Strengthening UN sanctions on proliferators Lessons from the reports of UN Sanctions Panels

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1 Strengthening UN sanctions on proliferators Lessons from the reports of UN Sanctions Panels Summary This paper considers how to strengthen United Nations Security Council sanctions which have been imposed on States that sponsor proliferation. Evidence contained in reports issued by two UN Sanctions Panels, on Iran and on the DPRK, shows that the majority of interdictions of goods and materials by Member States, in compliance with UN resolutions, do not involve items listed under UN sanctions. In the large majority of cases action has been taken by Member States on the basis of catch-all provisions. This suggests, first, that Iran and DPRK are developing their proliferation programmes in large part based on procurement of non-listed items, and second, that strengthening the impact of UN sanctions on State-sponsored proliferators requires strengthening the language of catch-all provisions. Background Two countries are currently subject to UN sanctions because of their WMD proliferation activities: the Islamic Republic of Iran and the Democratic Republic of Korea (DPRK). Iran is subject to four sanctions resolutions (1737 (2006), 1747 (2007), 1803 (2008) and 1929 (2010)) and so is the DPRK (1718 (2006), 1874 (2009), 2087 (2013) and 2094 (2013)). The importance of UN sanctions These resolutions were all adopted by the Security Council under Chapter VII of the UN Charter: all UN Member States are obliged to implement them, although it is for individual States to decide how to do so. This universality is important: neither Iran nor DPRK can seek to evade sanctions prohibitions though States with which for example they might have no current trading connections, or are far away. UN sanctions provide the basis for many unilateral or multilateral sanctions regimes, including those of the EU, US and others. 1 However, the great majority of UN Member States implement only UN not unilateral sanctions. UN sanctions provide for most Member States the legal basis for interdictions of goods and materials intended for Iranian or DPRK proliferation activities. Interdictions have stopped substantial quantities of dual-use, proliferation-sensitive materiel from reaching these countries. 2 1 Council Regulation (EU) No 961/2010 of 25 October 2010 on restrictive measures against Iran 2 See, e.g., Nick Gillard, Interdicted carbon fibre: Proliferation Case Study Series, Project Alpha, 26 September 2014, 1

2 In the case of Iran, halting or at least slowing procurement of goods and materials intended for prohibited nuclear activities or ballistic missile activities is enormously important. It delays the time when Iran, if it wished, could credibly declare a capability to produce a nuclear device, or the time when another State might mount military action to forestall Iran reaching this stage. The objectives of UN sanctions The objectives of the Security Council in adopting sanctions are described in preambulary paragraphs to the resolutions. In the case of Iran, these note that the Security Council is determined to take measures to persuade Iran to comply with relevant Security Council resolutions and the requirements set out by the Board of Governors of the International Atomic Energy Agency (IAEA), and to constrain Iran s development of sensitive technologies in support of its nuclear and missile programmes. The resolutions stress the need for negotiation. In the case of DPRK resolutions, the Security Council determines that there is a clear threat to international peace and security from DPRK s nuclear and ballistic missile-related activities. The Security Council decides that the DPRK shall abandon all nuclear weapons and existing nuclear programmes, return to the Non-Proliferation Treat (NPT) and act in accordance with the IAEA Safeguards Agreement. There is no reference in the DPRK resolutions to constraining proliferation activities possibly because, unlike Iran, DPRK has already built and exploded nuclear devices. In the case of Iran constraining development means preventing attempts, or at least hindering them, to procure goods and materials for Iran s proliferation activities. These include items which have applications only in nuclear facilities, and also dual-use items which have both nuclear and non-nuclear applications. Reports issued by the Iran Panel of Experts established pursuant to Security Council Resolution 1929 provide some evidence that UN sanctions are effective in this respect. The Iran Panel Reports also provide evidence that Iran still needs to procure from overseas. The Panel noted in June 2012 that Iran remained reliant on foreign suppliers for components, materials and equipment to build its missiles. In addition it appeared that Iran was continuing to import whole engines, or at least critical engine components, for its liquid-fuelled missiles, and it required components for guidance systems. 3 Also in June 2012, the Panel noted that sanctions were slowing the procurement of some critical items required for its prohibited nuclear programme. 4 A year later, the Panel noted that Iranian reliance on procurement from abroad provided the 3 ibid. 4 Final report of the Panel of Experts established pursuant to resolution 1929 (2010), S/2012/395 2

