What’s Behind New Iran and North Korea Pact

 

On September 1, Iran and North Korea signed a scientific and technological cooperation agreement. According to the Iranian Labour News Agency, the agreement calls for the two countries to

 

       ·set up joint laboratories and exchange programs for scientific teams;

 

       ·transfer technology in the fields of information technology, engineering, biotechnology,

        renewable energy and the environment;

 

       ·promote sustainable development of agriculture and food

 

On paper the cooperation between the two countries appears innocuous. In practice these partnerships create an umbrella that could allow them to conduct proliferation-linked activities.

 

 

The two countries are becoming more important to each other because both face increasing isolation from U.S.-led sanctions related to weapons proliferation activities in Tehran and Pyongyang. The relationship—and mutual reliance—is unique in the international community, since they lack any common ideology, religion, geographic space or ethnicity.

 

On the surface, relations may appear to embody the old proverb that "the enemy of my enemy is my friend." But the reality is that each has helped the other cope during national emergencies. For Iran, North Korea was a vital supplier of conventional arms during the Iran-Iraq War. For North Korea, Iran was a long-standing linchpin in its procurement activities in the Middle East and Eastern Europe — a role that China is increasingly playing now as a result of a growing national economy with more foreign companies setting up production facilities targeting the Chinese market.

 

At its core, the relationship is one where Iran provides much-needed cash to North Korea in return for missile parts and technology that are difficult to procure elsewhere.

 

 

With both countries facing tough sanctions, the new agreement appears to be an effort to create a formal mechanism through which they can procure materiel and equipment. Many items are not specifically on sanctions lists, but the expansive financial sanctions have led most foreign institutions and intermediaries to be unwilling to run the risk of doing business with Iran or North Korea. So the agreement can be seen as an attempt by Iran and North Korea to legitimize their activities under the innocuous heading of "civilian scientific and technological cooperation."

 

 

Private Chinese companies are a critical enabler of key components in this agreement. Procuring, developing and transporting components and equipment will necessitate both Tehran and Pyongyang to make greater use of unique Chinese intermediaries. 

 

Sanctions do have an impact in terms of raising transaction costs. While this initial effect is a negative one for Tehran and Pyongyang, the secondary effect is turning out to be a beneficial one for them. Cognizant of the reduced areas of movement, private Chinese companies command higher commission fees for conducting activities on behalf of Iranian and North Korean state trading companies. 

 

The number of actual Iranian-North Korean deals may be declining, but the sophistication of their transactions appears to be growing, thereby making them less prone to detection. That does not bode well for U.S. and Western efforts to curtail Iran’s suspected nuclear program or to counter North Korea’s ongoing nuclear weapons development activities.