Jeffrey LewisUS Sanctions Indian Firms For Chem Sales

Bill Gertz reported that the United States, under the Iran Proliferation Act of 2000, will impose sanctions on nine entities—one Austrian, six Chinese and two Indian firms.

The two Indian firms are Sabero Organics Gujarat Ltd and Sandhya Organics Ltd.

The Indian government cried foul. External Affairs Ministry Spokesman Navtej Sarna denied the sale violated Indian export controls:

We have also seen reports about imposition of sanctions on two Indian firms namely Sabero Organics Gujarat Limited and Sandhya Organics Limited under the US-Iran Proliferation Act, 2000.

[snip]

The sanctions imposed by the US Government on the two Indian firms relate to transfer of some chemicals to Iran. Our preliminary assessment is that the transfer of such chemicals is not in violation of our regulations or our international obligations. Government of India’s commitment to prevent onward proliferation is second to none. We have instituted a rigorous system of export controls and our track record in this regard is well known. India is working with the international community including with the US as a partner against proliferation. In this context the imposition of sanctions by the US on our firms, which in our view have not acted in violation of our laws or regulations, is not justified.

David Sanger reported that the “State Department announcement did not describe the technology exported to Iran, information that is classified.”

Wow, Dave, you’re the hardest workin’ man in the news business. Arms Control Wonk took the apparently unthinkable step of visiting the websites and e-mailing the two firms to ask what they’d exported—Phosphorus oxychloride (POCl3).

Here is the full response from Sandhya Organics:

Dear Sir,

Greetings from India.

We wish to inform that we are a small manufacturer manufacturing Phosphorus based speciality chemicals like Phosphorus oxychloride – POCl3, which comes under Schedule chemicals under Chemical Weapon Convention.

We had exported approximately 1.5 MT POCl3 to Iran and we have taken all necessary documentary permision to export the item as per the CWC convention.

Our facility has been audited by CWC people currently and they found all documents , records and facility as per there satisfaction.

Iran has also signed the CWC convention and so has India and so as per the CWC all things are OK.

To our surprise we found our name in major News Paper all over the world including India for doing nothing against any international export law or rules as per our knowledge and we have no intention of doing so to best of our knowledge.

We were not aware of the any US – Iran trade laws and particularily the ban of such chemicals to Iran.

Please Inform us if you need more information.

Snehal Patel
Director,
Sasndhya organic Chemicals P. Ltd.
www.sandhya-group.com

Arms Control Wonk.com then took the even more unorthodox step of e-mailing an export control expert, Scott Gearity, to ask about the chemical and its significance. His response is posted on his awesome blog.

Shorter Gearity: Puh-leeze.

Phosphorus oxychloride (US Export Control Classification Number 1C350.c.3) is a chemical weapons precursor. It’s on the least restrictive of the three Chemical Weapons Convention schedules—the one for stuff that may be produced in large commercial quantities for applications not banned under the convention. In other words, this chemical has a lot of innocuous industrial uses—something the framers of the CWC recognized.

Both India and Iran are both parties to the CWC so there’s no obligation under that agreement for the Indian exporter to even obtain an end-use certificate from their Iranian customer, let alone an overarching export prohibition.

Update: Nitin Pai notes that Sabero Organic Chemicals Gujarat “has revealed that it had shipped a single consignment of 200 tonnes of tri-methyl phosphite to Iran two years ago.” Tri-methyl phosphite is, like phosphorus oxychloride, also a Schedule 3 chemical.

Late Update: Sabero Organics just e-mailed me their press release. Here it is:

PRESS RELEASE
29th December 2005

IMPOSITION OF SANCTIONS ON TWO INDIAN FIRMS UNDER THE US-IRAN PROLIFERATION ACT.

India is a signatory to the Chemical Weapons Convention, which came into force in April 1997. Currently 162 Nations are State Parties to the Convention. Iran is also a State Party to the Convention as are India and the USA. It appears that the US has imposed sanctions on two Indian companies including Sabero Organics Gujarat Ltd.

