which contain an analysis of  each country’s export control system, and proposals for future assistance.  While we did not evaluate the quality of Energy’s assessments, INECP has  updated assessments for all of its program participants, and the  assessments contain the baseline data necessary for measuring future  progress and are updated on an annual basis. In addition, we noted that  the INECP country plans we reviewed assess the country’s progress in  improving its export control systems and contain recommendations for  future activities.
Energy and State officials said they are unable to systematically establish  that their assistance has effected positive change in countries to which  they provided assistance, because actions such as changing laws and  implementing new regulations are undertaken by sovereign governments  and are not always directly attributable to assistance efforts. However,  officials from both programs said some positive change occurred during  this period. For example, officials from both EXBS and INECP cited some  improvements in assistance recipients’ export controls that occurred after  training or other types of assistance were provided. In 2006, after  exchanges and consultations regarding licensing and regulations with  EXBS program officers, Pakistan strengthened its export controls by  further expanding its control lists, according to State officials. In addition,  officials reported that Malaysia, UAE, and Pakistan drafted export control  legislation during the period of EXBS engagement in each of these  countries. Pakistan passed its export control law in 2004.
Furthermore, INECP officials reported that their engagement with  Singapore has led its government to amend its control list to adhere to all  the multilateral control lists, and INECP also helped Pakistan complete  adoption of the European Union control list. In addition, they said that the  Republic of Korea has reported that INECP training led to several high- level investigations of illegal transfers and greater industry awareness of  dual-use items.
section_title: Agencies Cannot Identify Information to Assess Whether Their Ability to Combat Nuclear Proliferation Networks Has Improved
paragraphs: U.S. agencies engaged in export control enforcement activities are  impaired from judging their progress in preventing nuclear proliferation  networks because they cannot readily identify basic information on the  number, nature, or details of all their enforcement activities involving  nuclear proliferation. While facing this limitation, the U.S. government  since 2003 has made several changes to its policies and procedures related  to national enforcement activities that may strengthen its ability to prevent  nuclear proliferation networks.
subsections: section_title: Agencies’ Ability to Judge Progress Against Nuclear Proliferation Is Impaired by Constraints on Information
paragraphs: U.S. agencies engaged in export control enforcement activities are  impaired from judging their progress in preventing nuclear proliferation  networks because they cannot readily identify basic information on the  number, nature, or details of all their enforcement activities involving  nuclear proliferation. Most of these agencies do not collect or store their  data in a manner that would allow them to reliably identify which of their  enforcement actions involved nuclear proliferation. This makes it difficult  for agencies to determine the level of resources expended in countering  nuclear proliferation networks, as well as the results obtained from these  efforts. Since 2005, Commerce and ICE have taken steps to facilitate more  reliable identification of their enforcement activities involving nuclear  proliferation.
Most of the agencies engaged in export control enforcement activities— DHS, Justice, and Treasury—could not readily produce reliable data  representing their respective agency’s enforcement actions related to  nuclear proliferation. Enforcement data, such as data collected on  inspections, seizures, investigations, arrests, indictments, and penalties  applied, were often stored according to the law that had been violated or  by a category or code describing the item corresponding to the  enforcement action, such as the type of good seized. Consequently,  agencies compiling enforcement data related to nuclear proliferation often  depended on conducting searches of agency databases using key words  (e.g., “nuclear”) or key codes (e.g., the ICE code for dual-use items is “06”).  An accurate compilation of such data depends on several factors,  including (1) selecting appropriate key words or key codes for searching  the database, (2) use of appropriate words or codes to describe the nature  of the enforcement action when agency officials record it in the database,  and (3) mandatory completion of the data fields that would identify the  enforcement action as being related to nuclear proliferation. For example,  we asked agencies engaged in export control enforcement activities for  data on their activities related to nuclear proliferation, with the following  results:    CBP compiled data on enforcement activities (seizures) related to nuclear  proliferation by engaging in keyword searches of its database. However, a  CBP official noted there is not a specific category for dual-use seizures, so  these seizures would not be included in the statistics. Moreover, the  official stated that one would need to look beyond seizures, for example to  inspections, to get a complete picture of CBP activities conducted to  combat nuclear proliferation. However, CBP does not have data on  inspections conducted for nuclear or WMD proliferation purposes unless  the inspection led to a seizure of goods or involved nuclear material,  according to DHS officials.
ICE performed a key-code search of its database to produce statistics on  closed investigations involving nuclear proliferation. An ICE official said  the statistics that ICE compiled likely undercounted the number of  investigations involving nuclear proliferation because there is not one  single code agents can use to represent nuclear proliferation cases. Rather,  there are multiple codes that represent nuclear proliferation, but agents  are not required to enter all of them. The ICE official concluded that it  would be difficult to correctly identify all nuclear proliferation-related ICE  investigations.
