Thursday, August 26, 2010

China, Russia and North Korea have combined to supply Iran’s missiles

The West Lines up to Punish Iran
By Valerie Lincy
Updated August 2010

Last week, a host of Western countries lined up for the first time to hit Iran with a set of sanctions that could -- if vigorously applied -- cause real economic pain in Tehran. Although not as severe as the new U.S. strictures signed into law on July 1, Australia, Canada and the European Union went further than expected.

All 27 countries of the European Union are now barred from financing new projects in Iran’s oil and gas sector. Nor may they expand existing projects or supply “key equipment and technology.” Financial dealings are restricted as well. Transactions over €40 million involving banks domiciled in Iran, or Iranian banks overseas must now be individually authorized. Iranian banks are also barred from opening new branches in Europe or establishing new joint ventures. And all E.U. member states are prohibited (with some exceptions) from providing new loans, grants or other financial assistance to the Iranian government, and from insuring Iranian entities. The Europeans also decided to slap an asset freeze on Iran’s national maritime carrier -- the Islamic Republic of Iran Shipping Lines (IRISL) -- and 24 of its subsidiaries, along with a ban on all cargo flights operated by Iranian carriers or originating in Iran. Canada and Australia have adopted similar restrictions, which cover dealings with Iran’s energy, transportation and financial sectors.

Although these new measures exceed those required by the United Nations, they do not come close to the near total embargo implemented by the United States. In July 1, U.S. sanctions against Iran were further strengthened when U.S. President Barack Obama signed into law the Comprehensive Iran Sanctions, Accountability, and Divestment Act. This law, which President Obama called “the toughest sanctions against Iran ever passed by the United States Congress,” tightens the noose around the Iranian government’s primary source of income -- its energy sector -- and seeks to exploit one of Iran’s primary vulnerabilities -- its shortage of petroleum refineries.

The new law strengthens existing U.S. sanctions against Iran by penalizing not only firms that help Iran develop its petroleum and natural gas infrastructure, but also firms that sell gasoline to Iran, or that help Iran purchase gasoline by providing shipping, insurance or financing services. Firms found to be engaging in sanctionable activity are no longer eligible for U.S. government contracts. The law also increases the menu of sanctions that the president “shall impose,” adding a prohibition on accessing foreign exchange in the United States, a prohibition on accessing the U.S. banking system, and a prohibition on property transactions in the United States. A least three of the now-nine sanctions must be imposed unless the President chooses to exercise his waiver authority.

In addition to the energy sector, the law targets financial institutions that do business with blacklisted Iranian entities, including entities affiliated with the Islamic Revolutionary Guard Corps; these institutions must choose between helping Iran and continuing operations in the United States. Firms that provide Iran with “sensitive technology,” including telecommunications and computer equipment, are barred from U.S. government procurement contracts. And Iranians identified as human rights abusers are subject to visa restrictions and financial sanctions. The law also authorizes state and local governments to divest from firms involved in Iran’s energy sector, and it seeks to disrupt Iran’s weapon-related procurement by allowing the President to designate a country as a destination of diversion concern. This designation would allow a cooperating country to receive U.S. export control assistance; it would restrict U.S. exports to uncooperative countries.

Congress has long supported these measures. The executive branch, however, had worried that U.S. sanctions targeting foreign firms would alienate countries whose vote was needed on a U.N. sanctions resolution against Iran. Those concerns were quieted with the approval of U.N. Security Council resolution 1929 on June 9. A number of countries, and notably the European Union, have since announced plans to further tighten sanctions against Iran. On June 16, the U.S. Department of the Treasury blacklisted thirteen Iranian companies and three individuals for their links to proliferation. And the European Union announced on June 17 “new restrictive measures” against Iran, which will target general trade, including financial and energy companies that do business with Iran, and Iran’s transportation sector. The E.U. will also freeze the assets of additional Iranian entities, and issue visa bans on additional individuals.

