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INFO MISSILE TECHNOLOGY CONTROL REGIME COLLECTIVE

S E C R E T STATE 098749 
 
SIPDIS 
PARIS FOR POL: NOAH HARDIE 
BRASILIA FOR POL: JOHN ERATH 
 
E.O. 12958: DECL: 09/23/2034 
TAGS: MTCRE ETTC KSCA MNUC PARM TSPA FR BR
SUBJECT: MISSILE TECHNOLOGY CONTROL REGIME (MTCR): MISSILE 
PROLIFERATION TRENDS 
 
Classified By: ISN/MTR Deputy Director Ralph Palmiero. 
Reasons:  1.4 (B), (D), (H). 
 
¶1. (U)  This is an action request.  Please see paragraph 
¶2. 
 
¶2. (C)  ACTION REQUEST:  Department requests Embassy 
Paris provide the interagency cleared paper "Missile 
Proliferation Trends" in paragraph 3 below to the French 
Missile Technology Control Regime (MTCR) Point of Contact 
(POC) for distribution to all Partners.  Info addressees 
also may provide to host government officials as 
appropriate.  In delivering paper, posts should indicate 
that the U.S. is sharing this paper as part of our 
preparation for the Information Exchange that will be 
held in conjunction with the MTCR Plenary in Rio, 
November 9-13, 2009.  NOTE:  Additional IE papers will be 
provided via septels.  END NOTE. 
 
¶3. BEGIN TEXT OF PAPER: 
 
(SECRET REL MTCR) 
 
Missile Proliferation Trends 
 
      In the following presentation, we provide an 
overview of missile proliferation trends that the United 
States has identified over the last several years. 
 
Proliferation of Short-Range, Solid-Propellant Missiles 
 
      A key trend in recent years has been the 
proliferation of short-range, solid propellant ballistic 
missile systems with range and payload capabilities below 
the MTCR Category I threshold.  A number of countries, 
including many with well-established liquid propellant 
missile programs, have sought to acquire short-range, 
solid propellant missile systems.  These systems are 
attractive because of their increased availability on the 
international market, their accuracy, and their ease of 
handling as compared to liquid propellant systems.  In 
addition, short-range, solid propellant missiles also 
require less preparation prior to launch, less 
maintenance, and can be stored for longer periods of time 
than liquid-fueled missile systems. 
 
Decline of New Interest in Scud-Derived Technology 
 
      The growing interest in short-range solid-propellant 
missiles for many countries also is related to an 
emerging missile proliferation trend -- a decline in new 
governments seeking to acquire Scud-type short-range 
ballistic missiles, such as those marketed by North 
Korea.  Decreased sales of Scud-based missiles and 
technology is in part due to efforts by MTCR countries to 
promote missile nonproliferation and discourage new 
missile customers, as well as the effect of United 
Nations sanctions.  Potential new customers may also 
calculate that more accurate, short-range solid- 
propellant missiles are a better investment and more 
readily available than Scud technology, which is known 
for its poor accuracy and requires the purchase of 
extensive support equipment.  (Note: While North Korean 
exports of complete Scud-derived missile systems may have 
declined in recent years, North Korea likely does 
continue to provide Scud maintenance and refurbishment 
services to previous Scud missile customers.) 
 
China as a Key Source of Solid Propellant Missiles 
 
      Another reason may be that purchasing countries 
seeking a Category II SRBM capability can work fairly 
easily and above board with less disreputable arms 
suppliers such as China, rather than deal with a state 
such as North Korea that has been internationally 
recognized as a proliferator and is subject to United 
Nations Security Council sanctions.  For example, China 
has supplied a short-range, solid-propellant missile 
system to at least one former missile customer of North 
Korea and is marketing the P12 and B611M solid propellant 
systems to customers in the Middle East, Africa, and 
South Asia.  The P12 is advertised as having a 150-km 
range with a 450 kg warhead, and the B611M is marketed as 
a 260-km-range system that carries a 480-kg warhead. 
Although these missiles are below the MTCR Category I 
threshold, sales of these systems are likely to 
accelerate the diffusion of sophisticated and previously 
unavailable solid propellant missile technologies to 
regions of tension. 
 
