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Cablegate: Implementation of the Irisl Cargo Inspection

VZCZCXYZ0004
OO RUEHWEB

DE RUEHC #4723 2481531
ZNY SSSSS ZZH
O P 041526Z SEP 08
FM SECSTATE WASHDC
TO RUEHTH/AMEMBASSY ATHENS IMMEDIATE 0000
RUEHTV/AMEMBASSY TEL AVIV IMMEDIATE 0000
INFO RUEHFR/AMEMBASSY PARIS PRIORITY 0000

S E C R E T STATE 094723

SIPDIS

E.O. 12958: DECL: 09/04/2033
TAGS: GR IS ECON EFIN EWWT ETRD PARM PREL KNNP EUN
SUBJECT: IMPLEMENTATION OF THE IRISL CARGO INSPECTION
PROVISION OF UNSCR 1803

REF: A. REF A: STATE 69339
B. REF B: PARIS 1291

Classified By: ISN Patricia A. McNerney for reasons 1.4 (b) and (d).

1. (U) This is an action request. Please see paragraph 3.

----------------------
SUMMARY AND BACKGROUND
----------------------

2. (C) The Department sent a demarche (REF A) to initiate
discussions with key countries on the importance of
implementing robustly the inspection provision of UNSCR 1803
and warn them of the risks of doing business with IRISL. We
would like to provide this information to Greece, per the
recommendation from Martin Briens, Office Director for
Disarmament and Nuclear Nonproliferation at the French MFA,
who commented in discussions with Embassy Paris officials
(REF B) on the importance of reaching out to Greece to
sensitize it to the potential risks involved in conducting
business with IRISL. We also would like the information
transmitted to the Government of Israel to keep them aware of
our strategy to target IRISL.

-------------------------
OBJECTIVES/ACTION REQUEST
-------------------------

3. (S) Washington requests Posts deliver the non-paper in
paragraph 4 to appropriate host government officials in the
foreign affairs and finance ministries, and other appropriate
government agencies, including those responsible for shipping
and customs activities. This information is being provided
to the Government of Israel for information purposes only, no
action is required. Embassy Athens should pursue the
following objectives:

-- Emphasize UNSCR 1803's call for member states, in
accordance with national and international law, to inspect
the cargoes to and from Iran, of aircraft and vessels, at
their airports and seaports, owned or operated by Iran Air
Cargo and Islamic Republic of Iran Shipping Line (IRISL),
provided there are reasonable grounds to believe that the
aircraft or vessel is transporting goods prohibited under
resolution 1803 or resolution 1737 (2006) or resolution 1747
(2007).

-- Recall that UNSCRs 1737and 1803 also establish a
requirement for states to prevent the transfer, directly or
indirectly from their territories or by their nationals, to
or for the benefit of Iran, of specified nuclear and
missile-related items (including Nuclear Suppliers Group
(NSG) and Missile Technology Control Regime (MTCR)-controlled
items).

-- Encourage Greece to carefully monitor financial activity
with regard to IRISL, noting that UNSCR 1737 also requires
states to prevent the provision to Iran of financial
assistance and transfer of financial resources or services
related to the supply, sale, transfer, manufacture, or use of
prohibited items. Paragraphs 9 and 11 of UNSCR 1803 calls for
vigilance in entering into new commitments for
public-provided financial support for any trade with Iran,
including the granting of export credits, guarantees, or
insurance, to their nationals or entities involved in such
trade.

-- Inform Greece that cargo on four IRISL vessels was
interdicted in 2007 because the cargo (consisting of dual-use
items) was destined for entities that had been sanctioned by
the UN Security Council for their role in Iran's nuclear or
missile programs, or to entities acting on their behalf.

-- Highlight that IRISL is increasingly employing deceptive
measures to disguise the end-user, the destination of its
cargo, or IRISL's involvement, which suggests such transfers
could be of a sensitive nature and possibly
proliferation-related.

-- Inform Greece that IRISL has continued to carry cargoes
for entities including the Shahid Bakeri Industrial Group
(SBIG), Defense Industries Organization (DIO), and the Sanam
Industrial Group (SIG), all of which have been designated by
the UN Security Council under resolutions 1737 or 1747 and by
the United States under domestic authority (Executive Order
13382).

-- Remind Greek authorities of the risk that companies doing
business with IRISL could, even inadvertently or unwittingly,
facilitate the proliferation of items for use in a WMD,
military, or missile program.

-- Note in particular the increased possibility that IRISL
vessels could be searched (due to the call in UNSCR 1803),
resulting in increased costs to businesses shipping through
IRISL. These inspections could lead to delays in shipments
of legitimate cargoes. Stress the reputational difficulties
that may fall upon those entities found to be associated,
even inadvertently, with IRISL's proliferation activities.

-- Note that companies that continue conducting business with
IRISL could facilitate - unwittingly - transfers to or from
Iran of WMD- or military-related items prohibited under
UNSCRs 1737, 1747 and 1803.

