AMBASSADOR DISCUSSES NABUCCO, EXPORT CONTROLS,

C O N F I D E N T I A L VIENNA 000380

SIPDIS

SIPDIS

E.O. 12958: DECL: 02/13/2017
TAGS: PREL PGOV ETTC ENRG ETRD WTRO AU
SUBJECT: AMBASSADOR DISCUSSES NABUCCO, EXPORT CONTROLS,
DOHA AND ERP WITH MINISTER OF ECONOMICS BARTENSTEIN

REF: A) STATE 15811 B) STATE 14071

Classified By: Ambassador Susan R. McCaw for reasons 1.5 (b)
and (d)

Summary
--------------


1. (C) During a February 8 meeting with Minister of
Economics Martin Bartenstein, the Ambassador thanked the GoA
for its cooperation on export controls, but asked the GoA to
remain vigilant about Iranian proliferation activities.
Bartenstein told the Ambassador that Turkey remained the most
difficult piece of the Nabucco gas pipeline puzzle, while
Russia rightly fears Nabucco as a competitor. The Ambassador
warned that the USG would not support development of the
pipeline, should Iranian gas become part of Nabucco given the
current political situation in Tehran. With Doha focusing on
"agriculture, agriculture, and agriculture," Bartenstein said
Austrian business remains "reserved" in its support of a
successful outcome. The Ambassador raised the prospect of
revamping the European Recovery Program (ERP) to reflect
today's opportunities and challenges. Bartenstein promised
to raise the possibility of refocusing the ERP's goals with
his cabinet colleagues. End Summary.


Export Controls and UNSCR 1737
--------------


2. (C) Ambassador thanked Bartenstein for the GoA's
excellent collaboration with the embassy on export control
matters, particularly cooperation on thwarting efforts by
Iran to obtain sensitive materials. Drawing from ref B
points, the Ambassador underlined that the international
community should remain vigilant to ensure that it implements
UNSCR 1737 in its entirety and in an effective manner.
Ambassador noted that Iran may try to circumvent the
sanctions by diverting its nuclear proliferation efforts
through Iranian entities, which are not subject to UNSCR

1737. The USG is therefore asking its partners to
re-evaluate its overall trade relationship with Iran. The
international community needs to keep up the pressure on the
Iranian regime.


Nabucco: Ambassador Warns of Iranian Option
--------------


3. (C) Ambassador praised Austria, particularly the oil and
gas company OMV, for leading the way to develop the Nabucco
gas pipeline. The project would help diversify Europe's
energy supplies and enhance its energy security. However,
the Ambassador noted that the USG could not support Nabucco,
if the project opts to include Iranian gas given the current
political situation.


4. (C) Bartenstein said he had just met with OMV CEO
Wolfgang Ruttenstorfer to discuss Nabucco. OMV plans to make
a final decision to move forward with Nabucco by the end of

2007. According to Bartenstein, the European Commission (EC)
fully supports the project and the EC plans to nominate an EU
Coordinator for Nabucco in the near future. Bartenstein said
that Turkey, in OMV's view, remains the biggest obstacle,
because it is trying to assume a role beyond that of a
transit country. Bartenstein commented that Russia views
Nabucco as a competitor, "which is exactly why we launched
the project."


Doha Round: "Agriculture, Agriculture, Agriculture"
-------------- --------------


5. (C) Turning to Doha (ref A),Ambassador stressed the
importance for global economic growth to conclude a
successful Doha Round. Bartenstein said that the discussions
on the margins of Davos were not particularly encouraging.
However, he added that there is a rumor that USTR Schwab and
Commissioner Mandelson discussed specific numbers at Davos --
"17 and 4." The USG would agree to reduce its farm subsidies
to $17 billion over five years and the EU would reduce its
list of sensitive products from 8 to 4. Bartenstein lamented
that the Austrian business community remains "reserved." In
Bartenstein's view, Doha had unfortunately become
"agriculture, agriculture, agriculture."


Re-tooling the European Recovery Program
--------------


6. (U) Ambassador also raised the idea of re-tooling the
European Recovery Program (ERP) to better face today's
challenges and opportunities. Increased academic exchanges
and enhanced programs with Balkan nations are two

possibilities. The Ambassador stressed that the USG remains
open to suggestions and therefore wants to solicit input from
the Austrian Government and Austrian stakeholders on how to
move forward. The 60th anniversary of Marshall's speech in
June could be an opportunity to launch a new, modernized ERP.


7. (U) Bartenstein noted that the ERP, through revolving
loans to small- and medium-sized enterprises, had contributed
enormously to Austria's post-war recovery. He agreed that
the USG and GoA should "do something" beyond holding a
ceremony in June. Bartenstein promised to raise the issue
with his cabinet colleagues.
McCaw