Testimony of Gary Milhollin
Professor, University of Wisconsin Law School and
Director, Wisconsin Project on Nuclear Arms Control
Before the Senate Committee on Foreign Relations
Subcommittee on Near Eastern and South Asian Affairs
May 6, 1997
I am pleased to appear today before this distinguished Subcommittee, which has asked me to discuss the question of who is helping Iran build weapons of mass destruction. The Subcommittee has also asked whether the United States needs to do more to discourage Iran’s helpers.
There is no doubt that Iran is aggressively trying to develop nuclear weapons and the missiles to deliver them. There is also no doubt that Iran has already built chemical weapons. Iran’s progress in all these efforts has depended almost entirely on outside help, and will continue to depend on it in the future.
Specific cases
A great deal is known about who is supplying Iran. I would like to begin by looking at some specific cases. I have listed them in the appendix to my testimony:
Case #1: The C-801 and C-802 anti-ship missiles.
Iran recently imported this new anti-ship missile from the China Precision Machinery Import-Export Corporation (CPMIEC). Admiral John Redd, our naval commander in the Persian Gulf, took the unusual step of complaining publicly about the sale. Iran appears to have up to 60 of these missiles so far, plus fast attack boats to carry them. The missiles are a threat to our sailors and to commercial shipping in the Gulf.
Unfortunately, these missiles may have been built with help from the United States. In the appendix to my testimony, I have listed the sensitive equipment that the U.S. Commerce Department approved for export to China Precision Machinery from 1989 to 1993. It includes things like computer workstations for the simulation of wind effects, analyzers and computer equipment. The ability to simulate wind effects is something the designer of an anti-ship missile could find quite useful. I would like to emphasize that all of this equipment was deemed so sensitive that it required an individual validated export license to leave the United States.
I have also attached a print-out from the database that my Project publishes. It is called the Risk Report. It lists the companies around the world that are suspected of contributing to the proliferation of weapons of mass destruction. Includes China Precision Machinery Import-Export Corporation, which was sanctioned in 1993 by the United States for exporting missile components to Pakistan. It markets the M-family of nuclear-capable missiles.
If the question is: Who has been helping Iran build anti-ship missiles to threaten our sailors? The answer may well be: The U.S. Commerce Department.
Case #2: Air surveillance radar.
Iran recently imported a powerful surveillance radar from the China National Electronics Import-Export Corporation. The radar is now part of Iran’s air defense system, and it can detect targets up to 300 kilometers away. If the United States ever comes to blows with Iran, American pilots will have to contend with it.
This radar too seems to have been built with help from the United States. In the appendix to my testimony, I have listed the sensitive, controlled equipment that the U.S. Commerce Department approved for export to China National Electronics from 1989 to 1993. It totals $9.7 million. It includes things like equipment for microwave research, a very large scale integrated system for testing integrated circuits, equipment for making semiconductors, and a shipment of computer gear worth $4.3 million. All of this equipment appears highly useful for developing radar, and all of it was deemed so sensitive that it required an individual validated export license to leave the United States.
If the question is: Who has been helping Iran build air defenses? The answer, again, may well be: The U.S. Commerce Department.
I would like to point out that in these two cases, the exports were all approved under the Bush Administration. I urge the Subcommittee to obtain and study the exports approved under the Clinton Administration. This Subcommittee has the right to obtain all Commerce Department records on export licensing. The generally pro-export stance of the Clinton Administration leads one to suspect that China is importing even more sensitive high-technology from the United States today. I cannot emphasize too strongly the need for effective Congressional oversight of our export licensing process. The lack of Congressional oversight was one of the main reasons why so the Commerce Department approved so many sensitive American exports to Iraq before the Gulf War.
Case #3: A fusion reactor.
In 1993-94, the Institute of Plasma Physics of the Chinese Academy of Sciences transferred a nuclear fusion research reactor to the Azad University in Tehran. The reactor is a training device ostensibly used for peaceful purposes. As we know, however, Iran is using its nuclear knowledge to build nuclear weapons. In addition to supplying Iran, the Academy has helped develop the flight computer and the nose cone for the Chinese DF-5 intercontinental missile, which can target U.S. cities with nuclear warheads. The Academy has also studied the effects of underground nuclear weapon tests and ways to protect against nuclear explosions.
