FRANCE LOOKS BEYOND 1803 IMPLEMENTATION

S E C R E T PARIS 001424 NOFORN STATE FOR ISN/C, EEB/TSF NEA/IR TREASURY FOR U/S LEVEY E.O. 12958: DECL: 07/18/2018 TAGS: EFIN KNNP PARM EUN IR FR SUBJECT: FRANCE LOOKS BEYOND 1803 IMPLEMENTATION REF: A) PARIS 01200 B) PARIS 01305 Classified By: ECON MINCOUNS SETH WINNICK FOR REASONS 1.4 (B) AND (D) ¶1. (S/NF) Summary: The GOF supports using insurance to put further pressure on Iran, including its shipping, and is prepared to meet July 25 in Paris to begin work with a handful of like-minded countries on actions of this sort. Senior officials see as "possible" the adoption of an EU Common Position implementing UNSCR 1803 by written or "silence" procedure before September. Presidential Advisor Levitte said if any new U.S. Iran sanctions legislation hits French firms, the GOF will have to seek EU counter measures, thus diverting attention from the real problem, Iran's nuclear program. End Summary. ¶2. (S/NF) On July 17, Treasury U/S Stuart Levey met with French Treasury Director General Xavier Musca, MFA Political Director Gerard Araud and Senior Presidential Diplomatic Advisor Jean-David Levitte to discuss deceptive and illicit practices in the Iranian shipping and banking sectors and needed counter-measures. Levey proposed sensitizing insurers and reinsurers to the Islamic Republic of Iran Shipping Lines' and other Iranian companies' practices with a view to reconsidering renewal of insurance contracts that benefited designated entities. Levey cited a French bank that had been duped into serving as a correspondent bank for Bank Sepah transactions camouflaged as originating from other Iranian banks and suggested it was necessary to treat all/all Iranian government- controlled banks as a single class. ¶3. (S/NF) The three French officials were supportive of pursuing insurance considerations as a means of putting additional pressure on Iran, particularly since some action might be obtained with no new government actions. Citing other Iranian vulnerabilities that are exploitable through "discreet efforts" (e.g., near monopoly on key energy technologies by a handful of Western companies) Araud and Levitte repeated the GOF proposal (REF A) of additional actions coordinated by a few other "like-minded governments." They mentioned the UK, Germany, Italy, Japan, Australia, and even possibly South Korea. To get the work started in advance of a high-level September meeting, they accepted the U.S. proposal to consult with U.S. and UK representatives at the DAS-level in Paris on July 25. The Elysee indicated that an interagency group is clearing a paper with French proposals and they invited the U.S. to come prepared with its own. ¶4. (S/NF) In response to the U/S Levey's description of Bank Sepah's banking manipulations, Musca said that his ministry would raise this with the French bank concerned. French Treasury and Elysee both highlighted the problem of banks seeing through such maneuvers; Levitte allowed that treating all Iranian government- controlled banks the same was "obvious reasoning." ¶5. (S/NF) Araud expressed frustration that too many EU partners had raised objections to the "tough" Common Position to implement UNSCR 1803 to allow the EU to reach consensus. To pave the way, FM Kouchner would lead a "political discussion" at the July 22 GAERC meeting to flush the "resistors" from their positions. While no subsequent meeting will take place in August, the GOF is still working for subsequent adoption of the Common Position via a subsequent written procedure. ¶6. (S/NF) Levitte briefly raised concerns about the "hundreds" of draft Iran SANCTIONS bills in Congress that, if adopted, would directly impact French firms. He pointed out that if that occurred, the GOF would have no choice but to initiate an EU procedure for counter- measures. This would be very counterproductive, given how closely the GOF and USG are working together to oblige Iran to give up its nuclear weapons-related programs. ¶7. (U) U/S Levey has cleared this cable. Please visit Paris' Classified Website at: http://www.intelink.sgov.gov/wiki/Portal:Fran ce STAPLETON NNNN End Cable Text