-- Emphasize that we are providing this information in the
spirit of our cooperation as Proliferation Security
Initiative (PSI) partners, and we hope for host government's
energetic response in the same spirit.

4. (SECRET/ REL Greece and Israel)

-- In light of our commitment to share information with your
government on proliferation-related activities, we would like
to raise concerns about Iran's Islamic Republic of Iran
Shipping Lines (IRISL).

-- As you know, IRISL was named in United Nations Security
Council Resolution 1803. Operative paragraph 11 of this
resolution calls upon all UN Member States, in accordance
with national and international law, to inspect the cargoes
going to or from Iran, of aircraft and vessels, at their
airports and seaports, owned or operated by Iran Air Cargo
and Iran's Islamic Republic of Iran Shipping Lines (IRISL),
provided there are reasonable grounds to believe that the
aircraft or vessel is transporting prohibited items under
UNSCR 1803 or UNSCRs 1737 or 1747.

EXERCISE VIGILANCE REGARDING IRISL ACTIVITIES

-- We urge you to take into account and emphasize to
companies in your jurisdiction the significant risks of
conducting business with IRISL.

-- Specifically, we urge you to exercise vigilance with
regard to all IRISL-related transport of goods through your
jurisdiction, and any financial support for those transfers,
in light of paragraphs 9 and 11 of UNSCR 1803 mentioned
above. This vigilance will also facilitate your
implementation of the provisions of UNSCRs 1737 and 1803 that
require states to take steps to prevent the transfer through
or from their territories of certain items to or for the
benefit of Iran.

-- We urge you to issue an advisory to companies involved in
the shipping industry in your jurisdiction to encourage them
to practice enhanced due diligence when dealing with IRISL,
since companies conducting business with IRISL could
facilitate - unwittingly - transfers prohibited by UNSCRs
1737, 1747, and 1803.

-- We would note that potential delays caused by inspections
conducted in response to the call in UNSCR 1803 or cargo
seizure aboard IRISL vessels could add costs to businesses
that choose to continue to ship legitimate cargoes through
IRISL.

-- We also request that you not share this information with
any third parties.

INTERDICTIONS OF IRISL CARGO INVOLVING DESIGNATED ENTITIES

-- Cargoes on four IRISL vessels were interdicted in 2007
because they were transporting dual-use items to entities
that have been sanctioned by the UN Security Council for
their role in Iran's nuclear missile programs, or to entities
acting on their behalf. All of the following activities
occurred after the UNSC imposed sanctions on the entities
involved, through the adoption of UNSCRs 1737 (December 2006)
and 1747 (March 2007):

- An IRISL vessel in late 2007 was carrying potassium
perchlorate destined for Iran's Defense Industries
Organization (DIO). Potassium perchlorate can be used as a
propellant for artillery rockets and can potentially be used
to produce the solid rocket propellant oxidizer ammonium
perchlorate.

- An IRISL vessel in mid-2007 was attempting to ship
electronic parts and machine tools, for possible use in
Iran's missile program, to a front company for the Sanam
Industrial Group (SIG) and an entity that has procured for
the Shahid Bakeri Industrial Group (SBIG). SIG and SBIG have
been designated in UNSCRs 1747 and 1737, respectively, for
their involvement in Iran's missile program.

- Another IRISL vessel in mid-2007 was carrying cargo of
electronic parts and lathes that could contribute to Iran's
nuclear or ballistic missile program to a front company for
the SIG and an entity that has procured for SBIG.

- An IRISL vessel in mid-2007 was carrying aluminum sheets
and plates intended for Iran that could be used in Iran's
missile program. Documentation associated with this shipment
indicated a connection to Iran's DIO and a DIO subsidiary.
DIO was designated in UNSCR 1737 as an entity involved in
Iran's nuclear program.

IRISL EMPLOYING DECEPTIVE MEASURES

-- IRISL is increasingly employing deceptive measures to
disguise the end user, and/or destination of its cargo, and
IRISL's involvement in the transaction.

- During the period 2003 to 2006, we are aware of IRISL
ships diverting or attempting to divert from their originally
scheduled port calls, probably in order to avoid possible
inspection or seizure of missile-related cargo. Although
ships occasionally skip port calls for commercial reasons, we
have evidence these diversions were in response to perceived
threats of interdiction.

- In mid-2003 an IRISL vessel departed from North Korea
carrying missile-related and other military items destined
for Iran. Instead of going to its original destined port in
Iran, it changed course and deviated to the nearest available
Iranian port. We believe the change in course was due to
fear of being interdicted during its voyage.

- In early 2006, another IRISL vessel attempted to skip
one of its destined ports of call. We believe this ship was
carrying material for possible use in Iran's missile program.

- In mid-2006, another IRISL ship diverted course and
avoided making a scheduled port call, after becoming aware
that it might be inspected and its cargo seized in port. We
believe this ship was also carrying material for possible use
in Iran's missile industry.

