The writers in this symposium appear to share the view that the Iranians, if they so choose, have the capability to develop their nuclear program to the point of constructing a nuclear device. This may not be the case.
UN and other sanctions are intended to force the Iranian government to change policies and to disrupt and delay development of the country's nuclear program. In this latter respect, sanctions have had some success. They have delayed the critical point when clear evidence of an Iranian nuclear weapon capability might have forced other countries to respond -- for example, by taking military action or developing their own deterrent. Either of these situations would result in enormous regional instability. These drastic measures can be further delayed -- creating more time for finding diplomatic solutions -- if existing sanctions can be better implemented. And the private sector has an important role to play in achieving this.
The core of the Iranian program is the uranium enrichment plant at Natanz (it is possible that the Iranians are hiding other enrichment sites). Technology used in the plant is old, operations have not gone smoothly, and it is clear that output is less than planned. According to some estimates, the plant has produced enough low-enriched uranium for two nuclear devices; however, to build a nuclear weapon that is capable of threatening neighboring states, the Iranians need to process this uranium to much higher levels, build a working device, and incorporate this into a missile.
Judging from reports by the International Atomic Energy Agency (IAEA), as well as those by the Iranian government, it appears that the great majority of machinery and equipment currently in use at Natanz has been imported. It is almost certain that, alone, the Iranians could not build the machinery that is needed to upgrade Natanz, nor build a viable weapon; the country would need further material and equipment from abroad -- this is costly and difficult because of the secrecy required to evade sanctions. Iranian commercial agents and middlemen risk exposure and retribution from international authorities. The question is: How can the international community further restrain Iranian procurement efforts?
Commercial interests. Successful counter-proliferation requires close cooperation within the international community. The first task is to identify the individuals, entities, materials, or equipment, which are banned under UN resolutions or other international agreements. This is not an easy task because the Iranians have developed measures to evade sanctions, including changing names of trading companies, using front companies, mislabelling equipment, procuring sub-optimal but non-sanctioned substitute equipment, and trading through third countries. So the international community must identify both the procurement of dual-use equipment, as well as the apparent end-user -- neither of which might appear on control lists, despite their ultimate connection to nuclear or missile programs.
Some reported or suspected instances of illegal procurement for the Iranian nuclear and missile program include:
- Pressure transducers. Iran looked for hundreds of dual-use pressure transducers in North America, Europe, China, and Taiwan.
- Vacuum pumps. Iran sought vacuum pumps through intermediaries in a variety of countries.
- Valves. Iran tracked down valves from several countries through a variety of intermediaries. Kalaye Electric (KEC), a company directly linked to the Iranian nuclear program, allegedly imported valves and vacuum gauges made by a French firm from an intermediary representing a Shanghai-based Chinese company.
- Turbo compressors. Destined for Iran's missile program, Siemens-produced turbo compressors were seized in Hamburg.
- Computers. Intended for KEC, Siemens-brand computers shipped from China were stopped.
- Switches and computer modules. Siemens-made switches and computer modules, which were headed for Iran's Bushehr reactor via Moscow, were seized by Frankfurt Airport customs.
- Controllers, communication cards, and cables. A Dubai-based intermediary of a German company used false end-user certificates for companies in Asia; the end-user was Kalaye Electric.
- Nuclear-grade graphite. Graphite, apparently sourced from China, was seized after a Mumbai-based firm allegedly tried to export it to Iran.
- Specialized aluminium alloy, tungsten-copper plates and cylinders, tungsten metal powder, and maraging steel rods. All of these materials and more were allegedly procured by a Chinese company.
Iranian procurement exploits the private sector, i.e. exporters, freight-forwarders, shipping companies and port authorities, and the insurance industry. The private sector knows this and, in many cases, is supportive when governments around the world request help to intercept procurement; but the sector's reaction to counter-proliferation has been only on a case-by-case basis.
The private sector has no excuse for breaching sanctions. Doing so runs risks of penalties, particularly from US authorities; it further invites adverse publicity and damage to a company's reputation. This is bad for business. The lists of what to avoid under international agreements (such as the Nuclear Suppliers Group) and UN resolutions, EU, US, and other national legislation are readily available. The US Treasury Department maintains a comprehensive "black list" of Specially Designated Nationals and Blocked Persons.
