In Shadow of Nuclear Deal, State and Commerce Sanction Iran Proliferators

The U.S. State Department issued a new round of sanctions against individuals and companies linked with Iranian proliferation on September 2,[1] even as the nuclear deal with Iran moved closer to clearing key procedural hurdles in Congress.  About one month earlier, the Commerce Department restricted trade with ten entities in China and South Korea because they illicitly procured sensitive U.S. items for end use in Iran.  These designations may signal the White House’s commitment to maintaining certain kinds of sanctions against Iran even after the nuclear agreement enters into force.  The sanctions target firms supporting Iran’s missile program, as well as entities tied to Iran’s sponsorship of terrorism.

The State Department sanctions were imposed under the Iran, North Korea, and Syria Nonproliferation Act (INKSNA), which punishes entities for the transfer of technology and goods related to weapons of mass destruction or missile systems.  Under the terms of the nuclear deal, the United States has agreed to seek legislation to lift the INKSNA sanctions on the Iranian “acquisition of nuclear-related commodities and services of nuclear activities contemplated in the” nuclear agreement, though not until “transition day,” or about 2023.  From that point forward, the United States will treat Iran like “other non-nuclear-weapon states” under the Nuclear Non-Proliferation Treaty for the purposes of nuclear-related procurement.[2]  INKSNA’s other restrictions would presumably remain in place.

However, the measures imposed by the INKSNA are not meaningful penalties for the type of entity that the Act generally targets, and the sanctions last only two years.  Sanctioned entities cannot receive U.S. government assistance, procure from the U.S. government, or purchase U.S. Munitions List items or any U.S. dual-use items that require a license.  These measures do apply to any successor, subsidiary or subunit of the sanctioned entity.[3]

The new State Department designations include well-known and previously sanctioned Iranian entities, such as the Iranian Revolutionary Guard Corps’ Qods Force and its commander, Qasem Soleimani.  Soleimani’s apparent inclusion in a listing of individuals to be removed from European Union sanctions under the nuclear deal set off a firestorm of controversy over the summer, before E.U. officials confirmed that Soleimani would remain under sanctions for terrorism and human rights violations.

In addition, the designations renew sanctions against established suppliers to Iran’s missile program, like infamous Chinese proliferator Li Fang Wei (a.k.a. Karl Lee) and his company LIMMT Metallurgy and Minerals Company Ltd.  Other entities on the State Department list are targeted for the first time, including:

• Eliya General Trading (United Arab Emirates): This company was linked in a leaked State Department cable to procurement for Iran’s missile program.  According to an August 2009 cable, Eliya “was working to provide specialty alloys produced by the German firm NMT to Iran’s Kian Metals Company.”  Specifically, Eliya General Trading sold Kian Metals 195 metric tons of aluminum and titanium, including one alloy suitable for the production of missile motor cases and reentry vehicles for ballistic and cruise missile systems.  “Kian Metals is a cover name used by Iran’s Samen al-A’emmeh Industries Group (SAIG) […] and Sanam Industries Group (SIG),”[4] according to the State Department.  SAIG (also known as the Cruise Missile Industry Group) and SIG have both been sanctioned by the U. N. Security Council[5] and are subordinate to Iran’s Aerospace Industries Organization (AIO), which oversees Iran’s missile production.

• Rock Chemie (Iran): This company claims to be one of the largest chemical manufacturers and exporters in Iran.[6]  According to a January 2012 report from Taraf Online, Turkish officials reportedly seized four Iranian trucks bound for Syria containing ballistic missile parts originating from Rock Chemie.  The cargo reportedly included four large cylindrical tanks measuring six meters in length, heat resistant materials, and 66 tons of sodium sulfate. Shipping documents listed the cargo as tanning chemicals.[7]

The designations also target a Turkish company previously sanctioned for ties to Iran’s missile program:

• Multimat Ic Ve Dis Ticaret Pazarlama Limited (a.k.a Multimat Import and Export): This company is already on the U.S. Treasury Department’s blacklist, and has been sanctioned by the European Union, Japan, and several other governments.  It is not slated to be removed from the E.U. sanctions list until “transition day.”[8]  According to the Treasury Department, Multimat is part of a multi-million dollar procurement network supporting Iran’s Aerospace Industries Organization.  The company is run by Milad Jafari, himself sanctioned by a number of governments.  Reportedly, according to a 2006 investigation by Turkish customs, Multimat was involved in shipping dual-use materials, including aluminium, steel, iron, and electronic equipment to Iran.

These State Department sanctions come just over one month after action by the U.S. Commerce Department to add ten individuals and organizations to its Entity List, many for “illicitly procuring sensitive U.S. items for unauthorized end-use in China and Iran.”[9]  In addition to eight Chinese firms, Commerce added to two South Korean entities to its List, including Korean Automation Industry (KAI) and Joseph Choi, an individual affiliated with KAI.  According to Commerce, KAI and Choi “violated U.S. export laws by supporting the illicit procurement efforts of ballistic-missile related parties in Iran since at least 2011.”