May 1, 2014:
The U.S. recently revealed that it had been prosecuting three men (an American, a Briton and a Syrian) for running a smuggling operation from 2003 until 2012 that obtained industrial and military equipment for Syria. The three used third countries and forged documents to get Syria equipment banned by international sanctions. One of the three was arrested in Britain and is awaiting extradition while a fourth man is still being sought. The U.S. also sought evidence of smuggling items for Iran, but details of that, or any connections with China, were not revealed. It is known that Syria has been involved with helping Iran get around sanctions and both countries have used China for that sort of thing.
Because of decades of economic sanctions Iran has come to depend on Syria and China to help smuggle forbidden items into Iran. Syria has long been on the Iranian payroll. Like Syria, China opposes the sanctions but goes through the motions of observing them. Despite official sanction support China has always been the ultimate source of forbidden military and nuclear research items for Iran. This includes Western gear, especially stuff from the United States that the rapidly growing Chinese economy has legitimate buyers for. These American items are usually obtained by Chinese trading companies, who serve as a one-stop-shopping source for many countries. The trading companies break American laws when they ship some types of restricted (by American regulations) gear to embargoed nations. This is done using forged documents and bribes that mask these operations for years. These Chinese exporters have little fear of punishment at home because the Chinese government refuses to discipline its wayward firms. But these trading/smuggling companies can be hurt in other ways. That’s because U.S. regulators can reach just about every other country (even China) using the enormous U.S. presence in the international banking system. But the Chinese traders consider occasional fines and business interruption a cost-of-doing-business and passes these extra costs onto customers like Iran. Thus as the sanctions on Iran grow more formidable, prices Iran must pay go up and the Chinese profits increase even more.
This kind of smuggling employs techniques that Iran has used successfully for a long time. Many Western suppliers would simply charge a much higher price to cover the risk of being found out and prosecuted. There are, as the Iranians know well, a lot of Western suppliers who are willing to take the risk. But as the risk of getting caught, and the penalties, increase more and more Westerners abandon this lucrative business to the Chinese.
Ever since the U.S. embargo was imposed in 1979 (after Iran broke diplomatic protocol by seizing the American embassy), Iran has sought, with some success, to offer big money to smugglers who can beat the embargo and get needed industrial and military equipment. This is a risky business, and American and European prisons are full of Iranians, and other nationals, who tried, and often failed, to procure forbidden goods. The smuggling operations are currently under more scrutiny, and attack, because of Iran's growing nuclear weapons program. But the Iranians simply offer more money and more smugglers step up to keep the goodies coming.