October 12, 2010 | Hill

Iran’s Uranium Holdings

Despite international sanctions designed to derail Iran's nuclear program, the Islamic Republic legally owns 15 percent of the third largest uranium mine in the world.

How is this possible? Ask the management of Rossing Uranium Limited in the southern African nation of Namibia. According to the company's most recent annual report, Iran has owned a sizeable stake in it since the early 1970s.

The United Nations has made it illegal to sell fissile material to the Iranians, but it somehow allows them to own a major stake in a uranium mine. This is a loophole that needs to be addressed at Turtle Bay.

The Namibian government insisted last year that it did not enter into commercial deals to supply Iran with uranium. Under Namibian law, the Windhoek government must approve all uranium exports. And Rossing's most recent report to stakeholders declares that the company is in full compliance with International Atomic Energy Association directives on Iran.

Nevertheless, from Washington's perspective, Rossing could be a legitimate target for financial sanctions.

Presumably, Iranian personnel have access to the site. Indeed, two Iranian representatives of the Iran Foreign Investment Company (IFIC) sit on Rossing's board of directors. One of them, Seyed Nezameddin Ashrafizadeh, is an accomplished chemical engineer.

Are the Iranians acquiring technical knowledge from Rossing's experts and transferring it to Iran's domestic uranium mines? This is illegal, according to the Comprehensive Iran Sanctions, Accountability, and Divestment Act, which President Obama signed in July. It may also be illegal under UN Resolution 1929, which states that “Iran shall not acquire an interest in any commercial activity in another state involving uranium mining.”

Additionally, IFIC, the entity that holds Iran's 15 percent share of Rossing, is the mullahs' sovereign wealth vehicle. The U.S. Treasury placed IFIC on the Iranian Transactions Regulation list in August, making it unlawful for Americans to do business with it.

By way of background, IFIC is the investment arm of Iran's Oil Stabilization Fund (also known as the National Development Fund). Iran created the fund in 1999 to help insulate Iran from the gyrations of the oil market. When oil prices spiked, Iran threw money into the fund and invested it through IFIC. When oil prices dropped, Iran withdrew money from IFIC's investments to make up the shortfall.

The Treasury release naming IFIC stated that its designation stemmed from the fact that it is “wholly owned by the government of Iran,” and that its mission is to “manage and expand Iranian holdings abroad.”

Indeed, in addition to Rossing, IFIC has less radioactive holdings all over the globe. For example, it owns 40 percent of a bank Egypt, 12 percent of finance company in Oman, 10 percent of a Yemeni mobile phone company, and 10 percent of a technology fund in the United Arab Emirates.

All of these companies could be financial targets in the ongoing struggle to bring Iran to its knees. But they are not the first order of business.

Lawmakers should first ensure that the U.S. does not purchase uranium from Rossing. Washington should further engage with the Namibian government and Rossing's board of directors about their international security responsibilities. After that, if Rossing refuses to cut its ties with Iran, Congress should consider sanctions that would officially make it illegal to do business with it.

It will be important to learn whether the Islamic Republic owns controlling shares in other international businesses that could give it a leg up in its continuing efforts to build a nuclear weapon. As the Iranian nuclear endgame plays out, oversights like these could give Tehran a dangerous advantage.

Jonathan Schanzer, a former intelligence analyst at the U.S. Treasury, is vice president of research at the Foundation for Defense of Democracies. He contributes to the Foundation's project on Iran sanctions, www.iranenergyproject.org.

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