Saturday , 18 September 2021

How does Iran circumvent the sanctions on dual-use and military goods in Europe?

Radiozamaneh – The international military equipment and dual-use goods procurement network of the Islamic Republic of Iran is an extensive network operating in countries from East Asia to Europe, North America, South America and North Africa. This includes companies and individuals who provide military and dual-use equipment to Iran through secretive and dangerous means.

Instead of prioritizing the livelihoods and well-being of its citizens while helping to bring peace to the Middle East, the Iranian regime has made extensive international efforts since 2006 to buy dual-use goods from Western countries, despite UN arms sanctions and EU restrictions on exports of certain goods. These efforts have been aimed at completing and advancing the nuclear program and acquiring advanced military technology and equipment. In addition to dual-use goods and equipment, Iran seeks to obtain a variety of military weapons, which are mainly procured in black markets. While some European countries can track and identify the complex networks secretly involved in this business, Iran’s more hidden and covert business in these black markets are not easily traceable. 

Dual-Use Equipment: Dual-use refers to equipment, goods, machinery, and items, including both products and technologies, that can be used for both peaceful (non-military) and military purposes.

Even though the EU supports the commitment to the JCPOA agreement and disagrees with the return of UN sanctions against Iran and the activation of the trigger mechanism by the United States, they have continued to impose restrictive rules on the purchase and export of dual-use goods and military equipment against Iran until 2023. However, due to differences in laws, types of sanctions, and law enforcement by agencies in export fields in different European countries, it is left up to governments and companies to trade equipment with Iran. In recent years, a pattern can be seen which has been repeated by the Iranian regime and Western countries.

Quentin Michel

The EU’s restrictions on exports of dual-use equipment to Iran are ambiguous, and there are different interpretations of these laws. International media often use the word “sanctions” when they refer to export restrictions on Iran. Quentin Michel, a professor of political science at the University of Liège in Belgium, disagrees with the use of the word “sanctions” for dual-use goods. He explains for Zamaneh why he believes there are no real sanction on dual-use goods:

“By this definition, if there are restrictive laws, of course, it will be more difficult to export, because you have to respect and commit to a specific process. It will be easier if you do not have rules. Also, any agreement between countries in this regard or any sanctions will slow down the export process. If there are approved restrictions by the EU, EU countries must implement them. But you will be surprised if you know about the differences between the countries’ restrictions and what dual-purpose goods each country has.”

Those five steps to reduce fulfilled JCPOA’s commitments
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According to Quentin Michel, the implementation of export control laws for dual-use goods and military equipment in EU countries is overly complex and has major differences. Additionally, Michel explains that no sanctions are applied to the economic activity of European companies and that these companies only must ask the government for a legal permission to sell certain goods:

“If the relevant dual-use goods are among these goods, the company will have to ask a license from the national authorities to sell them. But some of these companies do not care about obtaining a license.”

Mark Akkerman

Due to the wide range of dual-use goods and the complexity of export rules, as well as the profits of European countries as a large part of this lucrative business with Iran, Zamaneh asked Mark Akkerman, researcher and investigative journalist at the NGO Stop Arms Trade (Stop Wapenhandel) in the Netherlands, about the mechanism and process of illegal exports of European countries.

Akkerman tells Zamaneh that the export of dual-use goods is not a problem itself, but in principle, the export of certain dual-use equipment is banned under UN and EU sanctions:

“Export of particular types of commodities with dual-use to Iran are essentially banned under the UN and EU sanctions. The fact that such exports have been gone through is to some extent because EU countries with the permission to export weapons have a wrong or soft position toward Iran (and it seems those commodities have not been sanctions or their use in Iran has not been scrutinized enough) or there was a case of illegal mediation by companies.”

In the continuation of this research, there will be a summary about a few operations of smuggling dual-use equipment and weapons to Iran from Italy and Germany. In a series of joint studies by Zamaneh and Danwatch about the export of dual-use goods and equipment to Iran, such trades through Italy, Spain, Germany, the Netherlands, Britain, and the United States will be covered in detail in separate articles. Another study also examined the export of large military weapons.

