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Us penalizes iran missile aid { May 23 2003 }

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U.S. Penalizes Chinese Firm Over Alleged Missile Aid to Iran

By Michael Dobbs and Glenn Kessler
Washington Post Staff Writers
Friday, May 23, 2003; Page A21

The Bush administration accused one of China's largest conglomerates of assisting in the Iranian ballistic missile program and imposed sanctions that will deprive the company of more than $100 million worth of exports to the United States over the next two years, U.S. officials said yesterday.

The sanctions, which will be formally published today in the Federal Register, are among the largest ever imposed on a Chinese company, a U.S. official said. They come in advance of an expected meeting next month between President Bush and Chinese President Hu Jintao at a time when Washington is seeking Beijing's cooperation on a wide range of issues, including the resolution of a nuclear standoff with North Korea.

The State Department directive prohibits imports into the United States from North China Industries, or Norinco, a state-owned conglomerate that produces everything from weapons to consumer goods. An Iranian company, the Shahid Hemmat Industrial Group, was also named in the order, but it will suffer fewer financial consequences because it has already been sanctioned and has little U.S. business.

"This is a huge blow" to the Chinese company, the official said.

The U.S. action against the Chinese firm surprised some experts because it appeared to be a break from the practice of trying to resolve nonproliferation differences with Beijing through diplomatic channels. In November 2000, China agreed to abide by international guidelines restricting the spread of missile technology, even though it was not a member of the missile technology control regime.

"The Chinese appeared to be making steady but uneven progress toward controlling missile technology sales," said Joseph Cirincione, a proliferation expert at the Carnegie Endowment for International Peace. "U.S.-China relations have been improving recently."

James Lilley, a former U.S. ambassador to China, said that the sanctions suggest that U.S.-China relations are mature enough not to be adversely affected by U.S. complaints about individual Chinese firms. "You don't have to shut your mouth on their proliferation activities because you want to keep the relationship solid," he said. "If you do it right, the decibel count should not get too high."

An administration official acknowledged that the decision to target Norinco was the subject of some debate within the administration, which held up action on the matter for some time. But he said that, despite the "excellent cooperation" with China on terrorism and the North Korean nuclear threat, "this shows the Bush administration still takes the proliferation of weapons of mass destruction very seriously."

U.S. officials declined to say what assistance Norinco had been providing to the Iranian missile program -- which has been focusing on short-range, solid-fuel missiles and intermediate-range missiles capable of reaching Israel -- except to say that it was a "material contribution" to the Iranian missile program. The United States has previously accused China of providing anti-ship cruise missiles to Iran, as well as guidance systems, rocket fuel ingredients and computerized machine tools. A recent CIA report to Congress cited China for supplying missile-related technology to Pakistan and for sending dual-use items to Iran that could be used for missile programs.

After some improvement during the run-up to the war with Iraq, U.S.-Iranian relations have been strained recently, with U.S. officials accusing Iran of harboring al Qaeda members linked to last week's suicide bombings in Saudi Arabia. The Bush administration recently stepped up efforts to draw attention to the Iranian nuclear program.

U.S. attempts to restrict Chinese technology sales to Iran and other Third World countries date to the Clinton administration, and have varied from quiet diplomacy to public sanctions. Under pressure from Israel, Congress passed laws obliging the administration to impose sanctions on any country providing missile technology to Iran or Iraq.

2003 The Washington Post Company

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