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A Chinese businessman indicted in the United States over sales of missile parts to Iran is still making millions of dollars from the trade, say security officials who monitor compliance with Western and U.N. sanctions.

These officials, speaking on condition of anonymity, said the businessman, Li Fangwei, has earned at least $10 million from illegal sales to Iran since his indictment by the New York County District Attorney in 2009.

Trade sanctions are at the heart of international efforts to curb Iran's nuclear program for fear it is for military ends -- a suspicion Iran rejects. Li's alleged activities may point to Iran's resourcefulness in circumventing those sanctions and turn a spotlight on China's ability to police its own export restrictions.

It is hard to quantify the contribution of foreign firms and individuals to Iran's nuclear and missile programs, but analysts believe some vital components are all but impossible for Tehran to produce at home.

---

Contacted by Reuters on Feb 4, Li said he continued to get commercial inquiries from Iran but only for legitimate merchandise, such as steel products. Li said his company, LIMMT, had stopped selling to Iran once the United States began sanctioning it several years ago.

He dismissed allegations by the security officials that he had used deception, including changes of company names, to supply Iran with Chinese and foreign-made parts such as high-grade alloys that can be used to enrich uranium and guidance devices suitable for missiles.

"Sure, we did business with Iran, but we did not export the goods they said we did, missiles or whatever," Li said. "We still get inquiries from Iranian clients, but we don't respond to them."

A Chinese Foreign Ministry spokeswoman said Beijing was adhering to trade restrictions, including a U.N. ban on helping Iran build missiles that can deliver nuclear warheads.

Officials from Iran, including at firms the security officials said were clients of Li and at the embassy in Beijing, did not respond to requests for comment. A Chinese bank that the security officials said Li used for Iranian business denied it had breached U.N. sanctions.

Targeted by feds, local prosecutor
In 2006, the U.S. Treasury barred Li from the U.S. financial system for allegedly selling goods with potential military uses to Iran.

Three years later, the New York County District Attorney unsealed a fraud indictment against Li and his metals company LIMMT on suspicion they had used false names to process further payments for sales to Iran through several U.S. banks.

The U.S. banks employed by Li were innocent of any wrongdoing because Li and other suspects had concealed their identities, then-District Attorney Robert Morgenthau said.

On Feb 4, Li said that at the time of the indictment he had felt there was no point in saying anything because U.S. courts and prosecutors "don't listen to reason. It's useless."

Three weeks ago, on Feb. 11, the U.S. State Department issued fresh sanctions against Li, saying he had "engaged in missile technology proliferation activities that require the imposition of missile sanctions", and placing additional restrictions on any missile technology trade involving him.

A State Department official said Li had been sanctioned because of his "proliferation to Iran" since his 2009 indictment. Li did not respond to calls seeking comment on the Feb 11 action.

China reacted with irritation to the Feb. 11 measures. Foreign Ministry spokeswoman Hua Chunying said the U.S. step "seriously violates the norms of international relations and harms China's interests" and urged the United States to immediately revoke "these irrational sanctions."

China has no extradition treaty with Washington.

Alloys, gyroscopes
The security officials allege that since the 2009 indictment Li, working in concert with the Iranian Embassy in Beijing, had supplied parts to firms that make Iranian missiles, in particular the U.N.-blacklisted Shahid Bakeri Industrial Group (SBIG). SBIG did not reply to faxes and emails sent by Reuters for comment.

The goods allegedly supplied included 15 metric  tons of high-grade aluminum alloy, more than 20 metric  tons of ultra-high strength steel and 1,700 kg of graphite cylinders.

Li agreed in 2011 to supply 1,500 gyroscopes and accelerometers to SBIG, the security officials alleged, referring to devices that can be used in missile guidance and control systems -- a quantity sufficient for about 500 missiles.

Gyroscopes are "controlled items" under the Missile Technology Control Regime (MTCR), an informal and voluntary partnership between 34 mainly Western countries. China is not a party to the MTCR but has similar export controls of its own.

Li also supplied more specialized devices known as fiber-optic gyroscopes, the officials allege; their main uses are in missiles, robots or remotely operated land or sea vehicles.

The officials accuse Li of advising SBIG and other Iranian clients to change details of shipments, including the falsification of the end-user and supplier details in contracts.

Li denies all the allegations.

Between 2010 and 2012, Li took over $10 million in payments from SBIG alone and travelled often to Iran, the officials allege. He used deception within China to hide his activities, not only from the authorities but from Chinese companies as well, the officials added.

In 2012, they said, Li listed a Chinese company as a false end user to obtain repair equipment he intended to send to SBIG in Iran.

A diplomat in Iran's Beijing Embassy helped Li, who is about 40, arrange meetings with defense officials when he visited Tehran, the security officials allege. In the Iranian capital, the officials said, some contacts knew him only as "The Tailor" to conceal his identity.

Critical components
The officials alleged that some of his clients were not always satisfied with the quality of his goods but kept on using him, perhaps for lack of choice.

