DEPSEC KIMMITT VISIT: MEETING WITH FERRERO-WALDNER

C O N F I D E N T I A L SECTION 01 OF 02 BRUSSELS 000243

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DEPT PASS TREASURY FOR U/S LEVEY, NSC FOR SINGH

E.O. 12958: DECL: 01/24/2017
TAGS: PREL ECON EAID EFIN EUN ETRD PARM IR IZ
SUBJECT: DEPSEC KIMMITT VISIT: MEETING WITH FERRERO-WALDNER
ON IRAN AND IRAQ COMPACT


Classified By: POLMINCOUNS LAURENCE WOHLERS FOR REASONS 1.5 (D) AND (E)
.

SUMMARY
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1.(C) On January 22, Deputy Secretary of the Treasury Robert
Kimmitt and Ambassador Gray discussed Iran sanctions and the
Iraq Compact with EU Commissioner for External Relations
Benita Ferrero-Waldner. Kimmitt underscored U.S.
expectations that the EU would put in place quickly binding
EU legislation which would allow member states to fully
implement UNSC sanctions against Iran. The EU had still not
yet done so in the case of similar UNSC sanctions against
North Korea. With the EU Foreign Ministers (GAERC) January
22 political guidance now in hand (septel),Ferrero-Waldner
explained that DG Relex would propose a set of implementing
regulations to the 27 member states in early February. While
confident that EU FMs would adopt a common position on the
implementing regulations at the February 12 GAERC,
Ferrero-Waldner insisted that they would not "go beyond" what
was in the resolution. Pressed by the Depsec on designation
of financial entities, she advised the U.S. to engage the
German Presidency and the member states. Kimmitt outlined a
notional political calendar for completion of the Iraq
Compact, noting that the new UNSYG was approached about
wrapping up the process by the end of March. Ferrero-Waldner
reiterated EU support for Iraq reconstruction and expressed
her personal interest in participating in a final Compact
planning meeting. Finally, the two compared notes briefly on
the Transatlantic Economic Partnership concept. END SUMMARY


2.(U) In a cordial and business-like thirty minute meeting
January 22, Deputy Secretary of the Treasury Robert Kimmitt,
accompanied by USEU Ambassador Gray, USEU Treasury attache
and USEU poloff (notetaker) met with European Union
Commissioner for External Relations Benita Ferrero-Waldner to
discuss implementation of Iran sanctions and completion of
the Iraq Compact. The Commissioner was joined by Cabinet
staffers Belen Martinez Carbonell and Hubert Gambs, Head of
Unit for Gulf Countries, Iraq, Iran and Yemen Patricia
Llombart Cussac, Deputy Head of Unit for Gulf Countries,
Iraq, Iran and Yemen, and Albertus Straver, desk officer for
Iran.

Iraq Compact - Completion Endgame
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3. (C) Depsec Kimmitt expressed appreciation for
Ferrero-Waldner's personal efforts to sustain the EU's
assistance budget for Iraq. He noted that the Administration
would propose a significant increase in U.S. Iraq-related
spending during the first week of February. The Deputy
Secretary and Commissioner agreed that Iraq-led political

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reconciliation and security efforts were critical to
internationally-supported reconstruction efforts. In this
regard, Kimmitt pointed out the importance of the passage of
new hydrocarbon law in Iraq, which would give Sunnis new and
significant access to oil revenue-sharing.

4.(C) Depsec Kimmitt noted that the new UNSYG Ban Ki-Moon
had made completion of the Iraq Compact an immediate priority
objective. He relayed the USG's suggestion that the SYG
convene the Compact Preparatory Group (PG) plus Permreps from
non-PG countries in New York in February with a view toward
holding a signing conference in March. Ferrero-Waldner
welcomed this news, as she had not heard from the UN on the
Compact since the November 2006 meeting of the PG. She
expressed interest in attending a February PG if it coincided
with her travel to the U.S. for the next Quartet meeting.

Iran Sanctions - EU Next Steps
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5. (C) Turning to Iran, Depsec Kimmitt praised the January 22
GAERC conclusions on Iran as "quite an important statement,"
Especially the section calling for a "ban on transactions
with and freeze the assets of individuals and entities
covered by the criteria in UNSCR 1737." Ferrero-Waldner said
that the EU 27 Member States had had difficult discussions on
the Iran in the week leading up to the consensus reached at
the GAERC early in the day. The end result was an EU
consensus that the UNSCR 1737 must be implemented as well as
a political framework for the European Commission to
undertake the drafting of the required implementing
regulations. DG Relex hoped to circulate its draft
legislative proposal to the member states for consideration
in early February. The final text would then be submitted
through the COREPER (EU Permreps) to the EU FMs for final
approval at the February 21 GAERC.

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6. (C) Depsec Kimmitt stressed the importance of putting into
place quickly the necessary authorities for member states to
take action. Unlike sanctions of the last thirty years which
were intended to change national behavior broadly, the new
sanctions were designed to be conduct-specific, fact-based,
and targeted. The United States was disappointed that the EU
had not yet created the legislative framework required for
member states to implement UNSCR 1695 on North Korea. The
situations with North Korea and Iran proliferation financing
activity were not dissimilar. In fact, there was a deepening
nexus of cooperation between the two proliferators in this
regard. Ferrero-Waldner expressed confidence that a common
EU policy would be reached, but doubted it would fully mirror
that of the USG; "it was important to implement what is in
the resolution (1737),and not go beyond it." Kimmitt warned
the EU against indulging itself in an overly technical
interpretation of UNSCR 1737 as the Russians had done in the
endgame of the UNSC negotiations in order to dilute the
impact of the resolution at the 11th hour. Ferrero-Waldner
remarked that the US should speak to the German Presidency
and the member states about this, since they would have to
reach consensus on whatever proposal the Commission drafted.
(See septel of more positive discussion of this point with
Common Foreign and Security Policy High Representative Javier
Solana.)

Transatlantic Economic Partnership - Whose Ideas?
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7. (SBU) Depsec Kimmitt stated that the U.S. supported German
Chancellor Angela Merkel's proposal for a Transatlantic
Economic Partnership. Ferrero-Waldner wryly noted that she
had put forward ideas on this concept in 2005, but the U.S.
had responded with little enthusiasm then. In any case, she
urged the USG to take a second look at some of those earlier
ideas in the context of Merkel's new proposals. Kimmitt
suggested that the U.S. and EU should continue using
mechanisms that are already working well even as we look at
new ideas in the Merkel initiative that could broaden
cooperation in the regulatory arena.


8. (U) This cable has been cleared by Deputy Secretary
Kimmitt.

GRAY
.