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The recent indictment of a Chinese company for providing banned nuclear and missile materials to Iran using New York banks has some experts calling for sharper security measures, saying the U.S. hasn't exhausted all its options as Iran's nuclear program proceeds apace.

"Diplomacy is about preserving national security," Michael Rubin, resident scholar at the American Enterprise Institute told The Jewish State. "Sanctions are not a solution all by themselves, but they do have impact, both symbolically and financially. We should throw the book at these guys, and raise the cost of doing such trade."

Rubin, a Ph.D. in Iranian history and former staff advisor for Iran and Iraq in the Office of the Secretary of Defense during the administration of former President George W. Bush, suggested implementing section 311 of the Patriot Act against Iran. That would designate Iran as a "primary money laundering concern," enabling the government to impose additional restrictions, such as forcing stricter transaction reporting, more thorough bank customer identification, and further impeding the targeted financial transactions.

That would severely limit Iran's ability to conduct illicit financial behavior, according to Rubin, but it's a step the U.S. has thus far balked at taking.

"Whenever any administration launches a high profile bid for diplomacy, there's a tendency to ignore anything which might hamper dialogue," Rubin said. "The purpose of dialogue, however, should be to solve problems, not just to talk."

On April 7, Manhattan District Attorney Robert Morgenthau announced a 118-count indictment against the Chinese company LIMMT and its manager, Li Fang Wei. The charges include illegal financial transactions, through American-based banks, to help Iran acquire nuclear weapon-related materials.

Doing business with LIMMT was outlawed three years ago for LIMMT's involvement in this type of activity. From that point, Morgenthau announced, LIMMT began using front companies and aliases to continue doing business with Iran. The Jewish State has previously reported on similar moves by Iranian front companies, such as the Alavi Foundation.

Rachel Ehrenfeld, director of the American Center for Democracy and author of "Funding Evil: How Terrorism is Financed -- and How to Stop It," said that despite the fact that transactions in U.S. dollars go through New York, the sheer volume of such financial activity makes it difficult to effectively screen for dummy corporations and front companies.

"They haven't figured out how to stop this because you cannot stop commerce," Ehrenfeld told The Jewish State.

When money comes from places like Iran and China, the financial system is set up to red-flag certain transactions, she said. But Iran has been able to set up processes that use several layers in an attempt to hide the true origin and/or destination of the money.

"Usually when transactions are being stopped, it's because there is human intelligence," Ehrenfeld said.

Ehrenfeld believes the U.S. needs its allies around the world to take a larger role in the Iran-sanctions regime previous administrations have attempted to put into place. One problem, she said, is that the international framework for preventing this type of funding isn't strong enough.

"If other countries would enforce an embargo on Iran then it would carry something," she said, adding that currently, "There is no definition for terrorism and there is no definition for corruption, internationally."

Asked whether the LIMMT indictment indicated an expanded role of China's subversive activity in the U.S., Ehrenfeld responded that the activity isn't new -- they simply got caught this time.

"China has been spying on the United States for a long time, has been corrupting people all over the world," she said. "This is not new. Sometimes we get lucky and we catch them. That's all."

Rubin said the U.S. should be tougher on China as well, and that diplomacy with both China and Iran must be accompanied by an understanding of retribution for duplicity. Additionally, he said, the U.S. should stop going back to square one at the inauguration of every new administration.

"Yes, we should continue diplomacy but also utilize coercion when they cheat," Rubin said. "Chinese military doctrine, as well as its governing philosophy, makes much of this two-sides approach. We've got to break out of our collective gullibility, and stop declaring a jubilee year -- wiping the slate of accumulated history and wisdom clean -- every time a new administration begins. The world doesn't revolve around the U.S. political calendar."

Ehrenfeld said Iran has seemingly mastered its stalling techniques. She said the indictments will slow down some of the more baleful activity of these Chinese and Iranian companies, but it won't be enough to stop Iran's nuclear program.

"We seem to be in great need of another miracle," she said. "And a leader."