NPT ENVOY SANDERS DISCUSSES IRAN WITH AUSTRALIAN

C O N F I D E N T I A L SECTION 01 OF 03 CANBERRA 000323

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STATE FOR T, NP/MNA, EAP/ANP AND NP/RA

E.O. 12958: DECL: 02/17/2015
TAGS: PREL KNNP AORC PARM AS IR IAEA
SUBJECT: NPT ENVOY SANDERS DISCUSSES IRAN WITH AUSTRALIAN
OFFICIALS

REF: A. STATE 18228


B. 04 STATE 219260

C. CANBERRA 322

Classified By: POLCOUNS WOO LEE FOR REASONS 1.4 (B AND D).


1. (C) SUMMARY: At a February 10 luncheon with senior
Australian officials hosted by the DCM, Ambassador Jackie
Sanders, Special Representative of the President for the
Nonproliferation of Nuclear Weapons, discussed how to handle
Iran's nuclear programs at the IAEA. GOA officials were
candid in their assessments of the high probability that the
EU-3 talks with Iran would fail, that Iran's intimidation
tactics had been successful with several states at the IAEA,
and that a strategy had to be pre-prepared for the moment
when the EU-3 and Iran reached an impasse in order to get
Iran's non-compliance reported to the UNSC. Ambassador
Sanders' consultations on the NPT Review Conference (RevCon)
reported septel. End Summary.

PARTICIPANTS
--------------


2. (C) The DCM hosted a lunch for Ambassador Jackie
Sanders, Special Representative of the President for the
Nonproliferation of Nuclear Weapons, that included Australian
Department of Foreign Affairs and Trade (DFAT) First
Assistant Secretary for International Security David Stuart,
Ambassador At-Large for Counterterrorism Les Luck, Australian
Ambassador to Vienna (UN/IAEA Mission) Deborah Stokes, and
Australian Safeguards and Nonproliferation Office (ASNO)
Director General John Carlson. Renick Smith, Special Advisor
to Ambassador Sanders; Dr. Elizabeth Murphy from the Office
of Multilateral Nuclear Affairs; John Mentz, Special
Assistant for Nuclear Nonproliferation Policy from the Office
of the Secretary of Defense; PolCouns and Polmiloff also
attended the lunch.

FOCUS ON IRAN
--------------


3. (C) Having completed NPT RevCon preparation discussions
that morning (septel),the DCM suggested focusing mainly on
Iran over lunch. Ambassador Sanders led off, expressing her
appreciation for the GOA's practice of keeping its policy
disagreements with the USG on the NPT, IAEA or other issues
in private channels, while generally supporting USG
initiatives publicly in multilateral fora. She asked for
Australian tips on approaching New Zealand (her next stop on
her swing through Asia) for support at the NPT RevCon.
Stuart assessed that the Kiwis did understand the need for
counterproliferation in addition to disarmament, highlighting
Wellington's cooperation on a variety of issues within the
Pacific Island Forum (PIF),intervention in the Solomon
Islands in 2003, and the Proliferation Security Initiative
(PSI). Luck offered that the best pitch to make to New
Zealand would be couched in terms of collective security.
Iran and others had to be seen no longer as proliferation
threats in order to enable the disarmament of Nuclear Weapons
States (NWS) that New Zealand sought under the NPT. Sanders
stated that, from her experience at the last two IAEA Board
of Governors (BOG) meetings in Vienna, New Zealand had been
good in standing up to Iran. Stokes added the caveat that
that was true until the GOI had threatened the Kiwis with the
loss of trade contracts. Through its intimidation tactics,
Iran had met with similar success in softening the stances of
Japan, South Korea and China, and had "tried it on" with
Australia, but without success.


4. (C) Stuart wanted to focus on what would happen when the
EU-3 negotiating effort with Iran foundered or if the talks
sputtered along inconclusively. He found the latter scenario
worrying, since Iran had been "cheating on the margins" for
many years. "We see no evidence that the Iranians are trying
to get a high price for agreeing to a permanent suspension of
enrichment," he elaborated, "rather, they are seeking a high
price for continuing uranium enrichment -- with some sort of
caveat." The GOA saw the Iranians as "getting themselves
into position to be able to make nuclear weapons on short
notice." "We agree with you that the Iranians want a
breakout capacity, and they aren't far from it," Stuart
concluded. Carlson pointed out that some GOI officials had
gone so far as to declare that they already had the capacity
to build nuclear weapons, although Australia believed this
was untrue. Stuart added, "we know the talks are
foundering," yet all the EU-3 states had a lot at stake in
seeing the diplomatic process continue. He and Carlson
wanted to have a pre-set strategy prepared for what to do
when the impasse was reached and Iran again claimed its
"right" to produce the full nuclear fuel cycle.


