EEB ASSISTANT SECRETARY SULLIVAN RAISES GAS DEAL \

2007-09-25 23:01:00 07STATE135395 Secretary of State CONFIDENTIAL 07BERN881|07BERN924|07STATE126979 VZCZCXRO7572\
PP RUEHAG RUEHBC RUEHDBU RUEHDE RUEHDIR RUEHKUK RUEHPT RUEHROV\
DE RUEHC #5395/01 2682315\
ZNY CCCCC ZZH\
P R 252301Z SEP 07\
FM SECSTATE WASHDC\
TO RUEHSW/AMEMBASSY BERN PRIORITY 2612\
INFO CIS COLLECTIVE\
EU MEMBER STATES COLLECTIVE\
IRAN COLLECTIVE\
RUEHAK/AMEMBASSY ANKARA 1491\
RUEHBK/AMEMBASSY BANGKOK 7667\
RUEHBR/AMEMBASSY BRASILIA 5721\
RUEHBY/AMEMBASSY CANBERRA 9024\
RUEHIL/AMEMBASSY ISLAMABAD 9123\
RUEHKL/AMEMBASSY KUALA LUMPUR 7137\
RUEHMO/AMEMBASSY MOSCOW 4459\
RUEHNE/AMEMBASSY NEW DELHI 3326\
RUEHNY/AMEMBASSY OSLO 4589\
RUEHOT/AMEMBASSY OTTAWA 7862\
RUEHTI/AMEMBASSY TIRANA 0098\
RUEHKO/AMEMBASSY TOKYO 0707\
RUEHYE/AMEMBASSY YEREVAN 4307\
RUEHIT/AMCONSUL ISTANBUL 1265\
RUEHPT/AMCONSUL PERTH 0525\
RUEHRI/AMCONSUL RIO DE JANEIRO 7877 C O N F I D E N T I A L SECTION 01 OF 02 STATE 135395 \
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E.O. 12958: DECL: 09/19/2017 \
TAGS: ETTC PREL ENRG EPET IR SZ TU GR IT
SUBJECT: EEB ASSISTANT SECRETARY SULLIVAN RAISES GAS DEAL \
CONCERNS WITH SWISS AMBASSADOR. \
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REF: (A) STATE 126979 (B) BERN 881 (C) BERN 924 \
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Classified By: EEB A/S Daniel Sullivan; Reason: 1.4 (d) \
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1. (C) Summary. EEB A/S Sullivan met with Swiss ambassador \
Ziswiler to underscore our concerns about the EGL \
gas/pipeline deal with Iran (reftels),particularly its \
negative impact on efforts to pressure Iran to comply with \
UNSC resolutions on its nuclear activities. Ziswiler \
defended the deal, asserting that it did not contravene UN \
sanctions resolutions and suggesting that it was needed to \
enhance energy security. Sullivan stressed the serious \
negative consequences of this first agreement to bring \
Iranian gas to Europe, and, noting clear indications of GOS \
involvement and support, rebutted claims that it was simply a \
private transaction. Ziswiler said he would take our points \
back to Bern. End Summary. \
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2. (C) EEB Assistant Secretary Daniel Sullivan met with Swiss \
Ambassador Ziswiler September 19 to reinforce strong USG \
concerns about the EGL deal to purchase gas from Iran and \
construct new pipeline infrastructure to bring it to Europe \
(Reftels). A/S Sullivan stressed the invidious effect of \
agreements of this kind, which directly undermine \
international efforts to pressure Iran to comply with UNSC \
resolutions concerning its nuclear activities. The outcome \
of those efforts is critically important, and it was deeply \
disappointing to see Switzerland involved in actions that \
impair the prospects for their success. \
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3. (C) A/S Sullivan noted that Iran takes every opportunity \
to play up commercial agreements, especially in the oil and \
gas sector, to suggest that UN efforts to apply economic \
pressure are failing and that Iran,s resources give it \
international leverage. Switzerland could be handing Iran a \
major diplomatic and commercial victory, while it continues \
to defy the international community. With efforts underway \
to craft a third sanctions resolution, the timing of the EGL \
deal was particularly bad. While we appreciate the \
conscientious way in which Switzerland has carried out its \
responsibilities as protecting power for the USG and official \
interlocutor with Iran, that role amplifies the negative \
impact of the EGL deal. \
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4. (C) Sullivan pointed out that the Swiss position stands in \
sharp contrast to that of the French. France has advised \
Total not to finalize its pending LNG deal with Iran at this \
time, and Foreign Minister Kouchner has said publicly that \
French companies are being encouraged not to bid on new \
contracts. That is the kind of stance we would like to see \
others take. Sullivan stressed that we are conveying the \
same message, discouraging energy deals with Iran, to others \
with similar plans, and noted that he had met with the CEO of \
Total and senior Shell representatives on this issue. \
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5. (C) Responding, Ambassador Ziswiler said Switzerland takes \
its international obligations with utmost seriousness. He \
pointed out that two Swiss banks, UBS and Credit Suisse, had \
been among the first to pull back from Iranian business; many \
banks elsewhere had not taken that step. He emphasized the \
importance of energy security as a concern of every \
government, suggesting that the EGL deal was necessary and \
desirable in that context. Switzerland, he said, depends on \
Russia for more than 50 percent of its gas imports, and \
needed to diversify its sources. Firms from other countries, \
such as Austria and Italy, were active in Iran,s oil and gas \
sector. Switzerland would be left behind its competitors if \
it did not take action. He stressed that the deal was not \
forbidden by UNSC resolutions, to which Switzerland \
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scrupulously adhered, and the GOS had also concluded that it \
was not an &investment8 subject to the Iran Sanctions Act \
(ISA, formerly ILSA). In any event, it was a private \
commercial transaction, in which the government was not \
directly involved. \
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6. (C) A/S Sullivan again stressed the deleterious effect of \
the deal, which would inevitably weaken the pressure on Iran \
and encourage Iranian obduracy. Going through with the deal \
would impair the effectiveness of UN action on a critically \
important issue )- an astounding position for a country as \
committed as Switzerland to international solutions for \
political problems. With respect to the activities of other \
countries in Iran,s oil and gas sector, there was much more \
talk than action, and Iran has had great difficulty in \
finalizing commitments by foreign companies. The idea that \
this was a purely private transaction was difficult to \
accept. It seems clear from our discussions in Bern, as well \
as the Ambassador,s own references to energy security as a \
national concern, that the GOS has strongly supported and \
facilitated this arrangement. It was telling that the \
President herself met with the visiting Iranian Acting Oil \
Minister, amid wide publicity, for a discussion of the gas \
deal. Concluding, A/S Sullivan emphasized that this \
transaction would have immense significance. It would be the \
first agreement to put Iranian gas into the heart of Europe. \
The negative consequences of that arrangement would be \
lasting. He hoped that the GOS and the company would fully \
consider those consequences before going forward. The \
Ambassador said he would fully report our further expressions \
of concern to Bern. \
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7. (C) Department appreciates Embassy efforts and the \
analysis provided in Ref. C. Welcome further reporting, as \
appropriate, as we continue to consider this matter. \
RICE \