Asked in Beijing whether China knew of Li's purported activities, Foreign Ministry spokeswoman Hua said China's position was "clear and steadfast" on non-proliferation: China had always upheld U.N. Security Council resolutions on non-proliferation. If a Chinese individual or company was doing anything illegal, it would be dealt with.

An internal report for the U.S. Congress in December concluded that sanctions, respected by China, were making it increasingly tough for Tehran to obtain certain critical components and materials for its missiles.

From 2004 to 2007, Chinese arms transfer agreements with Iran totaled about $300 million at today's prices; between 2008 and 2011 total arms transfer agreements dropped to less than $50 million, according to the report by the non-partisan Congressional Research Service (CRS) on Iranian missiles.

Li said his company, LIMMT, had stopped selling to Iran once the United States began sanctioning it several years ago. He did not indicate a date, but the U.S. Treasury first sanctioned LIMMT in June 2006, citing its alleged support of and role in the proliferation of weapons of mass destruction to Iran.

"We used to export steel, things like that. Nothing to do with missiles," he said.

At two buildings in the northeastern city of Dalian which the security officials said had been used by Li, people either had never heard of him or said he had left some years ago.

Additional reporting by William Maclean, Ben Blanchard and Michael Martina in Beijing and Dalian, Marcus George in Dubai, Dan Williams in Jerusalem, and Mark Hosenball, David Ingram and Anna Yukhananova in Washington.

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LONDON - Iran is using old tankers, saved from the scrapyard by foreign middlemen, to ship out oil to China in ways that avoid Western sanctions, say officials involved with sanctions who showed Reuters corroborating documents.

The officials, from states involved in imposing sanctions to pressure Iran to curb its nuclear program, said the tankers - worth little more than scrap value - were a new way for Iran to keep its oil exports flowing by exploiting the legal limitations on Western powers' ability to make sanctions stick worldwide.

Officials showed Reuters shipping documents to support their allegation that eight ships, each of which can carry close to a day's worth of Iran's pre-sanctions exports, have loaded Iranian oil at sea. Publicly available tracking and other data are consistent with those documents and allegations.

"The tankers have been used for Iranian crude," one official said. "They are part of Iran's sanctions-busting strategy."

---

Dimitris Cambis, the Greek businessman who last year bought the ships - eight very large crude carriers, or VLCCs - to carry Middle East crude to Asia, flatly denied doing any business with Tehran or running clandestine shipments of its oil to China.

Cambis said he had not been involved in shipping before but had bought the tankers as part of a new venture he runs from the United Arab Emirates. He denied trading with Iran - though he has contacts there from his previous work in the oil industry.

Related story: Skulduggery at sea: Iran uses tankers off Malaysia to evade oil embargo

He denied his vessels have loaded oil from Iran while at anchor in the Gulf. Known as ship-to-ship transfers, or STS, such movements are hard to track as crews can switch off tracking beacons or not update their recorded positions for periods to conceal that one vessel has come alongside another.

Cambis also explained a stop in Iran by one of his tankers - recorded in publicly available tracking data - as having been only for an emergency repair, not to load an oil cargo.

"There is no Iranian vessel that has done any STS with us," Cambis told Reuters in Athens in response to the officials' allegations of taking oil from Iranian tankers owned by Tehran shipping group NITC. "We have nothing to do with NITC."

The officials involved with sanctions dispute his account and showed documents detailing several ship-to-ship loadings. They said all eight of the tankers were involved in Iran trade.

In one instance in early December, according to the shipping documents shown to Reuters by the officials, an NITC tanker named Marigold loaded Iranian crude onto the Leycothea, one of Cambis's eight ships, while both were at anchor off the UAE emirate of Sharjah. Public tracking showed Cambis's tanker made a call about a month later to Zhanjiang oil terminal in China.

Loading at sea lets vessels pick up a cargo without visiting the country of origin of the crude. Officials allege the tankers are also used as offshore storage for Iranian oil which can then be transferred onward to other ships, concealing its origins.

Officials in Iran, which rejects Western allegations it is seeking nuclear weapons, did not respond to requests for comment.

Muddying waters
Experts on sanctions law said that by operating outside the European Union, ship-owners had no clear obligation to observe rules barring EU companies from buying Iranian oil, though banks and insurers with EU or U.S. business ties are giving a wide berth to firms they suspect of dealing with Iran, given U.S. and EU efforts to penalize such firms within their own jurisdiction. 

"Such ships would be used to delete traces of a trade taking place," a London-based ship broker said.

While Iran has its own substantial tanker fleet, capable of carrying over 72 million barrels, the 2 million barrels that each of the eight tankers can move would be a useful addition to its capacity, analysts said - particularly as their foreign ownership and management could help conceal the Iranian origin of the oil, making it easier to obtain insurance, finance and other ship services that are affected by EU and U.S. sanctions.