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Differences in export laws of European countries
In 2007, the European Union imposed restrictions on exports and trade of dual-use military equipment with Iran. The EU revised these regulations two years later, in 2009. These standards are legally imperative, but it is on the member states to choose their enforcement tools. Specifically, in Article 24 on dual-use equipment in the EU Regulation of 2009, member states are required to “take appropriate measures to ensure proper implementation” and to set “effective, proportionate and inhibitor” penalties for violations. Since the implementation of these laws and how they are enforced is the responsibility of countries, differences in the legal structure and culture of the member states of the EU affect how the laws are enacted. EU countries differ in six areas in this context.
 The first difference is in the rules and types of laws that EU member states have to control exports. Some countries, such as the Netherlands, prosecute such crimes under the General Economic (penal) crimes. Some others, like the UK, prosecute it under customs (penal) law, while other countries, such as Croatia, hold an option of using special export control laws.
 The second difference is in how much of this information is provided by countries in this case. Some countries, such as Germany and the United Kingdom, have enacted export control laws that provide a strict responsibility which means that it is more difficult to prevent prosecution by claiming to be unaware of the law.
 The third difference is the level and type of punishment that different EU countries have for such crimes. Whether the offense is classified as criminal or administrative influences the level of the punishment. In Cyprus, for example, the maximum penalty for intentionally violating export control laws is three years in prison, which is the minimum in the EU; while in Slovakia there are no prison penalties for export control offenses. In France, by contrast, the maximum prison sentence is 30 years. France has the highest penalty for such crimes in the EU.
 The fourth difference is about who is responsible for violating the export control laws of dual-use goods, whether it be individuals, institutions, or organizations. For instance, in the Netherlands, Slovenia, and the United Kingdom, both companies and individuals can be prosecuted. On the other hand, in Germany, it is not possible to prosecute a company.
 The fifth difference is regarding the different procedures and methods EU member states use to enforce their national laws. This can include the rules of criminal procedure that determine how a case is studied in a court. The authorities responsible for prosecuting such crimes also vary between countries. In addition, there are differences in the definitions of basic legal concepts in export control criminal cases, such as assistance and participation, effort, intent, negligence, and protection.
There are also organizational differences in how authorities oversee detecting, investigating, and pursuing operations in different countries. In most EU countries, customs make the initial assessment. However in some countries, the customs office (often one part of the customs office) may conduct the entire investigation. In other countries, the responsibility for the investigation may be with another institution such as the police, expert agencies, or intelligence and security services. In some cases, the prosecution may be even conducted by zones and districts, or by an expert unit.
 The sixth, and most important difference between EU countries, is that according to national priorities, different budgets are allocated to pursue export control of dual-use equipment.

Reference: Stockholm International Peace Research Institute (SIPRI)

Italian “Lady in black” and weapons and dual-use equipment export to Iran

Anna Maria Fontana, nicknamed the “black lady” by Italian media for her Islamic clothing, was one of the main actors in the smuggling of weapons and dual-use equipment to Iran. Fontana and her spouse, Mario Di Leva, had friendly relationships with senior Iranian authorities like Mahmoud Ahmadinejad. According to the Italian newspaper Ilmattino, the couple traveled regularly to the Middle East, specifically to Iran and Libya. They lived intermittently in Tehran for 17 years. After converting to converting to Islam, Mario di Leva changed his name to “Jafar” in respect of the sixth Shiite Imam.

Fontana also has had relations with the Islamic Revolutionary Guard Corps (IRGC) in recent years. She was involved in an international espionage case in 2006 to rescue two Israeli soldiers captured by Lebanese Hezbollah.

Anna Maria Fontana with former Iranian President, Mahmoud Ahmadinejad at a party of the Iranian embassy in Rome

According to a 2019 report by the Stockholm International Peace Research Institute (SIPRI), three Italian nationals were arrested on January 13, 2017 by the Italian Financial Police in Venice on a sentence issued by the Antimafia Investigative Direction (Direzione Investigativa Antimafia or DDA).

Annamaria Fontana and her husband Mario Di Leva, along with Andrea Pardi, CEO of the Italian Society of Helicopters (Società Italiana Elicotteri) – a company with expertise in the production of helicopters and new and used spare parts – have been charged with arms smuggling by a court. They were accused of sending dual-use equipment to Iran and ISIS supporters in Libya through an Iranian-based company between 2011 and 2015, as well as knowingly violating arms sanctions against Iran and Libya.

