REGIONAL CHAMBER OFFICIALS CONTINUE TO PUSH BACK ON IRAN

UNCLAS DUSSELDORF 000021 SIPDIS SIPDIS PASS: P, T, E, EEB, NEA/IR, ISN, EUR/AGS E.O. 12958: N/A TAGS: EFIN ECON PTER PGOV KNNP ETTC MNUC PREL IR GM SUBJECT: REGIONAL CHAMBER OFFICIALS CONTINUE TO PUSH BACK ON IRAN SANCTIONS REF: BERLIN 333 Sensitive but Unclassified -- Not for Internet Distribution ¶1. (SBU) As part of the Mission's ongoing dialogue with the German business community on Iran-related issues, EMIN, CG and Pol/Econoff met with a senior Duesseldorf Chamber of Commerce (IHK) official on April 17, who expressed "fear" that the German government and the Federal Agency of Economics and Export Controls (BAFA) are "overreacting" on sanctions. Expressing doubt that sanctions will ever influence Iranian behavior, the official stated that they "affect German businesses more." EMIN countered that the U.S. and Germany have been pursuing a dual-track approach towards Iran since 2006 and that economic sanctions are an important tool that supplements our ongoing diplomacy efforts. ¶2. (SBU) The official, alluding to recent (inaccurate) German press reports that claim the USG looks the other way when American firms trade with Iran, noted that the Chamber wants to see all firms held to the same standard. Exceptions to current rules, he said, create an uneven playing field. EMIN responded that the USG investigates every allegation of a U.S. company illegally doing business in Iran -- including through foreign-owned subsidiaries -- and appreciates leads from all sources. Although the U.S. does not exercise extraterritorial control over foreign-owned subsidiaries of U.S. companies, a U.S. parent company could be held accountable if it knowingly permitted a subsidiary to engage in trade of prohibited goods with Iran. EMIN requested that the Chamber contact the Mission with any information on U.S. businesses that appeared to be in violation of U.S. laws and regulations so that the case can be investigated. ¶3. (SBU) Comment: These remarks reflect a rather widespread, and misguided, sentiment among small and medium sized enterprises in Germany, of whom the Chamber of Commerce Duesseldorf represents a significant number. In March, EMIN engaged in a two-hour discussion on Iran sanctions with the German (federal) Chamber of Commerce in Frankfurt, in which representatives of German companies working in Iran trotted out similar arguments and allegations. As in this case, we rarely hear of any concrete evidence (other than that consumer goods with American logos are available in some Iranian shops),and have never received any leads, despite actively soliciting them. Chamber officials are focused first and foremost on protecting market share and employment levels in their district, and Iranian trade is a significant factor for some of their members. Our sense is that this segment of the business community does not feel that they should be responsible for implementing foreign policy. Mission Germany and ConGen Duesseldorf continue to engage the business community to address misperceptions and to sensitize them to the threat posed by a nuclear-armed Iran. ¶4. (U) This message was coordinated with Embassy Berlin. BOYSE