IRANIAN COMPANY'S EFFORTS TO PROCURE A

S E C R E T STATE 081940 SIPDIS E.O. 12958: DECL: 07/30/2033 TAGS: MTCRE PARM PREL ETTC MNUC TSPA SP IR SUBJECT: IRANIAN COMPANY'S EFFORTS TO PROCURE A SPANISH-MADE MILLING MACHINE (S) REF: A. 05 STATE 191240 ¶B. 07 MADRID 130 Classified By: ISN/MTR DIRECTOR PAM DURHAM FOR REASONS 1.4 (B),(C) AND (D). ¶1. (U) This is an action request. Embassy Madrid please see paragraph 4. ¶2. (S) Background: In October 2005, we provided the Government of Spain (GOS) with information indicating that the Spanish firm Maquinaria CME, S.A. was involved in a number of deals in 2004 and 2005 to sell computer numerically controlled (CNC) milling machines to several different Iranian companies (Ref A). At least two of these CNC milling machines were likely controlled by the Wassenaar Arrangement and the Nuclear Suppliers Group. As Iran's weapons of mass destruction and missile programs are heavily dependent on foreign- supplied machine tools, we were concerned that the transfer of controlled machines could contribute to Iran's weapons and missile development efforts. In response, the GOS informed us in January 2007 that it had finished an investigation of Maquinaria, and that the GOS had denied all additional export permits to sell additional equipment to Iran in 2006 and had formally advised Maquinaria to sever all business links with Iran (Ref B). ¶3. (S) Objectives: We now have new information to share with the GOS concerning a recent Iranian effort to procure a Maquinaria CME FS series 5-axis milling machine equipped with a rotary table. Because this type of milling machine is controlled by the Wassenaar Arrangement and the Nuclear Suppliers Group, we want to urge the GOS to immediately investigate this information with a view to preventing Iran from acquiring this equipment from Spain. The provision of NSG-controlled items to Iran was prohibited in UNSCRs 1737 and 1803, regardless of end-user, except for exclustive use in light water reactors or, for dual- use items, if necessary for IAEA technical cooperation. ¶4. (U) Action Request: Request Embassy Madrid approach appropriate Spanish government officials to deliver talking points/non-paper in paragraph 5 below and report response. Talking points also may be provided as a non-paper. ¶5. (S) Begin talking points/non-paper: (SECRET//REL SPAIN) -- In the spirit of our nonproliferation cooperation, we would like to alert you to a matter of potential proliferation concern and request your assistance in investigating this activity. -- You will recall that in October 2005, the U.S. alerted you to information indicating that the Spanish firm Maquinaria CME, S.A. was involved in a number of deals in 2004 and 2005 to sell computer numerically controlled (CNC) milling machines to several different Iranian companies. -- We brought this information to your attention because Iran's weapons of mass destruction and missile programs are heavily dependent on foreign-supplied machine tools such as those manufactured by Maquinaria CME. -- In response, your government informed us in January 2007 that your export control authorities had denied all subsequent requests by Maquinaria CME to sell machine tools to Iran and had formally advised Maquinaria CME to sever all business links with Iran. -- We greatly appreciate your actions in this case to date, and now would like to provide you with information concerning a recent Iranian effort to procure machines produced by Maquinaria CME. -- Specifically, we understand that in June 2008, an Iranian trading company known as MYP was interested in purchasing a Maquinaria CME FS series 5-axis milling machine equipped with a rotary table. --This type of milling machine being sought by MYP is a highly accurate machine tool and is controlled by both the Wassenaar Arrangement and Nuclear Suppliers Group. -- The provision of NSG-controlled items to Iran was prohibited in UNSCRs 1737 and 1803, regardles of end- user, except for exclusive use in light water reactors or, for dual-use items, if necessary for IAEA technical cooperation. -- We are providing you this information to support your export control efforts and urge you to immediately investigate this information in order to prevent Iran from acquiring this type of equipment from Spain. --We look forward to future cooperation on export control issues and would appreciate your sharing with us the results of your investigation into this activity at the earliest possible time. End talking points/nonpaper. ¶6. (U) Please contact ISN/MTR's John Paul Herrmann with any questions or follow-up issues related to this case (202-647-1430 - herrmannjp@state.sgov.gov) and slug any reporting on this issue for ISN/MTR, EUR/WE and EUR/PRA. ¶7. (U) A word version of this document will be posted at www.state.sgov.gov/demarche. RICE