The three accused Italians’ illegal trade in Iran and Libya included the sale of Russian-made weapons, including anti-tank and surface-to-air missiles, helicopter spare parts, and different kinds of ammunition. According to the Italian news agency Il Centro, they were arrested by police before they could make their next deal. A Libyan national is the fourth accused person in this case.

Also, according to documents obtained by Italian attorney generals, Mario Di Leva intended to sell an ammunition factory to Iran. During interrogations, Di Leva admitted he was negotiating with the Ministry of Defense of the Islamic Republic to sell the machinery and technology needed to set up an ammunition factory.

According to the Italian news website, Corriere del Mezzogiorno, Pardi was sentenced to two years in prison, Di Leva to three years and eight months in prison and a fine of 8,000 euros, and Fontana to three years and six months in prison and a fine of 7,000 euros.

Left to right: Maio Di Leva, Anna Maria Fontana, Andrea Pardi

In addition to these three, six other people were arrested in Italy in March 2016, concerning the same judicial case in which four people were Iranian.

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Italy has always had close political and economic relations with the Islamic Republic of Iran since the very beginning years of the revolution. Italy is Iran’s largest business partner in the European Union. During a meeting with Italian Prime Minister Giuseppe Conte, in New York on October 25, 2016, current president of Iran Hassan Rouhani emphasized the friendly relations between Iran and Italy, and the development of economic and business relations between the two countries. Business relations between Iran and Italy in 2017 grew by 68% and the amount of trade between the two countries this year reached 2.4 billion and 400 million euros.

The business of Fontana and the other accused people in this case exposes the other side of the close and stable political-economic relations between Iran and Italy – a series of secret and hidden business relations to bypass the international arms sanctions against Iran. 

Pieter D. Wezeman, a senior fellow at the Military Expenditure Program at SIPRI, believes that European countries were often aware about illegal trading cases and that law enforcement and their affiliates have worked to track and prevent them:

“Law enforcement agencies sometimes have succeeded locally [to prevent these trades]. In the cases that ended up in the courts, we can see that they really succeeded in arresting few people who were involved in this illegal business. But for sure, Iran will also learn from its past activities. The Iranian authorities will change their network, and change the people they come to, and eventually the countries where they tried to buy the equipment they needed. Of course, they will try to find the weakest countries; countries where law enforcement agencies are less developed and have a higher potential for corruption.”

Pieter D. Wezeman emphasizes that there are different ways for Iran to purchase the equipment it needs. According to this expert, measuring the level of effort of European countries to prevent such activities is exceedingly difficult and complex.

Iran’s covert deals and uninterrupted efforts to procure military equipment from Germany

Iran has tried to acquire German dual-use technologies since concluding the nuclear deal (JCPOA) with the Western powers in July 2015. According to the German Domestic Intelligence Agency, German intelligence agents recorded 141 attempts by Iran to acquire technologies for “nuclear weapons development” in 2015, almost twice as many as the year earlier. Two-thirds of these cases, or about 100 cases, involved Iranian institutions.

According to the Financial Times, “Iran often targets so-called ‘dual-use’ technology that can be used simultaneously for non-military and military purposes.”

Also, according to Reuters News Agency, 32 attempts by Iran to buy equipment from Germany were detected and are either likely or definitively related to developing their nuclear and mass destruction weapons in 2016.In addition to attempts by the Iranian government to purchase such equipment, in 2012 the German Federal Attorney General arrested four German citizens suspected of exporting “industrial valves” to Iran in violation of EU sanctions. According to Reuters, the delivery of these goods was done in shipments during 2010 and 2011, and were part of an order of several million euros. In order to prevent the tracking of illegal exports of these goods to Iran, the shipments were declared to be exported to Azerbaijan and Turkey.

According to a report by SIPRI in 2019, the final user of these products was MITEC, the Modern Industries of Technology Company in Iran. This company was responsible for building the IR-40 heavy-water reactor at the Arak nuclear power plant, which is why this plant is on the list of EU’s nuclear sanctions against Iran.

