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UNCLAS STATE 117616 
 
SIPDIS 
 
 
E.O. 12958: N/A 
TAGS: PARM PREL ETTC EFIN PGOV IR
 
SUBJECT: E.O. 13382: DESIGNATION OF TWO IRANIAN 
MISSILE-RELATED ENTITIES 
 
REF: 05 STATE 120771 
 
¶1.  (U) This is an action request.  Please see para 4. 
 
¶2.  (U) Background:  On June 29, 2005 the President issued 
Executive Order (E.O.) 13382 authorizing the U.S. to block or 
"freeze" the assets of weapons of mass destruction (WMD) 
proliferators and their supporters (reftel).  E.O. 13382 
authorizes the Secretary of the Treasury, in consultation 
with the Secretary of State, the Attorney General, and other 
relevant agencies to designate individuals or entities 
determined to be owned or controlled by, or acting or 
purporting to act for or on behalf of, directly or 
indirectly, those entities or individuals identified in the 
Annex of E.O. 13382 or subsequently designated pursuant to 
E.O. 13382.  In addition, E.O. 13382 authorizes the Secretary 
of the Treasury, in consultation with the Secretary of State, 
the Attorney General, and other relevant agencies to 
designate individuals or entities determined to have 
provided, or attempted to provide, financial, material, 
technological or other support for, or goods and services in 
support of, individuals or entities identified in the Annex 
to E.O. 13382 or subsequently designated pursuant to the 
Order.  Persons that are designated under the Order are 
denied access to the U.S. financial and commercial systems, 
and U.S. persons, wherever located, are prohibited from 
engaging in transactions with them. 
 
¶3.  (U) Background continued:  On July 18 the Department of 
the Treasury announced the E.O. 13382 designations of two 
additional Iranian entities, Sanam Industrial Group and Ya 
Mahdi Industries Group.  The USG has determined that they are 
owned or controlled by, or act or purport to act for or on 
behalf of, directly or indirectly, the Aerospace Industries 
Organization (AIO), which President Bush identified in the 
Annex to E.O. 13382.  AIO is a subsidiary of the Iranian 
Military of Defense and Armed Forces Logistics, and manages 
and coordinates Iran's missile program and oversees all of 
Iran's missile industries.  In reaching the decision to 
designate these entities, the USG took into account the 
implications of such a designation on our current diplomatic 
efforts, including the P5 1 offer to Iran of future 
incentives and cooperation in exchange for Iran's agreement 
to take concrete steps to build confidence that it has 
abandoned its nuclear weapons efforts.  We believe the 
decision to proceed with these designations is consistent 
with our support for the P5 1 offer to Iran.  After six 
weeks, Iran has not responded to the P5 1 package, and 
therefore, we have no choice but to resume discussions at the 
United Nations Security Council.  On July 12, P5 1 Ministers 
announced that they would seek adoption of a resolution that 
makes mandatory Iran's suspension of all enrichment related 
and reprocessing activities.  Consultations are now underway 
in New York.  The efforts in the UNSC, as well as these 
designations are intended to exert a greater level of 
pressure on Iran to make the strategic decision to abandon 
its pursuit of nuclear weapons. 
 
¶4.  (U) Action request:  Washington requests action 
addressees inform appropriate host government officials and 
Proliferation Security Initiative Operational Experts Group 
(PSI OEG) points of contact that two Iranian entities -- 
Sanam Industrial Group and Ya Mahdi Industries Group -- have 
been designated pursuant to E.O. 13382 and added to the 
Office of Foreign Assets Control's (OFAC) List of Specially 
Designated Nationals and Blocked Persons (SDN List).  Posts 
should also provide a copy of the Treasury press release at 
para 5 and note that the SDN List can be found at 
www.treas.gov/ofac and that a consolidated list of E.O. 13382 
designees can be found at 
www.treas.gov/offices/enforcement/ofac/progra ms/ 
wmd/wmd.pdf.  Posts should draw from points in paragraph 6 as 
needed. 
 
¶5.  (U) Begin Treasury press release. 
 
July 18, 2006 
 
The Department of the Treasury today designated two 
additional Iranian companies, Sanam Industrial Group and Ya 
Mahdi Industries Group, for their ties to missile 
proliferation. 
 
