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Issue Number 46, dated 5/4/98

No progress in Moscow (Serial 4601)

The President's Special Envoy for Nonproliferation, Ambassador Robert Gallucci, returned to Washington on April 24 after three days of talks with Russian officials in Moscow that led to no significant breakthroughs on the thorny issue of Russia's assistance to Iranian ballistic missile projects. The talks were "part of a process that produced some results," State Department sources told The Iran Brief, "but not all the results we would like to see."

Gallucci and State Department counselor Jim Timby met with Yuri Koptev, the head of the Russian Space Agency, who chairs the Russian working group dealing with the issue. Koptev has been accused by the CIA in classified briefings of being directly involved in organizing the missile technology transfers to Iran, a charge which he has repeatedly denied. A U.S. official who participated in the talks defended Koptev, saying he "his major interest is not selling nuclear or missile technologies to Iran, but the Russian space program. And he understands that what is at stake is U.S.-Russian space cooperation." However, U.S. officials no longer discount the possibility that Koptev may have an ownership stake in one or several of the Russian companies accused of selling missile technology to Iran.

Three other delegations of senior U.S. officials were also in Moscow, although not specifically dealing with the Iranian missile issue. Deputy Secretary of State Strobe Talbott, who has sought to downplay Russia's cooperation with Iran from the start, was in Moscow bearing diplomatic sweeteners in the form of a proposed Clinton-Yeltsin summit in May. Also in Moscow were John Holum, director of the Arms Control and Disarmament Agency and Acting Undersecretary of State for Arms Control, Deputy Assistant Secretary for nonproliferation Robert Einhorn, and Gary Samore, the NSC deputy in charge of non-proliferation issues, and with his deputy, Jack Keraveli.

The Russians are seeking to expand U.S.-Russian space cooperation, and to increase the U.S. quota for the number of commercial U.S. satellites that can be launched by Russian rockets. Both proposals had been put forward by Frank Wisner, but have since been withdrawn because of continued leakage of Russian technology to Iran.

Fuel tanks: The latest case on Gallucci's plate involved a shipment of 21.7 tons of specialized stainless steel alloyed sheets, which U.S. officials believed was to be used to manufacture liquid fuel tanks for Iran's Shahab-3 missiles. State Department officials said the U.S. learned about the shipment well before it actually left Russia and asked the Russian authorities to stop it, but they did nothing. "The level chaos in Russia is quite stunning," one knowledgeable official told The Iran Brief. "They have experienced a real loss of control. It's a spectacular mess."

But that chaos did not extend south of Russia's border. Once the trucks left Russia, the U.S. contacted the government of Azerbaijan and the shipment was seized on March 26, as the trucks were presenting paperwork at the Azeri border with Iran.

The shipment was organized by a private Russian firm in Moscow known as MOSSO, formed recently by missile experts from Moscow State University. The Iran Brief has learned that MOSSO has also been involved in recruiting missile scientists to work in Iran on the Shahab-3.

One week after the seizure, Vice President Gore wrote to Prime Minister designate Kiryenko, asking him to look into the case. He contacted Russian Space Agency chief Yuri Koptev, who categorically denied any transfers had been made by Iran from MOSSO and declared the case "a dead issue."

After Gore's letter, Russia's Federal Security Service, FSB, announced that it had arrested three men from Tajikistan in connection with the shipment, which they said had been declared on shipping documents as "galvanized steel sheets." They revealed that MOSSO had set up a front company, Europalas-2000, to handle shipment of the materials to Iran.

"Moscow's Men in Tehran:" On March 17, a Moscow newspaper, Novaya Gazeta, revealed that the FSB was not only recruiting, but actually facilitating the travel of Russian scientists to Iran. This was necessary, the paper said, because under Russian law top scientists who have access to classified information may not apply for passports to travel abroad. To get around this restriction, the FSB provided the passports, and arranged for 2-year contracts for the scientists to work in Iran.

Investigators for the paper said they interviewed scientists who said they visited Tehran in 1996, and were offered two-year contracts that included all expenses, an apartment, a chauffeur-driven Mercedes, a personal translator, and salary of $1,000 per month. They told the paper they turned down the contracts because they became convinced that Iran was seeking "to build its own production base - so as not to depend on [foreign] arms suppliers." By gaining independence from its suppliers, they said, Iran was seeking freedom of action. "Its aim is to build everything in the country: from the launch complex to ground-based services to heavy missiles."

