(S) HONG KONG FIRM MAY BUILD ARMED FAST ATTACK

S E C R E T STATE 084103

NOFORN
SIPDIS

E.O. 12958: DECL: 08/04/2034
TAGS: PREL PARM ETTC MASS HK IR
SUBJECT: (S) HONG KONG FIRM MAY BUILD ARMED FAST ATTACK
PATROL CRAFT FOR IRAN

Classified By: Daniel Kritenbrink, Acting EAP/CM Office Director,
Reasons: 1.4(b),(c),and (d).


1. (S) This is an action request to General Consulate Hong
Kong. Please see paragraph 4.

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BACKGROUND
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2. (S/NF) We have information that the firm Oceanemed Holding
Limited of Hong Kong is pursuing a contract to build armed
fast attack patrol craft for Iran. Since armed patrol craft
are controlled under the Wassenaar Arrangement Munitions List
(item ML9),any transfer of such patrol craft would require
reporting to Congress under the Iran, North Korea, and Syria
Nonproliferation Act (INKSNA). INKSNA could also provide the
basis for imposition of sanctions.


3. (S/NF) In addition, these armed fast attack vessels would
assist Iran's effort to develop an asymmetrical naval warfare
force in the Persian Gulf, which poses a threat to Coalition
naval forces and commercial vessels in the region. Over the
past several years, the United States has urged nations to
prevent sales to Iran of such vessels and related dual-use
items. Thus, it is imperative to prevent Iran from obtaining
armed fast attack vessels from Oceanemed in Hong Kong or
other entities in the Hong Kong SAR.

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ACTION REQUEST/OBJECTIVES
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4. (S/NF) Post is requested to approach appropriate host
government officials as soon as possible to pursue the
following objectives and to deliver the talking
points/non-paper in para 5 below:

-- Inform Hong Kong officials we have information that
Oceanemed Holding Limited of Hong Kong may contract to build
armed fast attack patrol craft for Iran.

-- Remind Hong Kong officials that these vessels may be
covered under UNSCR 1747 which calls upon states to exercise
vigilance and restraint in supply, sale or transfer of
certain military items to Iran, including warships, to
preclude a destabilizing accumulation of arms.

-- Urge the Hong Kong authorities to investigate, share with
us the results of its investigation, and act to terminate
this activity because the sale of such vessels would present
a threat to international shipping and countries in the
region.

-- Emphasize to Hong Kong officials that exports of armed
patrol craft are controlled under the Wassenaar Arrangement
and that a transfer of such systems to Iran is reportable to
the U.S. Congress under the Iran, North Korea, and Syria
Nonproliferation Act (INKSNA). Entities named in such
reports may also be subject to sanctions under U.S. law.


5. (SECRET/REL HONG KONG) BEGIN TALKING POINTS.

-- In the interest of transparency and enhanced cooperation
on nonproliferation matters, we would like to share the
following information.

-- The United States has information that Oceanemed Holding
Limited of Hong Kong is pursuing a contract to build armed
fast attack patrol craft for Iran.

-- These fast attack patrol craft may be covered under
paragraph 6 of UN Security Council Resolution 1747 which
calls upon all states to exercise vigilance and restraint in
the supply, sale or transfer of certain military items,
including warships, to Iran.

-- In addition, since the export of armed patrol craft is
controlled under the Wassenaar Arrangement (Item ML9),
transfers of these vessels are reportable to the U.S.
Congress under the Iran, North Korea, and Syria
Nonproliferation Act (INKSNA) and may result in the
imposition of U.S. sanctions on the entities involved in the
transfer.

-- We urge you to investigate the activities of this company
and share with us at your earliest convenience the results of
your investigation.

-- We also request that you act to terminate the acquisition
of such armed fast attack patrol craft as their acquisition
represents a destabilizing accumulation of arms in the
Persian Gulf region and, in particular, a threat to
international shipping.

-- Unfortunately, we do not have more detailed information we
can share at this time. We will endeavor to share any
further information that we may obtain with you.

-- We look forward to our continued cooperation on this and
other related matters.

(IF ASKED)

-- INKSNA also authorizes sanctions against persons and
companies reported, such as:

a. No department or agency of the United States Government
may procure, or enter into any contract or the procurement of
any goods, technology, or services from the designated entity;

b. No department or agency of the United States Government
may provide any assistance to the designated entity, and they
shall not be eligible to participate in any assistance
program of the United States Government;

c. No sales to the designated entity of any item on the
United States Munitions List are permitted, and all sales to
them of any defense articles, defense services, or design and
construction services under the Arms Export Control Act are
terminated; and,

d. No new individual licenses shall be granted for the
transfer to the designated of items, the export of which is
controlled under the Export Administration Act of 1979 or the
Export Administration Regulations, and existing such licenses
are suspended.

END TALKING POINTS

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REPORTING REQUIREMENT
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6. (U) Post is requested to please report results of its
efforts within seven business days following receipt of this
cable.

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POINT OF CONTACT
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7. (U) ISN/CATR PoC is Michael Rolleri
(RolleriMJ@state.sgov.gov; 202-647-0255).


8. (U) Post's assistance is greatly appreciated.
CLINTON