Nuclear black markets: other countries and networks

http://www.iiss.org/EasysiteWeb/getresource.axd?AssetID=2255&type=full&servicetype=Inline&customSizeId=0

Pakistan has not been the only country to utilise the private sector and exploit loopholes in export control regimes in order to further a nuclear programme. The black and grey markets in nuclear technology and expertise have existed for decades. However, they became more significant following India’s ‘peaceful nuclear explosion’ in 1974, after which supplier nations began to impose more rigorous controls on nuclear commerce.
Previously, the transfer of nuclear materials that was essential to most would-be nuclear weapons states had generally taken place in the form of state-to-state transactions or espionage, or in the context of technology and material diverted from an overtly civilian nuclear programme. Tighter controls on state-to-state technology transfers over the past four decades have resulted in the emergence of the private sector as an additional source of nuclear technology and expertise for proliferant states. Such activity has been notable in the nuclear weapons programmes of Iraq and Iran – both of which, like Pakistan, developed extensive procurement networks to obtain technology from the private sector. To a lesser extent India, North Korea, Libya, Argentina, Brazil, Egypt, South Africa, Syria and Israel are also alleged to have been involved in the nuclear black market. The following case studies give some illustration of the phenomenon outside of the Khan network, whose black market activities are discussed elsewhere. However, this chapter cannot claim to be an exhaustive account of the clandestine private-sector trade to date in nuclear technology and expertise. Given the trade’s murky nature, it is highly likely that a large proportion of this activity remains, and will remain, unknown.

Iraq
While Iraq never succeeded in building nuclear weapons, it did make extensive efforts to do so up to 1991. Thanks to UN and IAEA inspections both before and after the 2003 invasion, the world has a good understanding of how Iraq obtained nuclear technology and material from foreign suppliers. Not all of the details about the companies involved are available in open sources. A November 2005 UNMOVIC report describing Iraq’s procurement programme includes a sanitised annex of procurement activity and refers to an extensive compendium that has not been released. Similarly, Iraq’s ‘Currently Accurate, Full and Complete Declaration’ of December 2002 contained an annex detailing its nuclear-related procurement. This annex is not publicly available and was edited by US officials before being passed to the non-permanent members of the UN Security Council. However, a German newspaper claimed to have seen a copy of the uncensored document. This apparently listed dozens of Western companies which had supplied Iraq’s WMD programmes prior to 1991.

Like most would-be proliferators, Iraq had sought nuclear technology in large-scale transfers from other countries. However, Israel’s raid on a French-supplied reactor at Osirak in 1981 prompted a tactical change by the Iraqis. Rather than give priority to a plutonium bomb, which would require reactors exposed both to international scrutiny and possibly to another attack, they decided to develop a covert uranium enrichment capability while falsely professing to remain in compliance with the NPT. In fact, Iraq never completely discounted the plutonium route to a bomb, but by 1991 had made no practical progress towards developing a suitable plutonium-producing reactor. In January 1982 an Office of Studies and Development was established in the Iraqi Atomic Energy Commission (IAEC) to examine the practicalities of uranium enrichment. Iraq’s approach, according to Jaffar Dhia Jaffar, the former head of the nuclear weapons programme, was to ‘let Israel believe it destroyed our nuclear capacity, accept the sympathy being offered for this aggression and proceed in secret with the programme’. Several elaborate procurement networks were established to import substantial quantities of nuclear components without arousing international suspicion. David Kay, a former weapons inspector who went on to become the first leader of the Iraq Survey Group, estimated in the 1990s that Iraq may have spent $10 billion on procurements for its secret nuclear programme, which employed around 20,000 people.

The Iraqi nuclear programme had numerous procurement channels. The Ministry of Industry and Military Industrialisation (MIMI), headed by Saddam Hussein’s son-in-law Hussein Kamel, was charged with Iraq’s extensive military re-armament as the war with Iran (1980–88) came to a close. Following the transfer during 1987–88 of various departments from the IAEC to MIMI, Kamil became ultimately responsible for the Iraqi nuclear programme. Its procurement effort was assisted by the Iraqi diplomatic and intelligence services, which helped to establish the various networks that would supply Iraq with technology for both conventional and unconventional weapons. By 1988, Kamil was in charge of both MIMI and the Al-Amn al-Khas (Special Security Organisation, or SSO). Other Iraqi intelligence services (such as the Mukhabarat, or General Intelligence) were deeply involved in the procurement campaign. Iraqi intelligence officers and officials, such as Ali Mutalib Ali (commercial attaché in Bonn), assisted Iraqi-controlled European companies in their negotiations and suggested which suppliers might be more creative in their product descriptions, so that they might obtain export licences. The Iraqi security services were used to transfer funds to suppliers or middlemen. Lists of equipment required by the nuclear programme were transmitted in Iraqi diplomatic bags, and then on to front companies that could connect the Iraqis with potential suppliers. The procurement efforts of the intelligence services were not always closely coordinated with those of MIMI.

Dual-use goods and subcomponents
The Iraqi programme relied heavily on dual-use technology and components with false end-user statements, purchased from the European and American private sectors. The Iraqis soon realised that it was often easier to procure the subcomponents and equipment to construct major components themselves than to obtain tightly controlled units on suppliers’ trigger lists. Iraq was skilful at accumulating multiple components from different suppliers and successfully integrating them into a more sophisticated system. This allowed Iraq to exploit loopholes in export controls. For example, computer-numerically controlled machine tools, which could not be legally exported from the US when they were combined with laser alignment systems, were delivered to Western Europe or Iraq, only to be conjoined with these laser systems when they had reached their destination. Most subcomponents of Iraqi gas centrifuges were acquired from abroad and assembled on Iraqi soil. Dual-use subcomponents carried far less risk of discovery, and it was easier to obtain a false export licence for them. One reason Iraq decided to pursue the electromagnetic separation route to uranium enrichment (regarded as technically obsolete) was because the main pieces of equipment and software required were not on suppliers’ nuclear export control lists. This made their procurement less troublesome than attempting to acquire intact, state-of-the-art units.

Front companies and middlemen
To obtain sensitive items without openly violating export controls, and to prevent the true destination and purpose of nuclear imports from becoming generally known, front companies were established to act as false end users. These companies were set up both in Iraq and across Europe. As characterised by a US Congressman who discussed it in a public session, a CIA report of 1989 stated that ‘Baghdad uses aggressive covert techniques to acquire technology. The nuclear network – controlled by MIMI – uses Iraqi public sector enterprises, front companies, foreign agents and even civilian organizations to procure technology.’ MIMI controlled private firms such as the Al-Arabi Trading Company and the state-owned Nassr General Establishment. Both were nominally civilian organisations and directed numerous other front companies throughout Europe and the United States. Many of the companies which supplied Iraq with nuclear-related goods were also involved in procurement of other unconventional weapons. Some sections of the nuclear programme controlled various front companies directly. For instance, the gas centrifuge programme, known as the ‘Engineering Design Centre’ and based at Rashdiya, controlled and staffed the ‘Industrial Projects Company’ (IPC), one of the numerous companies or state-owned establishments used as channels to procure centrifuge technology. The Al-Arabi Trading Company answered to the ‘Technical Corps for Special Projects’, which in turn answered to MIMI. Al-Arabi was led by Dr Safa Al Habobi (formerly of the SSO and later appointed Iraqi oil minister), who also represented Nassr General Establishment. One of Al-Arabi’s subsidiaries was Euromac, staffed by two brothers, Hussein and Kassim Abbas. In March 1990 five people were arrested in London for attempting to export, through an affiliate of Euromac, military-grade capacitors of the type used to trigger nuclear weapons. One of those arrested was Omar Latif, an official at Iraqi Airways, but also apparently the head of Iraq’s intelligence network in Britain.

