Companies using gaps in oversight to provide nuclear technology to India and Pakistan

Hundreds of companies around the world are working outside of export oversight or ‘demonstrate high risk of illicitly procuring’ nuclear technology for India and Pakistan, a US-based think tank has said in a report.

Nuclear technology procurement networks in both Pakistan and India are larger and more visible than previously documented, the non-profit Centre For Advance Defense Studies (‘C4ADS’) said in one of the most comprehensive overviews of networks supplying the nuclear rivals, in a region regarded as one of the world’s most critical flashpoints.

The report, which used millions of trade records, isolated those entities that present the most risk for illicit dual-use trade.

In Pakistan’s case, in addition to the more than 100 entities listed by national export control authorities, ‘46 entities demonstrate high risk of illicitly procuring for Pakistan’s nuclear program based on their trade activity and network structures,’ the report said.

For India, C4ADS used public tender data to identify 222 companies that contracted with nuclear facilities outside the oversight of International Atomic Energy Agency (‘IAEA’) safeguards. ‘Of these 222 companies, 86 had contracted with more than one unsafeguarded facility,’ it said.

‘Pakistani nuclear procurement companies, who face strict international export control regulations and Nuclear Suppliers Group (NSG) trade restrictions, are more likely to procure through the use of transshipment hubs,’ the report said.

It added that customs and trade data demonstrate that the top 33 suppliers of Pakistan’s known procurement companies are located in mainland China (34%), Hong Kong (18%), the United Arab Emirates (UAE) (9%), the United States (9%), Germany (6%), Italy (6%) and Singapore (6%).

‘Hong Kong, the UAE, and Singapore are common transshipment hubs also associated with North Korean and Iranian proliferation. China, the United States, Germany, and Italy are NSG members, obligated to avoid supplying unsafeguarded or military facilities in India and Pakistan,’ write the report’s authors.

‘Indian companies tend to purchase more directly from NSG countries. Of the 124,089 imports from 64 countries between January 2017 and July 2019 associated with the 87 Indian companies known to have procured for more than one unsafeguarded facility, 92% were from companies in NSG member states including Germany, China, United States, South Korea, and the UK,’ the report said.

The report notes that India does hold a waiver from the NSG exempting it from certain nuclear trade restrictions, ‘However, this exemption does not apply to facilities outside of IAEA safeguards.’

‘The findings from this report are relevant for private sector companies, national export control authorities, and multinational organizations, who are at the frontlines of nonproliferation compliance,’ said C4ADS.