More Cracks in Iran Sanctions

Last week saw the emergence of another illicit nuclear procurement effort by Iran. On May 13, Reuters reported that Czech authorities had stopped an attempt by Iran in January to purchase $61 million worth of compressors, which can be used in uranium enrichment.  Reuters had gained access to a report by a U.N. Panel of Experts.

This report comes on the heels of two other reports of sanctions evasion this month: the British government warned the U.N. Panel of “an active Iranian nuclear procurement network” involving two well-known Iranian proliferators, and Iran’s Mahan Air took delivery of nine large commercial aircraft worth over $300 million by using front companies and leasing arrangements.  Taken together, these developments raise questions about the durability of the sanctions against Iran and how illicit procurement will be dealt with if a final nuclear deal is reached.

Mahan Air’s scheme successfully breached sanctions that have exacted a heavy toll on Iran’s aviation industry.  It netted nine used Airbus jets that were reportedly once owned by Virgin Atlantic.  According to a May 11 report in the Financial Times, Mahan Air, which has been sanctioned by the United States and European Union for its ties to the Islamic Revolutionary Guard Corps (IRGC), is suspected of using Iraq’s Al-Naser Airlines as a front to buy aircraft from Europe.  The European sellers were apparently unaware of the final destination of the airplanes, as Mahan used a series of leasing arrangements and contracts to evade export controls.  The U.S. Treasury Department has implicated Mahan Air in sending advisers, weapons and funds to Syria and Yemen on behalf of the IRGC’s Qod’s Force.  Western authorities fear that the Airbus planes – eight Airbus A340s and one Airbus A320 manufactured between 2001 and 2009 – could be used for the same purpose.

Meanwhile, the Czech Republic, according to the Reuters report, blocked an attempted purchase by Iran in January of $61 million worth of compressors, which can be used in centrifuge cascades.  According to a draft of the U.N. Security Council’s Panel of Experts report, seen by Reuters, Iran attempted to buy the compressors from the U.S.-owned company Howden CKD Compressors based in Prague.  After false documentation intended to bypass export controls raised suspicions, Czech authorities blocked the transaction.  An earlier leak from the U.N. Panel of Experts revealed that the British government in April implicated Kalaye Electric and the Iran Centrifuge Technology Company (TESA) – two companies under international sanctions with well-established ties to Iran’s uranium enrichment program – in “an active Iranian nuclear procurement network.”

How will future illicit procurement efforts be handled?  According to the U.S. government, as part of a final deal with Iran a dedicated procurement channel will be established “to monitor and approve, on a case by case basis, the supply, sale, or transfer to Iran of certain nuclear-related and dual use materials and technology.”  And the arms and missile embargo on Iran “should remain in place for some time,” according to congressional testimony by U.S. Ambassador to the U.N. Samantha Power on April 15.

Presumably, sanctions would be the tool of choice to deter or punish any procurement outside of the “white channel.”  According to Ambassador Power, “We are going to secure an arrangement to allow for snapback in New York that doesn’t require Russian or Chinese support.”  Yet Russia’s U.N. Ambassador Vitaly Churkin, in comments on May 13, rejected a snapback mechanism: “There can be no automaticity, none whatsoever.”  Taken with Russia’s decision last month to lift its ban on the delivery of the S-300 air defense system to Iran, this is a sign that certain members of the P5+1 will likely be less resolute in upholding sanctions on Iran going forward, regardless of whether a final deal is reached.