EU FOLLOW THROUGH ON UNSCR 1737 AND AUTONOMOUS

S E C R E T SECTION 01 OF 02 BRUSSELS 001037

SIPDIS

NOFORN
SIPDIS

NSC FOR SINGH

E.O. 12958: DECL: 03/23/2017
TAGS: ECON EFIN ETRD EUN IR PARM PREL
SUBJECT: EU FOLLOW THROUGH ON UNSCR 1737 AND AUTONOMOUS
DESIGNATIONS


Classified By: POLMINCOUNS Laurence Wohlers for reasons 1.5 (d) and (e)

SUMMARY
--------------

1. (S) On March 21, EU Member State experts on the Middle
East and non-proliferation reached agreement on a list of
Iranian entities and individuals the EU will likely designate
for travel and visa bans under the EU's new Common Policy on
Restrictive Measures Against Iran. The experts'
recommendations were made in advance of the March 25 UN
Security Council adoption of UNSCR 1747. A handful of
individuals and entities sanctioned under the new UNSCR
overlap with the EU's new "autonomous" designation list. The
EU list is now wending its way toward formal adoption by the
Council, likely in the next two weeks. On a separate track,
another EU experts group continues to work through
outstanding legal and technical issues on the Commission's
new draft regulations for the implementation of the new
Common Policy. END SUMMARY

Designations
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2. (S) On March 21, EU Middle East and Non-Pro experts
endorsed a list of 20 (of 20) individuals and 12 (of 13)
entities proposed by France and the UK for EU autonomous
designation. (USEU forwarded a copy of this list EUR/ERA and
ISN via classified e-mail on March 21.) According to two
Member State contacts present at the debate, Spain reportedly
blocked the group,s recommendation for designation of the
Iranian Ministry of Defense and Armed Forces Logistics
(MODAFL) on the grounds that it was too far reaching and
could constitute a defacto designation of the entire Defense
Ministry. All of the recommended designations were
determined on the basis of open source and unclassified
evidence.

An Easter Deadline?
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3. (S) The experts recommendations for the EU,s first round
autonomous designation list and the EU's implementing
regulations for the new Common Policy o Restrictive Measures
Against Iran are expectd to be passed up to the Council for
adoption before the EU's Easter recess. Another
Brussels-based contact close to the EU scene pointed out that
the EU's new regulation on implementing UNSCR 1737 would
constitute the first-ever EU "hard" policy on
non-proliferation for a third country. EU lawyers and policy
experts were clearly aware of the broad implications of
&getting it right8 on Iran.

Fonmins To Mull Over Next Steps
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4. (S) Moreover, at the March 30-31 informal meeting of EU
Foreign Ministers in Bremen (aka Gymnich),discussion of
UNSCR 1747 implementation is expected. Contentious issues to
be broached by Fonmins may include arms sales to Iran and
additional financial sanctions. One source assessed that
UNSCR 1747 language on financial sanctions would largely
determine the outcome of EU debate on cessation of export
credits and sanctioning of Iranian financial entities. Some
Member States fear that any EU agreement to cease future
export credits would open the door to suspension of existing
export credits. Any retroactive move could mean huge
potential loses for some like Germany stood to lose
approximately USD 7 billion if previous contracts were
suspended. For all of these reasons, sources say, a common
position is ultimately likely to call for reducing export
credits, not ending them entirely. However, smaller
countries with less existing exposure, such as Denmark and
the Netherlands, could be supportive of a tougher line.
Furthermore, our source pointed out that the Commission would
have a big stake in the outcome of the debate on export
credits. Currently the Commission has some competence over
&export promotion8 but has not had any role in Member
States' decisions on national export credits. If the EU were
to adopt a common policy on export credits, the Commission's
role could be broadened or redefined in some fashion.

Franco-British Cooperation
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5. (S/NF) Before circulating its list of candidates for
autonomous designation with the wider Membership, the UK
first shared the list with France. The French then came

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forward with the additional names for consideration in a
complementary fashion. Our UK contact (strictly protect)
said that HMG was disappointed that other Member States,
namely the Czech Republic, did not come forward with
candidates for designation in this first round exercise. Our
contact theorized that other Member States may have developed
a comfortable passivity as a result of the EU-3,s leadership
on the Iran nuclear file. In any case, the overall tone of
the experts meeting was business-like and
non-confrontational. Our contact thought the constructive
atmospherics were the result of French and British advocacy
in EU capitals in advance of the actual meeting.

Second Round of Designations?
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6. (C) Iran watchers we spoke to at the Council and a
Permanent Missions assess that the EU may not hold another
autonomous designation round until just before the end of the
German Presidency. (Note: UNSCR 1747 would be conducted
separately.) A next round will be considerably more
difficult than the first because more Iranian officials would
need to be considered, and classified and sensitive evidence
shared in support of the case.
.