Al-Arabi controlled UK holding companies such as the Technology Engineering Group (TEG) and the Technology Development Group (TDG). These in turn controlled numerous other firms throughout the UK and the United States, and helped to arrange large orders for the nuclear programme. TEG had originally been known as Meed International when it was established by Iraqi expatriate businessman Anees Mansour Wadi and British middleman Roy Ricks. In late 1987, TEG purchased goods worth around £1.25 million for the gaseous diffusion and centrifuge programmes, and shipped these to the Nassr General Establishment. TDG established TMG Engineering, which then acquired TI Machine Tools, later renamed Matrix Churchill Ltd. TMG also controlled Matrix Churchill Corporation, a distribution agent for Matrix Churchill in the United States. Although Matrix Churchill became one of Britain’s more successful manufacturers of machine tools, it was controlled by Iraq and formed an important part of its nuclear procurement apparatus. It built small, precision-tooled components for Iraq’s prototype centrifuges in its UK factory, and obtained items from other suppliers that were then redirected to Iraq. The Matrix Churchill group, in addition to its role in the Iraqi nuclear programme, was deeply involved in the procurement of technology for other unconventional weapons and military projects, and in the development of Iraq’s military-industrial infrastructure.

After the Gulf War, an attempted prosecution of three Matrix Churchill executives collapsed when it was shown that British intelligence services had been aware of the military end use of many of Matrix Churchill’s exports, as they had regularly received information from two of its employees. Despite this, the British government had allowed (and even encouraged) most of these exports to proceed for a variety of reasons, including a fear of losing valuable business to other European companies or the Soviet Union, a desire to learn more about Iraq’s rearmament, and a failure to appreciate how far some of Iraq’s unconventional weapons programmes had advanced. The ‘Scott Report’, which investigated the handling of the Matrix Churchill prosecution and government knowledge of the sale of arms to Iraq before the Gulf War, was highly damaging to the reputation of the Conservative government when it was eventually released in 1996.

A subsidiary of Matrix Churchill secretly purchased 18% of the Swiss firm SMB Schmiedemeccanica S.A., which made high-precision forgings. In 1990, SMB was contacted by IPC, one of the centrifuge programme’s front companies. IPC ordered 1,000 forgings, apparently for an automobile-parts manufacturing complex in Iraq. In fact, these forgings were intended to manufacture the end caps and baffles required to construct centrifuges. IPC also negotiated with Interatom, a subsidiary of Siemens AG, in an attempt to secure a centrifuge workshop and centrifuge-related training at the Al Furat facility. The first stage of a three-part contract was approved by the German export control authority, but the arrangement was terminated in 1990 after the connection between IPC and the Iraqi centrifuge programme became apparent. If completed, this workshop (Building B01) at Al Furat would probably have been used to manufacture pipework for cascades, and to assemble and test centrifuges. The IAEA estimated that, if it had become fully operational, the Al Furat facility might have been able to produce up to 5,000 centrifuges per annum.

Special financial arrangements
Iraq established a special relationship with a US branch of Banca Nazionale del Lavoro (BNL) in Atlanta, Georgia, which provided Iraq with credit on extremely favourable terms. The Atlanta branch was able to borrow large amounts of money thanks to the excellent credit rating of its parent institution, which was owned by the Italian government. BNL had first extended credit to Iraq so that it could purchase American agricultural products; as such, about $900m of credit to Iraq’s state-owned banks was guaranteed by a division of the US Department of Agriculture. BNL’s headquarters in Rome did not authorise the illicit activities of the Atlanta branch, although a judge presiding over an ensuing trial argued that this lack of oversight indicated severe mismanagement. Although some of the loans from BNL were used for civilian purchases, the bank also provided letters of credit to the Western suppliers of Iraq’s nuclear programme and other military projects. One of Atlanta BNL’s officials, Christopher Drogoul, was the son of Pierre Drogoul, a former consultant to Babil International. Babil International was a French subsidiary of the Al-Arabi network, and was owned by Safa Al Habobi. The Atlanta branch of BNL was raided by US officials in August 1989. In 1993, Christopher Drogoul was sentenced to 37 months’ imprisonment. Since the US government had encouraged economic aid to Iraq, the judge felt that Drogoul merited a lighter sentence than was usual in such cases.

Following the Gulf War, numerous media commentators alleged that the George H.W. Bush administration had connived with BNL to help Iraq purchase arms, that the Justice Department had obstructed the investigation into the bank, and that it had incorrectly treated its owner, the Italian government, as a victim, rather than a culprit in the fraud perpetrated by the Atlanta branch. This scandal was dubbed ‘Iraqgate’. A subsequent report by the Justice Department, released in 1995, exonerated the Bush administration of having illegally armed Iraq, denied that the Justice Department’s previous investigations had been ‘subverted for political purposes’, and argued that any allegations that BNL officials in Rome had been aware of the unauthorised loans were unproven.

Redirection and re-export
Consignments were often sent to third countries for transport to their final destination. For example, two shipments of maraging steel, produced by the Austrian firm Boehler Edelstahl, were exported from Antwerp to Dubai, then sent overland to Iraq via Saudi Arabia. After the United Nations imposed an embargo on Iraq following its invasion of Kuwait in August 1990, the Iraqi centrifuge programme arranged with several European suppliers for deliveries to be sent to the Mitramas company in Singapore. The plan was for this equipment to be re-exported to Jordan, and then on to Iraq, although most of these items were intercepted in Jordan. The use of ‘free-trade hubs’ such as Singapore, Dubai and Hong Kong is a common feature of procurement networks, as it makes it harder to identify the end user of restricted items.

Multiple purchases and ‘tradecraft’
Iraq would often place numerous orders for a desired item; each individual order would be smaller than the quantity that would trigger export controls. It calculated, usually correctly, that even if one of these orders were prohibited, there would not be a determined investigation by Western states that would uncover the other procurement channels for the same item.

The Iraqis also went to great lengths, using traditional ‘tradecraft’, to disguise their procurement. Examples include removing names of suppliers and banking transfer agents from invoices; removing names and destinations from wooden shipping crates; and the use of false identities by scientists when they travelled abroad.