In response to our request for enforcement statistics, FBI produced two  conflicting sets of statistics on open investigations related to nuclear  proliferation. One Bureau official noted that identifying enforcement  actions related to nuclear proliferation is not straightforward; rather, it  requires Bureau analysts to interpret information about the enforcement  action to judge whether it involves nuclear proliferation. In technical  comments on a draft of this report, Justice stated that FBI has a  classification which defines proliferation investigative activities. This  classification can be used to search the FBI’s automated case system to  determine the exact number of investigative activities and obtain a report  on the nature and details of these activities, according to Justice. However,  two FBI officials told us that it is not possible to search the database to  identify all cases related to nuclear proliferation. Compiling data such as  the number of cases involving nuclear proliferation and deciding whether  cases are related to WMD or nuclear proliferation requires an  interpretation of the data.
Finally, Justice (Executive Office for United States Attorneys) stated its  case management database could not sort cases according to nuclear  proliferation networks, nuclear proliferation, or WMD proliferation, due to  the way the data are stored, but can sort export enforcement data.
Furthermore, some agencies that maintain lists of individuals and  companies that have violated export control laws or engaged in WMD  proliferation could not identify which parties were placed on the lists for  nuclear proliferation reasons. For example, Treasury, which maintains a  specially designated nationals list containing the individuals and entities  that have been designated under its Office of Foreign Assets Control’s  (OFAC) various sanctions programs, reported it cannot identify all  entities that have been placed on the list for nuclear proliferation reasons.  Treasury officials said that they maintain records on the rationale for  placing an entity on the list, but do not necessarily denote the type of  WMD proliferation entities are engaged in or support. In addition,  Treasury confirmed that none of the entities publicly identified in relation  to the A.Q. Khan nuclear proliferation network appears on the specially  designated nationals list or in the Annex to Executive Order 13382.  Commerce stated that it does not maintain readily available information  that would allow it to identify individuals or entities placed on its denied  persons list for nuclear proliferation reasons. This list includes individuals  and entities that have been denied export privileges. In contrast, State  reported periodically to Congress that, between 2003 and 2006, it had  sanctioned foreign persons for engaging in nuclear proliferation activities  with Iran or Syria.
Several agencies stated they use their enforcement data to make resource  allocation decisions. However, without enforcement data that accurately  reflect actions taken to prevent nuclear proliferation, agencies would not  be able to make informed resource decisions. Without the ability to  reliably identify their enforcement activities involving nuclear  proliferation, it is difficult for agencies to accurately track the amount of  time and resources expended in countering nuclear proliferation  networks, as well as the results obtained from these efforts. Most of these  agencies lack performance metrics for assessing the results obtained from  their efforts to prevent nuclear proliferation. In contrast, federal  standards for internal control state that management should have  procedures in place to create performance indicators, monitor results,  track achievements in relation to agency plans, and ensure adequate  communications with external stakeholders that may significantly impact  achieving the agency’s goals.
Since 2005, two agencies have taken steps to facilitate more reliable  identification of their enforcement activities involving nuclear  proliferation. In fiscal year 2005, Commerce began classifying enforcement  data to identify enforcement actions involving nuclear proliferation. In  June 2007, an ICE official proposed modifying ICE’s case data collection  process to more precisely identify investigations involving nuclear  proliferation. Thus, the official stated, if implemented, this proposal would  allow ICE to better track its performance in combating nuclear  proliferation, as well as respond to congressional inquiries for information.
section_title: Changes to Policies and Procedures May Strengthen U.S. Agencies’ Ability to Combat Nuclear Proliferation Networks
paragraphs: Since 2003, the U.S. government has made several changes to the policies  and procedures governing national enforcement activities that may  strengthen agencies’ ability to combat nuclear proliferation networks. On  a national level, the United States endeavors to counter nuclear  proliferation by enforcing laws that control the export of materials that  could be used to make a nuclear weapon, including dual-use items, and  applying criminal or administrative penalties to proliferators. Commerce,  DHS, Justice, State, and Treasury carry out these enforcement activities,  often in collaboration.
subsections: section_title: Executive Order, New Law, and Proposed Legislation Create New Penalties and Enhance Existing Penalties
paragraphs: Two changes to policies and procedures governing national enforcement  activities created new penalties and increased existing penalties for export  control violations. In addition, draft legislation developed by the executive  branch is intended to further increase penalties and provide some new  authorities for one enforcement organization.
