ATOL
INVESTIGATION Chinese pieces to Iran's nuclear
puzzle By Bertil Lintner
BANGKOK - If Mehdi Kamyabi Pour, press
officer at Iran's embassy in Bangkok, is to be
believed, accusations that his country is
developing nuclear weapons are "absolutely
unfounded". Nuclear weapons, he recently asserted,
have no place in Iran's defense doctrine and his
country "has strongly condemned the use of such
inhumane weapons".
Pour's statement
appeared in the March 13 edition of the Bangkok
Post in response to an article the daily newspaper
published about Iran's attempts to obtain
nuclear-related material and devices in Asia and
its extensive shipping networks in the region.
Military analysts claim East Asia is becoming
Iran's main
source of such items and
often the origin of these nuclear-related goods is
China.
Iran has always denied that it has
a nuclear weapons program, insisting that its
research into atomic energy is for strictly
peaceful purposes. If that were the case, skeptics
argue, there should be more transparency and less
secrecy surrounding the country's procurement of
materials for its defense industries. And analysts
wonder why many of these materials are obtained
through a clandestine network of front companies,
often disguised as freight forwarding or
electronic businesses?
The United States,
European Union and United Nations have all imposed
sanctions on Iran over its nuclear program.
However, Iran's attempts to procure
nuclear-related materials through unorthodox
channels predates those restrictions. Many of the
goods Iran continues to obtain through the same
means are classified as "dual-use" items with both
civilian as well as military applications and thus
are not necessarily prohibited under the sanctions
regime. Still, secrecy and convoluted arrangements
through front companies and obscure middlemen
surround Iran's imports of goods even in this
category.
The easiest way to source such
materials has always been to use a middleman in a
third country, which is then declared as the end
user of items actually destined for Iran. Dubai in
the United Arab Emirates (UAE) was previously the
re-export hub for these clandestine activities,
and for years Iran imported more goods through
Dubai than its own ports. In January 2005, a
Tehran Chamber of Commerce official disclosed that
there were more than 4,650 Iranian companies in
Dubai and that Iranian interests contributed 45%
of fixed investments and 10% of all investment in
the sprawling Jebel Ali Free Zone near Dubai City.
Iranians make up around a quarter of
Dubai's resident population, and with more than
450,000 Iranians living in the emirate it
currently serves as Iran's most important banking
center anywhere in the world. To be sure, many of
these companies belong to Iranian individuals with
few or no ties to the government in Tehran, and
some are actually dissidents who preferred to stay
in Dubai rather than in the strictly controlled
Islamic Republic of Iran. At the same time, the
Iranian government ran a number of front companies
in Dubai which were often listed as "end users"
for goods procured in third countries.
Since the 9/11 terrorist attacks in the
US, which were financed partly by remittances from
banks in Dubai, the UAE has been more cooperative.
In March 2007, Stuart Levey, the US undersecretary
for terrorism and financial intelligence, traveled
to Dubai to warn Arab bankers to halt dealings
with Iran or face US sanctions. Levey alleged that
even innocuous-looking trade with Iran could
bankroll the country's disputed nuclear program.
The pressure seems to have paid off. In
August last year, the American ambassador to the
emirates, Richard Olson, stated that, "Today, our
countries have a prosperous and cooperative
relationship." That warming trend was most
recently seen by the UAE's agreement to send
warplanes in support of the still ongoing military
action against Libya, to which the US is a leading
participant.
Chinese middlemen Because the US in particular now has better
cooperation from the UAE, Iran is increasingly
turning to countries and territories like China,
Hong Kong, Taiwan and Malaysia to obtain what it
needs to keep its contested nuclear industry
running. In May last year, Chen Yi-lan, alias
Kevin Chen, a 40-year old Taiwanese passport
holder, pleaded guilty in a court in Miami to
charges of "conspiring to illegally export
dual-use commodities to Iran". He had been
apprehended on the Pacific island of Guam, a US
territory, while arranging a roundabout shipment
of embargoed goods to Iran via Hong Kong and
Taiwan.
According to court testimony,
since 2007 he had used Hong Kong freight
forwarders Acteam Logistics and Tex-Co to
transship, or conspire to transship, US goods
bound for Iran, including MIL-S-8516 sealing
compound with military applications,
glass-to-metal pin seals, which are used in vacuum
components, and circular hermetic connectors.
These goods can be used commercially but have
military and nuclear applications as well. (He was
also charged with transshipping P200 turbine
engines and spare parts that can be used in
unmanned aerial vehicles, or drones.)