5. (C) Ambassador Sanders said the USG fully shared
Australia's skepticism, noting that Washington had never
wanted to go down the EU-3 path; Iran should have been
reported to the UNSC by the November 2003 BOG. She noted
that UnderSecretary Bolton would be meeting with G-8
counterparts the following week and would discuss Iran.
During bilateral British-Australian political-military talks
the previous day, Stuart commented, he had asked his British
counterpart, DG for Defence and Intelligence David Richmond,
these same questions, but Richmond had not responded
directly. Stuart thought the EU-3's goal was to string the
talks out until they could convince the Iranians to "bite the
bullet" and stop their illicit nuclear programs, but everyone
knew the Iranians had systematically cheated for 18 years.
In addition, he said Richmond had not wanted to consider the
idea of continuing four-way talks in Vienna with the U.S.,
Canada and Australia. Richmond had said he would ask when
back in London, but it was clear he was not interested.
Sanders was not surprised; she assumed the Brits did not want
to be challenged on the risk they had taken in the EU-3.
Luck mentioned that he also had heard that the EU-3 talks
were "poised to take a serious dive," and that new evidence
was coming to light that Iran had been cheating, but he did
not have precise information. Stuart stated that he had
asked Richmond and other EU-3 counterparts whether any of the
EU-3 (Germany in particular) were seeking to lower the bar on
what would be an acceptable outcome from the GOI, and he had
gotten different answers. Mentz offered that the Germans had
made guarantees to the USG that they would not lower the bar.
Stokes commented that the French thought they could solve
the problem commercially by making nuclear power investments
and providing reactors to Iran. Meanwhile, Stuart observed,
Russian actions had improved: the GOR was now telling Tehran
it had to permanently suspend its enrichment efforts before
Russia would provide the fuel. Stokes said she had found the
Russians unpredictable, and Carlson thought there was a split
between the MFA and other ministries in Moscow over what to
do about Iran. The GOR as a whole would want to see the EU-3
effort fail clearly before reporting Iran to the UNSC, he
averred.


6. (C) Stuart reported that his office had used the USG
demarche (Ref B) from October about what the UN Security
Council could do vis-a-vis Iran before applying sanctions as
the basis for a policy options paper for Foreign Minister
Downer. One option, should the intelligence "firm up," he
related, would be to go public with Iran's misdeeds, but that
strategy, post-Iraq, was "fraught." He agreed with a process
of incremental steps from Presidential Statements to
resolutions, appealing to Iran to comply with its
obligations. The DCM thought it might be good to produce a
documentary laying out Iran's history of supporting Hizbollah
and other terrorists, and then ask viewers to consider what
it would mean to have a nuclear-armed Iran. Luck agreed --
so long as the USG itself did not make the documentary. He
noted that much of the world, and particularly Europe, still
saw the U.S. as a biased party with respect to Iran due to
the legacy of the 1979 Embassy hostages situation. There was
consensus around the table that part of the EU-3 motivation
to take on Iran was "to teach the USG how to do diplomacy,"
but Stokes asserted that the Europeans "had no idea how hard
it would be." Sanders wondered whether it would take an
egregious error by the Iranians to actually get them reported
to the Security Council. Stuart stated, "We cannot be held
hostage to waiting for them to make a mistake." Sanders
noted that any nation could take an issue that threatened
international peace and security to the Council. Stuart
thought that would be difficult in the absence of a clear
trigger. He added that the issue would likely come to a head
again later in 2005, just as it was time to select a new IAEA
DG.


7. (C) If the EU-3 were to state in Vienna that Iran's
actions needed to be reported to the UNSC, that would be in
the spirit of what they had agreed to in G-8 statements,
Stuart pointed out. Ambassador Stokes lamented that she had
seen enough of the EU-3's watering down of resolutions to
know that they could not be relied upon for a solution.
Stuart expressed his frustration with EU practices in
general, noting that all along, the goal had been to keep the
Western countries united vis-a-vis Iran. Procedurally,
however, it was now very difficult to keep the EU members
from completing all their negotiating together before they
talked to other states, by which time their EU position could
not be changed. Iran had responded in the past to a united
Western position, but that was now much more difficult.
Sanders suggested that there was no need to get bogged down
on procedures: nearly everyone, including those on the IAEA
Secretariat below ElBaradei, agreed that Iran was doing

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something bad. It was time to focus on doing something about
it. Stuart remarked that the Brits needed the breakdown in
EU-3 talks to wait until after the expected UK federal
elections in May.


8. (C) Luck encouraged the USG to do all it could to go to
and beyond the EU-3 to develop common thinking and responses
in preparation for action at the UNSC. All agreed with
Carlson and Sanders' comments that it was short-sighted of
states which had succumbed to Iranian intimidation about
losing oil and gas contracts, or states which still insisted
on disarmament as the be-all of the NPT. How would a
nuclear-armed Iran make either of those situations better?
This was why support for USG goals for handling Iran and for
the NPT RevCon had to be sought at the highest levels in
capitals, Sanders concluded, to get beyond the narrow "CD
Mafia" type of mindset.


9. (U) Ambassador Sanders and the delegation have cleared
this cable.
SCHIEFFER