The sanctions required by resolution 1929 are limited in scope, especially given that over two years have passed since the U.N. last acted against Iran -- a period during which Iran made considerable nuclear and missile progress. The resolution expands the list of Iranian officials subject to a travel ban and the list of firms and individuals subject to financial penalties; fifteen entities linked to Iran’s Islamic Revolutionary Guard Corps and three entities linked to the Islamic Republic of Iran Shipping Lines are specifically targeted. The resolution also bars Iranian nationals and entities incorporated in Iran from investing in nuclear and missile projects abroad. And it prohibits Iran from importing certain categories of conventional weapons. All of the required penalties are limited to Iranian proliferation. Elective penalties include a call for countries to “exercise vigilance” in doing business with, and in providing financial services to Iranian entities, and in dealing with Iranian banks. Similarly, countries are called upon to inspect suspicious shipments into and out of Iran, including on the high seas, and to refuse services to Iranian ships suspected of carrying illicit cargo. These conditions make it easy for countries to claim ignorance and avoid taking action.

The resolution received support from all the countries on the Security Council except for Brazil, Lebanon and Turkey. Lebanon abstained. Brazil and Turkey voted against the resolution because of a conviction that additional sanctions now could jeopardize their diplomatic outreach, which resulted in a May 17 nuclear fuel swap agreement with Iran. The agreement revives a proposal first presented to Iran last October by France, Russia and the United States. Iran rejected this proposal, which would have required the export of some 1,200 kg of its low-enriched uranium stockpile in exchange for the provision of research reactor fuel. At the time, this export would have temporarily eliminated Iran’s ability to use its uranium to fuel a nuclear weapon in a “break out” scenario. At present, Iran's export of 1,200 kg of low-enriched uranium hexafluoride would have no impact: Iran would be left with some 1,400 kg of this material, with more produced every day. This quantity is more than sufficient to fuel one first generation implosion bomb, in the estimate of Iran Watch. (See Iran’s Nuclear Timetable).

Iran has begun converting a portion of this low-enriched uranium stockpile into fuel for its Tehran research reactor, by enriching the uranium to higher levels. This effort, which Iran began in early February, is widely seen as an indication of nuclear weapon intentions: It would accomplish 90 percent of the work needed to bring Iran’s enriched uranium stockpile to weapon-grade. Iran claims that it will use the pilot plant at Natanz to produce the 19.75 percent enriched uranium fuel needed to run the Tehran reactor. However, Iran is not presently capable of converting this material into the fuel assemblies needed for the reactor. Nor does the pilot plant currently contain a sufficient number of centrifuges to do the necessary enrichment work in a timely manner. According to the International Atomic Energy Agency, Iran had produced 5.7 kg of uranium enriched to 19.3 percent as of May 21. On July 11, the head of Iran’s atomic energy organization claimed that Iran had produced about 20 kg of this material.

Iran has also pursued work on more advanced gas centrifuges, the machines used by Iran to enrich uranium. On April 9, Iran unveiled what it termed a “third generation” centrifuge, claiming it would be up to six times as efficient as the thousands of first-generation machines operating at Natanz. This machine has apparently not yet been tested with nuclear material. And Iran has announced plans to work with metallic uranium, which has nuclear weapon applications, without giving any explanation of how this material might fit into Iran’s claimed civilian nuclear program. Meanwhile, Iran has reduced cooperation with international inspectors, making it increasingly difficult to track Iran’s growing nuclear capability. In particular, inspectors are unable to monitor centrifuge development and manufacturing workshops, limiting knowledge of Iran's progress in upgrading its centrifuges.

The IAEA’s most recent report registered concern "about the possible existence in Iran of […] activities related to the development of a nuclear payload for a missile." The report fails, however, to shed additional light on the alleged military aspects of Iran's nuclear work, which the Agency has been investigating for years. Issues of "serious concern" include reports that Iran acquired designs for a nuclear warhead small enough to fit atop Iran’s medium-range Shahab-3 missile. Other possible military activities include:

•High explosives testing, involving high voltage and exploding bridge wire detonators, an underground test arrangement, and “a full-scale hemispherical, converging, explosively driven shock system that could be applicable to an implosion-type nuclear device,” perhaps with the support of “foreign expertise”;
•Using military-related institutes for nuclear research and the procurement of spark gaps, shock wave software, neutron sources, special steel parts and radiation measurement equipment;
•Manufacturing centrifuge components at Defense Industries Organization workshops;
•And the possession of a document describing how to produce enriched uranium metal and how to machine the metal into hemispheres, which are nuclear weapon components.
The Agency says these allegations come from “consistent and credible” sources. Taken together, this information makes a strong case that Iran may be trying to make nuclear weapons.