The
fear among Western countries is that Iran needs
these and other goods for its uranium enrichment
program and that it intends to use highly enriched
uranium to manufacture nuclear weapons. To
successfully enrich uranium requires centrifuges -
the manufacture of which Iran commissioned to a
company known as the Iran Centrifuge Technology
Company, or TSA. According to information posted
on the website Globalsecurity.org and dated 6
August 2006, TSA is "currently producing P1 and P2
centrifuges. This company plays a very important
role in the regime's nuclear activities and the
regime has kept it secret. The company's chair,
Jafar Mohammadi, is a top expert in the
manufacture of centrifuges. He was transferred to
TSA from the ministry of defense … Some of the
sensitive centrifuge parts such as magnets are
being bought on the black-market."
The
apparent link to the ministry of defense seems to
contradict the Iranian government's assertion that
its nuclear program is a strictly civilian
project. TSA reportedly manufactures centrifuges
for another company known as the Kalaye Electric
Company (KEC) but are actually for use at the
enrichment site at Nantanz, a huge complex
covering 100,000 square meters and located eight
meters underground, according to a report by the
Carnegie Endowment for International Peace and
Publicintelligence.net. Then International Atomic
Energy Agency (IAEA) director general Mohamed
ElBaradei visited the site in February 2003 and
reported that 160 centrifuges were complete and
ready for operation, with 1,000 more then under
construction at the site. It is now believed by
security analysts that at least 7,000 centrifuges
have been installed at Nantanz.
Nearly 200
front companies and other entities linked to
Iran's efforts to procure materials for its
nuclear program are now on the UN's and EU's lists
of "suspected entities". Among them is a seemingly
insignificant Iranian company called Javedan Mehr
Toos. According to an April 3, 2010 report in the
Asian Wall Street Journal and additional
information supplied to Asia Times Online by
Western security analysts, the little known
Iranian firm acquired critical valves and vacuum
gauges made by French company KD Valves-Descote,
which was formerly owned by US industrial
conglomerate Tyco International. Both firms told
the Journal they knew nothing about the case.
Yasa Part, another small Iranian company
which also goes under the name Shetab Gaman, was
listed by the EU on July 26, 2010, as "an entity
linked to Iran's proliferation-sensitive nuclear
activities or Iran's development of nuclear weapon
delivery systems". The EU's eyes are also focused
on a company called Sanat Pajoohan Amin, which
deals in titanium and aluminum alloys, maraging
steel and other dual-use goods. The company's
website, www.sanatpa.com/eindex-down.php,
announces that it does business "in the name of
God" with partners in China, Germany, Turkey and
France.
Security analysts familiar with
the situation told Asia Times Online that Aras
Farayande, Festival Metals, Paya Mavad and Parto
Sanat are also on the EU's list of "suspected
entities". Parto Sanat, another Iran-based
company, is on the sanctions lists of Australia
and Japan for suspected links with Iran's nuclear
or ballistic missile programs. According to the
EU's designation, the company is a "manufacturer
of frequency changers and it is capable of
developing/modifying imported foreign frequency
changers in a way that makes them usable in gas
centrifuge enrichment".
Proliferation
for profit The list of companies could be
much longer, but the specifications and dimensions
of the parts needed by Iran are based on designs
copied from the Pakistani P-1 centrifuge design
which were sold to them by the now defunct
proliferation network led by Pakistani nuclear
scientist Abdul Qadeer Khan.
Widely known
as the "father" of Pakistan's uranium enrichment
program, his semi-clandestine network spanned from
Europe to the Middle East and even as far as North
Korea until he was dismissed under US pressure as
head of the Khan Research Laboratories in Kahuta
Pakistan in 2001. After years of house arrest, a
Pakistani court in 2009 ruled he could travel
freely inside the country.
Others have
picked up where Khan's network left off. "New
procurers are being discovered as they attempt to
obtain the same goods," a security analyst told
Asia Times Online. "The P-1 centrifuge design is
notoriously unreliable and frequently fails in a
catastrophic manner resulting in the machines
having to be replaced rather than repaired. It's
estimated that Iran has to produce between 120-180
new centrifuges every month to maintain the
present number of machines as seen at Natanz and
reported by the IAEA."
Those new
procurement entities are generally Iranian
companies which also carry out legitimate business
inside the country, according to Western military
analysts and an Asia Times Online investigation.
The companies task a number of competing middlemen
based outside Iran to quote them prices for the
supply of the same goods. Depending on the urgency
of the requirement, Iran may offer many times the
market value of these items to the middleman who
claims to be able to offer the best deal.
