The Secret History Part II: The C-802 Cruise Missile: How the CIA left the Navy Defenseless against an Iranian Missile

An interview with Joe Trento about C-802 missiles and what they mean for the Persian Gulf.

In 2006, the U.S. Navy claimed it had a defense against the Iranian C-802 cruise missiles. But Iran, once again, put U.S. credibility to the test. During the war between Hezbollah and Israel, on July 14, 2006, Iranian-trained Hezbollah elite forces, operating with undercover Iranian commandos in Lebanon, fired two radar-guided C-802 missiles at the Israeli warship INS Hanit stationed 10 miles off the coast of Lebanon. The attack was timed to coincide with a speech being aired in the region by Hezbollah leader Sheik Hassan Nasrallah, who promised to deliver a series of “surprises” to Israel at the time the rocket was fired. In that missile attack, launched from Iranian-manned launchers smuggled into Beirut, four Israeli sailors died, and the Hanit suffered severe damage. The ship’s cruise missile detection system was not turned on. According to Israeli navy sources, these defensive systems are only turned on if the ship’s captain feels his ship is threatened by a cruise missile attack. If there is a small boat attack, that would be handled by the ship’s guns, a different system.

The Israeli military claimed that elite Iranian Revolutionary Guards assisted Hezbollah in launching the C-802 missiles. Nasrallah denied it. Iran insisted the Israeli claim was an attempt “to escape reality with the aim of covering up [Israel’s] inability to confront the Lebanese nation and resistance.” I have my own sources inside Hezbollah, and they say Nasrallah is dissembling and the C-802 units remained under the full control of Iranian Revolutionary Guards, who smuggled the launchers and missiles through Syria into Lebanon.

Only one of the two C-802 missiles fired actually hit the Hanit.  Still, the ship almost sank. Had the second missile hit, the Hanit would have sunk, according to Israeli and U.S. Navy authorities. If a defense had been developed by the U.S. Navy, it was one we had not shared with America’s closest ally in the region.

The latest chapter in Iran’s preparation for a U.S. attack emerged publicly last year when small Iranian fast boats swarmed three 5th Fleet ships in the Persian Gulf on Sunday, January 6, 2009. Few realized that that incident had a historical lineage dating back decades. It reflects the Navy’s continuing problems with the CIA and a growing fear that Iran is testing U.S. Navy defenses.

Iran had no intention of attacking the three U.S. Navy ships. The Revolutionary Guard small boats were “trying to light us up and it worked,” a senior U.S. Navy weapons expert told me.

The Pentagon said that the USS Hopper, the USS Port Royal and the USS Ingraham were passing into the Persian Gulf through the Straits of Hormuz when five Iranian small boats approached them at high speed and swarmed them. The Iranian boats weaved in and out of the three ships and made “threatening” moves – in one case coming within 200 yards of one of the ships. The patrol craft appeared to be dumping boxes into the water at the same time the Navy recorded a threatening radio transmission. The Iranian government called the incident routine.

What 5th Fleet commanders “had been fearing is that a faux terrorist attack might be used as a diversion to tie up our ships’ defenses while Iran covertly fired a fusillade of radar-guided cruise missiles into U.S. ships,” a Navy weapons expert said. The idea of Iran taking on the U.S Fleet might sound farfetched, but documents I obtained reveal Navy Intelligence has been warning about just such an attack since 1997.

According to these highly classified documents (some of them at the UMBRA classification level), Iran has had weaponry that could destroy U.S. ships since the mid-1990s, and the United States has done little to devise an effective defense against these highly accurate and relatively cheap cruise missiles.

According to secret National Security Agency intercepts, known as ECHELON, the military concluded in a highly classified Power Point presentation prepared by the Joint Staff in 1997 that a newly modified Iranian cruise missile based on a Chinese design gave Tehran “effective naval control of the Persian Gulf.”

Last year’s incident takes on additional significance because secret files of the Clinton and Bush administrations show that even though the U.S. government has known since 1997 that Iran had the ability to sink even the most sophisticated U.S. Navy ships in the Persian Gulf, our government took little action to prevent it. More startling, the CIA turned down a chance to obtain one of the Iranian missiles so a defense could be developed. Instead, the CIA relied on a company called Vector Microwave to obtain the missile even though the CIA was aware that Vector Microwave executives were in business with the Chinese firm controlled by the Chinese Army, which built the airframe for the Chinese cruise missiles that ended up in Iranian hands.

Sarkis Soghanalian in his Paris apartment.  Photo: Joseph Trento
Sarkis Soghanalian in his Paris apartment. Photo: Joseph Trento
In June 1997, I told U.S. government officials that the scale of Iran’s missile program was much larger than U.S. intelligence realized. The CIA told Navy non-proliferation officials that they did not follow up on the discovery because intelligence coming from a journalist was considered “witting.”

The real reason the CIA did not follow up to get a sample so the Navy could develop a C-802 defense was much more complicated and embarrassing. The CIA was in business with companies that were charging tens of millions of dollars to obtain copies of Chinese weapons, including the C-802. Vector Microwave Research Corporation, the spooky company that had been paid $9 million for an early precursor to the C-802, known as the C8XX series, was being run by a man who had actually gone into business with the China Precision Machinery Import and Export Corporation (CPMIEC), the company that built the C-802s.

A number of U.S. government agencies had concluded that elements of Vector Microwave may have actually provided secret technology to China to improve its systems. The offer from Soghanalian to supply a C-802 to the United States for $60,000 came in the middle of a Justice Department criminal investigation of Vector Microwave.

