IRANIAN MODAFL AFFILIATE SEEKS SWISS-ORIGIN

S E C R E T STATE 050119 SIPDIS E.O. 12958: DECL: 05/15/2034 TAGS: MTCRE PARM PREL ETTC MNUC TSPA IR GM SZ SUBJECT: IRANIAN MODAFL AFFILIATE SEEKS SWISS-ORIGIN DIGITAL MAGNETIC COMPASSES FROM GERMAN FIRM (S) Classified By: ISN/MTR DIRECTOR PAM DURHAM FOR REASONS 1.4 (B),(C),AND (D). ¶1. (U) This is an action request. Embassy Berlin please see paragraph 3. ¶2. (S) Background and Objectives: The United States has information indicating that as of mid-March 2009, Iran's Shiraz Electronics Industries (SEI) was seeking several digital magnetic compasses manufactured by the Swiss firm Vectronix via the German firm Holm GmbH. These items are designed for various applications, including in unmanned underwater vehicles, and while not controlled by the Missile Technology Control Regime (MTCR),they can be used as attitude and heading reference systems in unmanned aerial vehicles (UAVs). SEI is affiliated with Iran's Ministry of Defense and Armed Forces Logistics (MODAFL),which is the entity with responsibility for Iranian arms procurement and development. Although Holm GmbH representatives have requested an end-use statement from SEI, we want to urge German officials to view any such end-use statement with extreme skepticism, and encourage them to take measures to prevent sales of high-tech equipment to MODAFL and subordinate entities. ¶3. (U) Action Request: Request Embassy Berlin approach appropriate German government officials to deliver talking points/non-paper in paragraph 4 below and report response. Talking points also may be provided as a non-paper. This information will also be shared with Swiss officials via septel. ¶4. (S) Begin talking points/non-paper: (SECRET//REL GERMANY) -- We would like to raise with you a matter of proliferation concern and request your government's assistance in investigating this activity. -- The United States has information indicating that as of mid-March 2009, Iran's Shiraz Electronics Industries (SEI) was seeking several Swiss-origin digital magnetic compasses from the German firm Holm GmbH. -- The items sought were model DMC-SX 5000 digital magnetic compasses manufactured by Switzerland's Vectronix. -- This equipment is designed for various applications, including in unmanned underwater vehicles. Although not controlled by the Missile Technology Control Regime (MTCR),these items could also be used as an attitude and heading reference system in unmanned aerial vehicles (UAVs). -- SEI is affiliated with Iran's Ministry of Defense and Armed Forces Logistics (MODAFL),the entity responsible for Iranian arms procurement and production. -- Iran's Aerospace Industries Organization (AIO) and Defense Industries Organization (DIO) are subordinate to MODAFL. Numerous DIO and AIO entities are subject to sanctions under United Nations Security Council Resolutions. -- Holm GmbH representatives have requested an end-use statement from Shiraz Electronics before agreeing to provide a price quotation. -- While Holm GmbH appears to be exercising caution in its dealings with Shiraz Electronics Industries, we would recommend that any end-use statement provided by SEI or other MODAFL affiliates be viewed with extreme skepticism, and encourage you to take measures to prevent the sale by German firms of high-tech equipment to MODAFL and subordinate entities. -- We will also be discussing this matter with Swiss officials. -- We appreciate Germany's cooperation on nonproliferation matters and look forward to hearing of any actions your government takes in response to this information. End talking points/nonpaper. ¶5. (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/PRA and EUR/CE. ¶6. (U) A word version of this document will be posted at www.state.sgov.gov/demarche. CLINTON