SHIELD S59A-03: TELSTAR TO END IRAN SALES

S E C R E T MADRID 003302

SIPDIS

ISN/CBM FOR VANN VAN DIEPEN

E.O. 12958: DECL: 09/16/2020
TAGS: PARM PREL ETTC SP IR CBW
SUBJECT: SHIELD S59A-03: TELSTAR TO END IRAN SALES

REF: STATE 110923

Classified By: PolCouns Kathleen Fitzpatrick for reasons 1.4 (b) and (d
).


1. (S) Summary: Representatives of Spanish firm Telstar met
with ISN/CBM Director Vann Van Diepen on September 16 to
explore Telstar's options for exporting its products to Iran.
Van Diepen explained that, under the agreement that Telstar
made to get previous Iran Nonproliferation Act (INPA)
sanctions lifted, any Telstar sales to Iran would lead to the
Department reimposing sanctions. Telstar indicated that it
now understood the breadth of U.S. requirements and would not
engage in sales to Iran, including canceling its planned sale
of steam sterilizers (reftel). End Summary.


2. (S) On September 16, ISN/CBM Director Vann Van Diepen and
PolMilOff met with Telstar CEO Ton Capella and legal adviser
Xavier Bou in Madrid to discuss potential Telstar sales to
Iran. Capella explained that Telstar was confused by U.S.
policy and wanted to clarify whether it could sell any
products to Iran. Capella said that Telstar had been careful
to meet Spanish and EU rules, and didn't understand why the
US would prohibit Telstar from exporting "non-dual-use"
products to Iran as long as it followed these rules.


3. (S) Van Diepen agreed that Telstar appeared to have met EU
and Spanish rules, but explained the U.S. view of Iran that
led to the INPA, and the much broader scope of
INPA-reportable activity as compared to EU and Spanish export
controls. Because the U.S. understands that all Telstar
products would be of potential utility to a biological
weapons program (and therefore "dual-use" regardless of
whether they were specifically controlled),any Telstar sales
to Iran would lead to a reimposition of sanctions.


4. (S) Capella said that Telstar does significant business in
the U.S. and couldn't afford to have sanctions reimposed. He
indicated that Telstar would cancel the planned sale of two
custom-built steam sterilizers to Iran, even though Telstar
would have to break its contract. He asked for assistance
from the USG in demonstrating that he had to break the
contract due to "force majeure" and also in seeking
alternative customers for the sterilizers. Van Diepen said
that the USG would do what it could to assist and designated
the Embassy as the proper channel for any requests.


5. (S) Capella noted that Telstar's European competitors sell
similar products to Iran, but have not received sanctions.
Van Diepen explained that, if the USG were to catch others
making such sales, it would treat all companies and countries
equally as a matter of U.S. policy.
AGUIRRE