Despite all these activities, and despite being a well-known contributor to Iran’s nuclear program, the Academy of Sciences managed recently to import an American supercomputer. In March 1996, California-based Silicon Graphics Inc., sold the Academy a powerful supercomputer without bothering to obtain a U.S. export license. The computer is now part of a network linking all of China’s high-tech institutes and universities, which means the computer is accessible to anyone in China who is designing a nuclear weapon or a strategic missile.
So if the question is: what happens to a Chinese organization that helps Iran do nuclear research? The answer is: It can import an American supercomputer.
Case #4: Uranium exploration.
The Beijing Research Institute of Uranium Geology (BRIUG) prospects for uranium around the world. Attached to my testimony is a picture of this Institute prospecting in Iran. Any uranium it finds is likely to go directly into Iran’s nuclear weapon program. This Institute is part of the China National Nuclear Corporation (CNNC). I have also included a picture of the Deputy Chief of the China National Nuclear Corporation posing with Reza Amrollahi, Vice President of Iran and President of the Atomic Energy Organization of Iran.
CNNC has been implicated in the sale of ring magnets to the A. Q. Khan Research Laboratory in Pakistan, which enriches uranium for nuclear weapons. CNNC is also involved in the development of Pakistan’s secret nuclear reactor at Khusab and a CNNC subsidiary is currently constructing a power reactor for Pakistan at Chashma. CNNC would be the key player in any nuclear cooperation agreement that might be implemented between the United States and China. Right now, the Administration, under pressure from Westinghouse, is planning to revive the cooperation agreement that has been stalled since 1984 because of China’s bad proliferation behavior.
If the question is: What happens to a Chinese organization that helps Iran prospect for uranium and helps Pakistan make nuclear weapons? The answer is: Westinghouse and the Clinton Administration try to find a way to sell it American nuclear technology.
Patterns of supply
In addition to these specific cases, there are patterns of supply. These too are well known. In 1995 I discovered, and wrote in the New York Times, that the United States had caught China exporting poison gas ingredients to Iran, and that the sales had been going on for at least three years. The State Department sanctioned the front companies that handled the paperwork, but did nothing to the Chinese sellers for fear of hurting U.S. trade relations.
China’s poison gas shipments have only become worse since then. In 1996, the press reported that China was sending entire factories for making poison gas to Iran, including special glass-lined vessels for mixing precursor chemicals. The shipments also included 400 tons of chemicals useful for making nerve agents.
The result is that by now, in 1997, China has been outfitting Iran with ingredients and equipment to make poison gas for at least five years. When I spoke to U.S. officials recently, I asked them whether there was any change in China’s export behavior on poison gas. They said that the poison gas sales had continued to the present time, unabated. On April 10, 1997, in testimony before a subcommittee of the Senate Committee on Governmental Affairs, Deputy Assistant Secretary of State Einhorn confirmed this fact.
There is no reason to think this pattern will change as long as the United States follows its current policy of “constructive engagement.” Last fall, the executive branch finished a number of studies on China’s missile and chemical exports to Iran and Pakistan. The studies contained all the legal and factual analysis necessary to apply sanctions, but they have lain dormant since then. The State Department has chosen not to complete the administrative process because if it did, it would have to apply sanctions and give up its engagement policy. At present, the sanctions law is not achieving either deterrence or punishment, as Congress intended.
This lack of an American reaction has encouraged China to harden its position. China is now saying, explicitly, that it will not even talk to us about missile and chemical proliferation unless we are willing, at the same time, to discuss restraints on our arms sales to Taiwan. The arms sales, of course, are caused by China’s threat to Taiwan. And to make matters worse, the Chinese are beginning to complain about our policy of providing theater missile defenses to countries like Japan that might be vulnerable to Chinese missile attacks. The Chinese say that this is another form of missile proliferation.
Nuclear blackmail
In addition to poison gas technology, China is also helping Iran in the nuclear domain. China has agreed to sell Iran a 25 to 30 megawatt nuclear reactor, which is an ideal size for making a few nuclear weapons per year. And China has also agreed to sell Iran a plant to produce uranium hexaflouride from uranium concentrate.
