By Andrea Stricker Behnam Ben Taleblu
April 03, 2020
When it comes to the regime in Iran, the adage “old habits die hard” could not be truer.
Even amid a negligent and botched response to the coronavirus pandemic, Tehran’s leaders are investing precious resources to further their nuclear program in violation of the Joint Comprehensive Plan of Action (JCPOA) nuclear deal. Some of these violations, like Iran’s increasing stockpile of low-enriched uranium – fissile material that if further enriched to weapons-grade can be used for a nuclear weapon – have received much attention. But others, like illicit attempts to procure nuclear-related commodities from abroad, persist with scant mainstream media coverage.
Tehran’s more overt and egregious nuclear violations are best explained by a strategy of graduated escalation, adopted in May 2019 – precisely one year after Washington left the JCPOA – in a bid to garner sanctions relief. However, Iran’s attempts to procure nuclear-related goods while under the JCPOA date back to 2016, the very same year the agreement entered into force. This indicates that technical demand drives Iranian nuclear procurement, not politics or international obligations.
The most recent reported procurement attempt comes from the Balkans. As first reported in Balkan Insight, Iranian embassy officials in Sarajevo – including the Deputy Ambassador for the Economic Sector – met representatives of a Bosnian company to discuss Tehran’s desire to procure a controlled, direct-nuclear use material. Representatives of the firm, as well Bosnian officials, attest that the sale did not go through. A Bosnian government official went even further, claiming that the sale would have subjected Bosnia to U.S. sanctions.
However, citing the outlet Zurnal, Balkan Insight further reported that the discussed transfer of the material would have been moved through Turkey and Pakistan. Iran has a habit of working through cutouts and front-companies in jurisdictions of weak central authority to mask the true end-user, which is often an Iranian entity subject to sanctions, be they at the UN, EU, or U.S. level. What’s more, using shell companies and circuitous shipping routes is a practice that Iran had almost perfected in the pre-JCPOA era. In this instance, as in many others, the obfuscation was allegedly designed to also protect the exporter.
The material Iranian officials were reportedly interested in procuring in Bosnia is called aluminum oxide powder. According to the Nuclear Suppliers Group (NSG), aluminum oxide is controlled for export by the NSG Part 1 direct-nuclear use list, otherwise known as the “Trigger List.” This means that NSG members – nuclear supplying nations – must “trigger” automatic safeguards and controls over such exports. Notably, aluminum oxide is “resistant to corrosion” by uranium hexafluoride. Also known as UF6, uranium hexafluoride is the exact same compound of uranium gas that Iran injects into centrifuges, machines that enrich uranium and are made up of aluminum, or carbon fiber and maraging steel.
Aluminum oxide powder, relevant to several industries, can be used in multiple nuclear applications. Apart from centrifuge uses, aluminum oxide in pellet form can be used to fill gaps in control rods in the core of a reactor. The compound can also be used to prevent corrosion or cracking in a nuclear plant.
Whatever Tehran’s particular intended use, aluminum oxide is an internationally regulated substance, subject to tight controls.
The JCPOA and UN Security Council Resolution (UNSCR) 2231, which codifies the nuclear deal, prohibits the procurement of nuclear-related goods like aluminum oxide without prior authorization. Per Annex IV of the JCPOA, a Procurement Working Group (PWG) was established by the JCPOA’s member state body, the Joint Commission, to oversee licit nuclear trade to Iran. The PWG evaluates sales proposals submitted by governments for domestic companies to sell nuclear-related goods to Iran, or items covered by the NSG Parts 1 and 2 control lists. The UN Security Council Affairs Division and a facilitator are involved in and report on PWG decisions, in addition to Iran’s general adherence with UNSCR 2231. This JCPOA procurement channel is intended to prevent Iran from obtaining sensitive items that would allow it to augment its nuclear programs beyond the limits specified in the JCPOA.
On its face, a designated procurement channel to facilitate the sale and supply of pre-approved goods to Iran makes sense. Writing back in 2015, JCPOA proponents argued that the PWG and its associated channel could make spotting noncompliance easier, since “Undeclared procurement would be a violation that could lead to snapback sanctions.” Snapback refers to the full restoration of UN penalties on Iran waived by the nuclear deal. While simple, the above proposition means that, in theory, any procurement outside the channel is by default a violation, which can lay the predicate for the deal’s collapse. In practice, the deal’s parties have declined to adopt such a stance against Iran’s myriad JCPOA violations, including its illicit procurement attempts.
