IMPLEMENTATION OF THE IRISL CARGO INSPECTION

S E C R E T STATE 094723 SIPDIS E.O. 12958: DECL: 09/04/2033 TAGS: GR IS ECON EFIN EWWT ETRD PARM PREL KNNP EUN SUBJECT: IMPLEMENTATION OF THE IRISL CARGO INSPECTION PROVISION OF UNSCR 1803 REF: A. REF A: STATE 69339 ¶B. REF B: PARIS 1291 Classified By: ISN Patricia A. McNerney for reasons 1.4 (b) and (d). ¶1. (U) This is an action request. Please see paragraph 3. -------------- SUMMARY AND BACKGROUND -------------- ¶2. (C) The Department sent a demarche (REF A) to initiate discussions with key countries on the importance of implementing robustly the inspection provision of UNSCR 1803 and warn them of the risks of doing business with IRISL. We would like to provide this information to Greece, per the recommendation from Martin Briens, Office Director for Disarmament and Nuclear Nonproliferation at the French MFA, who commented in discussions with Embassy Paris officials (REF B) on the importance of reaching out to Greece to sensitize it to the potential risks involved in conducting business with IRISL. We also would like the information transmitted to the Government of Israel to keep them aware of our strategy to target IRISL. -------------- OBJECTIVES/ACTION REQUEST -------------- ¶3. (S) Washington requests Posts deliver the non-paper in paragraph 4 to appropriate host government officials in the foreign affairs and finance ministries, and other appropriate government agencies, including those responsible for shipping and customs activities. This information is being provided to the Government of Israel for information purposes only, no action is required. Embassy Athens should pursue the following objectives: -- Emphasize UNSCR 1803's call for member states, in accordance with national and international law, to inspect the cargoes to and from Iran, of aircraft and vessels, at their airports and seaports, owned or operated by Iran Air Cargo and Islamic Republic of Iran Shipping Line (IRISL), provided there are reasonable grounds to believe that the aircraft or vessel is transporting goods prohibited under resolution 1803 or resolution 1737 (2006) or resolution 1747 (2007). -- Recall that UNSCRs 1737and 1803 also establish a requirement for states to prevent the transfer, directly or indirectly from their territories or by their nationals, to or for the benefit of Iran, of specified nuclear and missile-related items (including Nuclear Suppliers Group (NSG) and Missile Technology Control Regime (MTCR)-controlled �00A;items). -- Encourage Greece to carefully monitor financial activity with regard to IRISL, noting that UNSCR 1737 also requires states to prevent the provision to Iran of financial assistance and transfer of financial resources or services related to the supply, sale, transfer, manufacture, or use of prohibited items. Paragraphs 9 and 11 of UNSCR 1803 calls for vigilance in entering into new commitments for public-provided financial support for any trade with Iran, including the granting of export credits, guarantees, or insurance, to their nationals or entities involved in such trade. -- Inform Greece that cargo on four IRISL vessels was interdicted in 2007 because the cargo (consisting of dual-use items) was destined for entities that had been sanctioned by the UN Security Council for their role in Iran's nuclear or missile programs, or to entities acting on their behalf. -- Highlight that IRISL is increasingly employing deceptive measures to disguise the end-user, the destination of its cargo, or IRISL's involvement, which suggests such transfers could be of a sensitive nature and possibly proliferation-related. -- Inform Greece that IRISL has continued to carry cargoes for entities including the Shahid Bakeri Industrial Group (SBIG),Defense Industries Organization (DIO),and the Sanam Industrial Group (SIG),all of which have been designated by the UN Security Council under resolutions 1737 or 1747 and by the United States under domestic authority (Executive Order 13382). -- Remind Greek authorities of the risk that companies doing business with IRISL could, even inadvertently or unwittingly, facilitate the proliferation of items for use in a WMD, military, or missile program. -- Note in particular the increased possibility that IRISL vessels could be searched (due to the call in UNSCR 1803), resulting in increased costs to businesses shipping through IRISL. These inspections could lead to delays in shipments of legitimate cargoes. Stress the reputational difficulties that may fall upon those entities found to be associated, even inadvertently, with IRISL's proliferation activities. -- Note that companies that continue conducting business with IRISL could facilitate - unwittingly - transfers to or from Iran of WMD- or military-related items prohibited under UNSCRs 1737, 1747 and 1803. -- Emphasize that we are providing this information in the spirit of our cooperation as Proliferation Security Initiative (PSI) partners, and we hope for host government's energetic response in the same spirit. ¶4. (SECRET/ REL Greece and Israel) -- In light of our commitment to share information with your government on proliferation-related