The hexaflouride plant is essential to enrich uranium for use in atomic bombs. Bombs fueled by enriched uranium have become the holy grail of developing countries trying to join the nuclear club. Such bombs are easier to make than those fueled by plutonium because uranium is easier to work with, less toxic, and easier to detonate with confidence that a substantial nuclear yield will result. Iraq was close to making a uranium bomb when the Gulf War began. The first bomb ever dropped was a uranium bomb that the United States released over Hiroshima without having to test it.
There is no peaceful use for enriched uranium in Iran. Enriched uranium is used to fuel reactors, but the only reactors in Iran that could use such fuel are being supplied by Russia, which is also supplying their fuel. The conclusion has to be that Iran wants to use this plant to make atomic bombs. The fact that China is even considering this deal shows that China is quite ready to put nuclear weapon-making capability into the hands of what the United States regards as a terrorist nation.
These two sales have not been finalized. In effect, they are being held over our heads like swords. If we don’t agree to implement our stalled nuclear cooperation agreement with China, which would allow China access to American nuclear technology, then China will complete these two dangerous export deals with Iran. This is essentially nuclear blackmail.
Russia is Iran’s other main nuclear supplier. In 1995, Russia agreed to supply Iran two light water power reactors plus a string of “sweeteners.” The “sweeteners” are sensitive items that should not in good conscience be exported, but which suppliers throw in to sweeten a larger deal. In this case, the sweeteners were a centrifuge plant to enrich uranium, a 30-50 megawatt research reactor, 2000 tons of natural uranium, and training. The centrifuge plant was canceled; the training is apparently going forward; the status of the research reactor and the uranium is unclear.
This deal too included some blackmail. The enrichment plant would only serve to make nuclear weapons, for the reasons I have already stated, and the same is true of the natural uranium. The research reactor would have been ideal, like the Chinese one, for making a bomb or two per year. Minatom, the Russian Nuclear Energy Ministry, was quite prepared to supply all of these items. Minatom only agreed to cancel or suspend them in a “compromise” to make the power reactor deal look better. The message from the Russians is clear: If you don’t like the reactor deal, how would you like a centrifuge deal?
Missiles
Both China and Russia are helping Iran make missiles. In June, 1995, the New York Times reported that the Central Intelligence Agency had concluded that China had supplied “dozens and perhaps hundreds” of missile guidance systems to Iran, along with computerized machine tools. In July, Jane’s Defense Weeklyreported that U.S. officials had confirmed that China had sold Iran rocket propellant ingredients as well as the guidance components. This case is the subject of one of the studies that is now languishing in the State Department.
In February of this year, the Washington Times reported that Russia had sold Iran plans for building the 1,240-mile range SS-4 missile, together with guidance components, and that U.S. Vice President Al Gore protested the sale during talks with Russian Prime Minister Viktor Chernomyrdin. If this report is true, it could help Iran take an important step forward in its nuclear missile program. According to the Nuclear Weapons Databook, the SS-4 is a single-stage, liquid-fueled missile capable of carrying a one megaton nuclear warhead. Its diameter is 1.65 meters (65 inches), almost twice that of Iran’s existing Scud-B. The larger diameter of the SS-4 would allow Iran to mount a much larger warhead, thus reducing the problem of miniaturization for a first-generation nuclear device.
Realistic export controls
Because the United States has little diplomatic leverage with Iran, export controls are the main vehicle for impeding Iran’s efforts. Unfortunately, the Clinton Administration’s decision to slash export controls had made it much easier for Iran to get what it needs.
Dubai is an example. In our database, we have listed 22 Iranian companies operating in Dubai’s free trade zone, the main purpose of which is to handle re-exports, frequently to Iran. These companies are legally off-limits to American exporters because of the U.S. embargo against Iran, but the companies are probably getting U.S. goods anyway because U.S. exporters have no way of knowing the companies are Iranian. The U.S. Commerce Department has never published a list of Iranian companies operating in Dubai. In fact, after the Commerce Department’s recent decontrol of high-speed computers, U.S. companies can now ship powerful supercomputers (operating at up to 7 billion operations per second) to buyers in Dubai without an export license. And because Dubai has no effective export control system, there is nothing to prevent these supercomputers from going on to Iran or anywhere else. Iran now imports more goods through Dubai than through its own ports. The lesson here is that you cannot slash controls on exports to everyone in the world except the “rogue nations” and expect the rogues not to get things through retransfers.
