Identifier
Created
Classification
Origin
07ROME122
2007-01-18 17:01:00
SECRET
Embassy Rome
Cable title:
ITALY: BUSINESS AS USUAL - EXPORT CREDIT INSURANCE
how-toVZCZCXRO1781 OO RUEHBC RUEHDE RUEHDIR RUEHKUK RUEHRN DE RUEHRO #0122/01 0181701 ZNY SSSSS ZZH O 181701Z JAN 07 FM AMEMBASSY ROME TO RUEHC/SECSTATE WASHDC IMMEDIATE 6960 RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE INFO RUCNIRA/IRAN COLLECTIVE PRIORITY RUEHSS/OECD POSTS COLLECTIVE PRIORITY RUEHRL/AMEMBASSY BERLIN PRIORITY 1714 RUEHFR/AMEMBASSY PARIS PRIORITY 2198 RUEHFL/AMCONSUL FLORENCE PRIORITY 2060 RUEHMIL/AMCONSUL MILAN PRIORITY 8221 RUEHNP/AMCONSUL NAPLES PRIORITY 2196 RUCNDT/USMISSION USUN NEW YORK PRIORITY 0697 RUEHBS/USEU BRUSSELS PRIORITY 4468
S E C R E T SECTION 01 OF 02 ROME 000122
SIPDIS
SIPDIS
TREASURY FOR D/S KIMMITT AND U/S LEVEY
STATE FOR EB/IFD/ODF EX-IM BANK LIAISON LAWRENCE (LADD)
CONNELL; EB/IFD/OMA JAMES GARRY; NEA/IR BRENDAN HATCHER;
IO/T HEATHER VON BEHREN
E.O. 12958: DECL: 01/18/2017
TAGS: PREL EFIN MNUC EXIM UNSC OECD IR IT
SUBJECT: ITALY: BUSINESS AS USUAL - EXPORT CREDIT INSURANCE
FOR IRAN
REF: A. STATE 4760
B. ROME 95
C. 06 ROME 2970
ROME 00000122 001.2 OF 002
Classified By: Economic Minister Counselor Tom Delare for reasons
1.4 (b) and (d).
S E C R E T SECTION 01 OF 02 ROME 000122
SIPDIS
SIPDIS
TREASURY FOR D/S KIMMITT AND U/S LEVEY
STATE FOR EB/IFD/ODF EX-IM BANK LIAISON LAWRENCE (LADD)
CONNELL; EB/IFD/OMA JAMES GARRY; NEA/IR BRENDAN HATCHER;
IO/T HEATHER VON BEHREN
E.O. 12958: DECL: 01/18/2017
TAGS: PREL EFIN MNUC EXIM UNSC OECD IR IT
SUBJECT: ITALY: BUSINESS AS USUAL - EXPORT CREDIT INSURANCE
FOR IRAN
REF: A. STATE 4760
B. ROME 95
C. 06 ROME 2970
ROME 00000122 001.2 OF 002
Classified By: Economic Minister Counselor Tom Delare for reasons
1.4 (b) and (d).
1. (S/NF) SUMMARY: In a discussion with Emboffs about Italy
halting export credit insurance for Iran (Ref A),a Ministry
of Finance official -- who also serves as the President of
Italy's export credit agency (ECA) SACE -- replied that an
internal review of SACE's business with Iran in 2006 had
found "only" a few instances of suspicious activity and that
SACE was working with other EU ECAs to ensure that Iran was
complying with international regulations on weapons
proliferation. The official stated that any GOI move to halt
business with Iran would harm Italy's economic bottom line,
as other ECAs would fill the gaps. In support of the U.S.
position, the official reported that SACE is not renewing
expired credit insurance for Iran, nor is SACE increasing
existing exposure. The official repeated several lines often
heard from our SACE and Ministry of Finance counterparts --
e.g., SACE is decreasing its credit exposure to Iran; Italy
has a unique and historical business relationship with Iran
that it does not wish to upset. The topic of Bank Sepah also
emerged in our discussion. According to the official, SACE
board's will decide to not do any business with Sepah in the
wake of the recent U.S. designation -- a move that does not
appear to result in any significant GOI action against the
bank. The official finished with a strong request for any
relevant U.S. intelligence on suspicious activities by
SACE-insured firms in Iran. End summary.
2. (C) EcMin and Econoff met January 17 to discuss halting
export credit insurance for Iran with Ignazio Angeloni,
Director General for International Financial Relations at the
Ministry of Finance (MOF) and President of SACE, and Filippo
Giansante, a senior MOF advisor to Angeloni.