First, Executive Order 13382, announced in 2005, created an additional  nonproliferation sanction program that allows Treasury and State to target  the assets of proliferators and those who assist them. Under the  executive order, Treasury and State designate individuals or entities that  are WMD proliferators, deny them access to the U.S. financial system, and  have all their property or interests in property blocked. Initially, the  sanction program applied to eight organizations in Iran, North Korea, and  Syria. As additional WMD proliferators are designated, they are added to  Treasury’s specially designated nationals list, which contains the names of  individuals and entities that have been sanctioned under OFAC’s various  sanctions programs. U.S. persons and entities are prohibited from  providing support to these proliferators and can be punished with criminal  or civil penalties if they are found to be in violation of this prohibition. The  executive order is designed to cut off support to proliferators from front  companies, financiers, logistical supporters, and suppliers. As of June 15,  2007, 43 persons or entities were on Treasury’s specially designated  nationals list pursuant to the executive order.
Second, the USA Patriot Improvement and Reauthorization Act of 2005  increased the maximum penalties that can be imposed on certain export  control violations from $10,000 to $50,000 per violation. Maximum prison  sentences increased from 10 years to 20 years. However, according to  Commerce statements, these increased penalties are not high enough to  deter violators or to provide incentives for violators to cooperate with law  enforcement. The Assistant Secretary of Commerce for Export  Enforcement recently noted that significantly increased penalty provisions  are needed.
Third, the congress enacted a law that that increased penalties and the  executive branch drafted a legislative proposal intended to further  increase penalties and provide some new authorities for one enforcement  organization. The International Emergency Economic Powers  Enhancement Act was enacted into law on October 16, 2007, and  increased the civil and criminal penalties applicable to the violation of  OFAC sanctions. In addition, the executive branch drafted a legislative  proposal, the Export Enforcement Act of 2007, to revise and enhance the  Export Administration Act (EAA) and be in effect for 5 years after the  date of its enactment. The legislative proposal would increase penalties for  export control violations while enhancing Commerce’s law enforcement  authorities to combat illicit exports of dual-use items. For example,  criminal penalty amounts in the proposal would be increased to $1,000,000  per violation or a fine and imprisonment for not more than 10 years, for  each violation by an individual, and $5,000,000 or up to 10 times the value  of the exports involved, whichever is greater, per violation by a person  other than an individual. The civil penalty amounts would be increased to  $500,000 for each violation of EAA or any regulation, license, or order  issued under that act. According to Commerce, the increased penalty  amounts would provide an enhanced deterrent effect. The proposal also  would provide Commerce’s special agents with statutory overseas  investigative authority and expanded undercover authorities and expand  the list of criminal violations upon which a denial of export privileges may  be based.
section_title: FBI Created a WMD Directorate and WMD-Related Initiatives but Provided No Information on Impact of These Changes
paragraphs: In 2006, the FBI created a WMD directorate to support and consolidate  FBI’s WMD components. The directorate was designed to prevent and  disrupt foreign nations or individuals from obtaining WMD capabilities and  technologies and using them against the United States, according to FBI  documents. In addition, FBI officials reported the initiation of several  initiatives designed to prevent WMD proliferation. These initiatives include  a program focused on dual-use nuclear technology, as well as country- specific WMD counterproliferation efforts in national labs and other U.S.  entities. However, FBI did not provide information on the impact of these  activities on FBI’s ability to counter WMD and nuclear proliferation.
In technical comments on a draft of this report, Justice stated that FBI has  information to provide but was not given the opportunity to do so. FBI’s  WMD Directorate can provide information on this impact by providing  limited information on accomplishments and statistics on a number of  proliferation investigations and operations, according to Justice. However,  on June 15, 2007, we asked FBI officials about the impact of either the  establishment of the WMD directorate or the WMD initiatives on FBI’s  ability to counter WMD and nuclear proliferation, but they provided no  answer nor would they meet with us to discuss related issues. In late June,  FBI provided us with a written response that included no specific  information that answered our request.
section_title: Department of Justice Has Made Initial Plans for Improving Prosecution of Export Control Violations
paragraphs: To respond to the threat of nuclear proliferation, Justice is preparing a  national export enforcement initiative that department officials stated is  intended to improve the investigation and prosecution of persons and  corporations violating U.S. export control laws. The initiative follows the  2006 creation of the National Security Division within Justice to strengthen  the effectiveness of its national security efforts and, according to a Justice  official, to respond to the threat of WMD proliferation.
