Illicit Nuclear Trade Continues Despite Procurement Channel

July 12, 2018

Publication Type: 

  • Policy Briefs

Weapon Program: 

  • Nuclear
  • Missile

Author: 

Valerie Lincy and Mana Mostatabi

On June 21, 2018, the United Nations released the fifth report by the Secretary General on the implementation of U.N. Security Council resolution 2231 (UNSCR 2231), which endorses the Joint Comprehensive Plan of Action (JCPOA) and prohibits most missile and military trade with Iran. The report once again describes numerous occasions on which these prohibitions may have been violated, including transfers to the Houthis in Yemen of Iranian ballistic missiles, efforts by Iran to illicitly procure air-to-surface missiles, and multiple seizures of Iranian conventional arms exports. In addition, the report notes for the first time that Iran may be receiving nuclear technology outside of the licit "procurement channel" established by the JCPOA and overseen by the Security Council.[1]

This channel allows Iran to obtain nuclear and nuclear dual-use items following a review by the Joint Commission's Procurement Working Group (PWG) and the approval of the Security Council. The channel is a critical part of the JCPOA. It helps guard against the illicit procurement networks that Iran relied on when developing its clandestine nuclear weapon program beginning in the late 1980s. Based on the allegations in the recent U.N. report, Iran's reliance on such networks may be ongoing.    

Bypassing the Procurement Channel?

Trade through the procurement channel was slow to take off following the implementation of the nuclear agreement, but now appears to be increasing. According to the U.N. report, countries have submitted 13 proposals for nuclear-related sales to Iran since the beginning of the year – marking the greatest number of proposals submitted in a single six-month period since implementation in January 2016.[2] Of the 13 proposals, eight were approved by the Security Council, two were withdrawn, and three remain under review.[3] Since implementation, five countries from three different regions have submitted a total of 37 proposals, of which 24 were approved, two were rejected, seven were withdrawn, and three remain under review.[4]

However, the U.N. report also describes allegations that some nuclear trade is bypassing the procurement channel.[5] In April 2018, the United Arab Emirates (UAE) informed the Secretary General that it had seized four shipments of nuclear items while in transit to Iran. According to UAE authorities, these shipments, which were intercepted in May 2016 and April, July, and December 2017, included items that meet the criteria set forth in Part II of the Nuclear Suppliers Group (NSG) guidelines, which would require a formal application, review by the PWG, and approval by the Security Council prior to their transfer to Iran.[6] Part II of the NSG guidelines covers nuclear dual-use items and technologies that can make a "major contribution" to a nuclear weapon program, but which have industrial applications as well.[7]

The seized items include 40 cylindrical segments of tungsten, one inductively coupled plasma mass spectrometer, 10 capacitors, and one titanium rod.[8] These items have a range of nuclear and non-nuclear applications. Tungsten is a high-strength metal that can withstand extremely high temperatures. The material has applications in nuclear explosive devices and for processing plutonium, as well as in missile components. Titanium rods can be used in nuclear reactors and the material also has missile and military applications. Capacitors are electronic components that can be used to help detonate a nuclear weapon and also have applications in commercial mining.[9] All of these items may be controlled by the NSG if they meet certain specifications, related to weight, composition, form, and/or performance.

Also in April, the United States alerted the Secretary General that two commodities listed in Part II of the NSG guidelines, carbon fiber and aluminum alloys, were transferred to Iran over the past year without the necessary Security Council approval.[10] These materials can be used to make centrifuge components, including rotors – again, depending on their technical specifications.[11] Iran has often sought to procure such materials for its uranium enrichment program in the past. The language in the U.N. report suggests that the United States detected these transfers but that they did not originate in the United States.

The United Nations has requested "clarification" about these transfers and the exporting countries have "initiated internal reviews" and promised to "provide additional information" when the reviews are concluded.[12]

Effectiveness of the Procurement Channel

The composition of the Procurement Working Group has changed following the U.S. withdrawal from the nuclear agreement in May 2018. It now is comprised of the remaining parties to the JCPOA (China, France, Germany, Iran, Russia, and the United Kingdom), with the EU foreign policy chief serving as coordinator. According to the U.N. Facilitator of resolution 2231, "the procurement channel has continued to function and the Joint Commission has continued to review proposals" since May.[13] While the United States can no longer issue recommendations to the Security Council as part of the PWG, as a permanent member of the Security Council the United States may still weigh in on any proposed nuclear transfer.

