Iranian Alert - September 23, 2004 [EST]- IRAN LIVE THREAD - "Americans for Regime Change in Iran"

Company pleads to illegally selling pumps to Iran

By Bill Gertz
THE WASHINGTON TIMES

The U.S. subsidiary of a Japanese company will plead guilty to illegally shipping high-technology pumps with military applications to Iran through two French companies, The Washington Times has learned.

Ebara International Corp., based in Sparks, Nev., has agreed to a plea bargain related to seven criminal violations from the sale of cryogenic transfer pumps to Iran, according to Bush administration law-enforcement officials.

The pumps are used to move cold fluid and have applications for liquid natural gas as well as for cooling nuclear power plants.

The company's founder, Everett Hylton, who left the company recently, also will offer a guilty plea to separate charges of conspiracy to make false statements to investigators, the officials said.

Mr. Hylton falsely told investigators that pumps worth $750,000 were sold to a company in France when he knew they were being sold to an Iranian company, according to court documents in the case.

The company has agreed to pay a fine of $6.3 million in addition to other civil penalties of about $99,000. Mr. Hylton also will pay a $99,000 fine and receive a suspended prison sentence, the officials said.

It is illegal under presidential directives and U.S. export laws to sell industrial products to Iran, a nation designated as a state sponsor of terrorism by the State Department.

The illegal sale of pumps was first disclosed by The Times in September 2003, triggering the yearlong investigation by the Commerce Department, U.S. Customs Service and Treasury Department into the diversion of four Ebara pumps to Iran.

The sale was masked by company officials who said the pumps would be used by two French companies, Cryostar and Technip, officials said.

However, an investigation disclosed that the pumps were resold to Iran's state-owned Pars Petrochemical Co., which is building an offshore gas complex near Qatar in the southern part of Persian Gulf.

The officials, who spoke on the condition of anonymity, said the plea deals are expected to be announced by the Justice Department today after a hearing before U.S. District Court Judge John Garrett Penn.

An investigation into the French companies' role in the pump diversion is continuing and could lead to U.S. economic sanctions against Cryostar and Technip, the officials said.

Spokesmen for the companies could not be reached for comment.

A Commerce Department official involved in the investigation said one "immediate concern" in the transfers is that the pumps can be used as part of the cooling system for Iran's nuclear reactors at Bushehr. Court documents indicate that the pumps were to be used in a petrochemical plant.

Iran's government recently announced that it was ignoring appeals from the International Atomic Energy Agency and will resume the processing of highly enriched uranium, which U.S. officials say will be used to make nuclear weapons.

Iran says its nuclear program is for making energy.

Court documents in the Ebara case stated that laws violated by the company included conspiracy to export four cryogenic pumps to Iran; exporting without a license; attempting to export three pumps without a license; money laundering related to payments for the pumps; and conspiracy to export technology assistance.

Officials said that Technip initially approached Ebara in 2000 with an offer of large cash payments if the company would export the pumps to Iran in violation of export laws.

Japanese executives from the parent company, Ebara Corp. Japan in Tokyo, also knew about the illegal pump sale, according to court papers.

Export documents used in the transactions were falsified to make it appear as if the pumps were meant to go from Technip to Cryostar, which posed as the end user of the pumps, according to court papers.

Japanese company officials also transferred sales proposals to its South Korean agent so that the sales could continue without the U.S. subsidiary.
The total pump deal was to have been worth $3.23 million and would have been supplied to Iran's South Pars Phase 4 and 5 petrochemical plants in Iran. The offshore oil project involves the construction of oil and gas platforms and 65-mile pipelines.

Officials said Ebara was enticed into the illegal deal by the prospect of a large cash sale.

Editorial

By Mortimer B. Zuckerman

Stopping a nuclear nightmare

The 20th century was the century of ideology and the wars spawned by fascism and communism. The 21st century is at risk of surpassing those evils in the depravities of unaccountable stateless terrorism coupled with access to a destructive power once a monopoly of the accountable sovereign state. The nature of the evil was manifest in the coldblooded torture and murder of the schoolchildren in Beslan. The taboo of child killing was coldbloodedly broken, a fact that has few parallels in the long history of evil.