As we have previously reported, U.S. Attorneys Offices have many  competing priorities, including prosecuting cases involving terrorism,  counterterrorism, and government contractor fraud, and the level of  interest and knowledge of export control laws varies among assistant U.S.  Attorneys. According to the U.S. Attorney General, one of the key  elements of the initiative will be to provide federal prosecutors with the  assistance, training, and expertise they need to undertake export control  prosecutions. For example, Justice held a national export control  conference in May 2007. The following month, Justice appointed its first  National Export Control Coordinator, who will be responsible for  coordinating with other U.S. agencies the enforcement of export controls  and development of training materials for prosecutors in an effort to  enhance their capacity and expertise. The impact of the export  enforcement initiative on Justice’s ability to prosecute export control  cases is yet to be demonstrated as the initiative has just begun.
section_title: Conclusion
paragraphs: Although the U.S. government has announced that countering nuclear  proliferation and nuclear networks is a high priority, it lacks the necessary  information to assess the impact of its multiple efforts to do so. While U.S.  assistance to foreign governments to help them strengthen their laws and  regulations against nuclear proliferation networks has the potential for  positive impact, U.S. agencies are not sufficiently monitoring aid  recipients’ actions to assess what U.S. assistance is accomplishing. State’s  assistance program is not completing and documenting risk analyses or  program assessments, as required by program guidance. In addition, U.S.  government agencies that engage in enforcement activities to counter  nuclear proliferation networks are impaired from judging their progress in  this effort because they cannot readily identify basic information on the  number, nature, or details of their enforcement activities involving nuclear  proliferation. Without such information, agencies cannot identify what  their efforts are, assess how their efforts are working, or determine what  resources are necessary to improve their effectiveness. Developing such  information would be a necessary first step for U.S. agencies in beginning  to assess how well their efforts to combat nuclear proliferation networks  are working. As of October 2007, these agencies may not know whether  their capabilities for addressing the problem of nuclear proliferation  networks have improved.
section_title: Recommendations for Executive Action
paragraphs: To help assess the impact of the U.S. response to the threat of nuclear  proliferation networks, we recommend that the Secretary of State take the  following two actions: (1) comply with its guidance to conduct periodic  assessments of proliferation risk and the export control system for each  country receiving EXBS funding and (2) document each risk analysis  conducted to evaluate the progress made in alleviating those risks.
To help assess how U.S. government agencies that engage in export  control enforcement activities are accomplishing their stated goal of  combating nuclear proliferation, we recommend that the Secretaries of  Commerce, Homeland Security, and Treasury, and the U.S. Attorney  General individually direct that their respective agency’s data collection  processes be modified to support the collection and analysis of data that  clearly identify when enforcement activities involve nuclear proliferation.  For example, each agency could consider    designating appropriate categories or codes for nuclear proliferation for  staff to use when recording information in the databases and   mandating completion of relevant data fields that would identify an  enforcement action as related to nuclear proliferation.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided copies of this report to Commerce, Defense, DHS, Energy,  Justice, State, and Treasury. Commerce, DHS, State, and Treasury  provided written comments. Justice provided us with technical comments  that we incorporated in the report, as appropriate. Defense and Energy did  not comment on the draft.
In its comments on a draft of this report, Commerce stated, first, that the  report did not identify what it means by enforcement activities involving  nuclear proliferation. Second, Commerce stated that the report should  present the President’s 2004 nonproliferation proposals to NSG exactly as  stated. Finally, Commerce stated that the recommendation to modify  relevant databases to support the collection and analysis of data that  clearly identify when enforcement activities involve nuclear proliferation  should not be directed to it because the report recognizes that it already  has this capability. Moreover, it said that Commerce officials could take  names from its denied persons list, which does not indicate the reason for  listing the name, and query the relevant database to identify whether the  name was listed for nuclear proliferation reasons. First, we did identify  what is meant by enforcement activities on page 8 of this report to include  inspecting items to be shipped, investigating potential violations of export  control laws, and punishing export control violators. We asked Commerce  officials to identify when such activities involved nuclear proliferation but  they indicated certain actions for which they could not. Second, we  shortened the description of the President’s 2004 proposals for brevity and  clarity. Moreover, Commerce’s description of the proposals does not  match the text of the proposals as originally presented in the President’s  speech. Finally, while our report recognized that Commerce had  developed the capability that we recommend for its database, we included  Commerce in the recommendation because its various lists, such as the  denied persons list, cannot identify names included for nuclear  proliferation reasons. Commerce indicated to us that because the database  and denied persons list were not linked, providing such information would  have been difficult and require a case-by-case analysis. As a result,  Commerce did not provide us with this requested data.
In its comments, DHS agreed with the substance of the report and  concurred with the overall recommendations. DHS described specific  actions that it took in September 2007 to identify seizures in the relevant  database that involve nuclear proliferation. It also described modifications  that it intends to make by the end of 2007 to identify examinations of cargo  involving nuclear proliferation issues.
