AMBASSADOR KEITH JOINS EU ENVOYS IN DELIVERING

C O N F I D E N T I A L SECTION 01 OF 02 KUALA LUMPUR 001078 SIPDIS FOR EAP/MTS, ISN/RA AND EEB/TFS E.O. 12958: DECL: 12/10/2018 TAGS: PARM MNUC EFIN KNNP GM IR MY SUBJECT: AMBASSADOR KEITH JOINS EU ENVOYS IN DELIVERING IRAN DEMARCHES REF: A. STATE 127040 - FINANCIAL PRESSURE ON IRAN ¶B. STATE 125551 - COORDINATED DEMARCHE ON IRAN Classified By: Political Counselor Mark D. Clark for reasons 1.4 b and d. ¶1. (C) Summary: Ambassador Keith joined chiefs of mission from France, Germany, Italy, and the United Kingdom in delivering ref A and B demarches concerning Iran sanctions and financial pressure on Iran to Malaysian Foreign Ministry Deputy Secretary General (Multilateral) Kamal Yan bin Yahya on December 9. The Ambassador recalled our ongoing bilateral exchanges on Iranian nonproliferation matters, emphasizing our shared interests in the integrity of the global nuclear nonproliferation regime. Kamal reaffirmed Malaysia's commitment to UNSC decisions, but also defended Malaysia's bilateral relationship with Iran, including Malaysia's presentation of what it considers legitimate commercial ties. Kamal left open the possibility that Malaysia would allow Iranian banks to open branches in Malaysia, but only those not currently sanctioned in UNSCRs. End Summary. ¶2. (C) Speaking in the lead for the EU4 during the December 9 meeting with MFA Deputy Secretary General Kamal, French Ambassador Marc Barety emphasized the nonproliferation, financial, and commercial energy points as directed in the coordinated demarche. He underlined the importance of Malaysia's support in persuading the Iranians to change their behavior. Deputy Secretary General Kamal expressed in reply Malaysia's unwavering commitment to the standards embodied in the relevant UN Security Council Resolutions, and, recalling Malaysia's upcoming chairmanship of the IAEA Board of Governors, to the IAEA's efforts to persuade Iran to conform to standards and behaviors mandated by the Security Council. Kamal was firm in his defense, however, of Malaysia's bilateral relationship with Iran and its determination to sustain legitimate commercial ties, reiterating a now familiar Malaysian position. ¶3. (C) The Ambassador recalled our ongoing bilateral exchanges on the subject, emphasizing our shared interests in the integrity of the global nuclear nonproliferation regime, the need to dissuade the Iranians from persisting on a course adverse to sustained peace and stability in the Middle East, and our continuing willingness to help Malaysia develop robust domestic laws that could help prevent illegitimate behavior on Iran's part. The Ambassador emphasized that the distinction the Malaysians were making was becoming increasingly blurry. In some cases Iranian individuals or corporations violated UNSCRs, in some cases they broke host country's domestic laws, and in some cases they were in violation of both. It was becoming more and more difficult to draw a fine distinction between Iran's willful violation of international standards on the one hand and domestic laws on the other. Ambassador Barety and Ambassador Keith both underlined the risk to Malaysia's reputation in such circumstances when the lines between legitimate and illegitimate Iranian activities were so hard to discern. Based both on a careful reading of its own long-term interests in stable supply of fossil fuels from the Middle East and its concern to protect its hard-earned international reputation as a safe and effective entrepot, Ambassador Keith argued, Malaysia should commit to more actively assist the UN and the EU in their efforts to convince Iran to choose cooperation with the international community. ¶4. (C) In reply to a query from the Italian Ambassador, Kamal declined to rule out the possibility that Iranian bank branches would be permitted in Malaysia. Kamal affirmed that no sanctioned bank would be permitted to do business in Malaysia, but he left open the possibility that Malaysia would consider allowing a non-sanctioned Iranian bank to do KUALA LUMP 00001078 002 OF 002 so. ¶5. (C) Kamal closed by urging continued close cooperation and asked Ambassador Keith in particular to continue to convey any detailed information related to illegitimate transfers attempted or undertaken by Iranian entities. KEITH