activities, we would like to raise concerns about Iran's Islamic Republic of Iran Shipping Lines (IRISL). -- As you know, IRISL was named in United Nations Security Council Resolution 1803. Operative paragraph 11 of this resolution calls upon all UN Member States, in accordance with national and international law, to inspect the cargoes going to or from Iran, of aircraft and vessels, at their airports and seaports, owned or operated by Iran Air Cargo and Iran's Islamic Republic of Iran Shipping Lines (IRISL), provided there are reasonable grounds to believe that the aircraft or vessel is transporting prohibited items under UNSCR 1803 or UNSCRs 1737 or 1747. EXERCISE VIGILANCE REGARDING IRISL ACTIVITIES -- We urge you to take into account and emphasize to companies in your jurisdiction the significant risks of conducting business with IRISL. -- Specifically, we urge you to exercise vigilance with regard to all IRISL-related transport of goods through your jurisdiction, and any financial support for those transfers, in light of paragraphs 9 and 11 of UNSCR 1803 mentioned above. This vigilance will also facilitate your implementation of the provisions of UNSCRs 1737 and 1803 that require states to take steps to prevent the transfer through or from their territories of certain items to or for the benefit of Iran. -- We urge you to issue an advisory to companies involved in the shipping industry in your jurisdiction to encourage them to practice enhanced due diligence when dealing with IRISL, since companies conducting business with IRISL could facilitate - unwittingly - transfers prohibited by UNSCRs 1737, 1747, and 1803. -- We would note that potential delays caused by inspections conducted in response to the call in UNSCR 1803 or cargo seizure aboard IRISL vessels could add costs to businesses that choose to continue to ship legitimate cargoes through IRISL. -- We also request that you not share this information with any third parties. INTERDICTIONS OF IRISL CARGO INVOLVING DESIGNATED ENTITIES -- Cargoes on four IRISL vessels were interdicted in 2007 because they were transporting dual-use items to entities that have been sanctioned by the UN Security Council for their role in Iran's nuclear missile programs, or to entities acting on their behalf. All of the following activities occurred after the UNSC imposed sanctions on the entities involved, through the adoption of UNSCRs 1737 (December 2006) and 1747 (March 2007): - An IRISL vessel in late 2007 was carrying potassium perchlorate destined for Iran's Defense Industries Organization (DIO). Potassium perchlorate can be used as a propellant for artillery rockets and can potentially be used to produce the solid rocket propellant oxidizer ammonium perchlorate. - An IRISL vessel in mid-2007 was attempting to ship electronic parts and machine tools, for possible use in Iran's missile program, to a front company for the Sanam Industrial Group (SIG) and an entity that has procured for the Shahid Bakeri Industrial Group (SBIG). SIG and SBIG have been designated in UNSCRs 1747 and 1737, respectively, for their involvement in Iran's missile program. - Another IRISL vessel in mid-2007 was carrying cargo of electronic parts and lathes that could contribute to Iran's nuclear or ballistic missile program to a front company for the SIG and an entity that has procured for SBIG. - An IRISL vessel in mid-2007 was carrying aluminum sheets and plates intended for Iran that could be used in Iran's missile program. Documentation associated with this shipment indicated a connection to Iran's DIO and a DIO subsidiary. DIO was designated in UNSCR 1737 as an entity involved in Iran's nuclear program. IRISL EMPLOYING DECEPTIVE MEASURES -- IRISL is increasingly employing deceptive measures to disguise the end user, and/or destination of its cargo, and IRISL's involvement in the transaction. - During the period 2003 to 2006, we are aware of IRISL ships diverting or attempting to divert from their originally scheduled port calls, probably in order to avoid possible inspection or seizure of missile-related cargo. Although ships occasionally skip port calls for commercial reasons, we have evidence these diversions were in response to perceived threats of interdiction. - In mid-2003 an IRISL vessel departed from North Korea carrying missile-related and other military items destined for Iran. Instead of going to its original destined port in Iran, it changed course and deviated to the nearest available Iranian port. We believe the change in course was due to fear of being interdicted during its voyage. - In early 2006, another IRISL vessel attempted to skip one of its destined ports of call. We believe this ship was carrying material for possible use in Iran's missile program. - In mid-2006, another IRISL ship diverted course and avoided making a scheduled port call, after becoming aware that it might be inspected and its cargo seized in port. We believe this ship was also carrying material for possible use in Iran's missile industry. -- Skipping port calls where cargo needs to be unloaded probably costs IRISL tens of thousands of dollars, concerns