VIENNA — Iran's attempts to illicitly procure materials for its disputed nuclear and missile programs appear to have slowed down as it pursues talks on a long-term accord with world powers, a U.N. expert panel said in a confidential report seen by Reuters.

The U.N. Panel of Experts, who monitor compliance with the Security Council's sanctions regime on Iran, presented this conclusion cautiously, suggesting it was also possible Tehran has simply learned to outsmart security and intelligence services in its pursuit of sensitive components and materials.

The report cited "a decrease in the number of detected attempts by Iran to procure items for prohibited programs, and related seizures, since mid-2013 . . . It is possible that this decrease reflects the new political environment in Iran and diplomatic progress towards a comprehensive solution."

The report came on the same day Iran's Supreme Leader Ayatollah Ali Khamenei was sending a different message within Iran, where on Sunday he said Western expectations for the Islamic Republic to limit its missile program were "stupid and idiotic.”

Tehran has embarked on a negotiated solution to its nuclear dispute with big powers after moderate President Hassan Rouhani won election last June, replacing a confrontational ideologue. The high-level talks have yielded an interim deal easing fears of a wider Middle East war and will resume this week in Vienna.

The report said it had become increasingly difficult to pinpoint any links between "dual-use" items — those with both civilian and military applications — that Iran has sought to procure and potential recipients in the Islamic Republic.

But, the report cautioned, "this may be a function of more sophisticated procurement strategies on the part of Iran, which has developed methods of concealing procurement, while expanding prohibited activities. Such methods can also be used by Iran to procure and finance legitimate trade, which further complicates the efforts of states to identify illicit procurement."

The report added that Iran had "also demonstrated a growing capability to produce key items indigenously." Among sensitive dual-use items Iran has pursued abroad over the years have been aluminum, carbon fiber and special valves.

Iran's priority in negotiations with the powers is an end to international sanctions that have hammered its oil-reliant economy. The Islamic Republic has long denied charges from the West and its allies that it is seeking a nuclear weapons capability under cover of a drive for peaceful atomic energy.

While Iran may have scaled back efforts to bypass sanctions aimed at preventing it from developing its nuclear and ballistic missile programs, the report made clear that the panel had registered no change in Iranian actions to dodge a U.N. arms embargo, especially in its weapons supplies to Syrian President Bashar al-Assad in his war with rebels trying to oust him.

"Member states and the media continue to report arms transfers from Iran, including to Syria, Gaza, Sudan, and Bahrain," the U.N. report said.

"Iran's military support for the current government in Syria is well documented. The war has also created additional opportunities for the IRGC's (Islamic Revolutionary Guards Corps) Quds Force to be even more active in the country."

Among the examples of Iran's flouting of the embargo, the report cited arms, explosives and munitions shipments seized by Israeli and Kenyan authorities.

 

UNCERTAINTY ABOUT U.N. SANCTIONS

The expert panel also warned that governments have expressed concern about the ambiguity created by the diplomatic push for a long-term deal between Iran and six world powers that would allow Tehran to ultimately engage in activities prohibited under U.N. sanctions, above all uranium enrichment.

"A challenge for states during this period of intense negotiation and, should it occur, implementation of a comprehensive solution, will be to maintain clarity with respect to state obligations under existing Security Council sanctions," the report said.

"Some states have shared with the Panel a degree of uncertainty as to whether Security Council resolutions concerning Iran remain fully in force. One source of uncertainty concerns the status of obligations regarding procurement related to Iran's uranium enrichment, should such activities continue under a comprehensive solution."

After Iran reached an interim deal with the five permanent Security Council members plus Germany in November, there was a limited easing of sanctions on Tehran's energy and financial sectors. But the overall sanctions regime remains in effect pending a permanent settlement of the nuclear dispute.

"Members of the private sector are also closely following developments with Iran and are eager to resume normal trade with Iran," the report said. "Many have begun to rebuild commercial ties to Iran and expressed optimism that the (interim deal) would quickly sweep away barriers to expanded trade."

The panel's report reached the U.N. Iran sanctions committee just days ahead of the latest round of Vienna talks between Iran and the United States, Britain, France, Germany, Russia and China. The goal is a long-term settlement that would place broad, verifiable limits on the scope of Iranian nuclear activities in exchange for a phased removal of sanctions.

Despite the apparent dip in procurement activity, Iran has continued to try to obtain items that could play an important role in its enrichment of uranium, the report said.

"Iran has been attempting to procure high-grade carbon fiber for use in the manufacturing of some of its centrifuge rotors," the experts said, adding that Tehran has also sought to procure aluminum and other dual-use materials.

"Iran continues to make extensive use of front companies to procure items for prohibited activities. Some companies may be established solely for the purpose of prohibited procurement. Others may also be engaged in legitimate business.

"It may be difficult for states, in particular those seeking to promote the ease of establishing new companies, to identify those that are engaged in procurement for prohibited activities in Iran, as such entities constitute a tiny fraction of business entities," the experts wrote.

Iran has also developed sophisticated methods of bypassing international financial sanctions, often using small Iranian banks that have not been hit by U.N. restrictions, it said.

Sometimes Iran uses legitimate enterprises to acquire key technology. The report, which includes detailed annexes, cited an example of how Iran used its petrochemical industry as a facade to procure crucial items for its heavy-water nuclear reactor at Arak, a plant that has proven to be a big sticking point in Tehran's nuclear negotiations with the powers.

If it goes online in its current form, the Arak reactor will yield significant amounts of weapons-grade plutonium. The United States and its European allies want Iran to either scrap the project or convert it to an unthreatening light-water reactor. Tehran has hinted that it would not oppose modifying the plant.