Cambis said that between August and November he bought the eight ships: Leycothea, Glaros, Nereyda, Ocean Nymph, Seagull, Zap, Ocean Performer and Ulysses I. The first five are now managed by his firm, Sambouk Shipping, in Sharjah and he is in the process of transferring management of the remaining three.

In other movements indicated by the shipping documents, the Nereyda was also involved in a separate ship-to-ship transfer with NITC's Rainbow in the Gulf in November, while the Glaros took an offshore transfer from the Marigold there in December.

The Nereyda was later recorded arriving at a terminal in China in December. The Glaros appears to have remained in the Gulf since that December transfer, according to tracking data.

Asked about publicly available ship tracking data showing that the Glaros stopped at Iran's Larak Island oil terminal on October 20 last year, Cambis provided what he said was an affidavit by the ship's master describing an emergency repair carried out by Iranian divers when the tanker was headed to Saudi Arabia.

The master, named as I. Bonoutas, could not be reached for comment. Cambis denied loading any oil in Iran. After its stop at Larak, Glaros's next recorded visits, according to ship tracking data, were at Chinese ports between November 24 to December 1.

The eight tankers, built up to 20 years ago, can carry about 16 million barrels of oil among them, shipping databases show.

Iranian crude exports declined to an average of 1.5 million barrels per day (bpd) in 2012, down about 1 million bpd from 2011 levels, data from the International Energy Agency showed.

NITC blacklisted
The eight tankers were bought last year for a total of about $204 million, ship trading sources said - reflecting prices only 3-4 percent above their worth as raw metal. The purchases have been the object of considerable discussion among ship brokers - not least because they would more typically have been broken up.

A ship dealer based in London said, however: "They can carry on trading for as long as people are willing to employ them.

"There's really not much that any authorities can do." 

NITC has been blacklisted by the West and the EU has imposed an outright ban on providing ship insurance that would benefit Iran. The exit from Iran of top providers of ship certification, vital for port access, and the removal of Iranian vessels from international registries have added to operational challenges.

While NITC has expanded its fleet in recent months, experts say access to additional foreign tankers would give Tehran more flexibility in maintaining exports.

"The key word for the Iranians is resistance as in the Supreme Leader's declaration of a resistance economy," said Scott Lucas, a specialist on Iran at Birmingham University.

"This is not an economy which is going to produce growth but it is one which is going to try and avoid a domestic collapse."

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An unapologetic North Korea declared Tuesday that it had conducted a test of a nuclear bomb after the detonation was detected by the U.S. Geological Survey.

"On February 12th... we successfully conducted a third underground nuclear test in the northern underground nuclear test site," the Daily NK reported, in a translation of Pyongyang's announcement on the state-run news agency, KCNA.

By conducting the test, the isolated authoritarian regime made good on a Jan. 24 pledge by North Korea's top military organ, the National Defense Commission, in further defiance of admonitions from the international community to cease and desist in its pursuit of nuclear weapons.

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The test was met with condemnation from around the globe. The White House called it a "highly provocative act" that warrants "further swift and credible action from the international community." Chinese Foreign Minister Yang Jiechi said Beijing was "strongly dissatisfied and resolutely opposed" to the move by its neighbor and long-time Communist ally.

 

South Korea and Japan convened emergency meetings of their top national security officials, while the UN Security Council held an emergency meeting Tuesday, after which it promised to "begin work immediately" to draft a new resolution against the North.

The explosion was registered as a 5.1-magnitude seismic event by the USGS at 9:57 p.m. ET Monday. The U.S. Office of the Director of National Intelligence quickly judged that North Korea had "probably conducted an underground nuclear explosion" with a yield of "several kilotons."

In a statement, President Barack Obama said the test "undermines regional stability, violates North Korea's obligations under numerous United Nations Security Council resolutions, contravenes its [international] commitments … and increases the risk of proliferation" in the wake of what he described as a "ballistic missile launch" by North Korea on Dec. 12.

"North Korea's nuclear weapons and ballistic missile programs constitute a threat to U.S. national security and to international peace and security," Obama said. 

U.S. officials have previously told NBC News that North Korea has up to a "few dozen" nuclear weapons that could be fitted on ballistic missiles, far more than had previously been believed.

Obama on Tuesday said that "the danger posed by North Korea's threatening activities warrants further swift and credible action by the international community," adding that the U.S. would work with the international community to "pursue firm action."

'Vile hostile acts'
In a tit-for-tat that has characterized a diplomatic stalemate for decades, North Korea blamed the United States for forcing its hand.

"This nuclear test was conducted as part of measures to safeguard the country’s security and independence in order to deal with the vile hostile acts of the United States, which violated our Republic’s legitimate right to peaceful satellite launches,” according to the KCNA report.

The comment refers UN Security Council Resolution 2087, passed after to Pyongyang's Dec. 12 rocket launch, heaping sanctions on previous sanctions against North Korea, further deepening the regime's isolation.

