CourcyInt

STRATEGIC INTELLIGENCE FORUM SPECIAL BULLETIN

To: All Strategic Intelligence Forum members

Date: 18 September 2006

From: JKC de Courcy, Chairman, Strategic Intelligence Forum

Subject: CHINA'S RELATIONS WITH NORTH KOREA AND IRAN

Long-standing Strategic Intelligence Forum (formerly Courcy's Intelligence Service) members will know that we follow closely the proceedings of the US-China Economic and Security Review Commission.  Last week the commission looked at China's relationship with North Korea and Iran.  Our reading of the testimony is as follows:

1.  The US considers China to be "a keystone" of the administration's efforts to stop the proliferation of weapons of mass destruction and related technology throughout the world.

2.  Chinese entities continue to involve themselves in proliferation activities despite China's formal adherence to non-proliferation treaties and agreements.  According to Paula A DeSutter, Assistant Secretary of State for Verification, Compliance, and Implementation, China's violations of its commitments include:

* The transfer of missile-related technology and material to missile programmes of concern in Iran and North Korea, thereby making "considerable contributions to the development of ballistic missiles in these countries".

* Research activities and the development of dual-use capabilities that indicate "the possibility that sophisticated BW [biological weapons] and CW [chemical weapons] work could be underway".

* The maintenance of "some elements of an offensive BW capability in violation of its BWC obligations".

* The likely existence of a "CW production mobilization capability".

* Transfers of Australia Group (AG) chemical control list items and technology "to countries of concern".

In his testimony, Ehsan M Ahrari, CEO of Stratetegic Paradigms Consultancy, added: "China has also supplied nuclear knowledge to Iran to manufacture nuclear weapons.  It has been training Iranian nuclear engineers.  In addition, Chinese nuclear experts have travelled to Iran to help that country build uranium conversion facilities..."

Ilan Berman, vice-president for policy for the American Foreign Policy Council, added that a decade on from the Pentagon's 1996 designation of China as "a principal supplier of nuclear technology to Iran", this aspect of the Sino-Iranian strategic partnership "is still going strong".

Berman said: "China has reportedly been a major focus of Iranian procurement activities, with Iranian front companies successfully acquiring nuclear-related materials from the PRC in recent years.  Iranian opposition elements have also charged that Chinese experts are employed at multiple nuclear facilities inside Iran, including the Saghand uranium mine and a uranium centrifuge facility outside Isfahan."

Berman concluded: "As a practical matter, China's record of proliferation to Iran is poor - and getting worse."

3.  Despite Chinese denials, the administration believes that these violations are not simply the consequence of inefficient controls.  As DeSutter put it: "Evidence of recurring transfers by serial proliferators - some of which are state-owned enterprises - suggests that the problem is greater than one of inadequate resources."

4.  China's motives for this behaviour are fairly straightforward - and rational, which makes countering its behaviour more complex.  Its motives include:

a) with regard to Iran:

* It is expected that China's energy reserves will be depleted by 2020.  Already, 40% of China's energy needs have to be met by imported oil - and Iran has the world's second largest reserves of natural gas (after Russia) and third largest reserves of oil (after Saudi Arabia and Canada).  Iran is China's single largest oil supplier, already accounting for 15% of the PRC's annual oil imports by 2002.

* China and Iran share a mutual desire for the evolution of a multipolar world in which the dominance of the United States is considerably diminished.

* China can use its relations with Iran as a means of applying pressure to the US over arms supplies and support to Taiwan.

* The prevention (or at least delay) of regime-change in Iran and any subsequent rapprochement with the United States.

* Iranian collaboration in maintaining stability in Central Asia and preventing the rise of Islamic fundamentalism and separatism.

* The emergence of Iran as the new geopolitical centre of gravity in the post-Saddam Middle East.

b) with regard to North Korea:

* Strong "fraternal" ies with the communists of North Korea, which date back to the 1930s when Kim Il Sung fought against the Japanese in Manchuria.

* The need to control the timing and terms of eventual Korean reunification, so that China can maintain a buffer between itself and South Korea for as along as South Korea remains more US-oriented that China-oriented.

* The prevention of any sudden destabilizing collapse in North Korea.

* The need to maintain influence over the unpredictable Kim Jong Il, in particular trying to prevent the open acquisition of nuclear weapons by North Korea which could lead to Japan and Taiwan going nuclear.

END

The full testimony from last week's hearings can be accessed via http://www.uscc.gov/