ITALY WON'T FORCE IRAN WTO ACCESSION ISSUE

C O N F I D E N T I A L SECTION 01 OF 02 ROME 001962

SIPDIS

NP/RA, EUR/PRA, EUR/RUS, EUR/WE

E.O. 12958: DECL: 04/19/2012
TAGS: PREL ETRD EU ETRD EU IT WTO ITPREL WTO
SUBJECT: ITALY WON'T FORCE IRAN WTO ACCESSION ISSUE

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PAGE 02 ROME 01962 01 OF 02 191836Z
REF: (A) STATE 71421 (B) ROME 1355

CLASSIFIED BY: CLASSIFIED BY ECOUNS KAREN MILLIKEN; REASON 1.5 B/D.


1. (C) SUMMARY AND COMMENT. ITALY STRONGLY DISAGREES WITH
USG POLICY ON IRAN'S POTENTIAL ACCESSION TO THE WORLD TRADE
ORGANIZATION BUT DOES NOT INTEND TO PUSH THE EU TO FORCE THE
ISSUE AT THE MAY 13 WTO GENERAL COUNCIL MEETING OR
THEREAFTER, ACCORDING TO MFA'S WTO COORDINATOR. ALTHOUGH THE
ITALIANS WILL NOT MAKE AN ISSUE OF IRAN'S WTO AMBITIONS,
NEITHER CAN WE EXPECT THEM TO CARRY REF A'S SUGGESTED MESSAGE
TYING CLOSER ECONOMIC TIES TO IMPROVED PERFORMANCE ON THE
LISTED ISSUES. ON THE CONTRARY, WE CAN COUNT ON THEM TO
COMMISERATE WITH THE IRANIANS ABOUT PERCEIVED USG OBSTINACY
ON WTO AS BENEFITING CONSERVATIVES AT THE EXPENSE OF
REFORMERS. END SUMMARY AND COMMENT


2. (C) ITALY ACCEPTS REF A'S STRAIGHTFORWARD MESSAGE THAT WE
ARE NOT OPEN TO DISCUSSION OF IRANIAN ACCESSION TO THE WTO
AND, CONSEQUENTLY, ITALY SEES THE MATTER AS A NON-ISSUE FOR
THE MAY 13 WTO GENERAL COUNCIL MEETING, MAURIZIO ZANINI,
MFA'S WTO COORDINATOR, TOLD ECONOFF ON APRIL 17. ECONOFF
ASKED WHETHER ITALY, LONG A FACILITATOR OF IRAN'S CONTACTS
WITH THE WEST, WOULD PRESS THE EU TO SPONSOR IRAN IN GENEVA.
ZANINI REPLIED THAT ITALY PICKS VERY CAREFULLY THE ISSUES ON
WHICH IT LOOKS TO LEAD THE EU AND, IN THE TRADE AREA, ITALY'S
SINGLE PROACTIVE ISSUE IS INTELLECTUAL PROPERTY PROTECTION
FOR GEOGRAPHICALLY DESIGNATED PRODUCTS. HE SAID ITALY WILL
NOT SPEND ITS WTO CAPITAL IN THE EU ON IRANIAN ACCESSION.