Purchasing foreign companies and expertise
The Iraqis invested heavily in or partly purchased European companies which then directly produced components or machinery required for the nuclear programme. One example was Matrix Churchill. Another was Al-Arabi’s secret purchase in 1987 of 50% of the German firm H+H Metalform GmbH, which specialised in the production of vertical flow-forming machines. These are extremely useful in the construction of metal cylinders with precise specifications, and thus can be used in the manufacture of both ballistic missiles and gas centrifuges. It is suspected that, in 1984, Dietrich Hinze, later the co-founder of H+H Metalform, supplied machines that would be used in the Brazilian centrifuge programme. As with Matrix Churchill, the rash of new contracts from Iraq after 1987 transformed the once-struggling H+H Metalform into a flourishing organisation. The resulting profits no doubt encouraged company executives to enter false end-use statements on export-licence applications. H+H Metalform contributed to Iraq’s ballistic missile development, as well as providing equipment and technical advice to its nuclear programme. In addition, the Iraqis were able to acquire technology, expertise and assistance from companies, engineers and scientists located for them by contacts at H+H Metalform, ‘who provided dozens of connections to high-tech firms who cooperated because of their long relationship with [H+H Metalform] and the ample funds that [Iraq] could provide’.

The most notorious of these engineers was Karl-Heinz Schaab, who probably bears more responsibility for the spread of centrifuge enrichment technology than anyone outside the Khan network. Schaab was a former employee of MAN Technologie AG, an important partner in Urenco’s development of centrifuge technologies. In 1989, Schaab sold Iraq classified blueprints of an experimental version of an advanced Urenco 3m-long supercritical centrifuge (TC-11) that his friend Bruno Stemmler had allegedly stolen from their former employer. Schaab also sold the Iraqis dual-use technology and numerous centrifuge components, including 38 carbon-fibre centrifuge rotors, and provided relevant equipment and on-site technical support once the components had arrived in Iraq. Schaab and his wife (the co-owner of their company Rosch) were convicted in 1993 of exporting these carbon centrifuge rotors to Iraq without a licence; Schaab received a fine (DM20,000) and a suspended prison sentence. Although Schaab’s wife had been apprehended in Austria in 1992, German authorities sought Schaab in Brazil, where it was suspected that he was associating with other ex-MAN personnel in projects involving carbon-fibre composite materials. Schaab was charged with treason after his full contribution to the Iraqi centrifuge programme (including the sale of the TC-11 designs) was revealed, and he again fled to Brazil in 1996. Schaab later agreed to return to Germany. It has been suggested that he provided technical assistance for Brazil’s gas centrifuges, although this has not been confirmed. In 1999, Schaab was convicted of treason, fined DM80,000 and sentenced to five years’ imprisonment. However, due to time already served and his cooperation with the authorities, he was freed immediately. Other scientists, such as Stemmler and Walter Busse (another ex-employee of MAN and, like Stemmler, deceased), also sold technical documents and their nuclear expertise to the Iraqis. For example, Stemmler sold photographs and drawings relating to the classified Zippe-type gas centrifuge (such as G-1 and G-2 designs) in 1988, allowing Iraq to shift its resources away from the less efficient oil-bearing Beams-type centrifuges. Stemmler also gave the Iraqis various centrifuge components, some of which they were able to reverse-engineer. The technology, materials and know-how supplied by Schaab, Stemmler and Busse provided the Iraqi centrifuge programme with a significant boost.
Germany’s reputation for technical excellence, combined with its slack export controls, help to explain why it produced a substantial proportion of Iraq’s nuclear imports. Weak German export laws, and their lax enforcement, allowed for the easy falsification of end-use statements and the delivery of dual-use items. (For the involvement of German companies in Pakistan’s nuclear imports, see chapter one.) Schaab and his collaborators, despite their later excuses, were probably aware that their export of nuclear technologies was illegal or, at the very least, violated the spirit of the law. It is harder to prove the illegal intentions of many of the other firms that exported dual-use equipment to Iraq, although their suspicions must have been raised. As the IAEA put it in 1991, ‘much of the equipment [exported] … is multi-purpose in the sense of being useful in a number of manufacturing processes. However, the application-specific fixtures remove most doubt as to the intended uses. Some of the companies … must have known (or could reasonably have inferred) the intended uses.’ Yet it is impossible to prove that all of Iraq’s suppliers exported items whose use they knew to be prohibited.

Links to the Khan network
It is now known that the Khan network approached Iraq in 1990 with an offer to supply enrichment technology and project designs. However, this offer was declined (see chapter three).

During its procurement campaign, Iraq dealt with various individuals or entities also involved with Khan or the Pakistani programme. For instance, Friedrich Tinner, patriarch of a family that would play a vital role in the Khan network’s later operations, supplied nuclear-related items to both Iraq and Pakistan. After leaving his post as export director at Vakuum-Apparate-Technik (VAT), he established his own firm, CETEC (later renamed PhiTec). It was reported that CETEC had attempted to send fluoride-resistant valves suitable for use with centrifuges to Iraq, although these items were intercepted in Jordan. The Swiss authorities later investigated Tinner, but did not charge him. Similarly, Iraq obtained 100 tonnes of maraging steel in 1989 through Mazhar Malik, a Pakistani middleman based in London. It is possible, although unconfirmed, that this was the same intermediary mentioned in the 1990 offer by the Khan network. However, the 1990 offer notwithstanding, the fact that suppliers to the Pakistani and Iraqi nuclear programmes overlapped is less an indication that the Khan network ‘supplied’ Iraq, than an illustration that the nodes comprising procurement and proliferation networks often work independently, sometimes at cross purposes. Certain firms and individuals have, wittingly or unwittingly, supplied several national nuclear programmes.

Reforms to export controls after the Gulf War
Iraq’s exploitation of weak export controls eventually prompted various measures at both national and international levels to hinder future procurement efforts. The German government, in particular, greatly strengthened its export control policies and enforcement procedures. For example, each company had to introduce an internal compliance system and nominate a senior ‘export-responsible executive’ who would be held personally accountable for any illegal actions by the firm. The penalties for foreign trade violations were increased. The creation of the Federal Exports Office in 1992 led to more export control officials and a longer and more rigorous approval process for exported items. In response to Iraq’s targeting of items not covered by the Nuclear Suppliers Group trigger list, the nuclear exporters established additional guidelines on dual-use items (see page 10). The Wassenaar Arrangement, established in 1995 as an informal agreement of 33 states (now increased to 40), was intended to control transfers of sensitive dual-use goods and technologies in a post-Cold War era and was, to a great extent, a reaction to Iraq’s vast effort to procure both conventional and unconventional weapons.

Iraq’s extensive procurement network prospered thanks to a combination of the ineffective enforcement of already weak export controls, particularly those concerning dual-use goods; the greed and naivety of numerous businessmen, engineers and scientists; and an elaborate infrastructure of deception involving front companies, indirect delivery routes and coordinated purchasing patterns, all designed to confound easy discovery of the true purpose of the procurements. Yet the Iraqi import network never mimicked A.Q. Khan’s by morphing into an onward proliferation network and exporting technology. Its goal was to produce a nuclear capability for Saddam alone; there is no evidence to suggest that Iraqis attempted to sell material to other states or groups. The network involved non-state actors, but the main player remained the Iraqi state itself. Despite the recommendations of certain members of Iraqi intelligence on how to deal with increased import restrictions after Saddam’s invasion of Kuwait, nuclear goods were never directly obtained from less-developed countries. Although items were delivered to Iraq via a multitude of intermediate states, the vast majority of Saddam’s nuclear infrastructure was manufactured in Western Europe or the United States, or assembled from components originating in those countries. In contrast, the Khan network would exploit complacency about the ability of less industrially developed states to produce the components necessary for a nuclear weapons programme.

