Identifier
Created
Classification
Origin
07BRUSSELS318
2007-01-30 15:41:00
CONFIDENTIAL//NOFORN
USEU Brussels
Cable title:  

DEPSEC KIMMITT VISIT: MEETING WITH HIGH REP SOLANA

Tags:  PREL ECON EAID EFIN EUN ETRD PARM IR IZ NK 
pdf how-to read a cable
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OO RUEHBC RUEHDBU RUEHDE RUEHFL RUEHIHL RUEHKUK RUEHKW RUEHLA RUEHROV
RUEHSR
DE RUEHBS #0318/01 0301541
ZNY CCCCC ZZH
O 301541Z JAN 07
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC IMMEDIATE
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE IMMEDIATE
RUCNRAQ/IRAQ COLLECTIVE IMMEDIATE
RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
C O N F I D E N T I A L SECTION 01 OF 03 BRUSSELS 000318 

SIPDIS

NOFORN
SIPDIS

DEPARTMENT FOR EUR/ERA (CHASE)

E.O. 12958: DECL: 01/30/2017
TAGS: PREL ECON EAID EFIN EUN ETRD PARM IR IZ NK
SUBJECT: DEPSEC KIMMITT VISIT: MEETING WITH HIGH REP SOLANA
ON IRAN AND IRAQ COMPACT

Classified By: AMBASSADOR C. BOYDEN GRAY FOR REASONS 1.5 (D) AND (E).

SUMMARY
-------
C O N F I D E N T I A L SECTION 01 OF 03 BRUSSELS 000318

SIPDIS

NOFORN
SIPDIS

DEPARTMENT FOR EUR/ERA (CHASE)

E.O. 12958: DECL: 01/30/2017
TAGS: PREL ECON EAID EFIN EUN ETRD PARM IR IZ NK
SUBJECT: DEPSEC KIMMITT VISIT: MEETING WITH HIGH REP SOLANA
ON IRAN AND IRAQ COMPACT

Classified By: AMBASSADOR C. BOYDEN GRAY FOR REASONS 1.5 (D) AND (E).

SUMMARY
--------------
1.(C) On January 23, Deputy Secretary of the Treasury Robert
Kimmitt and Ambassador Gray discussed Iran sanctions and the
Iraq Compact with High Rep Solana and his senior policy
advisor Robert Cooper. As in his meetings with other senior
EU officials (reported septels),Kimmitt underscored U.S.
expectations that the EU would put in place quickly binding
an EU regulation together with a common position which would
enable Member States to act together to implement fully UNSC
sanctions against Iran. He also expressed appreciation for
the GAERC's preliminary conclusion to implement UNSCR 1737
"to ban transactions with and freeze the assets of
individuals and entities covered by the criteria in UNSCR
1737." Kimmitt pressed Solana to address the EU's lack of
progress in implementing UNSC sanctions against North Korea.
Solana confirmed that the January 22 GAERC conclusions
signaled the EU "may go beyond" the 1737 annex of designated
entities, in order to comply with the spirit as well as the
letter of the resolution. Solana and Cooper said they
intended to pursue with the Council a step-by-step approach:
implementing regulations would incorporate the list of
designees contained in the Annex to UNSCR 1737, and an
ad-hoc, fact-based mechanism would be created for Member
States to update and expand the designations. If additional
designations were to be the next step after the approval of
the regulations, Kimmitt said he could agree to Cooper's
suggestion that the United States temporarily lower its
profile vis-a-vis the EU on immediate expansion of the
designation list. Solana welcomed U.S.-suggested next steps

on completion of the Iraq Compact. END SUMMARY

2.(U) In a cordial and informal forty-five minute meeting
January 23, Deputy Secretary of the Treasury Robert Kimmitt,
accompanied by USEU Ambassador Gray, USEU Treasury Attach
Matthews and USEU poloff (notetaker) met with Javier Solana,
European Council High Representative for Common Foreign and
Security Policy to discuss implementation of UNSC-mandated
Iran sanctions and completion of the Iraq Compact. The High
Rep was joined by Director General for External Relations and
CFSP Robert Cooper, Special Counselor in the High Rep's
Private Office Steve Everts, Transatlantic Affairs Desk
Officer Christiane Hoehn, and, Iran Desk Officer Jonas
Jonsson.

Iraq Compact Timeline
--------------
3.(C) Deputy Secretary Kimmitt said that the new UNSYG Ban
Ki-Moon had made completion of the Iraq Compact an immediate
priority objective and might raise the issue in his meeting
with Solana the following day. He relayed the USG's
suggestion that the SYG convene the Compact Preparatory Group
(PG) plus Permreps from non-PG countries for a ministerial
meeting in New York in February with a view toward holding a
signing conference in March. He indicated that the document
itself was complete and noted that the Ambassador would
provide Solana with a copy. Solana welcomed this news.

Iran designation process - EU accent on Unanimity and
Objectivity
--------------
4.(C) Depsec Kimmitt praised the January 22 GAERC conclusions
on Iran and noted the exceptional importance of the
statement's section calling on member states to "ban
transactions with and freeze the assets of individuals and
entities covered by the criteria in UNSCR 1737." Solana
confirmed unequivocally that the January 22 GAERC conclusions
signaled that the EU "may go beyond" the 1737 annex of
designated entities list, in order to comply with the spirit
as well as the letter of the resolution. Solana indicated
that the strength of the new conclusions had exceeded his
expectations, and he complimented the German Presidency on
its superb handling of this statement.

