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Crackdown on Iranian Network Underscores Pattern in Illicit Procurement

A federal indictment unsealed last month provides the latest illustration of the methods used by Iranian procurement agents to illicitly procure U.S.-origin goods for export to Iran. This case details how Iranian citizen Arash Sepehri conspired with individuals and companies operating in Hong Kong, the United Arab Emirates, and Iran to send hundreds of thousands of dollars worth of U.S. technology, most with military applications, to Iran between 2010 and 2011. While the U.S. case concerns military-related procurement and embargo violations, the network has also supported Iran’s nuclear program: Three of the companies involved in the conspiracy have conducted illicit nuclear procurement, according to the European Union.

Sepehri and his conspirators relied on well-known techniques to evade export controls and sanctions including the use of aliases, front companies, and circuitous shipping and payment methods. These techniques allowed Sepehri to conceal both the true end-users and intended use of the procured goods.

Sepehri pleaded guilty to the charges outlined in the indictment and will be sentenced in mid-January 2019. This move follows federal action six years ago against one of Sepehri’s co-conspirators, Omidreza Khademi, and suggests that the United States is continuing to target a network that may still be operating in Iran and the UAE.

The Network

THE STARTING POINT: IRAN 
The conspiracy was facilitated by Arash Sepehri, a thirty-eight year old Iranian citizen. Sepehri is an employee and on the board of directors of Tehran-based Tajhiz Sanat Shayan (TSS). Between 2008 and 2014, while living in Iran, Sepehri was directed by an Iranian individual, identified in the indictment only as Conspirator B, to illicitly procure U.S.-origin goods, some with military applications, for his Iranian customers. Conspirator B is the principal owner of TSS, as well as of another Iranian trading company, identified only as Company B.  Based on an analysis of court documents and government sanctions, Company B may be Aran Modern Devices.

TSS and Company B were designated by the European Union on May 23, 2011 for their involvement in procurement for Iran’s nuclear program. Neither company appears to have been removed from the EU sanctions list as part of the 2016 nuclear agreement with Iran, and both may subject to EU sanctions. These sanctions include a freeze of all funds and economic resources owned, held or controlled by both entities, and a prohibition on funds or economic resources being made available to them. In addition, TSS remains subject to sanctions imposed by the governments of Australia, Canada, and Japan.

Sepehri, who was named Chairman of the Board of TSS in June 2016, used the company to purchase dual-use U.S.-origin goods and technology for Iranian customers. He arranged for the items to be transshipped through Hong Kong and used false names, including “William Anderson,” in his communications with foreign companies. Correspondence by Sepehri suggests that he procured electronic parts and industrial computers from Europe, China, Taiwan, and sometimes the United States.

THE PAYMENT HUB: THE UNITED ARAB EMIRATES 
Key to the conspiracy’s success was Iranian national and UAE-resident Omidreza Khademi. Khademi was arrested by the United States in 2012 and pleaded guilty to charges related to his part in this scheme in May 2013. Khademi used his UAE-based company, Omid General Trading LLC, to transfer payments to U.S. companies for goods procured by Sepehri on behalf of Iranian end users. Omid General Trading LLC, which was established in 2003, allegedly supplies equipment to firms in the power plant, petroleum, gas, and petrochemical industries. It also reportedly conducts business dealings not only with businesses in Iran, but also with companies in Canada, Europe, Kazakhstan, and the United States.

A final, as yet unidentified, part of the network is also located in the UAE: Conspirator C, an Iranian citizen living in the UAE who owns and operates Company C. Based on an analysis of court documents and government sanctions, Company C may be Modern Technologies FZC, which also is still subject to EU sanctions for its role in procuring components for Iran’s nuclear program.

THE TRANSSHIPMENT HUB: HONG KONG 
At the conspiracy’s outset, Khademi provided Sepehri with the address of an unnamed Hong Kong company that Sepehri used to facilitate the transshipment of illicitly procured U.S.-origin goods. Additionally, Khademi and Sepehri used this company to negotiate prices with U.S. suppliers and to solve logistical problems related to the goods’ shipment.

The Sceme: A Common Pattern

The indictment describes five successful shipments of U.S.-origin goods facilitated by Sepehri; all roughly follow the same pattern. Conspirator B in Iran would request specific items from Sepehri who would in turn place orders with relevant U.S. companies, while hiding the end user and ultimate destination of the goods. Sepehri would have the goods shipped from the United States to Hong Kong. Payments to the U.S. companies would be made from the UAE, after which Khademi would instruct the Hong Kong company to ship the goods to Iran.

Shipments included:

  • SR0847-A01 Lens (2011): Procured from a New Hampshire-based manufacturer for an Iranian customer. This particular lens can be used for a missile tracking device and is a designated item on the U.S. Munitions List (Category XII(e)), which requires a license to be exported. There is a presumption of denial for any license applications of Munitions Lists items for Iran.
  • Side Scan Sonar System (2011): Procured from a Massachusetts-based company and shipped to Sepehri in Tehran at an address for Company B. These small, portable systems have military applications and can capture high-resolution images from small watercraft. They are controlled by the United States for shipment to Iran for anti-terrorism reasons (ECCN 6A991).
  • Underwater Acoustic Transducer (2011): Procured from an Ohio-based company and shipped to TSS in Iran with Company B identified as the consignee. According to court documents, the transducer “was designed for general purpose military and scientific applications in an underwater environment,” including the detection and classification of underwater improvised explosive devices (IEDs). The Ohio company questioned Sepehri about the intended use of the transducer because it is a “military type unit with no commercial sales.” Sepehri successfully assuaged the company by falsely stating that the system was for a civilian fishing project.
  • PCI Analog Input Board (2010): Procured from an Alabama-based company and intended for use at the University of Tehran’s computer lab. According to U.S. court documents, typical applications for this item include “high density analog inputs, industrial robotics, acoustic sensor arrays, biometric signal analysis and dynamic test systems.”
  • Rugged Laptop Computers (2010): Procured from a California-based company and shipped to TSS in Iran for an unidentified end user. According to U.S. court documents, these laptops have “extensive military applications,” and are able to withstand extreme conditions.

Case Status

Both Sepehri and Khademi were arrested and charged by U.S. authorities for their roles in the conspiracy. The dates and circumstances of their arrests have not been made public.

On May 28, 2013, Khademi pleaded guilty to his role in the conspiracy to export U.S.-origin goods to Iran in violation of the International Emergency Economic Powers Act and the Iranian Transaction Regulations. About four months later, on September 13, 2013, Khademi was sentenced in the District of Columbia to 29 months in a federal prison, $100 special assessment, and ordered to forfeit $4,400.

On November 8, 2018, the U.S. Department of Justice announced that Sepehri had pleaded guilty to conspiracy to unlawfully export controlled goods and technologies to Iran in violation of military controls and sanctions on Iran. Sepehri could face up to five years in prison and financial penalties in addition to the forfeiture judgement of $125,661 included in his plea agreement.  He is due to be sentenced on January 16, 2019.

It is unclear whether U.S. authorities will prosecute the remaining unidentified co-conspirators and companies involved in this procurement network. However, three companies in this network may still be listed by the EU for their role in illicitly supplying the Iranian nuclear program. Conspirator B, operating from Iran, directed the conspiracy, and Company C and Conspirator C could still be operating in the UAE.


References:

Council Implementing Regulation (EU) No 503/2011 of 23 May 2011 implementing Regulation (EU) No 961/2010 on restrictive measures against Iran, Official Journal of the European Union, L 136/31, May 24, 2011, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:136:0026:0044:EN:PDF, accessed on December 1, 2018.

Indictment, United States of America v. Arash Sepehri and Tajhiz Sanat Shayan, Case No. 1:16-cr-00081-RMC, U.S. District Court, District of Columbia, May 11, 2016, p. 2, available at https://www.iranwatch.org/library/governments/united-states/executive-branch/department-justice/indictment-united-states-america-v-arash-sepehri-tajhiz-sanat-shyan, December 1, 2018.

“Iranian National Pleads Guilty to Conspiring to Illegally Export Products From the United States to Iran,” U.S. Department of Justice, Press Release, November 8, 2018, https://www.justice.gov/opa/pr/iranian-national-pleads-guilty-conspiring-illegally-export-products-united-states-iran, accessed on December 1, 2018.

Statement of Major U.S. Export Enforcement, Economic Espionage, Trade Secret, and Embargo-Related Criminal Cases (January 2009-Present), U.S. Department of Justice, February 23, 2015, https://www.justice.gov/file/347376/download, accessed on December 1, 2018.

Statement of the Offense, United States of America v. Arash Sepehri, Case No. 1:16-cr-00081-RMC, U.S. District Court, District of Columbia, November 7, 2018, available at https://www.iranwatch.org/library/governments/united-states/executive-branch/department-justice/statement-offense-united-states-america-v-arash-sepehri, December 1, 2018.

Statement of the Offense, United States of America v. Omidreza Khademi, Case No. 1:12-cr-00278-RMC, U.S. District Court, District of Columbia, May 28, 2013, available at https://www.iranwatch.org/library/governments/united-states/executive-branch/department-justice/statement-offense-united-states-america-v-omidreza-khademi-omid-general-trading, December 1, 2018.

India Nuclear Milestones: 1945-2018

India's Dhruva heavy water research reactor
India’s Dhruva heavy water research reactor, which supplies spent fuel for plutonium production (courtesy: the Hindu)

1945: The Tata Institute of Fundamental Research Mumbai is inaugurated.

1948: The Atomic Energy Commission (AEC) is established under the direction of Dr. Homi J. Bhabha.

1950: Indian Rare Earths Limited (IREL) is established as a joint venture between the Government of India and Government of Travancore, Cochine. It is brought under the control of the Department of Atomic Energy in 1963.

1951: The first uranium deposit in India is discovered at Jaduguda.

1954: The Department of Atomic Energy (DAE) is created.

1956: India’s one MWt Apsara research reactor attains criticality.

1957: India establishes the Atomic Energy Establishment, Trombay, which will be renamed the Bhabha Atomic Research Center (BARC) in 1967.

1959: The Uranium Metal Plant at Trombay begins production.

1960: The heavy water forty MWt CIRUS reactor, supplied by Canada and run with U.S.-supplied heavy water, attains criticality and begins making weapons-grade plutonium.

1961: India’s 0.1 kW Zerlina research reactor attains criticality only to be decommissioned in 1983.

1962: Heavy water production begins at German-built Nangal plant.

1963: The United States and India sign an accord stipulating that the United States will supply enriched fuel to India’s Tarapur nuclear power plant.

1964: Extraction of plutonium from CIRUS spent fuel begins at Trombay.

1967: Uranium mining operations begin at Jaduguda. A uranium mill is also established there.

1968: India refuses to join the Nuclear Nonproliferation Treaty.

1968: Nuclear Fuel Complex is established at Hyderabad under the DAE.

1969: Two 160 MWe boiling water reactors begin operations at Tarapur Atomic Power Station (TAPS).

1969: Heavy Water Projects is established under the DAE. It is later renamed the Heavy Water Board.

1971: India establishes the Reactor Research Centre under the DAE. It is later renamed Indira Gandhi Centre for Atomic Research (IGCAR).

1973: The Canadian-built 100 MWe heavy water reactor Rajasthan-1 begins operations at Rajasthan Atomic Power Station (RAPS), serving as the model for later unsafeguarded reactors. Five additional heavy water reactors will be built and begin operations at RAPS: one in 1981, two in 2000, and two in 2010

May 1974: India conducts an underground nuclear explosion at Pokhran, Rajasthan. India describes the test, codenamed “Smiling Buddha,” as a “peaceful nuclear explosion.” Estimates of the yield range from 8 to 12 kilotons.

1975: Surda Uranium Recovery Plant is established.

July 1978: The Tuticorin Heavy Water Plant is commissioned.

1982: France agrees to take over supply of approximately 50,000 SWU per year of low-enriched uranium (LEU) to India’s General Electric-built Tarapur reactors, following the cessation of U.S. fuel supplies.

November 1982: BARC’s Power Reactor Fuel Reprocessing Plant at Tarapur is commissioned.

1982-87: India smuggles, via a German broker, heavy water from the USSR, China, and Norway, and uses the heavy water in reactors to make plutonium for a nuclear arsenal.

February 1983: Rakha Uranium Recovery Plant is commissioned.

May 1983: In response to a story in the Hindustan Times alleging that India has received a nuclear consignment from the Soviet Union, an Indian foreign ministry spokesperson admits that the Soviet Union has supplied 131 tons of heavy water to the Rajasthan Atomic Power Station (RAPS) out of the total of 256 tons promised under a September 1976 agreement.

1983-1984: The Norwegian firm Norsk Data reportedly sells six computers of the ND 100 and ND 500 type to BARC, according to the Foreign Ministry of Norway.

1984: West German firm Degussa re-exports to India 95 kg of U.S.-origin beryllium, usable as a neutron reflector in fission bombs, and is later fined $800,000 by the United States.

January 1984: The first 220 MWe heavy water reactor at Madras Atomic Power Station (MAPS) begins operations. A second unit is built and begins operations at MAPS in March 1986.

March 1984: Plutonium-Uranium mixed carbide fuel is fabricated at Trombay for the Fast Breeder Test Reactor (FBTR).

April 1985: The Kota Heavy Water Plant is commissioned.

August 1985: The heavy water 100 MWt Dhruva reactor attains criticality and starts producing weapons-grade plutonium.

October 1985: India’s forty MWt Fast Breeder Test Reactor (FBTR) attains criticality.

March 1986: Romania reportedly illegally re-exports 12.5 metric tons (MT)* of Norsk Hydro AS-produced heavy water to India, according to investigations conducted by Norwegian police in Bucharest.

April 1986: The Swedish periodical Dagens Nyheter reports that India was among several countries that purchased flash x-ray aggregates from Sweden between 1977 and 1984. This equipment has applications in high-speed photography of nuclear explosions.

July 1986: Nuclear Power Board chairman, Malur Srinivasan, reports that India is currently reprocessing spent fuel at Tarapur from MAPS. In addition to providing India with a source of unsafeguarded plutonium, Srinivasan adds that the output will be used to fuel the FBTR at Kalpakkam.

October 1986: Bhatin Uranium Mine is commissioned and the ore is sent to Jaduguda mill for processing.

January 1987: India’s AEC chairman, Dr. Raja Ramanna, says that India can enrich uranium to any desired level and that BARC has already been enriching uranium on a pilot scale. BARC Director, Dr. P. K. Iyengar notes that India is also developing laser enrichment technologies.

February 1987: The Thal Heavy Water Plant is commissioned.

September 1987: the Nuclear Power Corporation of India Limited (NPCIL) is established.

1988: Pakistan and India agree to exchange lists of nuclear installations as part of an agreement not to attack each others’ nuclear facilities. The first exchange occurs in January 1992.

1988: Russia agrees to build two 1,000 MW (VVER-1000) reactors at Kudankulam, India. Construction reportedly begins in March 2002.

February 1988: The INS Chakra nuclear submarine, which is leased for three years from Russia, arrives at Visakhapatnam in India.

March 1989: Director of U.S. Central Intelligence, William H. Webster, says that there are “indicators” that India is building a thermonuclear weapon. Among the signs are activities at India’s BARC involving purification and the separation of lithium-6 isotopes, used to produce tritium.

October 1990: According to India’s AEC Chairman, the design throughput of India’s reprocessing facility under construction at Kalpakkam has nearly doubled to 200 MTper year. The 100 (MT) per year Prefre reprocessing plant at Tarapur has undergone a fifty MTincrease in reprocessing capability.

December 1990: U.S. President George Bush eases export restrictions on supercomputer exports to Brazil, India and China.

1991: The Indian Navy reportedly begins work on a nuclear-powered submarine project, shortly after returning a Charlie I-type SSGN leased from the Soviet Union.

January 1991: The 220 MWe heavy water reactor at Narora Atomic Power Station (NAPS) begins commercial operations. An additional heavy water reactor with the same capacity will be built and commence operations at NAPS in July 1992.

January 1991: The Hazira Heavy Water Plant is commissioned.

November 1991: India withdraws an offer to sell a ten MW nuclear research reactor to Iran, following pressure from the United States.

March 1992: AEC Chairman P.K. Iyengar reportedly claims that a second gas centrifuge uranium enrichment facility is operational near a site for rare earths material production. Official sources suggest that the facility has several hundred operating centrifuges made of domestically-produced maraging steel.

December 1992: India’s AEC confirms the existence of approximately 10,000 tons of uranium ore in the West Khasi Hills of Meghalaya, possibly the largest reserve in India after Jaduguda.

May 1993: The 220 MWe reactor at Kakrapar Atomic Power Station (KAPS) begins commercial operations. An additional heavy water reactor with the same capacity will be built and commence operations at KAPS in September 1995.

June 1994: India has reportedly won its first commercial heavy water export deal, with the DAE supplying 100 tons of heavy water, under IAEA safeguards, for the Wolsung CANDU plants in South Korea.

January 1995: India receives its first consignment of LEU for the Tarapur nuclear plant from China. Indian officials say that the uranium will be converted into fuel assemblies along with a MOX fuel developed by DAE. France stopped supplying Tarapur in 1994, stipulating that India must first submit to IAEA full-scope safeguards before shipments resume.

January 1995: India inaugurates the Narwapahar uranium mine in Jharkhand.

1996: India cancels plans to test a nuclear weapon.

March 1996: India cold commissions the Kalpakkam Reprocessing Plant.

October 1996: The Chairman of the DAE announces that India and South Korea have signed a contract for the export to South Korea of 100 MTof heavy water to be conducted in 1998.

October 1996: India’s thirty kW, U-233 fueled Kamini research reactor attains criticality. The reactor is reportedly located beneath a hot cell of the radio metallurgy laboratory where neutron radiography of irradiated fuel of the FBTR at Kalpakkam will be conducted.

1997: Prime Minister I. K. Gujral says India will not sign the Fissile Material Cut-off Treaty (FMCT) or any other “discriminatory” nuclear agreement that would hamper India’s nuclear program.

December 1997: the Jaduguda Mill is expanded to treat 2090 tons of uranium ore per day.

January 1998: Scientists at BARC claim they have developed a low cost method of extracting tritium from heavy water used in nuclear power reactors.

May 1998: India conducts two rounds of nuclear weapon tests. After the first, Prime Minister Atal Behari Vajpayee announces that “a fission device, a low-yield device and a thermonuclear device” had been successfully tested in the Pokhran desert. Two days later the government explodes two more sub-kiloton nuclear tests at the same testing range. The five underground tests range in yield from less than one kiloton to an estimated 45 kilotons.

May 1998: President Clinton imposes economic sanctions on India after it refuses American demands to disavow future testing or deployment of nuclear weapons.

May 1998: Russia refuses to join other countries in punishing India for its nuclear tests.

May 1998: In response to India’s nuclear tests, the World Bank postpones the approval of $865 million in loans to India.

June 1998: “Well-placed Indian official sources,” reportedly claim that since the mid 1970s India’s DAE and BARC prepared about 25 spherical plutonium metal bomb cores from the spent fuel of two reactors.

November 1998: Analysts at Lawrence Livermore Laboratory have reportedly concluded that one of India’s May nuclear explosions, described by India as a successful thermonuclear test, failed to ignite its secondary stage as planned. As a result, one unnamed U.S. official states that India’s DAE “is under intense pressure to test again.”

November 1998: India introduces a resolution at the United Nations on nuclear de-alerting to reduce the potential for an accidental launch.

November 1998: The U.S. Department of Commerce’s Bureau of Export Administration sanctions Indian governmental, parastatal, and private entities thought to be involved in nuclear or missile activities.

December 1998: Indian Prime Minister Atal Behari Vajpayee tells parliament that India’s nuclear doctrine will be centered on two elements: a small but credible deterrent, and a no-first-use policy.

February 1999: The United States ends its opposition to extending World Bank loans to India, allowing the approval of a $210 million energy project.

April 1999: Dr. A.J.P. Abdul Kalam, head of India’s Defence Research & Development Organisation (DRDO) says that “the Agni II [intermediate-range ballistic missile] is designed to carry a nuclear warhead if required,” and claims that an Agni-class payload was tested during the underground nuclear tests in May 1998.

June 1999: Officials at DAE admit they are planning to build a new research-size reactor inside the BARC campus to increase its annual production of weapon-grade plutonium. Officials say the new reactor will be based on the existing CIRUS and Dhruva reactors and predict that it will be operational by 2010.

August 1999: The chairman of the AEC claims that India can manufacture nuclear weapons of “any type of size” based on information obtained during last year’s nuclear tests.

December 1999: The Assistant Secretary for Export Administration at the U.S. Department of Commerce announces the removal of 51 organizations from the list of 200 Indian entities sanctioned in November 1998.

March 2000: The 220 MWe unit 2 heavy water reactor at Kaiga Generating Station (KGS) begins commercial operations. Unit 1 begins operations in November 2000. Two additional heavy water reactors with the same capacity are later built and begin operations at KGS, the first in May 2007 and the second in January 2011.

June 2000: One of India’s leading nuclear scientists, retired DAE head P. K. Iyengar, tells an Indian newspaper that India’s May 1998 thermonuclear bomb test wasted most of its fuel by burning “only partially, perhaps less than 10 percent” and that India needs to redesign and test the weapon again.

August 2000: Russia agrees to supply India’s Tarapur nuclear power plant with 58 MT of LEU.

March 2001: The Canadian government announces that it is lifting economic sanctions that were imposed on India in the wake of its May 1998 nuclear tests.

May 2001: Russian fuel fabricator MSZ Elektrostal has reportedly completed work on fuel assemblies and has shipped nuclear fuel to India’s Tarapur facility, despite objections by the United States and European members of the Nuclear Suppliers Group (NSG).

September 2001: U.S. President George W. Bush waives U.S. economic sanctions against India and Pakistan originally imposed as a penalty for their nuclear weapon tests conducted in 1998. The New York Times suggests that the United States undertook this measure to reward those nations assisting in the “war on terrorism.”

October 2001: Japan lifts the economic sanctions that it imposed on India and Pakistan in the wake of their May 1998 nuclear weapon tests. A Japanese government spokesperson explains that sanctions are being lifted because Japan “values India and Pakistan’s efforts to contribute to strengthening the international coalition against terrorism.”

November 2001: India’s BARC has developed a nuclear power plant for its ATV cruise missile submarine. Russian engineers and Indian scientists have begun installation and testing of the plant at IGCAR.

December 2001: Defense and Foreign Affairs Strategic Policy announces that in the past twelve months Russia’s Rosoboronexport transferred a Russian Shchuka-B class nuclear power submarine to India’s navy, under a three-year lease.

December 2001: India and the United States resume military-to-military cooperation and revive the Defense Policy Group (DPG), which was suspended after India’s May 1998 nuclear tests.

November 2002: India and the United States establish the U.S.-India High Technology Cooperation Group to facilitate and promote bilateral high-technology trade, including trade in dual-use goods and technologies.

November 2002: The Turamdih uranium mine is inaugurated at Jharkhand.

December 2002: The Chairman of the AEC in India, Dr. Anil Kakodkar, unveils a Rs100-crore program that focuses on the use of thorium as an alternative to uranium in nuclear energy generation.

January 2003: India establishes its Strategic Forces Command (SFC) and approves appointment of a Commander-in-Chief to manage its nuclear and strategic forces.

January 2003: India outlines its eight-point nuclear doctrine. The doctrine includes: 1) a no-first-use posture; 2) authorization of retaliatory attacks only through civilian political leadership under the Nuclear Command Authority; 3) building and maintaining of a credible minimum deterrent; 4) non-use of nuclear weapons against non-nuclear weapon states; 5) the option to use nuclear weapons in retaliation to chemical and biological attacks; 6) continuance of strict export controls; 7) participation in negotiations of the FMCT; and 8) continued observance of its moratorium on nuclear testing.

March 2003: The creation of the Demonstration Fuel Reprocessing Plant (DFRP) at IGCAR is approved. The DFRP will reprocess fuel from India’s fast breeder reactors. It enters its commissioning phase in January 2017.

April 2003: U.S. officials reportedly confirm that in late 2002, India’s DAE, BARC, and DRDO requested permission from Prime Minister Atal Bihari Vajpayee to test three nuclear devices.

May 2003: The Compact Reprocessing Facility for Advanced Fuels in Lead cells (CORAL) is commissioned at IGCAR. It will reprocess spent fuel for fast breeder reactors.

September 2004: As part of the India-United States Next Steps in Strategic Partnership (NSSP) initiative, which began in January 2004, the U.S. Commerce Department announces removal of Indian Space Research Organisation (ISRO) headquarters from the U.S. Entity List and the introduction of a “presumption of approval” for all dual-use items not controlled by the NSG, if going to the “balance of plant” portion of an Indian nuclear facility subject to international inspection.

October 2004: Prime Minister Manmohan Singh launches the commercial phase of India’s fast breeder reactor program with the initiation of construction on the 500 MW Prototype Fast Breeder Reactor (PFBR). The facility remains under construction as of July 2018.

December 2004: Alexander Yuryevich Rumyantsev, director of the Russian Federal Atomic Energy Agency, states that Russia, because of its adherence to the NSG, will not continue to supply fuel for the Tarapur nuclear power plant, in spite of its provision of 50 MT of enriched uranium to the same plant in 2001. Rumyantsev comments that fuel provided in 2001 was for safety reasons, since “India at that time had no fuel.”

January 2005: Russia completes delivery of a 320 MT nuclear reactor, manufactured by the OAO Izhora Factories in St. Petersburg, Russia, for the first unit of the Kudankulam Nuclear Power Station (KKNPS) in Tamil Nadu.

March 2005: The United States agrees to sell F-16 aircraft, which can be used as delivery vehicles for nuclear weapons, to India and Pakistan.

April 2005: India participates for the first time at the Convention on Nuclear Safety (CNS) review meeting and ratifies the CNS.

May 2005: India passes the Weapons of Mass Destruction and Their Delivery Systems Bill, in response to U.N. Security Council Resolution 1540.

June 2005: India’s Defense Minister Pranab Mukherjee and U.S. Defense Secretary Donald Rumsfeld sign a defense agreement entitled “New Framework for the U.S.-India Defense Relationship.” Areas of cooperation will include combating the spread of weapons of mass destruction, collaboration on missile defense, as well as defense strategy and intelligence exchanges.

August 2005: India and Pakistan agree to set up a telephone hotline by September 2005 to reduce the risk of a nuclear accident. The head of the Indian delegation, Meera Shankar, also offers Pakistan a draft agreement “for undertaking measures to reduce the risks of accidental or unauthorized use of nuclear weapons under their respective control.” In a separate agreement the two parties agree to notify each other prior to tests of ballistic missiles, many of which are nuclear capable.

August 2005: Britain’s Foreign and Commonwealth Office issues amended measures to its policy restrictions on India. The measures state that the United Kingdom will consider on a “case-by-case” basis license applications for items on the NSG Dual-Use List, departing from its March 2002 policy to deny all such exports.