Iran
Iran has attempted to secure technical assistance from numerous other governments, most recently from China and Russia. It has also widely engaged the private sector. As with Iraq and Pakistan, Iran uses embassy officials, middlemen, false end-user certificates and front companies to obtain equipment and technologies essential for its nuclear programme. Some of these front companies and middlemen also seek technology relevant to conventional weapons and ballistic missiles, while others have been established specifically to obtain nuclear components. In addition, Iran’s nuclear programme received significant assistance from the Khan network, some undetected elements of which may still be in business with Tehran. Indeed, Iran probably received Khan’s address book of supplier contacts.

Iran’s procurement efforts have no doubt benefited from the country’s close proximity to the United Arab Emirates, a common destination for illicit items and eventually the hub of the Khan network. Iran has been the largest recipient of the UAE’s non-oil re-exports for much of the past decade, and slightly less than a quarter of the UAE’s population is comprised of Iranian citizens or people of Iranian origin. Iranian officials have expressed confidence that sanctions or strengthened export controls would not prevent the progress of its nuclear programme because, as one said, ‘you can get anything you need from Dubai’. This is clearly an exaggeration, but the UAE’s relatively lax export controls will no doubt prove tempting to Iran if the international community continues to target its nuclear-related imports.

Iran’s nuclear research programme began in the 1950s, and its procurement of technology from foreign firms predated the Islamic Revolution. For example, in 1978 a US company, headed by a scientist who had previously worked on classified laser enrichment work, reportedly shipped four lasers to Iran. These lasers may have aided Iranian engineers in their experiments to develop laser isotope-separation technologies, although the scientist later argued that the specifications of the lasers were unsuitable for uranium enrichment. The change of regime in 1979 temporarily halted nuclear research but, by the mid 1980s, Iran’s quest for foreign technology had restarted.

In 1985, Iran acquired ‘flow-forming’ machines from the German firm Leifeld, the former employer of both directors of H+H Metalform; equipment of this type is currently used in Iran’s centrifuge-manufacturing complex. The Japanese manufacturing company Mitutoyo is alleged to have supplied the Iranian Revolutionary Guard Corps and Ministry of Defence, among other Iranian entities, with nuclear-related measuring devices between 1984 and 1992, mainly via an Iranian front company based in Japan. It is unclear whether Mitutoyo’s involvement with Iran in these deals was connected with the company’s alleged involvement with the Khan network. In August 1991, US authorities arrested Reza Amiri and Mohammed Danesh for selling Iran an oscilloscope they had purchased from Tektronix. The US government also alleged that in the same period of 1989–90 they had sold Iran logic analysers and pulse generators. These items may be used for ballistic-missile development, but can also be used to monitor tests of nuclear weapons.

Despite reforms made to Western countries’ export controls following the Gulf War,
Iran continued to target companies in Europe and the United States. In 1991, the German firm Leybold may have sold a vacuum arc furnace to an official at the Iranian embassy in Bonn, Said Kareem Ali Sonhani. It was revealed in 1995 that Peyton Humphries, a CIA agent based in Germany who had been accused in the local media of conducting industrial espionage against German firms, had actually been investigating connections between Iranian procurement agents and German companies supplying dual-use goods potentially useful in unconventional weapons programmes. In 1996, a shipment of 55kg of maraging steel from the United States to the National Iranian Steel Company was seized by customs officials in the United Kingdom.

Like Iraq, Iran has explored the possibility of purchasing foreign companies to potentially serve its procurement needs. Reports from the 1990s indicate that Iranian nationals attempted to purchase small German firms to circumvent German export controls and transfer technology to Iran. Iranian officials signed a letter of intent in 1996 pledging their interest in the purchase of the German machine-tool manufacturer Sket Magdeburg. This was reminiscent of Iraq’s acquisition of Matrix Churchill, which then helped it to produce components and find suppliers for its nuclear programme.

German customs investigators raided the home of businesswoman Eva-Marie Hack in November 2002. Hack had ordered 44 high-voltage Behlke switches (which can be used to detonate a nuclear weapon) on behalf of Eddie Johansson. Johansson, whose original name was Hojat Nagash Souratgar, had been born in Iran but later acquired Swedish citizenship. The intended recipient of the switches was possibly Zaeim Electronic Industries of Tehran. Johansson had apparently contacted Hack through another German, Harold Hemming. Johansson’s brother transferred approximately $70,000 from an account at the Dubai branch of Bank Saderat Iran to a Swiss bank account kept by Hemming. Hemming then transferred these funds to Hack, who used some of this amount as a down-payment for the Behlke switches. (In September 2006, the US Treasury denied Bank Saderat all access to the US financial system on the grounds that it had been used to transfer tens of millions of dollars to terrorist organisations). Johansson left Germany soon after the raid on Hack’s house. He had previously attempted to acquire Behlke switches from an American firm, Eurotek Inc. USA, claiming that he represented a Taiwanese firm. But when questioned more specifically about the intended end use of the switches, Johansson broke off contact.

Iran has admitted to the IAEA that a private contractor made inquiries with a European intermediary about the procurement of 4,000 magnets suitable for use in a P-2 centrifuge (the designs, and possibly prototypes of which had been provided by the Khan network in the 1990s). Iran has claimed that in fact this European intermediary provided no magnets, but that a limited number of such magnets were successfully imported from other suppliers in 2002. The IAEA is still investigating other possible attempts by Iran to acquire magnets relevant to P-2 development.

It has been reported that Iran has persistently attempted to secure technical know-how by finding contacts among suppliers, consultants or subcontractors for the centrifuge programmes run either by Russia’s Minatom or Europe’s Urenco. In January 2003, a 53-year-old German businessman – identified only as ‘Helmut R.’ – apparently brokered a deal to supply an unnamed state with 24 manipulators, used for separating plutonium from spent nuclear fuel rods. It is suspected that his customer was Iran; he was the target of a fake bomb threat in July 2003, warning him to discontinue his cooperation with the Iranians. German intelligence services reportedly suspect Israel’s involvement in this incident. In January 2006, the head of Belgium’s State Security Police resigned after allegations that, despite multiple warnings from the CIA, his agency did not inform Belgian customs of the imminent export by Engineering Pressure Systems International of a hot isostatic press to Iran Aircraft Industries of Tehran in 2004. This equipment can be used to manufacture missile engines, but also nuclear weapons.

Also in 2006, German police announced that they had discovered a clandestine network supplying dual-use equipment, apparently to the Iranian nuclear reactor being constructed at Bushehr. The network involved at least six firms, some of which may have believed that they were only exporting goods to Russia. From 2003–04 goods worth about $3m were sent overland to Russia, then transported across the Caspian Sea. It is uncertain if these dual-use items were truly procured for Bushehr, as most necessary materials for this project are supplied legitimately by Russia. It is, therefore, possible that these items were really destined for another facility, such as the heavy water reactor at Arak.

Although China ended its official nuclear assistance to Iran in the late 1990s, US intelligence agencies reported in 2003 and 2004 that Chinese firms may have continued to supply the Iranian nuclear programme, in some cases without the knowledge of their government.