The resolution called on North Korea to abandon its nuclear program and any weapons and allow verification; to conduct no more launches using ballistic missile technology; and to conduct no more nuclear tests.

U.N. Secretary-General Ban Ki-moon said the latest test was a "clear and grave violation."

Later, South Korea's Yonhap News Agency reported that North Korea threatened, citing an unidentified foreign ministry spokesman, to conduct more nuclear tests if the U.S. moves to penalize it for Tuesday's test.

At a disarmament forum in Geneva on Tuesday, a North Korean official said that his country would not change course in the current climate, Reuters reported.

"The U.S. and their followers are sadly mistaken if they miscalculate the DPRK would respect the entirely unreasonable resolutions against it. The DPRK will never bow to any resolutions," Jon Yong Ryong, first secretary of North Korea's mission in Geneva, told the Conference on Disarmament, referring to the Democratic People's Republic of Korea (DPRK).

South Korea's government said in a statement that Tuesday's nuclear test, "poses a direct challenge to the whole international community as well as an unacceptable threat to the peace and security of the Korean Peninsula and Northeast Asia."

It said the government would stand firm in that it "will not tolerate a nuclear North Korea" and added that it will "also accelerate expanding its military capability, including deploying at an early stage its extended-range missiles, currently being developed, which cover all of North Korea."

Major hostilities in the 1950-1953 Korean War ended with armistice, not a peace treaty. Today, North Korean forces and South Korean forces bolstered by about 28,000 U.S. troops remain faced off at the 38th parallel, where the Korean Peninsula was divided.

Between 2003 and 2007, North Korean took party in several rounds of the so-called "Six Party Talks" with South Korea, China, the United States, Russia and Japan, in an attempt to reverse Pyongyang's nuclear weapons development in return for fuel and progress towards normalization of relations. The talks went on hold and then fell apart for good in April 2009 and Pyongyang expelled UN inspectors from the country.

China 'humiliated'
A key unanswered question is what Beijing will do after North Korea's latest move. The long-time Communist ally and neighbor, which has strategic reasons to continue supporting the regime in Pyongyang, nonetheless expressed its strong opposition to the test.

"China has been humiliated," according to Andrei Lankov, a veteran analyst of North Korea based in Seoul's Kookmin Unversity. That could prompt a change in Beijing's approach, he said.

"This time, China explicitly warned North Korea against conducting the test, but they were ignored," Landov added. "A Chinese government newspaper said two weeks ago that in the case of a nuclear test, China might significantly reduce its aid to North Korea."

China is a major source of aid to North Korea and key to keeping its decrepit economy afloat. China is also one of five permanent members of the UN Security Council with the power to veto sanctions.

The United States and other countries have urged China to put pressure on Pyongyang, but it remained to be seen how far Beijing would go to confront its old comrade.

"They are not happy about nuclear adventurism. At the same time though, a collapsing non-nuclear North Korea is far worse than a nuclear but stable North Korea," Lankov said.

North wants U.S. recognition
Professor Yan Xuetong, a top international security analyst at China's Tsinghua University, said "the key to the North Korean nuclear challenge is in the hands of the United States, not China."

"China is certainly opposed to North Korea's latest nuclear test and opposed to North Korea becoming a nuclear power, but the test was aimed at the Unite States with the aim of forcing the U.S. to normalize relations with North Korea, but if the U.S. doesn't want to play the  game of trade-off, then there is not much that China can do," he said.

Yan, who closely follows government policy thinking on the issue, argued that "the role of economic sanctions is limited," suggesting China will not stop economic assistance to North Korea because of the latest test.

"What China should do is to act as bridge between North Korea and the United States so that they will agree to a trade-off, with the U.S. granting recognition to the North Korean government in exchange for it giving up its nuclear program," he said.

"If the U.S. views North Korea's nuclear threat with the same seriousness as it views Iran's nuclear threat, then there will be hope for solving the North Korea's nuclear problem," he said.

NBC News staff writers Ian Johnston, Eric Baculinao, John Newland and Arata Yamamoto contributed to this report.

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This story was originally published on Tue Feb 12, 2013 12:11 PM EST

SEOUL — North Korea threatened Friday to attack rival South Korea if Seoul joined a new round of tightened U.N. sanctions, saying it would regard this as "a declaration of war."

The reclusive North has this week declared a boycott of all dialogue aimed at ending its nuclear program and vowed to conduct more rocket and nuclear tests after the U.N. Security Council censured it for a December long-range missile launch.

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On Thursday, Washington unveiled more of its own economic restrictions following Pyongyang's rocket launch last month.

Friday brought a third straight day of fiery rhetoric from the isolated communist state, this time directed against South Korea.

"'Sanctions' mean a war and a declaration of war against us," the North said.

"If the puppet group of traitors takes a direct part in the U.N. 'sanctions,' the DPRK [North Korea] will take strong physical counter-measures against it," the North's Committee for the Peaceful Reunification of Korea said, referring to the South.