August 2005: As part of the reciprocal steps to complete the U.S. and Indian NSSP, the U.S. Department of Commerce removes six Indian entities from the Entity List. Removed DAE facilities include Tarapur (TAPS 1 and 2), Rajasthan (RAPS 1 and 2), and Kudankulam (1 and 2), two of which are under IAEA safeguards and one of which is to be placed under safeguards after completion. The other three entities are ISRO subordinates and include ISRO Telemetry, Tracking and Command Network, ISRO Inertial Systems Unit, Thiruvananthapuram, and Space Applications Center, Ahmadabad. The order also eliminates export and re-export license requirements on items controlled unilaterally by the United States for nuclear nonproliferation reasons.

September 2005: A 540 MWe heavy water reactor begins operations at TAPS. A second 540 MWe heavy water reactor built at the plant and beings operations in August 2006.

September 2005: India and France issue a joint statement under which France acknowledges “the need for full international civilian nuclear cooperation with India,” pledging to “work towards this objective by working with other countries and the NSG and by deepening bilateral cooperation.”

September 2005: Canada’s Foreign Affairs Minister Pierre Pettigrew meets with Indian External Affairs Minister K. Natwar Singh and the two agree on measures including Canada’s permission for the supply of nuclear-related dual-use items to Indian civilian nuclear facilities under International Atomic Energy Agency safeguards, in accordance with NSG guidelines, and the development of peaceful uses of nuclear energy through bilateral and international forums.

February 2006: DAE Secretary Anil Kokodkar recommends that, in addition to the Dhruva and CIRUS units, a portion of India’s nuclear reactors, including the breeders and the naval reactor, not be put under IAEA safeguards in order to meet the country’s “strategic need.”

September 2006: The International Panel on Fissile Materials estimates that India has a net stockpile of approximately 0.52 MT of weapons grade plutonium, enough for 85-130 nuclear warheads, and 0.2 MT of highly enriched uranium. Assuming this uranium is enriched to weapons grade (90% or higher), this is enough for 10-20 nuclear warheads.**

December 2006: U.S. President George W. Bush signs the United States-India Peaceful Atomic Energy Cooperation Act, a key step in enabling the United States to share civilian nuclear technology with India.

February 2007: India and Pakistan sign an agreement on “Reducing the Risk from Accidents Relating to Nuclear Weapons” that requires both countries to immediately notify each other of any nuclear weapon-related accident that could create cross-border radioactive fallout risk or an outbreak of nuclear war. The agreement is renewed for five years in 2012 and 2017.

2008: The Bagjata uranium mine is commissioned.

April 2008: India’s facility for Advanced Heavy Water Reactor (AHWR) research and development becomes critical. The facility, overseen by BARC, is used to develop thorium-fueled AHWR technology.

August 2008: The IAEA Board of Governors approves the Agreement for the Application of Safeguards to Civilian Nuclear Facilities between India and the IAEA.

September 2008: The NSG adopts a policy to transfer trigger list and nuclear-related dual-use items and related technology to IAEA safeguarded Indian civilian nuclear facilities.

October 2008: U.S. President George W. Bush signs into law the United States-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act. This brings the U.S.-India 123 Agreement into force, which grants India advance consent to reprocessing in a designated safeguarded facility and provides fuel assurances.

October 2008: The New Hot Cells Facility for the examination of irradiated nuclear fuels is inaugurated at BARC.

October 2008: BARC director Dr. S. Banerjee indicates that fourth generation “advanced gas centrifuges” are being developed at BARC and will soon be installed at the Rare Materials Plant (RMP), which houses India’s military gas centrifuge enrichment facility. He adds that third generation centrifuges are currently being inducted at RMP.

October 2008: The International Panel on Fissile Materials estimates that India has a net stockpile of 0.68 MT of weapons grade plutonium, enough for 115-170 nuclear warheads, and 0.6 MT of highly enriched uranium. According to the Panel, a portion of the highly enriched uranium stockpile is used for naval fuel as it is enriched below weapons grade (90%).

November 2008: The United Kingdom revises its Indian nuclear-related export policy and will evaluate license applications for items on the NSG trigger and dual-use lists destined for IAEA-safeguarded civil nuclear facilities in India on a case-by-case basis.

November 2008: The Bulletin of the Atomic Scientists estimates that India has produced approximately 70 nuclear warheads, of which 50 are fully operational.

December 2008: India and Russia agree to cooperate in the construction of four nuclear power units at Kudankulam. A Russian diplomatic source reportedly claims the four new reactors may be VVER-1200s, capable of generating 1,170 MW each. The official also claims that Russia has agreed to supply India with six additional reactors.

December 2008: France’s AREVA signs an agreement with India’s DAE to supply 300 tons of uranium to NPCIL. The contract is concluded in 2009.

January 2009: India and Kazakhstan sign a Memorandum of Understanding (MoU) under which Kazakhstan will reportedly receive Indian-made nuclear reactors and supply India with 2000 tons of uranium. The contract is concluded in 2014.

January 2009: India inaugurates its first opencast uranium mine at Banduhurang.

February 2009: India’s NPCIL signs an MoU with France’s AREVA to set up two to six EPR reactors (advanced pressurized water reactors) at Jaitapur.

February 2009: Russia’s TVEL and India’s DAE sign a long-term contract for TVEL to supply India with 2000 MT of uranium pellets. The contract is concluded in December 2016.

May 2009: The Agreement for the Application of Safeguards to Civilian Nuclear Facilities between India and the IAEA enters into force.

May 2009: India signs a version of the IAEA’s Additional Protocol. This version is much less restrictive than the Model Additional Protocol.

June 2009: The Apsara research reactor is shut down for upgrades.

July 2009: India launches the INS Arihant, its first nuclear-powered submarine, which will reportedly be capable of launching nuclear-capable ballistic weapons.

August 2009: India and Namibia sign an Agreement on Cooperation in Peaceful Uses of Nuclear Energy that reportedly includes the sale of uranium to India.

October 2009: The IAEA receives written notification of fourteen nuclear-related facilities that India will put under safeguards: the Uranium Oxide Plant, Ceramic Fuel Fabrication Plant, Enriched Uranium Oxide Plant, Enriched Fuel Fabrication Plant and Gadolinia Facility at the Nuclear Fuel Complex in Hyderabad; TAPS 1 & 2 at Tarapur; RAPS 1, 2, 5 and 6 at Rajasthan; and KKNPP 1 & 2 at Kudankulam.

October 2009: India designates the following sites for setting up light water power reactors: Jaitapur, in cooperation with France; Kudankulum and Haripur, in cooperation with Russia; and Chhayamithi Virdi and Kovvada, in cooperation with the United States.

October 2009: The International Panel on Fissile Materials estimates that India has a net stockpile of approximately 0.7 MT of weapons grade plutonium, enough for 115-175 nuclear warheads, and 0.6 MT of highly enriched uranium. According to the Panel, this highly enriched uranium is used primarily in India’s naval propulsion program.

November 2009: Canada and India conclude negotiations on a nuclear cooperation agreement that would allow Canadian firms to trade in nuclear-related items with India.

March 2010: Satellite imagery of RMP indicates the excavation and construction of buildings suspected to be for a new gas centrifuge hall. Images taken in early 2014 indicate that the construction is nearly complete.

March 2010: India puts the remaining two heavy water reactors at Rajasthan (RAPS 3 and 4) under IAEA safeguards.

March 2010: Russia and India agree to jointly construct two more reactors at Kudankulam, which would bring the number of units at the site to six. They also agree to construct two reactors at Haripur in West Bengal.

July 2010: India and the United States sign the Agreement on the Arrangements and Procedures for the reprocessing of U.S. obligated material by India. The arrangements and procedures are pursuant to the 123 Agreement, which requires that U.S.-origin nuclear material only be reprocessed in Indian facilities that are under IAEA safeguards.

September 2010: The Bulletin of the Atomic Scientists estimates that India has produced 60-80 nuclear warheads, 50 of which are fully operational.

December 2010: India puts the two heavy water reactors at Kakrapar Atomic Power Station (KAPS 1 and 2) under IAEA safeguards.

December 2010: The International Panel on Fissile Materials estimates that India has a net stockpile of 0.5 MT of weapons grade plutonium, enough for 85-125 nuclear warheads, and 1.3 MT of highly enriched uranium. This uranium is assumed to be enriched to 30 % and used primarily in the nuclear submarine program.

December 2010: The CIRUS reactor is permanently shut down.

January 2011: The reactor fuel reprocessing plant PREFRE-2, which will reprocess spent fuel from India’s heavy water reactors, is established at BARC.

January 2012: The Hindu reports that India is building a second Arihant-class nuclear submarine named the INS Aridaman.

April 2012: The Mohuldih underground uranium mine is commissioned. A uranium ore mine and processing plant is also commissioned at Tummalapalle.

April 2012: The Indian Navy inducts a second INS Chakra nuclear submarine leased from Russia into service.

July 2012: The Bulletin of the Atomic Scientists estimates that India has produced 80-100 nuclear warheads.

December 2012: India puts the Away from Reactor (AFR) fuel storage facility at Tarapur under IAEA safeguards.

July 2013: The Indian government approves the establishment of the Fast Reactor Fuel Cycle Facility (FRFCF), which will be used to reprocess spent fuel at IGCAR.

August 2013: The reactor for the INS Arihant nuclear submarine attains criticality.

September 2013: India signs a preliminary contract with Westinghouse for the construction of six AP1000 reactors in the Bhavnagar district of Gujarat.

September 2013: The Canada-India Nuclear Cooperation Agreement enters into force. The agreement allows Canadian companies to export controlled nuclear materials, equipment, and technologies to Indian nuclear facilities that are under IAEA safeguards.

October 2013: The International Panel on Fissile Materials estimates that India has a net stockpile of 0.54 MT of weapons grade plutonium, enough for warheads 90-135 warheads, and 2.4 MT of highly enriched uranium. This uranium is assumed to be enriched to 30 % and used primarily in the nuclear submarine program.

March 2014: India puts the nuclear material store at Tarapur under IAEA safeguards.

July 2014: An Additional Protocol negotiated between India and the IAEA enters into force. India’s Protocol requires Delhi to notify the IAEA of nuclear-related exports but, it does not require India to report fuel-cycle related research and development, nuclear-related imports, and uranium mining. A number of India’s nuclear facilities also remain outside the scope of IAEA safeguards.

September 2014: Australia and India sign an agreement under which Australia will supply uranium to India. The agreement enters into force in November 2015.

November 2014: The Dhruva reactor begins operating at its full 100 MW capacity.

December 2014: The INS Arihant nuclear submarine reportedly begins sea trials.

December 2014: India puts the two heavy water reactors at NAPS (NAPS 1 and 2) under IAEA safeguards.

December 2014: India and Russia sign an agreement to pursue the joint construction of at least 12 additional nuclear power plants in India, and to cooperate on the production of nuclear fuel.

February 2015: India reportedly approves the construction of six nuclear-power attack submarines.

April 2015: Canada’s Cameco and India’s DAE sign an MOU under which Canada will supply India with approximately 3000 MT of uranium from 2015-2020.

May 2015: The Monazite Processing Plant (MoPP) is commissioned under IREL. The 10,000 tons per annum plant is used for recovering uranium in the form of nuclear grade ammonium di-uranate.

July 2015: Kazakhstan’s NAC Kazatomprom and India sign an MOU under which Kazakhstan will supply 3700-7000 MT of uranium to India from 2015-2019. The first shipment is made in 2016.

October 2015: Russia’s JSC TVEL supplies India with 42 MT of enriched uranium oxide pellets pursuant to a single delivery contract.

November 2015: The Bulletin of the Atomic Scientists estimates that India has produced 110-120 nuclear warheads.

December 2015: A report is released by a Washington, DC-based think tank indicating that India is building a large uranium enrichment plant in Challakere, Karnataka, to supply India’s nuclear reactors and nuclear submarines. Experts also believe that the facility will house atomic research labs and weapons testing areas, and will be used to develop thermonuclear weapons.

December 2015: The International Panel on Fissile Materials estimates that India has a net stockpile of .59 MT of weapons grade plutonium, enough for 100-150 nuclear warheads, and 3.2 MT of highly enriched uranium. This uranium is assessed to be enriched to 30% and used primarily in the nuclear submarine program.

December 2015: India receives its first shipment of uranium from Canada.

April 2016: Hannah Robert is sentenced by a judge in New Jersey to 57 months in prison for illegally exporting sensitive military technical data to India, including blueprints for parts used in torpedo systems for nuclear submarines.

May 2017: The Indian government approves the construction of ten 700 MW heavy water reactors in a fleet mode.

July 2017: Australia reportedly makes its first shipment of uranium to India.

July 2017: The Bulletin of the Atomic Scientists estimates that India has produced 120-130 nuclear warheads.

August 2017: Sources tell the Print that the Aridaman (aka Arighat) nuclear submarine has been assembled and is ready to be launched for further outfitting. The Aridaman is believed to be able to carry more SLBMs than the Arihant and to have a more powerful reactor. It is reportedly launched by January 2018.

September 2017: India puts two of its under-construction heavy water reactors at KAPS (KAPS-3 and 4) under IAEA safeguards.

December 2017: Indian Navy Chief Admiral Sunil Lanba reportedly confirms that India has started to build six nuclear-powered attack submarines.

February 2018: The International Panel on Fissile Material estimates that India has a net stockpile of .58 MT of weapons grade plutonium, enough for 100-150 nuclear warheads, and 4.0 MT of highly enriched uranium. This uranium is assessed to be enriched to between 30 % and 45 % and used primarily in the nuclear submarine program.

March 2018: India and the EDF Group of France sign an agreement to jointly construct six EPR reactors at Jaitapur. The total planned capacity at the site is 10 GW.

May 2018: India puts two of its under-development VVERs at Kudankulam (KKNPP 3 and 4) under IAEA safeguards.

September 2018: India recommissions an upgraded version of the Apsara research reactor. The upgraded version, the Apsara-U, is fueled with low enriched uranium fuel plates and will be used to produce radio-isotopes for medical purposes, as well as to conduct research in nuclear physics, radiation shielding, and material science.

* All tonnage referred to in this report are provided in metric tons (MT) unless otherwise specified. In these latter cases, it is not clear from the source whether the unit of measurement used is MT or Imperial Ton.

** All fissile material to warhead conversions in this report assume 4-6 kg of PGU per weapon, and 9-15 kg of WGU per weapon and rounded to the nearest “0” or “5”. These warhead masses were obtained from: “Fissile Material Basics [Fact Sheet],” Union of Concerned Scientists, 2004, available at https://www.ucsusa.org/sites/default/files/legacy/assets/documents/nwgs/nuclear_terrorism-fissile_materials.pdf, accessed on September 26, 2018.

Illicit Procurement Network Used Firms in China, Portugal, and Turkey to Supply Iran

A recently unsealed indictment provides detail on Iran’s use of deceptive practices to procure export controlled items with military applications from the United States and elsewhere. The indictment details an elaborate, multi-year conspiracy directed by an Iranian-born Canadian to procure such items for an Iranian firm, with help from co-conspirators in China, Portugal, and Turkey.​

Using a network of agents and front companies, the conspirators were able to falsify shipping documents and mislead U.S. manufacturers by claiming that the procured items were intended for end users in Portugal and Turkey. Furthermore, this network enabled the Iranian end users to pay for the items and finance the scheme using Chinese front companies. By transshipping goods through China and Turkey, and exploiting the ability of Portuguese firms to more easily acquire licensed U.S. technology, the conspirators were able to procure and in some cases successfully send to Iran a variety of items controlled for export by the United States.

This case highlights the extent to which Iran relies on a global network of front companies and procurement agents to acquire U.S.-origin goods, the procurement methods used to mask Iran as the intended destination, and the need for heightened vigilance by U.S. companies and by governments vulnerable to being exploited by these illicit networks.

The Players

The conspiracy, which took place from about December 2011 through March 2017, was orchestrated by three key individuals: Iranian-born Canadian-national Ghobad Ghasempour, Chinese national Yi Xiong, and Iranian national Reza Rejali. The scheme’s origins can be traced as far back as December 2011, when Ghasempour established a company in China (NHD) and proposed that it be used to handle trade between Iran and China. Ghasempour reasoned that NHD could use money owed to Iran for oil purchases as a means of payment.

In the following years, Ghasempour and Xiong established several front companies, including International Business Center (IBC Trade), Modo International (Modo), and Todi Enterprises (Todi). These China-based companies were primarily used to procure goods for the benefit of Rejali and his employer, Isfahan-based Kiyan Saynpaniz International (KSP). KSP is alleged to be a government-controlled engineering company that purchases items for Iranian government agencies.

The front companies enabled Ghasempour to purchase and transship sensitive items to KSP while disguising the true end user, as well as to move money from Iran to China in order to finance the scheme. Xiong managed the day-to-day operations of the Chinese front companies, including establishing bank accounts to handle Iranian funds and handling the transshipment of goods from the United States, Europe, and China to Iran. Rejali used Ghasempour, Xiong, and their front companies to procure goods for Iranian end users and to launder money for KSP. Rejali often used Xiong’s name in e-mails to hide from KSP that he was profiting off of the transactions.

Also involved in the conspiracy were Goktan Gokdag and his Turkey-based company Gokdag Foreign Trade and Consultancy; Portuguese-national Paulo Vincente and his company Firstfield Engineering; and Portuguese engineer Joao Manuel Pereira Da Fonseca. The Portuguese node in this supply network played an integral role by purchasing high-end controlled equipment from U.S. and German manufacturers on behalf of Rejali and KSP; obscuring the ultimate end user; and facilitating Fonseca’s travels to the U.S., where he received training to assist Iran in the installation and operation of some of the procured items.

The Schemes

High-End Machines and Training

Sometime in 2014, Firstfield, at the behest of Rejali, agreed to procure multiple high-end machines from the United States and Germany, some of which required on-site training from the manufacturer. These included two German-origin Optotech machines, one German-origin Taylor Hobson Luphoscan machine, and one U.S.-origin Nanotech 250 UPL (ultra-precision lathe) machine. The functions of these machines are complementary: Optotech machines are used for grinding and polishing lenses manufactured by the lathe, with the Luphoscan machine used for testing the lenses.

Firstfield planned to disassemble and transfer the machines to Iran after installation by the manufacturer in Portugal. KSP rented a warehouse for Firstfield in Portugal in order to demonstrate a legitimate end-use location for the machines. The plan was for Firstfield to breakdown the machines and to ship them through Turkey or China to KSP in Iran, where Fonseca would install and calibrate the machines, and then train Iranian end users.

In the first half of 2014, Rejali, Vincente, and Gokdag procured and shipped to KSP two Optotech machines. In June 2014, Gokdag helped facilitate Fonseca’s travel to Iran to install these machines and provide training in their use. Fonseca flew to Turkey to meet Gokdag, who accompanied the Portuguese engineer to meet Rejali in Isfahan.

Also as part of the scheme, Fonseca arranged to receive training from Taylor Hobson engineers on a German-origin Luphoscan machine procured by Firstfield for KSP sometime in 2014. The company’s engineers traveled from Germany to the KSP-funded warehouse in Portugal to train Fonseca. The training was secretly recorded and in February 2015 Fonseca uploaded the videos and photographs to the cloud for the benefit of Iranian engineers.

In 2015, Firstfield attempted to purchase, but ultimately failed to ship to Iran, a U.S.-origin Nanotech 250 UPL (Ultra Precision Lathe) – an item controlled by the United States for export to Iran on national security, nuclear non-proliferation, and anti-terrorism grounds. Firstfield certified to the U.S. company that the lathe would be installed at warehouse in Portugal and would not be sold, transferred, or exported, except to the United States or to another specific country, not including Iran. Fonseca traveled to the United States in October 2015 for training on the system.

In December 2015, Homeland Security Investigations (HSI), the investigative arm of the U.S. Department of Homeland Security, contacted the U.S. company about the UPL sale. The company informed HSI that Firstfield had paid $411,300 in total for the machine, training, and installation at Firstfield’s warehouse in Portugal. This contrasts with the approximately $788,000 KSP paid for the machine – indicating a hefty mark up by agents in the procurement network and by Rejali himself. The lathe was seized by HSI in February 2016 at New York’s JFK International Airport and never made it to Portugal.

Inertial Guidance System Test Table

In June 2014, Rejali contacted Ghasempour and Xiong to begin the process of procuring an inertial guidance test table from a North Dakota-based manufacturer. This machine is controlled for export by the United States because it can be used for military-grade navigation devices and missiles.

Nearly a year later, Rejali – pretending to be Xiong – used an IBC Trade company e-mail address to contact Firstfield’s Vincente and request a bid on the system, specifically a 2002PG two-axis positioning and rate table system with an AERO 4000 motion controller. Firstfield quoted the price as 315,000 euro; Rejali told KSP that Todi could sell the system for over 550,000 euros, again planning to pocket the difference. In June 2015, Rejali transferred nearly 300,000 euros from Iran to China in order to finance the purchase.

Using Modo, Ghasempour and Xiong transferred to Firstfield the 30 percent down payment required to start manufacturing the test table, with the intention of using the Portuguese company to forward the payment to the U.S. company. Firstfield was in the best position to secure an export license from the U.S. Department of Commerce, which it did in October 2015.

HSI contacted the U.S. manufacturer in January 2016 to investigate this purchase. Two months later, Fonseca traveled to the United States for a week-long training on the system. He was scheduled to leave the United States on April 3, 2016, but was detained by HSI at the airport for violating the Visa Waiver Program and lying to the U.S. government. The test table was never exported from the United States.

Thin Film Measurement System

Between September 2013 and April 2015, the co-conspirators attempted twice – failing the first time and succeeding the second – to procure and export to Iran a thin film measurement system. The system, which can be used to take microscopic measurements of liquid coatings and parts in missiles, is controlled by the United States for export to Iran on anti-terrorism grounds.

In September 2013, Rejali requested that Ghasempour and Xiong submit Modo’s best offer for the purchase of the system from a California-based manufacturer on behalf of KSP. Xiong sent his two co-conspirators an invoice a month later pricing the system at $93,000 and requiring a 50 percent down payment. Rejali transferred over $115,000 from Iran to Modo’s account in China in February 2014 to cover the required down payment. Two months later, Rejali contacted his two co-conspirators and an Iranian freight forwarding company to arrange for the system’s transshipment from the United States to its ultimate destination in Iran.

The system departed the United States in May 2014, but was intercepted by Dutch law enforcement officials during the shipping process the following month. Concerned that Modo’s role in procuring U.S.-origin controlled items had been detected, Ghasempour suggested to Xiong that they establish a new company. Indeed, Homeland Security in San Diego had been notified about the intercepted system and opened an investigation into Modo’s export activities. Xiong established two additional front companies – Todi and IBC Trade – in the ensuing months.

In November 2014, Rejali contacted his co-conspirators suggesting a second attempt to procure a thin film measurement system – this time from Canada. Ghasempour argued that this was too risky, instead suggesting that they use Turkey-based Gokdag Foreign Trade and Consultancy to procure the system. Xiong wired about 25,000 euros to Gokdag in December 2014 to purchase the measurement system for Rejali and KSP. Gokdag successfully exported the system to Iran around April 2015. However, the model delivered to Iran was different than the one KSP and Rejali had requested.

TAU 2 640 Cameras

Between January 2015 and February 2016, Rejali, Ghasempour, and Xiong on three occasions illicitly exported a total of 110 U.S.-origin TAU 2 640 thermal imaging cameras to Iran, via China. TAU 2 640 9Hz cameras are controlled by the United States for export to Iran for anti-terrorism purposes; TAU 2 640 30Hz cameras are controlled for national security, regional stability, and anti-terrorism reasons. Both cameras can be used in commercial security systems and military drones.

On the first occasion, in January 2015, the three co-conspirators used Todi to procure for KSP and transship to Iran ten cameras from an Oregon-based company. Todi’s pro forma invoice quoted a price of 349,320 yuan (about $50,448) for the ten cameras. An air waybill indicated the cameras were successfully shipped to Iran in February 2015.

In July 2015, Vicente contacted Rejali and said that Firstfield could sell IBC Trade one camera for 8,047 euros. Rejali, in turn, offered the camera to KSP for double that price, and transmitted the communication to KSP on Todi letterhead. On August 19, 2015, Firstfield shipped the camera from Portugal to IBC Trade in China; Xiong shipped the camera to Iran less than a week later.

Having successfully procured and transshipped the cameras twice, the three co-conspirators devised a scheme to export additional cameras in a plan intended to yield them about $20,000 each. Operations for a third round of camera purchases began in October 2015, when Firstfield contacted Xiong and offered to sell 1,000 TAU 2 640 cameras for the price of 3.7 million euros using a Chinese front company. Rejali proposed selling 500 cameras to KSP in five increments of 100 cameras per shipment, totaling about 2.4 million euros. In February 2016, Firstfield exported 99 cameras to a Chinese front company that then transshipped them to Iran.

Case Status

Ghasempour was arrested in Blaine, Washington on March 28, 2017 when crossing into the United States from Canada. He pleaded guilty on May 4, 2018 to one count of conspiracy to unlawfully export U.S. goods and technology to Iran and to defraud the United States, in violation of the International Emergency Economic Powers Act (IEEPA) and Iranian Transactions and Sanctions Regulations (ITSR). On August 20, 2018, he was sentenced to 42 months in prison.

Fonseca was detained on April 3, 2016 upon attempting to leave the United States. He pleaded guilty on July 17, 2017 to one count of conspiracy to unlawfully export U.S. goods and technology to Iran and to defraud the United States. He was sentenced on September 14, 2017 to 20 months in prison and one year of supervised release.


References:

Indictment, United States of America v. Ghobad Ghasempour, Case No. 17-cr-00081, U.S. District Court, District of Columbia, April 26, 2017, available at https://www.iranwatch.org/library/governments/united-states/executive-branch/department-justice/indictment-united-states-america-v-ghobad-ghasempour, accessed October 11, 2018.

Indictment, United States of America v. Joao Manuel Pereira Da Fonseca, Case No. 16-cr-00089, U.S. District Court, District of Columbia, May 25, 2016, available at https://www.iranwatch.org/library/governments/united-states/executive-branch/department-justice/indictment-united-states-america-v-joao-manuel-pereira-da-fonseca , accessed October 11, 2018.

Affidavit in Support of Criminal Complaint, United States of America v. Ghobad Ghasempour, Case No. 17-cr-00081, U.S. District Court, District of Columbia, March 28, 2017, available at  https://www.iranwatch.org/library/governments/united-states/executive-branch/department-justice/affidavit-support-criminal-complaint-united-states-america-v-ghobad-ghasempour, accessed October 11, 2018.

Affidavit in Support of Criminal Complaint, United States of America v. Joao Manuel Pereira Da Fonseca, Case No. 16-cr-00089, U.S. District Court, District of Columbia, April 3, 2016, available at https://www.iranwatch.org/library/governments/united-states/executive-branch/department-justice/affidavit-support-criminal-complaint-united-states-america-v-joao-manuel-pereira, accessed October 11, 2018.

