“THE UNLEASHED POWER OF THE ATOM HAS CHANGED EVERYTHING SAVE OUR MODES OF THINKING, AND WE THUS DRIFT TOWARD UNPARALLELED CATASTROPHE.” —ALBERT EINSTEIN

With the revelation of Iran’s secret uranium enrichment facilities, North Korea’s brazen testing of missiles and nuclear weapons, and nuclear-endowed Pakistan’s descent into instability, the urgency of the nuclear proliferation problem has never been greater. Based on his extensive experience in tracking the illicit nuclear trade as one of the world’s foremost proliferation experts, in Peddling Peril David Albright offers a harrowing narrative of the frighteningly large cracks through which nuclear weapons traffi ckers—such as Pakistani nuclear scientist A.Q. Khan—continue to slip.

Six years after the arrest of Khan, the networks he established continue to thrive, with black markets sprouting up across the globe. The dramatic takedown of the leader of the world’s largest and most perilous smuggling network was originally considered a model of savvy detection by intelligence and enforcement agencies, including the CIA and MI6. But, as Albright chronicles, the prosecutions of traffickers that were much anticipated have not come to pass, and Khan himself was released from house arrest in February 2009.

Iran, Pakistan, and North Korea all use statesponsored smuggling networks that easily bypass export regulations and avoid detection. Albright illuminates how these networks have learned many ways to trick suppliers across the globe, including many in the United States, into selling them vital parts, and why, despite the fact that, since 2007, several dozen companies have been indicted—with some pleading guilty—for suspicion of participating in illicit trade, very few prosecutions have been achieved.

Peddling Peril charts the dealings of several of these companies. Albright also reports on the hopeful story of the German company Leybold’s decision to become an industry watchdog, and shows how this story reveals just how effective corporate monitoring and government cooperation would be if more serious efforts were made. Concluding with a detailed plan for clamping down tightly on the illicit trade, Albright shows the way forward in the vital mission of freeing the world of this terrifying menace.

Peddling Peril

How the Secret Nuclear Trade Arms America's EnemiesBy David Albright

Free Press

Copyright © 2010 David Albright
All right reserved.
ISBN: 9781416549314

ONE

Out of the Cold

December 1975 was a busy time at the tiny single terminal at Amsterdam?s Schiphol airport. Amid the holiday travelers was a young man traveling with his wife and two small daughters. To any casual observer, this handsome, personable man appeared no different from any of the other harried vacationers and tourists.

In fact, Dr. Abdul Qadeer Khan was fleeing to Pakistan, having pulled off history?s most dangerous act of nuclear espionage.

Khan was ?coming out of the cold?¹ just as Dutch authorities were growing suspicious of his activities in the fall of 1975. A pioneer in nuclear smuggling who laid the foundation for pariah governments to acquire nuclear weapons, the Pakistani scientist was an unlikely spy. Born in 1936 into an educated Muslim family of military men, magistrates, and teachers, Khan?s middle-class childhood (he loved ice hockey, fishing, and kite flying) ended with the political and religious turmoil created by Indian independence. With the partition of the South Asian subcontinent in 1947, the large Muslim minority in his home state of Bhopal found itself part of Hindu-dominated India. His older brothers and sisters left for the safe haven of Pakistan. Abdul Qadeer stayed behind to finish high school. At sixteen, he headed to Karachi to join his siblings, making the hard journey alone, first by train, then barefoot across a four-mile stretch of desert that burned blisters on his feet.

Reunited with his family, he pursued his dream of becoming a teacher like his father, earning a bachelor?s degree in mathematics and physics. After a brief turn as an inspector of weights and measures, Khan left in 1961 to study at the Technical University of Berlin, then to the Netherlands to study engineering at the Delft Technological University. The engaging, charismatic Khan developed close relationships with his professors and classmates wherever he studied, making international connections that would serve him well during his rise to notoriety.

It was also in the Netherlands that Khan met and married a Dutch woman named Hendrina Reterink in March 1964. Khan was a devoted family man who enjoyed making dinner for his wife and, later, his two young daughters, cooking pilaf, kebabs, meat curry, and parathas, a flatbread fried in butter. His neighbors and colleagues were fond of Khan, an avid street volleyball player. One friend recalled that he was ?a great source of pleasure in all social gatherings.?

