U/S LEVEY SEEKS TURKISH COOPERATION AGAINST IRANIAN TERRORISM FINANCE AND NUCLEAR PROLIFERATION

C O N F I D E N T I A L SECTION 01 OF 03 ANKARA 006687 SIPDIS SIPDIS .O. 12958: DECL: 12/18/2016 TAGS: KNNP PRELEIN KTFN TU IR SUBJECT: U/S LEVEY SEEKS TURKISH COOPERATION AGAINST IRANIAN TERRORISM FINANCE AND NUCLEAR PROLIFERATION REF: ANKARA 6519 Classified By: DCM Nancy McEldowney for reasons 1.4(b) and (d). ¶1. (C) Summary: In his meetings with the Turkish Foreign and Finance Ministries, Treasury Under Secretary Stuart Levey explained U.S. interest in working with allies, within and outside of the UNSC process, to financially isolate Iran for its support for terrorism and nuclear weapons program development. Levey briefed on Iranian abuse of the international financial system and sought Turkish cooperation. Turkish officials expressed a desire to cooperate, asked for more information and undertook to study U.S. ideas. At the same time they made a distinction between UN sanctions and other financial measures. End Summary. -------------- -------------- Working with Allies to Target Bad Conduct vs. Whole Nation -------------- -------------- ¶2. (C) Treasury Under Secretary for Terrorism and Financial Intelligence Stuart Levey, accompanied by the Ambassador, met with Turkish MFA Under Secretary Ertugrul Apakan December 5 in Ankara. Apakan was joined by Director General for Security Affairs Hayati Guven and Deputy Director General for South Asia Babur Hizlan. Levey said the U.S. believes Iran is pursuing a nuclear weapons program, which violates requirements set forth by the United Nations Security Council(UNSC) and stressed that the U.S. is trying to develop an international consensus to put pressure on Iran, both within and outside the diplomatic process at the UN. U/S Levey expressed the U.S. preference to avoid country-wide sanctions that the international community has used in the past, such as trade embargoes, because governments and the private sector can evade them fairly easily, and they impede upon benign business relationships. If, instead, the U.S. can persuade its allies to target bad conduct through targeted financial measures against supporters of destabilizing policies (such as terrorism and weapons of mass destruction programs),ultimately the effort will be more successful. He asked for Turkish ideas and cooperation. The Ambassador said the spirit of the Levey visit was to consult with Turkey, and that it was part of a conversation begun by Ambassador Schulte when he came to Ankara in February. The Ambassador said the U.S. and Turkey need to focus on long-term things that Iran is doing -- not just in the military realm but also in the economic and financial spheres. -------------- Alerting Banks to Iranian Risk -------------- ¶3. (C) U/S Levey mentioned his meetings with Turkish banks (septel) and explained U.S. thinking on combating Iran's use of the international financial system to transfer funds to terrorists and to supply its nuclear weapons program. Levey described deceptive practices by Iranian entities and banks and cited the U.S. regulatory action against Bank Saderat. ¶4. (C) Levey asked whether Turkey had information about the Islamic Revolutionary Guard Corps (IRGC) increasing its role in the Iranian economy. Hizlan described the important role of Bonyads, state-linked foundations. He said that the Revolutionary Guard's share of Bonyad-controlled business was increasing but that the Revolutionary Guard did not control the entire economy. Stating increased USG concern about the IRGC,s resurgence under Ahmadinejad,s authority, U/S Levey cautioned that the IRGC,s growing role in the Iranian economy was not limited to the public sector, but included the private sector as well. Levey recalled the IRGC,s interference with two major Turkish-Iranian business deals: ¶1. the Turkish Company TAV,s contract to service the new Imam Khomenei International Airport in Tehran, which the IRGC forcibly cancelled by not allowing any planes to land on the runway; and 2. the IRGC,s involvement in halting Turkcell,s deal to provide a competitor telecom network in Iran; Irancell, Iran,s leading telecom company, is fully owned by the IRGC and won parts of the telecom replacement contract along with a South African provider. ANKARA 00006687 002 OF 003 -------------- Turks want more Information -------------- ¶5. (C) Apakan thanked U/S Levey and said Turkey is always trying to get Iran to act in accordance with international norms, including on Prime Minister Erdogan's December 3-4 visit to Tehran. Apakan said that they tell the Iranians that if the UN imposes sanctions, Turkey will comply with them. Apakan asked for a non-paper they could study. They were curious about other countries' reactions. Levey said he had visited the UK, Italy, France, Germany, and Switzerland, among others. U/S Levey reported that governments have tended to view a conduct-based approach as more attractive than their earlier experiences with broad sanctions. He also noted that the private sector has been receptive because it does not want to do business with bad actors. Levey described a general desire in many countries for the U.S. to share information about the actors who are helping Iran pursue its nuclear program in violation of existing UN Security Council resolutions. -------------- Relationship to UN Action -------------- ¶6. (C) Hizlan asked how the USG,s approach tracked with the P5 1 negotiations, which seemed likely to produce narrowly-targeted sanctions. Levey said that the USG is working with the UN and desires for that process to be successful. However, Secretary Rice has conveyed that in addition to the UN channel, like-minded countries should discuss cooperative actions that they could take. -------------- Turkish Economic Concerns -------------- ¶7. (C) Apakan and Guven said the issue was very sensitive because Iran was a neighbor and because of the economic relationship. Hizlan said bilateral trade was expected to reach $7 billion in 2006, of which roughly $6 billion was oil and gas imports. He said Iran supplied 30% or Turkey's crude oil imports and about 15% of its natural gas. Apakan expressed a desire to cooperate with the U.S. and promised to study any U.S. proposal, but he made a distinction between UN sanctions and measures suggested by friendly countries. The Ambassador pointed out that Levey had not used the word "sanctions" and urged the Turkish authorities to give serious consideration to the U.S. ideas. -------------- Finance Ministry Defers to MFA -------------- ¶8. (C) U/S Levey met separately with Finance Ministry Under Secretary Hasan Basri Aktan and Genc Osman Yarasli, the SIPDIS President of Turkey's financial intelligence unit, MASAK. When Levey briefed them on Iranian abuse of other countries' banking systems, Aktan was interested but largely deferred to the Foreign Ministry. Aktan said Turkey had long suffered from terrorism and would view Iran developing a nuclear weapon as a threat to peace and stability in the region. He said the Prime Minister had made this point to the Iranians in Tehran, and he said Turkey had always supported UN policies. He said he hoped any UN measures would be effective in preventing Iran from developing nuclear weapons. Levey supplied a paper on Bank Sepah and a list of companies facilitating North Korean and Iranian nuclear programs. ¶9. (C) With both MFA and the Ministry of Finance, Levey also discussed cooperation against PKK in Europe and Turkey's anti-terrorism finance regime (septel). Under Secretary Levey has cleared this message. Visit Ankara's Classified Web Site at http://www.state.sgov.gov/p/eur/ankara/ ANKARA 00006687 003 OF 003 WILSON