Plea Agreement, United States of America v. Ghobad Ghasempour, Case No. 18-cr-00080, U.S. District Court, Western District of Washington, April 19, 2018, available at  https://www.iranwatch.org/library/governments/united-states/executive-branch/department-justice/plea-agreement-united-states-america-v-ghobad-ghasempour, accessed October 11, 2018.

Statement of Offense, United States of America v. Joao Pereira da Fonseca, Case No. 16-cr-00089, U.S. District Court, District of Columbia, July 17, 2017, available at https://www.iranwatch.org/library/governments/united-states/executive-branch/department-justice/statement-offense-united-states-america-v-joao-pereira-da-fonseca, accessed October 11, 2018.

Defendant’s Motion for Bill of Particulars, United States of America v. Joao Pereira da Fonseca, Case No. 16-cr-00089, U.S. District Court, District of Columbia, March 24, 2017, available at  https://www.iranwatch.org/library/governments/united-states/executive-branch/department-justice/defendants-motion-bill-particulars-united-states-america-v-joao-pereira-da, accessed October 11, 2018.

Government’s Motion and Notice of Intention to Introduce Co-Conspirator Statements at Trial, United States of America v. Joao Manuel Pereira Da Fonseca, Case No. 16-cr-00089, U.S. District Court, District of Columbia, March 24, 2017, p. 2, available at  https://www.iranwatch.org/library/governments/united-states/executive-branch/department-justice/governments-motion-notice-intention-introduce-co-conspirator-statements-trial, accessed October 11, 2018.

Iran Dodges FATF Countermeasures but Looming U.S. Sanctions May Achieve Similar Outcome

Iran was once again on the agenda at a plenary meeting of the Financial Action Task Force (FATF) last week in Paris. The body decided not to re-impose the severe restrictions on financial dealings with Iran that were suspended in 2016, despite U.S. efforts to build a case for such action in the weeks leading up to the meeting. These restrictions, or “countermeasures,” expand on the FATF’s existing due diligence requirements on Iran and may include preventing Iranian banks from establishing overseas subsidiary branches, requiring banks to review and terminate correspondent accounts with Iranian banks, and limiting business relationships or imposing enhanced monitoring and reporting requirements on transactions involving Iran.[1] The re-imposition of these restrictions would deal a further blow to Iran’s economy, which has been crippled by the U.S. decision to withdraw from the nuclear agreement and re-impose sanctions.

In Friday’s public statement, the FATF rebuked Iran for its failure to implement most of the Action Plan enacted in July 2016 to redress Iran’s strategic Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) deficiencies. While acknowledging some legislative progress, the FATF listed nine items from the Action Plan that remain outstanding and warned of “further steps” in February 2019 if Iran fails to address these deficiencies through legislation and regulatory reform.[2] These items include a failure to criminalize terrorist financing and money laundering offenses, to identify and freeze terrorist assets, to enforce a customer due diligence regime, and to stand up an independent financial intelligence unit, among other deficiencies. In the interim, the FATF called on its members to continue urging financial institutions to conduct enhanced due diligence when dealing with Iran, including robust monitoring of business relationships and transactions with Iranian entities.

In the lead up to the FATF plenary – and a few weeks before the full snapback of U.S. sanctions – the United States announced a series of measures intended to illustrate how Iran exploits the international financial system to fuel terrorism, proliferation, human rights abuses, and destabilizing actions in Syria, Yemen, and beyond. The measures also reveal how the United States will implement its “maximum pressure” campaign against Iran, including through enforcement actions and the application of anti-money-laundering authorities, primary sanctions, and the threat of secondary sanctions in an effort to induce governments, banks, and industry around the world to stop dealing with Iran.

On October 11, 2018, the U.S. Financial Crimes Enforcement Network (FinCEN) issued an advisory to help financial institutions detect potentially illicit transactions with Iran. Specifically, the advisory provides useful red flags designed to “help foreign financial institutions better understand the obligations of their U.S. correspondents, avoid exposure to U.S. sanctions, and address the AML/CFT risks that Iranian activity poses to the international financial system.”[3]

This advisory was followed by another round of U.S. Treasury Department sanctions on October 16, targeting “a vast network of businesses providing financial support to the Basij Resistance Force, a paramilitary force subordinate to Iran’s Islamic Revolutionary Guard Corps (IRGC).”[4] In addition, the U.S. administration is debating whether or not to sanction the Belgium-based SWIFT financial messaging service if it fails to disconnect all Iranian financial institutions.

The FATF decision to maintain Iran’s status as a high-risk jurisdiction, but not to re-impose economic countermeasures on Iran, provides temporary support for efforts by the remaining parties in the nuclear agreement with Iran, or Joint Comprehensive Plan of Action (JCPOA), to preserve the agreement. The decision also reflects an ongoing struggle between the European Union’s effort to find a financial mechanism to allow European business to continue trading with Iran and U.S. efforts to end almost all such ties. The EU has created a “Special Purpose Vehicle” to support continued trade – essentially a channel to facilitate payments related to Iran’s exports (including oil) and imports, and which also could be open to countries outside the EU.[5] But it is unclear whether any business with ties to the United States would consider using this vehicle, particularly if the FATF re-imposes countermeasures in February.

U.S. Warns Foreign Firms against Iran

The October 11 FinCEN advisory describes typologies used by Iran to illicitly access the financial system, including: the misuse of banks and exchange houses; exploitation of commercial shipping; reliance on shell or front companies within complex procurement networks; reliance on senior officials from the Central Bank of Iran (CBI) to mask illicit transactions; and the use of precious metals and perhaps virtual currencies to evade sanctions.

Red flags for each of these deceptive behaviors are described as well, such as: the routing of transactions to personal accounts by CBI officials where funds may be withdrawn by entities with no affiliation to the Iranian government; the use of multiple exchange houses to conceal the origin of funds, accumulating fees and costs that are atypical of standard commercial practices; and the involvement of companies with opaque ownership structures, obscure names, or located at residential or multi-party addresses.

The advisory includes a description of U.S. sanctions that may be imposed following the U.S. withdrawal from the JCPOA and the subsequent 90- and 180 day wind-down periods. It warns foreign financial institutions that, as of November 5, they will be subject to “correspondent or payable-through account sanctions” for “knowingly conducting significant transactions for or with certain Iran-related persons,” and to “blocking sanctions” for “providing material support to designated persons.”[6]

The advisory serves not only as clarification to foreign financial institutions regarding the obligations of their U.S. counterparts, but also as a warning to non-U.S. banks and companies that may be doing business with Iran about the enforcement measures that U.S. authorities will focus on going forward.

U.S. Sanctions Target Iran’s Financial Networks

Last week saw the first major re-imposition of U.S. sanctions on Iranian state owned enterprises and financial institutions. Some 20 entities supporting the IRGC’s Basij paramilitary force were designated for supporting global terrorism, which allows for the imposition of secondary sanctions. The sanctioned entities included three Iranian financial institutions – Bank Mellat, Sina Bank, and Parsian Bank – that were removed from the U.S. blacklist following the implementation of the JCPOA. The United States has made clear that it intends to re-designate most or all of the entities that were removed as part of the JCPOA. However, the decision to begin doing so several weeks before the end of a 180-day wind-down period suggests that it will use the designation tool aggressively.

The United States also appears prepared to use the designation tool expansively. Last week’s sanctions targeted the Bonyad Taavon Basij network, which according to the Treasury Department “employs shell companies and other measures to mask Basij ownership and control over a variety of multibillion-dollar business interests in Iran’s automotive, mining, metals, and banking industries.”[7] Treasury designated four of the entities – Esfahan’s Mobarakeh Steel Company, Bahman Group, Sina Bank, and Parsian Bank – for their financial support to the network. Treasury’s use of the material support criterion rather than ownership or control to support the action demonstrates an expansive designation policy. A network map published with these sanctions illustrates this expansive targeting: Sina Bank and Parsian Bank, for example, are separated by several degrees from the Basij and the IRGC – the designated terrorist entities.[8]

This move follows narrower sanctions actions against financial networks in May, days after the U.S. withdrawal from the JCPOA. On May 10, in cooperation with the United Arab Emirates, the Treasury Department designated six individuals and three entities in an effort to disrupt a currency exchange network in Iran and UAE that transferred U.S. dollar-denominated bulk cash to the sanctioned IRGC Qods Force (IRGC-QF).[9] And on May 15, Treasury designated Iran’s Central Bank governor and part of Iraq’s banking sector for moving millions of dollars on behalf of IRGC-QF to Hezbollah.[10]

Both of these actions ultimately take aim at Iran’s Central Bank and preceded two key sanctions milestones: the re-imposition, on August 7, of secondary sanctions related to the purchase or acquisition of U.S. dollar banknotes by the Iranian government;[11] and the forthcoming re-imposition of secondary sanctions on persons engaging in certain significant transactions with the CBI on November 5.

The Specter of Secondary Sanctions against SWIFT

There is disagreement within the U.S. administration about how aggressively to target SWIFT, the Belgium-based financial messaging service that facilitates cross-border payments worldwide. SWIFT cooperated with U.S. and EU in the sanctions campaign during the years that preceded the nuclear agreement, by cutting off the CBI and other Iranian banks. However, SWIFT may be reluctant to do so at present, given the EU goal of maintaining the JCPOA and the economic sanctions relief the agreement is meant to deliver to Iran. Some in the United States conclude that SWIFT’s failure to disconnect Iran by a November 5 deadline would undermine the administration’s maximum pressure campaign; they argue that the banks represented on the SWIFT board and SWIFT officials should be targeted with sanctions. Others argue that such sanctions would pose a risk to the global financial system and would damage the U.S. ability to monitor illicit finance through information-sharing from SWIFT.[12]

The unusually public discussion of a potential target of U.S. secondary sanctions, especially against a high-profile entity like SWIFT, underscores the administration’s aggressive posture toward allies and foes alike in implementing its maximum pressure campaign.

Expected Enforcement Actions

The U.S. government may also use substantial financial penalties and the threat of criminal prosecution to deter major banks. One such expected enforcement action looms for Standard Chartered. The British bank disclosed that an ongoing U.S. government investigation into its past sanctions violations could yield considerable fines – reportedly up to 1.5 billion dollars. Since 2012, the bank has been operating with an independent monitor under terms from a deferred prosecution agreement with the Department of Justice and New York County’s District Attorney’s office for facilitating business with Iranian parties. Standard Chartered also entered into settlement agreements in 2012 with Treasury for these sanctions violations. Recently, there have been press reports that two former Standard Chartered employees could face criminal charges for their role in the alleged sanctions violations with Iranian-linked companies.

Conclusion

Despite the FATF decision to maintain the status quo, the United States is seeking to compel foreign financial institutions to avoid dealing with Iran’s financial sector through the threat and application of sanctions. This is one part of a broader U.S. campaign to exert maximum pressure on Iran, with the stated aim of creating conditions for negotiations on a comprehensive agreement that addresses the full range of threats posed by Iran.

The coming weeks and months will be critical in this campaign. Hundreds of entities that are part of or supporting the Iranian government will be returned to the U.S. blacklist. These designations will include the ability for the United States to sanction foreign banks and companies for dealing with such sanctioned parties. In addition, countries that fail to sufficiently reduce their purchases of Iranian oil may find themselves the subject of U.S. sanctions. Despite EU efforts to facilitate ongoing trade and investment with Iran, the overwhelming majority of firms in Europe and beyond are reluctant to jeopardize their much larger trade and investment with the United States. As a result, by the time the FATF meets next February to consider the re-imposition of countermeasures, Iran may already be cut off from the international financial system.


Footnotes:

[1] “High-risk and non-cooperative jurisdictions,” Financial Action Task Force, available at http://www.fatf-gafi.org/publications/high-riskandnon-cooperativejurisdictions/more/more-on-high-risk-and-non-cooperative-jurisdictions.html?hf=10&b=0&s=desc(fatf_releasedate).

[2] “Public Statement – October 2018,” Financial Action Task Force, October 19, 2018, available at https://www.iranwatch.org/library/multilateral-organizations/other-multilateral-organizations/financial-action-task-force/fatf-public-statement-october-2018-excerpts.

[3] “Advisory on the Iranian Regime’s Illicit and Malign Activities and Attempts to Exploit the Financial System,” FinCEN Advisory FIN-2018-A006, Financial Crimes Enforcement Network, U.S. Department of the Treasury, October 11, 2018, available via https://www.iranwatch.org/library/governments/united-states/executive-branch/department-treasury/advisory-iranian-regimes-illicit-malign-activities-attempts-exploit-financial.

[4] “Treasury Sanctions Vast Financial Network Supporting Iranian Paramilitary Force That Recruits and Trains Child Soldiers,” Press Release, U.S. Department of the Treasury, October 16, 2018, available via https://www.iranwatch.org/library/governments/united-states/executive-branch/department-treasury/treasury-sanctions-vast-iranian-financial-network.

[5] Implementation of the Joint Comprehensive Plan of Action: Joint Ministerial Statement, European Union External Action Service, September 24, 2018, available via https://www.iranwatch.org/library/multilateral-organizations/european-union/implementation-joint-comprehensive-plan-action-joint-ministerial-statement.

[6] “Advisory on the Iranian Regime’s Illicit and Malign Activities and Attempts to Exploit the Financial System,” FinCEN Advisory FIN-2018-A006, Financial Crimes Enforcement Network, U.S. Department of the Treasury, October 11, 2018, available via https://www.iranwatch.org/library/governments/united-states/executive-branch/department-treasury/advisory-iranian-regimes-illicit-malign-activities-attempts-exploit-financial.

[7] “Treasury Sanctions Vast Financial Network Supporting Iranian Paramilitary Force That Recruits and Trains Child Soldiers,” Press Release, U.S. Department of the Treasury, October 16, 2018, available via https://www.iranwatch.org/library/governments/united-states/executive-branch/department-treasury/treasury-sanctions-vast-iranian-financial-network.

[8] “Bonyad Support Network: IRGC’s Financial Lifeline,” U.S. Department of the Treasury, October 16, 2018, available via https://www.iranwatch.org/sites/default/files/irgc_chart_10162018.pdf.

[9] “United States and United Arab Emirates Disrupt Large Scale Currency Exchange Network Transferring Millions of Dollars to the IRGC-QF,” U.S. Department of the Treasury, May 10, 2018, available via https://www.iranwatch.org/library/governments/united-states/executive-branch/department-treasury/united-states-united-arab-emirates-disrupt-large-scale-currency-exchange.

[10] “Treasury Targets Iran’s Central Bank Governor and an Iraqi Bank Moving Millions of Dollars for IRGC-Qods Force,” U.S. Department of the Treasury, May 15, 2018, available via https://www.iranwatch.org/library/governments/united-states/executive-branch/department-treasury/treasury-targets-irans-central-bank-governor-iraqi-bank-moving-millions-dollars.

[11] “Frequently Asked Questions Regarding Executive Order of August 6, 2018, Reimposing Certain Sanctions With Respect to Iran,” U.S. Department of the Treasury, August 6, 2018, available via https://www.iranwatch.org/library/governments/united-states/executive-branch/department-treasury/frequently-asked-questions-regarding-executive-order-august-6-2018-reimposing.

[12] Mark Dubowitz, “SWIFT Sanctions: Frequently Asked Questions,” Foundation for Defense of Democracies, October 10, 2018, available via https://www.thefdd.org/analysis/2018/10/10/swift-sanctions-frequently-asked-questions/.

Letting ZTE Off the Hook, Again? Implications for Iran Sanctions Enforcement

The plight of Chinese telecommunications giant Zhongxing Telecommunications Equipment Corporation (ZTE) may have eased this week, as U.S. and Chinese officials met in Washington for high-level trade talks.

On April 15, 2018, the U.S. Commerce Department’s Bureau of Industry and Security (BIS) reactivated trade restrictions and re-imposed a $300 million fine against ZTE – barring the company from procuring critical U.S. components and effectively suspending the company’s business operations. The Commerce action came following the discovery that ZTE had continued to mislead investigators both during a probationary period and following March 2017 settlement agreements struck with the U.S. Departments of Commerce, Justice, and Treasury, for a combined penalty of $1.19 billion.[1] As part of the settlement, ZTE admitted to knowingly violating U.S. sanctions and export control laws by selling sensitive U.S. technology to Iran and to making false statements about the trade. ZTE falsely claimed that it had reprimanded employees complicit in the scheme. The company came clean only when pressed, which led Commerce to conclude that “ZTE still cannot be relied upon to make truthful statements” and to reactivate the trade restrictions.[2]

However, what was initially seen as an enforcement action separate from a broader trade conflict between the United States and China shifted following two presidential tweets earlier this week. In a tweet on May 13, President Donald Trump linked the two, saying that he is working with the Chinese president to “give massive Chinese phone company, ZTE, a way to get back into business, fast” and that the “Commerce Department has been instructed to get it done!” And in a May 14 tweet, President Trump wrote that the issue “is also reflective of the larger trade deal we are negotiating with China.”

The timing of this possible accommodation raises a number of questions. It comes fewer than two weeks after President Trump announced the U.S. withdrawal from the Iran nuclear accord and the re-imposition of sweeping U.S. sanctions – notably those targeting companies and governments around the world doing business with Iran. In this context, why would the U.S. administration be willing to ease impactful trade restrictions against a Chinese firm that knowingly and repeatedly violated U.S. sanctions and export controls? Why would the administration seek to cushion the blow of these restrictions by looking for “alternative remedies,” as Commerce Secretary Wilbur Ross reportedly suggested earlier this week?[3] And does this mingling of sanctions enforcement and trade policy indicate that other companies might see similar penalties eased or waived as part of broader trade deals? How does such easing fit into the administration’s newly declared “maximum pressure” policy on Iran?[4]

A group of 33 Senate Democrats expressed concern about the administration’s shift on ZTE. In a May 15 letter to the President, they argued that “bargaining away law enforcement power over bad actors such as ZTE undermines the historically sharp distinction between sanctions and export control enforcement and routine trade decisions.”[5] Republican Senator Marco Rubio warned against allowing ZTE “to operate in U.S. without tighter restrictions,” given national security and espionage concerns.[6] Indeed, a multi-year investigation by the House Select Committee on Intelligence concluded in October 2012 that ZTE “cannot be trusted to be free of foreign state influence and thus pose[s] a security threat to the United States and to our systems.”[7] During the investigation, ZTE refused to answer Congressional questions about its contracts with Iran and its compliance with U.S. export control laws.

ZTE’s Sanctions Evasion Scheme[8]

Over a period of six years, ZTE exported over 20 million U.S.-origin items to Iran, worth over $2 billion, in violation of U.S. export control laws and sanctions.[9] The scheme began in 2010, when ZTE’s Tehran-based affiliate, ZTE Parsian, negotiated a contract with the Telecommunication Company of Iran (TCI) to further expand TCI’s telecommunication network. Fulfilling the contract required U.S.-origin goods and components, many of which are controlled by the Commerce Department for national security or anti-terrorism reasons. ZTE signed a second contract in 2010 with another Iranian telecommunications company, Ertebatat Tamin Shams Novin (Tamin), to provide equipment for 1,000 cell towers in Iran. This contract, too, required U.S.-origin, Commerce-controlled goods.

To circumvent U.S. license requirements and trade rules, ZTE established an elaborate re-export scheme that involved lying to U.S. suppliers by declaring China to be the end-use destination, co-mingling U.S.-origin products with ZTE products in shipments to Iran, and deliberately falsifying customs declarations to omit the U.S.-origin goods. ZTE executives also tasked a committee with finding “isolation companies,” or third-party companies, that were used to facilitate the procurement of U.S. goods and their re-export to Iran while concealing ZTE’s involvement. In order to pursue trade with Iran despite several U.S. government investigations, ZTE created a “contract data induction team” (CDIT) to sanitize all documentation related to the Iran deals. The company also lied to its own defense counsel about its trade with Iran, causing its counsel to make false statements to U.S. investigators.

False Statements Continue

As part of the March 2017 settlement, ZTE promised to initiate disciplinary action against 39 individuals identified as complicit in the scheme. This action – issuing letters of reprimand and docking 2016 bonuses – was, according to ZTE, “necessary to achieve the Company’s goals of disciplining those involved and sending a strong message to ZTE employees about the Company’s commitment to compliance.” In letters to BIS dated November 30, 2016 and July 20, 2017, ZTE described the disciplinary action it had allegedly taken or would take.[10]

However, ZTE’s claims about disciplinary action proved to be false. The letters of reprimand were not issued until March 2018 – following a query by BIS the previous month. On March 6, ZTE admitted to making false statements in its earlier letters to BIS. In addition, all but one of the 39 individuals received their full 2016 bonus, indicating that these individuals were rewarded for their complicity in the scheme.[11]

When faced with ZTE’s violations under the settlement, the Commerce Department determined that severe trade restrictions were needed. Imposing the $300 million suspended fine alone would be unlikely to induce the company to implement promised compliance steps or submit truthful disclosures. Cutting off the U.S. import and export market to ZTE, however, is a crippling blow to the company. ZTE is critically reliant on U.S.-origin technology for the smartphones and telecommunications equipment the company sells around the world, as American companies reportedly supply up to 30 percent of the components.[12] In addition, ZTE is the fourth largest smartphone supplier in the United States.[13]

Following the re-imposition of trade restrictions in mid-April, which added both ZTE and its China-based subsidiary ZTE Kangxun to the BIS Denied Persons List,[14] trade in the company’s shares was suspended in Hong Kong and Shenzhen.[15] In a statement on May 9, the company said that because of the U.S. restrictions “the major operating activities of the company have ceased.”[16] It has since provided additional information to the Commerce Department and has asked Commerce to ease the trade restrictions. The company’s fate now appears to be contingent on the outcome of the high-level trade talks between the U.S. and China.

Business as Usual

The absence of severe trade restrictions until now may have contributed to ZTE’s failure to change its duplicitous behavior. An April 2017 Iran Watch report (Lesson Learned or Business as Usual?) anticipated this outcome, arguing that record financial penalties and mandated compliance changes might not be enough to incite a true change in corporate culture. The report pointed to inadequate changes in ZTE’s leadership, the failure of Commerce to penalize all complicit third-party companies involved in the scheme, and the fact that the financial penalties, while hefty, were less than what ZTE earned by illegally trading with Iran.

Several ZTE executives in place during the scheme continue to hold significant positions at the company. Zhao Xianming took over as CEO in April 2016; he has been at the company since 2001 and previously served as ZTE’s Chief Technology Officer and an executive vice president.[17] Yin Yinmin, who held various executive positions at the company since 2004, was appointed Chairman of the Board in March 2017.[18]

Moreover, all of the directors, supervisors, senior management, and key employees profiled in the company’s 2017 Annual Report held a position at ZTE, a subsidiary, or a ZTE shareholding organization over the course of the six years the scheme took place. All but one of the 14 individuals listed on ZTE’s Board of Directors served on the board during this time frame as well.[19]

The settlement also failed to hold accountable all third-party companies integral in assisting ZTE with the scheme. ZTE relied on “isolation companies” to facilitate the procurement of U.S. origin-goods and their re-export to Iran, while concealing ZTE’s role.[20] Beijing 8-Star and Far East Cable Co Ltd. were two such companies identified by name in the settlement documents. However, only Beijing 8-Star was added to Commerce’s Entity List.[21] No action was taken against Far East Cable, despite clear evidence that the company knowingly re-exported U.S-origin goods to Iran on behalf of ZTE and was fully aware of U.S. export laws prohibiting such trade.[22] The settlement documents also reference the existence of an unnamed “isolation company” that supported similar trade with North Korea.[23]

Far East Cable continues to do business in the United States, exporting $4.7 million worth of goods between April 2016 and December 2017.[24] The company also continues to engage Iran. It attended Iran’s 17th International Electricity Exhibition in November 2017, “in a bid to expand [its] overseas markets.”[25] A company press release noted that Far East Cable staff “visited many large wire and cable manufacturers in Iran to actively discuss Iran’s […] potential cooperation opportunities.”[26]

Looking Forward

The next chapter for ZTE is unfolding amidst an effort by the U.S. administration to mount a broad economic sanctions campaign against Iran and amidst rising trade tensions between the United States and many of its major trading partners. From statements this week, President Trump appears willing to relent on robust sanctions enforcement against ZTE in the context of larger trade deals. This may lead other companies and governments to seek similar accommodations and may weaken the maximum pressure campaign the administration wants to mount against Iran.

For example, the Justice Department has opened a criminal investigation into whether another Chinese-company – ZTE competitor Huawei Technologies Co. – also violated U.S. sanctions on Iran.[27] This investigation comes on the heels of administrative subpoenas issued by both the Commerce and Treasury Departments.[28] The Huawei investigation may, like ZTE, get caught up in the broader trade dispute between the United States and China. If the investigation finds that Huawei violated U.S. sanctions on a comparable scale to ZTE, the U.S. government would be well served to apply the lessons of the ZTE case, by mandating real leadership change and penalizing all complicit third parties.

The outcome for ZTE may also have a bearing on the approach taken by European governments as they seek a way to preserve the Iran deal following the U.S. withdrawal. These governments also are undertaking high-level trade talks with the United States. Several major European companies have announced plans to pull out of Iran in recent days unless they can come to an arrangement with the U.S. government. The French oil firm Total, for instance, said it is “engaging with the French and U.S. authorities to examine the possibility of a project waiver” to continue a $1 billion natural gas development project in Iran.[29] Total plans to wind down operations in Iran if it fails to win such a waiver.

If the United States proves unwilling to let stand penalties against ZTE, a company that knowingly and repeatedly supplied Iran with sensitive U.S. technology, does it intend to penalize firms engaging in trade and investment in Iran’s energy sector – in particular given that until recently the U.S. supported such business in the context of the nuclear accord?


Footnotes:

[1] “ZTE Corporation Agrees to Plead Guilty and Pay Over $430.4 Million for Violating U.S. Sanctions by Sending U.S.- Origin Items to Iran,” Press Release, U.S. Department of Justice, March 7, 2017, available at https://www.justice.gov/opa/pr/zte-corporation-agrees-plead-guilty-and-pay-over-4304-million-violating-us-sanctions-sending.

[2] “Order Activating Suspended Denial Order Relating to Zhongxing Telecommunications Equipment Corporation and Zte Kangxun Telecommunications Ltd.,” U.S. Department of Commerce Bureau of Industry and Security, Federal Register, Vol. 83, No. 78, April 23, 2018, p. 17646, available at https://www.gpo.gov/fdsys/pkg/FR-2018-04-23/pdf/2018-08354.pdf.

[3] Randy Woods and Jenny Leonard, “Trump Muddies ZTE Role in China Talks as Ross Reviews Sanctions,” Bloomberg, May 14, 2018, available at https://www.bloomberg.com/news/articles/2018-05-14/ross-says-u-s-eyeing-alternatives-to-sanctions-on-china-s-zte.

