Tag Archives: Iran

The Sanctions Busters: Germany and France

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The steps by Europe’s most powerful countries are part of their campaign to salvage the 2015 Iran nuclear deal after President Trump withdrew the U.S. in May. Their goal is to help European companies continue some business activity with Iran despite sweeping new U.S. sanctions on the country and any company that does business with it.

France or Germany will host the corporation that would handle the payments channel, the diplomats said. If France hosts it, a German official will head the corporation and vice versa. Both countries will help fund the corporation.  The payments channel, known as a special purpose vehicle, or SPV, would use a system of credits to facilitate compensation for goods traded between Iran and Europe—allowing some trade to proceed without the need for European commercial banks to make or receive payments to Iran.

U.S. pressure on Austria and Luxembourg recently prompted those countries to reject European Union requests to host it, raising the prospect that the initiative might collapse, the diplomats said.  The company would be owned directly by participating European governments—an arrangement intended to dissuade the U.S. from directly targeting it with sanctions, diplomats said.

Laurence Norman , France and Germany Step In to Circumvent Iran Sanctions, WSJ, Nov. 26, 2018

The Deadly Combination

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Two North Korean shipments to a Syrian government agency responsible for the country’s chemical weapons program were intercepted in mid-2017 according to a confidential United Nations report on North Korea sanctions violations.  The report by a panel of independent U.N. experts, which was submitted to the U.N. Security Council in August 2017 and seen by Reuters gave no details on when or where the interdictions occurred or what the shipments contained.  “The panel is investigating reported prohibited chemical, ballistic missile and conventional arms cooperation between Syria and the DPRK (North Korea),” the experts wrote in the 37-page report.

“Two member states interdicted shipments destined for Syria. Another Member state informed the panel that it had reasons to believe that the goods were part of a KOMID contract with Syria,” according to the report.

KOMID is the Korea Mining Development Trading Corporation.  It was blacklisted by the Security Council in 2009 and described as Pyongyang’s key arms dealer and exporter of equipment related to ballistic missiles and conventional weapons. In March 2016 the council also blacklisted two KOMID representatives in Syria.  “The consignees were Syrian entities designated by the European Union and the United States as front companies for Syria’s Scientific Studies and Research Centre (SSRC), a Syrian entity identified by the Panel as cooperating with KOMID in previous prohibited item transfers,” the U.N. experts wrote.  SSRC has overseen the country’s chemical weapons program since the 1970s.

The U.N. experts said activities between Syria and North Korea they were investigating included cooperation on Syrian Scud missile programs and maintenance and repair of Syrian surface-to-air missiles air defense systems….The experts said they were also investigating the use of the VX nerve agent in Malaysia to kill the estranged half-brother of North Korea’s leader Kim Jong Un in February.
North Korea has been under U.N. sanctions since 2006 over its ballistic missile and nuclear programs…Syria agreed to destroy its chemical weapons in 2013 under a deal brokered by Russia and the United States. However, diplomats and weapons inspectors suspect Syria may have secretly maintained or developed a new chemical weapons capability.

During the country’s more than six-year long civil war the Organisation for the Prohibition of Chemical Weapons has said the banned nerve agent sarin has been used at least twice, while the use of chlorine as a weapon has been widespread. The Syrian government has repeatedly denied using chemical weapons.

On September 7, Israel targeted and heavily damaged a SSRC weapons factory in Masyaf Syria.

Excerpts from Michelle Nichols North Korea shipments to Syria chemical arms agency intercepted: U.N. report, Reuters, Aug. 21, 2017
Excerpts from Israel Hits Syrian Site Said to be Linked to Nuclear Weapons, Reuters, Sept. 7, 2017

US Sanctions and Russian Titanium

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The United States imposed sanctions on Russia’s state arms export agency and four defense industry enterprises for alleged violations of international arms control regimes restricting export of nuclear and missile technologies to Iran, North Korea and Syria on Wednesday.

A notice posted on the U.S. government’s Federal Register on the State Department’s behalf on September 2, 2015 said the move was a response to violations of the Iran, North Korea and Syrian Nonproliferation Act (INKSNA).  The act prohibits the transfer of goods, services and technologies restricted under international arms control agreements such as the Missile Technology Control Regime to Iran, North Korea and Syria.