We need a global policy on export controls, but we don’t have one. The United States is following the same policy toward China today that it followed toward Iraq before the Gulf War. It can be summed up as: “Hold your nose and export.” China’s nuclear, chemical and missile exports to Iran and Pakistan have been greeted by the same American silence that greeted Iraq’s effort to smuggle nuclear weapon triggers out of the United States before the Gulf War. Rather than apply sanctions, or even complain publicly about Iraq’s violation of the Nonproliferation Treaty, the State Department chose “constructive engagement.” It would be better to maintain our influence with Saddam Hussein through trade, the State Department argued. By selling him what he wanted, we would bring Saddam into the mainstream of nations. Sanctions would only hurt American exporters and allow the Europeans and the Japanese to get all the business. It is now clear what that strategy produced. The United States was lucky. If Saddam had not been foolish enough to invade Kuwait, we would be facing a nuclear-armed Iraq with its shadow over most of the world’s oil supply.
America’s European allies are also following this same policy of constructive engagement toward Iran–a policy that the United States officially deplores. The United States now maintains a complete trade embargo against Iran, but our European allies have refused to join. They have refused in part because they want the export earnings, but also because they regard the U.S. position as hypocritical. They justly observe that the Clinton Administration, while giving lip-service to arms control and nonproliferation, routinely subordinates these objectives to commercial interests. The Administration decided at the outset of its tenure to promote U.S. exports as its primary foreign policy objective. But if the United States can hold its nose and trade with China, why can’t the Europeans and the Russians hold their noses and trade with Iran? In fact, most of the countries that worry Washington are interconnected, so the failure to confront proliferation by one usually means there will be a failure to confront proliferation by others.
I believe that Iran will acquire nuclear weapons within the next ten years unless something intervenes to stop the current effort. If the Gulf War had not intervened to stop Iraq, Saddam Hussein would have had nuclear weapons by now. When Iran does get the bomb, the Clinton Administration’s decision to slash export controls will be one of the main reasons for Iran’s success.
Product: C-801 and C-802 anti-ship missiles
Supplier: China Precision Machinery Import-Export Corporation (CPMIEC)
Comments: Iran has been steadily increasing its military presence in the Persian Gulf, and according to Admiral John Redd, Commander of U.S. naval forces attached to the Central Command, has tested a ship borne C-802 anti-ship cruise missile in January 1996. These missiles are deployed on Hudong Fast Attack Craft also supplied by China in 1994. Iran is believed to have obtained about 60 of the missiles, which are capable of destroying a warship, and could also pose a significant threat to commercial shipping in the Gulf. Iran reportedly tested a shore-launched C-802 in December 1995.
The China Precision Machinery Import-Export Corporation (CPMIEC) manufactures and markets the C-802. It is a long range, sea-skimming, multi-purpose anti-ship missile, powered by a turbojet engine. It can be deployed on warships, coastal bases, and aircraft. It can carry a warhead at high subsonic speed (Mach 0.9) to a range of 120 kilometers (75 miles) and is considered to be more sophisticated than the older Silkworm.
Iran has also obtained and deployed the C-801 anti-ship missile from CPMIEC. The smaller C-801 has a range of 40 kilometers and can also travel at high subsonic (Mach 0.9) speeds.
China Precision Machinery was sanctioned by the U.S. government in August 1993 for missile proliferation activities.
U.S. Exports: U.S. Commerce Departments records show that the following items were approved for export to CPMIEC from 1989 to 1993:
- modems for data transmission – $32,628
- modems for data transmission – $6,630
- cables and adapters for a macroware system – $45,834
- computer workstation for simulation of wind effects – $43,700
- analyzers – $4,876
- computer equipment – $7,707
Total: 141,375
Case #2
Product: JY-14 three-dimensional tactical air surveillance radar
Supplier: China National Electronics Import-Export Corporation (CEIEC)
Comments: According to U.S. Naval Intelligence, Iran recently acquired this tactical air surveillance radar from China. It can provide long-range tactical surveillance as part of an automated tactical air defense system. It can detect targets up to 300 kilometers away and at altitudes up to 75,000 feet, even when subjected to high electronic clutter or jamming. The system also provides automatic tracking and reporting of up to 100 targets. CEIEC also manufactures cryptographic systems, radars, mine detection equipment, fiber and laser optics, and communications technologies and is overseen by the Ministry of Electronics Industry (MEI), which is also known as the China Electronics Industry Corporation (CEIC) or Chinatron.
