BELGIANS URGED TO EXERCISE CAUTION ON IRAN TRADE;

C O N F I D E N T I A L SECTION 01 OF 02 BRUSSELS 002892

SIPDIS

SIPDIS
NOFORN

E.O. 12958: DECL: 09/13/2017
TAGS: PREL ETTC IR BE
SUBJECT: BELGIANS URGED TO EXERCISE CAUTION ON IRAN TRADE;
FM DE GUCHT PLANNING SEPTEMBER 15 VISIT TO ESCORT RELEASED
BELGIAN HOSTAGE HOME


Classified By: Ambassador Sam Fox, Reasons 1.4 (b) and (d)


1. (C) Summary: Belgian FM De Gucht plans to visit Iran on
September 15, 2007, according to MFA Secretary General
Grauls, who told the Ambassador that the Minister wanted to
escort home the Belgian citizen just released by Iranian
criminals after being kidnapped one month ago. The
Ambassador told Grauls on September 14 that it was important
for Belgium to exercise caution toward trading with Iran, and
urged Belgium to adopt strict limits on financial dealings
with Iran. Although initially defensive toward the U.S.
message, Grauls ended the meeting on a positive note, noting
that dissidents with whom he met during a just concluded trip
to Tehran had praised the international community for
pressing the regime hard. End Summary.


2. (SBU) Ambassador Grauls' three visits to Teheran over the
past month prompted the Ambassador to request a meeting to
discuss the issue of trade with Iran. Although Grauls said
the visits were largely connected to pressing the regime for
assistance in securing the release of two Belgians kidnapped
last month near the Pakistani border, Iranian-sourced press
reports had suggested that the trips had a trade agenda too.
The Belgian opened his September 14 meeting with Ambassador
by referring to the successful outcome of his mission, a fact
highlighted by an announcement earlier that day that the last
remaining hostage had been freed. Continuing, he said he had
taken note of several embassy inquiries about his visits.


3. (C) The Ambassador hailed the news of the hostage release,
and praised Grauls' skill in helping to bring it about. He
said he wanted Belgian leaders to be clear about U.S. views
on trading with Iran. It was vital, he continued, for
Belgium to adopt a more cautious approach toward trade with
Iran. While hailing Belgium's successful chairmanship of the
UN Security Council Sanctions Committee, the Ambassador said
the international community needed to maintain a unitd
approach toward dealing with Iran, particularly in the
financial sector. Minimizing financial dealings with Iran
would, he argued, make it easier to press the Iranians to
live up to their obligations on the nuclear issue.


4. (C) Grauls professed himself to be mystified by recent
embassy expressions of concern about Belgium's dealings with
Iran. Responding to a comment, Grauls firmly denied an
Iranian press report suggesting his first visit in mid-August
had been connected to trade promotion, rather than to
securing the release of the two captives. He asked pointedly
if the USG was questioning his professional abilities to deal
with a strictly bilateral issue without undercutting
Belgium's commitment to upholding the international sanctions
regime.


5. (C) The Ambassador made clear that the U.S. had absolutely
no intention of questioning Grauls' honor or of devaluing the
long and positive bilateral relationship. That said, the
Ambassador personally wanted to underscore the critical
importance the U.S. attached to halting the Iranian nuclear
program. Although Belgium was adhering closely to the
internationally-mandated sanctions, the U.S. was simply
urging all its friends to adopt a tougher, more skeptical
approach toward the issue of trade with Iran. Sanctions were
the only real tool available short of military action, and we
needed to make them as tough as possible, he argued.


6. (C) Grauls' attitude warmed notably as the Ambassador
outlined the depth of U.S. concern and the strength of the
bilateral relationship. After noting that Belgian trade with
Iran was small ("only .17% of our total trade"),Grauls and
the Ambassador discussed the particular difficulties faced by
the three Belgian banks operating in Iran (Fortis, KBC, and
ING). The Ambassador indicated that the banks needed to
exercise increased caution, especially since businesses would
be looking for any loophole they could find in the sanctions
regulations. Grauls did not respond directly, but noted that
he had met with a delegation of dissidents during his most
recent visit. They had denigrated arguments that sanctions
actually strengthened the current regime. The dissidents had
said that sanctions actually were weakening the regime.


7. (C) After the meeting ended, Grauls called the Ambassador
to say that Belgian FM De Gucht would be visiting Teheran on
September 15 to escort home the just-released hostage, a
resident of the town where De Gucht served as mayor. While
in Teheran, De Gucht planned to see Iranian FM Mottaki. He
would avoid discussing the nuclear issue, Grauls said.


8. (C) Comment: The change in Grauls' attitude was
especially evident at the end of the session, when he told
the Ambassador he and his wife would be delighted to attend

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an October 2 dinner honoring William H. "Bucky" Bush and his
wife Patty, the President's uncle and aunt. Also of interest
to us was FM De Gucht's obvious interest in the Ambassador's
meeting. He twice interrupted the meeting to speak with
Grauls, once in person and once by telephone. Fox
.