Excerpts

The Director of Central Intelligence (DCI) hereby submits this report in response to a Congressionally directed action in Section 721 of the FY 1997 Intelligence Authorization Act, which requires:

"(a) Not later than 6 months after the date of the enactment of this Act, and every 6 months thereafter, the Director of Central Intelligence shall submit to Congress a report on

At the DCI's request, the DCI Nonproliferation Center (NPC) drafted this report and coordinated it throughout the Intelligence Community. As directed by Section 721, subsection (b) of the Act, it is unclassified. As such, the report does not present the details of the Intelligence Community's assessments of weapons of mass destruction and advanced conventional munitions programs that are available in other classified reports and briefings for the Congress.

Acquisition by Country:

Following are summaries by country of acquisition activities (solicitations, negotiations, contracts, and deliveries) related to weapons of mass destruction (WMD) and advanced conventional weapons (ACW) that occurred from 1 January through 30 June 1998. We chose to exclude countries that already have substantial WMD programs, such as China and Russia, as well as countries that demonstrated little WMD acquisition activity of concern. The countries deemed of most concern are listed in alphabetical order.

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Iran

Iran remains one of the most active countries seeking to acquire WMD technology and ACW. During the reporting period, Iran focused its efforts to acquire WMD-related equipment, materials, and technology primarily on two countries: Russia and China. Iran is seeking to develop an indigenous capability to produce various types of nuclear, chemical, and biological weapons and their delivery systems.

During the reporting period, entities in Russia and China continued to supply missile-related goods and technology to Iran. Tehran is using these goods and technologies to achieve its goal of becoming self-sufficient in the production of MRBMs. The July flight test of the Shahab-3 MRBM demonstrates the success Iran has achieved in realizing that goal. Iran already is producing Scud SRBMs with North Korean help and has begun production of the Shahab-3. In addition, Iran's Defense Minister has publicly acknowledged the development of the Shahab-4 ballistic missile, with a "longer range and heavier payload than the 1,300-km Shahab-3."

Iran obtained material related to chemical warfare (CW) from various sources during the first half of 1998. It already has manufactured and stockpiled chemical weapons, including blister, blood, and choking agents and the bombs and artillery shells for delivering them. However, Tehran is seeking foreign equipment and expertise to create a more advanced and self-sufficient CW infrastructure.

Tehran continued to pursue purchasing dual-use biotechnical equipment from Russia and other countries, ostensibly for civilian uses. Its biological warfare (BW) program began during the Iran-Iraq war, and Iran may have some limited capability for BW deployment. Outside assistance is both important and difficult to prevent, given the dual-use nature of the materials and equipment being sought and the many legitimate end uses for these items.

During the first half of 1998, Iran also actively sought modern battle tanks, surface-to-air missiles, aircraft, and other weapon systems and spare parts from the former Soviet Union (FSU), China, and Europe. Iran's armed forces employ weapons from a wide variety of sources, including old US weapons, FSU aircraft seized from Iraqi pilots fleeing the Gulf war, and Chinese antiship cruise missiles. As with its WMD programs, Tehran is seeking relevant production technology to lessen its dependence on foreign sources.

Russian entities continued to market and support a variety of nuclear-related projects in Iran during the first half of 1998, ranging from the sale of laboratory equipment for nuclear research institutes to the construction of a 1,000-megawatt nuclear power reactor in Bushehr, Iran, that will be subject to International Atomic Energy Agency (IAEA) safeguards. These projects, along with other nuclear-related purchases, will help Iran augment its nuclear technology infrastructure, which in turn would be useful in supporting nuclear weapons research and development.

Russia has committed to observe certain limits on its nuclear cooperation with Iran. For example, President Yel'tsin has stated publicly that Russia will not provide militarily useful nuclear technology to Iran. Beginning in January this year, the Russian Government has taken a number of steps. For example, in May 1998, Russia announced a decree intended to strengthen compliance of Russian businesses with existing export controls on proliferation-related items.

During the reporting period, China continued to work on one of its two remaining projects--to supply Iran's civil nuclear program with a zirconium production facility. This facility will be used by Iran to produce cladding for reactor fuel. As a party to the Nuclear Nonproliferation Treaty, Iran is required to apply IAEA safeguards to nuclear fuel, but safeguards are not required for the zirconium plant or its products. During the US-China October 1997 Summit, China pledged not to engage in any new nuclear cooperation with Iran and to complete cooperation on two ongoing nuclear projects in a relatively short time. This pledge appears to be holding. In addition, China promulgated new export regulations in June 1998 that cover the sale of dual-use nuclear equipment. The regulations took effect immediately and were intended to strengthen control over equipment and material that would contribute to proliferation. Promulgation of these regulations fulfills Jiang Zemin's commitment to the United States last fall to implement such controls by the middle of 1998.