In 1965, while he was studying in Holland, war broke out between India and Pakistan over Kashmir, a dispute that ended in a stalemate. Deeply disturbed by a documentary he saw that blamed Pakistan for the conflict, Khan embarked on a solitary letter-writing campaign to Dutch newspapers to set the record straight. His letter-writing skills would ultimately prove to be a catalyst that changed both Khan?s and Pakistan?s future.

In 1971, a pivotal year for Khan, he obtained a doctorate in metallurgy from the University of Leuven in Belgium, and war broke out again between India and Pakistan. When Pakistan was created in 1947, its eastern and western halves were separated by thousands of miles of Indian territory. Growing pressures in East Pakistan, which later became Bangladesh, for greater autonomy from West Pakistan triggered a bloody crackdown by the army. Millions of East Pakistani refugees streamed into India to escape the violence and the destruction caused the previous year by the Bhola cyclone, the deadliest tropical cyclone on record. Televised images of the utter devastation, along with George Harrison?s Concert for Bangladesh in August 1971, led to an outpouring of support for Bangladesh. For Khan, though, the portrayal of his countrymen as murderers embittered him toward the West.

Further humiliation arrived when Pakistan?s army was routed in December 1971. The Indo-Pakistani war lasted two weeks, culminating with the mass surrender of Pakistan?s army and the loss of East Pakistan in the face of rapidly advancing Indian troops. Khan and his fellow countrymen had believed that they were a martial race??one Pakistani can handle ten Indians.? This myth had survived the 1965 stalemate, but the loss in 1971 created an identity crisis for both Pakistan and Khan.

In May 1972, Khan and his family moved to Zwanenburg, a quiet Amsterdam suburb, and he began a new job at a technical consulting firm, Physical Dynamic Research Laboratory [Fysisch Dynamisch Onderzoek-Technische Adviseurs] (FDO). FDO was part of Werkspoor Amsterdam, an important private contractor to the secretive Ultra-Centrifuge Nederland (UCN). UCN controlled all Dutch gas centrifuge work and was a partner with British and German companies in the URENCO uranium enrichment consortium. Founded in 1971, URENCO combined the resources of countries with the ambition to build commercial gas centrifuge facilities but without the sufficient funding to do so alone. These gas centrifuges produce low enriched uranium for nuclear reactors, but could also be used to make highly enriched uranium (HEU) for nuclear weapons. HEU was the fissile material used in the ?Little Boy? bomb dropped on Hiroshima.

Compared to other methods, a gas centrifuge plant is one of the cheapest ways to produce HEU for nuclear weapons. The core of a centrifuge is an ingeniously designed rapidly rotating tube, or ?rotor,? in which uranium gas spins. The spinning separates the lighter, rare isotope uranium-235 from the more plentiful and less useful uranium-238. In nature, uranium contains less than one percent uranium-235. When centrifuges increase the fraction of uranium-235 in the uranium to a level of 3 or 4 percent, the enriched material can be used in nuclear reactors. When the fraction of uranium-235 exceeds 20 percent, it is called HEU and is usable in nuclear explosives. Bomb makers typically want HEU enriched to at least 80 to 90 percent uranium-235, because at that level the bomb will need far less of it. A crude nuclear weapon requires several hundred kilograms of 20 percent enriched material, but needs only 15 to 20 kilograms of HEU enriched to 90 percent uranium-235, commonly called weapon-grade uranium. If the weapon must be small enough to fit under an aircraft or on top of a ballistic missile, the amount of HEU used matters.

Khan was hired as a metallurgist at FDO by A. Langstraat, a fellow engineering student at Delft Technological University who liked Khan and had since become head of FDO?s Metallurgy Department.² He also came highly recommended by his professors, but there was a problem: Khan?s hiring was a violation of URENCO?s rules, set in part by the United States which at the time had a virtual monopoly on the supply of enriched uranium. If a nonnational were to work in a top secret gas centrifuge consortium, with the range of classified centrifuge information routinely found at FDO, his application would need to be submitted to the ?Joint Committee,? run by the three governments involved in the URENCO partnership. (Nonnationals of the three countries were not allowed access without special permission.) According to a classified 1979 Dutch report, it was ?highly unlikely? that the Ministry of Economic Affairs (the Dutch ministry responsible for the enrichment work) would have approved Khan?s employment.³

