DEMARCHE DELIVERED ON IRANIAN EFFORTS TO BUY SPANISH-MADE MILLING MACHINE

S E C R E T MADRID 000979

SIPDIS

DEPARTMENT FOR ISN/MTR: JOHN PAUL HERRMANN AND FOR ISN/MTR,
EUR/WE, EUR/PRA,

E.O. 12958: DECL: 09/11/2033
TAGS: MTCRE, PARM, PREL, ETTC, MNUC, TSPA, SP, IR
SUBJECT: DEMARCHE DELIVERED ON IRANIAN EFFORTS TO BUY
SPANISH-MADE MILLING MACHINE

REF: A. SECSTATE 81940
B. 07 MADRID 130
C. 05 MADRID 3754
D. 05 STATE 191240

Classified By: DCM Arnold A. Chacon for reasons 1.4 (b),(c) and (d)

1. (S) PolOff met MFA and Ministry of Industry, Tourism, and
Commerce (MITC) officials to deliver points and give a copy
of REFTEL A's non-paper alerting the GOS of an Iranian
company's attempts to procure a computer numerically
controlled milling machine from the Spanish firm Maquinaria
CME, S.A.

2. (S) At the MITC on September 10, PolOff met Manuel Sanchez
Melero, Assistant Deputy DG for the Control of Foreign
Commerce in Defense and Dual-Use Material, and Conrado Igea
Calleja, Chief of Export Controls on Dual-Use Material, who
was introduced as the GOS expert on Spanish dual-use exports
to Iran. Upon reading the non-paper, Igea acknowledged that a
five-axis milling machine would indeed fall under the
parameters of the Wassenaar Agreement. Both gentlemen
concurred that Maquinaria would need an export license for
such a transaction with an Iranian company and that these
licenses are approved on a transaction-by-transaction basis
in situations such as this that included sensitive technology
and concerns about the past history and affiliation of the
purchasing company. Without the export license, Maquinaria
would not be able to legally sell its product abroad.

3. (S) PolOff mentioned that the same non-paper had been
shared with MFA officials a week earlier, which pleased the
MITC officials. (On September 3, Poloff met Gonzalo de
Salazar, the new Deputy DG for Non-Proliferation &
Disarmament, and Carlos Torres Vidal, Counselor for Nuclear
Non-Proliferation and Disarmament. As Salazar is new, he was
not familiar with the history of previous US-Spanish
cooperation on this case. Vidal also did not appear familiar
with it. However, they commented that, in accordance with
Spanish laws, any effort by Maquinaria to sell the milling
machine to the Iranian company would be denied.)

4. (C) Sanchez Melero, aware that PolOff had only recently
arrived in-country, explained the next steps that the GOS
would take at its scheduled inter-ministerial council on
sensitive items. The MFA, MITC, the Ministry of the Economy
and Finance, Spanish Customs, the Spanish National Police,
the Guardia Civil, and the National Intelligence Center (CNI)
all attend this council. A working group meets every month
and then items are forwarded to a higher level approximately
7-10 days later.

5. (S) Upon exiting the meeting, Sanchez Melero introduced
PolOff to Ramon Muro, the Deputy DG for the Control of
Foreign Commerce in Defense and Dual-Use Material. Sanchez
Malero and Igea assured PolOff they would inform Muro of the
items discussed in our meeting. COMMENT: Of the three
officials at the MITC, Muro is the most senior and appears to
be the institutional memory on the topic, as he had received
the 2005 demarche (REFTEL C) on Maquinaria's previous
questionable business interests with Iranian companies, as
reported in REFTEL D.
Aguirre