3. (C) EcMin pressed Angeloni for SACE to suspend all
business with Iran, focusing specifically on state-owned
enterprises, as most Iranian producers of concern are
government-owned entities. Angeloni noted that his Ministry
had discussed the issue of export credit insurance for Iran
with Treasury Secretaries Paulson, Kimmitt, and Levey on
several occasions the past six months. After each discussion
SACE had taken additional steps (unspecified by Angeloni
during our conversation) to ensure that Iran was complying
with international regulations on dual-use technologies and
weapons proliferation. Angeloni reported that SACE had
recently finished a review of all of its business with Iran
in 2006, and was now studying business done with Iran in
2005. SACE had found in its 2006 review that "only 2 or 3
situations" merited further review, because of suspicious
activities. (Angeloni claimed that he had not yet seen the
results of these reviews.)
4. (C) EcMin asked if the GOI and SACE had been practicing
due diligence in discerning whether Iran was using front
companies to produce items of concern. EcMin gave the
example of former USSR firms using "conversion" schemes,
whereby a seemingly innocuous business would be established
within a weapons factory. Foreign investment would be
solicited to the civilian line, which, in reality, could also
support the still "hot" armaments lines. Angeloni reported
that SACE and the GOI had detected no such activity by the
Iranians.
5. (C) EcMin also cited the case of an Italian firm being
pressured by the Iranian government to provide dual-use
items. The mechanism of coercion was the threat to deny a
very lucrative contract to the Italian firm in a different
economic area. Given the obvious inter-ministerial
cooperation on the Iranian side, we urged Angeloni to be
alert to pressure brought to bear on Italian firms.
6. (C) Angeloni asserted that SACE was working with other
ROME 00000122 002.2 OF 002
EU ECAs to ensure due diligence and Iranian compliance with
international regulations on WMDs and stated that SACE's work
with other ECAs ensured a common "European line" on Iran.
However, he added that any GOI decision to halt business with
Iran would be detrimental to Italy's bottom line, since other
ECAs -- SACE's "competitors" -- would fill the gaps. As for
steps taken that would support the U.S. position on export
credit insurance to Iran, Angeloni and Giansante reported
that SACE is not renewing expired credit insurance -- which
has led to an estimated three percent decrease in overall
exposure -- nor is SACE increasing its existing exposure to
Iran.
7. (S/NF) Angeloni reported that SACE's board would meet
January 18 to discuss Iran and the recent U.S. designation of
Bank Sepah, adding that the board will decide not to do any
business with any Italian entities associated with Sepah, nor
with any firms listed in UNSCR 1737. (Note: According to
the Embassy's Bank of Italy contacts, Bank Sepah's Rome
branch does no "significant" business with Italian
individuals or firms (Ref B) -- something confirmed by
Angeloni during out meeting.) Angeloni made a strong appeal
to the U.S. to share any intelligence it had regarding
suspicious activities by Iranian and Italian firms with whom
SACE had business dealings (Ref C, para 11). (Comment: Post
is aware of strains within GOI intelligence services after
recent leadership shake-ups that may complicate intel sharing
with the GOI. End comment.)
8. (S/NF) COMMENT: Angeloni repeated several lines often
heard from our SACE and Ministry of Finance counterparts --
SACE is decreasing its credit exposure to Iran by letting old
credit expire and not increasing its existing credit; Italy
has a unique and historical business relationship with Iran
that it does not wish to upset; and Italy is concerned about
its economic bottom line in halting any business with Iran --
especially given the Italian economy's fragile state. As for
Bank Sepah, the impending SACE board decision to not do any
business with Sepah is simply holding to the status quo and
does not appear to result in any significant GOI action
against the bank. End comment.
SPOGLI
SIPDIS
SIPDIS
TREASURY FOR D/S KIMMITT AND U/S LEVEY
STATE FOR EB/IFD/ODF EX-IM BANK LIAISON LAWRENCE (LADD)
CONNELL; EB/IFD/OMA JAMES GARRY; NEA/IR BRENDAN HATCHER;
IO/T HEATHER VON BEHREN
E.O. 12958: DECL: 01/18/2017
TAGS: PREL EFIN MNUC EXIM UNSC OECD IR IT
SUBJECT: ITALY: BUSINESS AS USUAL - EXPORT CREDIT INSURANCE
FOR IRAN
REF: A. STATE 4760
B. ROME 95
C. 06 ROME 2970
ROME 00000122 001.2 OF 002
Classified By: Economic Minister Counselor Tom Delare for reasons
1.4 (b) and (d).