A spokesman from the U.S. Embassy in Moscow, Will Stevens, told The Moscow Times that the Russian entities sanctioned under the act were among 23 foreign entities — including firms and entities based in China, Turkey and the United Arab Emirates — found to be engaging in violations of arms export conventions.

Russian arms export agency Rosoboronexport said it was unable to comment on the issue at this time.  The Russian defense industry firms that were involved in the alleged INKSNA violations were fighter jet manufacturer MiG, the high-precision weapons maker Instrument Design Bureau (KBP) Tula, NPO Mashinostroyenia — a rocket and missile design bureau in Reutov, outside Moscow — and Katod in Novosibirsk, which makes night-vision optics, among other things. The sanctions prevent any U.S. companies or government agencies from doing business with the sanctioned Russian arms entities.

The U.S. did not specify which arms deals in particular triggered the latest sanctions actions imposed on Russia’s defense industry…

Vadim Kozyulin of the Moscow-based PIR Center think tank argued that the imposition of sanctions under the Iran, North Korea and Syria Non-Proliferation Act was politically motivated …Kozyulin speculated that the arms transfers in question are deliveries to Syrian President Bashar Assad’s embattled regime, or the expected future delivery of advanced S-300 air defense systems to Iran — which, he pointed out, is not prohibited by any United Nations resolutions governing arms sales to Iran…

Russia’s largest arms export partners are nations such as China, India and Algeria…“This is not the first time that the U.S. has imposed sanctions on Russian defense companies,” Kozyulin noted. “I used to compile a list of such cases and I guess that you can count about 40 to 50 times when Russian companies were sanctioned by the U.S. since 1998.”…

However, Yury Barmin, an independent Russian expert on the global arms trade, said that “some Russian companies may import spare parts from the U.S. and the latest sanctions may force them to revise their procurement strategies and delay some outstanding orders.”…

Russians responded to the timing of the U.S. decision to place sanctions on 23 global entities for alleged INKSNA violations by accusing Washington of pursuing and protecting its own interests in the global arms market. Barmin argued that Wednesday’s sanctions were only implemented after the completion of a Pentagon contract with Rosoboronexport to deliver 30 Russian-built Mi-17 helicopters to the Afghan military in the wake of NATO’s withdrawal.“Now that this deal has been concluded the U.S. deemed it possible to impose sanctions,” he said.

The CEO of Russian defense firm Katod, which was producing night-vision goggles for sale on the U.S. market, told  that his company was sanctioned because the U.S. feared Russian competition in this segment of the arms market….

Barmin too pointed to the lack of contact with U.S. financial institutions and argued that existing measures will have little impact, “unless Rosoboronexport [is] prevented from performing banking transactions globally, which would imply cutting Russia off from SWIFT altogether.”

If the tit-for-tat game of sanctions with Russia continues, and the U.S. manages to cause significant damage to the Russian defense industry, Kozyulin pointed out that Russia holds certain trump cards that it could use to fight back at the U.S. defense industry.  “For example, Russian titanium,” which is used for Boeing aircraft, “and engines for space rockets might be prohibited for export to the U.S.”

Excerpts from Matthew Bodner, U.S. Sanctions Russian Arms Export Agency for Non-Proliferation Violation, Moscow Times, Sept. 2, 2015

Sabotaging Iran’s Nuclear Program

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A U.S. security institute said it has located via satellite imagery a section of a sprawling Iranian military complex where it said an explosion or fire might have taken place earlier this week. (pdf).

Iran’s official IRNA news agency on Monday cited an Iranian defence industry body as saying that two workers were killed in a fire at an explosives factory in an eastern district of Tehran.  Iran’s Defence Industries Organisation said the fire broke out on Sunday evening, IRNA said, giving no further detail.  An Iranian opposition website, Saham, described the incident as a strong explosion that took place near the Parchin military complex around 30 km southeast of the capital. It did not give a source and the report could not be independently verified….  The dissident National Council of Resistance of Iran (NCRI) exposed Iran’s uranium enrichment plant at Natanz and a heavy water facility at Arak in 2002. But analysts say it has a mixed track record and a clear political agenda.

The Washington-based Institute for Science and International Security (ISIS) said it had obtained commercially available satellite imagery on which six buildings at Parchin appeared damaged or destroyed.  However, the images ISIS issued indicated the site of the possible blast was not the same location in Parchin where the U.N. nuclear agency suspects that Iran, possibly a decade ago, carried out explosives tests that could be relevant for developing a nuclear arms capability. Iran denies any such aim.

