Middle East Quarterly*
Winter 2005
http://www.meforum.org/article/671
* Cross-posted with permission

In September 2002, President George W. Bush unveiled a new national security strategy that underscored the dangers posed by the proliferation of weapons of mass destruction (WMD). "The gravest danger our nation faces lies at the crossroads of radicalism and technology," he wrote. Central to the president's strategy was "proactive counter-proliferation."[1]

More than two years later, how goes this strategy? There has been some success. The Libyan regime has abandoned its nuclear program. But the threat from Iran and North Korea looms larger than ever. And, while North Korea spreads missile technology throughout the Middle East, and Iran works to enrich weapons-grade uranium, there is evidence that, rather than rolling back proliferation, U.S. policymakers are missing the target, instead spending their resources chasing phantoms. While the Islamic Republic of Iran systematically built its centrifuges and imported reactor parts, in a Kafkaesque situation, the full wrath of U.S. counter-proliferation efforts descended upon my suburban Philadelphia antiques business.

The Growing Proliferation Problem

Washington's concern about Iranian intentions is well justified, even if its counter-proliferation strategy appears misdirected. Iranian officials make no secret of their desire to develop nuclear capability. On October 6, 2004, for example, Iranian president Muhammad Khatami, told reporters, "We have to maintain our right to obtain nuclear energy for peaceful purposes without being subject to any conspiracies or pressures."[2] Less than a week later, Iranian foreign minister Kamal Kharrazi told a European energy conference, "The time has come for Europe to take a step forward and suggest that our legitimate right for complete use of nuclear energy is recognized (in return for) assurances that our program will not be diverted towards weapons."[3] While proponents of critical engagement might argue that Kharrazi was showing flexibility, his statement carried a threatening undercurrent, especially given past Iranian actions.

On December 14, 2001, for example, Expediency Council chairman and former president ‘Ali Akbar Hashemi Rafsanjani ascended the podium at Tehran University in order to deliver the Islamic Republic's formal sermon. Rafsanjani declared,

If one day, this Islamic world is also equipped with weapons like those that Israel possesses now, then the imperialists' strategy will reach a standstill because the use of even one nuclear bomb inside Israel will destroy everything,[4]

Bush and the State Department are correct to recognize that a number of countries have catalyzed or even enabled the Islamic Republic's nuclear ambitions. In 1995, Russia agreed to sell Iran one VVER-1000 nuclear reactor, 2,000 tons of uranium, and provide training for up to twenty employees.[5] Beijing agreed to assist Iran's efforts to enrich nuclear fuel.[6] While the International Atomic Energy Association (IAEA) inspects Bushehr's light-water reactor, real danger exists that the Bushehr plant can provide cover for other Russian-Iranian nuclear exchanges.[7] The August 2002 revelation that the Islamic Republic had constructed a secret underground uranium enrichment facility in Natanz brought the issue to light again.

The Islamic Republic has used the space created by the European Union's "critical engagement" policy to bolster its weapons programs. The EU is now Iran's largest trading partner. EU trade with Iran has doubled since 1999.[8] Bilateral trade now exceeds $13 billion. EU External Affairs Commissioner Chris Patten explained, "There is more to be said for trying to engage and to draw these societies into the international community than to cut them off."[9] International companies have also bolstered Iran's chemical weapons capability. In March 2000, for example, the Islamic Republic contracted with the German firm Salzgitter Anlagenblau to build a 1,450-kilogram per hour phosgene generator.[10] While phosgene has legitimate industrial applications, it can be used in chemical munitions to cause respiratory failure.

Iran's missile program also relies on outside technology. The Shihab-3 intermediate range ballistic missile is derived from North Korea's Nodong-1 missile, modified with Russian technology.[11] On September 21, 2004, Iranian president Khatami presided over a military parade displaying the Shihab-3. Draped over a trailer carrying the Shihab-3 was a banner saying, "We will crush America under our feet."[12]

Retroactive Sanctions

Iran's nuclear program developed to its current state because of the failure of successive administrations to counter proliferation effectively. Less than a year after issuing his national security strategy, Bush initiated an executive order meant to reverse that trend. On July 3, 2003, President Bush issued an executive order, quietly listed in The Federal Register as simply "Public Notice 4370."[13] This order, made retroactive to May 9, 2003, imposed sanctions on firms that "contributed materially to the efforts of Iran to use, acquire, design, develop, produce, or stockpile missiles capable of delivering weapons of mass destruction." The primary targets of this executive order were five major shipping companies, four of which were Chinese and one North Korean.[14]

The effectiveness of Executive Order 13094 in countering Iranian proliferation is unclear. Neither the White House nor the Department of State has publicized the success of these sanctions or reported any detail regarding the effectiveness of the executive order in stopping the flow of arms to Iran despite repeated requests.

