TREASURY U/S LEVEY DISCUSSES WITH FOREIGN MINISTER

S E C R E T SECTION 01 OF 02 ABU DHABI 000479

SIPDIS

SIPDIS

TREASURY FOR U/S LEVEY, A/S POBRIEN, DAS DGLASER, ACURTIS
STATE FOR NEA/IR, NEA/ARP TREUTER, DBAGWELL
STATE FOR S/CT, EB/ESC/TFS, INL/C/CP

E.O. 12958: DECL: 03/20/2017
TAGS: PREL KTFN ECON PTER IR AE
SUBJECT: TREASURY U/S LEVEY DISCUSSES WITH FOREIGN MINISTER
ABDULLAH BIN ZAYED WAYS THE UAE CAN APPLY PRESSURE ON IRAN

REF: A. 06 ABU DHABI 2080

B. 06 ABU DHABI 4473

Classified By: Ambassador Michele J. Sison, for reasons 1.4 b and d.


1. (S) Summary. On March 6, 2007 Treasury U/S Levey met with
UAE Foreign Minister Abdullah bin Zayed Al Nahyan (AbZ) to
encourage the UAE to apply financial pressure to Iran. U/S
Levey discussed Iran,s financing of terrorism, WMD
proliferation and its deceptive financial practices. Levey
emphasized that Iran is encountering financial problems due
to international measures like UNSCR 1737 and key financial
institutions reassessing their business dealings with Iran.
Levey encouraged AbZ to use the UAE,s influence with
financial managers handling the country,s significant wealth
to quietly pressure Iran. AbZ replied that the UAE would
8try to implement 100 percent8 UNSCR 1737 as long as the
UAE,s own security is not jeopardized. Levey warned AbZ
about IRGC companies doing business in the UAE and encouraged
full implementation of UNSCR 1737 to target those entities
owned or controlled by the head of the IRGC, who is
designated on the resolution,s annex. AbZ also stated that
the Iran standoff would only be resolved if other Middle East
crises were defused, thereby weakening Iran,s influence.
AbZ also noted that despite public statements to the
contrary, the Iranian leadership has a clear goal to obtain a
nuclear bomb and a delivery system and that a number of GCC
countries are frustrated with Iran but will not publicly
admit it. End Summary.


2. (S) On March 6, 2007 Treasury Under Secretary for
Terrorism and Financial Intelligence Stuart Levey met with
Abdullah bin Zayed Al Nahyan (AbZ),UAE Minister of Foreign
Affairs, to discuss ongoing international pressure against
Iran and to encourage the UAE to exert financial pressure on
Iran. U/S Levey detailed concerns about Iran and steps taken
since their last meeting in April 2006 (Ref A). U/S Levey
reiterated that the government of Iran is financing terrorist
organizations, using its financial institutions to finance a
nuclear weapons program, and engaging in deceptive financial
practices to cover these activities. He highlighted the fact
that UNSCR 1737 was passed unanimously and calls for action
against specific Iranian entities and individuals as well as
an injunction to freeze assets they own or control. U/S
Levey noted that the USG has sanctioned two Iranian banks for
their support of terrorism and Iran,s WMD program, Bank
Saderat and Bank Sepah respectively. Finally, Levey
discussed US efforts to encourage key financial institutions
to re-assess the risk of doing business with Iran.


3. (S) Levey noted that an important way to resolve the
current crisis with Iran peacefully is by applying financial
pressure. He observed that Iran is not happy with current
pressure from Europe and that if the international community
acts quickly while Iran is off balance, greater impact will
be achieved than if we wait until Iran is able to adjust to
the sanctions. U/S Levey explained that the USG is very
sensitive to the UAE,s position with respect to Iran, both
its physical proximity and the strength of the historic,
personal, business, and trade ties with Iran. He suggested
that the UAE quietly use its influence among its
international money managers to discourage them from doing
business with Iran. (Note: In December 2006, U/S Levey
encouraged Sheikh Ahmed bin Zayed Al Nahyan Managing Director
of Abu Dhabi Investment Authority (ADIA) to take similar
steps (Ref B). End note.) AbZ responded by asking whether
U/S Levey had specific names of financial institutions that
he wanted the UAEG to discourage from dealing with Iran. U/S
Levey replied that the UAEG is in the best position to
determine which financial institutions it has the most
influence over (ie: we do not know which institutions the
UAEG invests its money in). He noted that almost all key
European financial institutions would be good candidates for
such a discussion. AbZ warned that as the USG makes it more
difficult for firms to deal in dollars with Iran, it will
increase the incentive for the Europeans and Japanese to do
business with it in other currencies. U/S Levey agreed and
noted that this is one of the reasons that UAE outreach to
European financial institutions could be helpful. He also
noted that the tendency of financial institutions to cut off
dollar business, while continuing business in other
currencies, has only a temporary effect on Iran. AbZ opined
that the UAE was perhaps not &a good messenger8 for
applying financial pressure on Iran because of the very high
volume of trade between the two Gulf countries. U/S Levey
responded that the UAE would have great influence as a