The status of sanctions
Countries that are leading diplomacy with Iran have pursued a two-track strategy: Penalties -- such as U.N., E.U. and U.S. sanctions -- are coupled with offers of incentives and engagement. To implement U.N. Security Council resolutions and to further tighten the noose around Iran’s nuclear and missile developers, the United States has largely relied on Executive Order 13382. Of the 115 entities listed in Security Council Resolutions 1737, 1747, 1803 and 1929, the United States has designated 76 under this Executive Order, which freezes the bank accounts and financial assets of these entities, and prohibits U.S. persons from doing business with them. U.S. action against a number of entities not yet designated by the Council have probably had more impact, notably sanctions imposed against almost all major Iranian banks, along with some of their affiliates and subsidiaries. The bill signed by President Obama on July 1, 2010, is much broader in scope. As described above, it targets foreign firms that support the development of Iran’s oil and gas sectors, and firms that sell gasoline to Iran.

The United States has also invoked banking laws to encourage major financial institutions around the world to limit or cut ties with Iran. Last November, Treasury revoked Iran’s license for “U-turn” bank transfers, which had allowed certain dollar-based transactions involving Iranian entities to briefly enter the United States before being sent to offshore banks. And in March 2008, the Treasury Department’s Financial Crimes Enforcement Network warned U.S. banks that Iran is resorting to "an array of deceptive practices" in order to avoid sanctions. According to Treasury, Iran's central bank, also known as Bank Markazi, may be facilitating transactions for sanctioned Iranian banks. Bank Markazi and other Iranian banks have also requested that their names be removed from global transactions in order to mask the parties in the transaction. A number of banks have limited or ended business with Iran because of these risks, which has made it more costly and difficult for Iran to move hard currency around the world, and has raised the cost of doing business for the Iranian government and Iranian companies.

For its part, beginning in 2007, the European Union has pursued sanctions beyond the Security Council. In July 2010, member states adopted the broadest economic measures yet, targeting not only Iranian proliferators, but also Iran’s energy, transportation and banking sectors. In August 2008, the E.U. strengthened financial sanctions against Iran by requiring member states to “exercise restraint” in using public money to support trade with Iran, to inspect suspicious air and sea cargo to and from Iran, and placing additional due diligence requirements on E.U.-based financial institutions in their activities with Iranian banks. In late June 2008, 26 additional Iranian entities linked to missile and nuclear work were targeted -- including Iran’s Bank Melli and officials from Iran’s Islamic Revolutionary Guard Corps and Ministry of Defense. The move requires all E.U. member states to freeze the assets of listed entities and to institute a travel ban on listed individuals. Earlier, in April 2007, the E.U. acted outside the Council in hitting 23 Iranian entities with such penalties.

Iran’s refusal to suspend enrichment, reprocessing and heavy water work has led the U.N. Security Council to vote four rounds of sanctions: Resolution 1929 of June 9, 2010, resolution 1803 of March 3, 2008, resolution 1747 of March 24, 2007, and resolution 1737 of December 23, 2006. These resolutions bar Iran from importing or exporting most conventional weapon systems, as well as items related to uranium enrichment, reprocessing, heavy water and nuclear weapon delivery systems; they also bar states from providing Iran with financial or technical assistance aimed at acquiring these items. Resolution 1803 also bars Iran from purchasing dual-use nuclear and missile items, requests that countries inspect suspect cargoes to and from Iran, reduce public financial support for business with Iran, and cut back on transactions involving Iranian banks, particularly Bank Saderat and Bank Melli. However, the resolution’s language leaves plenty of room for countries uninterested in enforcing such measures to ignore them. Combined, the resolutions call for a freeze on the assets of some 117 Iranian entities linked to missile and nuclear work. States must also “exercise vigilance” in providing Iranian nationals with specialized nuclear and missile-related training and are called upon, but not required, to cut off “grants, financial assistance, and concessional loans” to the Iranian government. In addition, countries must report whether a person sanctioned by the Council has entered into or transited through their territory. Resolution 1929 applies a travel ban to all individuals designated by the Security Council so far.

