DESIGNATIONS OF IRANIAN ENTITIES AND INDIVIDUALS

UNCLAS SECTION 01 OF 08 STATE 148605 SIPDIS SENSITIVE SIPDIS E.O. 12958: N/A TAGS: PREL KNNP IR PARM EFIN SUBJECT: DESIGNATIONS OF IRANIAN ENTITIES AND INDIVIDUALS UNDER U.S. EXECUTIVE ORDERS ¶1. (U) This is an action request please see paragraphs 2- ¶5. For Moscow, Beijing, G7, and all NEA Posts, Washington requests delivery of the talking points at the Ministerial level. OBJECTIVES -------------- ¶2. (SBU) Secretary Rice and Secretary Paulson will go on camera at 0900 EST on Thursday, October 25, 2007 to announce the designation of several Iranian entities, individuals, and banks for their support to terrorism and on proliferation grounds. ¶3. (SBU) Washington requests that Posts embargo this information until the press conference begins. Ambassador should notify host government/EU officials (including the finance and foreign ministries) and provide the non-paper in paragraph 7 and fact sheet in paragraph 8 not earlier than 9:00 a.m. EST on Thursday, October 25, 2007. ¶4. (SBU) Specifically, the United States is designating Iran's Islamic Revolutionary Guard Corps (IRGC) the Ministry of Defense and Armed Forces Logistics, Banks Melli and Mellat, 9 IRGC-affiliated companies, 5 IRGC general officers, and 3 Aerospace Industry Organization (AIO) individuals under E.O. 13382 ("Blocking the Property of Weapons of Mass Destruction Proliferators and their Supporters") and IRGC-Qods Force and Bank Saderat under E.O. 13224 ("Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism"). ¶5. (SBU) These designations are aimed at implementing USG UNSCR 1737 and 1747 (the two UN Chapter VII resolutions passed against Iran in the last year) obligations, as well as protecting the U.S. financial system from financial activity supporting ongoing Iranian proliferation and terrorism activities facilitated by Iranian banks. Post should pursue the following objectives: -- Inform host government/EU officials of the U.S. designations under E.O. 13382 and 13224. -- Notify host government/EU officials these designations are aimed at implementing USG UNSCR 1737 and 1747 obligations, as well as protecting the U.S. financial system from financial activity supporting ongoing Iranian proliferation and terrorism activities facilitated by Iranian banks. -- Note that many of the entities/individuals not specifically named in UNSCR 1737 and 1747 are covered by the resolution's requirement to freeze the assets of entities/individuals acting on behalf of or owned or controlled by designated entities/individuals. -- Urge host government/EU officials to take parallel steps to isolate these entities/individuals from the international financial system to prevent further facilitation of Iran's proliferation and terrorist activities. -- Ask host government officials to designate IRGC, MODAFL, Banks Melli and Mellat, IRGC-Qods Force, and Bank STATE 00148605 002 OF 008 Saderat. Ask EU member states and EU officials to put such designations on the table with other EU autonomous measures now being considered. REPORTING DEADLINE -------------- ¶6. (U) Please report delivery of the U.S. non-paper and any immediate response by October 25, 2007. Please slug replies for ISN, T, TREASURY, EUR, EAP and NEA. Please use SIPDIS caption on all responses. NONPAPER -------------- ¶7. (U) Begin text of non-paper (embargoed until 0900 EST on Thursday, October 25, 2007) for all listed Posts: -- In May 2006, the United States and its P5+1 partners (Russia, China, UK, France, Germany) offered the Iranian government an historic opportunity to improve its relations with the international community and with the United States. Secretary Rice said at that time that our nation deeply respects the Iranian people, and that we are eager to build a better future together. We offered Iran new incentives to cooperate with the international community, including the construction of light water reactors in Iran. But we also said that, if the government of Iran continued to violate its international obligations and to confront the international community, that it would face sanctions in the UN and by individual countries. -- The United States remains fully committed to a diplomatic solution with Iran. Unfortunately, the Iranian government continues to spurn the P5+1 offer for cooperation; instead, it remains committed to threatening peace and stability in the Middle East: