THE D8 AND IRAN: EVEN WORSE THAN "BUSINESS AS

C O N F I D E N T I A L SECTION 01 OF 03 ISTANBUL 000085 SIPDIS SIPDIS LONDON FOR GAYLE; BERLIN FOR PATEZOLD; BAKU FOR HAUGEN; DUBAI FOR IRPO E.O. 12958: DECL: 02/15/2018 TAGS: PREL PGOV ETRD PINR ECON IR TU OIC SUBJECT: THE D8 AND IRAN: EVEN WORSE THAN "BUSINESS AS USUAL" Classified By: Acting Consul general Sandra Oudkirk; reason 1.5 (d) ¶1. (C) Summary: A tour d,horizon with the Secretary General of the "D8 Developing Countries" revealed an organization trying to find its niche in a crowded arena of multilateral economic organizations. The Secretary General has high hopes of using the D8 to foster "growth and developing across the board" in its eight member states (Turkey, Iran, Indonesia, Egypt, Malaysia, Nigeria, Pakistan, and Bangladesh) despite many internal challenges, while shunting off to member states themselves the task of dealing with the "messy politics" of UNSC sanctions against Iran. Iran, for its part, is actively using its D8 membership -- under the guiding hand of the D8 Secretariat's Director, a former Iranian nuclear negotiator SIPDIS -- to militate against its growing international isolation, particularly in the fields of tourism, telecommunications, and most recently petrochemical cooperation. Comment: Washington may want to consider a demarche to D8 capitals before its "Commissioners" meeting in April, to caution the D8 that its credibility depends in part on how firmly its member states are pressing Iran to meet UNSCR 1737 and 1747 obligations and to highlight the risks of deepening economic and trade relations with the regime. End Summary. The D8's 2008 Priorities ======================== ¶2. (C) D8 Secretary General Dipo Alam, a former Indonesian Deputy Economic Minister, gave Consulate Istanbul's "Iran watcher" on February 13 a tour d,horizon of the D8's near-term goals and priorities and longer-term ambitions. Alam, who has been based in Istanbul as D8 Secretary General since 2006, said he was looking ahead to the D8's July 7-8 Summit in Kuala Lumpur as an opportunity to show the world how effective the D8 has become. The D8's top priority this year is to secure member state ratification of the D8 "Preferential Trade Agreement" signed at the last D8 Summit in Bali in May 2006, intended to gradually reduce tariffs on "intra-D8" trade in sectors and products to be negotiated. In order to achieve that, D8 experts will first meet in Islamabad in late March to agree to "rules of origin" for the specific goods and sectors to be covered, followed by a 
full-court press to persuade remaining member states to ratify it this year. Alam is optimistic that this tight schedule can be met, "as long as we can stop some members from trying to add silly hobby horses to the agreement." He gave one example: "A big member state that happens to have the world's largest grower of saffron" -- Iran -- "insists that the agreement must eliminate all tariffs on D8 saffron exports. It is taking up so much time on this one product that no other D8 state even grows that it has slowed down discussions on more important sectors." ¶3. (C) Alam said another goal of the 2008 Summit will be to clarify what the D8's relationship should be with other multilateral organizations. He agreed, for example, that the D8 has overlap in its membership and mission with the "Economic Cooperation Organization" (ECO),though he pointed out the ECO is tailored to address specific regional (Caucuses and Central Asian) concerns. Alam has been spending time recently with the UN and associated UN bodies to raise the D8's profile. He had just returned from meetings in Rome with the UN's Food and Agriculture Agency (FAO) to discuss how the D8 and FAO, "without reinventing the wheel", can work together on food security and improving biotechnology capacity in D8 states. He hopes leaders at the Summit will ask him to reach out to ASEAN, and to invite India and China as "observers" to the D8. (No D8 members currently support expanding D8 membership.) ¶4. (C) Alam identified customs cooperation, civil aviation cooperation and tourism expansion as key sectors for D8 cooperation in 2008. In June Alam will attend a meeting in Jakarta of civil aviation organization directors from D8 member states to discuss establishing direct flights between all D8 member state capitals. "Most members support this. Only Iran and Egypt are the exceptions, because