Yet the report makes clear that FDO was willing to take advantage of URENCO?s nascent security rules. To avoid Khan?s application being sent to the Joint Committee, FDO explained that Khan?s area of work would be limited to metallurgical research, and that FDO experts had ?estimated? that Khan would only have access to information classified lower than the level that would require Joint Committee approval.⁴ Khan?s supporters in FDO also told UCN security officers that Khan had already lived in Europe for eleven years and wished to settle down permanently in the West, preferably in the Netherlands. An investigation at the time by BVD, the Dutch domestic security service, turned up nothing suspicious on Khan despite the inherent risk of hiring a Pakistani at a time when his country most wanted sensitive nuclear information. FDO, UCN, and Dutch government officials never followed through to ensure that Khan actually applied for citizenship, but whether the story about settling in the Netherlands originated with Khan or his advocates, Khan was deeply attached to Pakistan and had never taken steps to sever those ties.

Mr. L.L. Strappers, a senior security officer at the Ministry of Economic Affairs, granted Khan a security clearance for only low-level Dutch centrifuge information. He was not authorized to see centrifuge information from the Netherlands? partners, Britain and Germany. However, once Khan started working at FDO, his friendliness and helpfulness allowed him to quickly strike up relationships with his new colleagues. When returning from annual vacations in Pakistan, he always brought little presents for his co-workers. In addition, Khan became known as a key ?materials expert? for the entire UCN centrifuge project,⁵ and his colleagues ignored his lack of security clearance to see sensitive information. Later, when Khan violated basic security rules, they ignored that too.⁶ Collectively, FDO and UCN had no established procedures to block Khan from seeing a wide variety of classified centrifuge information from all three countries.

Khan?s expertise led to visits to the Almelo enrichment plant near the Dutch-German border and many other sensitive UCN facilities. URENCO relied on an excellent network of high-tech European contractors to make centrifuge parts and supply vital equipment and as part of Khan?s job he visited several URENCO suppliers, contacts that would later be invaluable when Khan shopped for his own centrifuge program. Because Khan was fluent in Dutch and German, he was also assigned by FDO in 1974 to help translate the overwhelming number of German documents FDO accumulated. His work took him to the restricted facility known as the ?brain box,? a temporary building located next to the factory at Almelo. There he had access to scores of highly classified centrifuge designs and manufacturing documents and was treated as a fully accredited member of the team.

Through his work at FDO, Khan obtained detailed designs of the Dutch SNOR and CNOR centrifuges, and the German G2 centrifuge. He also gained information about the more advanced Dutch M4 centrifuge, and most likely the German G4 centrifuge. Khan was so confident of how much he?d learned that he confided to a colleague he commuted to work with that he knew all the secrets of the centrifuge project and was himself capable of making a centrifuge.⁷

In less than a decade, Khan would make good on his boast. He christened Pakistan?s first and second generation centrifuges?duplicate versions of the Dutch and German centrifuges whose designs he had access to?P1 and P2.

THERE IS NO doubt that Khan had the means and the opportunity to become a spy. But why did he do it? The official Dutch investigation in 1979 concluded he was unlikely to have been a plant by the Pakistani government. URENCO officials speculated he was recruited by Pakistani officials early in his employment at FDO and told to stay in the Netherlands for a couple of years to collect information and experience.⁸

Khan?who likes to talk?tells his story this way.

When India detonated its first nuclear device (code-named ?Smiling Buddha?), in 1974, the memories of the Indo-Pakistani war were still fresh. In his mind, his country had been dismembered and its people humiliated. Now nuclear weapons were in the hands of a mortal enemy. A bolder approach than writing letters to Dutch newspapers was required. In an emotional letter to Pakistan?s Prime Minister Zulfikar Ali Bhutto in September 1974, delivered via Pakistan?s ambassador in Belgium, Khan argued that no less than the survival of his country was at stake. ?Why was a long struggle made for the creation of Pakistan and why were hundreds of thousands of mothers, sisters and brothers martyred at the hands of the Hindus? ? We must chalk out a line of action and start work on it immediately, as it is the demand of our security and welfare.?⁹ He volunteered his help in meeting this national emergency.