In order to oversee implementation, the Security Council created a Committee composed of Council members, responsible for investigating alleged violations of the resolutions, for expanding the asset freeze and travel surveillance to additional entities, and for considering exemption requests. The Committee reported in December 2009 on two additional instances of illegal exports of conventional arms from Iran to Syria, in violation of resolution 1747. As of June 2010, out of 192 countries, the Committee had received reports on the implementation of resolution 1737 from only 92, reports on the implementation of resolution 1747 from 79, and reports on the implementation of resolution 1803 from 68. No new implementation reports were received since the Committee's September meeting.

Nuclear progress
After an intermittent freeze on uranium enrichment that lasted several years, Iran resumed enrichment work in January 2006. Since early 2007, Iran has stepped up efforts at its underground commercial-scale enrichment plant at Natanz, with the installation of piping, wiring and control panels, and the installation and linkage of IR-1 (P-1) centrifuges in cascades. Iran has nearly completed the installation of three “units” at Natanz, with roughly 3,000 centrifuges each. As of the IAEA’s May 2010 report, 24 cascades of 164 machines were operating there on May 24, or about 3,939 centrifuges. All these centrifuges have been fed with UF6; a further 4,592 machines have been installed. According to an IAEA inventory in November 2009, Iran produced 969 kg of low-enriched uranium hexafluoride at the plant since November 2008, the date of the last verification. In all, as of May 1, Iran had produced about 2,427 kg of this material.

Work at the Natanz pilot plant has shifted away from the first-generation IR-1 centrifuges towards the development of more advanced machines, including the IR-2, IR-3 and IR-4. All of these machines have been tested with UF6. The IR-2 is a sub-critical machine with a single carbon fiber rotor and no bellows, according to a report by the Institute for Science and International Security. According to the IAEA, Iran is also testing a modified version of the IR-2. This modified IR-2, or one of the other, more advanced centrifuge models, is likely made with higher strength metals, like maraging steel. It is not clear whether Iran is able to manufacture, assemble and install any of these advanced machines in large quantities, as Iran may rely on foreign suppliers for some of the machine’s key materials and parts. However, Iran is working to make centrifuge operations entirely indigenous; at its Kalaye Electric research and development laboratory, Iran is developing not only centrifuge components, but also measuring equipment and vacuum pumps.

Iran has also continued to produce uranium hexafluoride (UF6) – a gas that can be enriched to make fuel for reactors or bombs – at its Uranium Conversion Facility (UCF) in Isfahan. From March 2004 through August 2009, Iran produced a total of 371 tons of this material.

At the same time, other parts of Iran’s nuclear program have progressed. Despite calls by the U.N. Security Council, the IAEA and Europe to abandon the project, Iran has pushed forward with its heavy water production plant at Arak, and with its 40-megawatt heavy water reactor nearby. The heavy water plant was inaugurated in August 2006, and, using satellite imagery, the IAEA has assessed the plant to be operational. The IAEA board indefinitely blocked Iran’s request for technical assistance for this project at a meeting in November 2007, over concerns that the reactor could be used to produce plutonium for weapons. During a visit by to the reactor in August 2009, IAEA inspectors confirmed that no reactor vessel was present and asked Iran to provide additional design information related to the reactor’s fuel and to fuel handling and transfer equipment. Inspectors’ access to the heavy water production plant is blocked, as long as Iran fails to implement the Agency’s Additional Protocol allowing for enhanced inspections. On May 23, 2009, Agency inspectors were able to visit the Fuel Manufacturing Plant; it was then operational and had produced natural uranium pellets to fuel the heavy water reactor. During a follow-on visit, in January 2010, inspectors confirmed that no new fuel assemblies had been produced since last May.

After years of delay, the light water power reactor at Bushehr, which is being built by Russia for over $1 billion, is nearing completion. Preliminary testing began in late February 2009 and start-up was then projected before the end of 2009. However, Russian officials have once again delayed start-up, which is now expected in March 2010. Delivery of the reactor fuel needed for start-up, some 82 tons, was completed in January 2008. The billion dollar reactor is expected to supply 1,000 megawatts of energy to the national power grid. Each year, the reactor will also generate spent fuel containing some 250 kg of weapon-useable plutonium – enough to fuel several dozen nuclear weapons after further processing. The spent fuel will be returned to Russia, in accordance with a protocol signed in February 2005.

