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

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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