In commenting on a draft of this report, State partially concurred with our  recommendation that it should (1) comply with its guidance to conduct  periodic assessments of proliferation risk and the export control system  for each country receiving EXBS funding and (2) document each risk  analysis conducted to evaluate the progress made in alleviating those  risks. State commented that it recognizes the value of taking a more  standardized approach to assessing program countries on a regular basis  as a means of refining assistance efforts and evaluating progress.  Therefore, State said that it will set clear guidelines for when assessments  and reassessments should occur. State also said that it recognizes the  value in documenting in one place all risk analyses and the process by  which they are reached and will do so in a revised publication of its EXBS  program strategic plan.
State disagreed with our finding that it did not conduct program  assessments for about 60 percent of its participating countries, asserting  that it conducted program assessments for all six of the countries in the  scope of our review that received EXBS funding. State said that it used  various means to assess its program other than its revised assessment tool  designed for this purpose. We reiterate our finding that State did not  conduct program assessments using its designated tool for two of the six  countries in our study that received EXBS assistance. More importantly,  these assessments do not evaluate the impact of U.S. training on the  country, as recommended by federal guidance for evaluating human  capital training. This guidance calls for assessing the extent to which  training and development efforts contribute to improved performance and  results. State also disagreed with our finding that it did not perform risk  analyses for 11 of the 56 countries in its program for fiscal years 2003  through 2006. It stated that the country risk assessment summary in its  program strategic plan included only those countries for which funds were  requested at the time the plan was prepared and the summary was never  intended as a comprehensive source of all risk analyses. However, the  State official responsible for EXBS did not provide this explanation and  said the risk summary does not change unless there is new information.  Furthermore, we found that this explanation of the risk assessment  summary is not consistent. At least one country was included in the  summary even though it received no EXBS funding throughout this period  and at least four other countries were not listed although they did receive  EXBS funding.
Treasury did not comment on our recommendations. However, Treasury  stated that it can and does identify which entities have been designated for  nuclear proliferation reasons at the time of designation. However, this  statement misses our point. As our report stated, U.S. government  agencies that engage in enforcement activities to counter nuclear  proliferation networks are impaired from judging their progress in this  effort because they cannot readily identify basic information on the  number, nature, or details of their enforcement activities involving nuclear  proliferation. If Treasury cannot readily retrieve this information, then the  information is not useful for assessing the impact of its sanctions  specifically on nuclear proliferators. Despite its assertion, Treasury did not  provide us with a list of all listed entities designated for nuclear  proliferation reasons, as we had requested. In commenting on our finding  that Treasury did not designate any entities publicly identified with the  A.Q. Khan network, Treasury stated that its designation decisions involve  an interagency process that identifies, assesses, and prioritizes targets.  Therefore, it appears that Treasury did not designate any A.Q. Khan  network entities because an interagency process did not identify and  assess them as priority targets.
We are sending copies of this report to interested congressional  committees and the Secretaries of Commerce, Defense, Energy, Homeland  Security, Justice, State, and Treasury. We will also make copies available  to others upon request. In addition, this report will be available at no  charge on the GAO Web site at http://gao.gov.
If you or your staff have any questions concerning this report, please  contact me at (202) 512-8979 or at christoffj@gao.gov. Staff  acknowledgments are listed in appendix VI.
section_title: Appendix I: Scope and Methodology
paragraphs: To meet our objectives, we reviewed program documentation and  interviewed knowledgeable officials from key U.S. agencies: the  Departments of Commerce, Defense (DOD), Energy, Homeland Security  (DHS), Justice, State, and Treasury.
To identify the status of U.S. efforts to strengthen multilateral controls to  counter nuclear proliferation networks, we reviewed program  documentation and interviewed knowledgeable officials from key U.S.  agencies: DOD, Energy, and State. We also met with acknowledged  nonproliferation experts to discuss U.S. proposals announced in 2004 and  their applicability to addressing nuclear proliferation networks. The  experts included two former Assistant Secretaries of State for  Nonproliferation and experts from the following institutions: Center for  Contemporary Conflict, National Security Affairs Department, Naval  Postgraduate School in Monterey, California; Center for International  Trade and Security at the University of Georgia, Athens, Georgia; Center  for Nonproliferation Studies at The Monterey Institute of International  Studies, Washington, D.C.; Center for Strategic and International Studies,  Washington, D.C.; Georgetown University, Edmund A. Walsh School of  Foreign Service, Washington, D.C.; Heritage Foundation, Washington,  D.C.; Nuclear Threat Initiative, Washington, D.C.; and Wisconsin Project  on Nuclear Arms Control, Washington, D.C.