3 international community with an opportunity to limit its ability to maintain and expand prohibited activities. 5 In June 2014 the Panel recorded that Iran was demonstrating a continuing demand for high-quality dual-use goods above- and below- control thresholds, and was continuing to procure non-listed dual-use goods as substitutes for controlled items. 6 In the case of the DPRK, the DPRK Panel described debris from a launch in December 2012 of an Unha-3 rocket which included a number of foreign-sourced components. The Panel concluded that this demonstrated the foreign-trade dependency of DPRK s prohibited activities and programmes. In June 2013, the Panel noted that while sanctions had not halted the development of DPRK s proliferation activities, they had in all likelihood considerably delayed the DPRK s timetable. 7 The requirements of UN Sanctions resolutions Both Iran and DPRK resolutions require UN Member States to take action against proliferation activities. First, they are required to prevent the transfer of items listed in documents referenced in the resolutions. Second, they are required to freeze the funds, other financial assets and economic resources of certain individuals and entities connected with proliferation activities. These designated individuals and entities are listed in the individual resolutions and on the UN website. The lists of prohibited items referenced in the resolutions are those of the Nuclear Suppliers Group (NSG) in the case of nuclear-related goods and materials, and the Missile Technology Control Regime (MTCR) in the case of ballistic-missile related goods and materials. The resolutions refer to the version of the lists current at the time and, although the lists are regularly updated by the NSG and the MTCR, updates are not automatically incorporated into the resolutions. Usually updates are minor and failure to incorporate into the resolutions probably matters little. Occasionally updates are significant and in these cases lack of automatic incorporation potentially undermines the effectiveness of the resolutions. 8 Forty-three individuals and 75 entities are designated under Iran sanctions and 12 individuals and 20 entities are listed under DPRK sanctions. These numbers are small In comparison to designations under unilateral sanctions regimes, and accordingly, there is a question mark on their impact. 5 Final report of the Panel of Experts established pursuant to resolution 1929 (2010), S/2013/331 6 Para 55, S/2014/ Final report of the Panel of Experts established pursuant to resolution 1874 (2009), S/2013/337 8 Ian J. Stewart, Andrea Stricker and David Albright, Chinese Citizen s Involvement in the Supply of MKS Pressure Transducers to Iran: Preventing a Reoccurrence, 3

4 In addition to the requirement for action on the basis of lists, member States are also required to take action on the basis of catch-all provisions, i.e. if a State determines that non-listed goods or materials are intended for use in prohibited nuclear or ballistic missile activities, a State should take action. 9 UN Member States are also required or called upon to take action on the basis of information that provides reasonable grounds to believe 10 that a certain activity or transaction is connected to prohibited activities. Varying interpretations of such catch-all provisions may lead different States to take different decisions regarding interdiction. 11 Below-Control Threshold Procurement The Iran Panel was told by many States that Iran is seeking items for prohibited activities which fall below control thresholds. 12 A recent exhibition in Iran of sabotaged foreign-made equipment purchased for Iran s nuclear programme showed mostly uncontrolled equipment. 13 Controlling below-threshold procurement poses challenges: many such items have numerous industrial applications. Some can be upgraded to surpass control thresholds. Some can be used in indigenously produced equipment which Iran is increasingly capable of producing. How do States identify items that are not listed but could contribute to proliferation activities? How do they maintain legitimate trade with Iran while not contributing unwittingly to its proliferation activities? One State emphasized that critical dual-use items are more at the centre of procurement than listed goods. 14 Similar observations have been made in respect of procurement by the DPRK. The DPRK makes use of off-the-shelf items or items just below prohibited parameters, which are then assembled or integrated into systems or subsystems. 15 Items whose specifications fall below control thresholds may pose a significant proliferation risk Paragraph 4(b) of resolution 1737(2006), updated by paragraph 13 of resolution 1929 (2010), requires States to take necessary measures to prevent the supply, sale, or transfer directly or indirectly from their territories of [any non-listed items] if the State determines that they would contribute to [Iran s prohibited activities]. 10 For example paragraph 14 of resolution 1929 (2010) calls upon States to inspect cargo to and from Iran if the possess information that provides reasonable grounds to believe that the items are either listed or covered by catch-all provisions. 11 Para 84 of S/2014/ Para 77 of S/2013/ See Ian J. Stewart and Nick Gillard, Sabotage? Iranian exhibition gives insights into illicit procurement methods and challenges, 8 September 2014, 14 Para 77 of S/2013/ Final report of the Panel of Experts established pursuant to resolution 1874 (2009), S/2014/ Rec 4, S/ ; Para 57, S/2014/147 4