In response to the U.N. report, the EU called it "regrettable" that "some exports of listed items have been undertaken contrary to the provisions" of resolution 2231. Both the EU and the United Nations have focused their outreach efforts on explaining the requirements of the procurement channel. In his report, the Secretary General called on countries "to continue their efforts to promote awareness and understanding of the procurement channel [and] the procedures for submission of proposals," and committed to supporting this outreach in order to "increase awareness and allay misunderstandings" regarding the channel.[14] For its part, the EU warned that the channel was "the only alternative to attempts for irregular transfers" and promised to "further familiarize countries and potential exporters with the Channel." The EU also called on national export control agencies to conduct corporate outreach to ensure that all relevant transfers pass "only through the official channels."[15]

Indeed, under the rules of the procurement channel, the onus falls on countries to determine whether a potential export to Iran must pass through the channel and formally submit export proposals to the Security Council. Among other details, each proposal must provide a description of the item or items, information about the exporting and importing entities, a statement of the proposed end-use and end-use location, as well as an end-use certificate attesting to the stated end-use and signed either by the Atomic Energy Organization of Iran (for the nuclear sector) or Iran's Ministry of Industry, Mine and Trade (for non-nuclear civilian sectors).[16] Robust enforcement of ongoing trade restrictions with Iran requires national authorities and their exporters to understand the channel's parameters and procedures.

Responding to Alleged Violations

Informational outreach about the procurement channel is a valuable initiative, but it is not sufficient. In addition, countries and companies need a better understanding of how to identify attempts to circumvent the channel and possible violations. For example, the U.N. Facilitator could release a list of sensitive dual-use goods that Iran has sought illicitly in the past. This list could include items just below the NSG control level, since the channel also covers such non-listed items with nuclear applications and these are often more difficult to catch. This list also could include the materials and equipment recently reported by the UAE and the United States, as well as illicit transfers reported by governments in the future. It might also include items identified as sought-after in past reports by the former U.N. Panel of Experts for Iran. Greater transparency on illicit procurement patterns would also be useful. For example, the Facilitator could publish procurement typologies that include preferred transport routes, transshipment locations, and means of procurement.

U.N. experts should also seek to inspect items seized by countries en route to Iran, in order to publicly confirm their specifications and confirm the alleged violation. The United Nations has done so in the case of Iranian-origin ballistic missiles and arms. However, it does not appear that the United Nations has requested access to the items seized by the UAE.

Unfortunately, increased transparency about illicit procurement will be difficult to achieve within publicly released United Nations reports, because the procurement channel's operations are "subject to the confidentiality of the U.N."[17] Countries may help bridge this information gap. Annual reports by German intelligence agencies, for instance, provide detail about the technologies sought, the types of parties involved, and the means of procurement. A June 2018 report by the intelligence agency for the state of Baden-Wurttemberg indicated that Iran is seeking German software, vacuum and control engineering technologies, measurement devices, and electrical equipment with missile applications.[18] The report also warns that Iran establishes front companies and then uses these companies to procure sensitive items, which it sends to Iran via third countries, including China, Malaysia, Turkey, and the United Arab Emirates. A 2017 report by the intelligence agency for the German state of Hessen describes Iran's reliance on academics and research exchanges to obtain proliferation-relevant technical information.[19]

In addition, U.S. export enforcement cases against entities helping Iran procure controlled U.S. technology, as well as designations by the U.S. Department of the Treasury of entities contributing to Iran's missile and nuclear programs, provide valuable information about sanctions evasion patterns and sought-after material.

Finally, an effort should be made to retroactively apply the requirements of the procurement channel to illicit items that are successfully shipped to Iran. If these items went to the nuclear sector, the International Atomic Energy Agency (IAEA) should be informed and given access to the location of the items. If they went to a non-nuclear sector in Iran, then the exporting state should request an end-use certificate, conduct a post-shipment verification of the end use, and could even require the return of the items pending formal approval by the Security Council. Iran's nuclear program was built with illegally obtained items. Rather than continuing the trend, Iran should be made to account for any newly acquired nuclear items obtained illicitly.