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In 2011, Hossein Tanideh, a key person in Iran’s nuclear program abroad, with the help of Bekasar Industrietechnik GmbH, a German company that belongs to two other Iranian-German people named Gholam Ali and Kianzad Kazemi (a father and his son), bought industrial valves and sent them to Iran through a company registered in Turkey.

Hossein Tanideh had introduced himself to the Germans as a “refinery manager”. According to a witness in a court, the German intelligence service had been aware of Hossein Tanideh’s actions since 2009 and of his involvement in buying German-made nuclear valves for export to Iran. However, no serious action was taken to prevent these activities until 2012.

In February 2015, Iran Watch, a Washington based website that monitors Iran’s missile, nuclear, and chemical weapons programs, wrote that initial discussions of the shipments began in 2007, when an Iranian named Hossein Tanideh contacted Rudolf Mayer, owner of a German company called MIT-Weimar, to purchase industrial valves. The first shipments were prepared in October 2010 and sent to Iran.The initiator of the deal, Tanideh, fled Germany to Turkey. He was listed by the United States in a Specially Designated Nationals and Blocked Persons List (SDN) in July 2012, and his assets were frozen by the US Treasury Department’s Office of Foreign Assets Control (OFAC). He is known as part of the procurement network of Iran’s nuclear program and is sanctioned by the United States for his connections.

According to “Valves for Arak”, a report by two researchers named Daniel Salisbury and Ian J. Stewart, Hossein Tanideh was arrested by Turkish authorities in January 2013 and his request for extradition to Germany was not granted. The Iranian State News Agency (ISNA) also wrote about Hossein Tanideh and his arrest in Turkey on August 6, 2013: 

“It is alleged that Hossein Tanideh is wanted by Interpol for purchasing the equipment needed for Iran’s nuclear ballistic missile program.” 

According to ISNA, Tanideh was finally tried in court by the intercession of Hakan Fidan, the head of the Turkish National Intelligence Organization. While the case was being considered, Tanideh would be conditionally and temporarily released and a lawsuit would be filed against him in Turkey.

Police in Germany arrested Gholam Ali and Kianzad Kazemi in Hamburg in August on suspicion of circumventing European Union sanctions to deliver equipment to Iran that was ultimately used in the country’s nuclear program. Photo: Andreas Ulrich / DER SPIEGEL

Finally, Rudolf Mayer was sentenced to three years suspended imprisonment and a fine of 106 thousand euros, Gholam Ali Kazemi to four years in prison and a fine of 250 thousand euros, Kianzad Kazemi to two years and nine months suspended imprisonment, and Hamid Khoran (an Iranian-German businessman who was an interface between the Kazemis and Meyer) to 18 months of conditioned prison by a German court.

Perspective for the export of dual-use goods to Iran after the lifting of arms sanctions

Despite sanctions and restrictions imposed on Iran by the UN and the EU for exporting weapons and dual-use goods, in recent years some European companies have risked exporting such goods to Iran through various channels. The benefits of these illegal trades seem to outweigh the potential risks.

Companies that try to bypass the EU laws and keep trade with Iran secret often do so through fictitious or nominal companies in third countries to make it harder for regulators and law enforcement agencies in their home countries to track them down.

In response to how such transactions have taken place in various European countries despite restrictions, Pieter D. Wezeman told Zamaneh:

“Many law enforcement agencies in the European Union believe that export control organizations are trying to figure out how Iranian institutions, often through fictitious companies from countries other than Iran, can order their specific equipment, materials or parts that can be used by the Iranian arms industry to produce weapons. Tracing these cases is difficult. Europe’s borders are open. Iran’s arms industry and Iranian purchasing agencies have developed the skills and networks to achieve such goods during the years.”

The UN arms sanctions against Iran was lifted on October 18, 2020, but questions remained unanswered: Will the lifting of sanctions make European companies more willing to sell dual-use weapons and equipment to Iran? Will conditions be facilitated for Iran to be able to legally procure the equipment that they need?

Frank Slijper

Frank Slijper, who leads the arms trade project at the PAX Peace and Disarmament Organization in the Netherlands, told Zamaneh that the situation would not change much once the arms sanctions are lifted. Regarding how European countries work, he says:

“It makes no difference now for European companies and their export to Iran. The European arms sanctions will remain in place, at least until 2023. After that, the results of the nuclear deal between Iran and the other parties show what the EU will decide and do.”