But the private sector can use more resources than official lists. For example, the Wisconsin Project on Nuclear Arms Control, a non-profit advocacy group, publishes information on covert procurement methods and publicizes interdictions or legal proceedings. Furthermore, governments publish declassified information of suspect Iranian companies, entities, individuals, equipment and materials, and end-users.
In a few countries, government departments (in the case of the UK, the Department for Business, Innovation and Skills) conduct successful counter-proliferation outreach programs with exporters and others to encourage cooperation and information exchange; briefings are provided to companies and, in turn, companies offer feedback on deals or activities of suspect dealers. But government resources are limited, and information on proliferation is hard to come by. Companies can make an active contribution to the exchange. Many possess good databases of customers and market knowledge, and some possess expertise and capabilities in monitoring and detection (perhaps in a counter-terrorism or counter-narcotics context). Commercially-sensitive information clearly needs to be protected, but where proliferation is suspected, pro-active sharing of information or capabilities with governments, and even with commercial competitors, could significantly enhance national counter-proliferation efforts.
Under current global economic conditions the private sector is wary of assuming additional bureaucratic burdens or commercial risks. Although large German companies such as Siemens, Daimler, and ThyssenKrupp reportedly started cutting ties with Iran last year, German-Iran trade links go back many years; there are plenty of smaller German companies that could fill commercial gaps, not to mention Asian or Far Eastern companies that might be interested. The shipping sector, although it already cooperates with law-enforcement authorities against illegal drugs shipments, risks losing business if cooperation on counter-proliferation results in slower freight movements. Similarly, ports risk a loss of business to regional rivals (Singapore and Malaysia's Port Klang are examples) if freight-handling slows as a result of compliance with government requests to detain suspect shipments for inspection.
Solutions. One approach to strengthening sanctions against Iran -- but adaptable to proliferation threats in any country -- would be to develop a set of commercial counter-proliferation, best-practice standards; if these were adopted globally, they would ensure equal advantage to businesses in any country.
Possible counter-proliferation standards:
Background checks. Implement internal systems to ensure that background checks are carried out on customers and business partners, and goods and equipment are reviewed. This will be accomplished by consulting:
- The Wisconsin Project.
- Government trade and business lists of sanctioned individuals and entities for guidance on potentially sensitive export control issues.
- Security and intelligence agencies for further advice, guidance, and briefing.
New systems. Develop and implement corporate monitoring and detection systems:
- Collate and check enquiries related to sensitive equipment.
- Ensure systems are robust enough to identify Iranian procurement through companies based in countries like China, Malaysia, Singapore, Turkey, Europe, and elsewhere.
Published lists. Terminate business dealings in materials or equipment connected with the Iranian nuclear program, or with individuals or entities involved in Iranian procurement that appear on published lists. Business relationships should be terminated when evidence of proliferation is provided by:
- Corporate detection or monitoring systems.
- Governments or other sources that end-users are connected with illegal Iranian programs.
Publicized proliferation and counter-actions. For reputational purposes and promotion of global standards, transparency, and good-faith, publicize information about proliferation and counter-actions:
- Share information with competitors (e.g. identities of commercial agents suspected of operating on behalf of an illegal program in Iran).
- Share information with government, business, and security agencies.
The private sector should:
- Encourage customers and business partners to adhere to similar standards (to promote international principles).
- Push professional bodies to promote counter-proliferation good-practice. In turn, these bodies would promote standards and monitor compliance globally.
- Incorporate counter-proliferation standards into existing standards of Corporate Social Responsibility.
Conclusion. Governments can do more to encourage the private sector to adopt counter-proliferation standards. The European Union, for example, uses an "Authorised Economic Operator" status to give cooperating companies access to customs simplifications in return for supplying information on transactions (i.e. parties and countries involved), and the items to be imported or exported. Similar mechanisms could be modified to incorporate a requirement for the private sector to implement counter-proliferation standards.
Such standards will have a real impact once they are adopted on a global basis. They will not stop Iranian procurement immediately nor the advancement of its nuclear program entirely. But they will increase the costs of illicit procurement and create more obstacles. Furthermore, as more companies see benefits and comply, those that continue to assist Iranian procurement will be easier targets for international authorities. In this way the international community can further slow Iranian nuclear progress and gain more time for diplomacy to achieve a peaceful resolution between Iran and the international community. The private sector has a key role to play.