?He seems to be talking sense,? Bhutto scribbled in the margin of Dr. Khan?s letter. Bhutto referred the letter with his comments to the head of the Pakistan Atomic Energy Commission (PAEC), Munir Ahmad Khan. Munir Khan had been trying, without success, to obtain a reprocessing plant from France to separate plutonium.¹⁰ Munir asked his point man in Europe, S.A.?Butt, a science and technology minister in the Pakistani embassy in Brussels, to verify Khan?s claims. ?I checked on A.Q.?Khan,? Butt said, ?and reported that he was really engaged in pioneering work on centrifuge technology and can be helpful in Pakistan?s nuclear program.?¹¹

Bhutto had reason to be excited, having started his country on the path to nuclear weapons. Pakistani nuclear scientists were faced with difficulties in purchasing overseas facilities to make plutonium. The unknown, European-educated Khan offered Bhutto another way. Pakistan could produce an atomic weapon based not only on plutonium but on highly enriched uranium as well. Khan?s offer held out the prospect of help from someone with up-to-date scientific knowledge, access to critical new technology, and a list of European companies happy to supply the equipment. Still, it was a monumental gamble requiring years of hard work, hundreds of millions of dollars, and an enormous amount of faith placed in a young, unproven scientist. It was a gamble Bhutto was willing to take.

Bhutto asked Khan to meet him in Karachi.¹² When he returned to Pakistan during his Christmas break in 1974, Khan laid out his plan to Bhutto, who asked him to meet with Munir Khan. Khan met Munir Khan and his officers and advised them on how to proceed in obtaining a centrifuge plant.¹³ According to later accounts by both Khan and the Pakistani government, he offered minimal direct assistance during the meeting, implying that he stole no sensitive centrifuge information while he was in the Netherlands and that he developed the P1 and P2 based only on general information.¹⁴

How much of Khan?s story is myth? URENCO?s conjecture of what transpired reveals that Khan may have been recruited in a less heroic manner. Butt was actively seeking assistance for Pakistan?s fledgling nuclear weapons effort and may well have heard about this young talented Pakistani engineer and approached him directly. Why did he choose Khan? There is some evidence that Khan was gathering information before meeting Bhutto in 1974. The secret Dutch government report on Khan states that a UCN employee told Dutch investigators that during his visits to several suppliers in Germany and Switzerland in 1974, he discovered that Khan had also made inquiries at these firms, which were supplying Dutch centrifuge components to URENCO.¹⁵ At the time, he wondered whether FDO was engaged in a centrifuge project itself, independent of URENCO. He did not even consider the possibility that one of FDO?s employees was providing secrets to a foreign government.

After meeting A.Q. Khan in January 1975, Munir Khan recommended that Bhutto establish a secret gas centrifuge program.¹⁶ The centrifuge project was code-named the Directorate of Industrial Liaison (DIL). At the same time, Munir started a program to find the resources to make ?hex??uranium hexafluoride, the feed gas for a gas centrifuge that is difficult both to produce and handle. He also created a team dedicated to building an atomic bomb out of HEU. (Producing the HEU would prove Munir?s greatest challenge.)

Armed with URENCO?s technology, Khan realized that he could buy a centrifuge plant and the means to make centrifuges piece by piece on the international market, and many suppliers would gladly help him do it for a fat profit. ?With years of experience working on similar projects in Europe,? he wrote later on, ?my contacts there with the various manufacturing firms were an invaluable asset to me.?¹⁷ Khan deserves credit for acknowledging Pakistan didn?t have the technological infrastructure to build the components needed for a centrifuge plant. Doing so would have ?cost an enormous amount of time,? he wrote, and he was ?sure that the [centrifuge] project would have been aborted at the very early stages because of this.?¹⁸ He was correct?centrifuges require highly precise manufacturing and advanced metallurgy generally unavailable to developing countries. Pakistan?s industries were unable to produce the specialized metals needed for centrifuges, and they lacked the equipment and technicians able to produce the high-quality components of a centrifuge.

Rounding out Munir Khan?s team was Sultan Bashiruddin Mahmood, an exuberant thirty-three-year-old fundamentalist who was placed in charge of the gas centrifuge project.¹⁹ Munir Khan placed Butt, already at the Pakistani embassy in Belgium, in charge of procurement for the new project.²⁰ Thus, PAEC launched its secret operation in Europe to purloin gas centrifuge information and procure parts for centrifuges from European companies.

