1. This is an Action Request. Embassy Beijing, please see
paragraph 5.



2. (S) BACKGROUND (FOR POST ONLY): On July 6, 2007, South
Korean officials informed the USG that on June 19, the ROK
had intercepted a shipment of Chinese-origin steel en route
to Syria. The ROK had taken this action in response to
Israeli-supplied information alleging that this steel was to
be used in the production of rockets for Hizballah (Ref A).
This consignment consists of type 30CrMoV9 steel, which
although not controlled by the Missile Technology Control
Regime (MTCR) Annex or China's missile technology control
list, is suitable for use as a structural material for solid
rocket motor cases. It is being shipped by China Precision
Machinery Import and Export Company (CPMIEC) and is being
purchased by Syria's Scientific Studies and Research Center
(SSRC), which is the lead missile development agency in
Syria.



3. (S) Following the seizure of this steel, the ROKG advised
us that it had requested that China investigate this
transaction for possible export violations, explaining that
the ROK's decision regarding the cargo would depend on the
response it received from the PRC(Ref C). On August 31, the
ROKG reported that China had completed its investigation,
which apparently concluded that the end-user -- a firm China
identified as Syria's Manufacturing Construction Factory
(MCF) -- was not a WMD-related firm. Based on this
information, the ROKG decided to release the cargo for onward
shipment to Syria.



4. (S) The cargo currently is en route aboard the "CMA CGM
Power," which is scheduled to make port calls in Saudi
Arabia, Egypt, and Lebanon. It will arrive in Syria on
September 29. However, we understand that MCF is acting on
behalf of Syria's SSRC and want to raise this case with
China. As noted above, SSRC is Syria's lead missile
development agency and also is on the Department of
Commerce's Entity List. MCF is a front company for SSRC and
subject to numerous MTCR denials. We want to alert Chinese
authorities that we believe this steel is intended to support
Syria's missile development efforts and ask that they recall
this shipment to China. We do not want to inform the PRC of
our discussions with the ROK regarding this case. (END
BACKGROUND)



5. (S) Action Request: Department requests Embassy Beijing
approach appropriate host government officials to deliver
talking points in paragraph 6 and report response. Talking
points also may be provided as a non-paper.



6. (S) Begin talking points/non-paper:

(Secret Rel China)

-- In the spirit of our cooperation on nonproliferation
issues, we would like to alert you to a matter of
proliferation concern and request your immediate assistance
in investigating this activity.

-- The U.S. has information that the China Precision
Machinery Import and Export Corporation (CPMIEC) recently
shipped 50 tons of type 30CrMoV9 specialty steel to Syria's
Mechanical Construction Factory (MCF).

-- Our information indicates that the stated end-use for this
steel is for use in the production of pressure tanks for
diving gear and other high-pressure applications.

-- However, we believe that this specialty steel is actually
intended to support Syria's ballistic missile development
efforts.

-- We understand that the ultimate end-user for this steel is
Syria's Scientific Studies and Research Center (SSRC), which
is the lead agency responsible for Syria's development of
ballistic missiles.

-- Although not controlled by the Missile Technology Control
Regime (MTCR) or China's export control lists, 30CrMoV9 steel
is suitable for use as a structural material for solid rocket
motor cases.

-- This cargo is currently en route to Syria aboard the "CMA
CGM Power," which is scheduled to make port calls in Jeddah,
Saudi Arabia on September 23, in Suez Port and Port Said,
Egypt on September 25, Damietta, Egypt on September 26, and
Beirut, Lebanon on September 28. It will arrive in Syria on
September 29.

-- Given that this steel can be used in missile applications
and is intended for Syria's central missile development
agency, we ask that you take immediate measures to recall
this shipment to China.

-- The U.S. has designated Syria a state sponsor of terrorism
and we believe its proliferation activities contribute to
regional instability and to violence in Iraq and Lebanon.

-- We look forward to future cooperation on nonproliferation
issues and to hearing the results on any actions you take in
this case at the earliest possible time.

END TALKING POINTS.



7. (U) Washington POC is ISN/MTR James Mayes (Phone:
202-647-3185). Please slug reporting on this or other
missile nonproliferation issues for ISN/MTR and EAP/CM.



8. (U) A word version of this document will be posted
at www.state.sgov.gov/demarche in the "MTAG - EAP"
folder.
RICE


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