The outcome is often cut-throat
competition between rival suppliers. The middlemen
are known to approach manufacturers of the
controlled goods on behalf of "clients", which are
just phoney names given to the supplier. Having
obtained the goods, the middlemen often conceal
their final destination from shipping companies by
providing false end-user certificates, typically
citing the final destination of the goods as
China, Malaysia and, at least previously, Dubai -
from where the same goods are then re-exported to
Iran.
The middlemen, however, are not all
cut from the same cloth. According to one analyst:
"The profiles of these middlemen vary, but there
are many common points. They are of various
nationalities, but most often Chinese, or still
some people of Iranian descent living in Dubai.
They are indifferent to the cause of the Iranian
procurement program but attracted by the
possibility of making a large profit and therefore
not shy to commit the fraud required to obtain and
deliver the goods."
Porous
sanctions Or, in other words, people like
Kevin Chen, who was arrested in Guam last year
when he made the mistake of offering his services
to an undercover officer working for the Office of
Export Enforcement at the US Commerce Department's
Bureau of Industry and Security. He was caught
red-handed, but there are many others who are
still assisting Iran in its efforts to circumvent
international sanctions regimes.
Concealed
under layers of middlemen, front companies and
other individuals, Iran's procurement continues
virtually unabated, although action is taken
whenever a secret deal is alleged. For instance,
in October 2008 the US barred the China
Shipbuilding & Offshore International
Corporation from entering into contracts with the
US government because it allegedly supplied
materials used in making weapons of mass
destruction not only to Iran but also to North
Korea and Syria.
Last year's acquistion of
valves and vacuum gauges by Javedan Mehr Toos was
struck through a little-known intermediary known
as Vikas Kumar Talwar. According to US government
documents reviewed by Asia Times Online, Talwar
represents China's Zhejiang Ouhai Trade
Corporation, a subsidiary of the Wenzhou-based
Jinzhou Group.
On October 18 last year,
the Washington Post quoted a senior official from
a Western intelligence agency as saying that
Chinese firms had been discovered "selling
high-quality carbon fiber to Iran to help it build
better centrifuges, which are used in enriching
uranium".
Before Hong Kong's return to
China in 1997, the local government closed seven
companies, including four which were suspected of
supplying Iran with military-related goods from
China. In recent years, at least one of those
companies has started up again and is selling
goods from China.
Authorities in Hong
Kong, the world's third-largest port, have begun
to enforce more vigorously the territory's export
laws, and even Malaysia - a country often
mentioned in this context - has introduced tougher
measures. Last year, Malaysia passed the so-called
Strategic Trade Act, which, the Malaysian paper
Business Times reported at the time, was meant to
protect "Malaysia and Malaysian exporters from
being exploited by proliferators".
The new
law was enacted after a February 2004 Malaysian
police report had implicated Scomi Precision
Engineering, a company owned in part by Kamaluddin
Abdullah, the businessman son of then prime
minister Abdullah Badawi, in shipping centrifuge
parts through Khan's network to Libya. The company
denied any wrongdoing, saying that it was unaware
of what the nuclear-related equipment was going to
be used for.
But the extent of China's
involvement in the trade is still a mystery. In
March 2009, it was discovered in an official
investigation that Taiwanese company Heli-Ocean
Technology Co Ltd had shipped 108 pressure
transducers to Iran. The gauges, dual-use items
that are essential for centrifuge uranium
enrichment, were ordered from Inficon Holding AG,
a Swiss manufacturer. Heli-Ocean, which serves as
Inficon's agent in Taiwan, said the company that
placed the order was a Chinese one, Roc-Master
Manufacture and Supply Company, which originally
asked for delivery of the transducers to its
Shanghai location.
Then, in a way typical
of convoluted re-exports to Iran, the company
requested that Heli-Ocean deliver the parts to
Moshever Sanat Moaser in Tehran on the assurance
that they were not intended for Iran's nuclear
program. Taiwan's bureau of foreign trade
investigated the affair and determined that its
export rules had not been violated because at the
time it occurred the parts involved were not
included on its list of "strategic high-tech
commodities". Security analysts say it was just
another example of how Iran eludes sanctions aimed
at preventing the country from developing weapons
of mass destruction.
Bertil
Lintner is a former correspondent with the Far
Eastern Economic Review and the author of
Blood Brothers: The Criminal Underworld of Asia.
He is currently a writer with Asia Pacific
Media Services.
(Copyright 2011 Asia
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