UAE FOREIGN MINISTER, U/S LEVEY DISCUSS TARGETED

S E C R E T SECTION 01 OF 03 ABU DHABI 002080

SIPDIS

NOFORN
SIPDIS

STATE FOR T - U/S RJOSEPH, ACTING A/S SRADEMAKER, PM - A/S
HILLEN, NEA FO A/S WELCH, GRAY, NEA/ARP MISENHEIMER,
SWALKER, EB/ESC/TFS DNELSON
TREASURY FOR U/S LEVEY
NSD FOR DSTEPHENS

E.O. 12958: DECL: 05/20/2016
TAGS: ETTC PARM MCAP IR AE
SUBJECT: UAE FOREIGN MINISTER, U/S LEVEY DISCUSS TARGETED
FINANCIAL MEASURES AGAINST IRAN

Classified By: Classified by Ambassador Michele J. Sison for reasons 1.
4 b and d.


1. (S/NF) Summary. On April 30 Treasury Under Secretary for
Terrorism and Financial Intelligence Stuart Levey met with
UAE Foreign Minister Abdullah bin Zayed Al Nahyan (AbZ) to
discuss the possibility of imposing targeted financial
measures to isolate the Government of Iran, in the event the
United Nations route is unsuccessful. U/S Levey discussed
multilateral measures that would financially isolate the
Iranian regime, with the aim of putting the Iranian
leadership on the defensive. AbZ said that he thinks it is
important for Iran to understand that there is "no way out,"
and that if there is a third option (other than a nuclear
armed-Iran or outright war) for the international community
to pursue, then "why not" try that option. AbZ requested a
memo on the proposed options, and said he would discuss the
concept of targeted financial measures against Iran with
senior members of the UAEG. AbZ also suggested the U.S.
coordinate a meeting in Europe with the key players to
develop these ideas. He noted that the participation of
other Gulf countries would be critical to success. Action
request contained in para 9. End summary.


2. (SBU) U/S Levey was accompanied by David Nelson, Director,
Office of Terrorism Finance and Economic Sanctions, Bureau of
Economic and Business Affairs; Matthew Epstein and Kristen
Hecht, Treasury Financial Analysts; Ambassador; and deputy
econchief (notetaker).


3. (S/NF) U/S Levey told AbZ that the USG wants to find an
option -- other than military confrontation -- in case UN
diplomacy fails. He said that the USG has developed a plan
to financially pressure the Government of Iran (GOI) by
creating a dynamic where the GOI is shunned by the
international financial community. He explained that the
U.S. and its international partners could pressure the
Iranian regime by cutting off access to financial
institutions in Europe, Japan, and the UAE, where most of the
regime's financial transactions are handled. The initial
measures would seek to financially isolate entities and
individuals engaged in proliferation, terrorist support
activity, destabilizing Iraq, or corruption, creating a
dynamic where typically risk-averse organizations (such as
banks) perceive that the risk of doing business with such
entities and individuals is simply too high. He also noted
that the regime could be further isolated if international
financial institutions closed GOI bank accounts. U/S Levey
suggested that if financial institutions cease doing business
with the GOI and Iran's elite, then the public may begin to
question Ahmadinejad's policies, and his regime will be put
on the defensive. U/S Levey declared that "the goal is not
to bankrupt Iran, but to exacerbate tensions among Iranian
elites." U/S Levey stressed that, in order for these
measures to be effective, buy-in from all of the major
financial centers would be essential. Ultimately, if Iran
persisted in pursuing WMD, steps could be taken to
financially isolate the regime more broadly. He told AbZ
that the USG is discussing these options with the G-7,
Austria, the Netherlands, and certain Gulf Cooperation
Council (GCC) members.


4. (S/NF) AbZ, who took detailed notes throughout the meeting
and focused intently on the U/S while speaking, asked a
number of detailed questions. He inquired whether the USG
had a timeline for when each of the steps would be
implemented. U/S Levey responded that the first step would
be to identify the entities and individuals, but he also
noted that the U.S. would develop an implementation timeline
that marries up with the UN process. AbZ asked whether
imposing travel bans on Iran's senior officials was an
option. U/S Levey responded that it was. AbZ inquired
whether the United Nations Security Council (UNSC) might be
able to impose such a travel ban. Smiling, AbZ noted that
the Secretary General of Iran's Supreme National Security
Council, Ali Larajani, would be in Abu Dhabi on May 2, and