We tried to visit the U.S. Mission to the International Atomic Energy  Agency, officials of the International Atomic Energy Agency, and foreign  government representatives to the Nuclear Suppliers Group, all in Vienna,  Austria, to discuss various U.S. proposals and other efforts to strengthen  activities to combat nuclear proliferation networks. While State agreed  after months of negotiation to facilitate our proposed travel to Vienna, it  did not do so within any acceptable time frames. Furthermore, citing  diplomatic sensitivities, State proposed restrictions on which U.S. and  foreign officials we could meet and on what subjects we could discuss,  thus causing considerable delays in completing our work.
To assess the impact of U.S. bilateral assistance to help other countries  improve their legal and regulatory controls against nuclear proliferation  networks, we reviewed program documentation and interviewed  knowledgeable officials from key U.S. agencies: DOD, Energy, and State.  To evaluate the amount of assistance provided overall and to the seven  countries associated with nuclear networks in our study (Malaysia,  Pakistan, Republic of Korea, Singapore, South Africa, Turkey, and United  Arab Emirates), we obtained and reviewed financial data from DOD,  Energy, and State, and interviewed agency officials about these data. We  determined that these data were sufficiently reliable for the purposes of  this report. Therefore, we reviewed program assessment documentation to  the extent that it was available in Washington, D.C. We interviewed  knowledgeable DOD, Energy, and State officials about the impact and  outcomes of these programs. We also contacted the embassies in  Washington, D.C., of the governments of Malaysia, Pakistan, Republic of  Korea, Singapore, South Africa, Turkey, and United Arab Emirates to  obtain their perspectives on U.S. assistance. However, only the  government of Singapore responded to our request for information.
To assess the impact of U.S. efforts to strengthen its national enforcement  activities to combat nuclear proliferation networks, we reviewed  documentation and met with officials of the Departments of Commerce,  DHS, Justice, State, and Treasury in Washington, D.C. We also spoke by  phone with DHS/Immigration and Customs Enforcement attaches  stationed in Bern, Switzerland, and Vienna, Austria, regarding their roles in  enforcing U.S. export control laws for cases related to nuclear  proliferation. Also, we reviewed statistical data and descriptions of  enforcement cases from Commerce, DHS, and Justice, when available, to  try to determine how many cases involved nuclear proliferation and how  such information was used to assess agencies’ activities. We also reviewed  data on Commerce, State, and Treasury sanctions against identified WMD  proliferators. The information on foreign law in this report does not reflect  our independent legal analysis, but is based on interviews and secondary  sources.
We focused our review on countries that, according to open-source  reporting, are involved in the A.Q. Khan network. These include Malaysia,  Pakistan, Republic of Korea, Singapore, South Africa, Turkey, and Dubai in  UAE. We did not travel to these countries because State cited foreign  policy sensitivities of ongoing diplomatic discussions in these countries. It  is important to note that the level of cooperation State provided on this  review was erratic and resulted in a delay of several months in completing  our work. Nonetheless, with information available from other sources, we  were able to address the review’s objectives.. For the purposes of this  report, we reviewed U.S. programs and activities that involved export  controls and their enforcement, as nuclear networks typically engage in  acts that violate or circumvent national and international export controls.
We conducted our review from September 2006 through August 2007 in  accordance with generally accepted government auditing standards.
section_title: Appendix II: Comments from the Department of Commerce
paragraphs: The following are GAO’s comments on the Department of Commerce’s  letter dated October 15, 2007.
subsections: section_title: GAO Comments
paragraphs: 1.  We agree with Commerce’s statement that the draft report did not  identify what it means by “enforcement activities involving nuclear  proliferation.” First, we did identify what is meant by enforcement  activities on page 8 of this report to include inspecting items to be  shipped, investigating potential violations of export control laws, and  punishing export control violators. We asked Commerce officials to  identify when such activities involved nuclear proliferation but they  indicated certain actions for which they could not.  2.  We disagree with Commerce’s comment that our description of the  President’s proposal to the NSG was not clear. We had simplified and  shortened the proposals to make them clear and free from jargon.  3.  We disagree with Commerce’s comment that our draft is true but  misleading in stating that Commerce does not maintain readily  available information that would allow it to identify individuals or  entities placed on its denied parties list for nuclear proliferation  reasons. Commerce said the purpose of this list is to readily identify  persons who are denied export privileges and it further explained that  its agents can query names from the list to determine the reason  individuals were denied export privileges. However, when we  requested that Commerce provide such a list, Commerce indicated that  it had not previously conducted such a review, did not maintain readily  available information, and it could not readily create a list of  individuals who have been denied export privileges for nuclear  proliferation reasons.  4.  In comments on a draft of this report, Commerce stated that the  recommendation to modify its data collection processes to clearly  identify when enforcement activities involve nuclear proliferation  should not be directed to it. Commerce stated that the report  recognized that it already has appropriate categories or codes for  nuclear proliferation staff to use when recording information in the  databases and already mandates completion of relevant data fields that  would identify an enforcement action as related to nuclear  proliferation. However, we directed the recommendation to Commerce  because its various lists, including the denied persons list, cannot  identify when names are listed for nuclear proliferation purposes.  Commerce acknowledged this deficiency when it was unable to  provide this type of information when we requested it.
