P 301530Z SEP 08
FM SECSTATE WASHDC
TO AMEMBASSY BEIJING PRIORITY
AMEMBASSY BERLIN PRIORITY
AMEMBASSY BERN PRIORITY
AMEMBASSY BRUSSELS PRIORITY
AMEMBASSY LONDON PRIORITY
AMEMBASSY PARIS PRIORITY
AMEMBASSY ROME PRIORITY
AMEMBASSY TOKYO PRIORITY

UNCLAS STATE 104207 
 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: KNNP PREL PARM IR MNUC UK GM FR BE IT SZ CH JP
 
SUBJECT: UPDATE ON IRAN SPECIFIC EXPORT CONTROL OUTREACH 
 
REF: A. STATE 021770 
     ¶B. STATE 039585 
     ¶C. STATE 052030 
     ¶D. STATE 083144 
     ¶E. STATE 099666 
     ¶F. STATE 104182 
 
¶1. (U) This is an action request.  Please see paragraph 3. 
 
---------- 
BACKGROUND 
---------- 
 
¶2. (SBU) BACKGROUND:  On May 15, Washington provided all 
Nuclear Suppliers Group 
(NSG) Participating Governments (PGs) with detailed 
information regarding critical commodities Iran will require 
to support the deployment of the next generation of gas 
centrifuges for their uranium enrichment program.  The 
information describes commodities that Iran can not 
indigenously manufacture, and would therefore need to procure 
from foreign suppliers (ref C). In ref D, E, and F we 
provided host governments with information on major 
manufacturers of these items in their respective countries 
and informed them about the U.S. efforts to enhance Iran- 
related industry outreach.  We would now like to provide host 
governments with further developments in the U.S.,s industry 
outreach efforts to prevent Iranian procurement of critical 
commodities and inform them of export guidance issued on 
September 25. 
 
¶3. (SBU) ACTION REQUEST:  Posts are requested to approach 
appropriate host government officials to deliver the 
nonpapers in para 4 and 5.  In doing so, posts should pursue 
the following objectives: 
 
-- Share information on the USG,s comprehensive 
industry-outreach strategy to sensitize U.S. industry to 
Iran,s deceptive procurement practices aimed as stopping the 
diversion of U.S. origin goods to Iran via third countries. 
 
-- Encourage the host government, if they have not already 
done so, to develop a comprehensive industry outreach 
strategy aimed at preventing Iran from procuring items both 
directly and via front companies in third countries. 
 
-- Urge host governments to share any relevant information 
from their industry outreach activities with the USG, the 
NSG, and the IAEA. 
 
¶4. (U) BEGIN U.S. NON-PAPER. 
 
-- We recently notified you that the U.S. government is 
currently reaching out to U.S. manufacturers of critical 
commodities that Iran will need to procure for its new gas 
centrifuge design.  We are alerting these U.S. manufacturers 
to be cautious of unknown customers that may be procuring 
items for Iran,s illicit programs. 
 
-- We wanted to follow-up and provide you with information on 
a recent action we took to alert U.S. industry of Iran,s 
illicit procurement practices.  Through such outreach, we 
hope to help U.S. companies prevent illicit diversion of 
their products, and thus prevent the unwitting transfer of 
items to Iran that may contribute to Iran,s weapons of mass 
destruction (WMD) programs, their means of delivery, or 
advanced conventional weapons. 
 
-- On September 25, 2008, the U.S. Department of Commerce 
published guidance advising exporters of actions they can 
take to avoid the illicit diversion of items to support 
Iran,s nuclear weapons or ballistic missile programs. 
 
-- This guidance alerts U.S. companies that Iran uses 
deceptive tactics to make its procurement efforts for its WMD 
programs appear to be commercial activities and establishes 
that exporters need to be vigilant and recognize red flags in 
order to help prevent their exports from being diverted to 
Iran. 
 
-- This guidance reminds exporters to take note of any 
abnormal circumstances in a transaction that indicate that 
the export is destined for an inappropriate end-use, 
end-user, or destination and summarizes the steps that 
exporters can take in order to prevent unauthorized transfers 
to Iran. 
 
-- Further, it notes that exporters should be cautious of 
customers operating in transshipment countries or free trade 
zones, as Iranian entities form front companies in third 
counties for the sole purpose of sending dual-use items to 
Iran.  This allows Iran to receive these items that the 
supplier country would normally deny under their export 
control laws. 
 
-- While the U.S. is working with transshipment countries to 
try to stop such activities, it is important that major 
supplier countries also work with their exporters to help 
them recognize a potentially risky transaction. 
 
-- This guidance was emphasized at the upcoming Department of 
Commerce Update Conference on September 29, with 
approximately 800 attendees from the exporting community, and 
was emailed to approximately 8,500 members exporting 
community. 
 
-- Industry outreach is critical to ensuring that Iran cannot 
procure items to advance its WMD programs.  If you have not 
already done so, we encourage you to conduct outreach to your 
industry to ensure that they are aware of the implication of 
export controls for Iran and alert companies about the 
deceptive procurement practices of Iran. 
 