3. (C) ALTHOUGH CONCEDING THE ESSENTIAL POINT OF OUR
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DEMARCHE, ZANINI LAMBASTED THE USG POSITION. HE WANTED TO BE
SURE THE USG UNDERSTANDS THAT SUCCESS IN BLOCKING CONSENSUS
ON AN ACCESSION PROCESS FOR IRAN IS NOT TANTAMOUNT TO ITALY
OR THE EU ADOPTING WHAT HE SEES AS MISGUIDED U.S. POLICY. HE
SAID ITALY, ON THE CONTRARY, "SUPPORTS EVERYONE FOR WTO
ACCESSION. THE WTO'S MOST COMPELLING ASPECT IS ITS
INCLUSIVENESS. WHEN THE ISRAELIS SPEAK, FOR EXAMPLE, THE
ARABS DON'T WALK OUT." THE U.S., HE INSISTED, IS ASKING THE
WRONG QUESTION. FOR ZANINI, THE QUESTION ISN'T WHETHER
IRAN'S POLITICAL CONDUCT WARRANTS WTO MEMBERSHIP BUT WHETHER
THE WORLD IS BETTER OFF WITH IRAN, NOTWITHSTANDING ITS
POLITICS, SUBJECT TO INTERNATIONAL TRADE RULES. HE BELIEVES
IRAN'S EVENTUAL WTO MEMBERSHIP WOULD HELP STABILIZE THE WORLD
TRADING SYSTEM AND, ESPECIALLY GIVEN MAJOR ITALIAN
INVESTMENTS IN IRAN, HE WOULD LOOK NO FURTHER FOR
JUSTIFICATION FOR LAUNCHING AN ACCESSION PROCESS. IF THE USG
WANTS TO LOOK FURTHER, HE SUGGESTED, WE MIGHT CONSIDER
WHETHER ENHANCED STABILITY IN THE TRADING SYSTEM MIGHT NOT
FOSTER ENHANCED POLITICAL STABILITY AS WELL.


4. (C) ECHOING COMMENTS MADE BY MFA ACTING GULF STATES OFFICE
DIRECTOR EMANUELE FARRUGGIA TO POLOFF AND ECONOFF, ALSO ON
APRIL 17, ZANINI SAID THE DISCUSSION OF WTO ACCESSION FOR
IRAN IS, IN ANY EVENT, LARGELY SYMBOLIC. MFA SEES THE
IRANIAN ECONOMY AS YEARS AWAY FROM A SERIOUS WTO RUN AND
FALLING EVEN FURTHER BEHIND AS WITNESSED BY IRAN'S RECENT
FAILURE TO ENACT EVEN RUDIMENTARY FOREIGN INVESTMENT
INCENTIVES (SEE ALSO REF B). NOTING THAT OUR DEMARCHE MAKES
NO MENTION OF THE OBVIOUS ECONOMIC BASIS FOR DENYING IRAN WTO
ACCESSION, FARRUGGIA SAID ITALY IS PRESSING IRAN HARD FOR
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BOTH ECONOMIC AND POLITICAL REFORM BUT DOES NOT SEE ONE
EFFORT AS LEVERAGING THE OTHER.


5. (C) IN RESPONSE, EMBOFFS PRESENTED REF A POINTS,
EMPHASIZING THAT A LINKAGE BETWEEN CESSATION OF IRAN'S
OBJECTIONABLE BEHAVIOR AND ECONOMIC COOPERATION COULD GIVE
IRANIAN REFORMERS BOTH A MEANS AND A MOTIVE TO AFFECT THE
BEHAVIOR OF CONSERVATIVES. ECONOMIC COOPERATION UNLINKED TO
POLITICAL BEHAVIOR, WE CONTINUED, COULD LEAVE CONSERVATIVES
CONVINCED THAT IRAN'S POLITICAL CONDUCT WAS OF NO CONCERN TO
WESTERN ECONOMIES. FARRUGGIA ARGUED THE OPPOSITE POINT --
THAT WITHHOLDING ECONOMIC COOPERATION WOULD BOLSTER THE
CONSERVATIVES' CONTENTION THAT IRANIAN RAPPROCHEMENT WITH THE
WEST IS ONE-SIDED.


6. (C) FARRUGGIA COMMENTED ON TWO OF REF A'S POINTS IN
PARTICULAR -- IRAN'S EVIDENT NUCLEAR AMBITIONS AND ITS
SUPPORT FOR VIOLENT OPPOSITION TO THE MEPP. HE SAID IRAN HAS
SEEN A NUCLEAR WEAPON CAPACITY AS AN ESSENTIAL NATIONAL
INTEREST EVER SINCE THE SHAH'S REGIME. HE FEELS THAT ANY
EFFORT, THROUGH THE NONPROLIFERATION TREATY OR OTHERWISE, TO
DISSUADE IRAN FROM PURSUIT OF NUCLEAR WEAPONS MUST TAKE INTO
ACCOUNT THE VISCERAL PLACE THESE WEAPONS OCCUPY IN THE
IRANIAN NATIONAL PSYCHE. ON THE OTHER HAND, HIS FREQUENT
CONTACTS WITH IRANIAN OFFICIALS HAS NOT LEFT HIM WITH A SENSE
THAT SUPPORT FOR PALESTINIAN NATIONALISM IS SIMILARLY CENTRAL
TO THEM.

