O 021320Z SEP 08
FM SECSTATE WASHDC
TO AMEMBASSY BEIJING IMMEDIATE

S E C R E T STATE 093558

E.O. 12958: DECL: 09/02/2033

TAGS: PARM PREL IR CH UK AS

SUBJECT: (S) SHIPMENT OF CHINESE ORIGIN GOODS DESTINED FOR IRAN

Classified By: EAP Acting DAS John Norris, E.O. 12958 Reasons 1.4 (b), (d)

1.(S) ACTION REQUEST: Washington has information about a Chinese origin shipment of proliferation concern that arrived in Bandar Abbas, Iran on 21 June. This cargo was conveyed to Iran on the IRISL merchant vessel "Iran Broojerdi" and was consigned to companies associated with designated entities in Iran. Washington requests that Embassy Beijing demarche appropriate Chinese officials and urge China to investigate this shipment, provide us with the results of that investigation, and prevent future transfers of a similar nature. Post should also inform counterparts at the British Embassy in Beijing of our plans to deliver this demarche. Post should draw on any relevant background and provide the non-paper in para

¶6. ---------- OBJECTIVES ----------

2.(S/Rel China) Embassy Beijing is requested to: -- Inform appropriate Chinese officials of this shipment of proliferation concern and that we are reinforcing the message that the British delivered on this same cargo last month.

-- Reinforce that our information, like that of the British, indicates that this shipment was destined for entities designated in United Nations Security Council Resolution (UNSCR) 1737.

-- Note that in view of Iran's refusal to address international concerns about its nuclear programs and its record as a serial proliferator that supports international terrorism, the United States views with serious concern any export of items with potential WMD applications to end-users designated under UN Security Council Resolutions 1737 and 1747.

-- Remind interlocutors that the U.S. takes very seriously WMD related shipments to Iranian entities and urge China to contribute to our joint non-proliferation efforts as embodied in UNSCRs 1737, 1747 and 1803 (which China voted for) and take action to investigate this shipment and prevent such shipments in the future.

---------- BACKGROUND ----------

3.(S/Rel China) The IRISL merchant vessel "Iran Broojerdi" traveled from Dalian, China, to Bandar Abbas, Iran, with several cargoes of proliferation concern. In particular, it was carrying 208 metric tons of potassium perchlorate, which can be used as a propellant for artillery rockets and can potentially be used to produce the solid rocket propellant oxidizer ammonium perchlorate, and liquid poly butadiene rubber, which is used commercially to produce a number of rubber products. However, liquid poly butadiene can also be used to produce binders used in solid rocket propellant. The potassium perchlorate and liquid polybutadiene are consigned to Aban Commercial and Industrial Group, which is associated with Iran's solid-propellant missile organization SBIG. SBIG is also designated in UNSCR 1737. Additionally, China's Zhejiang Qingji Industrial Company, Ltd shipped a dewatering machine on the Broojerdi that is consigned to a firm that is associated with the Atomic Energy Organization of Iran (AEOI) and is a known procurement agent for Iran's Defense Industries Organization (DIO). Both AEOI and DIO are designated entities and subject to the asset freeze provision of UNSCR 1737, para

¶12. This model dewatering machine is an industrial, two-stage centrifuge used to separate liquids from solids. This particular machine has a capacity of separating 20 tons per hour of solid matter and it appears to have a lot of industrial uses.

4.(S/Rel China and UK) We have raised the issue of transfers of items of proliferation concern to entities designated in UNSCRs repeatedly with Chinese officials. However, we continue to see shipments of Chinese goods intended for companies associated with entities in Iran designated in UNSCRs 1737 and 1747. China has noted in occasional responses to such information that the uncontrolled nature of the goods does not dictate a prohibition.

¶5. (S/Rel UK) In June 2008, while this shipment was en route to Iran, the UK approached Chinese officials in Beijing and objected to the transfer. We would like to support the UK demarche, underline our own opposition to such transfers to Iran, and remind Chinese officials of our common interest in enforcing UNSCR 1737, 1747 and 1803. Washington has confirmed that the information in the attached non-paper is identical to that which the UK passed to the PRC in June 2008.

-------------- BEGIN NONPAPER --------------

6.(S/Rel China) -- In the spirit of our nonproliferation cooperation, we would like to bring to your attention a shipment of proliferation concern that occurred in May and June 2008 from China to Iran. -- Our information indicates that a Chinese firm, Dalian North Potassium Chlorate Works, booked a cargo of 208 metric tons of potassium perchlorate and liquid poly butadiene rubber (LPBR) for shipment from Dalian, China to Bandar Abbas, Iran. The cargo was to be loaded into 13 20-foot containers and shipped under provisional invoice #14640/2/25875. The bills of lading for this cargo were IRSLPJL1860ISH2289 and IRSLPJL1860ISH2284.

-- Dalian North Potassium Chlorate Works produces a variety of perchlorate and chlorate products, including potassium perchlorate and sodium perchlorate. LPBR is a generic term that may refer to a number of poly butadiene-based chemicals, some of which are controlled under the MTCR for their use as binders in solid propellant composites. The cargo was probably loaded at Dalian in late May aboard the Islamic Republic of Iran Shipping Lines (IRISL) vessel M/V Iran Broojerdi. -- In addition, we believe that the M/V Iran Broojerdi loaded a model P-60 dewatering machine at Tianjin, China. This model dewatering machine is an industrial, two stage centrifuge used to separate liquids from solids.

The details regarding the shipment of the dewatering machine are as follows: -- Commodity description: Dewatering machine model P-60, 31 items of related spare parts:

- Shipper Zhejiang Qingji Industrial Company, Ltd.

- Consignee: The Sara Company

- Notify Address: The Sara Company

- Bill of Lading: IRSLPJL1860ISH2279

- Freight Provisional Invoice Number: 14640/2/25822

- Packing: Three wooden cases

- Weight: 11.500 metric tons

- Volume: 35.320 cubic meters

-- Our information indicates that the Sara Company is associated with the Atomic Energy Organization of Iran (AEOI) and has procured items from other Chinese firms in the past on behalf of Iran's Defense Industries Organization (DIO) and for the DIO subsidiary Parchin Chemicals Industries (PCI). These firms are designated in United Nations Security Council Resolutions (UNSCRs) 1737 and 1747 and, in accord with para 12 of UNSCR 1737, all states must ensure that "any funds, financial assets or economic resources are prevented from being made available(to or for the benefit of these(entities."

-- Given Iran's refusal to address international concerns about its nuclear programs and its record as a serial proliferator that supports international terrorism, the United States views with serious concern any export of items with potential WMD applications to end-users designated under UN Security Council Resolutions. Transactions such as these send the wrong signal by reinforcing the perception in Iran that it can continue to reject P5 1 demands with impunity. We ask that China investigate the transaction described above, share the results, and continue to do what it can to prevent future transfers of a similar nature.

----------------------------- Reporting Requirement and POC ------------------------------------

7.(U) Please report delivery of cable and any immediate response by September 15..

8.(U) Washington point-of-contact for follow-up information is XXXXXXXXXXXX Please slug all responses for ISN, T, EAP, and EUR. Washington appreciates Post's assistance. 
RICE