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Iran: Tehran asserts its independence.

Iran's arms procurement drive is in high gear. Alan Gore reports on the country's latest efforts to acquire technology and equipment in its drive to modernize its armed forces.

TWO YEARS AFTER Iraq's Gulf war defeat, Western governments are becoming increasingly alarmed at attempts by Iran to acquire sophisticated technology and equipment of direct or potential use in its drive to modernise its armed forces.

A particular concern is that Iran appears to be emulating Iraq and moving to win greater independence from foreign embargoes by establishing its own defence and aviation industries.

The fears were summed-up early last year by Robert Gates, then director of the Central Intelligence Agency. He told a Senate committee that Iran had "embarked on an across-the-board effort to develop its military and defence industries (including) programmes and weapons of mass destruction" and that Tehran "continues to shop in Western markets for nuclear and missile technology."

The parallel with Iraq should not be taken too far. Iran's military spending, estimated at $2 billion per year, is less than it was in the days of the Shah and only about 40% of what Iraq was spending after its 1988 ceasefire with Iran.

Tehran's procurement drive is nevertheless in high gear. The purchasers are a series of agencies and companies forming part of, or closely linked to, Tehran's defence ministry and Revolutionary Guards Corps (which has its own military infrastructure). Prominent amongst them are Golden Lawell, a Hong Kong-registered firm which procures mainly for the air force; Iran Aircraft Industries (IAI), which undertakes maintenance and related work for the air force and for civil airlines; Aviation Technology Affairs (ATA); Saziman poshtiban Defa (Defence Support Organisation); Ghoods Research Centre; Lavson Ltd; State Procurement Organisations; and Foreign Procurement Management Centre.

In foreign markets, these agencies operate with the assistance of a large network of usually small broking firms, frequently run by Iranian expatriates. Sometimes, the middlemen in turn subcontract to other firms, making it difficult for the manufacturer to be certain of the ultimate customer's identity.

Typical of these daisy chains is a network which included a branch of ATA operating from the National Iranian Oil Company (NIOC) building in London; AI Systems Ltd, a small firm run by an expatriate Iranian; and several small sub-contractors. A major aim was to acquire components for remotely piloted vehicles.

The lengths to which the Iranians are prepared to go are highlighted by their efforts, disclosed in February, to contract British companies to manufacture fan blades for General Electric J85 engines used in the Iranian Air Force's Northrop F-5 fighters. British Customs have seized 12,000 blades valued at about |pound~1 million. The contract was placed by the Foreign Procurement Management Centre with DBI Ltd, a small firm based near Maidenhead, west of London. DBI in turn sub-contracted the work to specialist engineering companies who are not thought to have known the end-user. The blades, which force air into the engines, are crucial to keep Iran's 65 ageing F-5s in the air.

A DBI spokesman claimed that the Iranians had told the firm that the blades were destined for use on propeller-driven Fokker F-27 aircraft. The intention, he claimed, was "to fit a jet engine to the F27 because the aircraft's existing engine is inadequate for the higher-altitude, short take-off fields in the northern part of the country". DBI had "a perfectly valid export licence for F27 parts", he added.

In the Netherlands, Fokker said that to its knowledge there had never been a jet or rocket-assisted take-off kit produced for an F-27 "although that doesn't mean there isn't one."

Following the Gulf crisis and the revelations of the full extent of Saddam Hussein's defence technology procurement successes, Western governments drastically tightened their export control regimes and enforcement procedures. In response, the Iranians have increasingly turned to Singapore, Hong Kong and other Far East countries as transhipment points. In the West, however, Switzerland, with its political neutrality, discreet banks and good communications remains an important centre of activity.

Typical of Iran's more questionable procurement efforts was a hitherto unreported attempt late last year to acquire night vision goggles for helicopter pilots, in defiance of a comprehensive US embargo on the supply of aerospace and defence materials and equipment to Iran.

The chain of suppliers had four links and the transaction involved four foreign states. The ultimate customer was the State Procurement Organisation (SPO) and next in line was Lavson Ltd. This had placed an order with a Sligo, Ireland, firm, which in turn sub-let work to a small company in Calgary, Canada, Eagle Copters Maintenance, From Canada, Eagle ordered from Litton Electron Devices of Tempe, Arizona, two M927 and two M929 nigh vision sets together valued at about $50,000.

Litton's International Marketing Director, Woody Wood, said that Eagle had not mentioned that the end-user was Iran. Although he declined to go into detail, he said: "They gave us documents showing that the end user was an acceptable and legal country and company."

From Canada, the goggles went to Mac Aviation in Sligo, which, having secured a valid export licence from the Dublin government, shipped the equipment to London to be sent on to Tehran by air. Shortly after its arrival in Britain, however, British Customs seized the shipment.

Mike O'Reilly, a senior figure at Calgary-based Eagle, declined to discuss the affair, except to say that it had been "a hassle". Tom McGuinn, who described himself as an "ex-director" of the company Mac Aviation, said he had "no idea why the stuff was blocked" and he stressed that the firm "would never get involved without an export licence."
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Article Details
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Title Annotation:Business & Finance
Author:George, Alan
Publication:The Middle East
Date:Apr 1, 1993
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