On May 10, 2003, thirteen days before the executive order was listed in The Federal Register, a 40-foot container left the port of Tianjin, China, destined for Philadelphia. The cargo, worth $32,000, consisted of three Oriental rugs and 300 crates of Chinese antique furniture. The goods and shipping costs were paid for months prior to the announcement of sanctions. My agent in China chose to ship with China North Trading, also known as NORINCO. The reason was simple: NORINCO is one of the largest trading companies in China. As such, it is able to provide one-stop service, including freight forwarding, consolidation, shipping, and documents.

One month later, upon arrival at the Philadelphia port, the U.S. Customs and Border Patrol seized the shipment; they did not inform me of this for almost a month. Authorities of the U.S. Customs and Border Patrol, the Treasury Department's Office of Foreign Assets Control, State Department, and even the White House concur that nothing in the shipment violated U.S. import laws.[15] Not only were there no weapons of mass destruction, but there also was not a single item that could possibly have any industrial use. Nineteenth century Chinese wooden cabinets do not make good centrifuges.

While authorities confirmed that I did nothing wrong while importing the shipment into the United States, its seizure was no miscalculation. Rather, it is symbolic of a U.S. failure to adopt policy that moves beyond symbolism to counter proliferation effectively.

Bush may have meant well when he targeted the shipping companies, but misdirected and uneven enforcement does little to stop proliferation, especially when the State Department considers a bargain with Iran to make available nuclear technology in exchange for a pledge not to develop nuclear weapons, sponsor terrorism, or interfere with stability in Iraq.[16] Retroactive sanctioning and seizure actually counters traditional U.S. practice. "Historically, as in the cases of sanctions imposed upon ­­­­Sudan and Syria, a grace period was allowed at least for those shipments that were already in transit," according to Margaret Gatti, a specialist in international and U.S. Custom's law.[17] For example, the Anti-Terrorism and Effective Death Penalty Act of 1996 provided a 30-day delay in the sanctions' effective date for trade contracts that were concluded prior to the date sanctions were announced.[18] The Syrian sanctions, on the other hand, called their grace period a "savings clause," which prescribed that "items that are on dock for loading, on lighter, laden aboard an exporting carrier or en route aboard a carrier to a port of export" on May 14, 2004, the date sanctions commenced, "remain subject to the licensing rules applicable to such items" as of May 13, 2004.[19] The Sudanese sanctions allowed a two-week grace period by which time the export had to occur.

The retroactive sanctions may have affected a number of other companies, both large and small. While the State Department, Treasury Department, and U.S. Customs have refused to name other companies caught in the retroactive sanctions Catch-22, Phillip Saunders and Stephanie Lieggi, specialists in nonproliferation policies and U.S.-China relations, say that retroactive sanctions on NORINCO likely cast a large net which penalized many U.S. businesses in no way involved in proliferation:

NORINCO has sizeable business ties with U.S. companies and offices in the United States. The sanctions may cost NORINCO as much as $100 million a year in lost exports to the United States and are also likely to hurt NORINCO's U.S. trading partners, which include large corporations such as Wal-Mart and Kmart.[20]

Such companies, with ample funds for lobbying, may have been able to come to special arrangements with the Bush administration.

