IRAN-ARMENIA PIPELINE DEMARCHE--FM OSKANIAN FINDS

C O N F I D E N T I A L SECTION 01 OF 02 YEREVAN 000323

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/15/2017
TAGS: ETTC PREL ENRG EPET EINV IR AM
SUBJECT: IRAN-ARMENIA PIPELINE DEMARCHE--FM OSKANIAN FINDS
IT A TOUGH MESSAGE

REF: STATE 32666

Classified By: CDA A.F. GODFREY, REASONS 1.4 (B,D)


1. (C) SUMMARY: CDA delivered reftel points March 15 to a
surprised and non-plussed FM Oskanian. Oskanian hoped
Washington would understand Armenia's difficult neighborhood,
and thus its imperative to obtain Iranian gas as an
alternative to the unreliable supply line of Russian gas.
Oskanian promised to see what he could do about mitigating
the damage of Ahmadinejad's visit with a separate GOAM
statement about UNSCR compliance, but was not optimistic
about cancelling the event altogether or snubbing the Iranian
president in person with provocative talking points. The CDA
held firm, and then urged Oskanian at least to ensure that
Kocharian not compound the damage by cheerleading for new and
grander energy cooperation projects between Armenian and
Iran. END SUMMARY


2. (C) CDA delivered reftel talking points to FM Oskanian
March 15, reading verbatim to underscore the seriousness of
the message. He noted that this issue was being closely
followed in Washington at a very high level. Oskanian seemed
surprised by the sharpness of the demarche, and complained
that it was very late in the game for the United States to
weigh in so strongly against a pipeline that we have known
was under construction for quite some time. CDA countered
that we had responded quite speedily to the news that Iranian
President Ahmadinejad would come personally to participate in
the pipeline's opening ceremony. Providing Ahmadinejad such
an opportunity to trumpet his defiance of the international
community was a significant exacerbation of the problem. CDA
noted that we had repeatedly expressed our concerns about
Iran's recent behavior and about the Iran-Armenia gas
pipeline to senior GOAM officials, recently including the
presidential chief of staff and DFM Kirakossian, so our
position on the matter should be no surprise. Oskanian
rejoindered that the pipeline project has been underway for
quite some time, and its completion should have been no
surprise to the United States.


3. (C) Oskanian said he would not "rush to comment" but
would get back to us with a suitably considered response
after communicating our message to President Kocharian. He
suggested it would be impossible at this late date--with the
event scheduled for Monday, March 19, and this fact ahving
been widely reported in the media of both countries--to
disinvite the Iranian president. Referring to reftel's
second to last talking point--that the damage would be
mitigated if Armenia called for Iran to respect and comply
with UNSCR 1696 and 1797--Oskanian said, "I hope you don't
mean the president should say those things during the
ceremony, with Ahmadinejad standing right next to him."
Oskanian suggested the GOAM might be able to make these
points in the public domain in the days immediately before or
after the pipeline ceremony, but that it would be unduly rude
and provocative to do so while standing on the same podium
with Ahmadinejad. CDA reaffirmed the strength of the U.S.
view that Ahmadinejad not be allowed to use the opportunity
to create the impression that the international community had
failed in its efforts to isolate Iran for its misbehavior.


4. (C) Oskanian said that Washington must understand the
context of Armenia's situation. With Turkish and Azerbaijani
borders long-sealed to Armenia, and the ongoing volatility of
the Russian-Georgian relationship, having an outlet for trade
and energy through Iran is a strategic necessity for Armenia.
Oskanian emphasized that the new pipeline had capacity only
to supply gas for domestic Armenian consumption, not for
onward transit. Iran would realize practically no
significant financial reward from the project. He ruminated
"What's Iran's interest in completing this project?," which
he suggested has much greater benefit to Armenia than to
Iran. Answering his own question, he said "probably Iran
does have its own proganda interests at heart, but Armenia is
the beneficiary of that. How can we turn down a project that
is so clearly in our national interest?" Oskanian also
pointedly noticed that "We did not announce that we would not
abide by any UN sanctions resolution, as Ilham Aliyev did in
Azerbaijan." He said Armenia was committed to complying
with UNSCRs, notwithstanding Armenia's need to live with its
next-door neighbor. CDA replied that Washington understands
Armenia's geopolitical and economic situation, but this does
not change our grave concerns about Iran's WMD programs and
our objection to the Ahmadinejad visit in the current context.


5. (C) The CDA expressed the firm hope that Presidents
Kocharian and Ahmadinejad would not use the upcoming occasion
to speculate aloud about grander bilateral energy projects,
such as an Iranian export pipeline across Armenia to onward

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markets. We have noticed an uptick in public speculation
about such future projects from officials on both sides of
the border lately, and these types of projects were much more
likely to violate the Iran Sanctions Act (ISA) than this new,
limited project.


7. (C) COMMENT: Oskanian was clearly surprised by the
vehemence of our message. The GOAM probably hoped that it
had tacit U.S. acquiescence for the limited-scope pipeline
that has now been built, and they did not anticipate such a
sharply negative U.S. reaction to Ahmadinejad's personal
participation in the opening. However, we see very little
chance that Kocharian will disinvite Ahmadinejad at this
stage, now that the event has been so widely publicized in
the media. Kocharian is generally careful not to take public
positions that he does not think he can back up, but once on
record rarely retreats. We hope our intervention will,
however, succeed in restraining Kocharian from waxing
enthusiastic about future projects with Iran, as he might
otherwise have been likely to do, and we may also get a good
public statement in the near future about Iran's duty to
comply with UNSCRs.
GODFREY