The committee is the North's front for dealings with the South. DPRK is short for the North's official name, the Democratic People's Republic of Korea.

The U.N. Security Council unanimously condemned North Korea's December rocket launch on Tuesday and expanded existing U.N. sanctions.

On Thursday, the United States slapped economic sanctions on two North Korean bank officials and a Hong Kong trading company that it accused of supporting Pyongyang's proliferation of weapons of mass destruction.

The company, Leader (Hong Kong) International Trading Ltd, was separately blacklisted by the United Nations on Wednesday.

Seoul has said it will look at whether there are any further sanctions that it can implement alongside the United States, but said the focus for now is to follow Security Council resolutions.

The resolution said the council "deplores the violations" by North Korea of its previous resolutions, which banned Pyongyang from conducting further ballistic missile and nuclear tests and from importing materials and technology for those programs. It does not impose new sanctions on Pyongyang.

San Francisco in range?
The United States had wanted to punish North Korea for the rocket launch with a Security Council resolution that imposed entirely new sanctions against Pyongyang, but Beijing rejected that option. China agreed to U.N. sanctions against Pyongyang after North Korea's 2006 and 2009 nuclear tests.

North Korea's rhetoric this week amounted to some of the angriest outbursts against the outside world coming under the leadership of Kim Jong Un, who took over after the death of his father Kim Jong Il in late 2011.

On Thursday, the North said it would carry out further rocket launches and a nuclear test, directing its ire at the United States, a country it called its "sworn enemy."

U.S. Defense Secretary Leon Panetta said the comments were worrying.

"We are very concerned with North Korea's continuing provocative behavior," he said at a Pentagon news conference. "We are fully prepared ... to deal with any kind of provocation from the North Koreans. But I hope in the end that they determine that it is better to make a choice to become part of the international family."

North Korea is not believed to have the technology to deliver a nuclear warhead capable of hitting the continental United States, although its December launch showed it had the capacity to deliver a rocket that could travel 6,200 miles, potentially putting San Francisco in range, according to an intelligence assessment by South Korea.

The foreign ministry of China, the North's sole remaining major diplomatic and economic benefactor, repeated its call for calm on the Korean peninsula at its daily briefing on Friday.

"We hope all relevant parties can see the big picture, maintain calm and restraint, further maintain contact and dialogue, and improve relations, while not taking actions to further complicate and escalate the situation," spokesman Hong Lei said.

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ANALYSIS: 'Spoiled child' North Korea snubs key ally China with rocket test

Copyright 2013 Thomson Reuters. Click for restrictions.

Syria's most powerful ally, Russia, said for the first time Thursday that President Bashar Assad is losing control of his country and the rebels might win the civil war.

While Deputy Foreign Minister Mikhail Bogdanov gave no immediate signal that Russia would change its stance and agree to impose international sanctions on Assad's regime, his remarks will likely be seen as a betrayal in Damascus, The Associated Press reported.

---

Russia's assessment could further strengthen the hand of the rebels, who have made some significant gains in their offensive, capturing two major military bases and mounting a serious challenge to Assad's seat of power, Damascus.

"We must look at the facts: There is a trend for the government to progressively lose control over an increasing part of the territory," Bogdanov, the Foreign Ministry's point man on Syria, said during hearings at a Kremlin advisory body, the Public Chamber, according to the AP.

"An opposition victory can't be excluded," he added.

Destruction and resistance: Window into war-torn Aleppo

NATO also predicted Assad's fall, with Secretary-General Anders Fogh Rasmussen saying the regime's collapse is "only a matter of time."

"In general, I think the regime in Damascus is approaching collapse. I think now it's only a question of time," he said.

Russia mulls evacuating its citizens
Bogdanov's statement marks a clear attempt by the Kremlin to begin positioning itself for Assad's eventual defeat.

He said that Russia is prepared to evacuate thousands of its citizens from Syria, although he didn't say when that might happen.

At the same time, Bogdanov reaffirmed Russia's call for a compromise, saying it would take the opposition a long time to defeat the regime and Syria would suffer heavy casualties.

 

"The fighting will become even more intense, and you will lose tens of thousands and, perhaps, hundreds of thousands of people," he said.

"If such a price for the ouster of the president seems acceptable to you, what can we do? We, of course, consider it absolutely unacceptable,” he added.

Syrian forces have fired Scud missiles at rebels, US officials say

Bogdanov repeated that Russia would stick to an agreement reached in Geneva in June calling for negotiations involving the government and the opposition.

Russia has joined with China at the United Nations Security Council to veto three resolutions that would have imposed sanctions on Assad's regime over its bloody crackdown on the uprising that began in March 2011.

Moscow also has continued to provide the Syrian government with weapons despite strong international protests.

'The moment of collapse'
Fyodor Lukyanov, the editor of the magazine Russia in Global Affairs, told the AP that Bogdanov's statement marked an effort by Russia to position itself for the fall of its ally.