It is strongly suspected that Iran has used its universities as fronts to obtain sensitive technologies for its nuclear programme. Sharif University of Technology in Tehran plays a significant role in both Iran’s nuclear and missile programmes. It has several facilities including a R&D centre called the Physics Research Center (PHRC) at Lavisan-Shian, a suspected Iranian military front organisation. Individuals at the PHRC have attempted to acquire equipment or conduct research on enrichment processes since at least the early 1990s. Italian intelligence services have claimed that in 1991 Sharif University ordered centrifuge components from the Austrian firm Treibacher, which had previously made ring magnets used in Iraq’s centrifuge programme before the Gulf War. In the same year, Sharif also ordered ring magnets from the German company Thyssen, but the bid was rejected. Leybold negotiated the sale of vacuum pumps to a university in Tehran (probably Sharif), although these may not have been delivered. Several British firms sent Sharif consignments of fluorine gas, which can be used in the manufacture of UF6, the feedstock for gas centrifuges. Another German firm, Carl Schenck of Darmstadt, initially sold Sharif a balancing machine, before cancelling the rest of the order. In 1993, the Swiss companies AGIE and Charmilles Technologies sold Sharif electronic-discharge machinery. This can be used to produce nuclear fuel, but can also be used in the manufacture of gas centrifuges.

Amirkabir University of Technology is another Iranian college allegedly used as a front to acquire nuclear technology. The university, founded in 1958, offers doctorates in nuclear science and technology and conducts research in theoretical and high-energy physics. University representatives reportedly attempted to purchase neutron-shielding equipment from the US firm Reactor Experiments. The equipment could have been used in a plutonium reprocessing R&D programme which Iran revealed to the IAEA in 2003. Although the university was not successful in acquiring such equipment, it has attempted to obtain other dual-use equipment or technology. In 2003, the Australian government prohibited GBC Scientific Equipment from delivering a mass spectrometer (used to evaluate the enrichment of uranium) to Amirkabir. GBC had previously exported a spectrometer to the Center for Agriculture and Medicine at Karaj in 2002. Iran admitted to the IAEA that the spectrometer had been used to provide isotope-enrichment measurements, in violation of export conditions. It also admitted that centrifuge rotors had been tested at Amirkabir. The German government placed Amirkabir on a ‘warning list’ to exporters in 2002. Engineering research at the university has been partially funded by the Atomic Energy Organization of Iran (AEOI). In 2005 the US government designated the AEOI as being involved in nuclear proliferation and imposed a freeze on its assets in the United States. The Iranians have proven that universities are useful both as fronts for procuring nuclear-related materials and as testbeds for research that could one day be used for military purposes.

Today, Iran remains the most active customer in the international nuclear black market. It has sought dual-use goods from some of the same people and firms previously linked to Khan, but has also turned to new technology brokers. According to one 2006 report, ‘German, EU and US officials say that Iran has built an equivalent, if not larger, network than Khan’s to supply prohibited goods for its nuclear … programme’. Although exporting countries have heightened their vigilance, Iran still tries to evade export controls by repeatedly changing front companies and financing arrangements. Iran continues to seek nuclear technology in Western Europe and nuclear know-how from the former Soviet Union. It has been suggested that Iran has secretly continued experiments into laser enrichment, using hired Russian expertise. An investigation by the Turkish Customs Directorate released in May 2006 claimed that an Istanbul trading firm served as the hub of a network which procured dual-use equipment manufactured in Europe, including by subsidiaries of US companies, for Iran’s nuclear programme. In late 2004 C. Surendar and Y.S.R. Prasad, both former directors of the state-run Nuclear Power Corporation of India, were sanctioned under the US–Iran Nonproliferation Act for allegedly having sold nuclear technology to Iran. However, the proscriptions against Surendar were rescinded in 2005. Despite the protests of the Indian government, the sanctions against Prasad remained until their expiry in September 2006. India continues to argue that both of these scientists were only involved in IAEA-approved projects in Iran. In 2005, Der Spiegel claimed that an Iranian front company, Partoris, had recently attempted to purchase tritium targets from EADS Sodern. These can be used to trigger a nuclear chain reaction. EADS Sodern was unaware of these items’ intended destination, as the relevant enquiries had been made by a South Korean firm, Kyung-Do Enterprises, which had had previous dealings with Partoris and was suspected to be ready to re-export the goods to Iran. In response to continued Iranian black market activity, the United States has stepped up its identification and isolation of those entities that it believes are supporting Iranian proliferation. US Treasury Secretary Henry Paulson declared in September 2006, ‘these are not front companies that say ”Nuclear Acquisition Corp.” or ”Weapons Production Corp.” … These are mundane-sounding companies that do many legitimate activities, but in addition, do some of these untoward and illicit activities.’
India

Compared with Pakistan, Iran and Iraq, India’s large industrial base gave its nuclear programme a far greater degree of self-sufficiency, and hence less need for an extensive procurement network. Nevertheless, there are examples of Indian attempts to obtain sensitive items from abroad on the open market.
By the early 1980s, India’s nuclear effort faced difficulties due to shortages of heavy water for its reactors. These were resolved after Alfred Hempel, a German ‘nuclear entrepreneur’ and former Nazi who died in 1989, organised illicit imports from China, Norway and the USSR. It is believed that these totalled over 250 tonnes, although estimates vary. These consignments of heavy water allowed the Madras I nuclear plant to operate without the safeguards which would have been imposed if India had imported the heavy water overtly. Although some believe that the Chinese, in particular, ‘could have been under no illusions’ about where the heavy water was bound, it is possible that Hempel, as a middleman, successfully deceived the suppliers as to the heavy water’s final destination. Hempel’s business contacts in China were severed when a Chinese government official discovered that his country’s heavy water had been sold to India, its strategic rival. Hempel controlled a group of companies including Alfred Hempel GmbH, Orda AG and Rohstoff-Einfuehr GmbH. His methods included transporting his product through multiple states in an attempt to conceal its true customer. For example, in 1983 he diverted around 15 tonnes of Norwegian heavy water, originally intended for West Germany, via Switzerland (where it was combined with about six tonnes of Soviet heavy water) and Dubai, finally arriving in India. He also established front companies as far afield as Liberia (Velsona Ltd and Beryl Corps.) to conceal the origin of his shipments. Hempel often sent heavy water in consignments of just under 1,000kg; at the time, no notification was required for transfers below 1,000kg to non-NPT states. There have also been reports that in the early 1980s Hempel was involved in the transfer from China of heavy water, low-enriched uranium (LEU) and yellowcake to Argentina, and LEU to South Africa. It seems likely that the Chinese state was aware of these consignments’ final destinations.

In 1984, the West German firm Degussa AG re-exported two batches of American beryllium, totalling 95kg, to India’s Bhabha Atomic Research Centre (BARC) without the consent of US officials. This violated US law. Such an export would almost certainly not have been granted a licence if it had originated directly from the United States, especially since the end-use statement provided by India was considered by American experts to be inadequate. In June 2004, an American electronics firm, Berkeley Nucleonics Corporation, was fined and sentenced to a (suspended) denial of export privileges for exporting, between 1998 and 2000, nuclear pulse generators to the Indian Department of Atomic Energy and the Nuclear Power Corporation without the required licences. In addition to his activities as a middleman for Pakistan (see chapter one), Asher Karni (an Israeli businessman based in South Africa) has also been accused of acting on behalf of Vikram Sarabhai Space Centre and the Liquid Propulsion Systems Centre of India. In 2002, Karni agreed to approach US firms for various items, including manometers, accelerometers and regulators, as it was hoped that these would be easier to obtain if their destination appeared to be South Africa. In the late 1980s and early 1990s, India received flow meter units designed for use with UF6 from Gerhard Wisser. His firm, Krisch Engineering, may also have arranged for the delivery to India of sensitive goods such as vacuum-measuring equipment and feed and withdrawal equipment for cascades. Wisser, a German citizen living in South Africa, would later play an important role in the Khan network (see chapter three).

