1. (S) Two weeks after receiving a demarche (Reftels) about
the possible sales of computer numerically controlled lathes
from the Czech firm Strojimport to firms in Iran, the MFA has
delivered its response. Jan Kara, Director of the UN
Department, and Otakar Gorgol, who handles MTCR issues, said
they appreciated the information in the demarche and took the
possibility of American sanctions very seriously.



2. (S) Kara said the Czech intel service, BIS, could not
confirm the information in the demarche. Therefore Vlastimil
Krepela, the Director of the Office of Special Materials in
the Licensing Department at the Ministry of Industry and
Trade, met directly with officials at Strojimport. The
officials confirmed that one Tos Varnsdorf machine, model
WHN13CNC, was sent to Teheran in the fall of 2003, as
reported Reftel B. That machine was the subject of a
contract between Strojimport and Mizan Machine Manufacturing,
as stated Reftel A. The Iranian firm has paid 90% of the
contract, but has not yet taken possession of the machine.
The machine, which was damaged in shipment to Iran, is,
according to Kara and Gorgol, not operational and remains in
a customs warehouse in Teheran. The MFA officials were not
able to say how this dispute might be resolved.



3. (S) As to the discussions to sell additional machines to
Mizan or other Iranian firms, Strojimport has agreed to end
such negotiations. Strojimport committed itself, in a letter
to Krepela, to ending all current discussions on further
sales to Iran.



4. (S) In addition, Principal Deputy Foreign Minister Jan
Winkler has instructed Krepela to assemble all Czech firms
that might export sensitive technology to Iran and make them
understand that sales to Iran are politically sensitive, and
encourage them to consult with authorities before pursuing
such sales. Krepela plans to do this in the near future.



5. (S) The MFA officials pointed out that Strojimport has
never exported any listed items to Iran. They say that since
the firm had no requirement to contact the MFA before
exporting the Tos Varnsdrof machine, which is a dual-use
item, in the fall of 2003, MFA official only became aware of
the transaction when they were demarched, approximately 9
months later. The MFA officials asked, more than once, that
U.S. intelligence be shared on a more timely basis to allow
them to prevent transactions that they also find
objectionable.
CABANISS