Identifier
Created
Classification
Origin
07FRANKFURT732
2007-02-15 11:17:00
CONFIDENTIAL
Consulate Frankfurt
Cable title:  

TREASURY DEPUTY SECRETARY KIMMITT MEETS

Tags:  EFIN ECON EINV ETRD GM 
pdf how-to read a cable
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TO RUEHC/SECSTATE WASHDC IMMEDIATE 9591
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C O N F I D E N T I A L SECTION 01 OF 02 FRANKFURT 000732 

SIPDIS

SIPDIS

E.O. 12958: DECL: 02/13/2017
TAGS: EFIN ECON EINV ETRD GM
SUBJECT: TREASURY DEPUTY SECRETARY KIMMITT MEETS
COMMERZBANK CEO


Classified By: EconCouns Douglas Neumann for Reasons 1.4(b) and (d)

C O N F I D E N T I A L SECTION 01 OF 02 FRANKFURT 000732

SIPDIS

SIPDIS

E.O. 12958: DECL: 02/13/2017
TAGS: EFIN ECON EINV ETRD GM
SUBJECT: TREASURY DEPUTY SECRETARY KIMMITT MEETS
COMMERZBANK CEO


Classified By: EconCouns Douglas Neumann for Reasons 1.4(b) and (d)


1. (C) At a meeting with Commerzbank CEO Klaus-Peter Mueller
and board member Martin Blessing on February 12, Treasury
Deputy Secretary Robert Kimmitt discussed implementation of
UNSCR 1737 and the need for banks to &know their customers8
in Iran. Mueller outlined Commerzbank actions to comply with
sanctions on Iran and the alarmed response of the Iranians.
Kimmitt relayed to the bankers information about an alleged
Commerzbank transaction involving North Korea and Syria,
which Mueller promised to look into. The meeting ended with
Kimmitt and Mueller sharing views on aligning accounting
standards, Doha and Basel II, with the German banker noting
that the business community was putting heavy pressure on the
German government to play a greater role in bringing Doha to
a successful end.

Cutting Business with Iran
--------------


2. (C) Treasury Deputy Secretary Kimmitt thanked Mueller for
the cooperation of Commerzbank on terrorism finance issues.
He noted that Treasury was in contact with banks globally on
doing business in Iran with the message that it is almost
impossible when dealing with institutions in that country to
&know your customer.8 He was pleased with progress on EU
implementation of UNSCR 1737, especially with regard to
encouraging the Europeans to move beyond the strict letter of
the resolution. Mueller hoped that EU implementation of
sanctions on Iran would make it easier for banks operating
across borders to deal with a more consistent international
regime.


3. (C) Mueller noted the importance of sharing information
about entities involved in terrorist or nonproliferation
activities. Commerzbank has sought to cut off any business
that meets the criteria of UNSCR 1737 but could act more
effectively if the USG would quickly share information it
receives. He is still uneasy about Commerzbank business in
Iran, but he is also uneasy about business in a number of
other countries. He complained about the portrayal of

Commerzbank by the Wall Street Journal which made it appear
that the bank were trying to evade sanctions on Iran. This
is far from the case. Kimmitt acknowledged the importance of
close collaboration and promised to work toward sharing
information more expeditiously.


4. (C) Mueller said that Commerzbank gave the Iranians eight
weeks warning that it was suspending its clearing business,
much less time than other banks had given them. The Iranian
ambassador tried to make an appointment to see him but he
refused. Mueller had his government relations people tell
the ambassador that the Iranians had not treated the bank
fairly. Mueller had told the Iranians numerous times that
they would have to treat Commerzbank in an above-board
fashion for the bank to continue doing business with the
government, so he felt no special compunction to explain
things directly to the ambassador; last year Mueller warned
the Iranian World Bank Vice President that his country would
have to stay out of political trouble. Mueller noted that
one transaction had especially raised his suspicions in which
funds intended for Bank Saderat were diverted to a third
party. Commerzbank notified Saderat of the diversion, which
the Iranian bank then claimed was a mistake.

North Korea
--------------


5. (C) Deputy Secretary Kimmitt noted that the EU had been
slow in implementing UNSCRs 1695 and 1718, which set out
clear obligations on sanctions against North Korea. He
understood that an issue had come up with how the resolutions
would be enforced in Gibraltar, delaying action. However, on
the margins of the Munich Security Conference, he had heard
that the issue had been resolved and sanctions could move
forward. Kimmitt then relayed information about alleged
Commerzbank activity involving a North Korean entity, that
Commerzbank had served as an intermediary between the Korea
Mining Development Corporation and Syria's Scientific Studies
Research Center and noted that both entities had been
designated under Executive Order 13382. Mueller was unaware
of any involvement with either entity and promised to
investigate. Board member Blessing requested clarification
of the Executive Order and the UNSC resolution it was
implementing. Kimmitt promised that he would provide
Commerzbank with a compendium of all authorities, executive
orders and laws, and related UNSC resolutions, under which
the U.S. is working to combat terrorism finance and
nonproliferation.


FRANKFURT 00000732 002 OF 002


Accounting Standards, Doha, Basel II
--------------


6. (U) Mueller asked Kimmitt about the prognosis toward
aligning accounting standards in the U.S. and Europe, noting
that having to deal with both GAAP and IFRS substantially
raised the cost of doing transatlantic business. Kimmitt
replied that the Financial Markets Regulatory Dialogue had
made a lot of progress although a great deal of work remained
to be done. Treasury will host a capital markets
competitiveness
conference in March to which it will invite European
representatives; Kimmitt expected this to be a venue for
discussion of accounting issues as well.


7. (U) Mueller highlighted the importance of a successful
resolution of the Doha Round. He noted that the business
community has been pressuring the German government to play a
more active role. Deputy Secretary Kimmitt replied that the
U.S. accords top priority to concluding Doha but that the
window for concrete progress is tight. The U.S. and the EU
need an understanding on agriculture as early as possible so
that an agreement can be worked out with the emerging
economies on other sectors such as services. He thinks the
willingness for agreement is there, but a way must be found
for all parties to come forward with their bottom-line
positions at the same time. With coming changes in
leadership in France and the United Kingdom, Chancellor
Merkel's involvement is critical.


8. (U) Commerzbank is implementing the Basel II capital
sufficiency requirements, Mueller noted. He hoped the U.S.
would make its intentions clearer about implementing Basel 2.
It was important for banks to operate on a level playing
field. Deputy Secretary Kimmitt replied that implementation
in the U.S. was complicated by the involvement of four
regulatory agencies, but he was hopeful that any problems
could be worked out.


9. (U) Mueller ended the meeting by noting that the negative
experience of entering the U.S. was harmful to business.
Although he traveled frequently to the U.S., he was recently
pulled into secondary because he had failed to return a
departure slip on a previous visit. Kimmitt acknowledged
that he heard such complaints often from foreign businessmen.



10. (U) Deputy Secretary Kimmitt has cleared this message.
POWELL