Iran: Shopping for Missile Technology

Although Iran has launched an aggressive effort to build long-range missiles, its success will depend almost entirely upon imports. According to a 1996 Pentagon study that ranks countries’ military capabilities, Iran is unable to produce essential items such as radar, sensors, computers and specialized electronics on its own. Iran also lacks the ability to make solid fuel rocket propellant, guidance components, and design and testing equipment.

To make up for this lack of wherewithal at home, Iran has also launched an aggressive shopping campaign. “Iran doesn’t like being dependent on outsiders for weapon supplies,” says a U.S. official. To improve the navigation and guidance of its Scud missiles, which have poor accuracy, Iran is looking to buy inertial navigational systems and their components, which include gyroscopes, accelerometers, and radar systems. Iran now gets much of this equipment from China. In late 1996, Tehran and Beijing were negotiating a $4.5 billion arms deal, which reportedly included the supply of Chinese multiple rocket launchers, missiles and missile launchers.

U.S. officials tell the Risk Report that Iranians are also shopping for missile components in the former Soviet Union. “We have no sense at the moment that a significant contribution is being made to Iran,” says one official, “but Iranians are in Russia looking for missile technology, that much is true.”

When unable to buy things legally, Tehran has been willing to smuggle sensitive products out of the United States and Europe. In 1988, Iran tried to import 286,000 pounds of ammonium perchlorate, an oxidizer used in solid-rocket fuel, from the United States. The American seller first shipped the cargo to Western Europe, where it was seized by Dutch police on its way to Iran.

In 1991, two businessmen who owned and managed a California company called Ray Amiri Computer Consultants were arrested for exporting to Iran restricted American equipment without a license. One of the men, a U.S. citizen of Iranian descent, was sentenced to a year in prison. The other, an Iranian citizen and permanent resident of the United States, fled to Iran while on bail. Their exports included oscilloscopes, logic analyzers and pulse generators, which were exported to the Iranian Ministry of Defense, the Iran Telecommunications Research Center and the Iran Telecommunications Manufacturing Company. The equipment was useful for developing missile guidance systems and monitoring nuclear weapons tests.

In 1993, U.S. federal agents arrested an Iranian citizen, Reza Zandian, and an American, Charles Reeger, for attempting to illegally export one of IBM’s most powerful computers, the ES-9000, to Iran. The pair apparently operated through two small companies in southern California: Lucach Corporation/Computerworld and Iran Business Machines. Commerce Department officials were quoted by the press as saying that the ES-9000 would have been used for Iranian weapon development.

Because of the U.S. embargo against Iran, it is now illegal for U.S. persons to export most goods to Iran or to conduct business with Iranian companies. U.S. exports to Iran have fallen drastically during the past eighteen months. Nonetheless, Iranians continue to shop for American products. “Like most proliferators, Iran is opportunistic,” a U.S. official says. “It will get as much stuff as possible and then see where the pieces fit best.”

U.S. and European customs officials warn that the United Arab Emirates, and Dubai in particular, has become a favorite diversion point for hot cargoes to Iran. The German Ministry of Economics has warned German companies that Iran is increasingly using Dubai to obtain high technology, particularly electronic equipment. They say Iranians operating in Dubai have created a number of front companies which exist only as mailing addresses. [See related article: “Dubai is a Growing Diversion Risk, German Officials Say,” Volume 2, Number 4 (July-August 1996).] When selling sensitive goods to the United Arab Emirates, exporters must pay close attention to the nationalities of the buyers. They may have an UAE address, but most of them are not UAE companies. And most shipments to Dubai, and to the Emirate’s Jebel Ali Free Zone, are re-exported. If an American company knows its product will end up in Iran, the export is illegal.