[4] Press Briefing by Sarah Sanders, White House, May 9, 2018, available at https://www.iranwatch.org/library/governments/united-states/executive-branch/white-house/press-briefing-press-secretary-sarah-sanders-excerpts-0.

[5] “Schumer, Wyden, Brown Lead 33 Senators in Calling on Trump Administration to Put American Jobs, National Security Before China,” Democratic Policy and Communications Committee, May 15, 2018, available at https://www.democrats.senate.gov/newsroom/press-releases/schumer-wyden-brown-lead-33-senators-in-calling-on-trump-administration-to-put-american-jobs-national-security-before-china.

[6] Jacob Pramuk, “Republican Sen. Marco Rubio Warns: Trump’s Reversal on China’s ZTE is a National Security Risk,” CNBC, May 14, 2018, available at https://www.cnbc.com/2018/05/14/marco-rubio-slams-trump-reversal-on-chinese-company-zte.html.

[7] “Investigative Report on the U.S. National Security Issues Posed by Chinese Telecommunications Companies Huawei and ZTE,” Permanent Select Committee on Intelligence, U.S. House of Representatives, 112th Congress, p. 45, October 8, 2012, available at https://intelligence.house.gov/sites/intelligence.house.gov/files/documents/huaweizte%20investigative%20report%20(final).pdf.

[8] An Iran Watch report published in April 2017 describes the sanctions evasion scheme, which is summarized here, in detail. See Jerrica Goodson and Valerie Lincy, “Lesson Learned or Business as Usual?,” April 4, 2017, available at https://www.iranwatch.org/sites/default/files/zte_report_complete_1.pdf.

[9] Settlement Agreement between Zhongxing Telecommunications Equipment Corporation, et al. and the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), ENF 40001, p. 4, March 7, 2017, available at https://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20170307_zte_settlement.pdf; “ZTE Corporation Agrees to Plead Guilty and Pay Over $430.4 Million for Violating U.S. Sanctions by Sending U.S.- Origin Items to Iran,” Press Release, U.S. Department of Justice, March 7, 2017, available at https://www.justice.gov/opa/pr/zte-corporation-agrees-plead-guilty-and-pay-over-4304-million-violating-us-sanctions-sending.

[10] “Order Activating Suspended Denial Order Relating to Zhongxing Telecommunications Equipment Corporation and Zte Kangxun Telecommunications Ltd.,” U.S. Department of Commerce Bureau of Industry and Security, Federal Register, Vol. 83, No. 78, April 23, 2018, pp. 17644-17648, available at https://www.gpo.gov/fdsys/pkg/FR-2018-04-23/pdf/2018-08354.pdf.

[11] IBID

[12] Valerie Volcovici and Michael Martina, “In concession, Trump will help China’s ZTE ‘get back into business’,” Reuters, May 13, 2018, available at https://www.reuters.com/article/uk-usa-china-zte/trump-working-with-chinese-president-to-help-chinas-zte-get-back-into-business-idUSKCN1IE0QI.

[13] U.S. Smartphone Share: By Quarter,” Counterpoint, February 27, 2018, available at https://www.counterpointresearch.com/us-market-smartphone-share/.

[14] “Recent Changes to the Denied Persons List, Bureau of Industry and Security,” U.S. Department of Commerce, April 24, 2018, available at https://www.bis.doc.gov/index.php/the-denied-persons-list.

[15] “Overseas Regulatory Announcement Progress of Material Matter in relation to Suspension of Trading,” ZTE Corporation, May 16, 2018, available at http://www.hkexnews.hk/listedco/listconews/SEHK/2018/0516/LTN20180516235.pdf.

[16] Sijia Jiang, China’s ZTE Says Main Business Operations Cease Due to U.S. Ban, Reuters, May 9, 2018, available at https://www.reuters.com/article/us-zte-ban/chinas-zte-corp-says-main-business-operations-have-ceased-due-to-u-s-ban-idUSKBN1IA1XF

[17] “ZTE Corporation Reaches Settlement with U.S. Authorities,” Press Release, March 7, 2017, ZTE via PR Newswire, https://www.prnewswire.com/news-releases/zte-corporation-reaches-settlement-with-us-authorities-300419401.html; “Zhao Xianming-President/Executive Director, ZTE Corp,” Bloomberg, available at https://www.bloomberg.com/profiles/people/16021560-xianming-zhao..

[18] “ZTE Names Yin as Chairman,” Global Telecoms Business, March 14, 2017, available at http://www.globaltelecomsbusiness.com/article/3669244/ZTE-names-Yin-as-chairman.html#/.WMw3JVUrLcs.

[19] ZTE Annual Report 2017, ZTE Corporation, pp. 113-122, 141, 2017, available at http://res.www.zte.com.cn/mediares/zte/Investor/20180326/E1.pdf.

[20] Settlement Agreement between Zhongxing Telecommunications Equipment Corporation, et al. and the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), ENF 40001, pp. 8-9, March 7, 2017, available at https://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20170307_zte_settlement.pdf.

[21] IBID; Additions to the Entity List, U.S. Department of Commerce Bureau of Industry and Security (BIS), Federal Register Vol. 81 No. 45, March 8, 2016, available at https://www.bis.doc.gov/index.php/forms-documents/aboutbis/newsroom/1440-81-fr-12004-entity-list-final-rule/file.

[22] United States of America v. ZTE Corporation, United States District Court for the Northern District of Texas Dallas Division, 3-17CR-0120K, Factual Resume, pp. 3, 16, March 7, 2017, available at https://www.justice.gov/opa/press-release/file/946281/download.

[23] “Report Regarding Comprehensive Reorganization and the Standardization of the Company Export Control Related Matters,” ZTE Corporation,” ZTE Corporate Document, August 25, 2011, available at https://www.iranwatch.org/sites/default/files/report_regarding_comprehensive_reorganization_and_the_standardization_of_the_company_export_control_related_matters.pdf.

[24] Far East Cable Co. Ltd, Shipments, April 2016-December 2016, accessed via Panjiva on May 2, 2018.

[25] “Smarter Energy attends the 17th Iran International Electricity Exhibition 2017,” New Far East Cable Co., Ltd., November 8, 2017, http://en.newfareast.com.cn/news/670.html.

[26] IBID

[27] Stu Woo, Aruna Viswanatha, “Huawei Under Criminal Investigation Over Iran Sanctions,” The Wall Street Journal, April 25, 2018, https://www.wsj.com/articles/huawei-under-criminal-investigation-over-iran-sanctions-1524663728.

[28] Stu Woo, Aruna Viswanatha, “Huawei Under Criminal Investigation Over Iran Sanctions,” The Wall Street Journal, April 25, 2018, https://www.wsj.com/articles/huawei-under-criminal-investigation-over-iran-sanctions-1524663728.

[29] “US withdrawal from the JCPOA: Total’s position related to the South Pars 11 project in Iran,” Total Press Release, May 16, 2018, available at https://www.total.com/en/media/news/press-releases/us-withdrawal-jcpoa-totals-position-related-south-pars-11-project-iran.

A Resilient Threat: SSRC’s Role in Syria’s Chemical Weapon Program

Introduction

After nearly seven years of fighting, it appears that the Syrian regime of Bashar al-Assad has gained the upper hand in Syria’s civil war, which has claimed nearly half a million lives.[1] In his ruthless campaign to hold on to power, Assad repeatedly has targeted civilian populations with chemical weapons. Since 2012, some 130 instances of chemical weapons use have been reported in Syria. The vast majority of the confirmed attacks have been attributed to the Assad regime.[2][3]

Click to view report infographic

Two of the most deadly attacks involved sarin gas, a highly toxic nerve agent. The first occurred in August 2013 in the Damascus suburb of Ghouta. The Syrian military launched a barrage of rockets and artillery armed with sarin at a rebel-controlled area, killing over 1,400 people, including at least 426 children.[4] The second attack occurred in April 2017 in Khan Sheikhoun. In this attack the Syrian Air Force dropped aerial bombs containing sarin on a civilian area, killing approximately 100 people.[5]

The Scientific Studies and Research Center (SSRC), which oversees the production of chemical weapons in Syria, contributed to these attacks. The SSRC operates a number of facilities across Syria, where it produces chemical weapons, missiles, and artillery. It also relies on a network of companies inside and outside of Syria through which it procures the equipment and materials necessary for production. This network continues to operate despite U.S. and other government sanctions and international efforts to dismantle Syria’s chemical weapons.

This report describes the SSRC’s role in the development of Syria’s chemical weapons and chemical weapon delivery systems, as well as the structure and operation of its procurement network.

The History of SSRC Chemical Weapons Development

The SSRC was established in 1971. While it performs civilian duties, one of its primary functions is to oversee Syria’s chemical weapon and missile programs.[6] Due to its involvement in these activities, the SSRC has been publicly sanctioned by the governments of Australia, Canada, the European Union, Japan, Norway, South Korea, Switzerland, and the United States.[7] The organization was also recommended for sanction in a draft U.N. Security Council resolution in February 2017. The resolution was vetoed by Russia and China.[8]

Declassified U.S. intelligence documents indicate that before 1983, the Soviet Union and Czechoslovakia provided Syria with chemical agents and relevant training.[9] According to a recent report in the French investigative journal Mediapart, which was based on interviews with exiled SSRC scientists, the SSRC also received support for chemical weapon development from entities in West Germany. In the 1970s and early 1980s, Syrian chemists trained at university labs and research centers in Germany. While such training had ceased by 1983, the SSRC continued to import German products for its chemical program well into the 2000s. These imports reportedly included sodium fluoride and hydrogen fluoride, which are used in the synthesis of sarin gas. In the late 1980s, Armenia also provided assistance, including a formula for VX nerve agent and a supply of VX precursors. SSRC was soon producing VX at a secret underground site near Al-Nabk, 75 kilometers northeast of Damascus. According to the exiled scientists, VX production continued at this facility, with few interruptions, until 2012.[10]

By the mid-2000s, Iran was reportedly helping Syria develop its chemical weapon program, providing the blueprints for facilities and equipment used to produce hundreds of tons of precursors for VX and sarin. Tehran has also reportedly supplied Damascus with chemicals that can be used to produce mustard gas, including ethylene glycol, sodium sulfide, and hydrochloric acid. One such exchange occurred in 2002, when Iran’s Defense Industries Organization (DIO) supplied the SSRC with 10 tons of monoethylene glycol (MEG), which can be converted into a precursor for mustard gas and VX.[11] In addition, Tehran is reportedly the primary foreign funder of the SSRC’s weapons activities, even paying for North Korea’s assistance to its chemical weapon program.[12]

The SSRC appears to be Syria’s chief liaison with North Korea for the illicit procurement of equipment and materials for chemical weapons and ballistic missiles. Pyongyang has reportedly been supporting Syria’s chemical weapon program, in the form of equipment and technical assistance, since at least the 1990s. This support is believed to have accelerated in 2007, and to have continued after the outbreak of the civil war.[13] In early 2013, for example, North Korea reportedly transferred a vacuum dryer, which is required to produce chemical weapons, to Syria.[14] According to a leaked report by a U.N. expert panel, the SSRC reportedly received some 40 shipments from North Korea between 2012 and 2017.[15]

In addition, North Korea and Iran have reportedly helped build and operate at least five chemical weapon facilities in Syria,[16] at which the SSRC has overseen the production of large quantities of chemical munitions.

The majority of Syria’s stockpile is composed of sarin nerve agent.[17] The SSRC developed a particular type of sarin that uses hexamine as a stabilizer. This hexamine is a key “signature” of SSRC-developed sarin. This sarin generates diisoproyl methylphosphonate (DIMP) as a byproduct. DIMP is the second “signature” of the SSRC variant.[18] These signatures make it possible to identify SSRC-developed sarin.

In addition, through 2013, Damascus had a stockpile of several hundred tons of mustard gas and several tens of tons of VX nerve agent, according to a report by the French government.

SSRC and Chemical Weapon Delivery Systems

Syria’s missile program, which is also overseen by the SSRC, developed alongside its chemical weapon program.[19] Its arsenal of chemical weapon-capable delivery systems include several variants of liquid-fueled Scud missiles, including from North Korea, solid-fueled missiles of Iranian and Russian origin, as well as artillery rockets and aircraft.[20]

Damascus reportedly first acquired missiles, including the 300 km liquid-fueled Scud B ballistic missile and the Frog-7 artillery rocket, from the Soviet Union in the 1970s. By the 1990s, it had added to its arsenal the liquid-fueled Scud C, which has a range of 500 km.[21] As with its chemical weapon program, Syria received extensive help from Iran and North Korea for missile development.

After acquiring the technology for the 700 km liquid-fueled Scud D from Pyongyang, Syria began producing the missile around 2000.[22] Between 2005 and 2008, North Korea sought to procure raw materials for Syria’s missile and rocket programs on behalf of Damascus, including graphite, nozzle throats, and titanium steel. North Korea also supplied the SSRC with specialty steel and other materials for Scud electronic systems procured from China.[23] Engineers from Pyongyang’s Tangun Trading Company reportedly work with SSRC personnel to integrate the chemical weapons into Scud missile warheads.[24]

Iran has been assisting Syria with missile development since the early 1990s. Iran has cooperated with the SSRC in the construction of solid and liquid propellant production facilities, and reportedly supplies solid propellant equipment and technical expertise. By 2007, Damascus had also acquired the solid-fueled Fateh-110 ballistic missile from Iran, which has a range of 200-300 km. The SSRC reportedly is producing its own version of this system, known as the M600.[25] The Iranian firms Shahid Hemat Industrial Group (SHIG) and Shahid Bakeri Industrial Group (SBIG) reportedly supply explosives, solid propellant-related technology, and technical expertise to the SSRC.[26]

Syria also has received the solid-fueled SS-21 “Tochka” ballistic missile, which has a range of 70 km. Russia reportedly delivered a shipment of some 50 of these missiles in early 2017.[27]

Crossing the Red Line: SSRC and the Use of Chemical Weapons

Exiled SSRC scientists report that in 2009, Damascus, alarmed by potential domestic unrest, ordered the SSRC to begin miniaturizing gas munitions for use against dissidents. It was also reportedly ordered that equipment for storing sarin precursors and arming munitions be set up at seven specially chosen air bases across Syria. In the summer of 2011, as the civil war was ramping up, personnel from the SSRC’s elite Branch 450 began to modify small scale munitions and prepare the sarin precursors for use at the bases.[28] By 2013, the SSRC had dispersed Syria’s chemical agents across many sites, with estimates ranging from 20 to 50.[29]

The first confirmed use of chemical weapons by the Syrian regime occurred in April 2013, in the Aleppo region. Sarin was used in that attack. Since then, Damascus is assessed to have launched at least 29 attacks with chemical weapons.[i] Seven involved sarin, while the remainder involved chlorine.[30] In the August 2013 sarin attack in Ghouta, SSRC personnel prepared the munitions prior to their launch, and reportedly developed the short-range rockets used in the attack.[31]

Under a joint U.S.-Russian agreement reached shortly after the August 2013 attack, Damascus was required to destroy all of its chemical weapons production equipment by November of that year. Its entire chemical weapon stockpile was to be removed from the country by July 2014. The Organization for the Prohibition of Chemical Weapons (OPCW) oversaw the implementation of this agreement.[32] In July 2014, the OPCW announced that all 1,300 metric tons of Syria’s declared stockpile had been removed.[33] By October 2017, the OPCW declared that 25 of the 27 chemical weapon production facilities declared by Syria had been destroyed (Syria requested assistance in the destruction of the remaining two facilities).[34]

Despite the OPCW’s efforts, reports soon emerged that Damascus had not surrendered its entire stockpile. OPCW officials reportedly found traces of undeclared VX and sarin at an SSRC facility in 2015.[35] That same year, international inspectors and officials told the Wall Street Journal that the Syrian government obstructed efforts to inspect its chemical facilities, leading U.S. intelligence agents to conclude that Syria had not surrendered its entire stockpile. Officials also said that Syria used its chemical labs to produce weaponized chlorine as the removal process occurred.[36] In October 2017, the OPCW reported that the SSRC still has not provided a complete declaration of its facilities and activities.[37]

The French and U.S. governments suspect that Damascus still has a stockpile of the sarin precursor methylphosphonyl difluoride (DF), the capacity to produce and stockpile sarin, as well as chemical-capable rockets and grenades.[38] An exiled SSRC employee estimates that the organization hid 35 metric tons[ii] of poison gas from the OPCW.[39]

Chemical weapon production under the SSRC continues. A report by a Western intelligence agency leaked to the BBC in May 2017 states that the organization is producing chemical weapons at three sites: Masyaf in Hama province, and two facilities near Damascus – Dummar (also known as Jamraya) and Barzeh. The chemical weapons are reportedly installed on artillery and long range missiles at Masyaf and Barzeh. While OPCW inspectors are present at the two sites near Damascus, they do not have access to all areas, and the weapons are reportedly produced in the restricted sections. The intelligence report also assesses that Russia and Iran are aware of Syria’s illicit activities.[40] The Israeli Air Force has reportedly conducted numerous airstrikes on these facilities over the past year, including at least three on Jamraya and one on Masyaf. It is not clear if these strikes have disrupted Syria’s chemical weapon production.[41]

Chemical weapons produced by the SSRC continue to be used by the Assad regime. Samples taken from Khan Sheikhoun following the April 2017 attack revealed the presence of hexamine and DIMP, the two “signatures” of SSRC sarin.[42] The Joint Investigative Mechanism (JIM), established by the UN and the OPCW to investigate chemical weapons use in Syria, assesses that the sarin used in the attack was produced with the DF that came from Syria’s original stockpile.[43]

SSRC engineers also build barrel bombs used by the Syrian armed forces against civilian populations. These barrel bombs were used in chlorine gas attacks via helicopter on several occasions between 2014 and 2015. Since the beginning of 2018, suspected chlorine attacks have occurred in Eastern Ghouta and in Saraqeb, resulting in a number of casualties and at least six deaths.[44] The chlorine used in Saraqeb allegedly was delivered using barrel bombs dropped from a helicopter.[45]

A Resilient Network: SSRC’s Production and Procurement

It is difficult to get a clear picture of the SSRC’s structure and how it uses affiliates, front companies, and procurement agents. Media and government reports have shed some light on how it is organized. Other subdivisions have been identified in open sources. According to these reports, the SSRC has five specialized units working on chemicals weapons and their delivery vehicles:

  1. Division 1000 (Damascus) – development of navigation and guidance systems, as well as other electronics
  2. Division 2000 (Damascus) – engineering and production of launchers for rockets and missiles
    • Branch 410 – production of electronic and mechanical systems
  3. Division 3000 (Baza) – development and production of chemical and biological weapons
    • Department 3100 – synthesis of chemical weapons and their antidotes; chemical weapon detection and decontamination
    • Department 3600 – production of chemical weapons
    • Branch 450 – storage, guarding, and deployment of Syria’s chemical weapon stockpile
  4. Division 4000 (Aleppo) – oversight of all of Syria’s aviation, missile, and rocket programs
    • Project 99 – development of Scud missiles in cooperation with North Korea
    • Project 111 – development of surface-to-air missiles
    • Project 350 – production of surface-to-surface rockets and missiles
    • Project 702 – development of solid propellants, including for the M600, in cooperation with Iran
  5. Advanced Institute of Applied Sciences and Technology (ISSAT) – civilian programs[46]

The SSRC also oversees two major subsidiaries, both of which have been sanctioned by the United States and the European Union. They were also recommended for sanction by the United Nations in the February 2017 draft Security Council resolution:

  1. Higher Institute of Applied Science and Technology (HIAST)
  2. National Standards and Calibration Laboratory (NSCL)[47]

In addition, the SSRC has cultivated a network of front companies and procurement firms (see appendix), many of which also have been sanctioned by the United States and the European Union, notably the General Establishment for Engineering Industries (Handasieh). This firm oversees a group of about 12 engineering firms and has been connected to a number of missile-related shipments from North Korea. Handasieh also sought a casting molding line for a Scud missile project from Iran in 2010.[48]

In the years preceding the civil war, SSRC used its supply network in an effort to import equipment and material necessary for chemical weapon and ballistic missile production, often from Iran and North Korea. Interdicted items destined for SSRC front companies included solid double-base propellant,[49] chemical protection gear,[50] brass discs used to produce artillery ammunition tubes,[51] and machinery used in the production of liquid propellants.[52]

The U.S. Treasury Department also reports that in 2009 and 2010, Mechanical Construction Factory (MCF), one such front company, received components used in the production of solid propellant for rockets and missiles from Iran. Another SSRC front, Business Lab, also sought to procure 500 liters of pinacolyl alcohol, which is a precursor for the nerve agent soman, in 2009.[53]

In 2008, an SSRC affiliate attempted to purchase items that can be used to produce chemical weapon agents from two chemical firms in India. These items included glass components, chemical processing equipment, and heat exchangers.[54]

The SSRC’s procurement network has continued to operate despite the disarmament agreement and OPCW dismantlement work. According to the French government, since 2014 Syria has attempted to acquire dozens of tons of isopropanol, which is used in the manufacture of sarin.[55] Also since 2014, Western governments have identified over 30 SSRC front companies and procurement agents (see appendix for the complete list). In addition, the United States sanctioned 271 SSRC officials in a single action taken in April 2017.[56]

The SSRC uses these entities to make weapon-related procurements, including sarin gas precursors.[57] Such procurements have also reportedly included electronic components, computer numerically-controlled (CNC) machines, and raw materials.[58] In addition, the SSRC has recently sought to procure items under its own name, including carbon dioxide cylinders, cutting machinery,[59] and measuring equipment.[60]

One the most active SSRC front companies, the Metallic Manufacturing Factory (MMF), has issued at least two separate tenders for ammonium nitrate, which can be used as an oxidizer in missile propellants, and can also be used in explosives. The first tender, issued in July 2017, requested 700 tons of ammonium nitrate. The second, issued in January 2018, requested 1,000 tons.[61] Last year, MMF also sought to procure detonators[62] and a number of items with missile production applications, including a CNC lathe.[63] Earlier, in 2014, it sought to procure materials for making gas masks.[64]

The SSRC also has relied on entities based overseas to procure sensitive items on its behalf. For example, in July 2016 the United States sanctioned a Dubai-based network run by Salah Habib. This network acquired and shipped “sensitive merchandise and war materials” to the SSRC. In the same month, the United States targeted the Mahrous Group, another Dubai-based network, for making payments on behalf of SSRC to its foreign suppliers.[65]

Conclusion

Syria has not abandoned chemical weapons despite the partial disarmament in 2013-2014. This is demonstrated by the Assad regime’s continued use of these weapons as well as ongoing efforts, led by the SSRC, to obtain chemical weapon precursors and other weapon-related items.

Unfortunately, creating a robust U.N. sanctions regime in response is not possible, given Russia’s support of the Assad regime. Russian opposition doomed the Joint Investigative Mechanism (JIM), which was established by the United Nations and the OPCW in August 2015 to investigate chemical weapons use in Syria. The JIM was terminated in late 2017 after Russia vetoed a series of Security Council resolutions which would have extended its mandate. During its tenure, the JIM issued reports implicating the Assad regime in four chemical weapon attacks: Khan Shaykhun in April 2017 (sarin); Sarmin in March 2016 (chlorine); Qmenas in March 2015 (chlorine); and Talmenes in April 2014 (chlorine).[66]

Thus, sanctions must be imposed by a multinational coalition. Given the SSRC’s reliance on foreign sources, the United States and its partners must continue to identify entities inside and outside of Syria supporting illicit procurement. The French government took such a step last January, identifying two networks comprised of dozens of entities that acted on behalf of the SRRC to procure chemical weapon material, including sarin gas precursors.[67] The entities in these networks operate from China, France, Lebanon, and the United Arab Emirates, as well as from Syria.

The French-initiated Partnership Against the Impunity for the Use of Chemical Weapons, which was launched in Paris in January 2018, is another positive step. The partnership is dedicated to identifying and holding accountable entities that use or proliferate chemical weapons. It has set up a database drawn from national sanctions lists that provides the names of entities involved in chemical weapon use and proliferation. The partnership currently consists of around 30 countries and international organizations, including the United States.[68] Initiatives such as these will be essential to hold the Assad regime accountable and to prevent it from continuing to produce, stockpile, and use chemical weapons in the future.

Appendix^

Entities Identified as SSRC Fronts or Procurement Agents Since 2011

ABC Shipping Co. (Lebanon) [69]
Aziz Allouch (Nationality: Unknown) [70]
Business Lab (Syria)[71]
Chahine Mireille (Nationality: Lebanese) [72]
Denise Company (Lenanon)[73]
EKT Smart Technology (China)
Electronic Katrangi Trading (EKT) (Lenabon)
Electronic System Group (ESG) (Syria) [74]
Expert Partners (Syria)
General Establishment for Engineering Industries (Handasieh)[75]
Golden Star Co. (Syria)
Houranieh Chadi (Nationality: Canadian)
Houranieh Fadi (Nationality: Syrian)
Houranieh Hwaida (Nationality: Canadian)
Houranieh Mohammad Khalil (Nationality: Syrian)
Houranieh Mohammad Nazier (Nationality: Canadian) [76]
Industrial Solutions (Syria)[77]
Joud Trading (UAE)
Kassoum Mohamed (Nationality: Unknown)
Katrangi Amir Hachem (Nationality: Syrian)
Katrangi Houssam Hachem (Nationality: Lebanese)
Katrangi Maher Hachem (Nationality: Syrian)
Lumière Elysées (France) [78]
Mahrous Group (Syria)[79]
Mahrous Trading FZE (UAE)
Mechanical Construction Factory (MCF)[80]
Megatrade (Syria)[81]
Metallic Manufacturing Factory (MMF) (Syria)[82]
MHD Nazier Houranieh & Sons Co (Syria)
MKH Import & Export (Syria)
NKTRONICS (Lenanon) [83]
Organization for Technological Industries (OTI) (Syria)[84]
Salah Habib (Nationality: French and Syrian) [85]
Shadi for Cars Trading (Lebanon)
Sigma Tech Company (Syria) [86]
Smart Green Power (France)
Smart Logistics Offshore (Lenanon)
Smart Pegasus (France)
Steelor Company (Lebanon) [87]
Syrian Arab Co. for Electronic Industries (Syronics) [88]
Technolab (Lebanon)[89]
Yona Star International (UAE, Syria) [90]
Zhou Yishan (Nationality: Chinese)[91]



Footnotes:

[1] Maksymilian Czuperski, et. al., “Distract, Deceive, Destroy: Putin at War in Russia,” Atlantic Council, April 2016, pp. 5, 19-20, available at http://publications.atlanticcouncil.org/distract-deceive-destroy/assets/download/ddd-report.pdf, accessed on January 25, 2018;  Brennan Weiss, “This photo says it all about Russia’s involvement in Syria,” Business Insider, November 21, 2017, available at http://www.businessinsider.com/putin-hugs-assad-photo-syria-russia-2017-11, accessed on January 25, 2018; “Syria: Populations At Risk,” Press Release, Syrian Observatory for Human Rights, November 24, 2017, available at http://www.syriahr.com/en/?p=79314, accessed on December 11, 2017; “Syria envoy claims 400,000 have died in Syria conflict,” United Nations Radio, April 22, 2016, available at http://www.unmultimedia.org/radio/english/2016/04/syria-envoy-claims-400000-have-died-in-syria-conflict/#.WnnyOmnwaUn, accessed on February 6, 2018; “Syria – Events of 2016,” Human Rights Watch World Wide Web site, https://www.hrw.org/world-report/2017/country-chapters/syria, accessed on February 6, 2018.