U.S. Exports: U.S. Commerce Departments records show that the following items were approved for export to CEIEC from 1989 to 1993:
- radio communication service monitor – $21,754
- computer equipment and software – $4,375,000
- personal computers and processor boards – $1,579,830
- protocol tester for telecommunications – $4,100
- equipment for basic microwave research – $10,916
- traveling wave tube amplifier – $33,600
- microwave frequency counter – $6,124
- statistical multiplexer systems and accessory boards – $75,632
- statistical multiplexers for use in data communications network – $65,120
- integrated circuits – $17,326
- computer equipment – $46,022
- computer equipment – $29,094
- equipment for circuit board design – $9,580
- computer chips – $1,820
- computer software – $105,000
- equipment for semiconductor manufacture – $107,000
- equipment for sweep generators for resale to Ministry of Machine Building and Electronics Industry – $32,000
- equipment for semiconductor wafer testing – $82,610
- computer equipment – $1,924
- computer equipment – $10,457
- computer equipment for oil reservoir numerical simulation – $92,916
- computer equipment – $32,500
- switching exchanges – $1,269,047
- phosphorus oxychloride (nerve gas precursor) for transistor manufacture – $7,397
- export telephone system – $15,000
- circuit design software – $243,160
- VLSI system to test integrated circuits – $1,315,000
- transistors and amplifiers – $13,648
- electronic equipment – $32,610
- equipment for electronic component testing – $60,000
Total: $9,696,117
Case #3
Product: Tokamak nuclear fusion reactor
Supplier: Chinese Academy of Sciences, Institute of Plasma Physics
Comments: The Chinese Academy of Sciences’ Institute of Plasma Physics transferred a HT-6B Tokamak nuclear fusion research facility to the Azad University in Tehran in 1993-94. The Institute designed and developed the Tokamak in the mid-1980s and successfully operated the unit for 10 years, after which it was transferred to Azad. In 1994, the Institute sent technicians and engineers to Azad to assist in the unit’s installation and debugging, with the understanding that the two sides would continue joint nuclear fusion research in the future.
U.S. Exports: Despite being a well-known contributor to Iran’s nuclear program, the Academy of Sciences managed recently to import an American supercomputer. In March 1996, California-based Silicon Graphics Inc., sold the Academy a powerful supercomputer without bothering to obtain a U.S. export license. In addition to supplying Iran, the Academy has helped develop the flight computer for the Chinese DF-5 intercontinental missile, which can target U.S. cities with nuclear warheads. The Academy’s Mechanics Institute has also developed advanced rocket propellant, developed hydrogen- and oxygen-fueled rockets, and helped develop the nose cone for the nuclear warhead of the DF-5. Its Shanghai Institute of Silicate successfully developed the carbon/quartz material used to shield the tip of the DF-5’s reentry vehicle from the heat created by friction with the earth’s atmosphere. The Academy’s Institute of Electronics has built synthetic aperture radar useful in military mapping and surveillance, and its Acoustic Institute has developed a guidance system for the Yu-3 torpedo, together with sonar for nuclear and conventional submarines.
In the nuclear field, the Academy has developed separation membranes to enrich uranium by gaseous diffusion, and its Institute of Mechanics has studied the effects of underground nuclear weapon tests and ways to protect against nuclear explosions. It has also studied the stability of plasma in controlled nuclear fusion. Its Institute of Electronics has developed various kinds of lasers used in atomic isotope separation.
Case #4
Product: Uranium mining exploration
Supplier: Beijing Research Institute of Uranium Geology (BRIUG)
Comments: BRIUG conducts scientific exchanges with Iranian and Pakistani nuclear scientists.