A 2006 report by the Institute for Science and International Security in Washington detailed clandestine attempts by elements of the Indian Department of Atomic Energy to purchase sensitive direct nuclear-use and dual-use items from abroad, with the suppliers often ignorant of their products’ final customer. These attempts were made on behalf of the Indian DAE by Indian and off-shore trading companies. India apparently has a secret enrichment plant near Mysore, codenamed the ‘Rare Materials Project’ (RMP). Indian Rare Earths Ltd of Mumbai (IRE) has procured sensitive materials and technology for RMP since the 1980s, often by placing lists of desired items in Indian newspapers to invite bids from potential suppliers or trading companies. IRE does not reveal to the foreign suppliers it contacts that the end user of these products is an unsafeguarded uranium enrichment facility. IRE has attempted to obtain numerous items, including flow-formed maraging steel tubes, maraging steel discs, and subcomponents of vacuum pumping systems, all of which are essential for centrifuge construction. The report also states that an Indian trading company seeking items advertised by IRE used an off-shore partner to obtain the items without revealing their ultimate destination. India has dismissed the report as ‘baseless’. A more recent report by the same authors alleged that BARC personnel travelled extensively in Europe to arrange the procurement of equipment for RMP from German, French and Swiss firms. Such procurement included a flow-forming machine from Leifeld. India also shopped for vacuum pumps, vacuum furnaces, valves, welding equipment, a mass spectrometer and numerous other pieces of equipment and subcomponents. India may also have obtained information about centrifuges and the design of cascades from these European suppliers.

The same report from 2007 indicated that India plans to add at least 3,000 additional centrifuges to the 2–3,000 already operating at the ‘Rare Materials Project’. Although India’s technological self-reliance is growing, it is probable that it will continue to depend on at least some level of disguised imports of dual-use goods for its nuclear weapons programme.

North Korea
North Korea’s links with the black market in nuclear technology extend well beyond its dealings with the Khan network (see chapter three). A report by German intelligence suggested that it acquired a small annealing furnace (used to treat maraging steel rotors) from Leybold in 1987, which possibly had been re-exported by entities in East Germany. The same report indicated that Leybold technicians had been observed in North Korea in 1989, and a company official was in the country in 1990. There have been suggestions that firms in Japan and Europe sold North Korea materials and equipment related to a gas centrifuge programme during
1988–89.

It is likely that North Korea targeted Russia for nuclear technology and expertise in the wake of the Soviet Union’s collapse. It has been alleged that Russian companies sold North Korea high-strength maraging steel, but whether this was intended for its missile or nuclear programme is unclear. In March 1994, five North Koreans were expelled from Moscow for ‘showing too much interest in nuclear components’. Around the same time, three employees of the North Korean embassy were arrested for attempting to acquire unspecified weapons. In addition, the head of Russia’s Counterintelligence Service announced in June of that year that three North Koreans had been detained not far from the DPRK’s border on suspicion of trying to procure nuclear weapons components.

In November 2002, the CIA provided an unclassified assessment to Congress which stated that, since the previous year, North Korea had begun to seek ‘centrifuge-related materials in large quantities’ and had also ‘obtained equipment suitable for use in uranium feed and withdrawal systems.’ Since then, the confidence of US intelligence about the existence of an ongoing enrichment programme has decreased to a ‘moderate’ level in comparison with ‘high’ confidence about the procurement effort. However, there is no question about North Korea’s past procurement activity.

Following the collapse of the Agreed Framework in late 2002, it was reported that North Korean agents had managed to purchase around 20 tonnes of tributyl phosphate (TBP) from China. TBP is a chemical which has numerous commercial applications, but was probably used to separate plutonium from spent nuclear fuel.
In May 2004, German businessman Hans Werner Truppel was sentenced to four years’ imprisonment for attempting to supply North Korea with 214 aluminium tubes intended for its gas centrifuge programme. The tubes were approximately the same size as the aluminium casing required for one of the Urenco centrifuge designs stolen by Pakistan during the 1970s. There is no indication that Truppel was connected to the A.Q. Khan network other than as a potential supplier. It is more likely that North Korea used specifications, and possibly a suppliers list, provided by Khan and did its shopping independently. Truppel’s firm Optronic had been approached several years earlier by a North Korean businessman who claimed to work for an import–export company called Nam Chon Gang. Truppel legitimately sold this firm various items such as vacuum pumps and angle grinders. In 2002 the North Korean firm, claiming to represent the Chinese Shenyang Aircraft Corporation, asked Truppel to obtain the aluminium piping. The German Trade Ministry denied Truppel permission to export the pipes, but he did so anyway. Prosecutors alleged that, after the initial shipment of some 22 tonnes, Truppel had planned to transport another 200 tonnes of tubes to North Korea. This quantity of aluminium could have been used to construct between 3,500 and 4,000 centrifuges. The cargo ship carrying the first consignment was diverted nine days after departing Hamburg in April 2003, and the contraband was removed.

It has also been reported that, in the same month, the Japanese company Meishin shipped frequency converters to Thailand, to be forwarded to North Korea. Devices of this kind can be used to stabilise the flow of electric current to centrifuges. Meishin was affiliated with the pro-DPRK ‘General Association of Korean Residents’ (known as ‘Chongryon’ or ‘Chosen Soren’). Reports in February 2007 indicated that the Japanese government suspects this residents’ group of being involved in the DPRK’s nuclear programme, and was attempting to restrict its activities. According to a US intelligence report, a North Korean front organisation, the Daesong Yushin Trading Company, had made previous attempts to purchase such converters from a Japanese firm in the late 1990s. In 2002 Meishin had attempted to deliver the frequency converters directly from Japan, but failed to obtain appropriate documentation. Instead, it tried to bypass export controls by shipping them to a Thai communications company, Loxley Pacific. From there, they would have been delivered to the Daesong General Trading Company, the state-owned trading company controlled by the Korean Workers’ Party. Instead, the frequency converters were seized by customs at Hong Kong and returned to Japan. This incident illustrates the evolving techniques used by procurement networks when their original attempts are thwarted: from direct orders by front companies in the destination state; to the use of front companies in the target state; to the redirection of the goods to a third country, which later re-exports them. Countries chosen as such intermediary stages often lack the will or the ability to enforce strict export controls. Redirection failed Meishin in April 2003.