by pursuing nuclear weapons, building dangerous missiles and proliferating that technology, supporting terrorists and other violent extremists in Iraq, Afghanistan, Lebanon, and the Palestinian territories, denying the existence of our ally, Israel, and threatening to "wipe Israel off the map." -- Working with other concerned nations all across the world, the United States has adopted a comprehensive policy to counter the threatening behavior of the Iranian government. We have worked with our fellow members of the U.N. Security Council to impose two sets of Chapter VII sanctions on the Iranian government and are now discussing a third UNSC Chapter VII sanctions resolution. -- The U.S. will take an important step today in our continuing efforts to curtail Iran's misuse of the international financial system as it seeks to procure and develop WMD capabilities. We will also separately take aim at disrupting Iran's support for terrorism. -- We are acting in concert with our obligations under UNSCRs 1737 and 1747, which require states to freeze the assets of designated entities and individuals, as well as entities owned or controlled by, or acting on behalf of them. Today's actions are also consistent with a warning recently by the Financial Action Task Force, an intergovernmental body that issues guidance on combating money laundering and terrorist financing, which highlighted the threat posed by Iran to the international financial system. U.S. actions will assist U.S. financial institutions in protecting themselves from deceptive STATE 00148605 003 OF 008 financial practices by Iranian entities and individuals engaged in or supporting proliferation and terrorism activities. -- We see these moves as complementary to possible parallel moves on other tracks, at the UN, within the EU, and by individual states that, like the U.S., may deem the risk to their financial institutions sufficiently grave as to merit immediate action on a national basis. -- These steps to designate Iranian state organizations and individuals involved in proliferation should be seen in the context of our larger collective effort to put pressure on Tehran to change course. Calibrating a series of moves - our own national designations, continuing P5+1 discussions on a third resolution, kicking off discussion in the EU of autonomous measures - will, we believe, amplify a sense of international resolve and unity on this critical issue that Tehran will find increasingly difficult to ignore or dismiss. -- We remain committed to the P5+1's dual track approach of supporting negotiations with Iran while at the same time being prepared to impose UNSC sanctions on Iran if it will not comply with its international obligations. To that end, we reaffirm our support for the P5+1 package of incentives offered to Iran in June 2006. However, as the P5+1 has agreed, we are also prepared to adopt additional Chapter VII sanctions at the UNSC as escalation of the pressure on Tehran should Iran fail to suspend its proliferation sensitive nuclear activities and enter into negotiations on the basis of the P5+1 offer. -- The designations we will announce today were crafted with that in mind. We would urge you to begin looking at efforts similar or comparable to those we announce today that will both assist in protecting the international financial system, as well as signal clearly to Tehran that international commitment and unity remain firm. In short, we need the international community to make the diplomacy more effective and credible to raise the cost to Iran of its current behavior and to convince it to agree to negotiations. End non-paper. ¶8. (U) Begin text of fact sheet (embargoed until 0900 EST on Thursday, October 25, 2007) for all listed Posts: Fact Sheet: Designation of Iranian Entities and Individuals for Proliferation Activities and Support for Terrorism -------------- -- The U.S. Government is taking several major actions today to counter Iran's bid for nuclear capabilities and support for terrorism by exposing Iranian banks, companies and individuals that have been involved in these dangerous activities and by cutting them off from the U.S. financial system. -- Today, the Department of State designated under Executive Order 13382 two key Iranian entities of proliferation concern: the Islamic Revolutionary Guard Corps (IRGC) and the Ministry of Defense and Armed Forces Logistics (MODAFL). Additionally, the Department of the Treasury designated for proliferation activities under E.O. 13382 nine IRGC-affiliated entities and five IRGC- affiliated individuals as derivatives of the IRGC, Iran's state-owned Banks Melli and Mellat, and three individuals STATE 00148605 004 OF 008 affiliated with Iran's Aerospace Industries Organization (AIO). -- The Treasury Department also designated the IRGC-Qods Force (IRGC-QF) under E.O. 13224 for providing material support to the Taliban and other terrorist organizations, and Iran's state-owned Bank Saderat as a terrorist financier. -- Elements of the IRGC and MODAFL were listed in the Annexes to UN Security Council Resolutions 1737 and 1747. All UN Member States are required to freeze the assets of entities and individuals listed in the Annexes of those resolutions, as well as assets of entities owned or controlled by them, and to prevent funds or economic resources from being made available to them. -- The Financial Action Task Force, the world's premier standard-setting body for countering terrorist financing and money laundering, recently highlighted the threat posed by Iran to the international financial system. FATF called on its members to advise institutions dealing with Iran to seriously weigh the risks resulting from Iran's failure to comply with international standards. Last week, the Treasury Department issued a warning to U.S. banks setting forth the risks posed by Iran. (For the text of the Treasury Department statement see: http://www.fincen.gov/guidance_fi_increasing_ mlt_iranian.p df.) Today's actions are consistent with this warning, and provide additional information to help financial institutions protect themselves from deceptive financial practices by Iranian entities and individuals engaged in or supporting proliferation and terrorism. Effect of Today's Actions -------------- -- As a result of our actions today, all transactions involving any of the designees and any U.S. person will be prohibited and any assets the designees may have under U.S. jurisdiction will be frozen. Noting the UN Security Council's grave concern over Iran's nuclear and ballistic missile program activities, the United States also encourages all jurisdictions to take similar actions to ensure full and effective implementation of UN Security Council Resolutions 1737 and 1747. -- Today's designations also notify the international private sector of the dangers of doing business with three of Iran's largest banks, as well as the many IRGC- affiliated companies that pervade several basic Iranian industries. Proliferation Finance - Executive Order 13382 Designations -------------- -- E.O. 13382, signed by the President on June 29, 2005, is an authority aimed at freezing the assets of proliferators of weapons of mass destruction and their supporters, and at isolating them from the U.S. financial and commercial systems. Designations under the Order prohibit all transactions between the designees and any U.S. person, and freeze any assets the designees may have under U.S. jurisdiction. -- The Islamic Revolutionary Guard Corps (IRGC): Considered the military vanguard of Iran, the Islamic Revolutionary Guard Corps (IRGC),is composed of five branches (Ground Forces, Air Force, Navy, Basij militia, and Qods Force special operations) in addition to a STATE 00148605 005 OF 008 counterintelligence directorate and representatives of the Supreme Leader. It runs prisons, and has numerous economic interests involving defense production, construction, and the oil industry. Several of the IRGC's leaders have been sanctioned under UN Security Council Resolution 1747. -- The IRGC has been outspoken about its willingness to proliferate ballistic missiles capable of carrying WMD. The IRGC's ballistic missile inventory includes missiles, which could be modified to deliver WMD. The IRGC is one of the primary regime organizations tied to developing and testing the Shahab-3. The IRGC attempted, as recently as 2006, to procure sophisticated and costly equipment that could be used to support Iran's ballistic missile and nuclear programs. -- Ministry of Defense and Armed Forces Logistics (MODAFL): The Ministry of Defense and Armed Forces Logistics (MODAFL) controls the Defense Industries Organization, an Iranian entity identified in the Annex to UN Security Council Resolution 1737 and designated by the United States under E.O. 