MALTA STUDYING USG REQUEST TO TAKE ACTIONS AGAINST

S E C R E T SECTION 01 OF 02 VALLETTA 000420 SIPDIS FOR ISN, T, TREASURY, AND NEA/IR E.O. 12958: DECL: 10/03/2018 TAGS: ECON EFIN ETRD PARM KNNP EUN EWWT PREL MT IR SUBJECT: MALTA STUDYING USG REQUEST TO TAKE ACTIONS AGAINST LOCAL IRISL SUBSIDIARY REF: A. STATE 104496 ¶B. VALLETTA 89 ¶C. VALLETTA 132 Classified By: DCM Jason Davis, reasons 1.4 (b) and (d) ¶1. (C) On October 2, Ambassador and DCM met with Minister of Finance Tonio Fenech and MinFin Head of Secretariat Alan Caruana to deliver reftel demarche. Emphasizing that action would be consistent with UNSCRs 1737, 1747 and 1803, the Ambassador told the Finance Minister that the U.S. was urging Malta to freeze the assets of IRISL (Malta) LTD, to require comprehensive mandatory inspections of IRISL-related cargo, and to ensure that all Maltese companies cease business operations with IRISL. Separately, DCM conveyed the same request to Charles Inguanez, head of Malta's interagency Sanctions Monitoring Board and the Director General for Economic Affairs at MFA. ¶2. (C) Initially somewhat taken aback at the broad ramifications of the request (IRISL Malta has a significant presence at Malta's Freeport, and IRISL transshipment activity constitutes a large chunk of total activity there -- one of the reasons the U.S. recently funded a 1.2 million dollar VACIS-equipped warehouse for Maltese Customs at the Freeport),Minister Fenech in the end assured the Ambassador that Malta was "fully committed to combatting WMD proliferation" and would do its utmost to support the request to the fullest extent possible under Maltese law. Caruana told DCM several hours later that Malta's Sanctions Monitoring Board was already examining the issue, and would determine what action would be possible on the basis of relevant UN resolutions and EU policy. Comment -------------- ¶3. (C) It would be unusual for the GOM to decline to take action on a direct USG request. As reported Ref B, Malta agreed during the visit of Treasury U/S Levey to keep a close eye on Iranian involvement in Malta's banking system; it has since (Ref C, inter alia) worked consistently behind the scenes to strictly limit that access. In this case, however, despite the Finance Minister's good intentions, it seems quite possible that unilateral GOM action to shut down a commercial entity -- one that is well established here and which has counterparts elsewhere in the E.U. -- may turn out to be not possible at this time. Economics and logistics are not the only factors; even more significant is the priority Malta places on acting in concert with its fellow EU member states. A decision to step up inspections of IRISL cargo is more likely, but "comprehensive, mandatory inspections" of all IRISL containers transitting the Freeport would present a severe logistical challenge. MINIMIZED CONSIDERED VALLETTA 00000420 002 OF 002 BORDONARO