Work started almost immediately, with Khan leading the way from his post at FDO. ?A.Q. Khan did some daring things, risking his job and imprisonment,? said Butt.²¹ He reportedly flooded Butt, through an unknown intermediary, with steady streams of secret information on designing and building centrifuges, as well as lists of suppliers.²²

Khan brought to his home in Zwanenburg from FDO entire packets of drawings of classified centrifuge components. He also ?spontaneously? offered his wife?s services to FDO as a translator from Dutch to English for classified centrifuge documents.²³ Astonishingly, the company agreed despite her not having any security clearance at all. He began receiving visitors from both the Pakistani embassies in Belgium and France at his home.²⁴ When Mahmood visited Europe in 1975 to shop for equipment and materials for the centrifuge program, Khan traveled to Belgium to meet both him and Butt.²⁵

PAEC decided to build its P1 model based on the designs from a Dutch centrifuge, this type being considerably easier to construct than the German model centrifuges for which Khan had designs. Butt and Khan started to seek out URENCO?s suppliers and began to order components. In August 1975, Butt telephoned Emerson Electric Industrial Controls Ltd., a U.S.-owned company, seeking information about frequency converters, an important component that powers a centrifuge and keeps it spinning at a precisely specified speed. He told the company he worked at Belgo-Nucleaire, a famous Belgian nuclear company, and asked about buying a specialized converter. Emerson became suspicious because this type of converter had been developed by the Dutch company Comprimo specifically for URENCO, and Belgo-Nucleaire had no known use for it. When Emerson informed Comprimo, its officials could not find any explanation for the order and UCN was notified.²⁶ Then in the fall of 1975, the French company Metalimphy received an order from the Pakistani embassy in Brussels for some equipment that company officials could see was drawn from a specific UCN report.²⁷ UCN determined that Khan appeared to be connected to this order.

Khan?s questionable behavior that fall during NUCLEX (an industry wide nuclear exhibition) in Basel, Switzerland, was finally enough to raise flags. He was overheard by officials at UCN asking suspicious questions of various UCN suppliers. Khan also reconnected with Henk Slebos, an old Dutch friend from his student days at Delft Technological University. Slebos would become a lifetime friend and a key ally in finding many sensitive items for Khan?s centrifuge plant.

Security officials at UCN notified the Ministry of Economics. ?It seems to me I have found a spy,? said a ministry official to Ruud Lubbers, the minister of economics.²⁸ Lubbers, who had become minister in 1973, decided not to order Khan?s arrest right away. This being 1975 he ?did not think about proliferation at that very moment, to be honest.?²⁹ Lubbers viewed Khan as a commercial threat to URENCO, worrying that its secrets would fall into the hands of its American and Japanese competitors. He likely also worried about adverse reactions from his British and German partners and the Dutch public, which at the time was increasingly antinuclear.

Lubbers ordered BVD to follow Khan, who had been reassigned to a less information sensitive job at FDO. His superiors tried to convince Khan that his new job was a high priority, but it is probable he didn?t believe them. Now aware his actions were being closely scrutinized by authorities, he acted much more cautiously. BVD agents were unable to find any clear evidence of espionage.

However, the wheels were already in motion for at least one order for centrifuge parts. Sometime toward the end of 1975, possibly at the NUCLEX conference, Khan asked R.W.Y. van Blijenburgh of Van Dorne?s Transmissie (VDT), which provided superstrong maraging steel parts to UCN, whether his company could produce certain types of steel tubes for one of Khan?s ?connections.?³⁰ Khan already knew van Blijenburgh because of his regular contact with FDO. Based on the technical details Khan provided, van Blijenburgh made a sketch, which was submitted to VDT?s drawing office to prepare an official drawing.³¹ The official drawing, dated November 21, 1975, was derived from classified UCN information for experimental versions of two Dutch centrifuges.³² The tubes Khan requested were the raw materials of a particularly tricky part of a centrifuge known as a bellows, a Russian invention that prevents longer and more powerful centrifuges from breaking as they gain speed during start-up.

