Volume 1 - Iraq Watch

Chinese Assistance in Iraqi TelecommunicationsOne area of robust cooperation between Chinesefi rms and Iraq was telecommunications. These technologieshad both military and civilian uses. Saddam’sRegime used Chinese circuits and fi ber opticsto connect static command, control, and communication(C3) bases. UN sanctions impeded rehabilitationof the telecommunications sector. This equipment wassanctioned because of the nature of modern communicationssystems, which could be used both for civilor military purposes. These obstacles were overcomeby the Iraqi Regime by acquiring materials for cashand procuring materials illicitly, outside the purviewof the UN.One Chinese company, illicitly provided transmissionequipment and switches to Iraq from 1999 to 2002 forprojects that were not approved under the UN OFFProgram. Reporting indicates that throughout 2000,Huawei, along with two other Chinese companies,participated in extensive work in and around Baghdadthat included the provision and installation oftelecommunication switches, more than 100,000 lines,and the installation of fi ber-optic cable.In early January 2001, the Chinese company pulledout of a $35 million mobile phone contract in Iraq,citing diffi culty it would face sourcing key componentsfrom a US firm. The company, which had beennegotiating for two years on a Baghdad ground stationmodule network, cited US Government pressureas the reason for its decision. Iraqi telecom officialretaliated by putting all other contracts with thiscompany on hold and cutting off contact with the fi rm.The company, however, in 2002 used Indian fi rms asintermediaries to illicitly supply fi ber-optic transmissionequipment for Iraqi telecommunications projects.Other companies were also present in Iraq. A summaryof their activity is given below:• A Chinese company was one of the more aggressivefi rms selling equipment to Iraq outside the UN OFFProgram, including major fi ber-optic transmissionprojects.• Another company agreed to provide switches toIraq as part of a large switching project for Baghdadprior to Operation Iraqi Freedom. Workingwith a second Chinese fi rm, this company participatedin a bid for a project in Iraq not sanctionedby the UN. In late 2002 this company submitted abid for a large switching system for Iraq.• Reporting indicated that a Chinese company,working through a second Chinese company, hadsupplied switches to Iraq. This company’s switcheswere used for both unsanctioned and sanctionedprojects in Iraq. This company illicitly supplied theswitches for the Jordan Project, a fi ber-optic networkin Baghdad that was completed in late 2000.This company might have been involved in supplyingswitches with more capabilities than specifi ed inan UN approved project.Regime Financeand Procurementpanies willingly supplied these types of items to theIraqi Regime.• In the fall of 2000, Iraq sought 200 gyros, suitablefor use in Russian and Chinese cruise missiles,and machine tools with missile applications fromNORINCO, a Chinese military supplier that hasbeen sanctioned many times by the United States,twice in 2004. (No delivery established.)• Contracts were initiated in 2000 between Al-Rawaand a Chinese firm, for test equipment associatedwith inertial guidance systems, including a one-109