This was made-for-TV terrorism, intended for the sole purpose of horrifying a worldwide audience. As on 9/11, we were made once again to witness the indefensible--and to recognize once again how utterly defenseless mankind is against nihilists who value human life--including their own--so cheaply. Russia will not respond by negotiating sovereignty with Chechnya, as some commentators here suggest it should. Instead, repression will follow. That's understandable--but it could be a dangerous diversion of energies. A more urgent requirement in Russia is to stop terrorists from killing on a much grander scale. The means are at hand in Russia, in the form of its weapons-usable nuclear material.

Building a bomb. Graham Allison, the founding dean of Harvard's Kennedy School of Government and a former assistant secretary of defense, has expounded, in Nuclear Terrorism, an important new book, on the security risks that this deadly resource holds for the world should it fall into terrorists' hands, or hostile nation-states, and used against us. Twelve years after the dissolution of the Soviet empire, Allison says, there are still thousands of weapons and tens of thousands of potential weapons in the form of fissionable material held in unsecured storage facilities across Russia.

The only practical way a terrorist organization could create a nuclear bomb is through access to fissionable material; stateless terrorists simply don't have the wherewithal, either technologically or monetarily, to manufacture the stuff themselves. That leaves them with basically two options--either win the support of a state sponsor who has fissionable material or steal it. Once they have acquired such materials, constructing a nuclear device is a very doable thing. Remember the Princeton student who, back in 1977, demonstrated in his senior thesis (he got an A) the capacity to design an inexpensive, little nuclear weapon from publicly available information? And let's not forget that A. Q. Khan, the founder of Pakistan's nuclear-weapons program, had spent a decade or more selling nuclear technology and services on the worldwide black market.

That's why it's so critical to secure, without further delay, the vast stockpiles of fissionable material that remain dangerously insecure. Even finished weapons are barely protected. A 99 percent success rate would not do; 1 percent would mean there would be some 200 nuclear weapons out of control in Russia.

And make no mistake about it--once the terrorists get hold of these materials, there is every reason to believe they could use it against America, for smuggling across its long porous borders is virtually unstoppable. The most recent estimate was that we had less than a 1 in 10 chance of detecting a nuclear cargo sent by land, sea, or air. Not to mention that no state or federal agency has jurisdiction to control the 21 American Indian reservations that stretch across hundreds of miles of our border.

First, all governments with plutonium and highly enriched uranium must secure these supplies so that they cannot be stolen by, seized by, or diverted to terrorists. Second, no more bomb material should be produced, and excess stocks should be destroyed. Third, highly enriched uranium used in nuclear reactors worldwide must be carefully monitored, so that no nation (read Iran) can, under the false flag of a peaceful power, even come close to having a bomb. Fourth, we must make sure that any rogue states with nuclear ambitions are stopped in their tracks.

Energy Secretary Spencer Abraham has launched a Global Threat Reduction Initiative that is designed to remove potential bomb material entirely from the world's most vulnerable sites, and to do it rapidly. Congress must give him the financial support and the authority to bring this about and appoint a full-time senior official to lead the efforts to stop nuclear terrorism at the source.

The nuclear arms race has been transformed from a race between the superpowers to a race between terrorists seeking weapons of mass destruction and a civilized world scrambling to stop them. It is a race we simply can't afford to lose.

Dollars for Dictators

[Excerpt]

September 23, 2004
The Wall Street Journal
Review & Outlook

When the International Monetary Fund meets next week in Washington, it is hoping to persuade the U.S. to approve its no-strings-attached, multi-billion-dollar foreign aid expansion. If that sounds odd at a time when U.S. resources are already stretched, wait until you see the list of beneficiaries.

The new IMF financing would make Iran eligible for a total of $465 million, Syria would be entitled to $90 million, Robert Mugabe's Zimbabwe $115 million and Sudan $100 million. Oil-rich, authoritarian Venezuela would have $840 million and the gentle junta running Burma $80 million. As the creditor nation in the Fund, the U.S. would be asked to cough up the lion's share of the dough.

The proposal, launched in 1997 by the Clinton Administration and Britain, is about increasing the "special drawing rights" pool at the Fund. SDRs, which are paper receipts that can be exchanged for real money, originated under the gold standard as a liquidity tool for balance of payments shortfalls. This meant that these "international reserves" would continually circulate from deficit to surplus countries.

But the collapse of Bretton Woods in 1971 removed any such logic for printing "paper gold." That meant that the SDR department at the Fund had to find a new line of work and, as Carnegie Mellon economist Adam Lerrick notes in a paper for the Joint Economic Committee released today, it has "morphed into a foreign aid mechanism to transfer money from rich to poor countries." Since 1970, the Fund has allocated 21.4 billion SDRs ($31 billion at the current dollar rate). Now it wants to double that.

