Body of Secrets: Anatomy of the Ultra-Secret National Security Agency (67 page)

For years,
Iran had purchased C-802s from China, but officials in Tehran were becoming
increasingly troubled about the prospects for future sales. They felt that as China
nudged closer to the United States, it might eventually slow down or halt
weapon sales to Iran, as it had been doing with Pakistan.

By the
summer of 1997, NSA intercepts of phone calls and faxes among Tehran, Beijing,
and Hong Kong were beginning to indicate that Iran might be attempting to build
the missiles themselves. The prospect made many in Washington very nervous,
because if Iran produced its own missiles the United States would have even
less ability to monitor and control its inventory. The near-supersonic weapons
could wreak havoc against American ships sailing in the Persian Gulf. But the
key to the missile was the complex, high-precision turbojet engine that powered
it. It was built by Microturbo, SA, a firm based in Toulouse. Few believed that
Iran would be able to successfully build such a machine on its own.

Then, in
July 1997, NSA delivered some bad news to the White House. Its electronic
vacuum cleaner had intercepted a phone call from Tehran to Hong Kong revealing
that Iran was attempting to reverse-engineer the French Microturbo engine—to
acquire one and then peel it back, layer by layer, until it understood the
engine well enough to build one. Then Iran would attempt to obtain engine parts
for as many as 100 missiles from Microturbo by disguising the parts' ultimate
destination. According to the intercepted conversation, instead of having
Microturbo ship the parts to Tehran, Iran would have them sent to a Hong Kong
company called Jetpower. Jetpower would then forward them on to Iran, although
it is unclear from the intercepts whether or not the company knew of the
deception. To further screen the true nature of the shipment, the equipment
would be labeled "Generator 4203 mini—jet engine."

Iran
seemed to be pulling out all the stops. GCHQ, through its Morwenstow antennas,
intercepted a call from an Iranian official in Paris to Tehran indicating that
Iran was considering hiring a notorious arms dealer to help obtain the
Microturbo engine. On July 29, 1997, an overcast but warm Saturday in Paris,
the Iranian official, a Mr. Mehrdad, met with Syrian arms trafficker Monzer
al-Kassar.

Flabby and
gray-haired, the forty-nine-year-old al-Kassar had traveled to Paris from his
home in Marbella, Spain, where he operated a company called Conastra Trading.
In 1992, al-Kassar was arrested in Spain on charges of providing weapons and
financing for the 1985 hijacking of the Italian luxury liner
Achille Lauro
but
was later acquitted. A man of many passports as well as identities, al-Kassar
had been part of the covert network run by Lieutenant Colonel Oliver North
during the days of the Iran-contra scandal. It was revealed that al-Kassar had
received $1.5 million to purchase weapons. When he was questioned about
al-Kassar, former U.S. national security adviser John Poindexter said,
"When you're buying arms, you often have to deal with people you might not
want to go to dinner with."

Mehrdad
told his contact in Tehran that "the meeting had gone very well" and
that they should invite both al-Kassar and another international arms dealer,
the French-born Bernard Stroiazzo-Mougin, to Tehran for further discussion on
ways to acquire the Microturbo engine. According to the GCHQ report,
"Stroiazzo-Mougin is Director of North Atlantic Airways. In August 1996,
he was noted [in earlier GCHQ intercepts] supplying electron tubes and Boeing
707 and 747 aircraft spare parts to an Iranian company."

Mehrdad
concluded the July 29, 1997, conversation by telling al-Kassar that he was
certain they would be able "to do very big things." A few weeks later
al-Kassar faxed to Tehran details concerning the half dozen people he was going
to bring with him on his visit to Iran— mostly engineers from South Africa, as
well as Stroiazzo-Mougin—to discuss the missile project. GCHQ dutifully intercepted
the list, which included such key data as dates of birth and passport numbers.