5.(C/NF) Director General Cooper noted that on January 25,
the Council (RELEX Counselors) would commence work on the
draft implementation proposal. Cooper himself had briefed
PSC Ambassadors on a proposal which would include the 1737
Annex list as a baseline for designations by the EU.
Although the details had yet to be determined, he expected EU
Member States to support his proposal to approve the current
1737 annex list as well as an ad hoc mechanism to identify
and designate entities and individuals in addition to those
already named in resolution. He stressed that the
designation process had to be based on Member State unanimity

BRUSSELS 00000318 002 OF 003


and objective fact-based evidence. This would help win over
skeptical EU Member States as well as ensure standards of
evidence that could hold up under any potential court
challenge. Solana underscored that the EU must avoid
repetition of the embarrassing political and legal setback it
suffered when the European Court of Justice overturned the
EU's designation in the so-calle
d "MKO" case.

Information Sharing
--------------
6.(C/NF) The Deputy Secretary welcomed these developments.
He noted that an anomaly exists in UNSCR 1737 whereby the CEO
of a bank had been designated, but the bank itself had not
been designated. The Deputy Secretary offered to provide the
EU with information on potential designees, to facilitate the
EU's fact-based process. The Deputy Secretary asked what
kind of information would be useful if the idea was to make
designations that could be defended in courts, noted that EU
courts do not have processes in place to handle confidential
information. Cooper noted that open source information was
more useful with respect to defense in potential court
challenges but that classified intelligence could be helpful
as well. (Note: the EU currently lacks safeguards in judicial
proceedings for classified information akin to those
contained in the U.S. Classified Information Procedures Act).
Cooper also recommended that information sharing
arrangements should be contemplated after the February 12,
2007 GAERC during which presumably the EU legal framework for
implementing USNCR 1737 would be agreed.

EU Process - The North Korea Experience
--------------

7. (C/NF) Kimmitt underscored that the United States had
placed a great deal of emphasis on multilateral cooperation
to resolve both the Iran and DPRK proliferation issues,
including close consultations with Member States who would
have to implement sanctions. Depsec Kimmitt stressed the
importance of putting into place quickly the necessary
authorities for Member States to take action. The United
States was disappointed that the EU had not yet created the
legal framework required for Member States to implement
UNSCRs 1695 and 1718 on North Korea, despite the fact that EU
Member States had been directly responsible for drafting the
United Nations texts.

8.(C/NF) Kimmitt noted that a deepening nexus of cooperation
between Iran and North Korea existed. Furthermore, the bite
of financial sanctions in Northeast Asia was driving the
North Korea to explore prospects for financial intermediation
in Europe. There was also evidence that Ahmedinejad was
feeling greater pressure from above and below for Iran's
deepening economic woes which were seen to be linked at least
indirectly to his confrontational stance on WMD.

Internal EU Problems
--------------

9. (C) In response, Solana noted that the EU had 27 different
national processes for implementing U.N. Security Council
resolutions. Kimmitt took the point, adding that this was
part of the reason why the Council's conclusions on Iran the
previous day were encouraging. By focusing on "transactions
with" individuals and entities covered by the UN sanctions in
addition to freezing the assets of the named individuals, the
EU was putting into place a legal framework to go beyond the
limited list in the UNSCR Annex. He observed that no
transactions occur without banks, so the language opens the
possibility to focusing on financial institutions in the
spirit of UNSCR 1737. Disrupting financial intermediation
channels (NOTE: examples include currency transactions;
letters of credit; equity-based financing) for individuals
and entities that fit the criteria of UNSCR 1737 can be more
effective than asset freezes in targeting illicit
proliferation activities.


10. (C) Although some Member States were involved in the
drafting of UNSCRs involving sanctions, Cooper asserted that
the EU itself had not been adequately consulted by the United
Nations. Moreover, the delay in crafting an EU-wide legal
framework (a political common position and an implementing
regulation) to implement the relevant UNSCRs on North Korea
was directly related to a dispute between Spain and the UK
over the sovereign authority over banks in Gibraltar. Solana
asked the Deputy Secretary whether the USG could help break
the impasse.

A Request for Patience

BRUSSELS 00000318 003 OF 003


--------------

11. (C/NF) Kimmitt highlighted problems with the incomplete
nature of the UNSCR 1737 Annex. For example, due to Russia's
last minute insistence and EU acquiescence, the Annex listed
the head of a major Iranian missile manufacturer, but not the
company itself. It was not acceptable for the Russians to be
able to limit the EU's ability to take action against that
company, as well as its leadership. Solana and Cooper
readily acknowledged that the EU needed to go where the facts
took it and have the ability to take action. At the same
time, they stressed a step-by-step approach in which the EU
would begin by laying a foundation of strong implementing
regulations to be put into place by the next GAERC meeting in
February. Once the foundation was in place, Cooper the EU
would have the ability to take broader actions, including
acting against additional designees.


12. (C/NF) As the internal EU technical drafting process
unfolded over the next few weeks, Cooper asked the United
States to take this staged approach into account. Kimmitt
agreed that the USG could consider "lowering our profile"
while legal texts were prepared. Finally, Cooper defended
the text of UNSCR 1737 as a "strong one" and noted that the
UN path "should not be abandoned" because he believed that
there was more to be squeezed out of the Russians in that
venue.

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

GRAY
.