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Washington Levies Sanctions for WMD-Related Transfers to Iran
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June 2002

Alex Wagner

The Bush administration imposed sanctions on 12 Chinese, Moldavian, and Armenian firms and individuals May 9 for transferring items to Iran that could assist Tehran with missile development or the production of chemical or biological weapons.

The administration levied the sanctions under the Iran Nonproliferation Act of 2000, which mandates penalties for entities that transfer to Iran equipment and technology controlled under multilateral export control regimes. These informal arrangements include the Australia Group and the Missile Technology Control Regime, which seek to coordinate member states’ policies on chemical and biological weapons-related and missile-related exports, respectively.

The sanctions, which are effective for two years, specifically bar the U.S. government from providing assistance to or engaging in business with any of the sanctioned entities, and they effectively prevent U.S. companies from doing so. Several of the entities are already under U.S. sanctions, but at a May 16 press conference State Department spokesman Richard Boucher said that imposing further penalties served to extend the time the entities remain under sanctions.

Little information about the transfers that triggered the sanctions is publicly available. According to a U.S. official, the State Department is “not in a position to describe the transfers or the roles of the entities in them.”

However, according to intelligence officials cited in a May 20 Washington Times article, some of the transfers by Chinese entities involved glass-lined equipment, which could be used while developing chemical weapons. The report also cited officials claiming that other Chinese entities were sanctioned for selling cruise missile components to Iran.

Of the eight penalized Chinese entities, Liyang Chemical Equipment Company, China National Machinery and Electric Equipment Import and Export Company, and Chinese citizen Q. C. Chen were sanctioned in January for transfers controlled by the Australia Group. At that time, the State Department said Chen had provided assistance to Iran’s chemical weapons program. (See ACT, March 2002.)

The administration is also sanctioning Zibo Chemical Equipment Plant, most likely for chemical weapon-related transfers; Wha Cheong Tai Company; China Shipbuilding Trading Company; China National Aero-Technology Import and Export Corporation; and China Precision Machinery Import/Export Corporation, which was sanctioned in June 1991 for transferring M-11 short-range missiles to Pakistan.
The Chinese Foreign Ministry denounced the U.S. sanctions as “unreasonable” and emphasized Beijing’s strict adherence to its international export control obligations.

Although Chinese entities have been extensively penalized in the past for transfers of weapons of mass destruction-related technology to the Middle East, the new measures mark the first time that Moldavian and Armenian entities have been sanctioned.

A May 9 Reuters report quoted a senior administration official suggesting that the Armenian and Moldavian companies were fronts for Russian entities. However, in an interview another administration official denied the connection, stating that there is “no evidence that these entities are acting as fronts for other entities or any government.”

Citing Moldavian government sources, BASA-press, a Moldavian news agency, reported on May 17 that one of the newly sanctioned companies, Cuanta, SA no longer exists. The report described Cuanta as a military research facility that was once a manufacturer of sophisticated telecommunications systems for guided missiles. The Bush administration also sanctioned Cuanta’s former manager, Mikhail Pavlovich Vladov.

Armenia’s Lizen Open Joint Stock Company and Armenian national Armen Sargsian were also penalized. At a May 18 press conference, Armenian Foreign Minister Vardan Oskanian confirmed that Lizen sold certain materials to Iran but said the company did not intend “to assist the weapons of mass destruction production or research in other countries.” Oskanian said the company was “probably told at some point that it could lead to problems for them, but, nevertheless, they apparently chose to go ahead with the sale, and they are now included in that list.”