Western Intelligence Sources: Malaysia Is Helping Iran Evade Sanctions

Sources say an unusual number of oil tankers have been sailing between the two countries, and that their alliance will provide Iran's economy with a source of oxygen

Demonstrators outside the Australian embassy in Kuala Lumpur protest against Australia's decision to recognize Jerusalem as Israel's capital, December 21, 2018.
Mohd Rasfan/AFP

Iran and Malaysia have woven an alliance which enables Tehran to evade economic sanctions, Western intelligence sources say. The oil tankers seen sailing in atypical numbers between the two countries is a clear example.

The Western intelligence sources expect that Iran is planning on funneling funds from sales of its oil and natural gas reserves through Malaysia – which will also supply the faltering Iranian economy with a major source of oxygen.

>> Read more: Malaysia has become hub for Iranian activity, Western intel suggests

U.S President Donald Trump announced this week that as part of the increased economic sanctions on Iran, he will not extend the temporary six-month waivers given to China, India, Italy, Turkey and South Korea to import oil from Iran. The waivers run out on May 2. This step is expected to severely hurt the Iranian economy and Western intelligence officials expect Malaysia’s attempts to help Iran export its oil will only grow next month as the oil sanctions take full effect.

Read more: Biden 2020: On Israel and the Mideast, Biden has a long, complicated legacy to run on

Malaysia has a population of over 30 million, two-thirds of whom are Muslim, and is led by openly anti-Semitic Prime Minister Mahatir bin Mohamad.

In April 2018, Fadi al-Batsh, a Palestinian engineer involved in developing and supplying weapons to Hamas, was killed in Kuala Lumpur, Malaysia’s capital. Foreign reports attributed the killing to the Mossad,

shedding light on the depth of the relationship between Iran, Hamas and Malaysia.

A long-term relationship

Malysia’s involvement in aiding the Iranian nuclear program has been going on since at least 2004. Components of the program were smuggled from Malaysia to Libya and Iran by a member of the network of Pakistani nuclear physicist Abdul Qadeer Khan, who is considered the father of the Pakistani nuclear bomb.

In November 2018, British businessman Alexander George was jailed by a British court for smuggling jet fighter parts from the United States to Iran, via companies in Malaysia and Dubai, putting such relations into question.

In December 2018, the Malaysian government-owned national oil company, Petronas, signed a memorandum of understanding on cooperation with the National Iranian Oil Company to conduct joint research on gas fields. Petronas is one of the world’s largest oil companies and is ranked by Fortune Magazine as the 69th largest company in the world in addition to being one of the most profitable companies in Asia. In May 2017, Petronas also signed an agreement with an Iranian refinery company to cooperate in producing automotive and industrial lubricants in Iran. Five months later, in October 2017, the company announced it was examining the possibility of developing the Iranian Azadegan oil field, and in February 2018 the Malaysian ambassador in Tehran announced Petronas was interested in working with Iran’s oil industry.

The current Malaysian Prime Minister Mahathir Mohamad, became Petronas' senior advisor after his loss in the 2003 general elections. Today the company is controlled by his son of Mahathir Muhammad Muhazani. Evidence of his country’s warm ties with Iran can be found in Malaysia being one of the very few countries in the world which does not require Iranians to obtain a visa to visit.

In the past, Malaysia has been involved in attempts to rescue its oil industry, a key source of revenue for the Iranian economy, from sanctions. The Malaysian island of Labuan has served as a point for receiving funds by a subsidiary of NIOC, which was placed on the sanctions list in the past. The U.S. Treasury also sanctioned the First East Export Bank, located in Labuan, for helping fund the Iranian ballistic missile program.