Austrian engineer Gernot Zippe had brought this type of bellows to URENCO. He had been captured by Soviet forces at the end of World War II and forced to work on the Russian centrifuge program until 1953. After being allowed to return to the West in 1956, he shared his new knowledge with faltering European centrifuge efforts, allowing them to make huge strides forward. Zippe?s bellows and longer centrifuges were critical to producing enriched uranium at a price competitive with the more established U.S. programs. This invention would make it more affordable to enrich uranium for nuclear reactors and nuclear weapons, ironically increasing the likelihood of the very kind of nuclear proliferation Khan sought to exploit.

Pakistan would likely have encountered significant difficulty in attempting to make these parts without assistance. The tubes had to be cut into sections, then skilled machinists would carefully thin a portion of the cylinder which was placed in a machine that would create an inward facing bulge in the thinned section. Even the most capable machinists faced high rates of manufacturing error. In response to Khan?s request, VDT produced a written proposal to make the tubes.

Nobody responded to the proposal. Khan left the Netherlands on December 15, 1975, with his family ?on holiday? and returned to Pakistan. Lubbers believed that Khan ?understood the signal? of being denied access to the centrifuge project and ?came in out of the cold.?³³ A month later, in January 1976, Khan?s wife, Henny, returned to the Netherlands to meet Frits Veerman, one of Khan?s close co-workers at FDO. Khan asked Veerman in a letter to go to Khan?s office on a Saturday, collect all of Khan?s materials from his filing cabinet and hand them over to Henny.³⁴ In that same letter, Khan asked Veerman to give Henny the home address of a mutual colleague who was an expert in the mass production of centrifuge components. He also asked Veerman to contact his brother, Abdul Lateef Khan, who was also living in the Netherlands, about making arrangements to visit Pakistan. Veerman refused these requests but later learned that Khan had nonetheless contacted their colleague.³⁵

The Dutch government acted as though Khan?s departure ended the case. It did not launch an investigation to determine what Khan could have stolen. Worse, it did not inform its partners Britain and Germany about Khan?s breach of security, despite its treaty obligations to do so. This not only allowed Khan to steal secrets, it also enabled him to benefit from that theft of centrifuge information for years to come. Khan was now free to procure materials and know-how for his centrifuge program from all over the world. One of the very few early opportunities to stop him was lost.

After Khan?s arrest in 2004, Lubbers tried to shift blame to the CIA. ?Certainly, at the time he [Khan] was already known to U.S. intelligence services who were following his movements,? he claimed.³⁶ He told the Japanese television network NHK in 2005 in a rambling interview that ?Washington requested?the Dutch people?services to inform them fully, but not to take any action so that they could follow Mr. Khan and try to find out what network was developing.?³⁷

In the 1980s and 1990s, the CIA would certainly be guilty of letting Khan operate in order to gather more information, but it seems unlikely they were aware of Khan in 1975. A former CIA official who served as their station chief in the Netherlands in 1975 categorically denies Lubbers? statements.³⁸ He did not even know Khan?s name at that time, and was not briefed about Khan?s activities by the BVD (Dutch intelligence). He added that the CIA could not have followed Khan, even if it had wanted to, because he lacked the resources to set up such an operation. Only the BVD had the resources to set up round-the-clock surveillance on Khan, and ?the Dutch BVD did not like the CIA operating inside Holland? without permission. He said that the CIA and BVD cooperated closely on many operations, running ?compatible operations? on China, terrorism, and the Eastern Bloc, but never on Khan. ?If someone had come up with Khan as a target in my day,? he said, ?I would have loved it.?³⁹

Stunned senior U.S. government officials didn?t learn about Khan?s centrifuge project until 1978, only weeks after Washington finally convinced France to cancel the sale of a plutonium separation plant to Pakistan. By then, Khan was well on his way to building the bomb, and U.S. efforts could only slow him down.

As for Khan, he had one last letter to write.

Not long after his departure, he sent word to his colleagues that he had become ill. In a letter dated January 26, 1976, Khan submitted his resignation, citing his desire to live in Pakistan. Despite suspicions about his spying, FDO sent him a testimonial regretting his departure. They wished him the best of luck, both in his future career and ?perhaps for the benefit of your country.?⁴⁰

? 2010 The Institute for Science and International Security

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