Parallel Space Launch Vehicle and Ballistic Missile 
Development Efforts 
 
      Another key missile proliferation trend has been for 
countries seeking to develop long-range missiles to 
establish developmental programs for space launch 
vehicles (SLVs).  SLVs and ballistic missiles are derived 
from virtually identical and interchangable technologies, 
and the similarities between SLVs and ballistic missiles 
extend from subcomponents to production facilities.  SLV 
programs can allow a country to test propulsion systems, 
stage separation, and some guidance and control 
technology, and provide a path to gain access to 
controlled, missile-related technologies and materials 
under the guise of peaceful space ambitions. 
 
North Korea 
 
      A clear example of a country attempting to mask its 
missile development efforts behind an SLV program is 
North Korea.  On April 5, 2009, North Korea tested a 
multi-stage Taepo Dong-2 (TD-2) missile, which it 
characterized as an effort to place an "experimental 
communications satellite" into orbit.  This test failed 
to place an object into orbit, but demonstrated North 
Korea's development of technologies such as stage 
separation that are applicable to longer-range ballistic 
missile systems.  In the case of the April 2009 test, few 
countries accepted North Korea,s claim that the TD-2 
launch was simply an activity carried out as part of a 
peaceful space program.  This was reflected in the United 
Nations Security Council,s adoption of a Presidential 
Statement on April 13, 2009 that condemned this launch as 
being in contravention of Security Council Resolution 
1718, which requires North Korea to suspend all 
activities related to its ballistic missile program. 
 
Iran 
 
      Iran has established an SLV program that complements 
and advances its missile development.  For many years, 
Iran has had active MTCR Category I ballistic missile 
programs.  These programs helped establish a technology 
base that assisted Iran,s development of an SLV known as 
the Safir, which successfully placed a small satellite 
into orbit in February 2009.  Although currently the 
Safir is restricted to very small payloads, Iran,s 
ability to place a satellite into orbit has demonstrated 
several technical capabilities applicable to longer-range 
ballistic missile systems, including staging, clustering 
small engines, and using gimbaled engines for control of 
the Safir,s second stage.  As such, Iran,s SLV program 
remains a key concern, as many technologies required for 
this program will directly benefit Iran,s long-range 
ballistic missile development efforts. 
 
The Role of Front Companies 
 
Increased Use of Intermediaries 
 
      Proliferators, reliance on cover companies has been 
well-documented at annual MTCR Information Exchange 
meetings.  Proliferation-related transactions now 
regularly involve multiple layers of intermediaries, 
resulting in deals that are more difficult for export 
control officials to detect.  The challenges posed by the 
use of multiple intermediaries were illustrated in a 2008 
U.S. Information Exchange presentation, which provided an 
overview of a three-year effort by Iran,s solid 
propellant ballistic missile program to procure 
environmental test chambers from foreign sources.  In 
that case, Iran used at least six different 
intermediaries and front companies, listed false end- 
users and false countries of destination, and used 
complicated routing to avoid export control regulations, 
in an effort to purchase the test chambers from two 
manufacturers in two foreign countries.   Ultimately, 
this attempt was unsuccessful, but this example shows the 
intricacy of Iran,s efforts -- and its willingness to use 
multiple intermediaries -- to procure a single commodity 
required for its missile development programs.  Similar 
tactics have been adopted by Syria,s missile program, 
which in 2009 used two false intermediaries to target 
companies in at least four different MTCR Partner 
countries in an effort to acquire uncontrolled imaging 
equipment suitable for missile testing.  Such use of 
multiple intermediaries to facilitate procurement is 
likely to continue as long as programs of concern remain 
dependent on foreign suppliers and experience difficulty 
procuring missile-related technology due to export 
control restrictions. 
 
