There are two reasons why Iranian cars – a basic middle class commodity that might normally not pose any proliferation concern – should in fact be sanctioned.
First, both technology and raw materials for car production can be dual-use. Increasingly, it appears that Iranian carmakers’ vast overseas procurement network is being used to supply the nuclear and missile programs.
And second, the car industry is an avenue for profit to Iran’s Revolutionary Guards, religious foundations, and political elite, who remain the car industry’s main shareholders, and who channel the revenues to finance the regime’s proliferation activities.
A recent Washington Post investigation of MCS International is a clear example of the dangers. From 2003 to 2011, this Iranian-owned factory in Germany produced gas cylinders for hybrid cars. But the factory also offered access to dual-use technology for Iran’s nuclear designs.
That included carbon fiber and hardened steel – key components of Iran’s second generation nuclear enrichment centrifuges. It also had sophisticated machinery in its inventory, which can be used both to make cylinders and manufacture centrifuges.
According to company papers, Iran’s car industry companies and personnel were directly involved in owning and managing the factory. Behind them lurked sanctioned entities, known proliferators, Iran’s ministry of intelligence, and the nuclear program’s custodians – Iran’s Revolutionary Guards.
A joint venture of German fronts for Iran’s Bahman Group and Rey Investment bought the near-bankrupt factory in 2003. They appointed a dual Iranian-German national who at the same time managed IKCO Trading GmbH, Iran Khodro’s German subsidiary, as managing director