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messenger with these financial institutions because of the
importance of its business, and that they would understand
the sensitivities of the UAE,s position.


4. (S) AbZ stated that the importance of trade between the
UAE and Iran also leaves the UAE in an extremely vulnerable
position with regard to its much larger neighbor. However,
the UAE would still &try to implement 100% UNSCR 1737,8 and
would take additional steps so long as UAE security was not
jeopardized. AbZ reiterated the importance of the USG
recognizing the sensitivities of the UAE,s situation and
asked that the USG use the UAE only as a very "last resort."
U/S Levey expressed that he was sensitive to the UAE,s
concerns and then suggested ways, under the auspices of the
UNSCR 1737, to act effectively against Iran. For example,
the annex to 1737 lists the head of the Iranian Islamic
Revolutionary Guard Corps (IRGC) and requires that his assets
be frozen. Therefore, all entities owned or controlled by
the IRGC head should also be frozen. Levey noted that if any
of the companies were operating in the UAE, it would be in
the UAE,s best interest to take action against the
companies. U/S Levey also suggested that due to increased
pressure on Iranian banks and banking activities in Europe,
there will be an incentive to move business elsewhere )-
most likely to the UAE. Thus, it would be valuable and not
confrontational to put Iranian banks, like Bank Saderat,
under increased scrutiny in the UAE.

Weaken Iranian Influence by Solving Regional Crises
-------------- --------------


5. (S) U/S Levey concluded by asking AbZ what ideas he had
about increasing pressure on Iran, since the UAE also felt
the threat of Iran's nuclear ambitions. AbZ referred to
regional crises, stating that there has to be a serious hope
for resolution of the Palestinian problem, that the Syrians
had to move out from &the Iranian wedge,8 that events had
to start moving positively in Lebanon, and that there had to
be improvements in Afghanistan as well as in Iraq. Until the
Iranians see themselves losing influence and becoming weaker,
AbZ stated, they will not do anything: &You have to have the
upper hand before they will work with you.8 AbZ also
volunteered the following advice: &Don,t write this down,
but the way to get to them is to get the price of oil down to
$20. They are an oil exporting country and that would really
hurt them.8

Iranian-Saudi March 3 Meeting in Riyadh
--------------


6. (S) Ambassador queried AbZ on the outcome of the March 3
Iranian-Saudi summit in Riyadh. AbZ said that "no matter
what you hear from any of the Iranian politicians," it,s all
just to buy time: &If they can sell you bullshit, they will
do it; they will mislead you in any way possible.8 He
continued: &They have a clear nuclear goal; they want a bomb
and they want a delivery system. Rafsanjani, Khamenei,
Ahmadinejad *- they are all the same in this regard.8 AbZ
also said that other members of the GCC are frustrated with
Iran, but will not say so publicly.


7. (S) AbZ commented that many people in the UAE were worried
about the growing Iranian influence in the region and in the
UAE itself, indicating that there is a natural limit to what
will be tolerated. According to AbZ, Emiratis "have not yet
figured out the balance that needs to be struck, or what
would be appropriate."


8. (U) U/S Levey was accompanied at his meeting with AbZ by
Ambassador; Treasury Senior Advisor Amanda Curtis; NEA/IR
Deputy Director for Iranian Affairs, Henry Wooster; Acting
Director of the Treasury Office of Intelligence and
Analysis,s Middle East Division, Michael Madon; OFAC Attache
and PolOff.


9. (U) U/S Levey has cleared this message.
SISON