Pieter D. Wezeman responded to the question in somewhat similar way:

“No, the situation will not change a lot. The European Union will continue to control its exports to Iran. There may no longer be a formal UN sanction, but a collective agreement on allowing arms or dual-use equipment to be exported to Iran is not acceptable in the current situation. And this has to do with how Iran uses its military weapons, because it increases Iran’s influence in the Middle East to achieve Iran’s specific goals in the region. These goals are not in line with what the European Union and the United States intend to support.”

While there is no clear perspective on dealing military weapons in Iran, and experts believe that the situation will not change quickly, officials in the Islamic Republic see the end of arms sanctions as an important achievement of the JCPOA: an achievement that paves the way for unrestricted weapons trade from “every source.”

Hassan Rouhani had previously said that Iran had nothing to achieve from the JCPOA nuclear deal. However on October 14, 2020, as the end of the arms sanctions approached, he described lifting the sanctions as one of the benefits of the JCPOA and addressed the deal’s opponents:

“Those who ask what the JCPOA has done for us, this is one of its benefits.” We have lifted the arms sanctions, and from Sunday we can buy and sell weapons from anyone we would like.”

The day after the end of the arms sanctions, Amir Hatami, the Minister of Defense of the Islamic Republic, stated that the country has advanced militarily and has increased demands of weapon purchases:

“Many countries came to us a year ago and we talked together. The Islamic Republic is ready for any sale and purchase of weapons, and of course we will sale them more widely.”

This is political rhetoric. On the other hand, the United States, in addition to its rhetoric by unilaterally withdrawing from the JCPOA and reinstating UN Security Council’s sanctions against Iran, has used all its efforts to prevent arms deals with Tehran. US Secretary of State Mike Pompeo issued a statement on Sunday, October 18, 2020 –  coinciding with the end of the arms sanctions on Iran – announcing that UN sanctions against Iran, including the arms sanction, would be returned on Monday, October 19, 2020.

On the same topic, Pompeo said:

“The United States is completely ready to use his internal authority to punish any person or entity that assists in the supply, sale or transfer of standard weapons to or from Iran, as well as those who provide technical training, financial and service support and other assistance related to such weapons.”

Following the implementation of the JCPOA agreement and the subsequent adoption of Resolution 2231, all UN sanctions against Iran, apart from the arms sanctions, were lifted. The arms sanctions were also lifted through the conditional solution that if five years after the JCPOA the International Atomic Energy Agency (IAEA) verifies that Iran has no undeclared nuclear activity, the arms embargo would be lifted. Also, during this period of five years, other countries were able to legally trade arms with Iran with the permission of the Security Council, but no country has done so.

The end of the UN arms sanctions does not necessarily mean facilitating the use of dual-use and military equipment for Iran, as EU exports restrictions continue to remain until 2023 and can also be extended. Given US pressure and unilateral sanctions against Iran, other countries will be cautious and Iran’s options will be limited to Russia and China.

Now that the arms sanctions against Iran have been lifted, if the government continues to face obstacles, will it use the same methods to purchase its dual-use goods and the weapons? Although it is difficult to predict what the Iranian government will do, continuing the legal transactions or smuggling of weapons and dual-use technologies means spending huge sums to develop a nuclear and missile program. This is notable given that the breadline for a family of four has been reached to 10 million tomans in October 2014.

The contentious political discourse of the Iranian regime and their nuclear ambitions have led to widespread economic sanctions, which will mainly press the citizens, the majority of whom have no role in the ambitions of Iran’s power-seeking regime. The bellicosity and domination of the Iranian regime in the region must be considered, as well as the costly payments in vicarious wars, rent capitalism, and systematic corruption within the country. The international sanctions, which are the result of the Iranian regime’s nuclear expansion, have given the dictatorship of Iran an excuse to justify mismanagement, inefficiency, structural corruption, and the suppression of any freedom-seeking voice. Ultimately, the main responsibility of a government towards its citizens should be to establish peace, welfare, social justice, and freedom for all.

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