O 011952Z AUG 08
FM SECSTATE WASHDC
TO AMEMBASSY BEIJING IMMEDIATE

S E C R E T STATE 083144

E.O. 12958: DNG: CO 08/01/2032
TAGS: ECON KNNP PARM PTER IR CH PINR

SUBJECT: EFFORTS TO HALT IRANIAN PROCUREMENT IN CHINA

Classified By: EAP Acting DAS John J. Norris for 1.4 b,d 
 
¶1. (U) This is an action request. Please see paragraph 3. 
 
------------------- 
SUMMARY/BACKGROUND 
------------------- 

¶2. (S//NF) Washington is currently initiating a more focused strategy to prevent shipments of commodities of concern to Iran. We are approaching countries and asking them to inform their relevant industries of the United Nations Security Council resolutions (UNSCRs) against Iran, and encourage those industries to contact appropriate officials in their governments if they receive any inquiries of concern. We are providing information about certain Chinese companies that have provided commodities to Iranian entities involved in its nuclear program in an effort to encourage China to ensure such activities are not continued and to encourage China to adopt a similar proactive strategy of working with their companies to make them aware of potential Iranian procurement in support of its nuclear program. We would also expect that the provision of this information will lead to subsequent expert-level discussions of this issue with Chinese Government counterparts. 
 
¶3. (S//NF) Iran has failed to suspend its uranium enrichment and heavy water-related activities as required by the United Nations Security Council. Iran makes frequent use of deceptive tactics in order to obtain items and technology to continue the development of its nuclear program. Furthermore, as described in IAEA Director General El Baradei,s report of 22 February 2008, Iran has admitted to evading international sanctions in order to procure sensitive nuclear-related technologies. DG El Baradei,s reports of 22 February and 26 May also describe Iran’s installation and testing of two new, advanced centrifuge designs. These new centrifuges are called the IR-2 and IR-3. Based on Iranian declarations to the IAEA and on photographs taken by the Iranian Government during a visit to Natanz by Iranian President Ahmadinejad, it is probable that these new designs use rotors made from carbon fiber. The other version of Iranian centrifuge (the IR-1) consists of high strength aluminum. We are approaching countries that develop the technologies and materials that Iran,s nuclear program will require (such as carbon fiber for the IR-2 and IR-3) and requesting that these countries take proactive steps to educate and inform their companies about potential Iranian procurement efforts.  
------------------------- 
OBJECTIVES/ACTION REQUEST 
------------------------- 
 
¶4. (S//REL CHINA)  We would like to reinforce China,s own efforts in thwarting Iranian attempts to procure critical materials for its nuclear program from Chinese entities. Washington requests Post deliver the non-paper in paragraph 4 to appropriate host government officials. (Note - The non-paper was originally prepared for U/S John Rood,s recent visit to China but was not delivered due to time constraints.) Post should pursue the following objectives:  

-- Inform China that the U.S. is taking proactive steps domestically to thwart Iranian procurement attempts in support of its nuclear program.  

-- Encourage China to take similar steps with their companies. 
 
-- Inform China that in the spirit of our cooperation, we are sharing our assessment of them regarding previous Iranian procurement attempts in China (information in attached non-paper). This includes information about specific Chinese companies that have been approached by Iran for commodities in support of its nuclear program in the past.  

-- Emphasize that the USG is very concerned that Iran will continue to approach Chinese companies to procure materials in support of its nuclear program.  

-- Inform China that we hope that by sharing this information we can establish an ongoing information exchange to help ensure that both our countries are taking all necessary steps to prevent Iranian procurement attempts in support of its nuclear program. 
 
----------------------- 
BACKGROUND AND NONPAPER 
----------------------- 
 
¶5. BEGIN NON-PAPER S//REL CHINA: 
 
-- Iran has failed to suspend its uranium enrichment- and heavy water-related activities as required by the United Nations Security Council. It has similarly refused to address International Atomic Energy Agency,s outstanding questions regarding its past efforts to develop a nuclear warhead, which have been described in detail in the last two IAEA reports.  

-- Iran makes frequent use of deception to obtain items and technology for its nuclear program. Furthermore, as described in IAEA Director General El Baradei,s report of 22 February 2008, Iran has admitted to evading international sanctions in order to procure sensitive nuclear-related technologies. 
 