section_title: Appendix III: Comments from the Department of Homeland Security
section_title: Appendix IV: Comments from the Department of State
paragraphs: The following are GAO’s comments on the Department of State’s letter  dated October 17, 2007.
subsections: section_title: GAO Comments
paragraphs: 1.  We disagree with State’s comment explaining why it did not conduct  program assessments for about 60 percent of its participating  countries. State said that it also relies on an interagency assessment of  a country at the early stages of engagement with the program and on a  variety of open source information, studies by nongovernmental  research organizations, and information from other U.S. agencies.  State did not indicate in its comments what percentage of contractor  program assessments have been completed and produced no  documentation of these other assessments. Moreover, in earlier  documents State explicitly informed us that the contractor assessment  tool is the current survey tool EXBS uses to provide a formal and full  assessment.  2.  We disagree with State’s comments that it assesses program progress  despite the absence of a contractor assessment. State’s EXBS strategic  plan, written responses to our questions, and discussions with the key  EXBS official who State designated to meet with us emphasized the  contractor program assessments as the tool to be used for a full  assessment of a country’s progress, as well as for planning purposes  and establishing a baseline of a country’s capabilities and needs. The  strategic plan describes the contractor’s assessment tool as compiling  data and analysis from all sources to assist State to measure  performance broadly by evaluating progress made between  assessments. State’s written response to us stated that EXBS tracks  the performance of the foreign government in its development of  strategic trade controls using the assessment tool.  3.  We agree with State’s comment that its program planning takes into  account other information, including open source information,  diplomatic reporting from posts, intelligence community products, and  assessments and information from other U.S. government agencies. We  have added language to the report to reflect this.  4.  State commented that EXBS officials have access to and factor into  their planning process assessments by other U.S. agencies, such as  Energy’s INECP which receives some EXBS funding. While we  commend such interagency collaboration, we note that any Energy  program assessments are relevant only to its training and courses  provided in support of EXBS, not to the EXBS program as a whole.  Furthermore, the evidence that State provided in its meetings with us,  its written response to our questions, and its EXBS strategic plan  discusses interagency coordination in planning, but not in assessing  the contributions made by the EXBS program to particular countries.  5.  We disagree with State’s comment that risk analyses have been  conducted and documented for each country that received or is  receiving assistance under EXBS and that we based our findings solely  on the EXBS strategic plan. In addition to the strategic plan, we relied  on State’s written response to questions we posed on the subject and  meetings with State EXBS officials. As we stated in our report, the  EXBS strategic plan did not identify a risk level for 11 of the 56  countries to which it provided assistance between fiscal years 2003  and 2006.  6.  We disagree with State’s comment that our report was inconsistent  because it included information on EXBS assistance to six of the seven  countries where A.Q. Khan network activity was reported to have  occurred as well as other countries receiving EXBS assistance. We  included statistical information on the total number of EXBS program  assessments to place the data on the seven countries into an overall  perspective.  7.  We partially agree with State’s comment that it would be more clear to  say that the EXBS country risk assessment summary did not include  two of the countries in which network activities are alleged to have  occurred. We cannot confirm State’s assertion that a risk analysis was  done for one of these countries. State provided no documentation to  support this point.  8.  We disagree with State’s comment that the absence of a country from  the risk summary table in the EXBS strategic plan does not mean a risk  analysis was not done. State provided no evidence that it had  conducted a risk analysis for this country, and the State official  designated to speak for the program said there was no documentation  for the analyses.  9.  We disagree with State’s comment that State subsequently requested  and received missing program assessment data in December 2006 that  the contractor had not initially provided to support assessment results.  State provided no evidence to support this comment and it directly  contradicts information provided to us by the cognizant State official.  10. We disagree with State’s comment that its EXBS program assessments  generally highlight the relationship between assistance efforts and  progress in specific countries. In a written response to our questions in  February 2007, State highlighted the difficulties in doing so. Also,  during the course of our review, State said that EXBS does not  systematically track information on changes to a country’s laws for the  purpose of showing the effectiveness of the EXBS program because it  is difficult analytically to create a good design for doing so.  Nonetheless, State said in its comments on a draft of this report that  formal reassessments of countries are needed to more accurately and  regularly measure progress.  