End-use certificates are the topic for today. ‘EUCs’ in the trade. The Leopards are not only going to be sprung on the Russians bear, but are also sprung from the restrictions German EUCs represent. Much has been made of Germany finally ‘allowing’ Leopard 2 tanks to go to Ukraine; opening up the arsenals of many NATO nation’s stores of these modern mainline battle tanks. Political considerations aside regarding the continuing ‘zeitenwende’ in Germany, the actual trade compliance practice of EUCs underpinning the policy has not generally been explained in the wider media and is certainly not unique to Germany. This article should be able to break the broad strokes down for you.

Essentially, an EUC is a promise from the foreign recipient of a weapon (or other controlled goods) that they will abide by the terms of the sale. The agreed upon end-use. Generally, the pertinent part is a promise to not retransfer the item to a third party without notification and assent from the licensing authority of the exporting country.

In Germany’s case, there is a firm standing policy from their Federal Office for Economic Affairs and Export Control (BAFA) that they will not authorize the retransfer or transshipment of German arms from a licensed recipient entity to then send those arms to a third party in a war zone. The Ukrainian Military is most certainly a third party in a war zone. Germany made this standing policy decades ago; in part as atonement for their collective responsibility as a nation for a significant portion of the horrors of WWII. They do not want to fan the flames of war.

Fortunately, political pressure, righteousness, and the better part of eight decades since the 3rd Reich’s fall has helped the recalcitrant Germans be on the correct side of history and reverse this policy on behalf of European security, but they are not alone in their restrictions. Most developed countries have EUCs.

The same situation actually applies for Ukraine’s broad appeals for F-16s. The ‘Fighting Falcon’ is a US-origin weapon system that needs an export license from the Directorate of Defense Trade Controls (DDTC) before it can be exported… and you guessed it – EUCs are an import part of the licensing paperwork.

DDTC as a division of the State Department may not have a standing policy like BAFA, but EUCs are alive and well for all controlled US-origin items. That is why Ukraine would get F-16s from willing nations wanting to help Ukraine only after President Biden would agree to the transfer. It doesn’t matter that Lockheed Martin see a sales opportunity to backfill donor nations or even if Congress passed a resolution in support of such action.

Violations of EUCs create trade restrictions for both the domestic manufacturer of the controlled goods and foment political tension between the origin and recipient countries. Ideally both countries agree to EUC restrictions so that they can continue to manage their foreign trade policy as it sees fit. It is a situation where ‘you honor my EUCs and I will honor yours’. Law-abiding nations that are constructive members of the international community do not want to violate them; for both their and their trade partners’ interests.

NOTE: For sake of completeness, there is also a similar rule for commercial goods controlled by the Commerce Department, but the context for today’s article are for military weapons found on the United States Munitions List (USML).

The bottom line is that President Biden both as the Commander-in-Chief of the US military and Executive of his cabinet has the power alone to authorize retransfer to Ukraine when there are serious foreign policy considerations – e.g. in this case that would be the prevention of the broadening of the war to a direct conflict between NATO and Russia. EUCs and their restrictions are not just for fighter jets; this practice applies all the way down to small arms and everything in between. If the military hardware needs a license from the State Department, the EUC binds the recipient. EUCs always essentially say “no re-exports without DDTC approval”. For a retransfer in the case of Ukraine, it make sense that approval for retransfer of advanced, long-range weapons systems like an F-16 would come from the President himself. As of today, those F-16s are a still a no-go, but so were Abrahams M1 tanks (and the Leopards in Germany) less than a month ago…

I hope this overview gave you a little more context on the release of those Leopards. EUCs are certainly part of that mix and I pray they do not play too big a role in restricting future transfers of heavy weapons to Ukraine going forward.

SLAVA UKRAINI!