The U.N. International Atomic Energy Agency wants to visit this area of Parchin, but Iran has so far not granted access. Iran says Parchin is a conventional military facility and that its nuclear programme is entirely peaceful. It has often accused its enemies of seeking to sabotage its atomic activities.

ISIS said its analysis of the satellite imagery from Oct. 7 and 8 indicated an explosion could have taken place at a southern section of Parchin.  “Several signatures that coincide with those expected from an explosion site are visible here,” it said on its website.  “Two buildings that were present in August 2014 are no longer there, while a third building appears to be severely damaged. In total at least six buildings appear damaged or destroyed,” ISIS added.

Israel and the United States have not ruled out military action against Iran if diplomacy fails to resolve a decade-old dispute over Tehran’s nuclear programme. Israel is widely believed to be the Middle East’s only nuclear-armed power.

U.S. think-tank says it located possible blast at Iran military site, Reuters, Oct. 9, 2014

The Flight of Gold: what Afghanistan, China and Iran have in common

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Packed into hand luggage and tucked into jacket pockets, roughly hewed bars of gold are being flown out of Kabul with increasing regularity, confounding Afghan and American officials who fear money launderers have found a new way to spirit funds from the country.  Most of the gold is being carried on commercial flights destined for Dubai, according to airport security reports and officials. The amounts carried by single couriers are often heavy enough that passengers flying from Kabul to the Persian Gulf emirate would be well advised to heed warnings about the danger of bags falling from overhead compartments. One courier, for instance, carried nearly 60 pounds of gold bars, each about the size of an iPhone, aboard an early morning flight in mid-October, according to an airport security report. The load was worth more than $1.5 million.

The gold is fully declared and legal to fly. Some, if not most, is legitimately being sent by gold dealers seeking to have old and damaged jewelry refashioned into new pieces by skilled craftsmen in the Persian Gulf, said Afghan officials and gold dealers.  But gold dealers in Kabul and current and former Kabul airport officials say there has been a surge in shipments since early summer. The talk of a growing exodus of gold from Afghanistan has been spreading among the business community here, and in recent weeks has caught the attention of Afghan and American officials. The officials are now puzzling over the origin of the gold — very little is mined in Afghanistan, although larger mines are planned — and why so much appears to be heading for Dubai.

“We are investigating it, and if we find this is a way of laundering money, we will intervene,” said Noorullah Delawari, the governor of Afghanistan’s central bank. Yet he acknowledged that there were more questions than answers at this point. “I don’t know where so much gold would come from, unless you can tell me something about it,” he said in an interview. Or, as a European official who tracks the Afghan economy put it, “new mysteries abound” as the war appears to be drawing to a close.

Figuring out what precisely is happening in the Afghan economy remains as confounding as ever. Nearly 90 percent of the financial activity takes place outside formal banks. Written contracts are the exception, receipts are rare and statistics are often unreliable. Money laundering is commonplace, say Western and Afghan officials.  As a result, with the gold, “right now you’re stuck in that situation we usually are: is there something bad going on here or is this just the Afghan way of commerce?” said a senior American official who tracks illicit financial networks.

There is reason to be suspicious: the gold shipments track with the far larger problem of cash smuggling. For years, flights have left Kabul almost every day carrying thick wads of bank notes — dollars, euros, Norwegian kroner, Saudi Arabian riyals and other currencies — stuffed into suitcases, packed into boxes and shrink-wrapped onto pallets. At one point, cash was even being hidden in food trays aboard now-defunct Pamir Airways flights to Dubai.

Last year alone, Afghanistan’s central bank says, roughly $4.5 billion in cash was spirited out through the airport. Efforts to stanch the flow have had limited impact, and concerns about money laundering persist, according to a report released last week by the United States Special Inspector General for Afghanistan Reconstruction.  The unimpeded “bulk cash flows raise the risk of money laundering and bulk cash smuggling — tools often used to finance terrorist, narcotics and other illicit operations,” the report said. The cash, and now the gold, is most often taken to Dubai, where officials are known for asking few questions. Many wealthy Afghans park their money and families in the emirate, and gold dealers say more middle-class Afghans are sending money and gold — seen as a safeguard against economic ruin — to Dubai as talk of a postwar economic collapse grows louder. But given Dubai’s reputation as a haven for laundered money, an Afghan official said that the “obvious suspicion” is that at least some of the apparent growth in gold shipments to Dubai is tied to the myriad illicit activities — opium smuggling, corruption, Taliban taxation schemes — that have come to define Afghanistan’s economy.