they cannot agree to direct flights until their bilateral relations improve." Alam noted the positive role played by Turkey's airport authority, TAV, in encouraging D8 privatization of their airline and airport management sectors. Tourism to Turkey and Malaysia is booming (23 million tourists to Malaysia last year, 21 million to Turkey),and Alam noted that Iran since 2007 has taken a special interest in promoting D8 investment in each other's tourist industries. ¶5. (C) Looking farther ahead, Alam said the D8 ISTANBUL 00000085 002 OF 003 "Commissioners" (i.e., A/S level MFA representatives in each member state charged with encouraging host state compliance with D8 agreements) are notionally planning to meet in Jakarta in April to work on a "10-year roadmap for D8 cooperation." Alam hopes the road map will commit the D8 member states to achieving a target of 20% of total trade volume on "intra-D8 trade", up from the current rate of only 8%. ¶6. (C) Warming to the topic of the D8's post-2008 work plan, Alam offered a scattershot list of additional sectors and challenges he would like to see the D8 take on, including: regulating remittances from migrant workers outside D8 countries into the D8; widening the availability of micro-financing to underdeveloped/rural areas throughout the D8; and examining the issue of D8 cooperation on energy diversification, including into biofuels. What the D8 is, and what it is not ================================== ¶7. (C) Alam carefully described the D8 as "a global, not regional, arrangement for fostering growth, development and trade across the board in our eight member states, without impacting member states' commitments to other international organizations." When it was founded in 1997 by Turkey's then-Prime Minister Erbakan, most member state economies were comparable, still firmly in the "developing" camp. In the past ten years some D8 economies and trade volumes have grown far faster than others, creating an unexpectedly wide spectrum of economic power within the group (and some corresponding tension between the D8's "haves and have-nots"). Alam noted that Malaysia, for example, had a 2007 trade volume of 300 billion dollars. Turkey had the second highest 2007 trade volume at 267 billion dollars, though with a 50 billion dollar trade deficit. At the other end of the spectrum is Bangladesh, "the only D8 member that is still officially a lesser developed country (LDC)" with a 2007 trade volume of only 26 billion dollars. ¶8. (C) All D8 member countries are also Organization of Islamic Conference (OIC) members and, according to Alam, "some important OIC members" -- like Saudi Arabia -- see the D8 as superfluous and would prefer to see the group act under OIC leadership and auspices. "But the OIC is 58 members who can't agree on basic ideas, let alone try to negotiate preferential trade agreements" Alam noted. Erbakan chose the D8 members carefully, he added, making sure not to include countries from the Gulf that would try to turn the D8 into a small OIC or OPEC. "That is why Egypt is our only Arab country." Alam suggested the D8's current geographical spread afforded it something of a global perspective, so it does not need to focus exclusively on the economic or political challenges of any particular region. ¶9. (C) Indeed, when we asked how UNSC Chapter VII sanctions are affecting D8 economic engagement with Iran, Alam said the D8 tries not to become constrained by controversial "political issues" involving its member states. "We are all UN members, OIC members, and other international organization members. Let those bodies deal with the politics. Our goal is to expand trade and cooperation with each other. D8 Commissioners in each capital oversee member state compliance with D8 pledges, and it is up to host governments to be aware of UN obligations with regard to each other." The D8 and Turkey ================= ¶10. (C) Alam shared his personal view that Turkey's current Justice and Development Party (AKP) government is uncertain how to deal with the D8. Because the D8 was founded by then-Prime Minister Erbakan, leader of the Islamist Refah (Welfare) party only months after the Turkish military had arranged his ouster in a "soft" coup in 1997, there remains "some baggage" burdening the AKP's institutional view of the D8. "The AKP also supports better relations with the countries that make up the D8, but perhaps they