5 Statistics on actions taken by Member States In light of the above, what do the Sanctions Panels reports say about the grounds used by Member States to interdict proliferation-related shipments? The following tables list the numbers of incidents involving goods and materials connected with proliferationrelated activities (i.e. some form of interdiction by the States concerned) recorded in Reports of the Iran and the DPRK Panels. The export-control procedures of most States rely to different degrees on electronic risk management systems. These systems can be of varying quality and some may rely on control lists to identify proliferation-sensitive items (meaning that below-threshold items will get through). 17 The incidents listed in the tables almost all relate to interdictions carried out on the basis of shared intelligence rather than interdictions that were triggered by a risk-management system. The data are crude for a number of reasons. First, the term incidents may, in different Panel Reports, cover more than one type of item and more than one single episode. Second, the date of transfer of items is not the same as, and may predate by some years, the date of the Report in which they are referenced. Third, in the case of Iran, the term incidents describes episodes formally reported by Member States to the 1737 Sanctions Committee, whereas in the case of the DPRK incidents may include episodes described by the media but not formally reported by Member States. The figures included in the tables do not include any incidents related to intangible technology transfer, nor to transfers of arms or related materials. The Security Council resolutions on Iran cover only incidents of attempted procurement by Iran. Member States are not required under these resolutions to take action against exports by Iran of such items. The resolutions on DPRK, however, require Member States to prevent transfers by DPRK as well as procurement of relevant material. 17 Para 83 S/2014/394 5

6 Iran Panel Year of Report Total number of incidents investigated (described in Iran Panel Reports) Of these, number involving listed goods And, number involving non-listed goods DPRK Panel Year of report Number of incidents investigated (described in Panel Reports) Of these, number determined to have involved listed goods And, number involving non-listed goods (import) (export) (see footnote (see 0 (import) 9) footnote 9) 2013 (export) 2014 (import) (export) Number of incidents in which designated individuals or entities were named in related documentation 18 Number of incidents in which designated individuals or entities were named in related documentation 18 Relevant documentation includes shipping, commercial and financial documentation. 19 Based on information provided by a Member State (para 29 of S/2013/331) 20 Annex II of S/2014/394. The data do not include a separate set of incidents involving attempted carbon fibre procurement described in Annex III of this Report. 21 A Member State held information that a designated entity was involved in the shipment (Para 57 of S/2012/422) 22 The Panel s report refers, in addition, to various items including industrial computers, para 60 of S/2012/337. It is not stated whether any of these items was included in control lists. 23 A Member State held information that a designated entity was involved in the shipment (Para 45 of S/2013/337) 6

7 Although the data for DPRK are inconclusive, the data for Iran show that very few interdictions were carried out of listed items. On the contrary, the majority of interdictions involve items which fall below control thresholds. These items were interdicted by Member States on the basis of catch-all provisions. Furthermore, apparently very few interdictions were carried out because designated individuals or entities were involved in the shipments. How to strengthen UN sanctions? The data in the tables above suggest that strengthening the effectiveness of UN sanctions depends on strengthening catch-all provisions. This would probably be more effective than adding items to the lists of controlled items, or names to the lists of designated entities and individuals. Catch-all provisions are written so as to give States discretion in how to implement them. Full and effective implementation requires States to have effective legislation in place; to have effective systems for communicating and receiving information from partners overseas and to have effective methods in place for outreach to their manufacturing and transportation sectors. These are challenging requirements. What are the additional possible ways to strengthen UN resolutions? They probably include: 1) Adding to the lists of designated individuals and entities. At present the numbers are so small that designations probably have little impact for this reason alone. It must be assumed that it is comparatively simple for Iran s procurement agents to employ or make use of non-designated individuals or entities. For designations to be effective therefore, a large number of additions would be needed. Neither the 1737 Committee nor the 1718 Committee has added designations since 2012 so it is perhaps unrealistic to expect significant action in this respect. 2) Updating the references in the resolutions to control lists. Both NSG and MTCR update their control lists on an annual basis but these updates are not always incorporated into UN resolutions in a timely fashion, or indeed at all. Although there is some evidence that updates might be significant to the resolutions (e.g. footnote 8), given the small percentage of controlled items in the tables above the practical impact is likely to be minor. 3) Encourage information-sharing: catch-all provisions are fully effective only when States have information about the end-use and end-user of given item. Effective 7

8 sharing of relevant information between international partners is therefore critical. 4) Ensure that States involved in interdictions are provided support by the international community. The Iran Panel notes that, in the course of interdicting and seizing items, States face challenges such as costs and the safe and secure storage of potentially hazardous materials. States may be reluctant to stop shipments and dispose of items where there are concerns about their capacity or the legal and financial implications of such actions. Appropriate support to States could be an important factor in the effectiveness with which they fulfill UN obligations. 8