EU RESUMES TRADE, POLITICAL NEGOTIATIONS WITH IRAN

C O N F I D E N T I A L SECTION 01 OF 02 BRUSSELS 000212

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NOFORN

DEPT FOR EUR/ERA, NEA - P. DIBBLE, NP - M. FITZPATRICK

E.O. 12958: DECL: 01/18/2010
TAGS: PREL KNNP PTER PHUM IR EUN USEU BRUSSELS
SUBJECT: EU RESUMES TRADE, POLITICAL NEGOTIATIONS WITH IRAN

REF: 2004 USEU 5396 AND PREVIOUS

Classified By: USEU POLOFF LEE LITZENBERGER; REASON 1.4 (B,D)


1. (C/NF) Summary. The atmospherics at the January 12-13
EU-Iran Trade and Cooperation and Political Agreement
negotiations in Brussels were positive and relaxed, and Iran
appeared to want the negotiations to succeed, according to
Council Secretariat officials who attended. Negotiations are
still in the initial stages, and will take some time to
complete. The next round is likely to take place in Tehran
in March, although no date has been set. The EU believes it
can sustain the talks -- and Iran's parallel commitment to
suspend uranium enrichment -- easily through March and
probably through the summer by offering Iran cooperation in
various areas. Beyond that point, though, the EU officials
expect that Iran will seek some gesture from the U.S. in
order to maintain its enrichment suspension. Should this
point be reached, the EU would hope the U.S. could make a
gesture. One possibility is support for Iran's WTO
accession, and Iran has also expressed concern about possible
attacks on its nuclear installations. End Summary.

Good Atmospherics
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2. (C/NF) On January 12-13 in Brussels, the EU renewed
long-suspended negotiations with Iran on a Trade and
Cooperation Agreement (TCA) and parallel Political Agreement.
The resumption was part of the Paris accord reached between
the EU-3 and Iran in November in exchange for Iran's
suspension of uranium enrichment. According to EU Council
Secretariat officials Bjorn Larsson and Sophie Kiesling

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(strictly protect),both of whom work on Iran and attended
the talks, the atmospherics were positive and relaxed. In
the Political talks, the Iranians complained about EU
Parliamentarians' contacts with MEK and, Larsson quipped,
"the Iranians always think they have more leverage than they
do." Some Commission officials also reportedly remarked that
the Iranians seemed tense, but in the view of Larsson and
Kisling the talks were more relaxed than past sessions. The
Iranians left the impression that they wanted the
negotiations to succeed.


3. (C) The EU delegation for the TCA talks was led by
Commission Middle East Director Christian Leffler, who had
led the first four rounds of TCA talks prior to their
suspension in 2003. The Political Agreement talks were led
by retired Luxembourg Political Director Paul Mertz (who
attended last fall's U.S.-EU-Iran Trilateral consultations in
Brussels).

No change in EU linkage of Trade and Political Talks
--------------

4. (C/NF) The Council officials assured USEU that the EU
has not dropped its earlier insistence that the trade and
political agreements are linked -- one won't be signed
without the other -- and progress on both must go hand in
hand. They also said the political agreement would "be
updated" to reflect new EU standard language on WMD that was
adopted after the talks had been suspended in 2003. They
added that the Iranians seemed prepared to accept this in
principle, although they noted that discussions are still
preliminary and no texts have been exchanged. The Council
officials said they expect Iran will object to many parts of
the text the EU will propose.

Next Round Likely to be in March
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5. (C/NF) A date for the next round of TCA/Political talks
has not been set, but Larsson said it is unrealistic to meet
more frequently than every two months and he therefore
thought it likely the next round will be held in March, in
Tehran.

EU not happy with Iranian comments to press
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6. (C/NF) Larsson said the recent comments to the press by
Iran's nuclear program chief Musawien that Iran's decision to
suspend uranium enrichment was conditional on the success of
its talks with the EU were "unhelpful." Larsson said the
EU-3 had reached agreement in December from Iran's National
Security Chief Rowhani that "the suspension of uranium
enrichment is indefinite for the duration of the talks," and
that press statements should be kept to a minimum.

U.S. role needed for long-term agreement?
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7. (C/NF) Larsson was confident the EU's TCA/Political
negotiations could provide Iran sufficient incentives to
maintain its uranium enrichment suspension through March and
probably into the summer of 2005. For a long-term
arrangement locking in a permanent enrichment suspension,
though, Larsson opined that Iran is likely to seek a
"positive signal from the U.S." In the economic area,
support for Iran's WTO accession would be one possibility.
(In this connection, Larsson noted that the Iranian press has
reported that a foreign subsidiary of Halliburton recently
signed a $310 million contract in Iran.) On the political
side, Larsson said the Iranians have expressed concern about
possible attacks against their nuclear facilities. Larsson
opined that, should the talks reach the point where a small
step by the U.S. could keep the enrichment suspension in
place, it would be difficult for the EU to blame Iran if the
U.S. proved unwilling to make a gesture toward Tehran.

SCHNABEL

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