Excerpts

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Scope Note

The Director of Central Intelligence (DCI) hereby submits this report in response to a Congressionally directed action in Section 721 of the FY 97 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

(1) the acquisition by foreign countries during the preceding 6 months of dual-use and other technology useful for the development or production of weapons of mass destruction (including nuclear weapons, chemical weapons, and biological weapons) and advanced conventional munitions; and

(2) trends in the acquisition of such technology by such countries."

At the DCI's request, the DCI Weapons Intelligence, Nonproliferation, and Arms Control Center (WINPAC) 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

As required by Section 721 of the FY 97 Intelligence Authorization Act, the following are country summaries 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 2002. We have excluded countries that already have substantial WMD programs, such as China and Russia, as well as countries that demonstrated little WMD acquisition activity of concern.

Iran

Nuclear. Despite Iran's status in the Treaty on the Nonproliferation of Nuclear Weapons (NPT), the United States remains convinced Tehran is pursuing a nuclear weapons program. To bolster its efforts to establish domestic nuclear fuel-cycle capabilities, Iran has technology that also can support fissile material production for Tehran's overall nuclear weapons program.

Iran has continued to attempt using its civilian nuclear energy program to justify its efforts to establish domestically or otherwise acquire assorted nuclear fuel-cycle capabilities. Such capabilities, however, are well suited to support fissile material production for a weapons program, and we believe it is this objective that drives Iran's efforts to acquire relevant facilities. We suspect that Tehran is interested in acquiring foreign fissile material and technology for weapons development as part of its overall nuclear weapons program.

Despite Bushehr being put under IAEA safeguards, Russia's provision of expertise and manufacturing assistance has helped Iran to develop its own nuclear technology infrastructure. In addition, facing economic pressures, some Russian entities have shown a willingness to provide assistance to other nuclear projects within Iran. For example, an institute subordinate to the Russian Ministry of Atomic Energy (MINATOM) had agreed to deliver in late 2000 equipment that was clearly intended for atomic vapor laser isotope separation, a technology capable of producing weapons-grade uranium. As a result of US protests, the Russian Government has halted the delivery of some of this equipment to Iran.

Chinese entities are continuing work on a zirconium production facility at Esfahan that will enable Iran to produce cladding for reactor fuel. As an adherent to the NPT, Iran is required to accept IAEA safeguards on its nuclear material. The IAEA's Additional Protocol requires states to declare production of zirconium fuel cladding and gives the IAEA the right of access to resolve questions or inconsistencies related to the declarations, but Iran has made no moves to bring the Additional Protocol into force. Moreover, Iran remains the only NPT adherent with a full-scope safeguards agreement that has not adopted a subsidiary agreement obligating early declaration of nuclear facilities. Zirconium production, other than production of fuel cladding, is not subject to declaration or inspection.

Missile. Ballistic missile-related cooperation from entities in the former Soviet Union, North Korea, and China over the years has helped Iran move toward its goal of becoming self-sufficient in the production of ballistic missiles. Such assistance during the reporting period continued to include equipment, technology, and expertise. Iran, already producing Scud short-range ballistic missiles (SRBMs), is in the late stages of developing the Shahab-3 medium-range ballistic missile (MRBM). In addition, Iran publicly has acknowledged the development of follow-on versions of the Shahab-3. It originally said that another version, the Shahab-4, is a more capable ballistic missile than its predecessor but later characterized it as solely a space launch vehicle with no military applications. Iran's Defense Minister has also publicly mentioned a "Shahab-5." Such statements strongly suggest that Tehran intends to develop a longer-range ballistic missile capability.

Chemical. Iran is a party to the Chemical Weapons Convention (CWC). Nevertheless, during the reporting period it continued to seek chemicals, production technology, training, and expertise from Chinese entities that could further Tehran's efforts at achieving an indigenous capability to produce nerve agents. Iran already has stockpiled blister, blood, and choking agents-and the bombs and artillery shells to deliver them-which it previously has manufactured. It probably also has made some nerve agents.