do not want to associate too closely with Erbakan's brainchild. We are less of a priority than the Black Sea Economic Cooperation (BSEC) group, the Iraq Neighbors group, and other groups where they can interact with bigger players." Still, Alam pointed out, the GOT continues to host the D8 Secretariat, providing the D8's headquarters on the 24th floor of a nice building in a well-heeled Istanbul neighborhood. And President Gul, who played a helpful role creating the D8 while a member of the Turkish national assembly in 1997, met several times as Foreign Minister with Alam in 2007. ISTANBUL 00000085 003 OF 003 ¶11. (C) Alam revealed that the D8 website (www.developing8.org) had recently been attacked by hackers, and a fake D8 website briefly appeared with false information about the D8. He believed these cyber attacks originated within Turkey and were intended "to discredit the D8 and to discredit Islam." He has reported these incidents as cyber-crimes to the Turkish MFA. Trying to put a positive spin on it, he characterized the cyber-attacks as "a necessary evil that successful organizations must get used to." Iran's ulterior motive ====================== ¶12. (C) Although SG Alam did not suggest it, Iran appears to be actively leveraging its D8 membership to counter the toughening international sanctions efforts against the regime, to militate against its growing isolation, and to portray itself both to outside and domestic audiences as an important player in the arena of international organizations. The fact that Iran has asked to lead D8 efforts in the sectors of tourism and telecommunications reinforces this conclusion. Alam noted that Iran had just added to the D8 agenda a February 17-19 meeting in Tehran of D8 petrochemical industry representatives, nominally to encourage D8-wide "investment in and privatization of member state petrochemical industries." Rather than raise a red flag with SG Alam, he described Iran's motives behind hosting the petrochemical industry meeting positively, praising Iran's willingness to provide Indonesia with the bulk of its fertilizer imports and to work with Malaysia on a joint project to build petrochemical refineries. ¶13. (C) Also illustrative is Iran's appointment of Ambassador Kia Tabatatabaee as the Director of the D8 Secretariat (and thus Alam's deputy). Before joining the D8 SIPDIS in December 2006, Tabatabaee served as Iran's ambassador to Moscow, Switzerland, and to the UN Missions in Geneva, as well as MFA DG for Political Affairs. He also acted as a "light heavyweight" on Iran's nuclear negotiating team prior to 2006. Given Tabataee's recent MFA stature, it is not unreasonable to assume that he still takes his marching orders from Tehran, and that he is using his position to exert a pro-Iranian influence over the D8 Secretariat's agenda-setting efforts. Comment ======= ¶14. (C) Alam was happy for the opportunity to brief a U.S. diplomat about the D8, eager to present the D8 as an organization to be taken seriously. His own future is uncertain, with his term provisionally expiring at the July Summit, though he hopes Summit leaders will reappoint him. His corresponding desire for quick progress on intra-D8 cooperation may explain in part his apparent self-denial about the hazards of using the D8 to significantly expand economic and trade links with Iran. As a result, the D8's relationship with Iran appears even cozier than "business as usual." At the risk of giving the D8 more attention than it may deserve, Washington might consider a demarche to D8 capitals before its "Commissioners" meeting in April to caution D8 governments that D8 credibility depends in part on how firmly its member states are pressing Iran to meet UNSCR 1737 and 1747 obligations and to highlight the risks of deepening economic and trade relations with the Iranian regime. ¶15. (C) Bio note: Alam described himself as a "real Washingtonian", noting that he had studied engineering at George Washington University, and still owns a house nearby. He was friendly and engaging throughout the meeting, but he was most enthusiastic when talking about his artwork; Alam is an avid painter, and has sold many paintings to donate the proceeds to refugee-related charities. (Many of his paintings can be seen on the "gallery" section of the D8 website). He is well-known to the Consulate, and is eager to maintain cordial contacts with us. End Comment. OUDKIRK