-- DG El Baradei,s reports of 22 February and 26 May describe Iran’s installation and testing of new, advanced centrifuge designs, the IR-2 and IR-3. Based on Iranian declarations to the IAEA and on photographs taken by the Iranian Government during a visit to Natanz by Iranian President Ahmadinejad, it is probable that this new design uses rotors made from carbon fiber. The other version of Iranian centrifuge (the IR-1) consists of high strength aluminum.  
-- The United States is increasing its efforts to ensure that U.S.-origin goods that could provide direct or indirect support to Iran,s nuclear efforts are not exported or re-exported to Iran. These efforts include:    Outreach to U.S. companies that manufacture sensitive commodities. These include producers of commodities listed in the Nuclear Suppliers Group (NSG) guidelines.    We have also taken steps to designate and sanction Iranian individuals and companies associated with Iran,s nuclear program. These designations forbid U.S. companies from engaging in business with them.  
-- We are currently undertaking a more focused international strategy to prevent shipments of commodities of concern before they happen. These efforts include:    Approaching other countries and asking them to take similar domestic steps such as informing their companies of the United Nations Security Council resolutions (UNSCRs) against Iran, and encouraging those companies to contact appropriate officials in their governments if they receive inquiries of concern.    We have also shared watchlists of sensitive commodities with NSG Participating Governments (PGs) and have provided information to NSG partners on Iran procurement efforts. 
 
-- In the spirit of our on-going nonproliferation cooperation and dialogue with China, we seek China,s partnership in this proactive strategy. We wish to work closely with you to ensure that our companies, either wittingly or unwittingly, are not aiding Iran,s nuclear program. As AFM He Yafei said in his meeting with Acting Under Secretary Rood on June 4 in Beijing, the U.S. and China must cooperate closely on Iran. 
 
-- In particular, we want to alert you to specific commodities that Iran has been trying to procure through Chinese companies to include high-strength aluminum alloys (AA-7075) and vacuum pumps. Certain types of these commodities are controlled on the NSG dual-use annex and are included in the gas centrifuge procurement watchlist that was circulated to NSG PGs, and are covered by the Wassenaar Arrangement.  

-- Additionally, based on the DG,s reports in February and May 2008, we believe that Iran may need to procure large amounts of high-strength carbon fiber to support the deployment of additional IR-2 and IR-3 centrifuges. Carbon fiber is included on the NSG,s dual-use annex and gas centrifuge watchlist circulated to NSG PGs. 
 
-- We would like to provide you with detailed information we have compiled regarding Chinese companies that are capable of producing these or other sensitive, dual-use commodities. We hope this information will assist you in your outreach to Chinese companies on your export control regulations as they apply to Iran. We would encourage you, as we have done domestically with our own firms, to ask these companies to contact appropriate authorities should they be approached by entities that may have ties to Iran. 
 
--Regarding aluminum 7075, we have identified Chinese companies that have conducted business with Iranian entities designated under UNSCR 1747, such as XXXXXXXXXXXX.  

-- The following are companies in China that have supplied aluminum 7075 to Iranian entities of concern: 
 
XXXXXXXXXXXX
 
 
XXXXXXXXXXXX 
 
XXXXXXXXXXXX 

XXXXXXXXXXXX   

--  Extra vigilance on the part of our governments will help thwart Iran,s efforts to evade export control regulations and flout UNSCRs to support a nuclear program of serious concern to the international community.  

-- We believe it would be beneficial if, in the spirit of our collaborative dialogue, you notify us, the NSG and the IAEA, if any of your companies receive inquiries from Iranian entities. Sharing this information will allow the international community to better track and stop Iran,s illicit procurement.  -- We would like to ensure that this effort is ongoing and we propose a face-to-face meeting with the appropriate experts to further discuss this matter.  -- We greatly appreciate your cooperation on this and other nonproliferation efforts and look forward to hearing the results of your work.  
END NON-PAPER 
 
------------------ 
REPORTING DEADLINE 
------------------ 
 
¶6. (U) Post should report results within seven (7) business 
days of receipt of this cable. Please slug replies for ISN. 
Please include SIPDIS in all replies. 
 
---------------- 
POINT OF CONTACT 
XXXXXXXXXXXX 

¶8. (U) Department thanks Post for its assistance. 
RICE