To a great extent the North Korean regime depends on the hard currency that it earns through various illicit activities, conservatively estimated to be some $500m per annum. Much of this illicit activity is coordinated through a network of banks, diplomats and front companies working under the direction of Bureau 39, the clandestine branch of the Korean Workers’ Party, which is dedicated to earning hard currency. The Korean Workers’ Party controls the Daesong Group which, as described above, has been implicated in various cases of suspected North Korean nuclear procurement. One of Bureau 39’s offshoots, the Golden Star Bank in Vienna, was identified in a 2003 report by the Austrian Interior Ministry as having participated in intelligence-gathering, ‘money-laundering, the distribution of forged currency and illegal trade with radioactive substances’. US intelligence officials apparently believe that North Korean front companies continue to act freely in China. Although the Six-Party Talks produced an agreement in February 2007 in which North Korea promised to disable its nuclear-weapons-related facilities, the potential overlap between the DPRK’s criminal and proliferation activities (related both to its nuclear and missile programmes) suggests that it would be able to draw upon a large and experienced transnational criminal network if it chose to continue its nuclear procurement efforts.

Libya
Libya suffered from a dearth of qualified technicians and, therefore, relied heavily on foreign expertise and technology in its attempts to initiate a nuclear programme. From the early 1970s onwards, Libya sought nuclear technology from numerous states, including China, the Soviet Union, France and India. Its attempts extended to requesting a weapon ‘off the shelf’ from both China and the Soviet Union. However, Libya also purchased expertise and technology from private actors, even prior to its involvement with the Khan network (see chapter three).

Numerous Egyptian nuclear scientists worked in Libya during the 1970s, following the collapse of formal inter-state nuclear cooperation agreed upon by Colonel Muammar Gadhafi and President Gamel Abdel Nasser. One such scientist was Dr Eizzat Abdel Aziz, later the head of the Egyptian nuclear research centre at Inchas. During his six years in Libya he acted as Gadhafi’s chief nuclear adviser and participated in negotiations with the Soviet and French governments, before returning to Egypt in 1980.

Credible reports suggest that Libya seriously pursued opportunities to obtain nuclear weapons from private individuals. One such case involved the former CIA employee Edwin Wilson and his Belgian associate Armand Donnay. Through Wilson, who had previously supplied Libya with 20 tonnes of C4 plastic explosive, Donnay met with senior Libyan officials in 1981. His proposal, along with a subsequent revised version, was amateurish and grandiose. It included the sale of a research reactor and other elements of a nuclear infrastructure; the supply of highly enriched uranium and plutonium; and a nuclear-warhead production facility which would manufacture dozens of strategic warheads and several hundred tactical weapons. Understandably, the Libyans rejected Donnay’s proposal due to its incompleteness and implausibility. Wilson later passed on Donnay’s documentation to the United States in an attempt to mitigate other charges against him. The CIA correctly dismissed the documents as a hoax perpetuated against Libya, and Wilson was eventually convicted of gun-running and the illegal export of explosives.

Experimental work involving centrifuges was secretly carried out at the Tajura Nuclear Research Centre from 1982 to 1992, led by a German flight engineer (allegedly Emil Stachli) who apparently brought his own centrifuge design. Libya also procured various components during this decade, including a specialised furnace from Japan in 1985, vacuum pumps from Europe, and two mass spectrometers from what the IAEA termed a ‘foreign expert’ – probably Stachli. Libya denied to the IAEA that it had been able to produce an operating centrifuge by 1992, although some report that a single centrifuge was running at one point during these clandestine experiments. In any case, no UF6 was introduced and no uranium was enriched. It was also reported in early 1992 that Libya had unsuccessfully attempted to recruit two Russian nuclear scientists to work at Tajura. After Libya’s decision to renounce its nuclear programme in 2003, a small number of unfinished maraging steel tubes were discovered. These were of the same diameter as those used in the L-2 model centrifuges later delivered by the Khan network (see chapter three). Libya informed the IAEA that these tubes were supplied in the early 1980s, and that there was no information on their origin. The IAEA has examined these tubes in an attempt to discover from where Libya obtained them.

Although a planned nuclear agreement with Belgium that would have provided a UF4 plant and other technical assistance to Libya’s nuclear facilities collapsed in early 1985, mainly due to American pressure, Libya did successfully acquire a pilot uranium-conversion plant from a Japanese firm in 1984. However, when the modules began to arrive in 1986 they lacked assembly or operating instructions, and were not unpacked for over a decade.

Despite Libya’s desire to obtain a nuclear capability, the results of its research were unimpressive, and it did not have a significant or coherent procurement effort until its dealings with the Khan network in the 1990s and early 2000s.

Other national programmes
Certain countries that have pursued nuclear weapons programmes, such as Argentina, Brazil, Egypt, South Africa and Israel, have been less flagrant in their use of clandestine private-sector trade, as have states such as Syria that have sparked concerns about nuclear proliferation. Some cases involving these countries are discussed below.

Argentina
Although Argentina never produced nuclear weapons, for many years it maintained a secret military nuclear programme that benefited from covert private-sector assistance. In 1950, President Juan Peron employed a former Nazi nuclear scientist, Ronald Richter, sparking rumours of an Argentinian weapons programme. However, Richter had been dismissed by 1952.

Argentina enjoyed significant technical transfers from other states (such as West Germany and Canada), but its military programme accelerated in the late 1970s. The construction of a uranium enrichment plant at Pilcaniyeu, using gaseous diffusion, was kept secret for five years. When Argentina refused to place the facility under IAEA safeguards after its existence was revealed in 1983, suspicions were raised about where Argentina had obtained the technology. It was subsequently revealed that the Swiss company Sulzer Brothers had supplied the plant’s electric generators and its entire cooling system. It is possible that Sulzer Brothers was aware that its products were being used for the construction of a secret uranium enrichment plant and chose to remain silent. The company later claimed that Argentina had deceived it as to the facility’s true purpose. In addition, Sulzer Brothers provided Argentina with a ‘turn-key’ heavy-water plant. The plant began operation in 1994, with an annual output of some 200 tonnes. Following the return of democratic government in December 1983, the nuclear programme was placed under civilian control. Argentina acceded to the NPT in 1995.

Brazil
Brazil’s early nuclear ambitions were driven primarily by rivalry with Argentina, and also by a desire to establish itself as a world power. In 1953 Admiral Alvaro Alberto, the first president of Brazil’s National Research Council, travelled to West Germany and met several scientists who had worked on the Nazi atomic-bomb project, including Paul Harteck and Wilhelm Groth. During these meetings, the Germans agreed to the shipment of centrifuges and supporting equipment to Brazil. In 1956, after previous attempts to ship the materials had been thwarted by the CIA and the British occupying authorities, the Germans were finally able to deliver three Groth-type centrifuges to the University of São Paulo in Brazil.

Brazil received technical assistance and transfers from the United States towards its civilian nuclear research from the 1940s onwards. However, in the late 1970s Brazil established a clandestine ‘Parallel Programme’ – codenamed Solimões and funded by the military – to develop an indigenous nuclear weapons capacity. The eventual failure of a 1975 nuclear-transfer agreement with Germany apparently intensified this programme. In 1981 Brazil successfully constructed its first centrifuge, and had enriched uranium to 20% by 1986, publicly announcing this achievement in September 1987. Brazil renounced its weapons programme following its transition to civilian government during the late 1980s, and joined the NPT in 1998.