11. We disagree that State made a sincere and good faith effort to  cooperate with our review of nuclear proliferation networks. The level  of cooperation State provided on this review was erratic and resulted  in a delay of several months in completing our work. While State  agreed after months of negotiation to facilitate our proposed travel to  Vienna, it did not do so within any acceptable time frames and delayed  providing some requested documents for several months. Nonetheless,  with information available from other sources, we were able to  address the review’s objectives.  12. These findings were not directed to State. The agencies to which they  were directed did not raise a concern about access to classified  information and none of these agencies disagreed with our  recommendation.  13. State commented that our draft should note that Pakistan passed its  export control law in 2004. We have added this language to the report.  14. We disagree with State’s comment that referring to PSI as a  multilateral body ascribes a formality to the PSI that does not exist and  that the U.S. has never sought to create. Given our previous classified  report on PSI, we would not ascribe any more formality to PSI than  appropriate. We recognized that this lack of formality contributed to  management deficiencies in U.S. PSI activities, and congress legislated  in Public Law 110-53 that corrective action be taken.  15. We agree with State’s statement that certain states or their  governments were not involved in proliferation network activities; only  private entities in these countries were reported to have been allegedly  involved in proliferation network activities in open sources. We  included clarifying language, accordingly.  16. We disagree with State’s comment that we should report that more  than 80 countries are PSI participants. As we reported in an  unclassified section of our report on PSI, State did not provide us with  documentation to demonstrate any precise number of countries that  expressed support for PSI.
section_title: Appendix V: Comments from the Department of Treasury
subsections: section_title: The following are GAO comments on the Department of Treasury’s letter dated October 24, 2007.
paragraphs: 1.  We disagree with Treasury’s statement that because the scope of our  study covered countries where A.Q. Khan operated, it likely skewed the  results. The request for our review directly asked us to assess the U.S.                    government response to the A.Q. Khan network. Therefore, it was                    methodologically appropriate to focus on countries where such network                    activities reportedly occurred and would have been fruitless to focus a                     review of the U.S. response to nuclear networks on countries where                    such activity has not occurred.  2.  We disagree with Treasury’s assertion that it is able to identify which of  its designations are related to nuclear proliferation and could similarly  identify any civil penalties imposed based on the violation of OFAC  sanctions. Treasury officials stated to us that they could not conduct a  keyword search to identify entities that had been designated for nuclear  proliferation reasons. One official emphasized that Treasury lacks the  ability to definitively identify whether a given entity was designated for  nuclear proliferation reasons. Treasury officials noted that they keep  records on the rationale for an entity’s designation, but they do not  necessarily record what type of WMD proliferation the entity is involved  in, if any. Despite its assertion, Treasury could not readily retrieve this  information when we requested it and did not provide us with a  complete list of entities designated for nuclear proliferation reasons.  3.  Treasury’s statement that it can and does identify which entities have  been designated for nuclear proliferation reasons at the time of  designation misses our point. It stated that entities or individuals  designated under Executive Order 13382 are listed on OFAC’s web site  and specially designated nationals’ list with the specific identification of  “NPWMD.” During our review, Treasury could not readily retrieve this  information specifically for nuclear proliferation designations.  4.  In commenting on our finding that Treasury did not designate entities  publicly identified with the A.Q. Khan network, Treasury stated that its  designation decisions involve an interagency process that identifies,  assesses, and prioritizes targets. Given the absence of these names,  Treasury’s statement suggests that the interagency process did not  identify and assess entities of the A.Q. Khan network as priority targets.  5.  We agree with Treasury’s comment on the footnote on OFAC’s sanctions  programs and have added clarifying language, accordingly.  6.  We have modified the language in the draft to reflect Treasury’s  comment.  7.  We have changed this language, accordingly.  8.  We believe that the language of our draft accurately reflects the meaning  of Treasury’s proposed rewording in a more concise fashion. Thus, we  have not modified the language of our report.  9.  We have modified language in the report to reflect Treasury’s updated  information on enactment of the International Emergency Economic  Powers Enhancement Act.
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: Muriel J. Forster, Assistant Director; Jeffrey D. Phillips; Leah DeWolf;  Jennifer L. Young; Lynn Cothern; Mark B. Dowling; Mark C. Speight; and  Martin De Alteriis made key contributions to this report.