AsiaWATCH — In the first installment of a four part series Luke Hunt examines Iran’s national shipping company and the perils of sanctions to the company’s in East Asia.

International efforts to thwart Iran’s nuclear ambitions have heralded a change in strategy by the United Nations Security Council with an increased focus on financial services and the world’s shipping lanes that deliver Tehran the materials needed to pursue its disputed nuclear program.

Heading the list of targets is the Islamic Republic of Iran Shipping Lines (IRISL). With perhaps the biggest fleet in the Middle East the carrier is struggling with banks foreclosing on mortgaged vessels and insurers refusing to underwrite its operations.

This has resulted in IRISL ships being arrested in Asian ports as banks clamor for their money back causing delays to customers and incurring additional financial penalties.

Its ships – numbering about 170 – were once routinely sighted in Asian ports. Hong Kong, Singapore, Thailand and in the Malaccan Straits dividing Malaysia and Indonesia, IRISL vessels were among the biggest and newest to ply the waterways.

Most of the goods shipped by IRISL were supplied by Chinese companies. For Iran’s nuclear program, China was key.

David Albright, a US nuclear physicist who inspected Iran’s nuclear facilities for the UN’s atomic energy agency, said Iran was a regular purchaser of Chinese goods. This included high strength maraging steel, specialty vacuum pumps, Kevlar and carbon fiber.

“Over and over, Iran goes there to buy things,” Albright, President of the Institute for Science and International Security in Washington, told the Woodrow Wilson International Center for Scholars.

No-one doubts sanctions are causing significant delays to Iran’s nuclear enrichment plans.

The US and its allies argue Iran’s nuclear program is a cover for weapons development and sanctions have been credited with hindering Iranian efforts to acquire carbon fibre and maraging steel used in centrifuges that can enrich uranium to make a nuclear bomb.

“Iran has consistently used its national maritime carrier to advance its missile programs and to carry other military cargoes,” said Stuart Levey, US Treasury undersecretary for terrorism and financial intelligence, said after the fourth round of sanctions were imposed in June last year.

Tehran denies the allegations saying its nuclear industry is for electricity generation and civilian use however it is yet to show any evidence of making fuel from enriched uranium.

The sanctions recently came to a head in Singapore where a sheriff’s sale of three IRISL ships was organized. The vessels were seized but released by the courts – spoiling a bargain hunters’ day out — after IRISL stumped-up the funds to meet loan repayment demands.

The commotion over IRISL has left the authorities in Iran in a flap, prompting the carrier’s chairman Mohammad Hossein Dajmar to go on the offensive through selective local and international media.

He says the sanctions violate international law and he was scathing of Singapore and the banks after his three ships were impounded by the island-state.

“We had a loan and (the banks) changed it from a loan to a due payment because of sanctions. In other words, they committed a violation. Because the loan contract was signed before the sanctions,” he said.

He also told the Financial Times that sanctions had not hurt the company’s bottom line and that revenue for the eight months from March 2010 was up 40 percent while shipping transactions had grown 25 percent.

However, that stretches plausibility, given another four European financial institutions are seeking the arrest of five recently built IRISL ships after alleged defaults worth $US268 million.

Two of the vessels were detained, the Decretive in Hong Kong and the Dandle in Malta last November – at the request of the banks. It is understood Hong Kong companies had organized mortgages on seven Maltese registered ships.