Biological. Even though Iran is part of the Biological Weapons Convention (BWC), Tehran probably maintains an offensive BW program. Foreign dual-use biotechnical materials, equipment, and expertise-primarily, but not exclusively, from Eastern Europe-continued to feature prominently in Iran's procurement efforts. While such materials do have legitimate uses, Iran's biological warfare (BW) program also could benefit from them. It is likely that Iran has capabilities to produce small quantities of BW agents, but has a limited ability to weaponize them.

Advanced Conventional Weapons. Iran continued to seek and acquire conventional weapons and production technologies, primarily from Russia, China, and North Korea. Since Russia announced in November 2000 that it was abrogating the Gore-Chernomyrdin Agreement, the Russian and Iranian Governments and firms have engaged in high-level discussions on a wide variety of military services and equipment - including air defense, naval, air and ground weapons, and technologies. In October 2001, Tehran and Moscow signed a new military-technical cooperation agreement, which laid the groundwork for negotiations and created a commission for future arms sales, but did not itself include sales contracts.

Contract negotiations, which may take years to complete, continued in the following months and at least one sale-apparently for helicopters-was concluded. Various Russian officials and academicians have suggested that sales under this new agreement could, in the next few years, make Iran Russia's third-largest arms customer, after China and India. Until that agreement is concluded, Russia will continue to deliver on existing contracts. Estimates of conventional arms sales to Iran of $300 million per year would put Iran's share of Russian sales worldwide at roughly 10 percent, compared to more than 50 percent going to China and India.

To facilitate new arms agreements, Russian oil enterprises entered an agreement with the Russian state arms trading firm Rosoboronexport to promote arms exports. Russian and Iranian arms dealers are to include such firms as Lukoil to coordinate "commercial conditions" and participate in projects proposed by the customer.

Outside the Russian market, Iran's search for conventional weapons is global. In particular, Iran capitalized on the specialized weapons services and lower prices that China and North Korea offered. Elsewhere, Iran sought out products, particularly weapons components and dual-use items, that are superior in quality to those available from Russia or that have proven difficult to acquire through normal government channels.

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Libya

Nuclear. An NPT party with full-scope IAEA safeguards, Libya continued to develop its nuclear infrastructure. The suspension of UN sanctions provided Libya the means to enhance its nuclear infrastructure through foreign cooperation and procurement efforts. Tripoli and Moscow continued talks on cooperation at the Tajura Nuclear Research Center and a potential power reactor deal. Such civil-sector work could present Libya with opportunities to pursue technologies that also would be suitable for military purposes. In addition, Libya participated in various technical exchanges through which it could try to obtain dual-use equipment and technology that could enhance its overall technical capabilities in the nuclear area. In 2001, Libya and other countries reportedly used their secret services to try to obtain technical information on the development of WMD, including nuclear weapons. Although Libya made political overtures to the West in an attempt to strengthen relations, Libya's continued interest in nuclear weapons and nuclear infrastructure upgrades raises concerns.

Missile. The suspension of UN sanctions in 1999 allowed Libya to expand its efforts to obtain ballistic missile-related equipment, materials, technology, and expertise from foreign sources. Outside assistance-particularly from Serbian, Indian, Iranian, North Korean, and Chinese entities-has remained critical to its ballistic missile development programs. Libya's capability is improving and with continued foreign assistance it will probably achieve an MRBM capability-a long-desired goal-or extended-range Scud capability.

Chemical and Biological. Libya also remained heavily dependent on foreign suppliers for CW precursor chemicals and other key related equipment. Following the suspension of UN sanctions, Tripoli reestablished contacts with sources of expertise, parts, and precursor chemicals abroad, primarily in Western Europe. Tripoli still appeared to be working toward an offensive CW capability and eventual indigenous production. Evidence suggested that Libya also is seeking to acquire the capability to develop and produce BW agents.

