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