There are also indications that Iran could be dipping into the Afghan gold trade. It is already buying up dollars and euros here to circumvent American and European sanctions, and it may be using gold for the same purpose.  Yahya, a dealer in Kabul, said other gold traders were helping Iran buy the precious metal here. Payment was being made in oil or with Iranian rials, which readily circulate in western Afghanistan. The Afghan dealers are then taking it to Dubai, where the gold is sold for dollars. The money is then moved to China, where it was used to buy needed goods or simply funneled back to Iran, said Yahya, who like many Afghans uses a single name.

Excerpt, MATTHEW ROSENBERG, An Afghan Mystery: Why Are Large Shipments of Gold Leaving the Country?, NY Times, Dec. 15, 2012

How Iran Copes with Sanctions?

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According to the latest figures from the Natural Gas Vehicle Knowledge Base, Iran, with the world’s second-largest natural gas reserves after Russia, in 2011 became the world leader in natural gas vehicles with some 2.9 million on the road, narrowly edging Pakistan, which is trailed by Argentina, Brazil and India, respectively.  Iran’s reliance on its cleaner fossil fuel seems unlikely to diminish as international sanctions continue to bear down on its nuclear program, which in turn have curbed imports of gasoline; though Iran has large oil reserves, its ability to refine its own gasoline falls well short of its needs.  But for ordinary Iranian motorists, natural gas is less a geopolitical or environmental issue than a pocketbook concern. “This sort of fuel is cheap, and it gets me home every day — that’s what I care about,” said Sasan Ahmadi, a 42-year-old office assistant filling up his Iranian-made Kia Pride at a natural-gas station for his hour commute home.

The government began promoting natural gas about a decade ago, and not just in response to American-led sanctions. A big initial reason was the increasingly thick yellow blankets of smog that often engulf greater Tehran and its 12 million inhabitants. That was a result of rising auto sales by domestic carmakers like Iran Khodro and Saipa, which took off as oil revenue began rising sharply around 15 years ago, enriching tens of millions of Iranians…..

As a means to counter outside economic pressure, natural gas’s usefulness is clear. Because of its inadequate investment in oil refineries, Iran has long been forced to refine a portion of its own crude at refineries in Europe to satisfy rising domestic demand for gasoline. So when the European Union in July barred gasoline sales to the country, natural gas helped to blunt the blow.

Despite the sanctions against Iran, motorists like Mr. Ahmadi can make their commute for the equivalent of less than a penny a mile using the alternative fuel at subsidized prices. Gasoline is more expensive, especially because government subsidies have been reduced, but it is still incredibly cheap by Western standards: less than $1 a gallon….

Excerpt, THOMAS ERDBRINK, Oil-Rich Iran, Natural Gas Turns Wheels, New York Times, Oct. 23, 2012

The US Campaigns of Attrition: Iran, Iraq

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There is another…theory, that Iran will persist in its drive to achieve a bomb—or at least a break-out capacity to get one quickly if it so desired. The Iranians say they never trusted Mr Obama’s offer of detente early in his presidency because of the heavier sanctions and the campaigns of sabotage and assassination that accompanied the offer. In the same vein,they deplore the American administration’s recent decision to drop its longstanding classification of the exiled People’s Mujahedeen of Iran as a terrorist organisation.

So Iran’s rulers will not easily trust future pledges to lift sanctions in return for nuclear concessions. In any event, Iran’s leaders may now believe that such concessions would destroy the Islamic Republic’s credibility and open it to a recurrence of the unrest that followed Mr Ahmadinejad’s disputed re-election in 2009. So it is possible that an American policy of containment, even an undeclared one, might lead to a long campaign of attrition of the kind that impoverished Iraq in the 1990s, while leaving its leader in power.

Anticipating trouble, Iran’s hardliners have been stifling the remaining repositories of dissent as fiercely as ever. The most notable of these is Akbar Hashemi Rafsanjani, an establishment heavyweight and former president who became an opposition figurehead after the contentious poll of 2009. The two most controversial of his five children—his daughter Faezeh and his son Mehdi—have recently been arrested, undoubtedly with the approval of Iran’s supreme leader, Ali Khamenei. Mr Rafsanjani had been expected to put up a fight when Mr Khamenei tries, as he probably will, to install his own nominee as president in elections that are due next spring. But with his children behind bars, the former president may favour circumspection over principle.