Almost nine months after the seizure, the office of John Bolton, undersecretary of state for arms control and international security, appeared to offer some help. In March 2004, his special assistant, Mark Groombridge, advised that the State Department had decided to reverse its decision to seize the antiques and that the goods would be released. Groombridge wrote to my lawyer:

The person who needs to sign the requisite document is out of the country. It will be taken care of this week or next. I had to go to a high level to reverse the decision. Consequently, that person needs to sign it personally … I know this has been frustrating for your client but sometimes the system works, however slowly. Trust me on this. I said I would get it done. I will.[21]

Despite Groombridge's promise, a month later he called to say that the State Department had again reversed its decision and that he could provide no further comment.[22] John S. Wolf, assistant secretary of state for nonproliferation, explained the decision in a June 24, 2004 letter:

The question of a grace period for items shipped before the effective date of the executive order penalties imposed on NORINCO (May 23, 2003) but not arriving in the United Sates until after the effective dates has been reviewed, taking into full account your particular circumstances. These sanctions were imposed … based on a determination that NORINCO contributed materially to the efforts of Iran to use, acquire, design, develop, produce, or stockpile missiles capable of delivering weapons of mass destruction. It was determined that the establishment of a grace period would not be appropriate given the paramount need to stop proliferation to Iran.

In an October 26, 2004 letter, Deputy Secretary of State Richard Armitage confirmed the decision to uphold the sanctions' retroactive clauses and not only liquidate the antiques but penalize me further with U.S. Customs' storage charges.[23]

The failure to provide a grace period or waiver is counter to precedent. While Wolf's commitment is laudable, the State Department has been unable to show that the sanctions have had any effect on proliferation. Indeed, the State Department seems more intent on targeting businesses, perhaps hoping to appear aggressive, while giving weapons proliferators a free hand. Talks about North Korea have bogged down as Pyongyang denies having any uranium enrichment program, despite evidence to the contrary.[24] On October 5, 2004, former Iranian president Rafsanjani, perhaps the second-most powerful man in Iran, announced that Iran had increased the range of its Shihab-3 missile to 1,200 miles, capable of reaching all of Israel, Turkey, or even Europe.[25]

The seizure of the antiques—bought and shipped prior to the announcement of sanctions—would be more understandable had Bolton's office shown the same diligence with regard to seized weapons cargo. On December 10, 2002, U.S. and Spanish forces boarded a freighter in the Indian Ocean. A search revealed fifteen North Korean Scud missiles hidden beneath sacks of cement. Two days later, U.S. authorities allowed the ship to proceed to Yemen where authorities said it purchased the missiles for defensive purposes.[26] Unclear is why a supposed U.S. ally in the war against terror would surreptitiously purchase North Korean missiles and, if legally bought as Yemen maintained, why such cargo would be concealed. U.S. intelligence officials, frustrated with the decision of Undersecretary Bolton to allow the ship to proceed, questioned whether Yemen was the ultimate destination of such missiles. After all, Yemen has little defensive need for such weapons.[27] North Korea is an active proliferator, though, and its missile technology provides the basis for Iran's Shihab-3 ballistic missile.[28]

The U.S. State Department has also rewarded Libya, despite Mu'ammar Qadhafi's ongoing double game. Bush has cited Libya as a model of counter-proliferation success. On December 19, 2003, he revealed that, after nine months of talks, Libyan strongman Qadhafi had agreed to "disclose and dismantle all weapons of mass destruction."[29] The extent of Libya's illicit weapons program came as a surprise to U.S. intelligence.[30]

Nevertheless, Qadhafi's sincerity is questionable. Not long after Qadhafi commenced his secret negotiations with U.S. and British intelligence officials, the U.S. Navy caught his regime red-handed seeking to import equipment to enrich uranium.[31] Only when caught did he come clean. Now that the Bush White House has resumed diplomatic relations with Libya,[32] and the European Union has lifted its arms embargo,[33] Qadhafi may use his new freedom to pursue old projects. The signs of Libyan sincerity are not good. Soon after Washington lifted sanctions on Libya, evidence emerged that Qadhafi sponsored a plot to assassinate Saudi crown prince Abdullah.[34] Two weeks after Bush lauded Qadhafi's release of leading dissident Fathi El-Jahmi as a sign of real change, Libyan security had not only arrested El-Jahmi again but imprisoned his wife and son as well.[35]

Tilting at Windmills

The Bush administration eloquently stated the danger of proliferation in the 2002 national security strategy. The intersection of technology and rogue regimes presents a grave and gathering threat to the security of the United States. The very seriousness of the threat makes more disturbing high-level policy decisions which absolve regimes such as Qadhafi's and release seized missile components such as those discovered offshore Yemen while bringing down the full-force of Kafkaesque retroactive law upon the small businessmen and citizens whose protection the president has sworn to uphold. While the president has admitted "miscalculations" with regard to the war on terrorism and Iraq,[36] there has yet to be White House recognition that misapplication of counter-proliferation policy has failed in its target. Sanctions are an important policy tool. Thomas Jefferson spoke of sanctions as one of the few policy tools short of war available to governments. If sanctions are not effective, then one step is removed on the path from diplomacy to war. The use of sanctions as well as other diplomatic and trade policies aimed at punishing regimes must not be so inflexible as to supersede our country's duty to correct an oversight when policy implementation brings harm to unintended targets.