Advanced Conventional Weapons. Following the suspension of UN sanctions, Libyan and Russian firms have completed contracts for conventional weapons, munitions, and upgrades and refurbishment for Libya's existing inventory of Soviet-era weapons.

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Key Suppliers:

Russia

Russia's cash-strapped defense, biotechnology, chemical, aerospace, and nuclear industries continue to be eager to raise funds via exports and transfers. In addition, some Russian universities and scientific institutes have shown a willingness to earn much-needed funds by providing WMD or missile-related teaching and training for foreign students. Given the large potential proliferation impact of such exports, transfers, and training, monitoring the activities of specific entities as well as the overall effectiveness of the Russian Government's nonproliferation regime remains a high priority.

Nuclear. Russia has played a key role in supporting civilian nuclear programs in Iran, primarily the Bushehr Nuclear Power Plant project. Even though the ostensible purpose of Russian assistance to Iran's nuclear infrastructure is for civilian applications, we assess that such support enhances Tehran's ability to support a nuclear weapons development effort.

President Putin in May 2000 amended the presidential decree on nuclear exports to allow Russia in exceptional cases to export nuclear materials, technology, and equipment to countries that do not have full-scope IAEA safeguards. For example, Russia supplied India with material for its civilian nuclear program in 2001.

Missile. Russian entities during the reporting period continued to supply a variety of ballistic missile-related goods and technical know-how to countries such as Iran, India, and China. Iran's earlier success in gaining technology and materials from Russian entities has helped to accelerate Iranian development of the Shahab-3 MRBM, and continuing Russian entity assistance most likely supports Iranian efforts to develop new missiles and increase Tehran's self-sufficiency in missile production.

Chemical and Biological. During the first half of 2002, Russian entities remained a key source of dual-use biotechnology, chemicals, production technology, and equipment for Iran. Russia's biological and chemical expertise makes it an attractive target for Iranians seeking technical information and training on BW and CW agent production processes.

Advanced Conventional Weapons. Russia continues to be a major supplier of conventional arms. Following Moscow's abrogation of the Gore-Chernomyrdin agreement in November 2000, Russian officials stated that they see Iran as a significant source of potential revenue from arms sales and believe that Tehran can become Russia's third-largest conventional arms customer after China and India. In 2001, Russia was the primary source of ACW for China, Iran, Libya, and Sudan, and one of the largest sources for India. Russia actively markets its thermobaric weapons at international arms shows.

Russia continues to be the main supplier of technology and equipment to India's and China's naval nuclear propulsion programs. In addition, Russia has discussed leasing nuclear-powered attack submarines to India.

Export Controls. The Duma enacted new export control legislation in 1999, and Putin in 2000 reorganized the export control bureaucracy. In 2001, Putin signed into effect several of the new law's implementing decrees, which updated export control lists for biological pathogens, chemicals, missiles, and related dual-use technologies and equipment. In May 2002, Russia amended its criminal code to allow for stricter punishment for violations involving the illegal export of material, equipment, and scientific-technical information that may be used in creating WMD or military equipment.

Despite progress in creating a legal and bureaucratic framework for Russia's export controls, lax enforcement remains a serious concern. To reduce the outward flow of WMD and missile-related materials, technology, and expertise, top officials must make a sustained effort to convince exporting entities-as well as the bureaucracy whose job it is to oversee them-that nonproliferation is a top priority and that those who violate the law will be prosecuted.

North Korea

Missile. Throughout the first half of 2002, North Korea continued to export significant ballistic missile-related equipment, components, materials, and technical expertise to the Middle East, South Asia, and North Africa. P'yongyang attaches high priority to the development and sale of ballistic missiles, equipment, and related technology. Exports of ballistic missiles and related technology are one of the North's major sources of hard currency, which fuel continued missile development and production.

