Excerpts

Acquisition by Country:

Iran

For the first half of 1999, entities in Russia and China continued to supply a considerable amount and a wide variety of ballistic missile-related goods and technology to Iran. Tehran is using these goods and technologies to support current production programs and to achieve its goal of becoming self-sufficient in the production of ballistic missiles. Iran already is producing Scud short-range ballistic missiles (SRBMs) and has built and publicly displayed prototypes for the Shahab-3 medium-range ballistic missile (MRBM), which had its initial flight test in July 1998 and probably has achieved "emergency operational capability"-i.e., Tehran could deploy a limited number of the Shahab-3 prototype missiles in an operational mode during a perceived crisis situation. In addition, Iran's Defense Minister last year publicly acknowledged the development of the Shahab-4, originally calling it a more capable ballistic missile than the Shahab-3, but later categorizing it as solely a space launch vehicle with no military applications. Iran's Defense Minister also has publicly mentioned plans for a "Shahab 5."

For the reporting period, Tehran continued to seek considerable dual-use biotechnical equipment from entities in Russia and Western Europe, ostensibly for civilian uses. Iran began a biological warfare (BW) program during the Iran-Iraq war, and it 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, the equipment being sought, and the many legitimate end uses for these items.

Iran, a Chemical Weapons Convention (CWC) party, already has manufactured and stockpiled chemical weapons, including blister, blood, and choking agents and the bombs and artillery shells for delivering them. During the first half of 1999, Tehran continued to seek production technology, expertise, and chemicals that could be used as precursor agents in its chemical warfare (CW) program from entities in Russia and China. It also acquired or attempted to acquire indirectly through intermediaries in other countries equipment and material that could be used to create a more advanced and self-sufficient CW infrastructure.

Iran sought nuclear-related equipment, material, and technical expertise from a variety of sources, especially in Russia, during the first half of 1999. Work continues on the construction of a 1,000-megawatt nuclear power reactor in Bushehr, Iran, that will be subject to International Atomic Energy Agency (IAEA) safeguards. In addition, Russian entities continued to interact with Iranian research centers on various activities. These projects will help Iran augment its nuclear technology infrastructure, which in turn would be useful in supporting nuclear weapons research and development. The expertise and technology gained, along with the commercial channels and contacts established-even from cooperation that appears strictly civilian in nature-could be used to advance Iran's nuclear weapons research and developmental program.

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 1998, the Russian Government took a number of steps to increase its oversight of entities involved in dealings with Iran and other states of proliferation concern. In 1999, it pushed a new export control law through the Duma. Russian firms, however, faced economic pressures to circumvent these controls and did so in some cases. The Russian Government, moreover, failed in some cases regarding Iran to enforce its export controls. Following repeated warnings, the US Government in January 1999 imposed administrative measures against Russian entities that had engaged in nuclear- and missile-related cooperation with Iran. The measures imposed on these and other Russian entities (which were identified in 1998) remain in effect.

China pledged in October 1997 not to engage in any new nuclear cooperation with Iran but said it would complete cooperation on two ongoing nuclear projects, a small research reactor and a zirconium production facility at Esfahan that Iran will use to produce cladding for reactor fuel. The pledge appears to be holding. As a party to the Nuclear Nonproliferation Treaty (NPT), Iran is required to apply IAEA safeguards to nuclear fuel, but safeguards are not required for the zirconium plant or its products.

Iran is attempting to establish 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 international 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.

. . .

Libya

Despite UN sanctions, which were still in effect for the first half of 1999, Libya continued to obtain ballistic missile-related equipment, materials, technology, and expertise from foreign sources. Outside assistance is critical to keeping its ballistic missile development programs from becoming moribund.

Libya remains heavily dependent on foreign suppliers for precursor chemicals and other key CW-related equipment. UN sanctions continued to severely limit that support during the first half of 1999. Still, Tripoli has not given up its goal of establishing its own offensive CW capability and continues to pursue an indigenous production capability for the weapons.