[2] “Allegations of Chemical Weapons Use in Syria Since 2012,” Directorate-General of External Security, Government of France, available at https://www.diplomatie.gouv.fr/IMG/pdf/170425_-_national_evaluation_annex_-_anglais_cle81722e.pdf, accessed on January 25, 2018.

[3] “Allegations of Chemical Weapons Use in Syria Since 2012,” Directorate-General of External Security, Government of France, available at https://www.diplomatie.gouv.fr/IMG/pdf/170425_-_national_evaluation_annex_-_anglais_cle81722e.pdf, accessed on January 25, 2018.

[4] “Government Assessment of the Syrian Government’s Use of Chemical Weapons on August 21, 2013,” Office of the Press Secretary, White House, August 30, 2013, available at https://obamawhitehouse.archives.gov/the-press-office/2013/08/30/government-assessment-syrian-government-s-use-chemical-weapons-august-21, accessed on December 11, 2017; Amb. Samantha Power, “United States Mission to the United Nations Exit Memo,” United States Mission to the United Nations, January 5, 2017, available at https://2009-2017-usun.state.gov/remarks/7643, accessed on December 11, 2017.

[5] “National Evaluation: Chemical Attack of 4 April 2017 (Khan Sheikhoun) Clandestine Syrian Chemical Weapons Programme,” Directorate-General of External Security, Government of France, April 25, 2017, p. 2, available at http://www.diplomatie.gouv.fr/IMG/pdf/170425_-_evaluation_nationale_-_anglais_-_final_1_cle8ca411.pdf, accessed on November 2, 2017; “Both ISIL and Syrian Government responsible for use of chemical weapons, UN Security Council told,” Press Release, United Nations, November 7, 2017, available at https://www.un.org/apps/news/story.asp?NewsID=58051#, accessed on December 11, 2017.

[6] United Nations Security Council Draft Resolution, S/2017/172, February 28, 2017, p. 11, available at http://www.securitycouncilreport.org/atf/cf/%7B65BFCF9B-6D27-4E9C-8CD3-CF6E4FF96FF9%7D/s_2017_172.pdf, accessed on December 4, 2017; “Fact Sheet: Increasing Sanctions Against Syria,” Office of Public Affairs, U.S. Department of the Treasury, July 18, 2012, available at http://www.treasury.gov/press-center/press-releases/Documents/Fact%20Sheet.pdf, accessed on December 14, 2017.

[7] “Autonomous Sanctions (Designated Persons and Entities and Declared Persons – Syria) List 2012,” Australian Department of Foreign Affairs, April 28, 2015, pp. 4, 18, available at https://www.legislation.gov.au/Details/F2015C00369/Download, accessed on January 24, 2018; “Special Economic Measures (Syria) Regulations,” Canadian Minister of Justice, May 24, 2011, SOR/2011-114, p. 9, available at http://laws-lois.justice.gc.ca/PDF/SOR-2011-114.pdf, accessed on January 24, 2018; Council Regulation (EU) No 36/2012 of 18 January 2012 concerning restrictive measures in view of the situation in Syria and repealing Regulation (EU) No 442/2011 (Consolidated Version), September 27, 2017, available at http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02012R0036-20170927&qid=1515531237694&from=EN, accessed on January 9, 2018; “Addition of Lists for the Measures to Freeze the Assets of President Bashar Al-Assad and His Related Individuals and Entities in Syria,” Press Release, Ministry of Foreign Affairs of Japan, December 22, 2011, available at http://www.mofa.go.jp/announce/announce/2011/12/1222_04.html, accessed on January 24, 2018; The Regulation on Special Measures Against Syria, Norwegian Ministry of Foreign Affairs, September 2, 2011, available at https://lovdata.no/dokument/LTI/forskrift/2014-02-14-214/*#* (in Norwegian), accessed on January 26, 2018; Amendment to Syria Sanctions – Consolidated List, State Secretariat for Economic Affairs (SECO), Government of Switzerland, October 10,, 2017, available at https://www.seco.admin.ch/dam/seco/de/…/Syrien/…/Syrien 2017-08-03.pdf, accessed on January 24, 2018; “Specially Designated Nationals and Blocked Persons List,” U.S. Department of the Treasury, Office of Foreign Assets Control, January 26, 2018, p. 269, available at https://www.treasury.gov/ofac/downloads/sdnlist.pdf, accessed on January 26, 2018; “List of persons subject to financial sanctions under Article 2, paragraph 1, subparagraphs 15 to 19 of the Guidelines for Payment and Recognition for the Implementation of Duties such as International Peace and Security Maintenance,” South Korean Ministry of Strategy and Finance, December 11, 2017, available at http://www.mosf.go.kr/com/synap/synapView.do?atchFileId=ATCH_000000000006869&fileSn=2, accessed on February 7, 2018; “Guidelines for Payment and Receipt for the Fulfillment of Obligations such as International Peace and Security Maintenance,” Ministry of Strategy and Finance, August 12, 2016, available at http://www.mosf.go.kr/com/synap/synapView.do?atchFileId=ATCH_000000000002556&fileSn=1, accessed on February 7, 2018.

[8] United Nations Security Council Draft Resolution, S/2017/172, February 28, 2017, pp. 5, 9, 11, available at http://www.securitycouncilreport.org/atf/cf/%7B65BFCF9B-6D27-4E9C-8CD3-CF6E4FF96FF9%7D/s_2017_172.pdf, accessed on February 8, 2018; “Russia, China block Security Council action on use of chemical weapons in Syria,” Press Release, United Nations, February 27, 2017, available at http://www.un.org/apps/news/story.asp?NewsID=56260#.WnyzgJ3waUk, accessed on February 8, 2018.

[9] “Implications of Soviet Use of Chemical and Toxic Weapons for U.S. Security Interests,” U.S. Central Intelligence Agency, September 15, 1983, p. 11, available at http://www.fas.org/irp/threat/cbw/sniecbw1983.pdf, accessed on September 17, 2013.

[10] Rene Backmann, “Chemical Weapons: Syrian Regime Has Developed its Arsenal with the Help of Several Countries,” Mediapart, June 2, 2017, available as EUL201706092761441 via Open Source Center (www.opensource.gov), accessed on December 1, 2017.

[11] “Australia Group: 2006 Information Exchange (IE),” U.S. Department of State, June 20, 2006, available at https://wikileaks.org/plusd/cables/06PARIS4218_a.html, accessed on December 7, 2017.

[12] Bruce E. Bechtol Jr., “North Korea and Syria: Partners in Destruction and Violence,” Korean Journal of Defense Analysis, September 2015, pp. 282-283, available at https://blackboard.angelo.edu/bbcswebdav/institution/LFA/CSS/Course Material/SEC6317/readings/01_Bruce E. Bechtol.pdf, accessed on December 4, 2017.

[13] Nate Thayer, “North Korea and Syrian Chemical and Missile Programs,” NK News, June 19, 2013, available at https://webcache.googleusercontent.com/search?q=cache:Iuw_Siobn3EJ:https://www.nknews.org/2013/06/north-korea-and-syrian-chemical-and-missile-programs/+&cd=1&hl=en&ct=clnk&gl=us, accessed via Google cache on January 8, 2018; Bruce E. Bechtol Jr., “North Korea and Syria: Partners in Destruction and Violence,” Korean Journal of Defense Analysis, September 2015, pp. 282-283, 286, available at https://blackboard.angelo.edu/bbcswebdav/institution/LFA/CSS/Course Material/SEC6317/readings/01_Bruce E. Bechtol.pdf, accessed on December 4, 2017.

[14] “N. Korea ‘Exporting Chemical Weapons Parts to Syria,’” Chosun Ilbo, June 17, 2013, available at http://english.chosun.com/site/data/html_dir/2013/06/17/2013061700887.html, accessed on December 4, 2017.

[15] https://af.reuters.com/article/worldNews/idAFKBN1FM2NH

[16] Bruce E. Bechtol Jr., “North Korea and Syria: Partners in Destruction and Violence,” Korean Journal of Defense Analysis, September 2015, p. 283, available at https://blackboard.angelo.edu/bbcswebdav/institution/LFA/CSS/Course Material/SEC6317/readings/01_Bruce E. Bechtol.pdf, accessed on December 4, 2017.

[17] “Syria/Syrian chemical programme – National executive summary of declassified intelligence,” Directorate-General of External Security, Government of France, September 3, 2013, pp. 1-2, available at http://www.diplomatie.gouv.fr/en/IMG/pdf/Syrian_Chemical_Programme.pdf, accessed on December 15, 2017.

[18] “National Evaluation: Chemical Attack of 4 April 2017 (Khan Sheikhoun) Clandestine Syrian Chemical Weapons Programme,” Directorate-General of External Security, Government of France, April 25, 2017, p. 2, available at http://www.diplomatie.gouv.fr/IMG/pdf/170425_-_evaluation_nationale_-_anglais_-_final_1_cle8ca411.pdf, accessed on November 2, 2017; Rene Backmann, “Chemical Weapons: Syrian Regime Has Developed its Arsenal with the Help of Several Countries,” Mediapart, June 2, 2017, available as EUL201706092761441 via Open Source Center (www.opensource.gov), accessed on December 1, 2017.

[19] United Nations Security Council Draft Resolution, S/2017/172, February 28, 2017, p. 11, available at http://www.securitycouncilreport.org/atf/cf/%7B65BFCF9B-6D27-4E9C-8CD3-CF6E4FF96FF9%7D/s_2017_172.pdf, accessed on December 4, 2017; “Fact Sheet: Increasing Sanctions Against Syria,” Office of Public Affairs, U.S. Department of the Treasury, July 18, 2012, available at http://www.treasury.gov/press-center/press-releases/Documents/Fact%20Sheet.pdf, accessed December 14, 2017; Robin Hughes, “SSRC: Spectre at the Table,” Jane’s Defense Weekly, January 22, 2014, available via Jane’s Information Group (www.janes.com), accessed on December 4, 2017.

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[75] Council Regulation (EU) No 36/2012 of 18 January 2012 concerning restrictive measures in view of the situation in Syria and repealing Regulation (EU) No 442/2011 (Consolidated Version), September 27, 2017, available at http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02012R0036-20170927&qid=1515531237694&from=EN, accessed on January 9, 2018; “Fact Sheet: Increasing Sanctions Against Syria,” Office of Public Affairs, U.S. Department of the Treasury, July 18, 2012, available at http://www.treasury.gov/press-center/press-releases/Documents/Fact%20Sheet.pdf, accessed on December 14, 2017.

[76] Order of January 18, 2018 Implementing Articles L.562-3 and Following of the Monetary and Financial Code, French Ministry of Economy and Finances, available at https://www.diplomatie.gouv.fr/fr/politique-etrangere-de-la-france/desarmement-et-non-proliferation/evenements-lies-au-desarmement-et-a-la-non-proliferation/evenements-lies-aux-armes-chimiques/article/communique-de-presse-conjoint-de-mm-le-drian-et-le-maire-23-janvier-2018# (in French), accessed on January 23, 2018; Order of January 18, 2018 Implementing Articles L.562-3 of the Monetary and Financial Code, French Ministry of Economy and Finances, available at https://www.diplomatie.gouv.fr/fr/politique-etrangere-de-la-france/desarmement-et-non-proliferation/evenements-lies-au-desarmement-et-a-la-non-proliferation/evenements-lies-aux-armes-chimiques/article/communique-de-presse-conjoint-de-mm-le-drian-et-le-maire-23-janvier-2018# (in French), accessed on January 23, 2018.

[77] Council Regulation (EU) No 36/2012 of 18 January 2012 concerning restrictive measures in view of the situation in Syria and repealing Regulation (EU) No 442/2011 (Consolidated Version), September 27, 2017, available at http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02012R0036-20170927&qid=1515531237694&from=EN, accessed on January 9, 2018; “Fact Sheet: Increasing Sanctions Against Syria,” Office of Public Affairs, U.S. Department of the Treasury, July 18, 2012, available at http://www.treasury.gov/press-center/press-releases/Documents/Fact%20Sheet.pdf, accessed on December 14, 2017.

[78] Order of January 18, 2018 Implementing Articles L.562-3 and Following of the Monetary and Financial Code, French Ministry of Economy and Finances, available at https://www.diplomatie.gouv.fr/fr/politique-etrangere-de-la-france/desarmement-et-non-proliferation/evenements-lies-au-desarmement-et-a-la-non-proliferation/evenements-lies-aux-armes-chimiques/article/communique-de-presse-conjoint-de-mm-le-drian-et-le-maire-23-janvier-2018# (in French), accessed on January 23, 2018; Order of January 18, 2018 Implementing Articles L.562-3 of the Monetary and Financial Code, French Ministry of Economy and Finances, available at https://www.diplomatie.gouv.fr/fr/politique-etrangere-de-la-france/desarmement-et-non-proliferation/evenements-lies-au-desarmement-et-a-la-non-proliferation/evenements-lies-aux-armes-chimiques/article/communique-de-presse-conjoint-de-mm-le-drian-et-le-maire-23-janvier-2018# (in French), accessed on January 23, 2018.

[79] “Treasury Sanctions Networks Providing Support to the Government of Syria,” Press Center, U.S. Department of the Treasury, July 21, 2016, available at https://www.treasury.gov/presscenter/press-releases/Pages/jl0526.aspx, accessed on November 2, 2017; “Syria Designations; Non-proliferation Designations,” Office of Foreign Assets Control, U.S. Department of the Treasury, July 21, 2016, available at https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20160721.aspx, accessed on February 6, 2018.

[80] Council Regulation (EU) No 36/2012 of 18 January 2012 concerning restrictive measures in view of the situation in Syria and repealing Regulation (EU) No 442/2011 (Consolidated Version), September 27, 2017, available at http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02012R0036-20170927&qid=1515531237694&from=EN, accessed on January 9, 2018; “Fact Sheet: Increasing Sanctions Against Syria,” Office of Public Affairs, U.S. Department of the Treasury, July 18, 2012, available at http://www.treasury.gov/press-center/press-releases/Documents/Fact%20Sheet.pdf, accessed on December 14, 2017.

[81] “Council Implementing Regulation (EU) No 1117/2012 of 29 November 2012 implementing Article 32(1) of Regulation (EU) No 36/2012 concerning restrictive measures in view of the situation in Syria,” Official Journal of the European Union, November 30, 2012, L330/10-11, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:330:0009:0011:EN:PDF, accessed on January 24, 2018.

[82] “Treasury Sanctions Senior Al-Nusrah Front Leaders Concurrently with UN Designations,” Press Release, U.S. Department of the Treasury, February 23, 2017, available at https://www.treasury.gov/press-center/press-releases/Pages/sm0011.aspx, accessed on November 2, 2017.

[83] Order of January 18, 2018 Implementing Articles L.562-3 and Following of the Monetary and Financial Code, French Ministry of Economy and Finances, available at https://www.diplomatie.gouv.fr/fr/politique-etrangere-de-la-france/desarmement-et-non-proliferation/evenements-lies-au-desarmement-et-a-la-non-proliferation/evenements-lies-aux-armes-chimiques/article/communique-de-presse-conjoint-de-mm-le-drian-et-le-maire-23-janvier-2018# (in French), accessed on January 23, 2018; Order of January 18, 2018 Implementing Articles L.562-3 of the Monetary and Financial Code, French Ministry of Economy and Finances, available at https://www.diplomatie.gouv.fr/fr/politique-etrangere-de-la-france/desarmement-et-non-proliferation/evenements-lies-au-desarmement-et-a-la-non-proliferation/evenements-lies-aux-armes-chimiques/article/communique-de-presse-conjoint-de-mm-le-drian-et-le-maire-23-janvier-2018# (in French), accessed on January 23, 2018.

[84] “Non-proliferation Designations; Syria Designations; Zimbabwe Designations Removals,” U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC), January 12, 2017, available at https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20170112.aspx, accessed on January 29, 2018.

[85] “Treasury Sanctions Networks Providing Support to the Government of Syria,” Press Center, U.S. Department of the Treasury, July 21, 2016, available at https://www.treasury.gov/presscenter/press-releases/Pages/jl0526.aspx, accessed on November 2, 2017; “Syria Designations; Non-proliferation Designations,” Office of Foreign Assets Control, U.S. Department of the Treasury, July 21, 2016, available at https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20160721.aspx, accessed on February 6, 2018.

[86] “Treasury Targets Syrian Regime Financial and Weapons Networks,” Press Release, U.S. Department of the Treasury, March 31, 2015, available at https://www.treasury.gov/press-center/press-releases/Pages/JL10013.aspx , accessed on January 9, 2018.

[87] Order of January 18, 2018 Implementing Articles L.562-3 and Following of the Monetary and Financial Code, French Ministry of Economy and Finances, available at https://www.diplomatie.gouv.fr/fr/politique-etrangere-de-la-france/desarmement-et-non-proliferation/evenements-lies-au-desarmement-et-a-la-non-proliferation/evenements-lies-aux-armes-chimiques/article/communique-de-presse-conjoint-de-mm-le-drian-et-le-maire-23-janvier-2018# (in French), accessed on January 23, 2018; Order of January 18, 2018 Implementing Articles L.562-3 of the Monetary and Financial Code, French Ministry of Economy and Finances, available at https://www.diplomatie.gouv.fr/fr/politique-etrangere-de-la-france/desarmement-et-non-proliferation/evenements-lies-au-desarmement-et-a-la-non-proliferation/evenements-lies-aux-armes-chimiques/article/communique-de-presse-conjoint-de-mm-le-drian-et-le-maire-23-janvier-2018# (in French), accessed on January 23, 2018;

[88] Council Regulation (EU) No 36/2012 of 18 January 2012 concerning restrictive measures in view of the situation in Syria and repealing Regulation (EU) No 442/2011 (Consolidated Version), September 27, 2017, available at http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02012R0036-20170927&qid=1515531237694&from=EN, accessed on January 9, 2018; “Fact Sheet: Increasing Sanctions Against Syria,” Office of Public Affairs, U.S. Department of the Treasury, July 18, 2012, available at http://www.treasury.gov/press-center/press-releases/Documents/Fact%20Sheet.pdf, accessed on December 14, 2017.

[89] “Treasury Sanctions Additional Individuals and Entities in Response to Continuing Violence in Syria,” Press Release, U.S. Department of the Treasury, December 23, 2016, available at https://www.treasury.gov/press-center/press-releases/Pages/jl0690.aspx, accessed on November 2, 2017.

[90] “Treasury Sanctions Networks Providing Support to the Government of Syria,” Press Center, U.S. Department of the Treasury, July 21, 2016, available at https://www.treasury.gov/presscenter/press-releases/Pages/jl0526.aspx, accessed on November 2, 2017; “Syria Designations; Non-proliferation Designations,” Office of Foreign Assets Control, U.S. Department of the Treasury, July 21, 2016, available at https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20160721.aspx, accessed on February 6, 2018.

[91] Order of January 18, 2018 Implementing Articles L.562-3 and Following of the Monetary and Financial Code, French Ministry of Economy and Finances, available at https://www.diplomatie.gouv.fr/fr/politique-etrangere-de-la-france/desarmement-et-non-proliferation/evenements-lies-au-desarmement-et-a-la-non-proliferation/evenements-lies-aux-armes-chimiques/article/communique-de-presse-conjoint-de-mm-le-drian-et-le-maire-23-janvier-2018# (in French), accessed on January 23, 2018; Order of January 18, 2018 Implementing Articles L.562-3 of the Monetary and Financial Code, French Ministry of Economy and Finances, available at https://www.diplomatie.gouv.fr/fr/politique-etrangere-de-la-france/desarmement-et-non-proliferation/evenements-lies-au-desarmement-et-a-la-non-proliferation/evenements-lies-aux-armes-chimiques/article/communique-de-presse-conjoint-de-mm-le-drian-et-le-maire-23-janvier-2018# (in French), accessed on January 23, 2018.

The Missile Sanctions Gap: Re-Aligning U.S. and EU Iran Designations

Introduction

January 2018 brought with it two key recurring deadlines for U.S. President Donald Trump: whether or not to certify Iran’s compliance with the nuclear deal and whether to continue waiving nuclear-related sanctions on Iran. On January 12, the president decided for a second time not to certify Iran’s compliance, but he stopped short of re-imposing sanctions. Instead, he waived sanctions once again to allow time to “fix the deal’s disastrous flaws,” including by securing Europe’s cooperation in addressing Iran’s ballistic missile threat. The president warned, however, that this would be “a last chance” and that without progress he would “withdraw from the deal immediately.”[1]

The January 12 sanctions waivers were accompanied by another round of U.S. Treasury Department sanctions, including against entities supporting Iran’s military-related procurement. Earlier in January, the Treasury Department designated five entities for their support of Iran’s solid fuel ballistic missile program.[2] These are the latest in a string of recent actions by the United States against Iranian missile proliferators, which have been taken in conjunction with sanctions targeting the Iranian government’s support for terrorism, human rights abuses, and its destabilizing regional actions.

The Sanctions Coordination Gap

The ongoing effort by the United States to identify and designate entities and suppliers supporting Iran’s missile program stands in contrast to the European Union, which has not sanctioned any Iran-related entities of proliferation concern since December 22, 2012.[3] While neither the United States nor the EU designated any entities during the height of the nuclear negotiations in 2015, the United States resumed such designations in January 2016 – just one day after the implementation of the nuclear agreement.[4]

Click to view report infographic

Since the agreement’s implementation, the United States has designated 73 proliferation-related entities, only three of which appear on the EU list.[5] (These entities are listed in appendix to this report.) The majority of these entities are derivative designations targeting subsidiaries and overseas networks of suppliers, front companies, and individuals acting on behalf of already designated entities. Most were targeted for supporting Iran’s ballistic missile program, with a fewer number designated for supporting Iran’s military, including through illicit procurement.[6]

In his January 12 statement, the president called on Europe to join the United States in taking “stronger steps” aimed at “constraining Iran’s missile development and stopping the proliferation of missiles, especially to Yemen.”[7] He also described ongoing efforts to work with European allies on “a new supplemental agreement that would impose new multilateral sanctions if Iran develops or tests long-range missiles.”[8]

Congress, too, has called for greater cooperation between the United States and the EU in efforts to constrain Iran’s missile development, including by coordinating proliferation designations. Such coordination was one reason for the high impact of international sanctions in the period before the 2015 nuclear agreement. The Countering America’s Adversaries Through Sanctions Act (CAATSA – P.L. 115-44), which the president signed into law last August, requires the administration to report to Congress every 180 days on the discrepancies between U.S. and EU WMD or missile proliferation sanctions.[9] The first such report is due at the end of this month.

While a number of EU member countries agree on the need to confront Iran’s missile program, all are critical of the president’s decision to tie such action to the nuclear agreement. EU foreign affairs chief Federica Mogherini repeatedly has emphasized the need to address ballistic missiles outside of the nuclear agreement, including at meetings with U.S. officials in Washington last fall.[10]

The Road to Iran’s Military

A pattern emerges in looking at the entities sanctioned by the United States for proliferation following the implementation of the nuclear agreement. Fifty-nine of the 73 entities are subsidiaries of or suppliers to a handful of well-known entities supporting Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL), including Shahid Hemat Industrial Group (SHIG), Shahid Bagheri Industrial Group (SBIG). Both of these entities are subordinate to Iran’s Aerospace Industries Organization (AIO), which is “responsible for ballistic missile research, development and production activities,” according to the Treasury Department.[11] Subsidiaries and suppliers of Shiraz Electronics Industries (SEI) also have been the target of recent sanctions. SEI produces electronics for Iran’s military. It is a subsidiary of Iran Electronics Industries (IEI), which is itself controlled by MODAFL. Most of the remaining 14 entities were designated for their connection to or support of Iran’s Revolutionary Guard Corps (IRGC). All of these designations were made pursuant to Executive Order (E.O.) 13382, “which targets proliferators of WMDs and their delivery systems.”[12]

The EU, too, has sanctioned all of the well-known proliferators named above through a series of Council decisions and regulations since 2007.[13] Like the U.S. Executive Order, these authorities provide that the sanctions – including an asset freeze and prohibition on transactions – apply to those entities acting on behalf of, or owned or controlled by, those that are explicitly designated. However, the EU has failed to take action against such related entities since the nuclear agreement’s implementation. This makes it easier for Iran’s missile supply network to continue operating and undermines the impact of U.S. sanctions.

SHIG and SBIG: Key Contributors to Iran’s Ballistic Missile Program

SHIG is responsible for Iran’s liquid-fueled ballistic missile program, including the development of the medium-range Shahab-3 originally based on North Korea’s No Dong missile. SHIG also has engaged in the transfer of controlled missile technology with North Korea.[14] SBIG is responsible for Iran’s solid-fueled ballistic missile program and produces Iran’s Fateh-100 short-range missile.[15] Twenty-eight of the 73 entities designated by the United States are subordinates or suppliers to SHIG or SBIG, both of which remain subject to U.N. sanctions pursuant to Security Council resolution 2231.[16]

The U.S. focus on SBIG and SHIG increased after Iranian-backed Houthi militants in Yemen launched short-range ballistic missiles into Saudi Arabia on three separate occasions between July and December 2017. During a press conference on December 14, U.S. Ambassador to the United Nations Nikki Haley presented missile parts recovered from two of these missile strikes. One piece of missile debris was stamped with the SBIG logo and a missile guidance system component was imprinted with SHIG’s name.[17] A U.N. investigative panel for Yemen reportedly stated that Iran may be in “noncompliance” with U.N. resolutions by failing to prevent the Houthis from acquiring the missiles.[18]

 

Stamped logos for SHIG and SBIG appear on debris from Iranian missiles fired into Saudi Arabia from Yemen. Photos by EJ Hersom and courtesy of the Defense Video Imagery Distribution System.