"It's better to talk about it now than keep saying until the moment of collapse that things remain under control," he added.

Obama says US recognizes Syrian opposition coalition

The statement may also reflect new information about the situation on the ground received by the Kremlin, he told the AP.

"A public statement like that appears to indicate that the balance is shifting," Lukyanov added.

Asked if and when Russia is going to evacuate its embassy in Syria, Bogdanov said that the "moment hasn't come yet."

He added that the Foreign Ministry is looking at possible evacuation plans for thousands of Russian citizens, most of whom are Russian women married to Syrian men and their children.

"We have plans for any occasion," Bogdanov said.

He said that "half of them support the opposition," adding that Syrian opposition delegations that have visited Moscow have included some Russian citizens.

The Interfax news agency said that if the government decides to evacuate Russians from Syria, it could be done by ships escorted by the Russian navy and by government planes.

Tens of thousands trapped in city
Meanwhile, the humanitarian group Medecins Sans Frontieres said Wednesday that fighting in Syria had trapped tens of thousands of people in the city of Deir al-Zor and there was urgent need for medical teams to be authorized to evacuate the wounded, Reuters reported.

Deir al-Zor has become one of many urban battlegrounds in the 20-month-old revolt against Assad in which more than 40,000 have died. With daily army shelling and routes cut off by fighting, many residents are trapped.

"MSF appeals for international and impartial medical assistance to be officially authorized by the government and for such assistance to be respected by all parties of the conflict," the group said in a statement. 

The Associated Press and Reuters contributed to this report.

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LONDON -- In the summer of 2008, Iranian security agents arrived at the family home of Saleh Hamid, who was visiting his parents in Iran during a break from his university studies. 

The plainclothes agents, he says, shackled him and drove him blindfolded to a local intelligence detention center. There, he says, they beat him with an iron bar, breaking bones and damaging his left ear and right eye.

Hamid says the authorities accused him of spreading propaganda against the regime and contacting opposition groups outside Iran. The evidence? His own phone calls.

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"They said, ‘On this and this day you spoke to such and such person,'" says Hamid, now 30 and a human rights activist in Sweden. "They had both recorded it and later they also showed me the transcript."

Hamid was not the only one. The Iran Human Rights Documentation Center and other human rights groups say they have documented a number of cases in which the Iranian regime has used the country's communications networks to crack down on dissidents by monitoring their telephone calls or Internet activities.

Now a Reuters investigation has uncovered new evidence of how willing some foreign companies were to assist Iran's state security network, and the regime's keenness to access as much information as possible.

Documents seen by Reuters show that a partner of China's Huawei Technologies Co. Ltd. offered to sell a Huawei-developed "Lawful Interception Solution" to MobinNet, Iran's first nationwide wireless broadband provider, as MobinNet was preparing to launch in 2010.

The system's capabilities included "supporting the special requirements from security agencies to monitor in real time the communication traffic between subscribers," according to a proposal by Huawei's Chinese partner seen by Reuters.

Huawei also gave MobinNet a marketing presentation on a system that features "deep packet inspection" -- a powerful and potentially intrusive technology that can read and analyze "packets" of data that travel across the Internet. Internet service providers use DPI to guard against cyberattacks and improve network efficiency, but it also can be used to block websites, track Internet users and reconstruct email messages.

Huawei says it has never sold either system to MobinNet and doesn't sell DPI equipment in Iran. But a person familiar with the matter says MobinNet obtained a Huawei DPI system before it began operating in 2010. The person does not know how MobinNet acquired it or if it is being used.

Asked to comment, Vic Guyang, a Huawei spokesman, said in a statement, "We think it's not for us to confirm or deny what systems other companies have." He later said, "It is our understanding that MobinNet does not have such equipment." An official with MobinNet declined to answer any questions, saying only, "So you know the answers. Why do you need confirmation?"

The relative ease with which Iran has been able to obtain technology that enables surveillance illustrates the cat-and-mouse nature of the American-European campaign to contain Iran's nuclear ambitions through crippling economic sanctions. It wasn't until this year that Europe and Washington -- which primarily have focused on Iran's banks and oil industry -- targeted the sale of monitoring gear to Iran. But even now, the ban is not global, and does not extend to Chinese companies.

Reuters reported in March that China's ZTE Corp had recently sold Iran's largest telecom firm, Telecommunication Co. of Iran, a DPI-based surveillance system that was capable of monitoring landline, mobile and internet communications.

ZTE later said it intends to reduce its business in Iran. Huawei made a similar announcement a year ago.

Fixing ‘the problem of youth’
The documents seen by Reuters challenge statements made by Shenzhen-based Huawei that it doesn't sell any Internet monitoring or filtering equipment.  

But the documents' descriptions of the Huawei systems pitched to MobinNet emphasize their filtering capabilities and ability to enable monitoring by security agencies.