A Senate vote on new Russia sanctions is expected between May 20-May 22. The White House is furiously lobbying to stave it off.

Russian missile experts have been in Iran since 1994 on such contracts, the journal said, following a top level Russian government decision to expand strategic and military cooperation with Iran. Major General Alexandr Kotelkin, who was then head of the state arms export organization, Rosvoorouzhenie, was said to have lobbied heavily on behalf of missile cooperation with Iran, and its efforts earned it a place on the CIA "short-list" of Russian entities assisting the Iranian missile program.

One of the Russian scientists interviewed by the paper said he met former colleagues from top secret missile complexes in Russia during his 10-day stay in Tehran in 1996. Among them: "experts on physical metallurgy (they were organizing the casting of missile airframes), specialists in composite materials, and experts on turbines (turbines are necessary for the [fuel] pumps...). He saw engineers who had become expert in creating test stands for the ground-based development of missile engines."

Russian officials dismissed the paper's investigation as "exaggeration," claiming the newspaper's publisher "lacked credibility."

One destination of the Russian scientists was a test site in the desert just east of Tehran run by the Shahid Hemat Industrial Group, where they have helped the Iranians conduct bench tests on the rocket motor for the Shahab-3, which bears many similarities to that of the SS-4 strategic missile. While Gallucci was in Moscow, an unnamed Israeli intelligence official told Israel's parliament that Iran has nearly completed development of the motor and can be expected to start producing the missile sometime next year.

In an interview with the Tel Aviv daily Ma'ariv published on April 16, the director of Israeli military intelligence, Major General Moshe Yaalon, went even further. "One cannot claim today, as it was attempted in the past...that we are dealing with private people who are doing this for money,' Yaalon said. "It is completely clear that we are talking about Russian policy."

Yaalon reiterated earlier claims by Israeli officials that Russia is providing components for the missile systems as well as professional advice, and has participated in different stages of development. "This constitutes massive involvement in the whole project," he said.

Sweeteners welcome: A Russian official who has been following the Koptev-Wisner (and now Koptev-Gallucci) talks said that Prime Minister Chernomyrdin warned Vice President Gore during their last meeting shortly before his dismissal in March that if sanctions legislation now pending before Congress becomes law, Russia "will put an end to the Koptev-Wisner channel."

Senate Majority leader Trent Lott announced recently that he would bring the Iran Missile Sanctions Act up for a floor vote between May 20 and May 22. Introduced late last year with Connecticut Democratic Senator Joseph Lieberman, the bill passed the House and has 82 co-sponsors in the Senate, assuring it a veto-proof majority.

Since Lott's announcement, the Russians appear to be changing tactics, focusing more on what happens once the bill passes the Senate. "The administration has promised us they would veto the bill," the Russian official told The Iran Brief, "and pin the blame for any repercussions on US-Russian relations on Congress."

Nonproliferation programs: The Russian transfers to Iran have also hit U.S. government programs to assist nonproliferation efforts in Russia. On March 19, the Department of Energy sent out a memo to officials at U.S. national nuclear laboratories, warning them to carefully review contracts with some twenty Russian entities, which were suspected of involvement in the Iranian programs.

Senior U.S. officials at the International Science and Technology Centers called the memo "a heads up, but not a prohibition list." The ISTC funds new jobs for Russian scientists that will keep them from selling their know-how to countries like Iran. "This is a program of tremendous value to us," one official said, "so we really have to watch very closely to make sure it is not abused. Every project must be examined to make sure the recipients have no involvement in the Iranian programs."

Another official working with the ISTC called the memo "part of our internal review" of the Russian recipients of U.S. funds. "But lots of U.S. companies have long and successful working relationships with these Russian entities, so there is a lot of money at stake, and a lot of concern. Name any major U.S. aerospace contractor - they are all involved" in joint ventures with Russian companies on the list.

One of the Russian entities affected is TsAGI, also known as the Aerohydrodynamic Institute, which contracted in early 1997 to build a wind tunnel at a Shahid Hemat missile plant outside of Tehran. The ISTC was exploring funding a TsAGI project involving new aircraft designs aimed at improving wake vortex disturbance, a phenomenon which can cause smaller planes to crash when they cross the wake of a larger aircraft. Other which could see prospective ISTC projects canceled include NPO Trud, which previously lost a major contract to sell rocket boosters to Lockheed and is seeking compensation, the Moscow Aviation Institute, and the Baltic State Technical University.