"As long as Iran's nuclear ambitions continue to threaten the 
international community, the United States will use its 
authorities to target Iran's efforts to sell and acquire 
items used to develop weapons of mass destruction and the 
missiles capable of carrying them," said Stuart Levey, 
Treasury's Under Secretary for Terrorism and Financial 
Intelligence (FTI).  "We have now taken steps to financially 
isolate thirteen entities tied to Iranian proliferation, and 
will continue to act aggressively against this grave threat." 
 
This action was taken pursuant to Executive Order 13382, an 
authority aimed at financially isolating proliferators of 
weapons of mass destruction, their supporters, and those 
contributing to the development of missiles capable of 
delivering WMD.  Designations under E.O. 13382, which is 
administered and enforced by the Treasury's Office of Foreign 
Assets Control (OFAC), prohibits all transactions between the 
designees and any U.S. person and freezes any assets the 
designees may have under U.S. jurisdiction. 
 
Sanam Industrial Group and Ya Mahdi Industries Group are 
being designated by OFAC because they are owned or controlled 
by, or act or purport to act on behalf of, directly or 
indirectly, the Aerospace Industries Organization (AIO), 
which the United States Government designated in the annex to 
E.O. 13382.  AIO is a subsidiary of the Iranian Ministry of 
Defense and Armed Forces Logistics, and manages and 
coordinates Iran's missile program and oversees all of Iran's 
missile industries. 
 
The Sanam Industrial Group, a subordinate to the AIO, has 
purchased millions of dollars worth of equipment on behalf of 
the AIO from entities associated with missile proliferation. 
 
Ya Mahdi Industries Group is also subordinate to the AIO and 
has been involved in international purchases of 
missile-related technology and goods on behalf of the AIO. 
 
Background on E.O. 13382 
 
Today's action builds on President Bush's issuance of E.O. 
13382 on June 29, 2005.  Recognizing the need for additional 
tools to combat the proliferation of WMD, the President 
signed the E.O. authorizing the imposition of strong 
financial sanctions against not only WMD proliferators, but 
also entities and individuals providing support or services 
to them. 
 
In the annex to E.O. 13382, the President identified eight 
entities operating in North Korea, Iran and Syria for their 
support of WMD proliferation.  E.O. 13382 authorizes the 
Secretary of the Treasury, in consultation with the Secretary 
 
SIPDIS 
of State, the Attorney General, and other relevant agencies, 
to designate additional entities and individuals providing 
support or services to the entities identified in the annex 
to the Order. 
 
In addition to the eight entities named in the annex of E.O. 
13382 and the two named today, the Treasury Department has 
designated sixteen entities and one individual as 
proliferators of WMD, specifically: 
 
-- Eight North Korean entities on October 21, 2005; 
-- Two Iranian entities on January 4, 2006; 
-- One Swiss individual and one Swiss entity tied to North 
Korean proliferation activity on March 30, 2006; and 
-- Four Chinese entities and one U.S. entity tied to Iranian 
proliferation activity on June 13, 2006. 
 
The designations announced today are part of the ongoing 
interagency effort by the United States Government to combat 
WMD trafficking by blocking the property of entities and 
individuals that engage in proliferation activities and their 
support networks. 
 
End Treasury press release. 
 
¶6.  (U) If raised: Will the designations undercut the P5 1 
offer? 
 
-- The package of incentives offered by the P5 1 remains on 
the table.  However, after six weeks, we have no indications 
from Iran that it is prepared to accept the package or 
suspend all enrichment related and reprocessing activities. 
As a result, we have no choice but to return to the United 
Nations Security Council. 
 
-- In reaching this decision to designate these entities, the 
USG took into account the implications of such a designation 
on our current diplomatic efforts. 
 
-- We believe the decision to proceed with these designations 
is consistent with our support for the P5 1 offer to Iran. 
 
-- The UNSC process, these designations, and other efforts 
are intended to enhance the effectiveness of our diplomatic 
efforts.  They are intended to exert greater pressure on Iran 
to make the strategic decision to abandon its nuclear weapons 
pursuits. 
 
End if raised points. 
 
¶7.  (U) Washington appreciates Posts' assistance.  Please 
slug replies for ISN, T and Treasury/OFAC. 
RICE 
 
 
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