Excerpt, Iran: Behind the rants, uncertainty grows, Economist, Sept. 29,2012, at 54

US Special Forces in Iraq to Stop Russia

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The civil war in Syria is testing Iraq’s fragile society and fledgling democracy, worsening sectarian tensions, pushing Iraq closer to Iran… just nine months after American forces ended their long and costly occupation here.  Fearing that Iraq’s insurgents will unite with extremists in Syria to wage a two-front battle for Sunni dominance, Prime Minister Nuri Kamal al-Maliki recently ordered guards at the western border to block adult men…along with thousands of refugees seeking to escape the grinding war next door.  Farther north, Iraqi officials have another concern, also related to the fighting across the border. Turkish warplanes have stepped up attacks on the mountain hide-outs of Kurdish insurgents galvanized by the war in Syria, underscoring Iraq’s inability to control its own airspace.

The hardening of the antagonists’ positions in Syria — reverberating across Iraq — was made clear Monday at the United Nations when the new special envoy for Syria, Lakhdar Brahimi, gave a bleak appraisal of the conflict to the Security Council and said he saw no prospect for a breakthrough anytime soon.

The Syrian war’s spillover has called attention to uncomfortable realities for American officials: despite nearly nine years of military engagement, an effort that continues today with a $19 billion weapons sales program, Iraq’s security is uncertain and its alliance with the theocratic government in Tehran is growing. Iraq’s Shiite-dominated leadership is so worried about a victory by Sunni radicals in Syria that it has moved closer to Iran, which shares a similar interest in supporting the Syrian president, Bashar al-Assad.,,,

In response, the United States has tried to secure its interests in Iraq. It has unsuccessfully pressed Iraq to halt flights from Iran that traverse Iraqi airspace to ferry weapons and fighters to the Assad government, although The Associated Press reported that over the weekend a government spokesman said Iraq would begin random searches of Iranian aircraft.  While some Congressional leaders have threatened to cut off aid to Iraq if the flights do not stop, the United States is trying to speed up weapons sales to Iraq to secure it as an ally, said Lt. Gen. Robert L. Caslen Jr., the American commander in charge of that effort. As regional security deteriorates, the United States is finding it hard to deliver the weapons — especially antiaircraft systems — quickly enough to satisfy the Iraqis, who in some cases are looking elsewhere, including Russia.

“Although they want a strategic partnership with the United States, they recognize the vulnerability, and they are interested in going with the nation that will be able to provide them, and meet their need, their capabilities gap, as quickly as possible,” said General Caslen, who oversees a Pentagon office here, under the authority of the American Embassy, that brokers weapons sales to Iraq.  The United States is providing Iraq with refurbished antiaircraft guns, free of charge, but they will not arrive until June. In the meantime, the Iraqis have collected cold war-era missiles found in a junkyard on an air base north of Baghdad, and they are trying to get them in working order. Iraq is negotiating with Russia to buy air defense systems that could be delivered much more quickly than those bought from the United States.

“Iraq recognizes they don’t control their airspace, and they are very sensitive to that,” General Caslen said. Each time Turkish fighter jets enter Iraq’s airspace to bomb Kurdish targets, he said, Iraqi officials “see it, they know it and they resent it.”  Iskander Witwit, a former Iraqi Air Force officer and member of Parliament’s security committee, said, “God willing, we will be arming Iraq with weapons to be able to shoot down those planes.”

The American military withdrew at the end of last year after negotiations for an extended troop presence collapsed because the Iraqis would not agree to extend legal immunities to any remaining force. Once the Americans left, Iraq celebrated its sovereignty, even as military officials in both countries fretted about the deficiencies of Iraq’s military and sought ways to work together that would not require a public debate about immunities.  Iraq and the United States are negotiating an agreement that could result in the return of small units of American soldiers to Iraq on training missions. At the request of the Iraqi government, according to General Caslen, a unit of Army Special Operations soldiers was recently deployed to Iraq to advise on counterterrorism and help with intelligence.

Excerpts from TIM ARANGO, Syrian War’s Spillover Threatens a Fragile Iraq, NY Times, Sept. 24, 2012