(S) NIAG 9130: IRAN SEEKS GERMAN-ORIGIN VALVES

S E C R E T STATE 096891 NOFORN SIPDIS E.O. 12958: DECL: 09/17/2034 TAGS: KNNP PARM PREL ETTC MNUC IR GM SUBJECT: (S) NIAG 9130: IRAN SEEKS GERMAN-ORIGIN VALVES Classified By: Classified by EUR/PRA Dir. Kathleen Morenski for reasons 1.4 (b) and (d). ¶1. (U) This is an action request. Please see paragraph 4. -------------- BACKGROUND -------------- ¶2. (S/NF) Washington has information that the German firms Tavakkoli Trading Company and MIT-Weimar were coordinating the sale of valves to an Iranian entity possibly associated with the construction of Iran,s IR-40 heavy water reactor. While these valves have applications in the petroleum and petrochemical industries, they also have nuclear applications. Some of them have been designed to nuclear standards. In addition, the valves were intended for an Iranian entity involved in the construction of Iran,s IR-40 heavy water reactor. Washington assesses that these valves could make a material contribution to Tehran,s nuclear activities. It is our assessment that transfers of these valves could constitute a violation of United Nations Security Council Resolution (UNSCR)1737. UNSCR 1737 prohibits the transfer of items that could make a contribution to Iran,s nuclear activities. Post should request that Germany undertake an investigation, and, if the transfers have not taken place yet, take all necessary measures to prevent the transfers. -------------- OBJECTIVES -------------- ¶3. (S/NF) Post should pursue the following objectives: -- Approach appropriate MFA officials and ask them to investigate U.S. information that indicates the possible transfer of valves by German firms to an Iranian entity possibly associated with the construction of the IR-40 heavy water reactor in Iran. -- Explain that these valves have nuclear applications and that the Iranian entity is involved in the construction of Iran,s IR-40 heavy water research reactor; therefore, we assess these valves could make a material contribution to Iran,s nuclear program. -- Note that UNSCR 1737 prohibits the transfer of items that could make a contribution to Iran,s nuclear activities. -- Request that Germany investigate these exports to Iran, and, if the transfers have not taken place yet, take all necessary measure to prevent the transfers. -- Request that Germany share with the U.S. any information that it gathers in its investigations. -- Thank German officials for their ongoing cooperation on proliferation- related matters. -------------- TALKING POINTS -------------- ¶4. (S/REL GERMANY) Begin talking points for Berlin: -- We would like to bring to your attention possible transfers by German firms to an Iranian entity possibly associated with the construction of Iran,s IR-40 heavy-water reactor. -- Our information indicates that an Iranian national affiliated with several Iranian firms was coordinating a purchase of valves with the German firm MIT-Weimar, dating from 2007. The valves were intended for Iran,s Rahkar Sanaye Novin Company, also known as Modern Industries Technique Company or MITEC, and were probably for use at Iran,s IR-40 heavy water reactor. -- We also have information that another German firm, Tavakkoli Trading Company, had received orders, from the same Iranian national, during 2008 and 2009 for motor operated globe valves with bellow seals, motor operated butterfly valves, and manual valves with and without bellow seals. The order for 1,767 valves totaled 1,783,080 euro. -- These valves have applications in the nuclear, petroleum, and petrochemical industries. However, one portion of this order included 856 manual bellow seal and globe valves designed according to the ASME III NC standard, which is a standard for nuclear components. -- The Iranian individual provided a letter of credit, number 13425/87201773, to Tavakkoli and the MIT-Weimar Company, which was issued on 8 October 2008 for 1,767 valves. The letter of credit, valued at 1,807,080 euro, designated the Rahtes Company as the applicant and Tavakkoli as the beneficiary. The Tabriz, Iran branch of Bank Mellat was the applicant bank for this letter of credit, and Bank Saderat Iran in Hamburg, Germany was to be the receiving branch for the funds. -- Given that some of these valves are to be designed to a standard for nuclear components, we asses that their transfer to Iran could make a material contribution to Tehran,s nuclear activities. Additionally, the involvement of an Iranian entity involved in the construction of Iran,s IR-40 heavy water research reactor indicates the likelihood that these valves would be used at this facility, and not a light-water reactor. -- In addition, Bank Mellat,s involvement in this transaction is also of concern, as UN Security Council Resolution 1803 calls on UN member states to exercise vigilance over the activities of banks in their territories domiciled in Iran, in order to avoid such activities contributing to proliferation-sensitive nuclear activities. -- As such, we assess that the transfer of these valves could constitute a violation of UNSCR 1737, which prohibits the transfer of items that could make a contribution to Iran,s nuclear activities. -- We therefore urge you to investigate the involvement of German firms in these possible transactions, and, if these transfers have not yet taken place, to take all necessary measures to prevent them. (As of June 2009, delivery of at least some of the valves was not yet complete.) We also request that you share with us the results of any investigation you may conduct. -------------- REPORTING DEADLINE AND POC -------------- ¶5. (U) Post should report results within ten (10) business days. Please identify the subject as &NIAG 91308 and slug replies for ISN and EUR/PRA. Department point of contact is ISN/CPI Lisa Meyers, 202-736-7939. CLINTON