- The Washington Times - Friday, July 19, 2002

The United States is imposing economic sanctions on eight Chinese companies for selling destabilizing arms and germ-weapons materials to Iran, The Washington Times has learned.

The administration for the fourth time since September has singled out Beijing's state-run companies for violating U.S. laws aimed at curbing transfers of weapons and arms-related goods to rogue states.

The sanctions will be formally announced in the next few days and involve three cases of sales of advanced conventional arms and chemical- and biological-weapons components to Iran, said State Department officials who spoke on the condition of anonymity.

Evidence of the sales was compelling, they said. "These are all pretty serious cases, and there's a lot of intelligence to support them," one official said.

The sales occurred between September 2000 and October 2001 and violated the Iran-Iraq Nonproliferation Act of 1992. The act mandates sanctions against companies or governments that make sales that "could materially contribute to either country's acquiring chemical, biological, nuclear, or destabilizing numbers and types of advanced conventional weapons."

The State Department notified the Chinese government of the sanctions yesterday.

The sanctions bar the eight companies from doing business with the U.S. government and prohibit the latter from issuing export licenses to U.S. companies that seek to sell goods to the sanctioned firms.

The measures will be in place for two years.

Officials declined to identify the companies, but they will be named when the formal announcement of the sanctions is made in the Federal Register.

A Chinese Embassy spokesman could not be reached for comment. China's government has denounced earlier U.S. sanctions as being based on "groundless" accusations.

The spate of sanctions against China since September is aimed at reversing the policy of the Clinton administration that ignored the country's arms sales or waived sanctions against China and its companies for dangerous arms-related transfers, officials said.

"When the law is violated, we have to take action," an official said.

President Bush has identified Iran as one of three "axis of evil" states, along with Iraq and North Korea.

"This administration has been pretty aggressive in implementing sanctions laws, unlike the past administration," another official said.

The Clinton administration declined to exercise the 1992 law to impose sanctions on China in 1996 for sales of advanced C-802 anti-ship cruise missiles to Iran, contending that the missiles were not destabilizing. The U.S. Navy, however, has said the C-802s give Iran a new and more lethal capability to threaten U.S. ships.

The Clinton administration also declined to sanction China for sales of chemical-weapons goods to Iran the same year, in violation of the 1992 law.

Mr. Bush said in January that he hopes all nations will follow the United States' lead in working to "eliminate the terrorist parasites."

"Many nations are acting forcefully," Mr. Bush said in his State of the Union speech. "But some governments will be timid in the face of terror. And make no mistake about it: If they do not act, America will."

For decades, China has been a major supplier of arms and weapons technology to terrorism-sponsoring states, such as Iran, Iraq, Libya and North Korea. However, senior Bush administration officials rarely criticize Beijing for backing such states.

According to the officials, one Chinese company triggered the latest order of sanctions by selling Iran advanced conventional weapons. Other companies transferred goods to Iran that were related to biological-weapons control and elimination.

Some of the sanctioned companies were previously hit by the State Department for other weapons-related sales to rogue states, an indication that the Chinese are ignoring U.S. government efforts to try to halt the arms transfers.

Last year, U.S. intelligence officials said technicians from Chinese companies were working in Iran on a new advanced air-defense system near the border with Afghanistan. It could not be learned whether the radar system triggered the latest sanctions.

Under the tougher Bush administration policy, economic sanctions were imposed on Chinese companies in September, January and May for sales of military equipment.

In May, the State Department ordered sanctions on several Chinese, Armenian and Moldovan companies for selling cruise missiles and chemical-weapons goods to Iran.

The sales involved transfers of missile parts and components, as well as glass-lined equipment used in making chemical weapons.

The sanctions in January were imposed under the Iran Nonproliferation Act of 2000 for sales of chemical and biological-weapons goods.

In September, sanctions were imposed on a major Chinese arms producer for selling missile technology to Pakistan in violation of an agreement by Beijing not to transfer nuclear-missile-related goods.

Gary Milhollin, director of the Wisconsin Project on Nuclear Arms Control, said the sanctions were a good step but that the U.S. government should do more.

"The restraints are not much punishment," he said. "It's an important gesture, but it doesn't have any practical consequences, because these companies don't do business with the United States."

Mr. Milhollin said that rather than impose symbolic economic sanctions, the U.S. government should deny all trade privileges to the sanctioned firms and also target their parent companies.

In the past, sanctioned Chinese companies have circumvented U.S. economic curbs by using subsidiary firms, he said.

"We need to put some teeth in the worn-out gums of these sanctions," Mr. Milhollin said. "If the administration is serious about sanctions, they need to be expanded so they really have an effect, which they don't have now."

Another tougher penalty would be to bar Chinese employees of sanctioned companies from traveling to the United States, he said.

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