As part of the China National Nuclear Corporation (CNNC), BRIUG carries out research on radio metrical and conventional geophysical uranium prospecting methods and conducts geological interpretations throughout China using satellite images. It develops and designs spectrometers, laser fluorometers for trace uranium analysis, mineral inclusion analyzers, scintillation radon analyzers, scintillation spectrometers, laser analyzers for trace substances, and high and low frequency dielectric separators. BRIUG also conducts research on geological disposal of nuclear waste, and possesses scientific equipment including neutron activation analyzers, electron microscopes, electron microprobes, mass spectrometers, X-ray fluoro-spectrometers, X-ray diffractometers, infrared spectrophotometers, ultraviolet spectrophotometers, atomic absorption spectrophotometers, laser raman spectrophotometers, fluoro-spectrophotometers, gas chromatography analyzers, fluid chromatography analyzers, image processing system and computer and color plotter systems.
BRIUG’s parent, CNNC has been implicated in the sale of ring magnets to the A. Q. Khan Research Laboratory in Pakistan, which enriches uranium for nuclear weapons. CNNC is also involved in the development of Pakistan’s secret research reactor at Khusab and a CNNC subsidiary is currently constructing a power reactor for Pakistan at Chashma.
Case #5
Product: High-grade seamless steel pipes
Supplier: Rex International (Hong Kong)
Comments: Owned by China North Industries (Norinco), Rex is known to have acted as a broker for numerous deals between Norinco and the Middle East. Rex reportedly handled a shipment of high-grade seamless steel pipes, suitable for use in chemical or explosives manufacturing, to an Iranian chemical weapon plant. The consignee was Iran’s Defense Industries Organization (DIO), a notoriously bad destination. The pipes were reportedly shipped from Spain to Hong Kong and then to the Iranian port of Bandar Abbas.
Rex International Development was founded in 1982 as a joint venture between Hong Kong entrepreneur T. T. Tsui and Norinco. It functioned as a broker for Norinco’s business in commercial high explosives, served as Norinco’s window on the world arms markets and as a link to the international financial system through Hong Kong.
Employees of Norinco were indicted in 1996 by the United States for illegally conspiring to import 2,000 fully automatic AK-47 assault rifles into California intended for street gangs. In addition to AK-47s, Norinco develops and manufactures armored fighting vehicles, howitzers, mortars, rocket launchers, antiaircraft weapons, anti-tank missile systems, small arms, ammunition, radars, sighting and aiming systems, high-performance engines, and nuclear/biological/chemical warfare protection systems, sensor-fuzed cluster bombs, optical-electronic products, explosives and blast materials, light industrial products, fire-fighting equipment, and metal and non-metal materials. Norinco was established in 1980 with the approval of the State Council of China, and is overseen by the Commission on Science, Technology and Industry for National Defense (COSTIND). Norinco subsidiaries in the U.S. include: Beta Chemical, Beta First, Beta Lighting, Beta Unitex, China Sports (California), Forte Lighting, Larin, NIC International (New Jersey).
Case #6
Product: “Silkworm” anti-ship missiles
Supplier: China Nanchang Aircraft Manufacturing Corporation
Comments: Iran has deployed Chinese HY-2 “Silkworm” anti-ship missiles along the Iranian coast of the Persian Gulf, on the island of Abu Musa in the middle of the Persian Gulf, on Qeshm Island and Sirri Island. The missiles are Chinese modifications of the Soviet SS-N-2 Styx missile, and can carry 1000 lb. warheads over a range of 50 miles at high subsonic (Mach 0.85) speeds. They can be equipped with either radar or infrared guidance systems, and thus can threaten U.S. and other ships transiting the Persian Gulf and the Strait of Hormuz, through which one-fifth of the world’s oil supply passes. Iran used Silkworms during its war with Iraq to attack shipping in the Gulf. Iranian forces fired an improved version of the Silkworm missile during military exercises in late November 1996.
U.S. exports: U.S. investigators believe that CATIC (China National Aero-Technology Import-Export Corporation), a powerful state-owned Chinese company, intentionally misled American officials in order to import sensitive American machine tools that were later diverted to forbidden military purposes. CATIC, China National Aero-Technology and China National Supply and Marketing Corporation imported the machines under export licenses issued by the U.S. Commerce Department with the stated purpose of making civilian aircraft. The machines had been used previously to make parts for the B-1 strategic bomber. The machines were shipped to China between September 1994 and March 1995 by the McDonnell-Douglas Corporation and were destined for CATIC’s Beijing Machining Center. The Machining Center, however, did not exist at the time the licenses were granted and was never created. Instead, the tools were illegally sent to other locations, including the China Nanchang Aircraft Manufacturing Company, maker of the Silkworms.