US embassy cable - 05PRAGUE109

S E C R E T PRAGUE 000109 
 
SIPDIS 
 
FOR NP/CBM, EUR/NCE, EUR/PRA 
 
E.O. 12958: DECL: 01/20/2015 
TAGS: PARM, PREL, MNUC, ETTC, EZ, IR, MTCR 
SUBJECT: (S) MTAG 05-96: CZECH FIRM STROJIMPORT AND IRANIAN 
MISSILE PROGRAM 
 
REF: A. STATE 10746 
 
     B. 04 STATE 162508 
 
Classified By: Deputy Political Counselor Mark Canning for reasons 1.4 
B, D, H 
 
1.  (S) Poloff met January 20 with Otakar Gorgol, Deputy 
Director of the Czech MFA's UN Department to discuss ref A. 
Poloff and Gorgol, who handles many of the ministry's 
non-proliferation issues, have had a series of meetings about 
a horizontal boring machine, manufactured by the Czech firm 
Tos Varnsdorf, that has been in Iran since the fall of 2003. 
Gorgol repeated his earlier statements that this is the only 
machine of this model in Iran that he is aware of, and that 
the GOCR policy is to "not allow any controlled items or even 
dual-use items to be exported to sensitive areas."  He backed 
this up by pointing out that just this month the GOCR, 
specifically the pro-business Ministry of Industry and Trade, 
had turned down a Strojimport request to sell a horizontal 
boring machine to Syria because of MTCR concerns. 
 
2. (S) As part of the follow-up to discussions after the July 
27, 2004 demarche in Reftel B, Gorgol reported in November 
that Varnsdorf sent one of its lathes, model WHN13CNC, to 
Iran for exhibition at a trade fair, the TIIF event in 
Teheran in 2003 (this information is also on the Tos 
Varnsdorf website). Participation in the event was arranged 
by another Czech firm, Czech Machine Tools Ltd.  This firm 
was also authorized to find a buyer and secure a sale.  There 
was some initial interest from an Iranian firm called SADAD 
Machine Corp.  The Czech intelligence agency, BIS, has no 
negative information on this Iranian firm.  There were some 
problems with the sale and early in 2004 the machine was 
moved to a customs warehouse in Teheran. 
 
3. (S) According to Gorgol, Varnsdorf said repeatedly 
throughout 2004 that if a buyer was not found by the end of 
the year, they would bring the machine back to the Czech 
Republic.  Gorgol reported January 20, 2005 that as of this 
week the machine is still in Teheran and that the exporter, 
Czech Machine Tools Ltd., was attempting to bring it back. 
 
4. (S) In November, Gorgol mentioned that there is another 
firm whose name is in the file for this case.  That firm is 
HADID Industries Corporation, PO Box 13185-1153.  HADID had 
been interested in buying similar Czech-made horizontal 
boring machines.  HADID has been identified as a 
cover/partner for a second firm that works with the Iranian 
firm SHIG.  SHIG participates in Iran's ballistic missile 
program.  This is consistent with information in Reftel A. 
 
5. (S) Gorgol was given a copy of the nonpaper in Reftel A 
and made aware of the reporting obligations under the US Iran 
Nonproliferation Act of 2000.  He has promised a more 
detailed response after checking with other GOCR entities. 
HILLAS