(S) MTAG 05-96: CZECH FIRM STROJIMPORT AND IRANIAN

S E C R E T PRAGUE 000109 SIPDIS FOR NP/CBM, EUR/NCE, EUR/PRA E.O. 12958: DECL: 01/20/2015 TAGS: PARM PREL MNUC ETTC EZ IR MTCR SUBJECT: (S) MTAG 05-96: CZECH FIRM STROJIMPORT AND IRANIAN MISSILE PROGRAM REF: A. STATE 10746 ¶B. 04 STATE 162508 Classified By: Deputy Political Counselor Mark Canning for reasons 1.4 B, D, H ¶1. (S) Poloff met January 20 with Otakar Gorgol, Deputy Director of the Czech MFA's UN Department to discuss ref A. Poloff and Gorgol, who handles many of the ministry's non-proliferation issues, have had a series of meetings about a horizontal boring machine, manufactured by the Czech firm Tos Varnsdorf, that has been in Iran since the fall of 2003. Gorgol repeated his earlier statements that this is the only machine of this model in Iran that he is aware of, and that the GOCR policy is to "not allow any controlled items or even dual-use items to be exported to sensitive areas." He backed this up by pointing out that just this month the GOCR, specifically the pro-business Ministry of Industry and Trade, had turned down a Strojimport request to sell a horizontal boring machine to Syria because of MTCR concerns. ¶2. (S) As part of the follow-up to discussions after the July 27, 2004 demarche in Reftel B, Gorgol reported in November that Varnsdorf sent one of its lathes, model WHN13CNC, to Iran for exhibition at a trade fair, the TIIF event in Teheran in 2003 (this information is also on the Tos Varnsdorf website). Participation in the event was arranged by another Czech firm, Czech Machine Tools Ltd. This firm was also authorized to find a buyer and secure a sale. There was some initial interest from an Iranian firm called SADAD Machine Corp. The Czech intelligence agency, BIS, has no negative information on this Iranian firm. There were some problems with the sale and early in 2004 the machine was moved to a customs warehouse in Teheran. ¶3. (S) According to Gorgol, Varnsdorf said repeatedly throughout 2004 that if a buyer was not found by the end of the year, they would bring the machine back to the Czech Republic. Gorgol reported January 20, 2005 that as of this week the machine is still in Teheran and that the exporter, Czech Machine Tools Ltd., was attempting to bring it back. ¶4. (S) In November, Gorgol mentioned that there is another firm whose name is in the file for this case. That firm is HADID Industries Corporation, PO Box 13185-1153. HADID had been interested in buying similar Czech-made horizontal boring machines. HADID has been identified as a cover/partner for a second firm that works with the Iranian firm SHIG. SHIG participates in Iran's ballistic missile program. This is consistent with information in Reftel A. ¶5. (S) Gorgol was given a copy of the nonpaper in Reftel A and made aware of the reporting obligations under the US Iran Nonproliferation Act of 2000. He has promised a more detailed response after checking with other GOCR entities. HILLAS