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ACTION NP-00

INFO LOG-00 AID-00 AIT-03 AMAD-00 ACQ-00 CEA-01 CIAE-00
COME-00 CTME-00 INL-00 DODE-00 SRPP-00 DS-00 EB-00
EUR-00 EXIM-01 E-00 VC-00 FRB-00 H-01 TEDE-00
INR-00 IO-00 ITC-01 LAB-01 L-00 VCE-00 MOFM-05
MOF-01 AC-01 NEA-00 DCP-01 NSAE-00 NSCE-00 OES-01
OIC-02 OMB-01 OPIC-01 PA-00 PM-00 PRS-00 ACE-00
P-00 SCT-00 SP-00 SSO-00 SS-00 STR-00 TRSE-00
T-00 USIE-00 SA-00 EPAE-00 PMB-00 DSCC-00 DRL-02
G-00 NFAT-00 SAS-00 /023W
-------------- 88ED59 191836Z /38
P 191732Z APR 02
FM AMEMBASSY ROME
TO SECSTATE WASHDC PRIORITY 3357
INFO IRAN COLLECTIVE
AMCONSUL FLORENCE
AMCONSUL MILAN
AMCONSUL NAPLES
USMISSION GENEVA

C O N F I D E N T I A L SECTION 02 OF 02 ROME 001962

SIPDIS

NP/RA, EUR/PRA, EUR/RUS, EUR/WE

E.O. 12958: DECL: 04/19/2012
TAGS: PREL ETRD EU ETRD EU IT WTO ITPREL WTO
SUBJECT: ITALY WON'T FORCE IRAN WTO ACCESSION ISSUE

CONFIDENTIAL

PAGE 02 ROME 01962 02 OF 02 191836Z


7. (C) COMMENT. ITALY GENERALLY SAVORS ITS OCCASIONAL ROLE
AS WASHINGTON-TEHRAN MESSAGE CARRIER, MOST RECENTLY EVIDENT
WHEN ITALY CONVEYED IRAN'S CONCERN ABOUT ITS PROFILE IN DOD'S
NUCLEAR POSTURE REVIEW. THE ITALIANS, HOWEVER, DRAW THE
LINE AT ADOPTING AS THEIR OWN THE USG-SUGGESTED LINKAGE
BETWEEN POLITICAL REFORM AND ECONOMIC COOPERATION. THE
ITALIAN ENERGY GIANT ENI, BY ITSELF, HAS TEN BILLION DOLLARS
AT RISK IN IRAN AND THE GOVERNMENT OF ITALY, ENI'S BIGGEST
SHAREHOLDER, ISN'T ABOUT TO MAKE IT MORE AT RISK. MFA WILL
CONTINUE TO PUSH IRAN ON WMD, BALLISTIC MISSILES, SUPPORT FOR
TERRORISM, AND THE REST, BUT ECONOMIC RELATIONS WILL CONTINUE
ALONG A DIFFERENT PATH. IN PARTICULAR, ITALY HAS LONG
SUPPORTED IRAN FOR WTO ACCESSION AND WILL CONTINUE TO DO SO,
ALBEIT NOT TO THE POINT OF PROVOKING AN EU CONFRONTATION WITH
THE U.S. WE SHOULD EXPECT, MOREOVER, THAT THE ITALIANS WILL
COMMISERATE FULLY WITH INEVITABLE IRANIAN COMPLAINTS THAT USG
OBSTINACY ON WTO ACCESSION PLAYS INTO THE HANDS OF THOSE IN
IRAN WHO OPPOSE REFORM.
SEMBLER

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2002ROME01962 - Classification: CONFIDENTIAL