ABU DHABI 00002080 002 OF 003


that it could be "very embarrassing" if people like him
wanted to come and the Gulf countries told them they were not
welcome. (Comment: UN mandated travel bans do have
exceptions for official travel and may not affect all of the
GOI's key players. End comment.) AbZ also asked if
Hizballah would be on the targeted list of terrorism
supporters. U/S Levey responded that the USG would like to
add Hizballah to the list, and if the group of countries
involved supported that decision, it would be included.
Considering the question of whether isolating Iran's elite
would create the right kind of tension within the regime, AbZ
noted that Rafsanjani and his son are frustrated with
Ahmadinejad and they believe that it is already difficult for
Iranians to do business around the world. "If Rafsanjani --
who is already pissed at Ahmadinejad -- is on the list, then
you will just isolate him," AbZ declared. Stating that AbZ's
comment essentially confirmed the USG's belief that there is
already tension among the Iranian elite, U/S Levey explained
that we would consult with our partners as to who should be
on the list. U/S Levey and AbZ mused that keeping certain
regime insiders on or off the list could be perceived by the
GOI as an insult or as a triumph. Either you are the enemy
of the U.S., which could be good or bad PR for the
individual, or you are ignored by the U.S., which could have
the same effect. "This is exactly why we need our friends
around the table to discuss the tactics that can exacerbate
tensions in the regime," added U/S Levey.


5. (S/NF) Thoughtfully considering U/S Levey's proposal and
the answers to his questions, AbZ said that he believes it is
important for Iran to understand that there is "no way out."
"Senator McCain said the smartest thing when he said that
going to war with Iran is horrible, but Iran having a nuclear
bomb is worse." AbZ said that we must ensure that both
options (war or a nuclear-armed Iran) are difficult. "If
there is a way to get Iran out of this in a face-saving way,
then why not?" AbZ asked whether Iran could get around these
efforts by going through China, Russia, South Africa, or
Latin America. U/S Levey said that Iran could get around the
measures in their early stages, but as the plan escalated,
Iran would be financially cut off. "Iran needs access to
dollars, yen, and the Euro, and if it is fully isolated from
the EU, Japan, the U.S., and the UAE, there would be no other
way for Iran to access sufficient amounts of those
currencies," said U/S Levey. Understanding, AbZ noted with a
rueful smile, "This is one of those times where I wish the
UAE was not a major financial hub."


6. (S/NF) AbZ suggested that the USG coordinate a meeting in
Europe with all of our international partners to discuss
potential financial measures against Iran and formulate an
implementation strategy. AbZ said that the UAE would welcome
such a meeting, but that it was also important to have at
least one or two other Gulf countries involved. "Having them
involved will also help them to realize the consequences if
we do not implement measures such as these. If we do not do
this, and if the UNSC fails, then it will be much worse."
AbZ also told U/S Levey that GCC involvement was critical
because if the UAE were to block Iranian entities, access to
UAE financial markets, they would move the money to other
Gulf countries which are currently trying to increase their
trade with Iran. AbZ suggested that Kuwait and Bahrain would
probably be the first GCC countries that the GOI would move
money to if closed off from the UAE. Asking U/S Levey if the
Europeans are on board with the strategy to financially
isolate Iran, U/S Levey responded that all the countries he
presented the strategy to have gone back to their respective
capitals to discuss the options.


7. (S/NF) U/S Levey told AbZ that, in the short run, the USG
hopes the UAE will close any accounts of entities designated
on the annex to Executive Order 13382. AbZ asked for a copy
of the list, and U/S agreed to provide it. (Note: Embassy
passed AbZ the Executive Order, the annex, and the list of
derivative companies on May 1. End note.)


ABU DHABI 00002080 003 OF 003



8. (S/NF) AbZ also requested that U/S Levey provide him with
a memo outlining the proposed actions. He said he would take
the memo to the UAE's senior leaders and discuss the issue
with them. "The Iranians are patient and will try every
trick to achieve their objectives. We must delay them and
make it more difficult. If we can achieve that, it is good
enough, at least for the time being."


9. (S/NF) Action Request for Treasury: Please provide a memo
summarizing the presentation, "Financial Measures to Pressure
and Isolate the Iranian Regime," with corresponding estimated
timeline, to the Embassy for passage to AbZ as soon as
possible.


10. (U) This cable has been cleared by U/S Levey.
SISON