SHIELD S13-08: CHINESE FIRMS PROVIDE HYDROFLUORIC

S E C R E T STATE 044852

SIPDIS

E.O. 12958: DECL: 04/10/2034
TAGS: PARM PREL ETTC CH IR
SUBJECT: SHIELD S13-08: CHINESE FIRMS PROVIDE HYDROFLUORIC
ACID AND TRAINING TO IRAN

Classified By: Robert Mikulak, Dir., ISN/CB
Reasons: 1.4 (c) and (d)


1. (U) This is an action request. Please see paragraph 4.


2. (S//NF) BACKGROUND: The U.S. has obtained information
indicating that Chinese firms have provided a key chemical
weapons (CW) precursor and assistance with operating a
chemical manufacturing plant to Iran. In July 2008, Shenzhen
Yujie Electronics Company Ltd. provided hydrofluoric acid to
the Iranian firm Nasser Sultani Trading. Hydrofluoric acid
is a solution of water and hydrogen fluoride, which is
controlled by the Australia Group and China's export control
rules. In an unrelated event, employees from Zhejiang
Material Industries Chemical Group and Shanxi Weiqida
Pharmaceuticals Company may be traveling to Iran to assist
with the start-up of a plant purchased by an Iranian customer.


3. (S//NF) BACKGROUND CONT'D: We are concerned that these
exports could be used for or diverted to a CW program and
would therefore like to bring them to the attention of the
Chinese government. We are also interested in learning
whether these transfers were reviewed by China's export
control system and if so, the reasons for their approval.
Finally, we would like to remind the Chinese government that
we may have to report these transfers to Congress, and that
the Chinese firms involved may be subject to sanctions,
pursuant to provisions of the Iran, North Korea, and Syria
Nonproliferation Act (INKSNA).


4. (U) ACTION REQUEST: The Department requests that Post
deliver the points in paragraph 6 to appropriate host
government officials and report a response. The points may
be left as a nonpaper.


5. (S//NF) Please begin all responses with SHIELD S13-08 and
slug for ISN.


6. (U) Begin talking points/nonpaper:

(SECRET//REL CHINA)

-- In the spirit of our cooperation in preventing
proliferation, we would like to raise a matter of chemical
weapons (CW) proliferation concern and request the Chinese
government's assistance in investigating this activity.

-- We have information that in July 2008, the Iranian firm
Nasser Sultani Trading acting as a middle man, procured
hydrofluoric acid from the Chinese entity Shenzhen Yujie
Electronics Company Ltd.

-- Shenzhen Yujie Electronics Company Ltd. is located at Room
1825, Block A, Qunxing-Square, Huaqiang Road North, Shenzhen,
China.

-- Although it has legitimate civilian uses, hydrofluoric
acid also can be used as a CW precursor chemical and is
therefore controlled by China as well as the Australia Group.

-- In addition, we have information that a group of employees
from Zhejiang Material Industries Chemical Group and Shanxi
Weiqida Pharmaceuticals Company may be traveling to Iran to
provide technical training and expertise as well as
installation and start-up of a plant purchased by the
Iranians.

-- We are concerned that the chemical and technology in
question could be intended for, or diverted to, Iran's CW
program.

-- In light of its CBW and other programs of proliferation
concern, support to terrorist organizations, and efforts to
destabilize other countries in the region, we believe Iran is
an unreliable destination for dual-use exports, and Iranian
end-user statements or other assurances are neither credible
nor trustworthy.

-- In addition, the Iran, North Korea, and Syria
Nonproliferation Act (INKSNA) requires us to provide periodic
reports to the U.S. Congress identifying persons (including
individuals and entities) who have transferred to, or
acquired from Iran, North Korea, or Syria, items that are on
the multilateral export control lists, including the
Australia Group.

-- Under INKSNA, sanctions also may be imposed against
persons identified in such reports.

-- We therefore request that the Chinese government take all
steps necessary to investigate this matter and to prevent
Iran from acquiring dual-use equipment and technology that
could be used in its CW program.

-- We look forward to the Chinese government sharing with us
the results of its investigation in to this matter.

End talking points/nonpaper.
CLINTON