Brokering 
 
      In recent years, the role of cover companies in 
assisting procurement by proliferation programs has 
expanded.  These entities not only pose as end-users for 
controlled and dual-use missile technologies, but they 
also have become involved in brokering, shipping, and 
financing.  Brokering has become particularly critical to 
procurement efforts by missile programs of concern. 
Brokering entities regularly orchestrate proliferators, 
purchases of controlled and dual-use equipment and often 
are the only party to a transaction in direct contact 
with both the supplier and end-user.  While brokers can 
be located in the supplier country, a transshipment 
state, or within the recipient country, many base their 
operations in countries through which purchased goods are 
never physically shipped.  For example, from an office 
within an MTCR Partner country, a broker could coordinate 
a missile-related purchase on behalf of an Iranian front 
company from a supplier in China.  To further complicate 
the transaction, the broker could arrange for the export 
to be routed through an intermediary in the UAE, 
Singapore, or Malaysia, making it more difficult for 
export control authorities to link the broker to the 
ultimate end-user or the commodity to a program of 
concern. 
 
Commercial Industries as a Procurement Cover 
 
      Most intermediaries assisting proliferation related- 
procurement are not overtly affiliated with government- 
owned entities.  In fact, many are engaged in legitimate 
commercial activities.  In the case of Iran, commercial 
enterprises often are used as a cover through which dual- 
use items are purchased.  These firms, primary functions 
are as commercial manufacturers or distributors, and the 
use of such entities by programs of concern provides a 
seemingly plausible end-use for dual-use and controlled 
items.  This in turn helps these transactions avoid 
detection from licensing and export control officials in 
supplier countries. 
 
      One example of this trend has been in Iran,s 
continuing use of the automotive industry as a 
procurement cover for its missile programs.  Stating that 
commodities are intended for automobile manufacturing 
allows Iran a means of purchasing a variety of dual-use 
goods, particularly specialty metals and industrial 
machine tools, which could have utility in the automobile 
sector, but which also often are diverted to support its 
missile production and development efforts. 
 
Intermediaries Operating in Malaysia 
 
      Front companies and intermediaries involved in 
missile-related procurement often operate in countries 
with weak export control oversight and enforcement.  This 
continues to be the case in Malaysia, which, as noted in 
an Australian presentation from the 2008 MTCR Information 
Exchange, increasingly serves as a procurement hub for 
missile-related goods and technology.  Malaysian entities 
act as brokers and false end-users for items intended for 
missile-development organizations in third countries. 
Over the past several years, companies in Malaysia 
repeatedly have attempted to procure a variety of 
aerospace-qualified electronics from the U.S. and other 
MTCR Partner countries on behalf of military- and 
missile-related end-users in Iran.  It also appears such 
companies in Malaysia are expanding their procurement 
operations, regularly using multiple cover names and 
fraudulent end-user documentation, and routing their 
transactions through additional intermediaries to conceal 
the ultimate destination of an export.  This trend of 
missile-related intermediaries basing their procurement 
operations in Malaysia is largely the result of 
Malaysia,s lack of a comprehensive export control system 
due to its government,s concern that efforts to improve 
its export controls will impede international trade. 
Until robust controls are put in place, Malaysia, as well 
as other countries without effective export controls, 
will continue to attract proliferation-related 
intermediaries seeking to evade the export control 
systems of supplier countries. 
 
Conclusion 
 
      Each of the trends identified above poses challenges 
to international efforts to prevent missile 
proliferation.  They also demonstrate that the missile 
proliferation threat is not static and will continue to 
evolve as technology progresses, becomes more widely 
available, and as proliferators develop more 
sophisticated methods to evade export control 
restrictions.  All of these trends underscore the 
importance of effective export control systems -- in both 
MTCR and non-MTCR countries -- that are able to detect 
proliferation-related transactions and ensure that 
transfers of missile technology are licensed in a 
responsible manner that limits proliferation risks. 
Meeting these challenges will require MTCR Partners to 
continue to work together, and with key non-Partners, to 
ensure the MTCR continues to effectively respond to the 
evolving nature of global missile proliferation. 
 
END TEXT OF PAPER. 
 
¶4.  (U)  Please slug any reporting on this or other MTCR 
issues for ISN/MTR.   A word version of this document 
will be posted at www.state.sgov.gov/demarche. 
CLINTON