August 5, 2006Foreign Affairs

Blundering Blacklists (2)

Political motivation destroys the credibility of the US State Department’s blacklists

This is an archived blog post from The Acorn.

Russia’s Sukhoi Corporation manufactures and sells fighter aircraft. Rosboronexport, Russia’s state-controlled arms exporter sells, among other items, Tor-M1 surface-to-air missiles manufactured by the Antei conglomerate’s Izhevsk Electromechanical Plant-Kupol.

Korean Mining and Industrial Development Corporation and Korea Pugang Trading Corporation, both based in North Korea, have previously been fingered by the US government before, for providing assistance to Iranian missile programmes and also for laundering money.

Cuba’s Centre for Genetic Engineering and Biotechnology is that country’s premier R&D institution: it is open to foreign visitors, involved in scientific collaboration with China, India and Iran, and denies American allegations that it is engaged in biological warfare production.

Balaji Amines Ltd and Prachi Poly Products Ltd are manufacturers of industrial chemicals based in India’s Maharashtra state. Both are ISO 9001 certified, and the former is listed on the Bombay Stock Exchange. So what do they have in common with Russian aircraft and missile makers, North Korean money launderers and a Cuban research institute? Well, they have all just been sanctioned by the US State Department for supplying Iran with Weapons of Mass Destruction.

The chemicals supplied by Indian companies could have been used by Iran for manufacturing chemical or biological weapons. But unlike missiles and surface-to-air systems, the chemicals they supply are available from numerous suppliers in the international market. Blacklisting companies that sell run-of-the-mill products to Iran is absurd: If the Iranians used German screwdrivers to assemble their missiles, would German firms be guilty of proliferation? Or for that matter, what if Japanese made office supplies were used at a sinister Iranian WMD factory? And surely, the computers those Iranians used to carry out complex WMD related calculations had American microprocessors in them. Will Intel (well, okay AMD too) be sanctioned next?

It is also important whether the Indian firms knew what their Iranian customers were doing with their products. Given the risk to their reputation it is likely that these firms would have co-operated with the Americans, even if their exports did not violate any Indian or international laws. It is unclear if the US authorities even attempted to warn them before jumping to sanctions.

Iran is likely to have imported industrial chemicals from many international suppliers. And China, a known supplier of missile technology to Iran, is conspicuously absent from the State Department’s list this time. So the singling out of small and mundane Indian firms has a political ring to it—an attempt to put the Indian government on the defensive on Iran. Unfortunately, the State Department is using tools from a different age. That this list was released after the US House of Representatives voted on the India-US nuclear accord is not as much a goodwill gesture as it is deft political manoeuvre by the Bush administration.

Two more private Indian firms—the first two were blunderlisted in December 2005—have been made scapegoats. An appropriate course for the Indian government is not to give this any more rhetorical oxygen, but to assist the affected companies to take legal action in the United States and have their names cleared.

Update: Balaji Amines had been verbally’ warned by India’s foreign ministry in Dec 2005. It is baffling that the Indian government should think a mere phone call was all that is necessary for a public listed company to cancel a supply contract. (Linkthanks: Swami Iyer)

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