Government officials quickly dropped the case against Vector Microwave at the CIA’s request. Thomas Green, a lawyer for Vector Microwave’s founder, Donald Mayes, said “there were too many worms in the can” to continue prosecution. Government investigators became suspicious that Mayes had helped the Chinese perfect a Chinese version of the American Stinger shoulder-fired missile. The Agency was more concerned about losing Mayes as an intelligence asset and tipping off the Chinese than they were about the potential danger to our ships and sailors. As a result, the CIA told their cruise missile expert to let the Pentagon know that the Agency’s Directorate of Operations would not deal with a reporter who had an alternate source for procuring the missile. Unfortunately, Vector Microwave never got the CIA a copy of the missile, despite the fact that its top executive was in business with CPMIEC.

As the Israelis learned, no effective defense for the advanced C-802 has been developed despite U.S. Naval officials being warned about the missiles in a Joint Staff power point presentation in 1997.

Iran’s efforts in the 1990s to circumvent an arms embargo to purchase and improve missiles that could destroy U.S. ships reveal embarrassing gaps in U.S. intelligence. The CIA relied on less than honorable contractors to get samples of these weapons so they could develop a response to the new threats. Later, they were more interested in covering up their colossal bungling than making sure the Navy could defend its ships against Iranian threats. Feckless Clinton and Bush officials let China and France supply Iran key designs and components that originated in the United States.

This dark video shows the INS Hanit sending up flares after being attacked by a Hezbollah C-802 missile. At eighteen seconds you can see smoke and fire coming from the ship.

The secret files obtained by DCBureau reveal that France, China and Israel supplied Iran the upgrades for the C-802. This was not an isolated incident of Tel Aviv helping Tehran. The Israelis brokered arms to Iran during the bloody Iran Iraq War in the 1980s. Israel has a long history of cooperating with China in arms deals. Unfortunately, the seeker head technology for the C-802 came from an earlier Israeli missile called the Sampson and was leaked to China from a top secret U.S. Army computer laboratory in Aberdeen, Maryland. Unlike Israel’s earlier help to Iran, this technology transfer was from the United States to China, through representatives China actually had in the Army computer lab. The help from France came through the French company Labinal in the form of an improved turbo pump for the C-802 missile. The turbo pump, that was far superior to anything the Chinese had, was built for Iran by a Labinal subsidiary called Microturbo that operates in Texas.

The help from China and France came when Iran was under a UN arms embargo.  Contained in the files of U.S. intelligence is an embarrassing trove of weak responses to our allies’ actions. The U.S. reaction was to issue what one former Clinton official described as “démarche-mallows” – timid complaints sent off to allies who broke the arms embargo to make money off of Iran.

Secret documents obtained by DCBureau show that, beginning in 1988, China, France and Israel engaged in secret arms sales to Iran that would, by 2006, fundamentally shift the balance of naval power in the Persian Gulf. The decision by Iran to procure missiles that could offset American naval power was detected by the National Security Agency. But the CIA dismissed the significance of the missile deals with North Korea and China and ignored them for years, despite having access to copies of contracts through NSA, that proved involvement in the deals.

More significantly, the CIA failed to detect that two U.S. allies, France and Israel, were working with the Chinese on an advanced anti-ship cruise missile being built for the Iranians. These events also show how poorly the CIA performed when it relied on allies that were transferring key technology to Iran at the same time their intelligence services were assuring the CIA that Iran was making little progress in its missile program.

According to these highly classified NSA documents, repeated opportunities to correct the intelligence failures were not undertaken by the CIA because officials did not want it to become known that their source for foreign advanced weapons procurement had become a fugitive and had gone into business with the Chinese-Army-operated company that made the new Iranian version of the missile’s airframe.

The consequences of this decade-long intelligence cover-up fell first, not on the United States, but on the Israeli ship that was attacked in 2006.

The Iranian government has had 15 years to perfect the C-802 and its follow on missiles. Ironically, in 1997 the US Joint Staff concluded the missile program provided “Iran effective control of the Persian Gulf.”

Officially, the Navy claims it has a defense against the Chinese-designed Iranian missile. Defense Department sources tell me that an integral part of planning naval operations is how to deal with a massive C-802 cruise missile attack against our fleet. “The reality is half a dozen of these missiles could take out a super carrier,” said one officer, deeply involved in current war planning.

Still wondering about the sailors killed on the USS Cole and who really was responsible, I pressed my sources in the Navy about what was learned from al-Kassar. While he would not admit that he provided the warhead to Hezbollah, he urged his debriefers to focus on the USS Cole as a target.

“Why was it picked?” my Navy source asked me.

C-802 anti-ship missiles sit in two launchers carried on the Chinese F-22P class frigate PNS Zulfiquar. Photo: Mak Hon Keong
C-802 anti-ship missiles sit in two launchers carried on the Chinese F-22P class frigate PNS Zulfiquar. Photo: Mak Hon Keong
The answer is obvious. The USS Cole is an Aegis cruiser, just like the USS Vincennes that had shot down Iran Air Flight 655. The Clinton administration was never convinced Al Qaeda had attacked the USS Cole; the same was true with the Bush administration prior to 9/11. “Had Hezbollah and not Osama bin Laden ordered the attack?” I asked my source. “It looks that way,” he said.

We may never know the real answers, but we do know this: Iran has C-802 missiles, and China is about to deploy its first anti-ship ballistic missile. With a range of around 900 miles, it can be fired from mobile, land-based launchers. It is designed specially as a countermeasure to U.S. carrier strike groups, especially U.S. Navy carriers assigned to defend Taiwan from a Chinese attack.

Decisions made years ago comes back to haunt us years later. U.S. taxpayers foot the bill for advanced military technologies that we later spend billions of dollars to defend against. In the meantime, arms dealers make billions of dollars.