1. (S/NF) SUMMARY: In a discussion with Emboffs about Italy
halting export credit insurance for Iran (Ref A),a Ministry
of Finance official -- who also serves as the President of
Italy's export credit agency (ECA) SACE -- replied that an
internal review of SACE's business with Iran in 2006 had
found "only" a few instances of suspicious activity and that
SACE was working with other EU ECAs to ensure that Iran was
complying with international regulations on weapons
proliferation. The official stated that any GOI move to halt
business with Iran would harm Italy's economic bottom line,
as other ECAs would fill the gaps. In support of the U.S.
position, the official reported that SACE is not renewing
expired credit insurance for Iran, nor is SACE increasing
existing exposure. The official repeated several lines often
heard from our SACE and Ministry of Finance counterparts --
e.g., SACE is decreasing its credit exposure to Iran; Italy
has a unique and historical business relationship with Iran
that it does not wish to upset. The topic of Bank Sepah also
emerged in our discussion. According to the official, SACE
board's will decide to not do any business with Sepah in the
wake of the recent U.S. designation -- a move that does not
appear to result in any significant GOI action against the
bank. The official finished with a strong request for any
relevant U.S. intelligence on suspicious activities by
SACE-insured firms in Iran. End summary.
2. (C) EcMin and Econoff met January 17 to discuss halting
export credit insurance for Iran with Ignazio Angeloni,
Director General for International Financial Relations at the
Ministry of Finance (MOF) and President of SACE, and Filippo
Giansante, a senior MOF advisor to Angeloni.
3. (C) EcMin pressed Angeloni for SACE to suspend all
business with Iran, focusing specifically on state-owned
enterprises, as most Iranian producers of concern are
government-owned entities. Angeloni noted that his Ministry
had discussed the issue of export credit insurance for Iran
with Treasury Secretaries Paulson, Kimmitt, and Levey on
several occasions the past six months. After each discussion
SACE had taken additional steps (unspecified by Angeloni
during our conversation) to ensure that Iran was complying
with international regulations on dual-use technologies and
weapons proliferation. Angeloni reported that SACE had
recently finished a review of all of its business with Iran
in 2006, and was now studying business done with Iran in
2005. SACE had found in its 2006 review that "only 2 or 3
situations" merited further review, because of suspicious
activities. (Angeloni claimed that he had not yet seen the
results of these reviews.)
4. (C) EcMin asked if the GOI and SACE had been practicing
due diligence in discerning whether Iran was using front
companies to produce items of concern. EcMin gave the
example of former USSR firms using "conversion" schemes,
whereby a seemingly innocuous business would be established
within a weapons factory. Foreign investment would be
solicited to the civilian line, which, in reality, could also
support the still "hot" armaments lines. Angeloni reported
that SACE and the GOI had detected no such activity by the
Iranians.
5. (C) EcMin also cited the case of an Italian firm being
pressured by the Iranian government to provide dual-use
items. The mechanism of coercion was the threat to deny a
very lucrative contract to the Italian firm in a different
economic area. Given the obvious inter-ministerial
cooperation on the Iranian side, we urged Angeloni to be
alert to pressure brought to bear on Italian firms.
6. (C) Angeloni asserted that SACE was working with other
ROME 00000122 002.2 OF 002
EU ECAs to ensure due diligence and Iranian compliance with
international regulations on WMDs and stated that SACE's work
with other ECAs ensured a common "European line" on Iran.
However, he added that any GOI decision to halt business with
Iran would be detrimental to Italy's bottom line, since other
ECAs -- SACE's "competitors" -- would fill the gaps. As for
steps taken that would support the U.S. position on export
credit insurance to Iran, Angeloni and Giansante reported
that SACE is not renewing expired credit insurance -- which
has led to an estimated three percent decrease in overall
exposure -- nor is SACE increasing its existing exposure to
Iran.
7. (S/NF) Angeloni reported that SACE's board would meet
January 18 to discuss Iran and the recent U.S. designation of
Bank Sepah, adding that the board will decide not to do any
business with any Italian entities associated with Sepah, nor
with any firms listed in UNSCR 1737. (Note: According to
the Embassy's Bank of Italy contacts, Bank Sepah's Rome
branch does no "significant" business with Italian
individuals or firms (Ref B) -- something confirmed by
Angeloni during out meeting.) Angeloni made a strong appeal
to the U.S. to share any intelligence it had regarding
suspicious activities by Iranian and Italian firms with whom
SACE had business dealings (Ref C, para 11). (Comment: Post
is aware of strains within GOI intelligence services after
recent leadership shake-ups that may complicate intel sharing
with the GOI. End comment.)
8. (S/NF) COMMENT: Angeloni repeated several lines often
heard from our SACE and Ministry of Finance counterparts --
SACE is decreasing its credit exposure to Iran by letting old
credit expire and not increasing its existing credit; Italy
has a unique and historical business relationship with Iran
that it does not wish to upset; and Italy is concerned about
its economic bottom line in halting any business with Iran --
especially given the Italian economy's fragile state. As for
Bank Sepah, the impending SACE board decision to not do any
business with Sepah is simply holding to the status quo and
does not appear to result in any significant GOI action
against the bank. End comment.
SPOGLI