On December 20th an American court sentenced a naturalized American citizen Nader Modanlo, who was born in Iran, to eight years of prison for getting Iran the technology and services they needed to build and launch their first space satellite. This was the Sina-1 communications and photo-reconnaissance satellite that was capable of performing espionage, especially against Israel. Launched in October 2005 on a Russian rocket, the satellite was described as being used for scientific purposes only. With a three year lifetime, the Iranians described the Sina-1 camera equipment as capable of 50 meter resolution (pictures taken allow the identification of any object 50 meters wide or larger.) This is not military grade resolution. You can get better stuff from Google Earth.
Russia built the 110 kg (375 pound) satellite, and is unlikely to have provided higher resolution (and much more expensive) camera gear. Besides, you can’t get high res equipment into a satellite of that size. Russia received a $132 million contract with Iran, to build and launch this satellite, so the Russians are not saying much about the Iranian claims. The “spy satellite” claim by Iran is apparently for domestic consumption, another attempt to show the Iranian people that the country is getting its money’s worth and to buff the country’s anti-Israeli reputation.
Modanlo was the front man in arranging the design, building and launching of the satellite. He was paid $10 million by Iran for his services, which included hiding his relationship with Iran. This enabled the Russians to do the work legally. Modanlo knew that once the satellite went up there would be no hiding it from American intelligence. His cover plan did not work and by 2007 he was found out. In 2010 he was under arrest and indicted. The U.S. also charged five Iranians for assisting Modanlo in evading export controls to buy and smuggle to Iran space satellite hardware and technology. The Iranians were never caught.
Many Western nations, in addition to the United States, have become more aggressive in going after Iranian technology and hardware smuggling. Iran has been quite blatant about buying dual use equipment, and then openly using the stuff for military purposes. 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 locals 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.
The U.S. has gotten more aggressive, and successful, at shutting down Iranian smuggling operations. Not just by bribing the smugglers themselves, but also by getting the cooperation of nations the smugglers operate out of. This has been so successful that most of these smugglers no longer feel safe working out of Arab Persian Gulf nations (especially the United Arab Emirates). As a result, more smugglers are operating out of Malaysia, and the U.S. is trying to shut down that activity. America also monitors the international banking network, seeking signs of smuggler activity, and leaning on the banks involved, to step back.
The smuggling effort has been a mixed success. The Iranian armed forces are poorly equipped, because new tanks, warplanes and ships could not be sneaked in. Thus major weapons acquired in the 1970s are falling apart for want of sufficient replacement parts.