Sabero Organics is engaged in the manufacture of various agrochemicals including Tri-Methyl Phosphite (TMP) and Tri Ethyl Phosphite (TEP), which are Schedule 3 chemicals. In Schedule 3 are listed dual purpose chemicals that have large number of legitimate civil and commercial applications such as in pesticides, flame retardants, optical brighteners and which could also be used as a pre-cursor for the purpose of developing chemical weapons. Each State Party is required to make annual declaration of the production, import and export of Scheduled chemicals and their production facilities. Sabero Organics is one of several Indian companies, registered with the Ministry of Chemicals & Fertilizers, a nodal agency under the Chemical Weapons Convention and has been regularly filing the necessary declarations under the Chemical Weapons Convention.

Coming to business with Iran, Sabero organics has made a one time export of 112 MT of TMP in 2003 to Raja Shimi Industrial Manufacturing Centre, Iran, after complying with all the legal requirements such as filing of requisite declarations with the DGFT, Ministry of Commerce and other government agencies such as Ministry of Chemicals, Ministry of External Affairs and the National Authority under the requirements and guidelines of the Chemical Weapons Convention. Since Iran is also a signatory to the Chemical Weapons Convention, one is allowed to export such chemicals to Iran, without any export licence but, the required filings need to be done on completion of the transaction. Sabero had in fact, informed the Ministry of Chemicals & Fertilizers before exporting the chemical to Iran, and the export was made only after obtaining, from the Iranian company, an end-use certificate, stating the use for herbicide manufacture, which is an essential requirement under the Chemical Weapons Convention.

The imposition of sanctions by the US on Sabero Organics is not justified because Sabero Organics has exported the chemical, after complying with all the legal formalities under the Chemical Weapons Convention.

The Ministry of External Affairs, Government of India, has released a Press Report, the extract of which is as under:

“Our preliminary assessment is that the transfer of such chemicals is not in violation of our regulations or our international obligations. Government of India’s commitment to prevent onward proliferation is second to none. We have instituted a rigorous system of export controls and our track record in this regard is well known. India is working with the international community including with the US as a partner against proliferation. In this context the imposition of sanctions by the US on our firms, which in our view have not acted in violation of our laws or regulations, is not justified”.

Comments

  1. Nitin (History)

    Jeffrey,

    The Indian Express reports that Sabero, the other Indian company concerned, was owned by an American national, and exported tri-methyl phosphite to Iran. This compound too is under Schedule 3 of the Annex to CWC.

    I’ve written about it here
    http://opinion.paifamily.com/?p=1766

  2. Cheryl Rofer (History)

    Interesting…sanctions for Schedule 3 chemicals while the State Department is scurrying to figure out ways to implement Bush’s nuclear deal with India.

    Something about the right hand and the left hand? A token slap on the wrist to placate those worried about the NPT? Or is it just too early in the morning and I’ve read something wrong? (I’ve read your post twice now, I think I’ve got it right…)

  3. James (History)

    Quite possibly your best post yet.

  4. James W (History)

    Likely political. The US doesn’t like Iran and is trying to isolate it. So it looks for excuses to sanction companies that are engaged in legitimate business with it. The hope is that everyone will be afraid to sell Iran even a paperclip.

    The is the sort of smirking “smarter-than-you-are” policy that gives the US a reputation for arrogance. The US government knows the charge is bogus; the Indian government knows the US knows the charge is bogus. They are left in impotent rage.

    On a psychological note, it leaves the Indians and the Iranians with a motive to conceal future sales to avoid bogus sanctions. In other words, it makes India an ally of Iran, involved in a “conspiracy” to engage in lawful commerce.

    The short-term effect is to isolate Iran commercially; the long-term effect is to isolate the US politically. It undermines more legitimate law-enforcement cooperation and leads to skepticism with regard to claims of arms-control violations.

  5. R. Ash (History)

    what cheryl thinks is a slap on the wrist might well be seen as a calculated attempt by anti-deal US officials to enrage the anti-deal Indians. Same logic as james w. (impotent rage) but not as thoughtless. Fairly deliberate action to (1) put India on the radar of US legislators as a “proliferator” not to be trusted with nuclear jewels and (2) put pro-deal Indians in a spot where they have to explain away yet another non-friendly and non-legal US action against India to the hostile domestic audience. Perfect!

Pin It on Pinterest