The United States has continued to target subsidiaries of SHIG and SBIG, most recently on January 4, when the Treasury Department designated five entities for their role in developing and producing missile guidance systems, propellant for solid-fueled ballistic missiles, and ballistic missile launchers. All five are “owned or controlled” by SBIG.[19]

U.S. sanctions also have aimed to shut down the overseas supply networks used by SHIG and SBIG. For example, in February 2017 the Treasury Department designated a key Iranian procurement agent, Abdollah Asgharzadeh, and a network of China-based brokers and companies used by Asgharzadeh to procure dual-use technology for SHIG. The Asgharzadeh network procured and shipped foreign-produced ball bearings required for the Shahab-2 and Shahab-3 ballistic missiles.[20] Also in February 2017, the Treasury Department targeted a Dubai-based procurement network supplying SBIG with ballistic missile components.[21]

SEI: Targeting Proliferation Abroad

SEI produces electronic equipment for the Iranian military, including radars, avionics and control systems, and missile guidance technology.  The firm has used front companies[22] and individuals globally[23] to obtain sensitive U.S.-origin missile-related goods and technology.[24]

Half of the 28 foreign firms sanctioned by the United States for proliferation since the nuclear agreement’s implementation were targeted for their support of SEI or its parent, IEI.[25] For example, in July 2017, the Treasury Department designated a China-based procurement agent and a network of Chinese companies she used to procure U.S.-, Canadian-, and European-origin electronic components on behalf of SEI.[26] And in May 2017, the Treasury Department designated another Chinese national and three associated China-based companies for supplying SEI with goods and technology used for missile navigation, guidance, and stabilization. Some transactions have taken place “since at least 2015,” the year of the nuclear agreement.[27]

In the Treasury Department’s most recent action on January 12, yet another China-based supply network was sanctioned for selling specialized sensors and navigational gyrocompasses to SEI.[28]


Equipment and electronic components for anti-tank missiles with SEI and IEI logos, seized while en route from Iran to Yemen. Photos courtesy of the United Nations.

SEI and IEI also have been connected to military-related exports to Yemen. In January 2016, a U.N. investigative panel concluded that weapons seized by the U.S. and Australia while en route to Yemen were likely of Iranian origin. The panel’s report noted that the weapons bore “the markings bearing the names of Iranian industrial companies” and contained photos revealing stamps belonging to SEI and IEI.[29]

The Challenges of Realignment

Since the implementation of the nuclear agreement, the EU has failed to join the United States in identifying and targeting organizations and individuals under the umbrella of entities responsible for Iran’s missile development, production, and export. More broadly, the EU has rarely pursued the overseas networks supplying missile technology to these entities. As a result, SHIG, SBIG, SEI, and others are able to circumvent sanctions more easily by using subordinates, front companies, and overseas agents to support missile development.

There are several reasons for this failure to act. First, establishing consensus among the EU’s 28 member countries is difficult. France has taken a firm stance, calling Iran’s missile program “inconsistent” with U.N. resolutions and “a destabilizing factor in the region.”[30] In a speech on January 8, President Emmanuel Macron noted that Iran’s “ballistic missile activity has been stepped up” since the 2015 nuclear agreement, and that dialogue with Iran to restrict this activity is “essential.”[31] Other countries, however, have been less forceful in calling for action.[32]

Second, the EU is concerned that any punitive action against Iran’s missile program could further undermine the nuclear agreement, which they judge as already in jeopardy as a result of the U.S. administration’s actions. In remarks last November, Mogherini said that the EU was “ready to addresses other issues,” including missiles, “once it is very clear that the nuclear deal implementation is preserved by all sides [in] full.”[33] However, the nuclear agreement and Iran’s ballistic missile program are linked; both are part of U.N. Security Council resolution 2231, which endorsed the agreement[34] and imposed restrictions on Iran’s missile and military activities.[35]

Finally, the EU has faced legal challenges to its designations in recent years. Some Iranian companies and individuals have disputed their designation in EU courts, and have had sanctions against them lifted because the information used to support the designation was confidential. Such information could not be shared openly in court and with the defendants. This may have increased the evidentiary burden required for the EU to issue additional autonomous designations, including derivative designations against subordinates and suppliers of sanctioned entities.

A Way Forward

Recent statements by U.S. and EU officials indicate a desire to work together to address the threats posed by Iran that the nuclear agreement did not contain, including Iran’s ballistic missile program. During a visit to London this week, U.S. Secretary of State Rex Tillerson announced that a working group had been set up with France, Germany, and the United Kingdom to discuss these threats and “how we might approach Iran to address our concerns.”[36] According to Tillerson, working group participants have been named and the group could meet as early as next week.[37]

In addition, French Foreign Minister Jean-Yves Le Drian will be traveling to Iran in early March to discuss Iran’s missile program along with related “regional questions.”[38] He promised to deliver a “frank message” about the need for Iran to contain its missile program as required by resolution 2231. Finally, Germany reportedly is advocating for targeted EU economic sanctions aimed at punishing Iran’s missile program.[39] If Iran refuses to curb its missile development through negotiations, a package of such sanctions reportedly may be adopted.[40] These are welcome developments. Closer collaboration between the United States and Europe increases the prospect of meaningfully restricting Iran’s missile work, whether through negotiation, economic pressure, or both.

Proliferation-Related Entities Designated by the United States since Implementation Day (January 16, 2016) Pursuant to Executive Order (E.O.) 13382, Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters^

EntityDate SanctionedRelationship, Activity, and/or Location
MODAFL > Aerospace Industries Organization (AIO)
Anhui Land Group Co., Limited+1/17/2016
  • Mabrooka Trading Co. > Navid Composite > Sanam Industrial Group > AIO

  • Hong Kong-based
  • Candid General Trading LLC+1/17/2016
  • Mabrooka Trading Co. > Navid Composite > Sanam Industrial Group > AIO

  • United Arab Emirates-based
  • Chen Mingfu+1/17/2016
  • Mabrooka Trading Co. > Navid Composite > Sanam Industrial Group > AIO

  • Chinese citizen
  • Hossein Pournaghshband1/17/2016
  • Mabrooka Trading Co. > Navid Composite > Sanam Industrial Group > AIO

  • Procured equipment and materials for carbon fiber production
  • Mabrooka Trading Co. LLC+1/17/2016
  • Navid Composite > Sanam Industrial Group > AIO

  • United Arab Emirates-based
  • Rahimreza Farghadani+1/17/2016
  • Candid General Trading > Mabrooka Trading Co. > Navid Composite > Sanam Industrial Group > AIO

  • United Arab Emirates-based
  • Ervin Danesh Aryan Company2/3/2017
  • Navid Composite > Sanam Industrial Group > AIO
  • Ghodrat Zargari2/3/2017
  • Mabrooka Trading Co. > Navid Composite > AIO

  • Worked with Mabrooka Trading Co. to ship goods through China to Iran
  • Mohammad Magham2/3/2017
  • Navid Composite > Sanam Industrial Group > AIO

  • Procured goods for carbon fiber production from foreign suppliers
  • Mostafa Zahedi2/3/2017
  • Mabrooka Trading Co. > Navid Composite > Sanam Industrial Group > AIO

  • Procured carbon fiber production equipment from foreign suppliers
  • Zist Tajhiz Pooyesh Company2/3/2017
  • Mabrooka Trading Co. > Navid Composite > Sanam Industrial Group > AIO
  • Shahid Alamolhoda Industries10/13/2017
  • Naval Defense Missile Industry Group > AIO

  • Involved in the development of cruise missiles
  • MODAFL > Aerospace Industries Organization (AIO) > Shahid Bagheri Industrial Group (SBIG)
    Kambiz Rostamian+2/3/2017
  • Royal Pearl Trading and MKS International > SBIG

  • United Arab Emirates-based
  • MKS International Co. Ltd.2/3/2017
  • Provided financial support to SBIG and AIO for ballistic missile-related procurement
  • Royal Pearl General Trading+2/3/2017
  • MKS International > SBIG

  • United Arab Emirates-based
  • Rahim Ahmadi5/17/2017
  • SBIG Director

  • Coordinated SBIG’s ballistic missile flight tests with AIO
  • Shahid Kharrazi Industries*1/4/2018
  • Iran-based subordinate of SBIG

  • Involved in solid-fueled missile development production
  • Shahid Moghaddam Industries1/4/2018
  • Iran-based subordinate of SBIG

  • Involved in solid fuel missile development and production
  • Shahid Sanikhani Industries1/4/2018
  • Iran-based subordinate of SBIG

  • Involved in solid fuel missile development and production
  • Shahid Shustari Industries1/4/2018
  • Iran-based subordinate of SBIG

  • Developed carbon fiber for missiles
  • MODAFL > Aerospace Industries Organization (AIO) > Shahid Hemat Industrial Group (SHIG)
    Sayyed Javad Musavi1/17/2016
  • SHIG Commercial Director

  • Coordinated missile-related shipments with North Korea
  • Seyed Mirahmad Nooshin1/17/2016
  • SHIG Director

  • Coordinated missile-related cooperation with North Korea
  • Shahid Movahed Industries3/24/2016
  • Iran-based subordinate of SHIG
  • Shahid Nuri Industries3/24/2016
  • Iran-based subordinate of SHIG
  • Abdollah Asgharzadeh2/3/2017
  • Supported missile-related procurement for SHIG, including through China-based brokers
  • Carol Zhou+2/3/2017
  • Provided financial and other support to Asgharzadeh and Darian > SHIG

  • China-based broker
  • Cosailing Business Trading Company Limited+2/3/2017
  • Provided financial and other support to Asgharzadeh > SHIG

  • China-based
  • East Star Company2/3/2017
  • Front company used by Asgharzadeh for missile-related shipments to SHIG
  • Jack Qin+2/3/2017
  • Ningbo New Century Import and Export Co. > Asgharzadeh > SHIG

  • China-based broker and Chinese citizen
  • Ningbo New Century Import and Export Company, Ltd.+2/3/2017
  • Facilitated Iran-bound shipments for Asgharzadeh > SHIG

  • China-based
  • Ofog Sabze Darya Company2/3/2017
  • Front company used by Asgharzadeh for missile-related shipments to SHIG
  • Richard Yue+2/3/2017
  • Cosailing Business Trading Co. > Asgharzadeh > SHIG

  • China-based broker
  • Tenny Darian2/3/2017
  • Worked with Asgharzadeh on missile-related procurement for SHIG, including through China-based brokers
  • Matin Sanat Nik Andishan5/17/2017
  • Procurement agent for SHIG and AIO
  • Amir Al Mo’Menin Industries7/28/2017
  • Iran-based subordinate of SHIG

  • Provided ballistic missile-related research and production services
  • Shahid Cheraghi Industries7/28/2017
  • Iran-based subordinate of SHIG

  • Developed and manufactured liquid propellant
  • Shahid Kalhor Industries7/28/2017
  • Iran-based subordinate of SHIG

  • Manufactured and maintained missile launchers
  • Shahid Karimi Industries7/28/2017
  • Iran-based subordinate of SHIG

  • Produced missile components
  • Shahid Rastegar Industries7/28/2017
  • Iran-based subordinate of SHIG

  • Developed and produced liquid-fueled ballistic missile engines
  • Shahid Varamini Industries7/28/2017
  • Iran-based subordinate of SHIG

  • Developed ballistic missile-related guidance and control systems
  • MODAFL > Iran Electronics Industries (IEI) > Shiraz Electronics Industries (SEI)
    Ruan Runling+5/17/2017
  • Procured missile-related technology for SEI

  • Chinese citizen
  • Shanghai Gang Quan Trade Co.+5/17/2017
  • Sold missile applicable items to SEI

  • China-based
  • Shanghai North Begins International+5/17/2017
  • Sold missile applicable items to SEI

  • China-based
  • Shanghai North Transway International Trading Co.+5/17/2017
  • Sold missile applicable items to SEI

  • China-based
  • Abascience Tech Co. Ltd.+7/18/2017
  • Front company used by Emily Liu > SEI

  • China-based
  • Emily Liu+7/18/2017
  • Procured electronic components on behalf of SEI

  • Chinese citizen
  • Raybeam Optronics Co. Ltd.+7/18/2017
  • Front company used by Emily Liu > SEI

  • China-based
  • Raytronic Corporation Limited+7/18/2017
  • Front company used by Emily Liu > SEI

  • China-based
  • Sunway Tech Co., Ltd.+7/18/2017
  • Front company used by Emily Liu > SEI

  • China-based
  • Wuhan Sanjiang Import and Export Co. LTD+10/13/2017
  • Sold navigational equipment and sensors to SEI

  • China-based
  • Bochuang Ceramic Inc+1/12/2018
  • Supplier to Pardazan System Namad Arman > IEI

  • China-based
  • Pardazan System Namad Arman (PASNA)1/12/2018
  • Supplied military goods to IEI from China-based companies
  • Shi Yuhua+1/12/2018
  • Wuhang Sanjiang Import and Export Co. employee > SEI

  • Chinese citizen
  • Zhu Yuequn+1/12/2018
  • Bochuang Ceramic Inc representative > PASNA > IEI

  • China-based
  • MODAFL and Iranian Aviation Industries Organization (IAIO)
    Seyed Mohammad Hashemi1/17/2016
  • MODAFL official
  • Sayyad Medhi Farahi*1/17/2016
  • MODAFL Deputy

  • Coordinated missile-related cooperation with North Korea
  • Morteza Farasatpour5/17/2017
  • Acted on behalf of Defense Industries Organization (DIO) > MODAFL

  • Senior Iranian defense official
  • Iran Aircraft Industries (SAHA)*1/12/2018
  • Owned or controlled by Iran's Aviation Industries Organization > MODAFL

  • Serviced military aircraft
  • Iran Helicopter Support and Renewal Company (PANHA)1/12/2018
  • Owned or controlled by Iran's Aviation Industries Organization > MODAFL

  • Built and repaired military equipment for IRGC
  • Islamic Revolutionary Guard Corps (IRGC)
    Farshad Hakemzadeh7/18/2017
  • Procured military items from China on behalf of Rayan Roshd Afzar > IRGC
  • IRGC Aerospace Force Self Sufficiency Jihad Organization (ASF SSJO)7/18/2017
  • Responsible for the research and development of ballistic missiles

  • Designated by the U.S. Department of State
  • Islamic Revolutionary Guard Corps Research and Self-Sufficiency Jehad Organization (RSSJO)7/18/2017
  • Involved in ballistic missile research and flight test launches

  • Designated by the U.S. Department of State
  • Mohsen Parsajam7/18/2017
  • Procured military items from China on behalf of Rayan Roshd Afzar > IRGC
  • Qeshm Madkandaloo Shipbuilding Cooperative Co.7/18/2017
  • Supplier to IRGC
  • Rayan Roshd Afzar7/18/2017
  • Supplier to IRGC
  • Ramor Group+7/18/2017
  • Front company for Qeshm Madkandaloo Shipbuilding Cooperative Co. > IRGC

  • Turkey-based
  • Resit Tavan+7/18/2017
  • President and sole owner of Ramor Group; procured military items for Qeshm Madkandaloo Shipbuilding Cooperative Co. > IRGC

  • Turkey-based
  • Seyyed Reza Ghasemi7/18/2017
  • Supported defense contracts for Rayan Roshd Afzar > IRGC
  • Sadid Caran Saba Engineering Company9/14/2017
  • Procurement for IRGC Research and Self-Sufficiency Jehad Organization > IRGC
  • Fanavari Moj Khavar (Fanamoj)10/13/2017
  • Provided financial and technological support to IRGC

  • Provided support to Naval Defense Missile Industry Group > AIO
  • Rastafann Ertebat Engineering Company10/13/2017
  • Provided financial and technological support to IRGC

  • Provided support to Naval Defense Missile Industry Group > AIO
  • Greenwave+1/12/2018
  • Supplier to Fanamoj and Rastafaan

  • Malaysia-based
  • Morteza Razavi1/12/2018
  • Director of Greenwave > Fanamoj and Rastafaan

  • Acquired and re-shipped U.S.-origin technology to Iran
  • Summary
    Proliferation-related entities designated by the U.S. since implementation day73
    Entities tracing back to MODAFL59
    Overseas suppliers28
    Entities designated by the U.S. since implementation day that were previously listed by the EU3
    Key
    * = Designated by the U.S. and EU
    + = Overseas supplier

    Attachment:

     The Missile Sanctions Gap: Re-Aligning U.S. and EU Iran Designations



    Footnotes:

    [1] “Statement by the President on the Iran Nuclear Deal,” The White House, Press Release, January 12, 2018. (https://www.whitehouse.gov/briefings-statements/statement-president-iran-nuclear-deal)

    [2]  “Treasury Sanctions Iranian Entities,” U.S. Department of the Treasury, Press Release, January 4, 2018. (https://home.treasury.gov/news/press-releases/sm0246)

    [3]  “European Union Restrictive Measures (sanctions) in Force,” European Commission, August 4, 2017.

    (https://eeas.europa.eu/sites/eeas/files/restrictive_measures-2017-08-04.pdf); “European Union Consolidated Financial Sanctions List,” European Commission, January 12, 2018. (PDF download: https://webgate.ec.europa.eu/europeaid/fsd/fsf/public/files/pdfFullSanctionsList/content?token=dG9rZW4tMjAxNw); several entities previously designated for proliferation were re-designated by the EU after 2012, following unsuccessful legal appeals, including Sharif University of Technology.

    [4]  “Treasury Sanctions Those Involved in Ballistic Missile Procurement for Iran,” U.S. Department of the Treasury, Press Release, January 17, 2016. (https://www.treasury.gov/press-center/press-releases/Pages/jl0322.aspx)

    [5] Kenneth Katzman, “Iran Sanctions,” Congressional Research Service, pp. 79-80, January 10, 2018. (https://fas.org/sgp/crs/mideast/RS20871.pdf); “Treasury Sanctions Individuals and Entities for Human Rights Abuses and Censorship in Iran, and Support to Sanctioned Weapons Proliferators,” U.S. Department of the Treasury, Press Release, January 12, 2018. (https://home.treasury.gov/news/press-releases/sm0250); European Union Consolidated Financial Sanctions List, European Commission, January 12, 2018. (https://webgate.ec.europa.eu/europeaid/fsd/fsf/public/files/pdfFullSanctionsList/content?token=dG9rZW4tMjAxNw)

    [6] “Treasury Targets Persons Supporting Iranian Military and Iran’s Islamic Revolutionary Guard Corps,” U.S. Department of the Treasury, Press Release, July 18, 2017. (https://www.treasury.gov/press-center/press-releases/Pages/sm0125.aspx)

    [7] “Statement by the President on the Iran Nuclear Deal,” The White House, Press Release, January 12, 2018. (https://www.whitehouse.gov/briefings-statements/statement-president-iran-nuclear-deal)

    [8] “Statement by the President on the Iran Nuclear Deal,” The White House, Press Release, January 12, 2018. (https://www.whitehouse.gov/briefings-statements/statement-president-iran-nuclear-deal)

    [9] Countering America’s Adversaries Through Sanctions Act (H.R.3364), Pub. L. No. 115-44, (2017). (https://www.treasury.gov/resource-center/sanctions/Programs/Documents/hr3364_pl115-44.pdf)

    [10] “Remarks by High Representative/Vice-President Federica Mogherini upon arrival at the NATO Defence Ministers’ meeting,” European External Action Service, Press Release, November 8, 2017. (https://eeas.europa.eu/headquarters/headquarters-Homepage/35311/remarks-high-representativevice-president-federica-mogherini-upon-arrival-nato-defence); “Remarks by Federica Mogherini on the implementation of the Joint Comprehensive Plan of Action (Iran Nuclear Deal),” European External Action Service, Press Release, October 16, 2017. (https://eeas.europa.eu/headquarters/headquarters-homepage/33997/remarks-federica-mogherini-implementation-joint-comprehensive-plan-action-iran-nuclear-deal_en)

    [11] “Fact Sheet: Designation of Iranian Entities and Individuals for Proliferation Activities and Support for Terrorism,” U.S. Department of the Treasury, Press Release, October 25, 2007. (https://www.treasury.gov/press-center/press-releases/Pages/hp644.aspx)

    [12] “Executive Order 13382 – Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters,” The White House, Federal Register, Vol. 70, No. 126, July 1, 2005, pp. 38567-38570 (https://www.treasury.gov/resource-center/sanctions/Documents/whwmdeo.pdf)

    [13] “Council Regulation (EC) No 423/2007 of 19 April 2007 concerning restrictive measures against Iran,” Official Journal of the European Union, L 103/1, April 19, 2007. (http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1516654909072&uri=CELEX:32007R0423); “Commission Regulation (EC) No 441/2007 of 20 April 2007 amending Council Regulation (EC) No 423/2007 concerning restrictive measures against Iran,” Official Journal of the European Union, L 104/28, April 20, 2007 (http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1516654790317&uri=CELEX:32007R0441); “Council Regulation (EC) No 267/2012 of 23 March 2012 concerning restrictive measures against Iran and repealing Regulation (EU) No 961/2010,” Official Journal of the European Union, L 88/1, March 23, 2012 (http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32012R0267); “Council Decision 2012/168/CFSP of 23 March 2012 amending Decision 2011/235/CFSP concerning restrictive measures directed against certain persons and entities in view of the situation in Iran,” Official Journal of the European Union, L 87/85, March 24, 2012. (http://eur-lex.europa.eu/eli/dec/2012/168(1)/oj)

    [14] “Remarks at a Press Conference on Iranian Arms Exports,” United States Mission to the United Nations, December 14, 2017. (https://usun.state.gov/remarks/8215)

    [15] “Treasury Designates U.S. and Chinese Companies Supporting Iranian Missile Proliferation,” U.S. Department of the Treasury, Press Release, June 13, 2006. (https://www.treasury.gov/press-center/press-releases/Pages/js4317.aspx); “Treasury Sanctions Iranian Entities,” U.S. Department of the Treasury, Press Release, January 4, 2018. (https://home.treasury.gov/news/press-releases/sm0246)

    [16] “The List established and maintained pursuant to Security Council res. 2231 (2015),” United Nations Security Council, 2015. (https://scsanctions.un.org/en/?keywords=iran).

    [17] “Evidence Shows Iranian Weapons Proliferation [Image 2 of 68],” Defense Video Imagery Distribution System, December 12, 2017. (https://www.dvidshub.net/image/4030006/evidence-shows-iranian-weapons-proliferation); “Evidence Shows Iranian Weapons Proliferation [Image 37 of 68],” Defense Video Imagery Distribution System, December 12, 2017. (https://www.dvidshub.net/image/4029684/evidence-shows-iranian-weapons-proliferation)

    [18] Kareem Fahim, “U.N. probe details fallout of proxy war in Yemen between Saudi coalition and Iran,” Washington Post, January 11, 2018. (http://wapo.st/2AQLktC?tid=ss_tw&utm_term=.fb935292b69f)

    [19] U.S. Department of the Treasury, Press Release, “Treasury Sanctions Iranian Entities,” January 4, 2018. (https://home.treasury.gov/news/press-releases/sm0246)

    [20] “Treasury Sanctions Supporters of Iran’s Ballistic Missile Program and Iran’s Islamic Revolutionary Guard Corps – Qods Force,” U.S. Department of the Treasury, Press Release, February 3, 2017. (https://www.treasury.gov/press-center/press-releases/Pages/as0004.aspx)

    [21] “Treasury Sanctions Supporters of Iran’s Ballistic Missile Program and Iran’s Islamic Revolutionary Guard Corps – Qods Force,” U.S. Department of the Treasury, Press Release, February 3, 2017. (https://www.treasury.gov/press-center/press-releases/Pages/as0004.aspx)

    [22] “Treasury Designates Iranian Military Firms,” U.S. Department of the Treasury, Press Release, September 17, 2008. (https://www.treasury.gov/press-center/press-releases/Pages/hp1145.aspx)

    [23] “Treasury Sanctions Iranian Defense Officials and a China-Based Network for Supporting Iran’s Ballistic Missile Program,” U.S. Department of the Treasury, Press Release, May 17, 2017. (https://www.treasury.gov/press-center/press-releases/Pages/sm0088.aspx)

    [24] “Treasury Sanctions Iranian Defense Officials and a China-Based Network for Supporting Iran’s Ballistic Missile Program,” U.S. Department of the Treasury, Press Release, May 17, 2017. (https://www.treasury.gov/press-center/press-releases/Pages/sm0088.aspx)

    [25] Kenneth Katzman, “Iran Sanctions,” Congressional Research Service, pp. 79-80, January 10, 2018. (https://fas.org/sgp/crs/mideast/RS20871.pdf); “Treasury Sanctions Individuals and Entities for Human Rights Abuses and Censorship in Iran, and Support to Sanctioned Weapons Proliferators,” U.S. Department of the Treasury, Press Release, January 12, 2018. (https://home.treasury.gov/news/press-releases/sm0250)

    [26] “Treasury Targets Persons Supporting Iranian Military and Iran’s Islamic Revolutionary Guard Corps,” U.S. Department of the Treasury, Press Release, July 18, 2017. (https://www.treasury.gov/press-center/press-releases/Pages/sm0125.aspx)

    [27] “Treasury Sanctions Iranian Defense Officials and a China-Based Network for Supporting Iran’s Ballistic Missile Program,” U.S. Department of the Treasury, Press Release, May 17, 2017. (https://www.treasury.gov/press-center/press-releases/Pages/sm0088.aspx)

    [28] “Treasury Sanctions Individuals and Entities for Human Rights Abuses and Censorship in Iran, and Support to Sanctioned Weapons Proliferators,” U.S. Department of the Treasury, Press Release, January 12, 2018. (https://home.treasury.gov/news/press-releases/sm0250)

    [29] “Letter dated 22 January 2016 from the Panel of Experts on Yemen established pursuant to Security Council resolution 2140 (2014) addressed to the President of the Security Council,” United Nations, S/2016/73, Annex 13. (https://digitallibrary.un.org/record/819771/files/S_2016_73-EN.pdf)

    [30] “Iran – Mr. Le Drian’s participation in a ministerial meeting with Javad Zarif,” France Diplomatie, Press Release, January 11, 2018. (https://www.diplomatie.gouv.fr/en/country-files/iran/events/article/iran-mr-le-drian-s-participation-in-a-ministerial-meeting-with-javad-zarif)

    [31] “French President’s New Year Greetings,” France Diplomatie, Speeches and Statements, January 4, 2018. (http://basedoc.diplomatie.gouv.fr/exl-php/util/Kiosque/FranceDiplomatie/kiosque.php?type=baen)

    [32] “EU/E3 meets Iran: nuclear agreement in the international community’s interest,” Germany Federal Foreign Office, Press Release, January 11, 2018. (https://www.auswaertiges-amt.de/en/aussenpolitik/laenderinformationen/iran-node/-/1302392); “Statement on Nuclear Disarmament by Ambassador Michael Biontino, Permanent Representative of Germany to the Conference on Disarmament,” Permanent Mission of the Federal Republic of Germany to the United Nations, Press Release, October 13, 2017. (https://new-york-un.diplo.de/un-en/news-corner/20171013-biontino-disarmament/971436)

    [33] “Remarks by High Representative/Vice-President Federica Mogherini upon arrival at the NATO Defence Ministers’ meeting,” European External Action Service, Press Release, November 8, 2017. (https://eeas.europa.eu/headquarters/headquarters-Homepage/35311/remarks-high-representativevice-president-federica-mogherini-upon-arrival-nato-defence)

    [34] “Background,” Resolution 2231 (2015), U.N. Security Council. (http://www.un.org/en/sc/2231/)

    [35] “Ballistic missile-related transfers and activities,” Resolution 2231 (2015), U.N. Security Council. (http://www.un.org/en/sc/2231/restrictions-ballistic.shtml)

    [36] “Remarks With United Kingdom Foreign Secretary Boris Johnson at a Press Availability,” U.S. Department of State, Press Release, January 22, 2018. (https://www.state.gov/secretary/remarks/2018/01/277569.htm)

    [37] Matthew Lee, “Tillerson sees progress in fixing Iran nuclear deal with Europeans,” January 22, 2018, Associated Press. (https://www.pbs.org/newshour/politics/tillerson-sees-progress-in-fixing-ira)

    [38] Entretien de Jean-Yves Le Drian, ministre de l’Europe et des Affaires étrangères, avec Le Figaro, French Ministry of Foreign Affairs, January 22, 2018. (https://www.diplomatie.gouv.fr/fr/les-ministres/jean-yves-le-drian/presse-et-medias/article/entretien-de-jean-yves-le-drian-ministre-de-l-europe-et-des-affaires-etrangeres)

    [39] “Berlin Supports New Iran Sanctions – German Government to Accommodate Trump to Rescue Nuclear Deal,” Der Spiegel, January 20, 2018.

