Beijing’s weak enforcement of nuclear anti-smuggling laws may finally be catching up with it as the number of brazen attempts to illegally export nuclear parts linked to China multiply rapidly.
While Pakistan may have been implicated in the shadowy nuclear components trade in the past, events took an unexpected turn this week when reports surfaced of an Indian company being involved in an enquiry on a Chinese website regarding the procurement of ring magnets for use in gas centrifuges.
According to a study published on Thursday by the Institute for Science and International Security (ISIS) here, countries operating outside formal nuclear trade agreements, such as Pakistan, Iran and North Korea, have “become more dependent on using China as a platform for smuggling many of its targeted goods,” by exploiting China’s inadequate trade controls and weak United Nations Security Council sanctions enforcement to purchase these goods.
Typically the strategy entails the use of private Chinese front companies to provide suppliers with false end-user statements. Once the sensitive products were acquired from often-unsuspecting Western companies and their subsidiaries in China “smuggling networks arrange their shipment” to unnamed third parties. “In this type of smuggling operation, China is considered a transit or turntable country between the supplier” and these countries, ISIS noted.
However, in this instance a “relatively small” Indian company, Ferrito Plastronics, appeared to be offering its services in China, the report noted, and was implicated in communications with an Iran-based firm called Jahan Tech Rooyan Pars on the Chinese nuclear equivalent of e-commerce website Ebay.
While Ferrito was unlikely to have been capable of manufacturing the 1,00,000 ring magnets demanded – enough to run 50,000 IR-1 centrifuges – ISIS argued that “both the Indian and Chinese governments should warn companies that there is zero tolerance for any of their domestic companies entering into such transactions.”
The murky saga of stolen ring magnets and covert centrifuge development leads back in many ways to Pakistan too. While the magnet in this case was “a relatively old style magnet,” ISIS noted, the IR-1 centrifuge was a copy of the P-1 centrifuge deployed in Pakistan that in turn was a 1970s Dutch design stolen by A.Q. Khan while he lived in the Netherlands at that time. The advanced centrifuge allegedly used by Iran is also derived from the P-2 centrifuge design, which Khan also stole in the 1970s.
Speaking to The Hindu the paper’s author David Albright said that what was surprising was that the agent in question felt comfortable enough advertising for the magnets, which was clearly at testament to the fact that the Chinese government “was not adequately watching for this.”
The Chinese government was “just not enforcing its own trade control laws, or UNSC sanctions, a recurring occurrence,” Mr. Albright added, saying that numerous Chinese corporations were “desperate to make money” and this was also fuelling the lax attitude. “Exports also viewed as essential to Chinese economy so there is a mindset that exports are fine whatever they are... China has robust domestic intelligence that focuses on criticism of the state, but not on this type of crime,” he pointed out.
Mr. Albright said other nations had been in China’s position in the past, that is, serving as a de facto nuclear smuggling hub, but had evolved institutionally to end that trend. “In the 1980s Pakistan was similarly procuring parts from Germany as Germany wasn’t watching for this,” Mr. Albright said, adding that Germany however “woke up in the early 1990s and was now very different and it is hard to procure parts there.”
While there is significant global attention given to China’s role as a “Destination of Diversion Concern,” India appears to be developing as a source of similar, if lesser, concern. Mr. Albright explained that in the case of Ferrito, the company had its operations in China and once the enquiry for the magnets was received on the Chinese website from the potential buyer, Ferrito may have engaged in offline communications with the entity.
Whether or not this led to an actual transaction being processed and the exact role of the Indian firm remains unclear at this point.