China

Over the past several years, Beijing has improved its nonproliferation posture through commitments to multilateral arms control regimes, promulgation of export controls, and strengthened oversight mechanisms, but Chinese entities remain key suppliers of WMD and missile-related technologies to countries of concern.

Nuclear. In October 1997, China agreed to end cooperation with Iran on supplying a uranium conversion facility (UCF) and to undertake no new nuclear cooperation with Iran after completion of two existing projects. China also made bilateral pledges to the United States that go beyond its 1992 NPT commitment not to assist any country in the acquisition or development of nuclear weapons. For example, in May 1996, Beijing pledged that it would not provide assistance to unsafeguarded nuclear facilities. We cannot rule out, however, some continued contacts subsequent to the pledge between Chinese entities and entities associated with Pakistan's nuclear weapons program, and we are concerned that some interactions between Chinese and Iranian entities may run counter to Beijing's expressed bilateral commitments to the United States.

Missile. Beijing on several occasions has pledged not to sell Missile Technology Control Regime (MTCR) Category I systems but has not recognized the regime's key technology annex. China is not a member of the MTCR.

In November 2000, China committed not to assist, in any way, any country in the development of ballistic missiles that could be used to deliver nuclear weapons, and to enact at an early date a comprehensive missile-related export control system. Chinese entities continued to provide Pakistan with missile-related technical and material assistance during the reporting period. Pakistan has been moving toward domestic serial production of solid-propellant SRBMs with the help of Chinese entities. Pakistan also needs continued Chinese entity assistance to support development of solid-propellant MRBMs. In addition, firms in China have provided dual-use missile-related items, raw materials, and/or assistance to several other countries of proliferation concern-such as Iran, Libya, and to a lesser extent, North Korea.

Chemical. Since 1997, the US has imposed numerous sanctions against Chinese entities for providing material support to the Iranian CW program. Evidence during the current reporting period continues to show that Chinese firms still provide dual-use CW-related production equipment and technology to Iran.

Advanced Conventional Weapons. China remains a primary supplier of advanced conventional weapons to Pakistan and Iran, and other countries. Beijing and Islamabad also have negotiated the sale of an additional 40 F-7 fighters for delivery to Pakistan.

Emerging State and Non-State Suppliers

As nuclear, biological, chemical, and ballistic missile-applicable technologies continue to be more broadly available around the world, new sources of supply are emerging that are making the challenge of stemming WMD proliferation even more complex and difficult. Nuclear fuel-cycle and weapons-related technologies have spread to the point that, from a technical view, additional states may be able to produce sufficient fissile material and to develop the capability to weaponize it. As developing countries expand their chemical industries into pesticide production, they also are advancing toward at least latent chemical warfare capability. Likewise, additional non-state actors are becoming more interested in the potential of using biological warfare as a relatively inexpensive way to inflict serious damage. The proliferation of increasingly capable ballistic missile designs and technology poses the threat of more countries of concern developing longer-range missiles and posing greater risks to regional stability.

In this context, there is a growing concern that additional states that have traditionally been recipients of WMD and missile-related technology may follow North Korea's practice of supplying specific WMD-related technology and expertise to other countries or non-state actors. Even in cases where states take action to stem such transfers, there are growing numbers of knowledgeable individuals or non-state purveyors of WMD-related materials and technology who are able to act outside the constraints of governments. Such non-state actors are increasingly capable of providing technology and equipment that previously could only be supplied directly by countries with established capabilities.

Although Western European countries maintain rigorous and effective export controls on WMD and missile-related goods and materials, proliferators and associated networks nonetheless continue to seek machine tools, spare parts for dual-use equipment, and widely available materials, scientific equipment, and specialty metals. Western countries are also an important source for the proliferation of WMD-related information and training. The relatively advanced research of western institutes, the availability of relevant dual-use studies and information, the enthusiasm of scientists for sharing their research, and the availability of dual-use training programs and education may have shortened development time for some WMD programs, particularly those of terrorist organizations.