    [40] John Irish, Robin Emmott, and Arshad Mohammed, “Spurned by Trump, Europeans ponder how to meet Iran ultimatum,” Reuters, January 21, 2018. (https://www.reuters.com/article/us-iran-nuclear-eu-usa/spurned-by-trump-europeans-ponder-how-to-meet-iran-ultimatum-idUSKBN1FA0S4)

    North Korea Missile Milestones – 1969-2017

    1969-70: North Korea obtains FROG-5 and FROG-7A missiles from the Soviet Union.

    1976: Egypt sends Soviet Scud-B missiles to North Korea.

    1980: The Korean Committee for Space Technology is established.

    1984: North Korea successfully tests its first reverse-engineered Scud-B missile.

    1984: An Iranian businessman, Babeck Seroush, and a Soviet citizen, Yuri Geifman, are indicted in New York for conspiring to smuggle U.S. missile guidance components to North Korea.

    1985: Iran agrees to finance the development of North Korean Scud missiles in exchange for Scud-B technology and an option to buy the missiles when they become available.

    1987: Iran and North Korea sign a $500 million arms deal that includes the purchase of 90 to 100 Scud-B missiles by Tehran.

    1987-88: North Korea delivers approximately 100 Scud-B missiles to Iran.

    1989: Two Japanese companies ship spectrum analyzers to North Korea, which can be used to improve missile accuracy.

    1990: North Korea successfully tests a Scud-C missile, hitting targets off North Korea’s eastern coast from a base in the Kangwon Province; Iran tests what U.S. intelligence identifies as a North Korean version of the Scud-C.

    1991-92: North Korea delivers an estimated 24 Scud-Cs and 20 mobile launchers to Syria, and ships additional Scuds to Syria through Iran.

    1992: The U.S. State Department sanctions entities in North Korea for missile technology proliferation, including Lyongaksan Machineries and Equipment Export Corporation and Changgwang Credit Corporation.

    1993: North Korea successfully tests the Nodong medium range ballistic missile (MRBM) to a range of about 500 km.

    September 1993: The North Korean navy reportedly signs a contract to purchase 12 decommissioned Russian submarines from a Japanese company, including Golf II-class vessels, which are capable of carrying submarine-launched ballistic missiles. The submarines are reportedly delivered with elements of the missile launch system still intact.

    April 1994: Japanese television reports that North Korea has agreed to construct a Nodong missile production plant in Iran.

    1995: According to comments by the U.S. Central Intelligence Agency (CIA), Iran has received four Scud transporter erector launchers (TELs) from North Korea.

    1996: The United States and North Korea begin bilateral talks on how to curb North Korea’s missile exports and freeze its missile development.

    1996: Taiwanese Customs officials seize 200 barrels (15 tons) of ammonium perchlorate, reportedly from North Korea’s Lyongaksan General Trading Corporation, on a North Korean freighter bound for Pakistan’s SUPARCO (Space and Upper Atmosphere Research Commission).

    January 1997-March 1998: North Korea reportedly exports Nodong missile components to Pakistan.

    May 1997: North Korea tests its AG-1 cruise missile. A Pentagon official says that the missile uses “unimpressive, old technology” from Russian Styx and Chinese Silkworm missiles.

    October 1997: Two North Korean defectors testify before a U.S. Senate Committee. Choi Ju-hwal, a former colonel in North Korea’s Ministry of the People’s Army, states that North Korea transferred missile technology and experts to Egypt in the early 1980s and “has been engaged” in a plan to jointly develop missiles with Egypt. Ko Young-hwan, a formerly employed in North Korea’s Ministry of Foreign Affairs, testifies that North Korea primarily exports missiles to Iran, Syria, Egypt and Libya. Ko Young-hwan also testifies that North Korea earns about $1 billion a year from missile sales.

    August 1998: North Korea tests a nuclear-capable Taepodong-1 missile. The missile flies over northern Japan and lands in the Pacific Ocean.

    September 1998: North Korea announces that the recent test of a Taepodong missile was a launch to deploy a satellite.

    September 1998: The U.S. State Department confirms that North Korea attempted launch a satellite into orbit. A three-stage Taepodong rocket was launched, but failed when the satellite fell into the Pacific still attached to the rocket’s third stage.

    November 1998: According to U.S. intelligence and diplomatic sources, North Korea is building two new launch facilities for the Taepodong-1 and is increasing its production of short-range missiles.

    February 1999: George Tenet, the Director of Central Intelligence, tells Congress that North Korea is developing missiles that are capable of hitting the continental United States.

    June 1999: Indian officials stop a North Korean vessel, the Kuwolsan, carrying what one Indian government official describes as “an entire assembly line” for Scud-B and -C missiles. U.S. intelligence officials assert that the shipment was en route from North Korea to Libya. The cargo, falsely labeled “water refining equipment,” includes components for missile subassembly such as tips of nose cones and sheet metal for rocket frames, machine tools for setting up a fabrication facility, instrumentation for evaluating performance of a full missile system, equipment for calibrating missile components, and engineers’ drawings.

    July 1999: Two members of the Japanese parliament claim that semiconductors and argon gas burners used in North Korea’s missile program came from Japan.

    July 1999: South Korea reports that North Korea is building an underground missile launch site at Yeongjeo-dong, within a dozen miles of the Chinese border.

    September 1999: North Korean television displays a Taepodong-1 missile. Analysts confirm that its first stage has a single engine exhaust and not a cluster of four smaller motors as originally believed. The single exhaust supports allegations that Pyongyang helped Pakistan develop its Ghauri missile and helped Iran develop its Shahab-3 missile.

    September 1999: American and North Korean delegates meet in Berlin, where North Korea agrees to freeze the testing of long-range missiles. The United States agrees to ease some economic sanctions in return.

    October 1999: North Korea declares its right to launch missiles, just one week after pledging to freeze long-range missile tests.

    October 1999: A U.S. National Air Intelligence Center (NAIC) report says North Korea is developing the Taepodong-2 missile, which NAIC has classified as an intercontinental ballistic missile (ICBM).

    November 1999: North Korea sells Iran 12 medium-range ballistic missile engines. According to U.S. intelligence officials, the engines are the same as those used in the Nodong missile, which Iran uses in the first stage of the Shahab-3 missile.

    February 2000: U.S. and Israeli intelligence sources allege that American technology obtained by Egyptian government-owned companies is being sent on to North Korea for the manufacture of advanced missile components for a medium-range ballistic missile. Egypt also may be providing technology to North Korea for its Taepodong missile, some of which was acquired by Egypt for its Condor missile program.

    April 2000: The United States imposes sanctions against North Korean and Iranian entities involved in Scud missile transfers; among those sanctioned was North Korea’s Changgwang Sinyong aerospace company.

    June 2000: The Clinton administration eases some sanctions against North Korea following a historic meeting between the leaders of North and South Korea.

    June 2000: North Korea declares that it will extend its moratorium on long-range missile test flights.

    June 2000: Russia is selling missile technology, including a special aluminum alloy, connectors and relays, and laser gyroscopes, to North Korea.

    July 2000: North Korea refuses to stop developing missiles it says are for self-defense. However, North Korea offers to halt missile technology exports in exchange for $1 billion a year.

    July-December 2000: The CIA says North Korea continues its procurement of ballistic missile-related raw materials and components, especially through North Korean firms based in China. North Korea also continues to export ballistic missile-related equipment, components, materials, and technical expertise to countries in the Middle East, South Asia, and North Africa.

    October 2000: U.S. Secretary of State Madeleine Albright and North Korean leader Kim Jong-il hold the highest level talks to date between the two countries. According to Secretary Albright, the two parties discussed North Korea’s missile program and exports, as well as Kim Jong-il’s “ideas of exchanging [North Korea’s] restraint in missiles for launches of [North Korea’s] satellites.”

    November 2000: Following Secretary Albright’s visit to North Korea, the United States and North Korea hold talks in Kuala Lumpur, Malaysia. The talks, which focus on North Korea’s missile program, end inconclusively.

    May 2001: North Korean leader Kim Jong-il tells European officials that North Korea will not launch ballistic missiles until at least 2003, unilaterally extending a moratorium on missile testing.

    December 2001: The U.S. National Intelligence Council releases the unclassified version of its National Intelligence Estimate, which states that the United States will “most likely” face an intercontinental ballistic missile threat from North Korea before 2015. The report further notes that North Korea’s Taepodong-2 program may be ready for flight-testing, “probably” in a space launch configuration.

    June 2002: The CIA reports that North Korea is “nearly self-sufficient in developing and producing ballistic missiles” and demonstrates “a willingness to sell complete systems and components” to other countries.

    October 2002: The New York Times reports that U.S. intelligence officials have concluded that Pakistan was a major supplier of critical equipment to North Korea’s nuclear program apparently as part of a barter deal beginning around 1997, in which North Korea supplied Pakistan with ballistic missiles.

    November 2002: Spanish warships halt and U.S. authorities board a North Korean freighter, named So San, 600 miles off the Horn of Africa. The freighter, headed for Yemen, contained 15 Scud missiles, 15 high-explosive conventional warheads, and nitric acid rocket fuel, according to Spain’s defense minister.

    December 2002: The United States agrees to release the ship containing North Korean missiles bound for Yemen. A senior U.S. official argues that the United States did not have the authority to hold the ship, which was flying a Cambodian flag and was engaged in fulfilling a “state-to-state” commercial transaction. An unnamed senior administration official suggests that the ship was freed since Yemen does not constitute a threat and is a partner in the U.S. “war on terrorism.”

    2003: South Korea’s Ministry of National Defense issues a report stating that North Korea has deployed Scud-B and Scud-C missiles with a maximum range of 300 to 500 km and the Nodong-1 with a maximum range of up to 1,300 km. The report further confirms the August 1998 test of the 2,000 km range Taepodong-1and announces that the 6,000 km-range Taepodong-2 is under development.

    March 2003: The Washington Times reports that recent U.S. sanctions on Khan Research Laboratories (KRL) resulted from the purchase and receipt by Pakistan of North Korean Nodong missiles that are “fully assembled and ready to fly.”

    May 2003: North Korea appears to have successfully tested an engine for a long-range missile, which is believed to be for the Taepodong-2, according to unnamed diplomatic sources quoted in South Korea’s JoongAng Ilbo newspaper.

    May 2003: The Japanese periodical, Yomiuri Shimbun, reports that North Korea is believed to have exported $580 million worth of missiles to the Middle East in 2001 and that North Korea possesses 600 to 750 ballistic missiles, with 175 to 200 believed to be Nodong missiles.

    May 2003: A man identified as a North Korean expert in missile guidance, who claimed he had worked at a plant in Chagang Province before defecting to South Korea in 1997, states in testimony before a Senate subcommittee that he helped to test-fire a missile in Iran during the summer of 1989. The defector, alias Bok Koo-lee, also declares that Iran later became a client for North Korean missile guidance control equipment and that 90 percent of the components came from a pro-Pyongyang ethnic Korean group in Japan.

    May 2003: The Washington Post reports a crackdown by the Japanese government on companies suspected of supplying North Korea with WMD-related equipment, after the Japanese company Meishin attempts to export specialized power-supply devices that can be used in either uranium enrichment or missile launch development.

    June 2003: North Korea indefinitely suspends service of the only passenger ferry that runs between North Korea and Japan in response to Japanese cargo vessel inspections. According to testimony given by North Korean defectors, the Mangyongbong-92 was used to smuggle missile parts to North Korea.

    July 2003: The New York Times reports that CIA officials have identified an advanced nuclear testing facility via satellite in Youngdoktong, with equipment for explosives tests, suggesting that North Korea is attempting to combine its missile and nuclear programs.

    July 2003: The South Korean Defense Ministry claims that North Korea deployed a “battalion” of Nodong missiles in June 2002.

    October 2003: South Korea’s Defense Ministry reports that North Korea has exported approximately 400 Scud missiles and missile-related components to Iran, Iraq, Syria, and Yemen, since the mid-1980s.

    November 2003: An article in the Far Eastern Economic Review, citing unnamed U.S. and Asian officials, suggests that Myanmar has begun negotiating the purchase of surface-to-surface missiles from North Korea. Rangoon-based diplomats say that about 20 North Korean technicians are working at the Monkey Point naval base, possibly getting ready to install the missiles on Burmese naval vessels.

    May 2004: The South Korean periodical Choson Ilbo reports that U.S. intelligence satellites have uncovered 10 new ballistic missiles and mobile launching pads at two underground ballistic missile bases. One base is in Yangdok, east of Pyongyang, and the other is in Hochon, South Hamgyong province. They are thought to be 80 percent complete, according to South Korean intelligence.

    July 2004: South Korea’s Defense Minister, Cho Young-gil, tells the National Assembly that North Korea is deploying new intermediate-range ballistic missiles with a range of up to 2,500 miles and is testing a new main engine for its Taepodong-2 missile.

    July 2004: Former Pakistani Prime Minister Benazir Bhutto admits in an interview that Pakistan obtained missile technology from North Korea after she visited Pyongyang in December 1993.

    July 2004: Jane’s Defense Weekly reports that North Korea is developing a road mobile medium-intermediate-range ballistic missile and a submarine-launched ballistic missile. Both are believed to be based on the decommissioned Soviet R-27.

    December 2004: The Assistant Secretary of State for Arms Control says that North Korea’s Taepodong-2 missile “could be flight tested at any time.”

    February 2005: A defense white paper released by the South Korean military reports that North Korea has established a Missile Guidance Bureau under the People’s Armed Forces Ministry.

    February 2005: An unnamed top U.S. official tells Time Magazine that Iran may be giving North Korea telemetry and other data from missile tests, which North Korea uses for improvements in its own missile systems.

    May 2005: North Korea tests an upgraded version of the Soviet SS-21 ‘Scarab’ missile, according to a Yonhop News Agency report. The SS-21 is a short-range, road-mobile, solid-propellant ballistic missile (SRBM) that carries one warhead. The North Korean version of this missile is known as the KN-02.

    May 2005: Israeli military officials announce that Syria has test-fired a Scud-B and two Scud-D missiles for the first time since 2001. Israelis suggest that the missile tests were part of a program using North Korean technology and designed to deliver air-burst chemical weapons.

    December 2005: The German newspaper Bild, citing the German Federal Intelligence Service, reports that Iran has acquired 18 disassembled BM-25 intermediate-range ballistic missiles from North Korea.

    2006: The Taiwanese company Royal Team Corporation makes the first of two known sales of pressure transmitters to North Korea. The transmitters are later recovered in debris from the December 2012 test of a three-stage Unha-3 rocket.

    July 2006: North Korea test fires five short-range missiles and a Taepodong-2 long-range missile. The Taepodong-2 missile fails a minute after launch and lands in the sea.

    July 2006: In response to the test of the Taepodong-2 missile, the U. N. Security Council unanimously passes Resolution 1695 which demands that U.N. member states block the sale to North Korea of materials that could be used in its ballistic missile program.

    October 2006: In response to the North Korean nuclear test on October 9, 2006, the U.N. Security Council adopts Resolution 1718, which calls for North Korea to give up its nuclear and ballistic missile programs. The resolution also further restricts the sale of missile-related materials to North Korea and calls for the freezing of funds held by individuals and businesses connected to Pyongyang’s nuclear and missile programs.

    December 2006-January 2007: A series of shipments of what are believed to be jet vanes for solid-fueled medium-range ballistic missiles are transferred via air from North Korea to Shahid Bagheri Industries Group (SBIG) in Iran.

    April 2007: The United States identifies a new type of North Korean intermediate-range ballistic missile, called the “Musudan,” using satellite imagery, according to Japanese media reports. Twelve of these new missiles were photographed as they took part in a parade celebrating the 75th anniversary of the founding of the Korean People’s Army.

    October 2007: A shipment containing solid double-base propellant blocks usable in Scud missiles is seized en route from North Korea to Syria.

    March 2008: A shipment containing 5,000 detonating fuses for unguided rockets and related materiel is seized en route from North Korea to Iran. The shipper is affiliated with Korea Mining and Development Corporation (KOMID), North Korea’s primary exporter of ballistic missile-related equipment and conventional weapons. The consignee is affiliated with Iran’s Shahid Bagheri Industries Group (SBIG).

    September 2008: South Korean Defense Minister Lee Sang-hee reports the existence of a new North Korea missile launch site to a parliamentary committee. The site, located on the west coast of North Korea, includes a launch pad and a ten story tower to support long-range ballistic missiles.

    November 2008: North Korea signs a memorandum of understanding with Burma to provide the Burmese government with assistance in producing medium range, liquid-fueled ballistic missiles.

    April 2009: North Korea launches a Taepodong-2 missile. While the North Korean government claims that the launch successfully placed a payload in orbit, U.S. Northern Command reports that the second and third stages of the missile, along with its payload, landed in the Pacific Ocean.

    April 2009: The U.N. Security Council issues a unanimous condemnation of the North Korea’s Taepodong-2 missile test. The Security Council also orders the U.N. Sanctions Committee to begin enforcing financial sanctions and an arms embargo against North Korea.

    May 2009: South Korea announces that it will participate in the U.S.-led Proliferation Security Initiative, which involves the potential inspection of North Korean vessels suspected of playing a role in the proliferation of weapons of mass destruction and missile technology.

    May 2009: In response to South Korea’s participation in the Proliferation Security Initiative, North Korea warns that it will respond with force if its ships are interdicted.

    June 2009: The U.N. Security Council unanimously adopts Resolution 1874, imposing a ban on all arms exports by North Korea and authorizing the inspection of North Korean cargo vessels and aircraft suspected of transporting military material.

    June 2009: Police in Yokohama, Japan, reportedly arrest three people accused of attempting to illegally export a magnetic measuring device used for developing long-range ballistic missiles to Burma, acting on instructions from North Korea.

    2010: Taiwan’s Royal Team Corporation makes the second of two known sales of pressure transmitters to North Korea. The transmitters are later recovered in debris from the December 2012 test of a three-stage Unha-3 rocket.

    February 2010: According to the U.S. Defense Department’s Ballistic Missile Defense Review, North Korea will be capable of deploying a nuclear-armed missile capable of reaching targets in the continental United States within a decade.

    March 2010: The South Korean news agency Yonhap reports that North Korea has established a special military division in charge of deploying and operating intermediate-range ballistic missiles.

    May 2010: According to a U.N. report, North Korea has circumvented U.N. sanctions and exported nuclear and missile technology to Burma, Iran, and Syria. The report asserts that North Korea has used front companies, overseas criminal networks and falsified shipping information to avoid export restrictions.

    August 2010: U.S. President Barack Obama signs Executive Order 13551, targeting North Korea’s weapons proliferation network.

    September 2010: A shipment of machinery and components used in the production of liquid propellant for Scud missiles is seized en route from Dalian, China to Lattakia, Syria. The shipment is made on behalf of Leader (Hong Kong) International, which facilitates shipments for Korea Mining Development Trading Corporation (KOMID).

    October 2010: North Korea publically displays a variant of the road-mobile BM-25 Musudan missile for the first time in a military parade in Pyongyang. The parade also includes a version of the Nodong missile with a tri-conic nosecone similar to that of Iran’s Shahab-3, leading some analysts to cite it as evidence of Iran-North Korea technical cooperation on missile development.

    2011: Two North Korean officials are arrested in Ukraine attempting to obtain information on missile design, liquid propellant engines, spacecraft, and missile fuel supply systems from an employee of Ukraine’s Yuzhnoye Design Office.

    January 2011: U.S. Secretary of Defense Robert Gates warns that North Korea is within five years of being able to strike the continental United States with an intercontinental ballistic missile.

    February 2011: Satellite imagery obtained by American media shows the completion of a new missile launch facility in northwestern North Korea. According to a report by Chosun Ilbo, the new site, located in Tongchang-ri, North Pyongan Province, is 70 km from Yongbyon nuclear facility and close to the Sanum-dong long-range missile development center in Pyongyang. It includes a 50-meter launch tower, an underground fuel storage facility, and a missile assembly building from which missiles can be transported to the launch pad by rail.

    May 2011: According to a U.N. report, Iran and North Korea have exchanged ballistic missile technology in violation of sanctions on both countries. Prohibited missile-related items are suspected to have been shipped by air on regular Air Koryo and Iran Air flights. Several diplomats reportedly claim that China was used as a transshipment point for some of these shipments.

    February 2012: During bilateral talks with the United States, North Korea agrees to implement a moratorium on long-range missile launches, nuclear tests, and nuclear activities at Yongbyon. In return, the U.S. agrees to finalize details for providing 240,000 metric tons of food aid.

    March 2012: North Korea unveils the Strategic Rocket Force Command of the Korean People’s Army, which is later sanctioned by the United States for conducting “multiple ballistic missile launches.”

    April 2012: North Korea attempts to launch a satellite using the Unha-3 satellite launch vehicle. The vehicle’s first stage falls into the sea 165 km west of Seoul and the second and third stages are assessed to have failed. The launch took place from the Sohae Satellite Launching Station at Tongchang-ri.

    April 2012: The United States cancels food aid to North Korea following the Unha-3 launch.

    April 2012: A dozen Iranian officials reportedly attend North Korea’s Unha-3 rocket launch. According to a diplomatic source, the Iranians were members of the Shahid Hemmat Industrial Group (SHIG).

    April 2012: North Korea displays several Musudan missiles, Nodong missiles, and what may be new long-range ballistic missiles (designated KN-08 by Western analysts) during a military parade. According to analysts, the new missile appears to have two or three stages, though its re-entry vehicle appears to be a mock-up. All the missiles are carried on transporter-erector-launchers (TELs).

    April 2012: The U.N. Security Council investigates claims that a 16-wheel TEL featured in a North Korean military parade on April 15 is of Chinese origin. The TEL closely resembles the WS2600 and WS51200 vehicles designed by the Hubei Sanjiang Space Wanshan Special Vehicle Co. Ltd., also known as the 9th Academy of the China Aerospace Science and Industry Corporation (CASIC). The TEL was shown transporting the KN-08 missile. Chinese officials later confirm that the shipment took place but claim that the WS51200s were intended for civilian use.

    May 2012: South Korea seizes a ballistic missile-related shipment en route from Tianjin, China to Lattakia, Syria. The shipment contains 10 tons of fine grain graphite cylinders. The consignor and consignee have both acted on behalf of the Korean Tangun Trading Corporation, an entity involved with North Korea’s WMD and ballistic missile programs.

    December 2012: North Korea successfully places a satellite into orbit using the Unha-3 rocket. According to analysts, the first stage of the Unha-3 (like the Taepodong-2) is powered by Scud-B motors, but the upper stages appear to be custom-designed. The 100kg Kwangmyongsong-3 satellite was launched from Sohae Satellite Launch Stataion.

    2013: A shipment from a North Korean company of spare components for Scud-B missiles is intercepted en route to Egypt.

    January 2013: The U.N. Security Council unanimously adopts resolution 2087, condemning North Korea’s recent missile test and imposing sanctions on North Korean entities involved in missile work. Sanctioned entities, whose assets are to be frozen, include the Korean Committee for Space Technology, Bank of East Land, Korea Kumryong Trading Corporation, Tosong Technology Trading Corporation, Korea Ryonha Machinery Joint Venture Corporation, Leader (Hong Kong) International, and individuals associated with Sohae Satellite Launch Station.

    February 2013: According to a report by the U.S. Department of Defense, North Korea has close to 200 mobile missile launchers, including fewer than 100 for KN-2, SCUD-B, SCUD-C and SCUD-ER missiles, fewer than 50 for No Dong missiles, and fewer than 50 for intermediate-range ballistic missiles. In addition, North Korea’s Taepodong-2 (Unha-3) “could reach the United States with a nuclear payload if developed as an ICBM,” according to the report.

    March 2013: The U.N. Security Council unanimously adopts resolution 2094 in response to the February 12, 2013 nuclear test conducted by North Korea. The resolution expands sanctions on North Korea by targeting the illicit activities of diplomatic personnel, transfers of bulk cash, and the country’s banking relationships. The resolution also expands the list of missile-related items that North Korea is banned from importing and imposes an asset freeze on entities linked to ballistic missile proliferation, including the Second Academy of Natural Sciences and individuals linked to KOMID and Tanchon Commercial Bank.

    March-April 2013: North Korea tests a rocket engine at Sohae Satellite Launch Station, according to satellite imagery.

    April 2013: North Korea establishes the National Aerospace Development Administration (NADA), which takes over the responsibilities of the Korean Committee for Space Technology after the latter is sanctioned by the U.N. Security Council.

    May 2013: An air shipment originating in North Korea is intercepted and found to contain components for Scud missiles.

    July 2013: Panamanian authorities find weapons hidden beneath bags of sugar aboard the Chong Chon Gang, a North Korean cargo vessel, as it travels through the Panama Canal from Cuba. The shipment contains surface-to-air missile systems and launchers, MiG-21 jet fighter parts and engines, shell casings, rocket-propelled projectiles, and other ammunition.

    August 2013: KOMID reportedly signs a contract to supply Sudan Master Technology Engineering Company with precision-guided rocket control components and air attack satellite-guided missiles. According to a 2017 U.N. Panel of Experts report, the weaponry was delivered.

    November 2013: North Korea reportedly signs a contract to supply Mozambique with man portable air defense systems and early warning radar components, and to modernize its Pechora surface-to-air missile system.

    January 2014: The U.S. Director of National Intelligence confirms that North Korea is developing a road-mobile intercontinental ballistic missile known as the KN-08.

    March 2014: North Korea test-fires two Nodong missiles. The tests are reportedly successful.