its customers, and from a business perspective makes no sense for IRISL, which is a profit-making venture. It is also likely that the ship captains are not aware of the nature of the cargo that they are carrying, but know only that it is of a special interest to the government of Iran. -- We also know that IRISL directed its international offices to obtain and use deceptive documents - including false bills of lading that remove references to IRISL and the Iranian recipient - to negotiate letters of credit with banks refusing to deal with Iranian entities. -- We are also aware that Iranian entities designated under United Nations Security Council resolutions are using deceptive tactics to obtain materials such as chemicals that could be used in missile fuel. Again, these deceptive tactics include concealing the true identity of the intended Iranian recipient. This is done by changing the name of the recipient to one that is not designated by the United Nations Security Council and changing the dates on paperwork in an attempt to provide cover for the shipment to avoid seizure while in transit through other states' ports. -- We are also aware that IRISL is likely adapting to increased scrutiny of its sensitive cargoes. In late 2007, IRISL officially changed the policy of one of its shipping lines to avoid refueling while en route to Iran, thus preventing the possibility of inspection and seizure of sensitive cargo. This is the same line that had two of its ships inspected in 2007. Both of these ships were carrying materials, including chemicals prohibited by UNSCR 1737, for Iran's ballistic missile entities that are designated by the UN Security Council. CONTINUED TRANSPORT OF ITEMS FOR DESIGNATED ENTITIES -- IRISL continues to carry cargoes for entities designated by the UN Security Council. As stated previously, four shipments were interdicted in 2007 from IRISL vessels that were carrying dual-use goods destined for entities designated by the UN Security Council, including Sanam Industrial Group, Shahid Bakeri Industrial Group, and the Defense Industries Organization. -- Other SBIG-related shipments include: - In early 2008, an IRISL vessel was en route from Dalian, China, to Bandar Khomeini, Iran, carrying a cargo of materials that are useful in the production of solid-fuel for ballistic missiles. The intended recipients were cover companies for Iran's SBIG. SBIG is responsible for Iran's solid-fueled ballistic missile program, and was designated in UNSCR 1737. - In mid-2007, an IRISL vessel was en route from Dalian, China, to Bandar Abbas, Iran, carrying a cargo to a cover company for Iran's Shahid Bakeri Industrial Group (SBIG). The cargo is useful in the production of solid-fuel for ballistic missiles. -- Other DIO-related shipments include: - In late 2007, an IRISL vessel was carrying a variety of military-related goods from China to Iran that were consigned to a known front company for Iran's DIO. - In late 2007, an IRISL vessel loaded military-related material supplied by Iran's DIO through a company using a cover name at Bandar Abbas, Iran, for delivery to Syria's defense industries. - In mid-2007, an IRISL vessel also loaded military-related cargo supplied by the DIO for Syria's defense industries. -- We would note that, in addition to the designation under UNSCRs 1737 and 1747, Sanam Industrial Group (SIG),SBIG, and the DIO, have been designated (as subject to financial sanctions) by the United States under domestic authority (Executive Order (E.O.) 13382). - SIG was designated under E.O. 13382 on July 18, 2006, for its ties to missile proliferation. SIG is a subordinate of Iran's Aerospace Industries Organization, previously designated by the United States under domestic authority (E.O. 13382),that has purchased millions of dollars worth of equipment on behalf of AIO from entities associated with missile proliferation. - SBIG was designated under E.O. 13382 on June 29, 2005. SBIG is an affiliate of Iran's AIO and is also involved in Iran's missile programs. Among the weapons SBIG produces are the Fateh-110 missile, with a range of 250 kilometers, and the Fajr rocket systems, a series of North Korean-designed rockets produced under license by SBIG with ranges of between 40 and 75 kilometers. Both systems are capable of being armed with at least chemical warheads. - The DIO was designated under E.O. 13382 on March 30, 2007, for engaging in activities that materially contributed to the development of Iran's nuclear and missile programs. DIO has been identified by the IAEA as involved in centrifuge component production for Iran's nuclear program. END SECRET NONPAPER. -------------- REPORTING DEADLINE -------------- ¶5. (U) Posts should report in a timely manner. Please slug replies for ISN, T, TREASURY, IO and NEA. Please include SIPDIS in all replies. -------------- POINT OF CONTACT -------------- ¶6. (U) Washington point of contact for follow-up information is Jennifer Chalmers, ISN/CPI, (202) 647-9715, CHALMERSJA@STATE.SGOV.GOV, or Anthony Ruggiero, ISN/CPI, (202) 647-5181, RUGGIEROAJ@STATE.SGOV.GOV. ¶7. (U) Department thanks Posts for their assistance. RICE