By
September, Iran's fears about the Chinese connection seemed to be coming true.
Chinese officials told their Iranian counterparts that the latest shipment of
C-802 missiles had been temporarily halted because of "technical
problems." There were no "technical problems." According to U.S.
intelligence reports, the Chinese government had quietly decided to cease
delivery of the missiles until at least after the late October summit meeting
in Washington between China's president Jiang Zemin and Bill Clinton. Also
according to the intelligence reports, General Mohammad Vahid-Destjerdi, the
Iranian deputy minister of defense, didn't buy the "technical problems"
excuse and accused the Chinese of being unprepared to stand up to Western
pressure and lacking in resolve.

In
Washington on October 29, behind blue and white sawhorses across from the White
House, protesters chanted and shouted. But as the long black armor-plated
limousine arrived with President Jiang Zemin, a military band drowned out the
demonstrators with the national anthems of both the United States and China.

Following
the summit talks, a news conference was held in the Rose Garden. In the crisp
fall air, under a bright sun, Clinton addressed the issue of nuclear
proliferation. "President Jiang and I agree," he said, "that the
United States and China share a strong interest in stopping the spread of
weapons of mass destruction, and other sophisticated weaponry in unstable
regions, and rogue states, notably Iran." In part on the basis of
President Jiang's assurances that China had halted missile sales to Iran,
Clinton granted permission for U.S. companies to sell nuclear power plant
equipment to China. But Clinton was relying on more than Jiang's word: behind
the scenes, away from the press and the public, he was relying far more heavily
on NSA to tell him whether China was keeping its agreement.

In
November, NSA intercepted messages confirming earlier reports: Iran had decided
to go it alone and build its own missile. Plucked from an INTELSAT were faxes
indicating that six months earlier, in May, a deal had been struck between Iran
and Microturbo. The intercepts included a letter of credit, valued at over $1.1
million, issued by Iran's Defense Ministry to Microturbo. The terms of the
contract indicated that there was little time left: the "goods" were
to be shipped to Iran by December 3, less than a month away. They were to be
loaded on an Iranian ship in Antwerp, Belgium, which would take them to Bandar
Abbas, Iran.

At the
White House there was outrage over the NSA report on the backdoor deal between
Microturbo and Tehran's generals. In June the United States had sent a démarche—a
diplomatic protest—to France complaining about earlier sales of Microturbo
engines to China. In response, the French Foreign Ministry agreed to prohibit
future sales by the company to China as well as "to other pariah states
such as Iran out of principle."

Now, as a
result of the NSA intercepts, a second démarche was issued, this time
requesting an investigation into the Microturbo contract with Iran. More U.S.
protests followed. Officials from the American embassy in Paris approached the
French Foreign Ministry again about the same time, and Pentagon officials
called on the French defense attaché in Washington. But the French would only
say, unofficially, that the Microturbo contract simply involved
"generators," not missile engines.

Finally,
when no formal reply was forthcoming, an unusually high-level and blunt protest
was made to the French Foreign Ministry. "It is our understanding,"
it said, "that Microturbo's generators and jet engines are almost entirely
identical, and only slight modifications are necessary to turn the 'generator'
into a jet engine."

Although
it was December, the atmosphere in Microturbo's offices was decidedly hot
following the U.S. diplomatic protests over who their clients were and what
they were shipping. The issue was especially sticky because Microturbo had a
subsidiary located in Grand Prairie, Texas, and that subsidiary depended
greatly on U.S. government contracts for sales of its turbojet engines.

What
employees of Microturbo did not know was that they had become entangled in
UKUSA's electronic web. Thus when T. Dècle, a company official, faxed a message
to Mr. R. Heidari, an Iranian defense official, it was intercepted by GCHQ's
Morwenstow antenna, several hundred miles away. Transferred to the agency's
headquarters at Cheltenham, it arrived on the desk of an analyst who
specialized in weapons systems and had been following the C-802 closely. The
analyst concluded that Microturbo was attempting to "mask involvement in
Iranian anti-ship [C-802] cruise missile component deal."

In his
report, the GCHQ analyst wrote that Dècle had informed the Iranian military
officials "that he would advise them in the next few days of Microturbo's
position. To avoid any faxes being missent to Microturbo's U.S. subsidiary, Dècle
requested that in the future the headers of faxes should not show the name of
the U.S. subsidiary, and he also asked them to use a specific French fax
number."