    June-August 2014: North Korea conducts a series of test-launches of the KN-02 missile in an effort to develop an extended-range version of the missile.

    July 2014: Satellite imagery indicates that North Korea is upgrading the gantry and launch pad at Sohae Satellite Launch Station. It also shows evidence of a series of tests of the first stage rocket engine for the KN-08.

    September 2014: South Korean officials report that Pyongyang is developing a short-range nuclear-capable missile known as the KN-10, which is based on the Soviet SS-21.

    February-April 2015: North Korea test fires six KN-02 missiles.

    May 2015: South Korean officials report that North Korea has conducted an “ejection test” to evaluate stabilization systems and the ejection process for a submarine-launched ballistic missile.

    October 2015: North Korea displays what appear to be four modified KN-08 ballistic missiles and a new 300 mm multiple launch rocket system during a military parade in Pyongyang.

    January 2016: According to a report by the U.S. Department of Defense, North Korea has several hundred short and medium-range ballistic missiles available for use.

    January 2016: The U.S. Treasury Department reports that Iranian missile technicians from SHIG have been working with North Korea on the development of an 80 ton rocket booster for the past several years. Treasury also states that SHIG has supplied KOMID with equipment that can be used to test liquid propellant ballistic missiles and space launch vehicles.

    February 2016: North Korea successfully places the Kwamyongsong-4 satellite into orbit using a satellite launch vehicle launched from Sohae Satellite Launch Station. The South Korean military reportedly believes the rocket to have a range of 13,000 km, 3,000 km greater than the Unha-3 rocket launched in December 2012.

    March 2016: The U.N. Security Council adopts resolution 2270, condemning North Korea’s latest nuclear and rocket tests and imposing additional sanctions. The resolution requires the inspection of all cargo vessels going to or coming from North Korea, and generally prohibits making vessels and aircraft available to North Korea. It also imposes an asset freeze on additional entities linked to North Korea’s ballistic missile program.

    March 2016: North Korea claims that it has successfully developed miniaturized nuclear warheads to fit on ballistic missiles.

    March 2016: North Korea tests a re-entry heat shield for an intercontinental ballistic missile, claiming that it was successful.

    March 2016: North Korea test fires a new 300 mm multiple launch rocket system, its first acknowledged test. The system is estimated to have a range of 200 km.

    March 2016: The head of U.S. Strategic Command (STRATCOM) assesses that North Korea likely has the capability to miniaturize a nuclear weapon and put it on an intercontinental ballistic missile capable of reaching the United States, while acknowledging that an attack with such a weapon is not likely to succeed.

    March 2016: North Korea tests a solid-fueled rocket motor. Analyst assess that the test is successful.

    April 2016: North Korea tests a new intercontinental ballistic missile engine at Sohae Satellite Launch Station. Analysts assess that the test involved twin engines from the R-27 submarine-launched ballistic missile.

    April 2016: North Korea test fires a submarine-launched ballistic missile, which reportedly travels 30 km before exploding. The missile was a newly-designed solid-fuel system, according to analysts.

    June 2016: North Korea test fires a Musudan intermediate-range ballistic missile. The test, which appears to be partially successful, is reportedly preceded by five unsuccessful tests of the same missile since April.

    July 2016: Satellite imagery reveals that North Korea is building fortified structures that could be used to shelter ballistic missile submarines near the port city of Sinpo.

    August 2016: North Korea test-fires two Nodong missiles from Hwangju in the western part of the country. The first missile explodes immediately after launch, but the second flies 1,000 km over North Korea and lands in waters off northern Japan.

    August 2016: North Korea test fires the Pukguksong (KN-11) submarine-launched ballistic missile off the coast of Sinpo. The missile travels approximately 500 km before landing in the Sea of Japan, reportedly within Japan’s air defense identification zone. Analysts assess the test to be successful.

    September 2016: North Korea fires three Nodong missiles from Hwangju. The missiles each fly approximately 1,000 km before landing in the Sea of Japan.

    September 2016: North Korea tests a new large rocket engine at Sohae Satellite Launch Station. Analysts assess that the engine uses liquid fuel, and will likely be used for a space launch vehicle.

    October 2016: North Korea reportedly conducts two failed tests of the Musudan intermediate-range ballistic missile.

    November 2016: The U.N. Security Council adopts resolution 2321, condemning North Korea’s nuclear test in September and imposing additional sanctions. The resolution places new restrictions on North Korea’s shipping industry, lengthens the list of prohibited items, expands member states’ authority to search North Korean cargo, and places banking and property restrictions on North Korean embassies, consulates, and foreign service officials. It also strengthens restrictions on Pyongyang’s mineral trading, placing a numerical limit on its coal exports.

    December 2016: North Korea reportedly conducts a ground test of a submarine-launched ballistic missile.

    February 2017: North Korea test fires a new medium range ballistic missile known as the Pukguksong-2 (KN-15) from a tracked TEL using cold launch technology. The missile reportedly reaches a height of 550 km and a distance of 500 km, landing in the Sea of Japan. Analysts assess that the Pukguksong-2 is a solid-fueled missile with a range of 1,200 km. It is derived from the Pukguksong submarine-launched ballistic missile.

    April 2017: North Korea unveils a number of new missiles during a military parade, including a Scud variant with fins on the nosecone (KN-18), a KN-08/Musudan hybrid ballistic missile, and two new ICBMs. One of the ICBM systems is assessed to be a variant of the KN-14, and the other a variant of the Pukguksong known as the Pukguksong-3.

    May 2017: North Korea conducts the first successful test launch of the road mobile Hwasong-12 intermediate-range ballistic missile. It is fired on a highly lofted trajectory, reaching an altitude of over 2,000 km and traveling a distance of 700 km. The missile is estimated to have a range of 4,500 km if fired on a standard trajectory.

    May 2017: North Korea conducts a second test of the Pukguksong-2. The missile reportedly reaches an altitude of 560 km and travels a distance of approximately 500 km.

    May 2017: North Korea test fires the new KN-18 variant of the Scud missile to a range of 450 km. The KN-18 is equipped with fins to provide terminal guidance, allowing for improved maneuverability.

    June 2017: An anonymous U.S. government source tells the Diplomat that North Korea conducted three failed test launches of the Hwasong-12 in April and May before the first successful test.

    June 2017: North Korea reportedly conducts a rocket engine test possibly for the upper stage of an ICBM.

    June 2017: The National Council of Resistance of Iran (NCRI) issues a white paper claiming that North Korean experts are assisting Iran in the construction of dozens of missile production sites run by the Islamic Revolutionary Guard Corps (IRGC).

    June 2017: The U.N. Security Council adopts resolution 2356, condemning North Korea’s nuclear weapons and ballistic missile development and imposing additional sanctions. The resolution imposes an asset freeze on additional entities and individuals linked to North Korea’s ballistic missile program, as well as a travel ban on designated individuals. One of the entities designated is the Strategic Rocket Force Command.

    July 2017: North Korea conducts two tests of an ICBM, the Hwasong-14 (KN-20), a two-stage, road-mobile, liquid fuelled missile. In the first test the missile is fired on a lofted trajectory, reportedly reaching an altitude of 2,800 km and traveling a distance of 933 km. Analysts assess that the missile could reach a distance of 7,000-8,000 km if fired on a “maximum-range trajectory.” In the second test the missile reportedly reaches an altitude of 3,700 km and travels approximately 1,000 km, expanding estimates of the missile’s range to between 9,000 and 10,500 km.

    July 2017: The U.S. Defense Intelligence Agency (DIA) reportedly assesses that North Korea will be able to deploy a “reliable, nuclear-capable ICBM” sometime in 2018. The DIA also assesses that Pyongyang has produced miniaturized nuclear weapons for delivery on ballistic missiles, and has up to 60 nuclear weapons in its arsenal.

    August 2017: The U.N. Security Council adopts resolution 2371, condemning North Korea’s ICBM tests and imposing additional sanctions. The resolution prohibits the import from North Korea of coal, iron, iron ore, lead, lead ore, or seafood. It also bars member states from allowing additional North Korean workers into their territory and from allowing the creation of new joint ventures with North Korean entities and individuals.

    August 2017: The International Institute for Strategic Studies (IISS) assesses in a report that the liquid fuel engines used in the Hwasong-12 and -14 are based on the Soviet RD-250 engine series and were obtained by Pyongyang through “illicit channels” in Russia and/or Ukraine. The assessment is challenged by Ukrainian officials and disputed by U.S. intelligence officials.

    August 2017: Photos from a visit by Kim Jong Un to an Academy of Defense Science facility shows diagrams for a new solid-fueled ballistic missile called the “Pukguksong-3,” as well as another, unidentified missile. The photos also reveal a large container assessed to be wound-filament reinforced plastic rocket casing.

    August 2017: North Korea fires an intermediate-range ballistic missile over the island of Hokkaido in northern Japan. The missile, believed to be a Hwasong-12, travels approximately 2,700 km.

    September 2017: North Korea launches another Hwasong-12 intermediate-range ballistic missile over the island of Hokkaido in northern Japan. The missile, which is fired from a mobile launcher, reportedly travels on a standard trajectory, traveling 3,700 km and reaching a maximum altitude of 770 km.

    November 2017: North Korea conducts a test of a new ICBM, the Hwasong-15. The missile is fired on a lofted trajectory, reaching an altitude of approximately 4,500 km, the highest for a North Korean missile to date, and traveling a distance of approximately 950 km. The Hwasong-15 is reportedly a two-stage road-mobile missile, wider than the Hwasong-14, with an estimated range of 13,000 km — long enough to reach any target on the U.S. mainland.

    Pressure to Address Iran’s Missile Program and Arms Exports Intensifies

    Events over the past week have created mounting pressure to address Iran’s ballistic missile program and its missile and arms exports. On December 19, Iranian-backed Houthi militants in Yemen fired another short-range ballistic missile into Saudi Arabia. This marked the third such attack since July and followed revelations by the United States and the United Nations that these missiles appear to be of Iranian origin. In response to these and other alleged violations of U.N. resolutions, the United States is pressing for punitive action at the United Nations.

    U.S. Displays Recovered Missile Parts from Iran

    In a dramatic press conference at a military base in Washington D.C. on December 14, U.S. Ambassador to the United Nations Nikki Haley revealed evidence that two missiles fired into Saudi Arabia were made in Iran and then sent to the Houthis. She presented this evidence while standing in front of a missile reconstituted from parts recovered in Saudi Arabia.[1]

    Pointing to the absence of planar fins and the arrangement of nine valves along the length of the missile, Haley identified it as Iran’s Qiam. (The missile is called the Burkan-2H by the Houthis). The Qiam is an Iranian variant of the Scud missile, with distinctive features such as those highlighted by Haley. The recovered parts of the missile body are made of aluminum rather than steel, also a feature of the Qiam.[2] The logo and/or name of well-known Iranian missile developers, including Shahid Bagheri Industrial Group (SBIG) and Shahid Hemat Industrial Group (SHIG), appear on recovered parts used for missile guidance, according to high resolution images released by the U.S. government. Both SHIG and SBIG were sanctioned by the United Nations in December 2006 for their role in Iran’s ballistic missile program and remain subject to U.N. sanctions pursuant to Security Council resolution 2231.[3]

    Alongside these missile parts, the United States displayed material from an anti-tank guided missile, an unmanned aerial vehicle, and an explosive boat, all of which Haley claimed to have been made in Iran and provided to the Houthis. She concluded that Iran is “in direct violation of U.N. Security Council resolutions” and that “the nuclear deal has done nothing to moderate the regime’s conduct in other areas.”[4] Dozens of high definition photographs of missile and other parts released by the U.S. government are available here.[5]

    Ambassador Haley invited all Security Council members to visit the military base and view the missile parts, along with other Iranian-origin military hardware sent to Yemen. She noted that the United States had supported a United Nations investigation of alleged Iranian violations of resolution 2231 by declassifying evidence of such violations, like the items on display at the base.

    U.N. Report Reinforces U.S. Findings

    On the same day as Haley’s press conference, the United Nations released its fourth report on the implementation of Security Council resolution 2231, which endorsed the nuclear agreement with Iran and imposed restrictions on Iran’s missile and military programs.[6] This report, issued by the U.N. Secretary General, echoed, in more measured terms, many of the U.S. government’s findings. Following an examination by U.N. experts of the missile debris recovered by Saudi Arabia from the July and early November attacks, the report concluded that “the diameter of both missiles was consistent with that of the Scud family” and that the missiles “had similar structural and manufacturing features,” suggesting a “common origin.”[7] According to the report, U.N. experts also noted that “remnants of mounting plates” from the July missile “suggest that the missile was finless” and that three actuators used for guidance “bore the castings of a logo similar to that of the Shahid Bagheri Industrial Group.”[8]

    The United Nations still is investigating the origin of the missile debris but recommended that the Security Council receive a joint briefing “by the Panel of Experts on Yemen and the Secretariat on their respective findings” related to the “possible transfer” of ballistic missiles or missile parts from Iran to the Houthis.[9] The Secretariat has taken over the investigative role on Iran and the implementation of resolution 2231; the dedicated Panel of Experts for Iran was dissolved following the implementation of the nuclear agreement.

    In addition, U.N. experts were able to examine arms seized by the United States in March 2016 in the Gulf of Oman. The Secretary General’s report concluded that Iran was the source of this shipment, the second such arms shipment from Iran interdicted that month.[10]

    The report described other apparent violations of resolution 2231, including provisions imposing an asset freeze and travel ban against specific Iranian entities. The Defense Industries Organization (DIO), which is subject to the U.N. asset freeze, exhibited at an aerospace trade fair held in Zhukovsky, Russia in July 2017. This is the third time that DIO has participated in a foreign defense-related fair since the nuclear agreement was implemented, according to the United Nations. In March 2016[11] and March 2017[12], DIO was an exhibitor at the Iraqi Defense, Security, and Military Exposition (IQDEX). In these instances, a lack of consensus at the Security Council has prevented any response. In the most recent case, Russia claimed that no violation of resolution 2231 was committed because DIO did not pay a fee to exhibit and used only mock-ups in its display.[13]

    Similarly, the U.N. report once again documented instances of foreign travel by Major General Qasem Soleimani, who is subject to a U.N. asset freeze and travel ban. According to the report, he has been seen visiting Iraq and Syria on a number of occasions since June.[14] Soleimani heads the Islamic Revolutionary Guards Quds Force (IRGC-QF), which supports terrorist groups across the Middle East and Africa and has sent arms and fighters to conflict zones in these regions.

    In addition, the U.N. received information about an individual who “may be acting in support of a designated entity,” as well as another designated entity that may be using subsidiaries in order to circumvent the asset freeze provisions of resolution 2231. In response to these allegations, the U.N. report recommends that the Security Council “review and update” its list of entities “to ensure proper implementation of the asset freeze and travel ban provisions.”[15]

    What Next?

    The United States is demanding punitive action by the United Nations in response to “Iran’s lack of full compliance with resolution 2231” and as a means of arresting “Iran’s destabilizing behavior.”[16] In remarks at a Security Council briefing on December 19, Haley put forward several options: strengthen the provisions of resolution 2231 or adopt a new resolution to clearly prohibit Iran from pursuing “all activities related to ballistic missiles”; impose sanctions on Iran for its violations of the arms embargo on Yemen; or target the IRGC “for its violations of numerous Security Council resolutions.” She concluded that unless such action is taken, “Iran will bring the world deeper into a broadening regional conflict.”[17]

    In her remarks, Haley was careful to address the concerns of countries committed to the nuclear agreement and worried that additional sanctions would undermine it. She acknowledged that “while the JCPOA itself was not intended to directly address Iran’s non-nuclear behavior, we must all recognize that resolution 2231 does address such behavior.” As with the nuclear agreement, Haley argued, “the international community must also demand full implementation of resolution 2231.”[18]

    This did not satisfy Russia, whose deputy U.N. ambassador reportedly rejected “the language of threats and sanctions” by the United States and criticized the United Nations for its investigative work, undertaken without “the authority nor the expertise.”[19]

    France, however, appears ready to increase the pressure against Iran’s missile program and its destabilizing regional activity. Speaking to the press during a visit to Washington D.C. on December 19, French Foreign Minister Jean-Yves Le Drian reiterated French concerns about “Iran’s hegemonic temptations in the region,” as well as “the development of an increasingly significant ballistic capability.”[20] He warned that additional sanctions were possible in response. And in remarks the same day at the United Nations, French Ambassador François Delattre said that “France is increasingly concerned by Iran’s violations of Resolution 2231 – I’m thinking of arms transfers – as well as its actions inconsistent with Resolution 2231 – I’m thinking here of its ballistic missile program.”[21]

    The coalition of countries that negotiated the nuclear agreement with Iran is divided on how – and even whether – to address Iran’s missile program and its role in regional destabilization, including activities that appear to violate Security Council resolutions. Russia opposes further action. Europe appears divided; France and the United Kingdom have spoken out at the United Nations about the need to address violations and inconsistencies in the implementation of resolution 2231; other European countries remain focused on protecting the nuclear agreement. Meanwhile, continued U.S. commitment to the agreement is uncertain. The Trump administration did not issue a favorable certification to Congress in October and must decide once again next month whether to waive sanctions as required by the agreement. The result of this division and uncertainty may be an expansion of the numerous non-nuclear threats posed by Iran, as well as the unraveling of the nuclear agreement.


    Footnotes:

    [1] Nikki Haley, “Remarks at a Press Conference on Iranian Arms Exports,” U.S. Mission to the United Nations, December 14, 2017, available at https://usun.state.gov/remarks/8215.

    [2] Colum Lynch, “U.N. Panel Finds Evidence of Iranian Hardware in Yemeni Rebels’ Missile. And American.” Foreign Policy, December 8, 2017, available at http://foreignpolicy.com/2017/12/08/u-n-panel-finds-evidence-of-iranian-hardware-in-yemeni-rebels-missile-and-american-middle-east-iran-saudi-arabia-human-rights-blockade-white-house/.

    [3] The List established and maintained pursuant to Security Council res. 2231 (2015), United Nations, accessed on December 21, 2017, available at https://scsanctions.un.org/en/?keywords=iran.

    [4] Nikki Haley, “Remarks at a Press Conference on Iranian Arms Exports,” U.S. Mission to the United Nations, December 14, 2017, available at https://usun.state.gov/remarks/8215.

    [5] “Evidence Shows Iranian Weapons Proliferation,” Defense Video Image Distribution System, December 12, 2017, available at https://www.dvidshub.net/image/4029999/evidence-shows-iranian-weapons-proliferation.

    [6] Fourth report of the Secretary-General on the implementation of Security Council resolution 2231 (2015), United Nations, December 8, 2017, available at http://www.iranwatch.org/sites/default/files/20171512-unscr2231-fourthreportofsecgen.pdf.

    [7] Fourth report of the Secretary-General on the implementation of Security Council resolution 2231 (2015), United Nations, December 8, 2017, p. 6, para. 29, available at http://www.iranwatch.org/sites/default/files/20171512-unscr2231-fourthreportofsecgen.pdf.

    [8] Fourth report of the Secretary-General on the implementation of Security Council resolution 2231 (2015), United Nations, December 8, 2017, p. 6, para. 29, available at http://www.iranwatch.org/sites/default/files/20171512-unscr2231-fourthreportofsecgen.pdf.

    [9] Fourth report of the Secretary-General on the implementation of Security Council resolution 2231 (2015), United Nations, December 8, 2017, p. 3, para. 10, available at http://www.iranwatch.org/sites/default/files/20171512-unscr2231-fourthreportofsecgen.pdf.

    [10] Fourth report of the Secretary-General on the implementation of Security Council resolution 2231 (2015), United Nations, December 8, 2017, p. 2, para. 11, available at http://www.iranwatch.org/sites/default/files/20171512-unscr2231-fourthreportofsecgen.pdf.

    [11] Second report of the Secretary-General on the implementation of Security Council resolution 2231 (2015), United Nations, December 30, 2016, p. 4, paras. 221-226, available at http://www.iranwatch.org/sites/default/files/unsyg-secondreporton2231.pdf.

    [12] Third report of the Secretary-General on the implementation of Security Council resolution 2231 (2015), United Nations, June 20, 2017, p. 8, para. 38, available at http://www.iranwatch.org/sites/default/files/unsyg-thirdreporton2231-170620.pdf.

    [13] Fourth report of the Secretary-General on the implementation of Security Council resolution 2231 (2015), United Nations, December 8, 2017, pp. 8-9, paras. 36-38, available at http://www.iranwatch.org/sites/default/files/20171512-unscr2231-fourthreportofsecgen.pdf.

    [14] Fourth report of the Secretary-General on the implementation of Security Council resolution 2231 (2015), United Nations, December 8, 2017, p. 9, paras. 39-42, available at http://www.iranwatch.org/sites/default/files/20171512-unscr2231-fourthreportofsecgen.pdf.

    [15] Fourth report of the Secretary-General on the implementation of Security Council resolution 2231 (2015), United Nations, December 8, 2017, p. 3, para. 14, available at http://www.iranwatch.org/sites/default/files/20171512-unscr2231-fourthreportofsecgen.pdf.

    [16] Nikki Haley, “Remarks at a UN Security Council Briefing on Iran,” U.S. Mission to the United Nations, December 19, 2017, available at https://usun.state.gov/remarks/8227.

    [17] Nikki Haley, “Remarks at a UN Security Council Briefing on Iran,” U.S. Mission to the United Nations, December 19, 2017, available at https://usun.state.gov/remarks/8227.

    [18] Nikki Haley, “Remarks at a UN Security Council Briefing on Iran,” U.S. Mission to the United Nations, December 19, 2017, available at https://usun.state.gov/remarks/8227.

    [19] Edith M. Lederer, “US urges UN to punish Iran, but Russia says no sanctions,” Associated Press, December 19, 2017, available at https://apnews.com/dff67bf44cb44bf0b819fffc5777badb.

    [20] “France, U.S. ‘determined’ to up pressure on Iran over ballistic weapons,” Reuters, December 19, 2017, available at https://www.reuters.com/article/us-iran-nuclear-france/france-u-s-determined-to-up-pressure-on-iran-over-ballistic-weapons-idUSKBN1ED0ZV.

    [21] “Iran – Remarks to the press by Mr. François Delattre, Permanent Representative of France to the United Nations,” Permanent mission of France to the United Nations in New York, December 19, 2017, available at https://onu.delegfrance.org/Iran-has-not-violated-its-nuclear-commitments.

    Nuclear Monitoring and Verification in the Digital Age: Seven Recommendations for Improving the Process

    Nuclear Verification Capabilities Independent Task Force of the Federation of American Scientists

    Third Report – September 2017

    The goal of this Task Force report is to offer findings and make recommendations regarding nonproliferation monitoring and verification in general; our observations are grounded in large part on the Task Force’s continued attention to the Joint Comprehensive Plan of Action (JCPOA) between the P5+1 and Iran, nuclear developments in North Korea, and other nonproliferation challenges.

    The Task Force seeks in this report to examine some of the significant developments in the current digital age as they relate to nonproliferation monitoring activities by both governmental and non-governmental organizations (NGO), to include:

    1. the accelerating quality and quantity of available imagery and other forms of remote sensing available outside governments;
    2. the growing volume and availability of worldwide transactional data related to commerce; and
    3. the ease of communicating findings, observations, and assertions about illicit activities related to nuclear programs and proliferation (with varying degrees of accuracy and truthfulness) through an increasing number of traditional and newer social media outlets.

    Overlaying these three developments is the introduction of new forms of data analytics, including nascent artificial intelligence (AI) approaches such as machine learning, which serve to speed up both the process and pace at which these developments affect monitoring and verification activities. The sheer volume of available data, imagery, and analysis, some of it conflicting, has made the nuclear monitoring (data gathering) and verification (a policy determination ideally based on accurate data) more challenging due to a significant worsening in the signal-to-noise ratio.  Additionally, as all three of these developments reflect modern society’s dependence on the digital cloud, servers, data storage, websites, and internet communications, the need to ensure data integrity has increasingly become a salient concern.

    Enabled by these increases in the speed and quantity of open data sources, the NGO community will play an increasing role in commenting on the JCPOA and other nonproliferation agreements, in facilitating greater transparency, and in helping to identify options, opportunities, and challenges. Use of these enhanced open-source tools by the NGO community is likely to increase as the technologies continue to improve and costs continue to decline. A paper co-written by Dr. Christopher Stubbs of Harvard University and Dr. Sidney Drell of Stanford University, titled “Public Domain Treaty Compliance Verification in the Digital Age,” described these new tools collectively as “Public Technical Means (PTM).”

    The intent of the findings and recommendations of this Task Force report is to suggest some of the measures that could be taken to enable the work of nongovernmental bodies in nuclear monitoring. The report highlights a few of the many examples of additional analytical and information resources available to NGOs. The report further suggests ways in which relevant analysis and reports can be separated from misinformation, and ways in which transparency can be enhanced. The findings and recommendations are not intended to be comprehensive but rather to suggest some possible measures as illustrations of what might be possible and how to exploit these new tools.

    The report examines examples in the human rights and business communities where centers for facilitation of monitoring activities and for validation of claims have been established independent of advocacy groups and governments. Our report calls for the establishment of similar centers focused on fusing and authenticating arms control and nonproliferation information. In the governmental arena, the report calls for more openness and better publicizing of the cooperative efforts of all parties working to ensure Iran’s compliance with the JCPOA. The final set of recommendations focuses on methods for maintaining the integrity of monitoring data as well as the safety and privacy of people who are working on ensuring compliance with nonproliferation objectives. A short summary of the recommendations follows:

    1. An independent Network of Centers of Nonproliferation Authentication (NCNA) — a distributed network consisting of four to five separate institutions worldwide — should be created and funded outside of government and advocacy channels.
    2. The P5+1 and Iran should seek opportunities for public ceremonies, press coverage, and diplomatic events to mark important implementation steps.
    3. There should be periodic public updates on monitoring measures and U.S. support to the IAEA and the Joint Commission.
    4. There should be a priority diplomatic push by members of the P-5+1and other interested states, supported by the international business community, toward encouraging Iranian openness and more public release of data concerning implementation and compliance steps by Iran.
    5. A trusted body of outside experts should be created for the Iranian nuclear agreement to review monitoring efforts and build confidence even among skeptics that serious and appropriate monitoring steps were being taken.
    6. NGOs, in the nonproliferation and nuclear arms control sectors that are collecting, handling, processing, and storing sensitive personal information, should take the necessary actions and use appropriate tools to protect both the information and the physical safety of its providers.
    7. Funders of nonproliferation NGOs should consider robust funding for upgrades in cyber security in order to protect key data and should insist that fundees adopt a culture of maintaining good “cyber hygiene” by their personnel as a condition of receiving grants.

    To read the complete report on the Federation of American Scientists’ website, click here.

    To read an accompanying working paper, “Tracking Proliferation through Trade Data” by Senior Research Associate Matthew Godsey and Executive Director Valerie Lincy, click here.