For instance, in the face of persistent illicit procurement, European countries like Germany, which are still a party to the JCPOA, have turned a blind eye. This is despite information produced by Germany’s own domestic intelligence agencies noting Iranian attempts to attain proliferation-sensitive material and technologies. In 2015, the same year the JCPOA was agreed; these agencies disclosed 141 Iranian procurement attempts, many “for goods that can be used specifically in the area of nuclear technology.” Since then, German intelligence reports have continued to cite additional cases relating to dual-use technologies, but with no policy change out of Berlin.
Inaction from the European community, coupled with lackluster UN reporting, appears to have spurred Washington towards greater action. Relying on counter-proliferation authorities and sanctions, the Trump administration has shifted its policy to more actively name, shame, and punish Iranian illicit procurement networks.
In July of 2019, the Treasury Department sanctioned seven Iranian entities and five individuals that made up “a network of front companies and agents involved in the procurement of sensitive materials for sanctioned elements of Iran’s nuclear program.” While Treasury did not provide a timeline for the procurement activity, it did mention the countries that the network spanned. The entities, based in Iran, China, and Belgium, “acted as a procurement network for Iran’s Centrifuge Technology Company (TESA).” TESA manufactures centrifuges and was sanctioned by Washington in 2011. TESA is also subject to EU sanctions until October 2023, as stipulated by the implementation plan of the JCPOA.
Among the goods sought by the network were “thousands of dollars’ worth of Chinese-origin aluminum products.” Under the scheme, an Iranian firm associated with nuclear engineering used its Belgian office to set up a Chinese front company, and together, they coordinated prohibited exports of aluminum to Iran.
As part of the July 2019 designations, the Treasury Department also sanctioned another Iranian illicit procurement network. The department alleged that an Iranian firm contracted directly with Chinese companies “to purchase metal materials for end-use by TESA” and facilitated the acquisition of a specific part used in Iran’s centrifuges. The Treasury Department also sanctioned TESA’s commercial director.
In August 2019, the Treasury Department sanctioned an Iranian procurement ring, which it referred to as the “Shariat network.” In a press release, the department stated that since at least 2016, the network had been illicitly procuring goods controlled by the NSG, such as “large amounts of aluminum alloy products for multiple Iranian entities, including Iran Electronic Industries (IEI) and Iran Aviation Industries Organization (IAIO).”
IEI is deeply involved in Iran’s satellite program, which many believe to be a cover for its longer-range missile aspirations. IAIO supports Tehran’s military aviation program and drone capabilities. Both entities are controlled by Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL). The United States sanctioned IEI and IAIO in 2008 and 2013, respectively, and designated MODAFL in 2007. Per the JCPOA, IEI, IAIO, and MODAFL are subject to EU sanctions only until October 2023.
All of these now-exposed Iranian procurement schemes should tell Washington one thing. Despite claims of self-sufficiency and a growing effort to change this, particularly in the area of gas centrifuge manufacture and operation, Tehran still remains reliant on foreign material and components. That is a good thing, and means there is room for U.S. policy to affect Iranian capabilities, rather than just financial bottom-lines. This holds true not only for Iran’s nuclear program, but also its missiles. In recent years, Iran has sought to illicitly import everything from ingredients used to make solid propellant, to materials for missile parts, and even whole missile systems.
To offset this, Washington will need to take three different approaches.
At home, greater coordination will be needed between the State, Commerce, and Treasury Departments, as well as the U.S. intelligence community, so as to increase designations of Iranian procurement actors and their partners. China should be a clear target of such sanctions given the prevalence of Iran’s one-stop nuclear shopping there and Beijing’s ongoing refusal to crack down.
Abroad, the U.S. must deepen its engagement with governments of countries where Iranian networks are most active or have been previously reported. This means working with partners to empower and train local businesses in detecting Iran’s procurement methods, as well as enhancing the capabilities of customs agents to recognize schemes that route controlled goods through jurisdictions of transit concern. Such agents also need assistance to better identify sensitive and controlled goods passing through their borders.
Finally, if Iran’s illicit buying won’t cease, and continues to grow its centrifuge program using many of the networks and goods identified by the U.S. and its partners, Washington should use its seat at the UN Security Council to restore all prior international sanctions against Tehran including those on its nuclear program.
While Washington’s recent surge in activity and publicity on the Iran procurement file is welcome, it must increase to keep pace with reported Iranian efforts. Although Tehran ultimately did not receive what it sought to procure from Bosnia, if history is a guide, it will be seeking this material elsewhere. Washington should be prepared.