Sheila MacVicar and Ashley Velie with Amy Guttman / CBS News – 2007-05-26 23:05:21

(May 23, 2007) — CBS News has learned that Iran is continuing to make progress on its expanded efforts to enrich uranium — in spite of covert efforts by U.S. and other allied intelligence agencies to actively sabotage the country’s nuclear program.

“Industrial sabotage is a way to stop the program, without military action, without fingerprints on the operation, and really, it is ideal, if it works,” says Mark Fitzpatrick, the former Deputy Assistant Secretary of State for Non-Proliferation and now Senior Fellow in Non-Proliferation at the International Institute for Strategic Studies.

Sources in several countries involved told CBS News that the intelligence operatives involved include former Russian nuclear scientists and Iranians living abroad. Operatives have sold Iran components with flaws that are difficult to detect, making them unstable or unusable.

“One way to sabotage a program is to make minor modifications in some of the components Iran obtains on the black market, and because it’s a black market … you don’t know exactly who you are dealing with,” Fitzpatrick says.

Senior government representatives, who spoke to CBS News on condition that neither they nor their country be identified, pointed to the case of the exploding power supplies. Installed at the pilot enrichment facility at Natanz in April 2006 as Iran was first attempting to enrich uranium, the power supplies, used to regulate voltaage current, blew up, destroying 50 centrifuges.

The head of the Iranian Atomic Energy Agency, Vice-President Gholamreza Aghazadeh said in January of this year that the equipment had been “manipulated.”

There is other evidence, CBS News was told, that some of the technical difficulties Iran is having in consistently running its centrifuges are the results of a concerted effort at industrial sabotage.

Sources familiar with the U.S. effort against Iran tell CBS News that U.S. intelligence agencies have run several programs in recent years, employing different techniques, including modifying components in hard-to-detect ways and making subtle changes to technical documents and drawings, rendering them useless.

“Governments [interested in deterring Iran] are investing a lot of effort to disrupt the Iranian trade, or track their purchases,” says David Albright, President of the Institute for Science and International Security.

Iran is vulnerable to industrial sabotage because it is prohibited from buying what it wants on the open market. Instead, analysts say, it has turned to the black market, focusing efforts to clandestinely acquire the technology in Western Europe. Intelligence sources tell CBS News that Iranian agents working from the Islamic Republic’s consulate in Frankfurt, Germany, have shipped home banned components using the protection and secrecy of diplomatic bags.

Although export controls are stronger in Europe than in many other countries, the Iranians still need European products because of either their quality or reliability, or because they already have European-manufactured products and are looking for spare parts.

But the procurement network is global, and trans-national, analysts say. In Dubai and other neighboring nations, Iran has established a shifting network of front companies.

“These are clandestine efforts. Iran frequently changes its front companies, frequently changes its financial arrangements, and government intelligence agencies have been looking at this,” says Fitzpatrick

Albright says Iran has become even more sophisticated in its illicit procurement efforts than the network established by AQ Khan that obtained components and materiel for Pakistan’s bomb program.

“They have moved beyond just front companies and are very hard to detect,” he said. “The Iranians are very clever.”

Iran is described as “highly suspicious” and “almost paranoid,” and is believed to be predisposed to believe that any of its many technical problems may be the result of foreign sabotage.

“It’s impossible to say the extent to which Iran has discovered any industrial espionage,” Fitzpatrick says. “Any technical problems that Iran experiences in its program, some of which were the result of its own speed-up effort, Iran may attribute to foreign espionage.”

According to diplomats, getting the Iranians to believe that components may have been tampered with can be as effective in delaying the program as the real thing. But the diplomats also warn that with enough money and time, Iran’s nuclear ambitions cannot be derailed by sabotage alone.

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