13382 on March 30, 2007. MODAFL also was sanctioned, pursuant to the Arms Export Control Act and the Export Administration Act, in November 2000 for its involvement in missile technology proliferation activities. -- MODAFL has ultimate authority over Iran's Aerospace Industries Organization (AIO),which was designated under E.O. 13382 on June 28, 2005. The AIO is the Iranian organization responsible for ballistic missile research, development and production activities and organizations, including the Shahid Hemmat Industries Group (SHIG) and the Shahid Bakeri Industries Group (SBIG),which were both listed under UN Security Council Resolution 1737 and designated under E.O. 13382. The head of MODAFL has publicly indicated Iran's willingness to continue to work on ballistic missiles. Defense Minister Brigadier General Mostafa Mohammad Najjar said that one of MODAFL's major projects is the manufacturing of Shahab-3 missiles and that it will not be halted. MODAFL representatives have acted as facilitators for Iranian assistance to an E.O. 13382- designated entity and, over the past two years, have brokered a number of transactions involving materials and technologies with ballistic missile applications. -- Bank Melli, its branches, and subsidiaries: Bank Melli is Iran's largest bank. Bank Melli provides banking services to entities involved in Iran's nuclear and ballistic missile programs, including entities listed by the U.N. for their involvement in those programs. This includes handling transactions in recent months for Bank Sepah, Defense Industries Organization, and Shahid Hemmat Industrial Group. Following the designation of Bank Sepah under UNSCR 1747, Bank Melli took precautions not to identify Sepah in transactions. Through its role as a financial conduit, Bank Melli has facilitated numerous purchases of sensitive materials for Iran's nuclear and missile programs. In doing so, Bank Melli has provided a range of financial services on behalf of Iran's nuclear and missile industries, including opening letters of credit and maintaining accounts. -- Bank Melli also provides banking services to the IRGC and the Qods Force. Entities owned or controlled by the IRGC or the Qods Force use Bank Melli for a variety of financial services. From 2002 to 2006, Bank Melli was used to send at least $100 million to the Qods Force. When handling financial transactions on behalf of the STATE 00148605 006 OF 008 IRGC, Bank Melli has employed deceptive banking practices to obscure its involvement from the international banking system. For example, Bank Melli has requested that its name be removed from financial transactions. -- Bank Mellat, its branches, and subsidiaries: Bank Mellat provides banking services in support of Iran's nuclear entities, namely the Atomic Energy Organization of Iran (AEOI) and Novin Energy Company. Both AEOI and Novin Energy have been designated by the United States under E.O. 13382 and by the UN Security Council under UNSCRs 1737 and 1747. Bank Mellat services and maintains AEOI accounts, mainly through AEOI's financial conduit, Novin Energy. Bank Mellat has facilitated the movement of millions of dollars for Iran's nuclear program since at least 2003. Transfers from Bank Mellat to Iranian nuclear-related companies have occurred as recently as this year. -- IRGC owned or controlled companies: Treasury is designating the companies listed below under E.O. 13382 on the basis of their relationship to the IRGC. These entities are owned or controlled by the IRGC and its leaders. The IRGC has significant political and economic power in Iran, with ties to companies controlling billions of dollars in business and construction and a growing presence in Iran's financial and commercial sectors. Through its companies, the IRGC is involved in a diverse array of activities, including petroleum production and major construction projects across the country. In 2006, Khatam al-Anbiya secured deals worth at least $7 billion in the oil, gas, and transportation sectors, among others. -- Khatam al-Anbiya Construction Headquarters -- Oriental Oil Kish -- Ghorb Nooh -- Sahel Consultant Engineering -- Ghorb-e Karbala -- Sepasad Engineering Co -- Omran Sahel -- Hara Company -- Gharargahe Sazandegi Ghaem -- IRGC Individuals: Treasury is designating the individuals below under E.O 13382 on the basis of their relationship to the IRGC. One of the five is listed