The secret
intercepts offered clear, hard evidence that the Jiang-Clinton summit was
having a positive effect. Inside a low, pale-colored government building near a
busy intersection in Tehran, Hossem Jafari, the official responsible for buying
the C-802 missiles from Beijing, was becoming more and more angry at the
Chinese, who were reneging on their contract. His anger was specifically directed
at China National Precision Machinery Import & Export Corporation.

In early
December, Jafari marched over to China Precision's office in Tehran and
demanded some answers from Wen Bo, the local representative. Like a man who had
been conned, Jafari laid into Wen. He demanded to know why China Precision had
not returned his calls, why the contracts had not been fulfilled, and why he
had been given no explanations. Jafari said he had instructed his financial
department to cease all payments and then demanded that Wen Bo immediately call
China Precision's president, Jin Xuekuan, or its vice president, Ji Yan-shu,
for an explanation.

Wen Bo did
as Jafari asked and made the call to Beijing. While Jafari listened to Wen Bo's
side of the conversation, NSA was eavesdropping on
both
sides. Over the
telephone, Wen Bo told an official at China Precision that he was in an
embarrassing position because he had received no instructions on the missile
deal. He then listed Jafari's complaints and asked to speak to the top
executives. In response, an official suggested to him that although both Jin
Xuekuan and Ji Yanshu were both in the building, he should tell Jafari that the
executives were temporarily out and could not be reached. Wen Bo did as he was
told, and Jafari left as angry as he arrived. However, he said, he did not
blame Wen Bo but rather the "policymakers" in Beijing.

The
Jiang-Clinton summit, according to the NSA intercepts, also affected a
long-planned trip to Tehran by a delegation of China Precision engineers. They
were scheduled to travel to Tehran in October, just before the summit, to help
repair and service the missiles already delivered. The trip was then delayed
for several months. Finally, in December, just before the team's rescheduled
arrival, Beijing sent Wen Bo some disappointing news. "The future looked
bleak," the NSA report quoted the Chinese officials. The delegation had
been shrunk to just three persons and they were going to Tehran only to carry
out some nonspecific discussion about contract matters, "not to actually
do anything about them." When the delegation finally arrived at Tehran's
Mehrabad Airport on December 4, a still-boiling Jafari asked them why the two
top executives of the company had never got back to him. He was simply told
that "the current situation had already gone beyond the realm of CPMIEC's
[China Precision's] control; consequently, Jin and Ji were not able to
reply."

For
Jafari, things did not get better. In February 1998 he learned from press accounts
what he was never told directly: China had pledged not to sell any more cruise
missiles to Iran. In a further meeting with officials of China Precision, the
Iranian officials demanded renewed commitment within two weeks; otherwise,
cooperation between Iran and China might be suspended.

These
intercepts brought smiles to normally glum officials at the White House and
State Department. "The complaints lodged by Tehran suggest Beijing is
holding firm on the original pledge," said a State Department intelligence
report. "Since the commitment was made, the U.S. has detected only one
possible shipment to Iran of small components related to the air-launched
version of the C-802." Giving up on China, Iran began working hard at
reverse engineering and attempting to build its own missiles with the parts
already received. "Iran may already have received some or all of the
equipment necessary to assemble C-801 or C-802 missiles before the commitment
was made," said the State Department report.

In March,
the U.S. defense attaché based in Tel Aviv reported that an Israeli military
intelligence official had passed on some hot information. "According to
IDF DMI [Israeli Defense Force, Directorate of Military Intelligence], Iran
signed a contract in 1993 with the Chinese corporation CPMIEC for the
procurement of C-801 and C-802 missiles for its naval units and shore-to-sea
missile batteries." The U.S. defense attaché could barely keep from
laughing at this report, which, he warned, might include "circular
reporting from U.S. intelligence exchange program." That is, he felt it
was simply something Israel had happened to pick up from U.S. intelligence and
was feeding right back to U.S. intelligence for "credit." "Caution
should be exercised in using this information for direct reporting. ... It is
interesting that the Israelis are dredging up old information to serve as a
vehicle for renewed request for information on the Iranians, or, in the
alternative, are just now obtaining information on six-year-old
contracts."