AUSTRIA ON IRAN SANCTIONS; OMV; INDIA NUCLEAR DEAL

C O N F I D E N T I A L SECTION 01 OF 02 VIENNA 000175 SIPDIS SIPDIS E.O. 12958: DECL: 02/04/2023 TAGS: PREL KNNP ENRG IR EPET AU ETTC SUBJECT: AUSTRIA ON IRAN SANCTIONS; OMV; INDIA NUCLEAR DEAL REF: VIENNA 83 Classified By: CDA Scott Kilner. Reason: 1.4(b) and (d). ¶1. (C) Summary. At a Feb. 4 lunch with USUNVIE Amb. Schulte and Embassy Vienna Charge Kilner, MFA PolDir Thomas Mayr-Harting and Chancellery Foreign Policy Advisor Bernhard Wrabetz detailed GoA objections to sanctions against Iran outside the UNSC framework. Austria's concerns rest on a commitment to international solidarity, pragmatic concern about possible negative political consequences in Iran, and parochial concern about the economic impact on Austria. Raising OMV's South Pars gas deal with Iran himself, Mayr-Harting defended it as not illegal and necessary to retain access to Iranian gas, even if the deal will only be implemented in the long-term. He asked pointedly whether the U.S. was pressuring the Italian government on Edison's January 9 Dayyer gas deal as vigorously as we have criticized OMV. Mayr-Harting also warned that Austria would have a difficult time endorsing the Indian nuclear deal in the NSG if its IAEA safeguards agreement diverged from the standard model. Sanctions -------------- ¶2. (C) Mayr-Harting offered a vigorous, but somewhat defensive, rationale for Austria's view that further sanctions against Iran would be successful only if limited to directly nuclear-related activities and promulgated within the UNSC framework. He stressed first the fundamental importance of maintaining international solidarity, both to avoid giving the Iranian regime the opportunity to portray Iran as the victim of a Western plot. The political signal of a united international community would be very strong and, Mayr-Harting implied, offset the fact that such sanctions might be weaker than some would desire. In contrast, sanctions not targeted specifically at nuclear activities and entities would also be counter-productive because of their overly broad reach. He took specific issue with those in the EU who had argued that new sanctions should be imposed before the Iranian parliamentary elections to send a message to the Iranian people. He argued that the reaction would be, rather, to strengthen public solidarity with the regime. Wrabetz strongly concurred on the inadvisability of broad sanctions, and suggested that targeting leading regime figures and their families with visa restrictions offered the most promising approach. ¶3. (C) Mayr-Harting was unusually candid in his discussion of sanctions against Iranian banks. Not only did he reject them as not well-targeted, he specifically detailed the cost to Austria if it were to agree to add Bank Melli to existing sanctions list. That Bank, he said, had historically financed most Austro-Iranian trade and now held some 300 million euros owed to Austrian firms. If Bank Melli were sanctioned, it would refuse to make good on those payments, and the Austrian public, via the export credit bank, would have to foot the bill for repayment. Mayr-Harting said this would be a disproportionate burden on Austria in the EU. Germany, he claimed, was in an analagous situation as regards Bank Saderat. "The concerns are the same both here and in Germany," he said. "Unfortunately, however, the bank with the greatest exposure is not the same." OMV --- ¶4. (C) Mayr-Harting raised OMV himself. He claimed that it appeared the U.S. was applying much stronger prsure on "small Austria" than on other European countries. In particular, he singled out Italy, stating that Italian officials had told him they had heard "almost nothing" from the U.S. about Edison's January hydrocarbon deal with Iran. Charge countered that this was absolutely not/not the case. Mayr-Harting defended OMV's relationship with Iran as "not illegal" and meant to be implemented in the "long-term." However, to ensure long-term access, OMV was obliged to continue working with Iran to some extent - although how much was unclear. Wrabetz also defended OMV's presence in Iran, making the tired argument that "Indian or Chinese" companies will just fill the gap if western firms leave. India -------------- ¶5. (C) Mayr-Harting also briefly raised the United States' nuclear agreement with India, asking whether the safeguards arrangement with the IAEA would be the standard model. Amb. Schulte indicated it would be largely the same as the standard agreement, althoughnot 100 percent. While VIENNA 00000175 002 OF 002 Mayr-Harting thought that the IAEA BoG would approve a deal as long as it was acceptable to the DG, he was more uncertain about what might happen in the Nuclear Suppliers Group, where unanimity is required. He expected the GoA would face domestic criticism that the deal represented a double-standard on non-proliferation and that, because Austria would be in a position to block consensus at the NSG, it would come under great pressure to do so. Comment -------------- ¶6. (C) Austrian relations with Iran are not a completely one-sided picture. Mayr-Harting,s dogged defense of OMV not withstanding, there are (as we have reported) multiple indications that the company has slowed down its implementation of the South Pars heads-of-agreement (most recently in the form of assurances offered by FM Plassnik to visiting UN PermRep Khalilzad on January 29). In addition, the GOA has recently: turned down FM Mottaki,s request to visit Vienna; put the kabash on a large semi-official business delegation,s travel to Tehran; and continued to cooperate closely with us on obtaining more than 1,000 exit permits for Iranian religious minorities each year. ¶7. (C) On the question of sanctions, however, Mayr-Harting,s firm defense of remaining within the U.N. framework is echoed unapologetically across ministries and party lines in this coalition government. Kilner