Jerry Sorkin is a Philadelphia entrepreneur.

[1] The National Security Strategy of the United States of America, September 2002 (Washington, D.C.: The White House, 2002), p. 14.
[2] China Economic Net (Beijing), Oct. 7, 2004.
[3] Aljazeera.com (International English edition, London), Oct. 12, 2004.
[4] Voice of the Islamic Republic of Iran Radio, Dec. 14, 2001.
[5] Michael Eisenstadt, "Russian Arms and Technology Transfers to Iran: Policy Challenges for the United States," Arms Control Today, Mar. 2001; The Washington Post, May 4, 1995; Michael Eisenstadt, Iranian Military Power: Capabilities and Intentions, policy paper no. 42 (Washington, D.C.: Washington Institute for Near East Policy, 1996), p. 14.
[6] Eisenstadt, Iranian Military Power, p. 15; The Washington Post, Apr. 17, 1995.
[7] Robert J. Einhorn, assistant secretary of state for non-proliferation, testimony before the Senate Foreign Relations Committee, Washington, D.C., Oct. 5, 2000.
[8] "Bilateral Trade Relations: Iran," Directorate General Trade of the European Commission, Brussels, Jan. 2004.
[9] The Guardian (London), Feb. 9, 2002.
[10] Periscope Daily Defense News Capsules, Mar. 31, 2000.
[11] "Iran's Shihab-3 Missile," Middle East Intelligence Bulletin, Aug. 5, 2000.
[12] The Daily Star (Lebanon), Sept. 22, 2004.
[13] Executive Order 12938, amended by Executive Order 13094, in "Notices," Federal Register, vol. 68, no. 130, July 8, 2003.
[14] The New York Times, July 4, 2003.
[15] Lou Dobbs Tonight, CNN, July 16, 2003; The Philadelphia Inquirer, July 20, 2003; The New York Times, July 26, 2003.
[16] The International Herald Tribune (Paris), Sept. 21, 2004.
[17] Interview with author, office of Gatti and Associates, Haddonfield, N.J., Oct. 15, 2004.
[18] R. Richard Newcomb, director, U.S. Treasury Office of Foreign Assets Control, testimony before the Senate Banking, Housing, and Urban Affairs Committee, Oct. 30, 1997.
[19] "Sudanese Sanctions Regulations," U.S. Department of the Treasury, sec. 538.506, p. 656.
[20] Phillip C. Saunders and Stephanie C. Lieggi, "What's behind U.S. Nonproliferation Sanctions against NORINCO?" Center for Nonproliferation Studies, Monterey Institute of International Studies, May 30, 2003.
[21] E-mail from Mark Groombridge to attorney Tim Rolland, Mar. 15, 2004.
[22] Telephone conversation with the author's attorney, Apr. 15, 2004.
[23] Letter from Richard Armitage to Sen. Arlen Spector (R-Pa.), Oct. 26, 2004.
[24] The New York Times, Oct. 13, 2004.
[25] Financial Times, Oct. 5, 2004.
[26] CNN.com, Dec. 12, 2002.
[27] Ibid.
[28] "Iran's Shihab-3 Missile."
[29] George W. Bush, "Libya Pledges to Dismantle WMD Programs," White House news release, Dec. 19, 2003.
[30] The Christian Science Monitor, Jan. 27, 2004.
[31] The Washington Times, Sept. 9, 2004.
[32] The Washington Post, June 29, 2004.
[33] Radio Free Europe/Radio Liberty Newsline, Oct. 12, 2004.
[34] The International Herald Tribune, June 10, 2004.
[35] Claudia Rosett, "Dial a Dissident," OpinionJournal, Apr. 7, 2004; "Dissident Watch," Middle East Quarterly, Fall 2004, p. 89.
[36] The New York Times, Aug. 27, 2004.