In the past, Libya has sought to obtain major weapon systems, spare parts, and other support for its military forces from traditional sources in the former Soviet Union (FSU) and Eastern Europe, as well as from Iran. However, it appears Tripoli sought to procure only a limited amount of advanced conventional technology during the first half of 1999.

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Key Suppliers:

China

China joined the Zangger Committee-which clarifies certain export obligations under the NPT-in October 1997 and participated in the Zangger Conversion Technology Holders meeting in February 1999. This was China's first opportunity to participate in a discussion of this type.

China pledged in late 1997 not to engage in any new nuclear cooperation with Iran but said it would complete work associated with two remaining nuclear projects-a small research reactor and a zirconium production facility-in a relatively short period of time. The Intelligence Community will continue to monitor carefully Chinese nuclear cooperation with Iran.

During the reporting period, firms in China provided missile-related items, raw materials, and/or assistance to several countries of proliferation concern-such as Iran. China also was a supplier of ACW to Iran through the first half of 1999.

Prior to the reporting period, Chinese firms had supplied CW-related production equipment and technology to Iran. The US sanctions imposed in May 1997 on seven Chinese entities for knowingly and materially contributing to Iran's CW program remain in effect. In June 1998, China announced that it had expanded its chemical export controls to include 10 of the 20 Australia Group chemicals not listed on the CWC schedules.

China has provided extensive support in the past to Pakistan's WMD and ballistic missile programs, and some ballistic missile assistance continues. In May 1996, Beijing promised to stop assistance to unsafeguarded nuclear facilities, but we cannot preclude ongoing contacts. China's involvement with Pakistan will continue to be monitored closely.

Russia

Russian entities during the reporting period continued to supply a variety of ballistic missile-related goods and technical know-how to Iran and were expanding missile-related assistance to Syria and India. 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. Russian entities during the first six months of 1999 have provided substantial missile-related technology, training, and expertise to Iran that almost certainly will continue to accelerate Iranian efforts to build new indigenous ballistic missile systems.

During the first half of 1999, Russia also remained a key supplier for civilian nuclear programs in Iran. With respect to Iran's nuclear infrastructure, Russian assistance enhances Iran's ability to support a nuclear weapons development effort. By its very nature, even the transfer of civilian technology may be of use in Iran's nuclear weapons program. In addition, Russia supplied India with material for its civilian nuclear program during this reporting period.

Russian entities remain a significant source of biotechnology and chemicals for Iran. Russia's world-leading expertise in biological and chemical weapons would make it an attractive target for Iranians seeking technical information and training on BW and CW agent production processes.

Russia also was an important source of conventional weapons and spare parts for Iran, which is seeking to upgrade and replace its existing conventional weapons inventories.

Following intense and continuing engagement with the US, Russian officials took some positive steps to enhance oversight of Russian entities and their interaction with countries of concern. Russia has reiterated previous commitments to observe certain limits on its nuclear cooperation with Iran, such as not providing militarily useful nuclear technology, although-as indicated above-Russia continues to provide Iran with nuclear technology that could be applied to Iran's weapons program. President Yel'tsin in July 1999 signed a federal export control law, which formally makes WMD-related transfers a violation of law and codifies several existing decrees-including catch-all controls-yet may lessen punishment for violators.

Despite these decrees, the government's commitment, willingness, and ability to curb proliferation-related transfers remain uncertain. Moreover, economic conditions in Russia continued to deteriorate, putting more pressure on Russian entities to circumvent export controls. Despite some examples of restraint, Russian businesses continue to be major suppliers of WMD equipment, materials, and technology to Iran. Monitoring Russian proliferation behavior, therefore, will remain a very high priority.

North Korea

Throughout the first half of 1999, North Korea continued to export ballistic missile-related equipment and missile components, materials and technical expertise to countries in the Middle East and Africa. P'yongyang attaches a 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.

Western Nations

As was the case in 1998, entities in Western nations in early 1999 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 many controlled dual-use goods. Machine tools, spare parts for dual-use equipment, and widely available materials and scientific equipment and specialty metals were the most common items sought.

Trends

As in previous reports, countries determined to maintain WMD programs over the long term have been placing significant emphasis on insulating their programs against interdiction and disruption, 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.