Ostensibly, the new SDRs would restore equity in the Fund since some new members have never received any SDRs and others' share of the world economy has grown. But as Mr. Lerrick notes, these goals could have been met by a reallocation of existing SDRs. The rub is that those countries that had used up their allocations would have been required to pay back what they had borrowed. Mr. Lerrick points out that "63 governments or more than half of IMF developing country members with SDR allocations have consumed their existing shares." So the more politically acceptable path is to expand the SDR account.

Which presents its own problems. First, despite the rhetoric, SDRs are not free money created out of thin air. They are receipts that borrowers bring to the window to be redeemed, usually for dollars, euros or yen. The Fund has to get that real money from its creditor members -- and that means you, dear taxpayer.

According to Mr. Lerrick, "SDR Department charges add up to an annual cost to U.S. taxpayers of $330 million." That means, Mr. Lerrick says, if the SDR expansion is ratified by Congress, "U.S. exposure could easily surpass $12 billion in hidden foreign aid without control over where the funds go or the ends to which they are devoted. The cost to U.S. taxpayers would then reach $750 million per year." The IMF is hoping no one will notice, since the Fund's drain on American resources is "off-budget" under Congressional accounting, meaning that it doesn't show up as an annual expenditure but is an off-the-books future liability.

Equally egregious is the lack of accountability in SDR accounting. SDRs are supposed to be "borrowed," but formal IMF policy states that they are distributed without condition and without any expectation of repayment. This is the antithesis of President Bush's foreign-aid policy, which pledges to screen candidates, monitor results and emphasize incentives. We have a hunch Iran, Syria and Venezuela wouldn't qualify under these Bush standards.

Expansion of the SDR account requires three-fifths approval of Fund members and that hurdle has already been cleared. But it also needs 85% approval by voting power and only has 76% to date. The U.S., with its 17% vote, holds the blocking veto. Unless Washington wants to prop up Tehran's mullahs and other class acts, we would suggest using it. ...

US Ramps Up Military Rhetoric On Iran

[Excerpt]

September 23, 2004
Dow Jones Newswires
Alex Keto

In a thinly veiled threat, Secretary of State Colin Powell noted Wednesday that "all nations" reserve the right to use military force to shutdown Iran's drive to build nuclear weapons.

However, Powell also added the qualifier that, at the moment, he knows of no plans to launch a pre-emptive strike on Iran.

Over the weekend, Iran rejected a demand from the International Atomic Energy Agency (IAEA) to put an end to its uranium enrichment programs. The step moves Tehran closer to producing the enriched uranium needed for a nuclear weapon.

Tehran has said its nuclear energy program is strictly for peaceful purposes, but U.S. officials believe that is nonsense given that nation's vast reserves of crude oil and natural gas.

Israel has expressed great unease about Iran's efforts to develop the capability to enrich uranium - and has indicated it wouldn't tolerate letting Iran possess nuclear weapons. In 1981, Israel launched a military strike that demolished a nuclear reactor in Iraq that Tel Aviv believed was the foundation of Saddam Hussein's efforts to build nuclear weapons.

Asked about the possibility Israel would launch a strike against Iran, Powell said, "I'm not aware of any plans to attack Iran. Every nation has all options available to it."

Israeli Foreign Minister Silvan Shalom likewise sidestepped the question at the U.N., but made it clear Israel believes time is running out in the crisis.

"They are trying to buy time, and the time has come to move the Iranian case to the Security Council in order to put an end to this nightmare," Shalom said.

Shalom predicted the Iranians will never abandon their nuclear weapons program voluntarily.

As far as the U.S. is concerned, Powell said the decision now is to pursue diplomacy. However, he also indicated the U.S. has only a limited amount of patience left.

He said Iran needs to backdown by the time the IAEA meets again at the end of November and if it doesn't, then other options may come to the fore.

"We're talking about diplomacy and political efforts to stop this movement on the part of the Iranians toward a nuclear weapon and we're not talking about strikes. But every option, though, is -- of course -- remains on the table," Powell said.

While President George W. Bush has made it a practice not to rule out any option when confronting an international crisis, Powell is the first top administration official to weigh in on the topic of military strikes and Iran. ...

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