Brazil’s reluctance to allow the IAEA unrestricted access to its enrichment facility at Resende has raised suspicions that full inspections may reveal past illicit purchases of centrifuge designs. The Brazilian explanation that it wishes to protect commercial secrets (such as a unique magnetic suspension bearing system) seems unconvincing, given how well centrifuge technology is understood. However, there is no evidence that the Khan network sold any centrifuges or components to Brazil.

German and US intelligence services reportedly believe that some of the German scientists and firms that aided the Iraqi programme also supplied technology (such as the G-2 centrifuge design) and engineering expertise to Brazil. These engineers included ex-MAN Technologie employees Karl-Heinz Schaab, Bruno Stemmler and Walter Busse. Dietrich Hinze, later of H+H Metalform, sold a vertical flow-forming machine to Brazil in early 1984, which was subsequently used by the centrifuge programme. The centrifuges installed at Resende are based on carbon-fibre rotor assemblies, as opposed to the maraging steel used in the G-2. Schaab was skilled at working with carbon-fibre composite materials, and supplied the Iraqi nuclear programme with, among other things, 38 carbon-fibre centrifuge rotors. As already mentioned, he spent some years in Brazil during the 1990s, after being accused of transferring technology to Iraq. It should be noted that Brazil had already begun to use carbon-fibre centrifuges before Schaab’s time there. Brazil has denied that the design modification to its centrifuges received any assistance from either German experts or the Khan network between the mid-1980s and 2000, and claims that the design of its centrifuges’ magnetic bearings is completely indigenous. It has been reported that the collection of TC-11 blueprints that Schaab sold to Iraq was missing the drawings of its bottom bearing design.

In early 2006, the IAEA reached an agreement with Brazil that would allow inspectors to meet their verification goals without having to see the actual centrifuges.

Egypt
Egypt’s nuclear programme began in the 1950s. Concerned by Israel’s nuclear weapons programme, Nasser also attempted to develop a corresponding nuclear weapons capability. He even tried to purchase complete weapons from the Soviet Union and China. However, both these states rejected his requests. Egypt has allegedly been offered nuclear weapons-related technology and material by foreign individuals, notably by an unidentified group of Germans in the 1950s. The Egyptians apparently rejected all of these offers from private individuals. Egypt later decided not to acquire nuclear weapons and signed the NPT in 1968, ratifying it in 1981. Egypt’s non-proliferation intentions came under scrutiny in 2004 after revelations of unreported experiments relating to plutonium separation and uranium conversion. But an IAEA investigation concluded that the nuclear experiments were small scale, did not produce fissile material and did not appear to be part of any attempt to develop nuclear weapons.

South Africa
South Africa’s nuclear weapons programme benefited from the country’s advanced economy and national prowess in mining and metallurgy. These advantages, in addition to earlier agreements on technology transfers with the United States, reduced the amount of material, technology and expertise that it was obliged to procure secretly from abroad. In addition, South Africa’s increasing political isolation due to the apartheid regime encouraged technological self-sufficiency. Approximately 5,000 people were employed to manufacture components at the Valindaba and Pelindaba sites. South African technicians demonstrated ingenuity in their use of simple machines to produce complicated products for the weaponisation programme. This helped to avoid the scrutiny which would have resulted from the attempted procurement of more sophisticated equipment. Still, South Africa did import machine tools, furnaces, valves and other equipment for its programme, and received support from firms such as Leybold. Much of South Africa’s procurement was intended to supply the civilian aspect of its nuclear programme, as opposed to its military component. Although many of these imports did not violate nuclear-export controls, they did violate the sanctions against the apartheid regime. In the early 1980s, South Africa secretly hired around 25 American reactor operators and technicians to work at the Koeberg nuclear power plant. These specialists were contracted without the required US government authorisation.
When F.W. de Klerk became president in 1989, he ordered the nuclear programme to be halted. In 1991 South Africa became a member of the NPT. In 1993, de Klerk publicly acknowledged South Africa’s six nuclear weapons, and announced that they had been dismantled. However, the Khan network would later use former participants in the South African nuclear programme, drawing on their technical expertise and their experience of procuring technology while avoiding export controls and international sanctions (see chapter three).

Israel
Like South Africa, Israel obtained much of its nuclear technology through large-scale state transfers and cooperative agreements. Indeed, South Africa and Israel cooperated extensively in the nuclear field. It has been widely speculated, but never proven, that they jointly tested an atomic device in the Indian Ocean in 1979. Israel has a strong technological base, and obtained material for its bomb by reprocessing plutonium from its facility at Dimona. Israel had sufficient quantities of plutonium for one or two bombs shortly before the Six Day War in 1967, and consequently avoided many of the restrictions on state-to-state nuclear trade imposed in the 1970s.
Known examples of Israeli clandestine commerce are therefore rare. Richard K. Smyth was indicted in 1985 and sentenced in 2002 for the illegal export from the US to Israel of 800 electronic switches used in nuclear detonations. But Israel has generally relied less on purchases from private suppliers than on the diversion of material from a nominally civilian programme. In addition, there are numerous allegations of Israeli nuclear espionage, such as the reported diversion in 1968 of 200 tonnes of Belgian UO2 from the Scheersberg, a West German freighter sailing to Genoa from Antwerp (often referred to as the ‘Plumbat Operation’, after the labelling of the drums containing the UO2); and the reported diversion in the mid-1960s of about 100kg of HEU from the Nuclear Materials and Equipment Corporation’s uranium fabrication plant in Pennsylvania.

Syria
Although Syria is not known to have an active nuclear weapons programme, some incidents have prompted alarm over its ambitions. In 1984, Italian prosecutors filed an indictment which included the charge that, two years previously, an Italian arms-smuggling ring had attempted to sell Syria three complete nuclear weapons. However, one of the key individuals involved claimed that, although Syrian officials had expressed interest, the weapons never existed and were merely a scam devised by the United States. Both the United States and Sweden expressed concern when they discovered that the Swedish company MEAB Metallextraktion AB had built a fertiliser-production facility in Homs that could be used to recover uranium from the phosphoric acid produced by a nearby fertiliser plant. Despite MEAB’s declaration that the plant could not form part of a nuclear programme, suspicions were raised by the involvement of the Syrian Atomic Energy Commission. The Syrian Atomic Energy Commission was apparently included in a 2003 MI5 list of entities that had sought to procure nuclear-related technology for questionable end uses.

There has also been much speculation regarding Syria’s association with the Khan network. A.Q. Khan himself visited Syria several times and met Syrian officials (see chapter three). Syria signed the NPT in 1968 and ratified it the following year.

Conclusions
At least two countries mentioned in this chapter – Iran and India – remain active customers in the nuclear black market, although India to a much lesser degree than Iran. Like Pakistan, Iran in particular has used procurement networks to supply its nuclear programmes via the private sector, and will probably continue its efforts for the foreseeable future. North Korea, although possibly willing to forgo further nuclear weapons development for the time being, has an international network experienced in clandestine procurement and smuggling, which would be well suited for any future nuclear procurement activity.

Although this chapter has focused on the emergence of state procurement networks and their exploitation of the private sector in nuclear technology, it does not argue that older methods of technology transfer (such as inter-state cooperation, diversion and espionage) are extinct. These techniques persist to the present day, and are likely to be explored by any future would-be proliferator, in addition to engaging the private sector.