Procurement: Iran Has A Different Plan

Archives

July 24, 2016: Germany recently revealed, in some detail, how Iran continued its smuggling (of nuclear weapons tech) operations in Germany after signing an agreement in July 2015 that ended the trade sanctions in return for Iran halting its nuclear weapons program. It was thought that this would end the ballistic missile projects as well but Iran later pointed out that this was not explicitly addressed in the agreement and Iran was going to continue work on the missiles. Iran denied the German findings about nuclear tech but Iran has always denied accusations of smuggling.

It wasn’t just Germany that has problems with Iranian smugglers. In April 2015 the United States began prosecuting four companies and five individuals for smuggling high tech gear (mainly electronics and special power supplies) to Iran. Three of the accused men are Iranians and are part of the extensive Iranian smuggling network in the United States and other countries outside Iran. This particular operation had branches in Taiwan and Turkey. The Taiwanese connection is particularly important as East Asia has become the main source of forbidden missile and nuclear tech getting into Iran, Germany believes Iran has kept these other smuggling networks going as well.

Because of decades of economic sanctions Iran came to depend on China to help smuggle forbidden items into Iran. China opposed the sanctions but pretended to observe them. China often does that, for its friends. Despite official sanction support China has always been the ultimate source of forbidden military and nuclear research items for Iran. This includes Western gear, especially stuff from the United States that the rapidly growing Chinese economy has legitimate buyers for. These American items are usually obtained by Chinese trading companies, who serve as a one-stop-shopping source for many countries. The trading companies break American laws when they ship some types of restricted (by American regulations) gear to embargoed nations. This is done using forged documents and bribes that usually mask these operations for years. These Chinese exporters have little fear of punishment at home because the Chinese government refuses to discipline its wayward firms. But these trading/smuggling companies can be hurt in other ways. That’s because U.S. regulators can reach just about every other country (even China) using the enormous U.S. presence in the international banking system. But the Chinese traders consider occasional fines and business interruption a cost-of-doing-business and passes these extra costs onto customers like Iran. Thus as the sanctions on Iran grow more formidable, prices Iran must pay go up and the Chinese profits increase even more.

This kind of smuggling employs techniques that Iran has used successfully for a long time. Many Western suppliers would simply charge a much higher price to cover the risk of being found out and prosecuted. There are, as the Iranians know well, a lot of Western suppliers who are willing to take the risk. But as the risk of getting caught, and the penalties, increase more and more Westerners gradually abandoned a lot of this lucrative business to the Chinese.

The war on Iranian arms smuggling intensified after 2004. Most countries cooperate, but not all. While Turkey has been getting cozy with Iran, the Turks still enforce international trade sanctions against Iran. But as Turkey encourages its companies to do more business with Iran, there are more opportunities to smuggle in forbidden goods that assist Iranian nuclear weapons and ballistic missile projects. Iran takes advantage of this whenever possible and is apparently continuing either out of habit or because it believes it will need these smuggling networks again. Since 2015 Iran has boasted that it can resume its nuclear development work quickly and points out that the 2015 treaty allows this after fifteen years. So the Iranians are not doing nothing while they wait for 2030.

Ever since the U.S. embargo was imposed in 1979 (after Iran broke diplomatic protocol by seizing the American embassy), Iran has sought, with some success, to offer big money to smugglers who can beat the embargo and get needed industrial and military equipment. This is a risky business, and American and European prisons are full of Iranians, and other nationals, who tried, and often failed, to procure forbidden goods. The smuggling operations are currently under more scrutiny, and attack, because of Iran's continuing nuclear weapons program and the 2015 treaty. But the Iranians simply offer more money and more smugglers step up to keep the goodies coming. Now the Iranians have the 2015 agreement that enables them to openly obtain stuff they used to smuggle and, apparently, continue their smuggling operations for tech many nations are unwilling to provide.

 

X

ad

Help Keep Us From Drying Up

We need your help! Our subscription base has slowly been dwindling.

Each month we count on your contributions. You can support us in the following ways:

  1. Make sure you spread the word about us. Two ways to do that are to like us on Facebook and follow us on Twitter.
  2. Subscribe to our daily newsletter. We’ll send the news to your email box, and you don’t have to come to the site unless you want to read columns or see photos.
  3. You can contribute to the health of StrategyPage.
Subscribe   Contribute   Close