Grounds for suspicion
Doubts about the peaceful nature of Iran’s nuclear work have grown in response to Iran’s decision to limit its cooperation with the IAEA. In early February 2008, the IAEA presented member states, including Iran, with specific evidence that Iran had pursued work related to nuclear weapons. In its May 2008 report, the Agency listed eighteen documents supporting these allegations. Iran has called the documents “forged” or “fabricated,” but still refuses to help the Agency investigate their validity by providing access to individuals, records and sites. For instance, it has barred IAEA inspectors from interviewing Mohsen Fakhrizadeh, former head of the Physics Research Center who was reportedly described by the IAEA as the Iranian military official in charge of Iran's nuclear effort. Since May, the IAEA has made a number of proposals aimed at breaking this impasse -- none of which Iran has accepted.

The IAEA has also presented specific information showing that a company in Iran involved in uranium conversion was in touch with a team designing the inner cone of a missile re-entry vehicle that could, according to the Agency, “quite likely accommodate” a nuclear warhead. The IAEA wants Iran to explain documents and technical information that link Iran to the testing of high voltage detonator firing equipment, the development of exploding bridge wire detonators and an arrangement for underground, remote explosive testing. The Agency considers these activities to be “relevant to nuclear weapon R&D.”

The IAEA also wants clarification on Iran’s efforts to procure such potentially nuclear weapon-related items as spark gaps, shock wave software, neutron sources, corrosion resistant steel parts and radiation measurement equipment. These items might have been intended for use in interrelated studies on uranium conversion, high explosives testing and the design of a nuclear-capable missile re-entry vehicle.

The IAEA is still reviewing elements of Iran’s undeclared nuclear program, including the illicit import of centrifuge equipment in the late 1980s and 1990s. In November 2007, Iran finally turned over a one-page document containing a 1987 offer from the network run by Pakistani scientist A.Q. Khan. According to Iran, this is the only remaining evidence of the offer, which included supplying a disassembled P-1 centrifuge, centrifuge manufacturing specifications, blueprints for a “complete plant,” and materials to make 2,000 centrifuges. The offer also included auxiliary vacuum and electrical drive equipment, mechanical, electrical and electronic support equipment for the centrifuge plant, and a document on how to reduce UF6 to metal, and how to cast and machine enriched, natural and depleted uranium into “hemispherical forms.” Iran insists that it only received some components for two disassembled centrifuges along with supporting drawings and specifications.

After reviewing what the Agency described as “the limited documentation provided by Iran,” the IAEA concluded that its findings matched Iran’s statements about the 1987 acquisition of P-1 centrifuge technology. However, several questions about Iran’s early research and development work following this offer remain open, including the genesis of a 1993 offer of P-1 enrichment technology from the Khan network and the conditions under which Iran received a document on how to make hemispheres of uranium metal—an activity uniquely useful for bomb making.

As for the development of its more advanced centrifuge program, Iran is sticking to its unlikely story that after receiving a full set of drawings for Pakistan’s P-2 from the Khan network in 1996, during a meeting in Dubai, it conducted no work at all on the P-2 until 2002, and that it never received P-2 components. Iran has also insisted that it procured only a small number of magnets for the P-2. The IAEA was unable to substantiate evidence that Iran received 900 magnets from a foreign supplier during the period between 1996 and 2002 when Iran says it undertook no work on the P-2. As a result, the Agency has concluded its findings about Iran’s P-2 activities match Iran’s statements. Yet, Iran’s current pursuit of the IR-2 makes uncertainties about the program’s early development troubling.

Foreign assistance
Imports of nuclear-, chemical- and missile-related equipment have been indispensable to Iran’s weapon efforts. The latest report by the U.S. Director of National Intelligence on transfers of mass destruction and advanced conventional weapon technology, which covers 2008, repeats claims made many times in the past that Iran has continued to seek foreign assistance from entities in Russia, China, and North Korea. According to the report, China supplies “a variety of missile-related items” to Iran; and Russia provides assistance to Iran’s missile and “civilian nuclear program.”

