- Associated Press - Monday, May 12, 2014

UNITED NATIONS (AP) - A report by U.N. experts says Iran’s purchases for its banned nuclear and missile programs have slowed over the last six to nine months which could be the result of the changed political climate under President Hassan Rouhani or its use of new clandestine methods.

Excerpts of the report, obtained Monday by The Associated Press, also stressed that “Iran continues to make extensive use of front companies to procure items for prohibited activities.”

The panel of experts, appointed by Secretary-General Ban Ki-moon, conducts investigations and reports to the U.N. Security Council committee monitoring implementation and alleged violations of sanctions against Iran.

The report, which has not been made public, coincides with Monday’s start of a new round of high-level negotiations between Iran and six world powers in Vienna aimed at reaching an agreement to limit Iran’s ability to produce nuclear weapons before a July 20 deadline.

Iran insists its nuclear program is peaceful, aimed at producing nuclear energy, but the U.S., its Western allies and Israel have long believed Tehran’s real aim is producing nuclear weapons.

According to the panel’s report, several countries that were not identified “noted that procurement associated with Iran’s prohibited activities appears to have slowed over the last six to nine months.”

“This slowdown could be explained by Iran using more opaque means of procurement, or states reporting less actively,” the report said. “It may also be the case that Iran has deliberately slowed the pace of procurement, possibly coinciding with a change in the political climate under President Rouhani” and the start of the nuclear talks.

After centrist Rouhani replaced hard-liner Mahmoud Ahmadinejad in June 2013, he pledged to reduce confrontation with the international community over its nuclear activities. He agreed to restart stalled negotiations with the six powers in November in a deal which required Iran to stop enrichment of uranium to 20 percent - which is a possible pathway to nuclear arms - in exchange for the easing of some Western sanctions.

A final agreement between Iran and the U.S., Russia, China, Britain, France and Germany would lead to the lifting of all sanctions, which have crippled its oil-based economy.

According to the experts’ report, “Iran faces substantial difficulties in accessing the international financial system because of the sweeping impact of unilateral sanctions.”

“For this reason, Iran uses a variety of channels for financing procurement including both banking and non-banking methods,” the experts said, noting transactions through institutions in neighboring states, the possible role of small Iranian banks and overseas accounts held by Iran’s Central Bank, and transactions using money transfer businesses known as hawalas, money exchanges, and barter.

The experts recommended that in order to identify front companies, U.N. member states should “open public registries of companies with as many details as possible of their legal ownership, beneficial ownership and shareholders.”

Member states should also alert manufacturers of goods with dual civilian and military uses in their country to the risk of their diversion to Iran through overseas distributors, and encourage compliance with procedures to ensure these banned items aren’t sent to Iran, the experts said.

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