Footnotes: 

 

[1] Implementation of Security Council resolution 2231 (2015) - Fifth report of the Secretary-General, June 12, 2018, p. 4, available at http://www.un.org/en/ga/search/view_doc.asp?symbol=S/2018/602, accessed on July 10, 2018.

[2] Resolution 2231 (2015) - Reports of the Secretary-General, United Nations Security Council, http://www.un.org/en/sc/2231/sg-reports.shtml, accessed on July 10, 2018.

[3] Letter dated 21 June 2018 from the Security Council Facilitator for the implementation of resolution 2231 (2015) addressed to the President of the Security Council, p. 5, June 21, 2018, available at http://www.un.org/ga/search/view_doc.asp?symbol=S/2018/624&Lang=E, accessed on July 10, 2018.

[4] Implementation of Security Council resolution 2231 (2015) - Fifth report of the Secretary-General, p. 4, June 12, 2018, available at http://www.un.org/en/ga/search/view_doc.asp?symbol=S/2018/602, accessed on July 10, 2018.

[5] Ibid

[6] Certain nuclear-related activities outlined as part of UNSCR 2231 do not require approval, although States are still required to notify the Security Council and/or the Joint Commission. These activities include the transfer to Iran of equipment and technology covered in Part I of the NSG intended for light water reactors, as well as activities related to modifications at the Fordow facility and the modernization of the Arak heavy water reactor. However, the items of concern noted in the U.N. report fall outside these specifications.

[7] "Guidelines," Nuclear Suppliers Group, http://www.nuclearsuppliersgroup.org/en/guidelines, accessed on July 11, 2018.

[8] Implementation of Security Council resolution 2231 (2015) - Fifth report of the Secretary-General, p. 4, June 12, 2018, available at http://www.un.org/en/ga/search/view_doc.asp?symbol=S/2018/602, accessed on July 10, 2018.

[9] "A Handbook for the Nuclear Suppliers Group Dual-Use Annex," The U.S. Department of Energy, April 1996.

[10] Implementation of Security Council resolution 2231 (2015) - Fifth report of the Secretary-General, p. 4, June 12, 2018, available at http://www.un.org/en/ga/search/view_doc.asp?symbol=S/2018/602, accessed on July 10, 2018.

[11] "A Handbook for the Nuclear Suppliers Group Dual-Use Annex," The U.S. Department of Energy, April 1996.

[12] Ibid

[13] Letter dated 21 June 2018 from the Security Council Facilitator for the implementation of resolution 2231 (2015) addressed to the President of the Security Council, p. 5, June 21, 2018, available at http://www.un.org/ga/search/view_doc.asp?symbol=S/2018/624&Lang=E, accessed on July 10, 2018.

[14] Implementation of Security Council resolution 2231 (2015) - Fifth report of the Secretary-General, p. 12, June 12, 2018, available at http://www.un.org/en/ga/search/view_doc.asp?symbol=S/2018/602, accessed on July 10, 2018.

[15] "Briefing by H.E. Mr. João Vale de Almeida to the Security Council, Agenda item: Non-Proliferation," European Union European External Action Service, June 27, 2018, https://eeas.europa.eu/delegations/un-new-york/47548/briefing-he-mr-joão-vale-de-almeida-security-council-agenda-item-non-proliferation_en, accessed on July 10, 2018.

[16] Information on the Procurement Channel, United Nations, September 2017, available at http://www.un.org/en/sc/2231/pdf/Information%20note_EN.pdf, accessed on July 10, 2018.

[17] Ibid

[18] Verfassungsschutzbericht (in German), Ministeriums für Inneres, Digitalisierung und Migration Baden-Württemberg, pp. 273-275, 2017, available at http://www.verfassungsschutz-bw.de/site/lfv/get/documents/IV.Dachmandant/Datenquelle/PDF/2018_Aktuell/Verfassungsschutzbericht_BW_2017.pdf, accessed on July 10, 2018.

[19] "Aktivitäten ausländischer Nachrichtendienste" (in German), Verfassungsschutz in Hessen Bericht, 2016, https://lfv.hessen.de/sites/lfv.hessen.de/files/Bericht2016/Spionageabwehr.html, accessed on July 11, 2018.