on the Annex of UNSCR 1737 and the other four are listed on the Annex of UNSCR 1747 as key IRGC individuals. -- General Hosein Salimi, Commander of the Air Force, IRGC -- Brigadier General Morteza Rezaie, Deputy Commander of the IRGC -- Vice Admiral Ali Akhbar Ahmadian, Chief of the IRGC Joint Staff -- Brigadier Gen. Mohammad Hejazi, Commander of Bassij resistance force -- Brigadier General Qasem Soleimani, Commander of the Qods Force -- Other Individuals involved in Iran's ballistic missile programs: E.O. 13382 derivative proliferation designation by Treasury of each of the individuals listed below for their relationship to the Aerospace Industries Organization, an entity previously designated under E.O. ¶13382. Each individual is listed on the Annex of UNSCR 1737 for being involved in Iran's ballistic missile program. -- Ahmad Vahid Dastjerdi, Head of the Aerospace Industry Organization (AIO) -- Reza-Gholi Esmaeli, Head of Trade & International STATE 00148605 007 OF 008 Affairs Dept., AIO -- Bahmanyar Morteza Bahmanyar, Head of Finance & Budget Department, AIO Support for Terrorism -- Executive Order 13224 Designations -------------- -- E.O. 13224 is an authority aimed at freezing the assets of terrorists and their supporters, and at isolating them from the U.S. financial and commercial systems. Designations under the E.O. prohibit all transactions between the designees and any U.S. person, and freeze any assets the designees may have under U.S. jurisdiction. -- IRGC-Qods Force (IRGC-QF): The Qods Force, a branch of Iran's Revolutionary Guard Corps (IRGC),provides material support to the Taliban, Lebanese Hizballah, Hamas, Palestinian Islamic Jihad, and the Popular Front for the Liberation of Palestine-General Command (PFLP-GC). -- The Qods Force is the Iranian regime's primary instrument for providing lethal support to the Taliban. The Qods Force provides weapons and financial support to the Taliban to support anti-U.S. and anti-Coalition activity in Afghanistan. Since at least 2006, Iran has arranged frequent shipments of small arms and associated ammunition, rocket propelled grenades, mortar rounds, 107mm rockets, plastic explosives, and probably man- portable defense systems to the Taliban. This support contravenes Chapter VII UN Security Council obligations. UN Security Council resolution 1267 established sanctions against the Taliban and UN Security Council resolutions 1333 and 1735 imposed arms embargoes against the Taliban. Through Qods Force material support to the Taliban, we believe Iran is seeking to inflict casualties on U.S. and NATO forces. -- The Qods Force has had a long history of supporting Hizballah's military, paramilitary, and terrorist activities, providing it with guidance, funding, weapons, intelligence, and logistical support. The Qods Force operates training camps for Hizballah in Lebanon's Bekaa Valley and has reportedly trained more than 3,000 Hizballah fighters at IRGC training facilities in Iran. The Qods Force provides roughly $100 to $200 million in funding a year to Hizballah and has assisted Hizballah in rearming in violation of UN Security Council Resolution ¶1701. -- In addition, the Qods Force provides lethal support in the form of weapons, training, funding, and guidance to select groups of Iraqi Shi'a militants who target and kill Coalition and Iraqi forces and innocent Iraqi civilians. -- Bank Saderat, its branches, and subsidiaries: Bank Saderat, which has approximately 3200 branch offices, has been used by the Government of Iran to channel funds to terrorist organizations, including Hizballah and EU- designated terrorist groups Hamas, PFLP-GC, and Palestinian Islamic Jihad. For example, from 2001 to 2006, Bank Saderat transferred $50 million from the Central Bank of Iran through its subsidiary in London to its branch in Beirut for the benefit of Hizballah fronts in Lebanon that support acts of violence. Hizballah has used Bank Saderat to send money to other terrorist organizations, including millions of dollars on occasion, to support the activities of Hamas. As of early 2005, Hamas had substantial assets deposited in Bank Saderat, and, in the past year, Bank Saderat has transferred STATE 00148605 008 OF 008 several million dollars to Hamas. End fact sheet. POINT OF CONTACT -------------- ¶9. (U) Questions may be directed to ISN/CPI Anthony Ruggiero, 202-647-5181. ¶10. Minimize considered. RICE