Volume 1 - Iraq Watch

Most of the illegal transactions involving prohibitedgoods between companies from South Korea and Iraqbegan in the summer of 2001, following a MIC visitto Seoul. The May to June 2001 visit was designedto develop contacts with South Korean firms for Iraqicompanies. Subsequent meetings, reflected in recoveredSalah Al-Din General Company documentation,reveal the following agreements:• An agreement with the Shinsung Company toacquire production plans and technology transfersof crystal units, filters, and oscillators.• An agreement with Salah Al-Din and the Koreancompany UNIMO Technology Co. Limited toacquire portables and mobile radio technologytransfers and to upgrade the existing productionfacilities in Salah Al-Din Company for hybrid circuits.• An agreement between Salah Al-Din and TechmateCorporation of Korea for production andtechnology transfer of hand generators, coils andtransformers, hand crank generator (GN-720) cabletester, image still picture transmission equipment,and coastal radar.• An agreement with Armitel in South Korea for thetechnology transfer for the local manufacturing(assembly & test) of STM -1 optical transmissionsystem (AOM-1155) with Salah Al-Din.Another element of illicit trade with South Koreancompanies focused on procuring fiber optics telecommunicationtechnology with potential militaryapplications.• In 2001, the MIC’s Commercial Department signeda contract for fiber optics with the South Koreancompany Armitel. Payment, however, was not madebecause the equipment provided did not meet Iraqispecifications.• The IIS coordinated with one of its agents tobring a delegation of experts from a South Koreancompany called Armitel. Their senior expert, Dr.Lee, visited Baghdad and as a result, signed manycontracts with the Iraqi MoTC, specifically in thefield of fiber-optic communications and militarycommunications. These contracts were valued at$75 million.• The MoTC and Armitel executed a portion of thesecontracts, delivering two shipments of more than 30containers. Delivery was conducted through Lebanonusing Syrian and UAE trade intermediaries.The first contract was delivered through Syria andthe second through Lebanon. These contracts werecovered through Syrian and UAE middle companies.People’s Republic of ChinaAlthough China stated publicly on multiple occasionsits position that Iraq should fully comply with all UNSecurity Council resolutions and cooperate with theSecurity Council and the Secretary General, firms inChina supplied the former Iraqi Regime with limitedbut critical items, including gyroscopes, accelerometers,graphite, and telecommunications throughconnections established by MIC, its front companies,and the IIS. There is no evidence to suggest the ChineseGovernment complicity in supplying prohibitedgoods to Iraq It is likely that newly privatized stateownedcompanies were willing to circumvent exportcontrols and official UN monitoring to supply prohibitedgoods. In supplying prohibited goods, Chinesecompanies would frequently employ third countriesand intermediaries to transship commodities intoIraq. The Chinese-Iraqi procurement relationshipwas both politically problematic and economicallypragmatic in nature, but it ultimately provided Iraqwith prohibited items, mainly telecommunicationequipments, and items with ballistic missile applications.This relationship allowed Iraq to improve itsindigenous missile capabilities.Multiple sources clearly demonstrate that Iraq’s procurementgoal with Chinese firms was to overcomeweakness in missile inertial guidance capabilitiescaused by a lack of technical expertise and components.Iraq had limited capabilities in indigenouslymanufacturing gyroscopes and accurate accelerometers,compounded by the inability to purchase highprecision machinery and equipment. Chinese com-108