The nuclear smuggling network run by Pakistani scientist A. Q. Khan is believed to have been the main supplier to Iran’s centrifuge enrichment program. Speculation as to exactly what equipment and material Iran received has been the subject of numerous media reports since Libya renounced its mass destruction weapons and the Khan network was revealed as Libya’s primary supplier. The IAEA has already confirmed that the enrichment programs in Iran and Libya relied on the same technology obtained from the same foreign sources. And Iran’s P-2 centrifuge design is the same as the one found by the Agency in Libya. The P-1 centrifuges Iran has installed at Natanz are of an early European design, similar to the machines that have been under the control of the Khan Research Laboratories (KRL) in Pakistan. If Iran indeed received the same package of nuclear goods as did Libya, then it is possible that Iran received the same Chinese-origin bomb design. Iran may also have received more sophisticated nuclear weapon designs from the Khan network. Such designs were found on computers seized from Swiss nationals Friedrich, Marco and Urs Tinner. The Tinners were a known part of the Khan smuggling network and the designs found on their computers would reportedly require only 15 kilograms of highly enriched uranium and would be small enough to fit atop Iran’s medium-range Shahab-3 missile.

China has also provided key assistance to Iran’s nuclear effort. Chinese entities have helped Iran prospect for uranium, have sold UF6 ready for enrichment and have provided Iran with blueprints, equipment test reports, and equipment design information for its uranium conversion plant at Isfahan.

Russia’s main contribution is the 1,000 MW light-water power reactor it has been building at Bushehr. As of December 2005, 700 Iranian experts had completed training at Russia's Novovoronezh training center, which is run by the Russian nuclear power agency Rosenergoatom. The training included a theory course, work on a nuclear power unit simulator, and work at Russian nuclear power plants similar to the Bushehr reactor. The Iranian experts will continue their training at the Bushehr reactor itself. In addition to the reactor, Russian entities are alleged to have supplied laser equipment for uranium enrichment, know-how for heavy water reactors, and help with heavy water and nuclear-grade graphite production.

Iran has also sought dual-use nuclear technology from some members of the Nuclear Suppliers Group (NSG), an organization of 45 nuclear supplier countries. According to the New York Times, seven NSG countries have denied Iran the purchase of nuclear-related materials at least 75 times, mostly since 2002. Iranian end users involved in these denied sales, according to the Times, include the government of Iran, the atomic energy organization, energy, engineering, aircraft and petrochemical companies, schools and universities, a plasma physics center, a helicopter support company and mineral research centers. Denied sales involved nickel powder, petrochemical plant components, compressors, furnaces, steel flanges and fittings, electron microscopes, radiometric ore-sorting machines, valves and tubing, lasers, a rotary drilling rig, a mass spectrometer and a nitrogen production plant.

China, Russia and North Korea have combined to supply Iran’s missiles. Iran’s 1,300 kilometer Shahab-3 missile is essentially an imported North Korean Nodong missile enhanced by Russian technology. It was distributed to Iran’s Revolutionary Guards in June 2003 and has since been tested several times. And it is widely assumed that if Iran fields a Shahab-4 missile, it will be a copy of Russia’s SS-4 missile. Both the Nodong and the SS-4 can carry a nuclear warhead. In January 2007, Russian defense minister Sergei Ivanov confirmed that Russia had delivered Tor-M1 air defense missile systems to Iran. Iran has already tested the missiles and will use them to defend key nuclear sites. North Korea, in addition to selling the Nodong missile, has furnished Iran a fleet of SCUD-B and SCUD-C short-range missiles, plus the factories to make them. Both the SCUD-B and SCUD-C have a diameter sufficient to accommodate a compact nuclear warhead.

From China, Iran has imported the 150 kilometer CSS-8 ballistic missile and a series of land-, sea-, and air-launched short-range cruise missiles. Many of these latter are anti-ship weapons.

In addition, Grigory Omelchenko, a member of Ukraine’s parliament, revealed in early February 2005 that a former officer in Ukraine’s secret police sold six unarmed Soviet-era cruise missiles to Iran between 1999 and 2001. The nuclear-capable missile, known as the KH-55 or the AS-15, has a range of up to 3,000 km and travels near the ground in order to avoid air defenses.

http://www.iranwatch.org/update/

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