Iran claims to desire the establishment of a complete nuclear fuel cycle for its civilian energy program. In that guise, it seeks to obtain whole facilities, such as a uranium conversion facility, that, in fact, could be used in any number of ways in support of efforts to produce fissile material needed for a nuclear weapon. Despite outside efforts to curtail the flow of critical technologies and equipment, Tehran continues to seek fissile material and technology for weapons development and has set up an elaborate system of military and civilian organizations to support its effort.

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Key Suppliers:

China

During the first half of 1998, China continued to take steps to strengthen its control over nuclear exports. China promulgated new export control regulations in June 1998 that cover the sale of dual-use nuclear equipment. This follows on the heels of the September 1997 promulgation of controls covering the export of equipment and materials associated exclusively with nuclear applications. These export controls should give the Chinese Government greater accounting and control of the transfer of equipment, materials, and technology to nuclear programs in countries of concern.

China pledged in late 1997 not to engage in any new nuclear cooperation with Iran and to complete work on two remaining nuclear projects--a small research reactor and a zirconium production facility--in a relatively short period of time. During the first half of 1998, Beijing appears to have implemented this pledge. The Intelligence Community will continue to monitor carefully Chinese nuclear cooperation with Iran.

During the reporting period, Chinese entities provided a variety of missile-related items and assistance to several countries of proliferation concern. China also was an important supplier of ACW to Iran through the first half of 1998.

Chinese entities sought to supply Iran and Syria with CW-related chemicals during this reporting period. The US sanctions imposed in May 1997 on seven Chinese entities for knowingly and materially contributing to Iran's CW program remain in effect.

China has provided extensive support in the past to Pakistan's WMD programs, and some assistance continues. China's involvement with Pakistan will continue to be monitored closely.

Russia

Russian firms supplied a variety of ballistic missile-related goods and technical know-how to foreign countries during the reporting period. For example, Iran's earlier success in gaining technology and materials from Russian companies accelerated Iranian development of the Shahab-3 MRBM, which was first flight tested in July 1998.

During the first half of 1998, Russia remained a key supplier for civilian nuclear programs in Iran and, to a lesser extent, India. With respect to Iran's nuclear infrastructure, Russian assistance would enhance Iran's ability to support a nuclear weapons development effort. Such assistance is less likely to significantly advance India's effort, given that India's nuclear weapons program is more mature. By its very nature, even the transfer of civilian technology may be of use in the nuclear weapons programs of these countries.

Russia remains a key source of biotechnology for Iran. Russia's world-leading expertise in biological weapons makes it an attractive target for Iranians seeking technical information and training on BW agent production processes.

Russia also was an important source of conventional weapons and spare parts for Middle Eastern countries like Iran and Syria, that are seeking to upgrade and replace their existing conventional weapons inventories.

Following intense and continuing engagement with the United States, Russian officials have taken some positive steps. Russia has committed to observe certain limits on its nuclear cooperation with Iran, such as not providing militarily useful nuclear technology. In January 1998, the Russian Government issued a broad decree prohibiting Russian companies from exporting items known or believed to be used for developing WMD or related delivery systems, whether or not these items are on Russia's export control list. In May 1998, Russia announced a decree intended to strengthen compliance of Russian businesses with existing export controls on proliferation-related items. These actions, if enforced, could help to counter the proliferation of WMD and their delivery systems. However, there are signs that Russian entities have continued to engage in behavior inconsistent with these steps. Monitoring Russian proliferation behavior, therefore, will have to remain a very high priority for some time to come.

North Korea

Throughout the first half of 1998, North Korea continued to export ballistic missile-related equipment and missile components and materials to countries of concern. Pyongyang attaches a high priority to the development and sale of ballistic missiles, equipment, and related technology. North Korea has little else to export to raise significant amounts of hard currency besides ballistic missiles and other weapons.

Western Nations

During the first half of 1998, Western nations were not as important sources for WMD-related goods and materials as in past years. Increasingly rigorous and effective export controls and cooperation among supplier countries have led foreign WMD programs to look elsewhere for controlled dual-use goods. Spare parts for dual-use equipment and widely available materials and scientific equipment were the most common items sought.

Trends

Foreign WMD procurement managers in countries of concern have responded to Western export controls by seeking dual-use goods largely from Russia and China. In addition, the countries of concern are looking more to each other as a source of ballistic missiles systems, critical missile components, and related technology. In these cases, assistance from countries like China and Russia may still be needed to integrate the components and technologies into an effective operational weapon system.

Countries determined to maintain WMD programs over the long term have been placing significant emphasis on insulating their programs against interdiction and disruption. Many of them are trying to reduce their dependence on imports by developing indigenous production capabilities. Although these capabilities may not always be a good substitute for foreign imports--particularly for more advanced technologies--in many cases they may prove to be adequate.