-- We welcome your government,s suggestions on how key 
suppliers can best work to prevent the supply of critical 
items to Iran,s nuclear and missile programs.  The United 
States is open to further discussions at the expert level. 
 
END U.S. NON-PAPER. 
 
¶5. (U) BEGIN NON-PAPER. 
 
Guidance on Actions Exporters Can Take to Prevent Illicit 
Diversion of Items to 
Support Iran,s Nuclear Weapons or Ballistic Missile Programs 
 
It is the policy of the United States to counter Iran,s 
pursuit of technology that could enable it to develop nuclear 
weapons and missiles capable of delivering them.  In support 
of this effort, the United States maintains comprehensive 
economic sanctions on Iran. 
 
IRAN,S ILLICIT PROCUREMENT EFFORTS 
 
- Iran is currently trying to procure items for its uranium 
enrichment centrifuge program.  For this program, Iran will 
need to procure items on the Commerce Control List (CCL) such 
as carbon fiber (controlled under Export Control 
Classification Numbers (ECCNs) 1A002, 1C010, 1C210, 1C990) 
and filament winding machines (ECCNs 1B001, 1B101, 1B201), as 
well as items classified as EAR99, such as epoxy resin. 
Epoxy resin and related hardening/accelerator agents are 
necessary to bind the carbon fibers used in both uranium 
centrifuge and missile structures.  Thus, U.S. manufacturers 
of such items should be particularly vigilant. 
 
- As outlined in International Atomic Energy Agency (IAEA) 
Director General El Baradei,s report of February 22, 2008, 
Iran has admitted to attempting to evade international 
sanctions to procure sensitive items, using deceptive 
procurement tactics to obtain items that can contribute to 
its weapons of mass destruction (WMD) programs. 
 
- Specifically, Iranian entities form front companies in 
other countries for the sole purpose of exporting dual-use 
items, including U.S. origin items, to Iran that it can use 
in its nuclear and missile programs.  These companies appear 
to be procuring dual-use items for commercial activities and 
enable Iran to obtain materials that would typically be 
prevented by export control restrictions in supplier 
countries.  They make it difficult for businesses to know 
that the end-user is in Iran.  Furthermore, these front 
companies are often in third countries where U.S. companies 
have strong trading relationships. 
 
EXPORTER DILIGENCE 
 
- Not all items that Iran could use for weapons of mass 
destruction-development activities are listed on the CCL. 
Therefore, exporters must be vigilant on the potential 
end-use of all items exported from the United States.  (e.g., 
epoxy resin). 
 
- The exportation of any item that is subject to the EAR 
(including an EAR99 item) to Iran without a license is 
prohibited under regulations maintained by the Department of 
the Treasury,s Office of Foreign Assets Control (OFAC). 
This includes any exports to a third country if the exporter 
knows or has reason to know that the item will be reexported 
to Iran. 
 
- Exporters should screen parties to a transaction against 
the Denied Persons List, Entity List, Unverified List, BIS 
General Orders, and the Specially Designated Nationals and 
Blocked Persons List. 
 
- Exporters should take note of any abnormal circumstances in 
a transaction that indicate that the export may be destined 
for an inappropriate end-use, end-user, or destination. For 
example: 
 
     unusual quantity requests; 
     paying above market prices or using unusual payment 
methods; 
     waivers of normal installation, training or maintenance 
agreements; and 
     requests for delivery to one country with original 
orders from a second country or 
direct delivery to a freight forwarder. 
 
- When such "red flags" arise, you should check out the 
suspicious circumstances and inquire about the end-use, 
end-user, or ultimate country of destination. 
 
- If you encounter &red flags8 that you are unable to 
resolve with reasonable inquiry, contact BIS. 
 
- Companies should have in place compliance and/or business 
procedures to be immediately responsive to theft or 
unauthorized delivery. 
 
- If you believe a previous shipment has been diverted and 
may have gone to an end user in Iran, we encourage you to 
report it to BIS. 
 
SUMMARY OF STEPS U.S. EXPORTERS CAN TAKE TO PREVENT 
UNAUTHORIZED EXPORTS TO IRAN 
 
- Remain vigilant and know your customer. 
- Understand &Red Flag8 indicators. 
- Be cautious of customers operating in transshipment 
countries or free trade zones. 
- Be familiar with U.S. Government screening lists. 
- Contact BIS if something does not seem right about the 
transaction or if you suspect a shipment may have been 
diverted to Iran. 
- Subscribe to the BIS listserv to receive e-mail 
notifications of changes to the BIS published list to 
entities of concern. 
- Subscribe to the Department of the Treasury, Office of 
Foreign Assets Control,s service to receive notifications of 
changes to the List of Specially Designated Nationals and 
Blocked Persons. 
 
 
END U.S. NON-PAPER. 
 
-------------------------- 
REPORTING DEADLINE AND POC 
-------------------------- 
 
(U) Posts are requested to report any substantive responses 
within seven (7) days of receipt of this cable.  Lisa Meyers 
(ISN/CPI, 202-736-7939, MeyersLA@state.sgov.gov) is the 
Department's POC for this activity. 
RICE 
 
 
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