UNSCR 1803: SRI LANKA REVIEWING "LINE BY LINE"

C O N F I D E N T I A L COLOMBO 000313 SIPDIS SIPDIS STATE FOR SCA/INS, EEB/ESC/TFS, ISN/CPI, AND NEA/IR TREASURY FOR LESLIE HULL E.O. 12958: DECL: 03/27/2013 TAGS: EFIN KNNP UNSC IAEA IR CE SUBJECT: UNSCR 1803: SRI LANKA REVIEWING "LINE BY LINE" PRIOR TO AHMADINEJAD VISIT IN APRIL REF: A. SECSTATE 21770 ¶B. COLOMBO 1307 AND PREVIOUS ¶C. COLOMBO 281 ¶D. COLOMBO 1506 ¶E. COLOMBO 1639 Classified By: Ambassador Robert O. Blake, Jr., reasons 1.4 (b,d) ¶1. (C) Summary: Sri Lanka's Ministry of Foreign Affairs and Central Bank both responded to post's demarches on UN Security Council Resolution 1803 with assurances that Sri Lanka would meet its international obligations with respect to sanctions against Iran. The MFA acting Director General for UN and Multilateral Affairs said that Sri Lanka would study the terms of UNSCR 1803 "line by line" prior to planned late April visit of Iranian President Ahmadinejad. He asked for further guidance, if possible, about how Sri Lanka should exercise "vigilance" toward the Iranian banks identified in the resolution and said Sri Lanka would welcome training in how to guard against transactions that might facilitate Iranian banks' evasion of sanctions. Please see action request in para 6. End summary. ¶2. (C) On March 4, post conveyed ref A demarche to Sri Lanka's Ministry of Foreign Affairs. The same day, Ambassador and Econoff delivered the demarche to Central Bank Governor Cabraal and Deputy Governor Jayamaha. Cabraal and Jayamaha assured the Ambassador that Sri Lanka would comply with te obligations created by the new Security Council resolution against Iran. Jayamaha reaffirmed tha the Central Bank had instructed other Sri Lankanbanks not to conduct transactions with Bank Sepa, in accordance with UNSCR 1747 (ref B). ¶3. () On March 25, Econoff followed up the UNSCR 1803 demarche with the MFA acting Director General forUN and Multilateral Affairs Vijaya Padukkage. Ecnoff, noting Sri Lanka's recent aid and trade dels with Iran, urged Sri Lanka to pay particular ttention to the resolution's call for states to xercise vigilance with respect to public support for trade with Iran and with regard to transactionsinvolving Banks Melli and Saderat. (Note: Econof did not mention to Padukkage the recent case of Citibank's Sri Lanka branch blocking a payment to Bank Melli, because the matter has not yet become public (ref C).) ¶4. (C) Padukkage was familiar with UNSCR 1803 and responded that Sri Lanka would be "extra careful" in complying with it. He said his ministry was going through the resolution "line by line" prior to the planned late April visit of Iranian President Ahmadinejad to Sri Lanka. He had in fact noted the resolution's call for "vigilance" and asked how to interpret the term. Econoff replied that the Financial Action Task Force (FATF) had issued guidance to its members on this issue, and that Sri Lanka's Central Bank was aware of the FATF guidance (ref D). Padukkage asked if the United States was satisfied that Sri Lanka was fully complying with the UNSCR 1747 prohibition against transactions with Bank Sepah. Econoff replied that we had taken the Central Bank at its word that it had instructed local banks in how to comply. ¶5. (C) Returning to the question of exercising vigilance on transactions with Iran, Padukkage said Sri Lanka would welcome any training the United States could provide on what kind of transaction to watch out for and what kind of evasions the Iranian banks were practicing. Padukkage also asked whether anything in the UN sanctions limited the issuance of "import permits" for products from Iran. Econoff reminded him that UNSCR 1747 prohibited Iran's export of all arms and related materiel, but that he was not aware of any reference to import permits in the various UN sanctions. ¶6. (C) Comment and action request: Sri Lanka is increasing its aid, trade and investment ties with Iran (ref E),but appears to be serious at the same time about following the terms of UN resolutions against Iran. Post would welcome any additional guidance or training from the Department on how a country should exercise vigilance with respect to transactions involving Iran. Padukkage did not elaborate on the types of products that might be the subject of his query regarding import permits. Sri Lanka requires import permits for certain goods that have security implications, such as global positioning systems, night vision devices, etc. and also for various other categories, such as telecommunications, agricultural, health products. We would also welcome guidance, if any, on the question of whether UN Iran sanctions in any way touch on the issue of import permits. BLAKE