Michael Richardson: US shows muscle by punitive action

The United States and many other Western nations suspect Tehran is working secretly to develop nuclear weapons to enhance its regional clout and match Israel's undeclared atomic arsenal.

Under a United Nations Security Council resolution this year, Iran has until tomorrow to suspend uranium enrichment in exchange for incentives, or it risks sanctions. It has said repeatedly it will not do so.

China and Russia joined Britain, France and the US - the other three permanent members of the Security Council with veto powers - in supporting the resolution. But Beijing and Moscow do not endorse international sanctions because both have important energy, trade and arms links with Tehran.

China gets about 13 per cent of its oil imports from Iran and has signed energy supply deals of $156 billion, and Russia is providing nuclear power reactors and air-defence missiles to Iran despite US objections.

Washington has announced bilateral sanctions on Russia's state arms export monopoly Rosoboronexport, and military jet manufacturer Sukhoi, for allegedly providing Iran with equipment that could be used to develop missile systems and weapons of mass destruction.

The penalties, which will remain in place for at least two years, were also imposed on companies in India, Cuba and North Korea.

The sanctions prohibit US Government agencies from dealing with the seven companies, but private firms are exempt apart from military technology. Rosoboronexport was furious, saying the measures were an unfriendly act.

The US has taken an even tougher line against China. Since 2001, the Bush Administration has slapped financial sanctions on Chinese companies 16 times for alleged transfers related to ballistic missiles, chemical weapons and cruise missiles to Iran and Pakistan.

China Great Wall Industry Corporation and a leading defence industrial firm, China North Industry Corporation have been prominent on the list of repeat offenders. Some US arms control officials have referred to them as serial proliferators.

Great Wall Industry is China's monopoly satellite-launcher. China contends that Great Wall Industry was singled out for punishment because it started offering reliable but cheaper commercial launch services for Asian and other customers of American companies.

But US officials have accused Great Wall Industry of trying to acquire American satellite and rocket technology which could be passed on to the Chinese military's missile units and foreign customers.

Three months ago the US Treasury penalised Great Wall Industry and three other firms in China after accusing them of supplying Iran's armed forces with missile parts.

Great Wall Industry's representative office in California was also implicated. The US action froze the assets of the relevant Chinese companies in the US and banned all American US transactions with them indefinitely.

Stuart Levey, the Treasury's Under-Secretary for Terrorism and Financial Intelligence, made it clear that Washington expected foreign compliance.

He urged governments worldwide to ensure companies and financial institutes were not facilitating Iran's proliferation activities.

In Beijing, the Government and Great Wall Industry protested their innocence.

The company said its business was solely concerned with the peaceful application of space technology and its foreign sales adhered strictly to international laws.

The Chinese foreign ministry said the US move was unreasonable and irresponsible and had been made without providing any evidence of wrongdoing.

Washington's charges have added to the reservoir of deep mutual suspicion and mistrust between the US and China over sensitive strategic issues, including how best to handle the Iranian nuclear situation.

Great Wall Industry and co-accused companies are said to have worked with three Iranian firms linked to the military. The US Treasury said one of the companies produces Iran's Fateh-110 missile, which has a range of 200km , and the Fajr rocket family, a series of North Korean-designed rockets with ranges of 40km to 100km.

The US says all these missiles are capable of being armed with chemical warheads.

Another of the Iranian firms is said to be responsible for Iran's liquid-fuelled ballistic missile programmes, including the Shahab-3 missile, which is based on a North Korean design and has a range of 1300km - sufficient to strike US ally Israel, which the Iranian regime has sworn to destroy.

If America's recent Iran-related sanctions on Chinese and Russian companies with close ties to their governments and militaries were intended to put pressure on the two countries to cooperate with the US in isolating Tehran, the timing could hardly have been worse.

The charges are likely to make Beijing and Moscow more determined to block any US-backed move to apply sanctions on Iran.

The US must have known this before taking punitive action, which suggests that Washington firmly believes its charges are true.

* Michael Richardson is a research fellow at the Institute of South East Asian Studies.