For example, a proposal made to MobinNet dated April 2009 offers what it calls a Huawei "lawful interception" solution. The proposal was prepared by China's CMEC International Trading Co., which states in the document that it had selected Huawei as its bid partner.

"As we know, lawful interception is mandatory and sensitive for the operators in Iran," the proposal states.

An accompanying diagram illustrates how the system can duplicate data streams and transmit the copies to multiple "monitoring" centers. It also states that more than 0.5 percent of all subscribers could be targeted and that individuals would not be aware their communications were "being intercepted."

CMEC is a part of an engineering conglomerate that includes a unit that for years has been under U.S. sanctions for allegedly helping Iran and Iraq obtain weapons of mass destruction. CMEC didn't respond to a request for comment. Huawei says it no longer partners with CMEC.

U.S. and other international sanctions are designed to deter Iran from developing nuclear weapons; Iran says its nuclear program is aimed purely at producing domestic energy.

Although Huawei maintains it doesn't sell any filtering technologies, its presentation given to MobinNet, marked confidential, repeatedly says its "DPI Solution" features "URL filtering," which can be used to block specific websites. The presentation also cites a number of customer "success" case studies -- including in Britain, Russia, Colombia, and China -- where it says telecommunication operators were using its system to filter websites.

For example, the presentation states that a Chinese telecoms firm was using the Huawei system "to settle the problem of youth getting secure and healthy access to websites, and the traffic should be controllable." The presentation also states that the system was used during the 2008 Beijing Olympic games to block "illegal" Internet phone services, filter websites and to conduct "user behavior analysis."

In a series of emailed statements, Guyang, the Huawei spokesman, did not address Huawei's claim that it doesn't "provide any services related to monitoring of filtering." But he says website filtering is used by many telecoms, including in the U.S., "as part of efforts to counter cyberterrorism, child pornography, smuggling of narcotics and other crimes, as well as illegal websites and data."

He said Huawei "did not sell products containing this function in Iran." He also said the Huawei system described in the proposal -- the Quidway SIG9800 -- can't access "content" in the telecommunications network.

But a former Huawei employee who has worked in Iran said the SIG9800 can be used to reconstruct email messages provided they are not encrypted. "This product has some special usage which Huawei customers do not like to share ... especially in Iran," said the former employee, who spoke on condition of anonymity.

Storing every text message
The proposal to MobinNet for the Huawei lawful-intercept system states that it includes technology from a German company called Utimaco Safeware AG. Utimaco says Huawei is one of its worldwide resellers but that neither MobinNet directly -- nor Huawei on behalf of MobinNet -- purchased or licensed its products.

The proposal also states that Huawei equipment at another Iranian telecom had "already successfully integrated with" an Utimaco product "and accumulated rich integration experience, which will be shared."

The other Iranian telecom isn't named but Malte Pollmann, Utimaco's chief executive officer, confirmed that in 2006, Nokia's German unit had purchased Utimaco software for MTN Irancell, Iran's second-largest mobile phone operator which has a major contract with Huawei. He said the product hadn't been maintained for several years and that Utimaco believes it no longer is being used.

MTN Irancell is 49 percent owned by South Africa's MTN Group, Africa's largest telecom carrier. It declined to comment about the Utimaco product.

Interviews and internal MTN documents reviewed by Reuters show that prior to MTN Irancell's launch, Iranian intelligence authorities took a keen interest in the capabilities of its lawful-intercept system, and pushed to make it more intrusive.

Like most countries, including the United States, Iran requires telephone operators to provide law enforcement authorities with access to communications. But people who have worked at Iranian telecoms say authorities sometimes abused their access, targeting certain individuals without a warrant or with little or no explanation.

In response, a spokesman for Iran's mission to the United Nations in New York emailed a section of Iran's constitution which states that recording telephone calls, eavesdropping and censorship "are forbidden, except as provided by law." 

The terms of MTN Irancell's license agreement stipulated that Iran's security agency could record and monitor subscribers' communications, including voice, data, fax, text messaging and voicemail, the internal MTN documents show. "At least 1 percent of all subscribers" could be targeted, and authorities wanted access to their location -- "within 10 to 20 meters" -- as well as billing information, according to the documents.

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According to a person familiar with the matter, prior to its launch, Iranian authorities pushed MTN Irancell to provide them with even more surveillance capabilities. The requests included copying and storing all text messages on the network for 30 days and providing 36 different monitoring centers with access to communications. 

The authorities also wanted to be able to intercept every call handled by an individual mobile-phone tower. "They were not talking of a single tower, they were talking of a large number of towers," the person said. "That is not the norm."

MTN, which oversaw the telecom's launch, didn't express to the authorities any concern about potential abuse, according to this person. Rather, the company argued during a series of meetings that the new requirements weren't part of the scope of the licensing agreement. MTN offered to add other surveillance capabilities over time, this person said.

MTN declined to comment. In April, its chief executive, Sifiso Dabengwa, said that any allegations that MTN was complicit in human rights abuses in Iran "are both false and offensive."

