EU POLITICAL DIRECTOR ON IRAN

S E C R E T SECTION 01 OF 02 BRUSSELS 001008

NOFORN
SIPDIS

E.O. 12958: DECL: 06/30/2018
TAGS: PREL ETTC KNNP MNUC EFIN PGOV PHUM IR EUN
SUBJECT: EU POLITICAL DIRECTOR ON IRAN

REF: A. PARIS 1200

B. BRUSSELS 955

Classified By: Alyce Tidball, Acting Political Minister Counselor for r
easons 1.4 (b) and (d)


1. (C/NF) SUMMARY: Work continues in Brussels to push
forward UNSCR 1803 implementation, but doubts remain about
whether it will be possible to act at France's first GAERC
session (July 22-23). EU Political Director Cooper requested
additional information from Treasury about shifting flows of
funds and financing activity. FinAtt promised to request a
briefing from Washington on the issue. Cooper also suggested
that strategic energy dependence/Russia issues might be
growing in importance as a component of the sanctions debate
in Europe. END SUMMARY.


2. (C/NF) EU Political Director Robert Cooper met with
Treasury Department FinAtt and Financial Affairs Minister
Counselor Barbara C. Matthews, on June 30, Acting Political
Minister Counselor Alyce Tidball also attended. He
told us the EU continues to seek implementation of UNSCR 1803
in all 27 Member States. The EU3 and the Italians seek action
at the July GAERC. However, it is unclear whether sufficient
consensus exists to move forward in July.
As for sanctions beyond those called for in 1803, Cooper said
the possibilities are strong that the EU will go into
"coalition of the willing" territory, urging individual
Member States to implement expanded restrictions. He noted
that if this scenario unfolds, the Council and its
Secretariat would not be involved because it would not
incorporate all 27 Member States. (COMMENT: Following on
the heels of the Irish rejection of the Lisbon Treaty, the
French Presidency's open frustration with the EU process, and
the French Presidency's willingness to consider independent
action beyond the EU process, it seems that various
policymakers are increasingly willing to consider a
"two-speed" or "multi-speed" Europe. It is unclear whether
such a process would be effective or legally possible in the
sanctions arena, given the structure of bank branching and
oversight laws and regulations in Europe. END COMMENT.)


3. (C/NF) Cooper asked if the next target in terms of banks
would be Saderat, and whether Treasury was watching branching
activity in the Gulf. Treasury Attache indicated that her
office was focused on the EU dimension and so would not have
detailed information on the regional picture. She noted that
when Treasury Assistant Secretary O'Brien met with EU
officials in June, he noted to his counterparts that EU
leadership in implementing UNSCRs was being observed
carefully in the Gulf and that action in Brussels could have
a catalytic effect in the region. Cooper observed that
expansion of Bank Saderat's activities could be in part
replace Bank Melli's role.


4. (C/NF) Cooper asked whether Treasury was monitoring the
flow of funds and possible shifts in funding activity.
FinAtt responded that Assistant Secretary O'Brien had raised
in June with EU counterparts observed re-pricing of
transactions into euros. She noted that clearing euro
transactions would occur in Frankfurt at the ECB. Cooper
said it would be useful to have a picture of how things look
through U.S. Treasury eyes worldwide with respect to flows of
funds. Treasury Attache agreed to request a briefing by
Treasury officials for Cooper in Brussels.


5. (S/NF) Cooper reiterated EU concerns about Chinese and
Russian energy deals in Tehran (REF B). China closed a big
oil deal with Iran last year and the question is whether it
will also do one on gas. In addition, he said, the idea of a
Gazprom-Iran deal makes him very nervous. Articles in the
press, he noted, have linked financial sanctions to problems
in the Iranian energy market, suggesting some success.
Emphasizing EU desire to do things that will be effective,
Cooper said, "we've gone part of the way, but still have a
long way to go."


6. (C/NF) In a separate discussion with Poloff, Dutch and UK
diplomats (strictly protect) reported that Italian diplomats
made an exceptionally constructive intervention during the
first round of EU-27 deliberations of the new EU3 proposal on
UNSCR 1803-related measures. The Italians explained their
policy about-face (i.e., now supporting an expansive rather
than a narrow interpretation of 1803 responsibilities) based
on their belief that the new proposal would tangibly
interfere with Iran's ability to undertake
proliferation-related activity. The Spanish reps did not
have instructions at the first experts meeting; Malta,
Cyprus, Greece, and Austria opposed the new EU3 draft and
called for a narrow interpretation of the EU's implementation

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duties under UNSCR 1803. The French Presidency is expected
to keep the item on the expert working group (RELEX
Counselors) twice-weekly agenda until a consensus draft is
produced. (COMMENT: If the experts cannot reach agreement,
it is likely that the French would elevate the action to the
political level for handling by either the Ambassador-level
Political and Security Committee (PSC) or the next GAERC on
July 22. END COMMENT.)
Murray
.