-- Skipping port calls where cargo needs to be unloaded
probably costs IRISL tens of thousands of dollars, concerns
its customers, and from a business perspective makes no sense
for IRISL, which is a profit-making venture. It is also
likely that the ship captains are not aware of the nature of
the cargo that they are carrying, but know only that it is of
a special interest to the government of Iran.

-- We also know that IRISL directed its international offices
to obtain and use deceptive documents - including false bills
of lading that remove references to IRISL and the Iranian
recipient - to negotiate letters of credit with banks
refusing to deal with Iranian entities.

-- We are also aware that Iranian entities designated under
United Nations Security Council resolutions are using
deceptive tactics to obtain materials such as chemicals that
could be used in missile fuel. Again, these deceptive
tactics include concealing the true identity of the intended
Iranian recipient. This is done by changing the name of the
recipient to one that is not designated by the United Nations
Security Council and changing the dates on paperwork in an
attempt to provide cover for the shipment to avoid seizure
while in transit through other states' ports.

-- We are also aware that IRISL is likely adapting to
increased scrutiny of its sensitive cargoes. In late 2007,
IRISL officially changed the policy of one of its shipping
lines to avoid refueling while en route to Iran, thus
preventing the possibility of inspection and seizure of
sensitive cargo. This is the same line that had two of its
ships inspected in 2007. Both of these ships were carrying
materials, including chemicals prohibited by UNSCR 1737, for
Iran's ballistic missile entities that are designated by the
UN Security Council.

CONTINUED TRANSPORT OF ITEMS FOR DESIGNATED ENTITIES

-- IRISL continues to carry cargoes for entities designated
by the UN Security Council. As stated previously, four
shipments were interdicted in 2007 from IRISL vessels that
were carrying dual-use goods destined for entities designated
by the UN Security Council, including Sanam Industrial Group,
Shahid Bakeri Industrial Group, and the Defense Industries
Organization.

-- Other SBIG-related shipments include:

- In early 2008, an IRISL vessel was en route from Dalian,
China, to Bandar Khomeini, Iran, carrying a cargo of
materials that are useful in the production of solid-fuel for
ballistic missiles. The intended recipients were cover
companies for Iran's SBIG. SBIG is responsible for Iran's
solid-fueled ballistic missile program, and was designated in
UNSCR 1737.

- In mid-2007, an IRISL vessel was en route from Dalian,
China, to Bandar Abbas, Iran, carrying a cargo to a cover
company for Iran's Shahid Bakeri Industrial Group (SBIG).
The cargo is useful in the production of solid-fuel for
ballistic missiles.

-- Other DIO-related shipments include:

- In late 2007, an IRISL vessel was carrying a variety of
military-related goods from China to Iran that were consigned
to a known front company for Iran's DIO.

- In late 2007, an IRISL vessel loaded military-related
material supplied by Iran's DIO through a company using a
cover name at Bandar Abbas, Iran, for delivery to Syria's
defense industries.

- In mid-2007, an IRISL vessel also loaded military-related
cargo supplied by the DIO for Syria's defense industries.

-- We would note that, in addition to the designation under
UNSCRs 1737 and 1747, Sanam Industrial Group (SIG), SBIG, and
the DIO, have been designated (as subject to financial
sanctions) by the United States under domestic authority
(Executive Order (E.O.) 13382).

- SIG was designated under E.O. 13382 on July 18, 2006, for
its ties to missile proliferation. SIG is a subordinate of
Iran's Aerospace Industries Organization, previously
designated by the United States under domestic authority
(E.O. 13382), that has purchased millions of dollars worth of
equipment on behalf of AIO from entities associated with
missile proliferation.

- SBIG was designated under E.O. 13382 on June 29, 2005.
SBIG is an affiliate of Iran's AIO and is also involved in
Iran's missile programs. Among the weapons SBIG produces are
the Fateh-110 missile, with a range of 250 kilometers, and
the Fajr rocket systems, a series of North Korean-designed
rockets produced under license by SBIG with ranges of between
40 and 75 kilometers. Both systems are capable of being
armed with at least chemical warheads.

- The DIO was designated under E.O. 13382 on March 30, 2007,
for engaging in activities that materially contributed to the
development of Iran's nuclear and missile programs. DIO has
been identified by the IAEA as involved in centrifuge
component production for Iran's nuclear program.

END SECRET NONPAPER.

------------------
REPORTING DEADLINE
------------------

5. (U) Posts should report in a timely manner. Please slug
replies for ISN, T, TREASURY, IO and NEA. Please include
SIPDIS in all replies.

----------------
POINT OF CONTACT
----------------

6. (U) Washington point of contact for follow-up information
is Jennifer Chalmers, ISN/CPI, (202)
647-9715, CHALMERSJA@STATE.SGOV.GOV, or Anthony Ruggiero,
ISN/CPI, (202) 647-5181, RUGGIEROAJ@STATE.SGOV.GOV.

7. (U) Department thanks Posts for their assistance.
RICE

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