The Iranian intelligence authorities eventually agreed to hold off on their surveillance wish list - and allowed the telecom's launch. But they made clear they expected MTN Irancell would eventually install more capabilities, according to the person familiar with the situation.

The extent to which MTN Irancell later added new surveillance capabilities to its network remains unclear. The network did add enhanced location-based services in 2011.

A British company, Creativity Software, announced in August 2009 that it had won a contract to supply the technology, which it said would allow MTN Irancell to offer its customers special rates at home.

An official with Creativity Software did not respond to requests for comment. In a statement last year, the company said its sale was legal and "any connection implied between the provision of commercial location-based services deployed by MTN Irancell in Iran and any possible human rights abuses is ... erroneous."

Hamid, the human rights activist who says Iranian security agents told him in 2008 they had listened to his telephone conversations, says he had been using a cellphone he had purchased through MTN Irancell.

Then a student at a Syrian university, he said that he had returned to Iran to visit his family in Ahwaz, Khuzestan. The region is home to many Iranian Arabs who allege they have been subject to discrimination and economic deprivation by the Iranian government.

Now 30, Hamid said he eventually was released on bail and fled the country. But he said he was arrested in Iraq, jailed for three years and finally received refugee status in Sweden.

He said he was surprised that Iranian authorities had intercepted his phone calls. "I was completely taken aback," he said. "When I bought the Irancell mobile, I didn't even buy it in my name."

MTN declined to comment. The spokesman for Iran's U.N. mission said Hamid's allegations "are unfounded" and that Iran's constitution protects the rights of Iranian Arabs and other ethnic groups.

"Iran's constitution also bans any kind of torture and espionage," the spokesman added.

Additional reporting by Yeganeh Torbati in Dubai.

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LONDON -- The European Union on Monday increased economic and diplomatic pressure on Iran by ratcheting up sanctions put in place against the country’s nuclear program.

“Despite six U.N. Security Council Resolutions calling for Iran to cease enrichment-related activities, Iran continues to choose the wrong path. It is enriching uranium on a scale that has no plausible civilian justification,” British Foreign Secretary William Hague said at a meeting of foreign ministers from the 27 EU countries in Luxembourg.

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At the same meeting, EU foreign policy chief Catherine Ashton stressed the path to a negotiated diplomatic solution remains open.

“We have always said sanctions are not an end in themselves, but are there to apply pressure on the Iranian authorities to meet their international obligations,” Ashton said.

Tough measures
In addition to current bans on oil and gasoline imports from Iran, Monday’s package of measures addressed what the EU called its “serious and deepening concerns over Iran’s nuclear program,” by targeting Tehran’s funding of such schemes.

All transactions between European and Iranian banks will now be prohibited, unless they have been explicitly authorized by national authorities.

The import of natural gas from Iran into the EU will be banned, along with associated activities, such as transport and insurance.

EU member states also decided to stop supporting trade with Iran by ending short-term export credits, guarantees or insurance.

These new restrictions come amid growing concern among world powers of Iran’s lack of engagement in its protracted negotiations with the United States, China, Russia, Britain, France and Germany in their on-and-off talks, which have dragged on for years with little sign of progress.

Iran says ready 'to offer an exchange' on nuke issue

World powers accuse Iran of covertly using its uranium enrichment program to produce nuclear weapons. Tehran insists the research and development is to generate electricity and produce medical isotopes.

The ongoing negotiations have limped from meeting to meeting, with the world powers’ frustrations punctuated by occasional concessions by Iran and assertions of its willingness to engage with the international partners. Recently, Iran suggested it would halt its enrichment program in exchange for fuel for a research reactor.

Despite the protracted dialogue, diplomats hope that a negotiated settlement can be reached, with international sanctions providing an incentive for Tehran to engage more meaningfully.

Western intel: 'Small signs of wavering' on Iran nuke policy

Ashton told reporters in Luxembourg that she met recently with her Iranian counterpart, Saeed jalili, and “had left him in no illusion about our desire to make progress.”

Staggering economy
Although the EU says sanctions are not aimed at the Iranian people, the existing sanctions, backed by numerous U.N. resolutions dating back to 2006, began to bite this summer.

Hyperinflation in Iran is pushing up prices daily and the dramatic slide in the value of the rial against the U.S. dollar led to unrest in Tehran earlier this month, when angry currency traders clashed with security forces.

These new sanctions appear likely to add to Iran’s economic turmoil, according to analysts.

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Despite the tightening sanctions, U.S. exports to Iran rose by nearly one-third in the first eight months of 2012, according to data released by the U.S. Census Bureau.

The jump, to $199.5 million, was due chiefly to an increase in grain sales and hides a sharp drop in the value of exports of humanitarian goods, such as medicinal and pharmaceutical products, which fell to $14.9 million from $26.7 million in the same period in 2011.

Reuters contributed to this report.

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