IRAN: UK PUSHES BACK ESTIMATED DATE OF EU'S

C O N F I D E N T I A L SECTION 01 OF 02 LONDON 001204

SIPDIS

SIPDIS

E.O. 12958: DECL: 04/28/2018
TAGS: EFIN KTFN PREL MNUC PTER EU IR UK
SUBJECT: IRAN: UK PUSHES BACK ESTIMATED DATE OF EU'S
DESIGNATION OF MELLI BANK

REF: LONDON 1172 (NOTAL)

Classified By: Political Minister Counselor Maura Connelly for reasons
1.4 (b) and (d)


1. (C) Summary. The British Foreign and Commonwealth Office
(FCO) told Embassy there is "an eighty percent chance" the EU
will vote to designate Bank Melli and 34 other persons and
entities at the "next available" EU-level ministerial
meeting. FCO was optimistic a text on designations will be
finalized at an EU experts' meeting scheduled for May 5, and
noted a "last-minute legal hiccup" in HMG's internal review
of the text is now resolved. Ministers, however, would not
be able to vote any earlier on the approved text than May 19.
End summary.

Experts Meet May 5, Ministers on May 19
--------------


2. (C) Revising a previous, slightly more optimistic FCO
estimate (ref a),and citing a "lack of progress" at the most
recent EU experts ("RELEX") meeting, FCO Iran Coordination
Group Team Leader Will Gelling on April 28 predicted to
London Iran Watcher (Poloff) that EU experts will produce a
text on designating Bank Melli and 34 other entities at an
experts' meeting that Gelling said will occur May 5. He
added EU ministers would then vote on designation at "the
next available" ministerial meeting; Gelling on April 29 said
HMG is aiming to have the designations voted on at the May 19
EU Fisheries and Agriculture meeting, contingent on expected
agreement by the experts on May 5. Gelling also commented
that, had experts at an April 23 EU RELEX meeting been able
to agree on a text, an EU ministerial vote on May 5 would
have been possible.

The Usual Suspects
--------------


3. (C) Gelling predicted with "eighty percent" confidence
that experts would act promptly and ministers would approve
designation of Melli and 34 other entities at their first
opportunity. He added, however, that resistance on
implementation details from some EU members at both
ministerial and experts level is still possible, despite
Italy's decision to lift its political objections to the
Melli designation. Alluding to the general atmosphere in
recent working-level exchanges on the designations issue,
Gelling commented "the picture is less than clear," and named
Austria, Italy, Greece and Spain as those most likely to
continue to resist on the details as the Iran designation
issue goes forward.

HMG Lawyers' Late Objection
--------------


4. (C) Gelling confirmed Iran designations are not on the
agenda at the April 29 GAERC, in part due to what he said had
been a UK legal, not a political problem, raised at the
eleventh hour by HMG lawyers, who flagged that the text's
legal descriptions of Iranian bank branches, though legally
sufficient in other EU jurisdictions, are inadequate under UK
law. Speaking as a non-lawyer, Gelling said other EU
members' laws treat branches of foreign banks in their
jurisdictions as foreign entities, while UK law treats such
branches in the UK as "UK legal entities," even when control
of the branch remains with the parent bank in Tehran.
Gelling said this distinction had required adjustments (now
inserted in HMG's working draft) to the text.


5. (C) In his comments, Gelling contrasted the designations
issue, which he feels is near final resolution, with the even
greater efforts he believes achieving EU agreement to limit
investment in Iran will require. He noted there has not yet
been a political commitment on Iran investment from all EU
members. Gelling said he expects success in the EU on the
investment issue, but not without weeks, and perhaps many
weeks, of vigorous engagement with EU partners.

Comment: HMG Firm, EU Partners Reluctant
--------------


6. (C) HMG's determination to continue pressing the EU to
follow up UNSCR 1803 with meaningful collective action on
Iran is matched by its frustration with some of its EU
partners who continue to drag their feet over a decisive
increase in international pressure on Tehran. HMG is now, in
effect, being forced by EU dissension on Iran sanctions to
focus on one EU measure at a time as London pushes its
reluctant partners into action in the wake of UNSCR 1803.

LONDON 00001204 002 OF 002



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