Identifier
Created
Classification
Origin
07MANAMA714
2007-07-26 14:35:00
SECRET
Embassy Manama
Cable title:  

BAHRAIN: ENSURING ROBUST IMPLEMENTATION OF

Tags:  KNNP MNUC ECON PARM IR BA REGION 
pdf how-to read a cable
VZCZCXRO3291
PP RUEHDE RUEHDIR
DE RUEHMK #0714/01 2071435
ZNY SSSSS ZZH
P 261435Z JUL 07
FM AMEMBASSY MANAMA
TO RUEHC/SECSTATE WASHDC PRIORITY 7084
INFO RUEHUNV/USMISSION UNVIE VIENNA PRIORITY 0007
RUCNDT/USMISSION USUN NEW YORK PRIORITY 0092
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY
S E C R E T SECTION 01 OF 02 MANAMA 000714 

SIPDIS

SIPDIS

ISN/CPI, T, NEA/ARP, EEB

E.O. 12958: DECL: 07/26/2017
TAGS: KNNP MNUC ECON PARM IR BA REGION
SUBJECT: BAHRAIN: ENSURING ROBUST IMPLEMENTATION OF
UNSC-IMPOSED SANCTIONS ON IRAN

REF: A. STATE 101574

B. MANAMA 675

C. STATE 98419

Classified By: Ambassador William T. Monroe, reasons 1.4(b) and (d).

S E C R E T SECTION 01 OF 02 MANAMA 000714

SIPDIS

SIPDIS

ISN/CPI, T, NEA/ARP, EEB

E.O. 12958: DECL: 07/26/2017
TAGS: KNNP MNUC ECON PARM IR BA REGION
SUBJECT: BAHRAIN: ENSURING ROBUST IMPLEMENTATION OF
UNSC-IMPOSED SANCTIONS ON IRAN

REF: A. STATE 101574

B. MANAMA 675

C. STATE 98419

Classified By: Ambassador William T. Monroe, reasons 1.4(b) and (d).


1. (U) This is an action request. Please see paragraph 10.

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


2. (C) The Ambassador July 25 urged Central Bank Governor Al
Miraj to continue his vigilance regarding Bahrain's
involvement with Iranian financial institutions. Al Miraj
said he remained committed to preserving the integrity of
Bahrain's financial system. However, he stated that Ahli
United Bank (AUB) CEO El-Labban had assured him that Future
Bank's prospective venture to open a branch on Kish Island in
Iran would be limited to trade-related projects and would
involve nothing illicit. Al Miraj proposed a joint meeting
with El-Labban to explore any legal basis of USG concerns
regarding the venture as well as broader goals on Iran trade
restrictions. Al Miraj doubted that UNSC financial
prohibitions would deter Iran from its nuclear ambitions.
Post requests talking points ahead of the aforementioned
joint meeting with AUB. End Summary.

--------------
VIGILANCE URGED
--------------


3. (C) The Ambassador, in his July 25 farewell call to
Central Bank Governor Rashid Al Miraj, reaffirmed the
importance of universal and robust implementation of UNSCRs
1737 and 1747 (per Ref. B). The Ambassador said that Iran is
seeking any possible means of escaping the pressures
currently being brought to bear on its nuclear weapons
program by the financial restrictions these resolutions
impose. He urged the CBB's continued vigilance in this
regard. "I can't overstate how important this is from a U.S.
point of view." The Ambassador acknowledged that Bahrain's
UN delegation had submitted its 1737 and 1747 implementation
reports and noted that the U.S. delegation had responded with
specific questions regarding several Bank Sepah-related
transactions. Al Miraj indicated that he had seen the

questions but did not elaborate on the status of Bahrain's
response.


4. (C) Al Miraj said he had read the demarche that the
Ambassador had delivered to Foreign Minister Shaikh Khalid
(Refs. C and D) and that he wished to assure the Ambassador
that the CBB was committed to preserving the integrity of
Bahrain's financial system. On AUB's interest in Future
Bank, Al Miraj said AUB was only a minority stakeholder. He
said he had discussed U.S. concerns with AUB CEO Adel
El-Labban and had been assured that AUB's involvement with
Future Bank transactions would be limited to trade-related
projects and would involve nothing illicit.


5. (C) (Note: El-Labban confirmed to the Ambassador July 24th
that Future Bank had applied for approval to open a branch on
the Iranian Kish Island free zone. El-Labban told the
Ambassador that Iran had been pressing Future Bank to open a
branch in Iran, but that a branch on Kish Island would have
little commercial significance (suggesting it was just a
gesture to ease pressure from Tehran).


6. (C) Al Miraj asked if there was a legal basis for USG
concerns over AUB's current and prospective additional stake
in Future Bank. More broadly, he asked if the USG ultimately
sought to restrict all commerce with Iran? If not, what
commerce, financial ties, with Iran did the USG recognize as
legitimate? "Iran is our neighbor and is an important
commercial market." He proposed a joint meeting with AUB's
El-Labban that would allow the CEO to fully discuss the
issues and hopefully allay Embassy concerns.


7. (C) Acting Pol/Econ Chief stressed that, while there were
financial ties with Iran that could be said to be legitimate,
it was becoming increasingly difficult to distinguish these
from the illegitimate. Deceptive financial practices
supported by the Iranian Government meant that apparently
clean transactions could be tainted. Increasing caution and
scrutiny in dealing with Iranian institutions was, therefore,
required.


MANAMA 00000714 002 OF 002


--------------
FINANCIAL PROHIBITIONS SUFFICIENT?
--------------


8. (C) The Ambassador noted that UNSCRs 1737 and 1747 were
having an effect. "You think so?" Al Miraj asked. He said
it was difficult to believe that sanctions could be
particularly effective so long as "two of the world's biggest
countries, Russia and China," resisted truly meaningful
measures. The Ambassador replied that Russia's suspension of
assistance had significantly slowed the progress of Iran's
nuclear program. He added that North Korea and Libya each
served as instructive examples of the potential effectiveness
of financial sanctions in reversing the development of rogue
nuclear programs.


9. (C) Al Miraj said he believed these examples did not apply
to Iran. He added that in his view, Iran saw itself as an
ascending power with an agenda that called for exerting ever
greater influence in the region. He doubted that Iranian
leadership would be deterred from its ambitions by UNSC
financial prohibitions. "Iran is belligerent. They have
ambitions and they are already seeing their ambitions unfold
in the Middle East."

--------------
COMMENT AND ACTION REQUEST
--------------


10. (S) Although Al Miraj appears to be under no illusions
regarding Iran's regional ambitions, his recognition of Iran
as an "important commercial market" reflects a view widely
held in Bahrain's business community. The CBB thus far
assesses that from a due diligence perspective, there are no
problems with Future Bank's future Kish Island venture (Ref.
A). However, the bank is sensitive to potential threats to
Bahrain's reputation as a tightly-regulated financial center,
and we should use our upcoming meeting with CBB/AUB officials
to press our position. Post requests releasable talking
points tailored to address Governor Al Miraj's questions
(para. 6) regarding the legal arguments against the pending
Future Bank venture on Kish Island and trade/financing with
Iran. End Comment.


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Visit Embassy Manama's Classified Website:
http://www.state.sgov.gov/p/nea/manama/
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MONROE