QATAR'S IRAN POLICY OUTLINED AS EU-USG DEMARCHE ON

C O N F I D E N T I A L SECTION 01 OF 03 DOHA 000219

SIPDIS

E.O. 12958: DECL: 03/28/2029
TAGS: PREL ECON PGOV QA
SUBJECT: QATAR'S IRAN POLICY OUTLINED AS EU-USG DEMARCHE ON
IRAN (FINALLY) DELIVERED

REF: 2008 SECSTATE 128901

Classified By: Classified by: Amb. Joseph LeBaron, reasons 1.4 (b) and
(d).

--------------
Key Points
--------------

-- It took over three months to arrange a meeting, but two EU
ambassadors (German and Italian),two EU charges (British and
French) plus the US Ambassador delivered March 26th common
points on Iran covering three major issues: terrorist
finance, nuclear weapons, and energy development.

-- The MFA's State Minister, Ahmad al-Mahmoud, attended by
three MFA notetakers, listened to the demarche attentively,
making notes himself, from which he made several key points
in response:

-- Nuclear: Qatar has two essential concerns in this area:
that Iran acquires the bomb, or that Iran is bombed. Qatar
is very worried about, and opposes, both. "We are in trouble
if Iran gets the bomb."

-- Terrorist Finance: Qatar will continue to support actively
all relevant UNSCR resolutions, including UNSCR 1737 (2006),
UNSCR 1747 (2007) and UNSCR 1803 (2008).

-- Oil and Gas Development: Qatar supports dialogue with
Iran, not the isolation of Iran. (Qatar publicly welcomed
President Obama's reason overture to Iran.) Al-Mahmoud mused
about finding some mutual development project that Western
and Gulf countries could negotiate with Iran, thus helping
induce Iran not to develop nuclear weapons. Ambassador
interjected at this point, reminding him of the Iran
Sanctions Act.


--------------
Comments
--------------

-- Al-Mahmoud's comments constitute a useful overview of
Qatar's official foreign policy towards Iran.

-- His remarks underscore yet again that Qatar's relationship
with Iran is, at its core, rooted in fear. Iran, much larger
and much more powerful, shares an offshore gas field of
enormous size and consequence to Qatar and its future
generations.

-- Qatar knows that Iran is well positioned to destroy
Qatar's future, if and when Iran so chooses. So much in the
Qatar-Iranian relationship can be explained by that certain
knowledge.

End Key Points and Comments.



1. (C) The German Ambassador, Dr. Dirk Baumgartner, delivered
the points on nuclear issues. (See his talking points below
in para. 9.)



2. (C) Before Al-Mahmoud responded to Ambassador
Baumgartner's points, he described Qatar's general policy
towards Iran:

-- Qatar's relationship with Iran is founded on certain
immutable, existential facts: "we will be neighbors
forever," he said. Qatar's most important national
hydrocarbon asset, the North Field, is shared with Iran.

-- If Qatar were to make Iran an enemy, Qatar would be
sacrificing its national security. "We cannot and will not
do that."

-- That is why Qatar followed a policy of neutrality in the
Iraq-Iran War. "No one would have helped us, if Iran
demanded compensation from us for its war losses." Even
though Qatar was neutral, "we were attacked by Iraq." (Note:
Two Iraqi missile strikes occurred in Qatar during that war.)

-- Qatar supports dialogue with Iran, not the isolation of
Iran. Accordingly, Qatar publicly welcomed President Obama's
reason overture to Iran.

-- "But we worry about a deal by the United States with Iran
behind our back, without consulting, without even telling
us."

DOHA 00000219 002 OF 003



--------------
Nuclear
--------------


3. (C) Turning to nuclear issues specifically, Al-Mahmoud
said:

-- Qatar has two essential concerns in this area: that Iran
acquires the bomb, or that Iran is bombed. Qatar is very
worried about, and opposes, both. "We are in trouble if Iran
gets the bomb."

-- Qatar supports the region's development of peaceful
nuclear energy; it also believes the region, including
Israel, should be a nuclear weapon free zone.


4. (C) Italian Ambassador Andrea Ferrari presented the common
points on energy development. (See para. 10 for those
points.)

--------------
Oil and Gas Development
--------------


5. (C) Al-Mahmoud's response:

-- "I understand the concerns you have about Iran developing
its oil and gas, but I don't understand why Qatar is
criticized so much about its relations with Iran, when our
Arab neighbors have much stronger (trade) relations."

-- Qatar's annual exports to Iran are less than $40 million,
Al-Mahmoud said; other GCC states annually export more than
$1 billion. "Iran criticizes us all the time for not doing
more trade with Iran," commented Al-Mahmoud, who represents
Qatar in a Qatar-Iran joint commercial committee.

-- Al-Mahmoud then mused about finding some mutual
development project that Western and Gulf countries could
negotiate with Iran, thus helping induce Iran not to develop
nuclear weapons. US Ambassador interjected at this point,
reminding him of the Iran Sanctions Act.

--------------
Terrorist Finance
--------------


6. (C) US Ambassador delivered the point on terrorist
finance. (Please see para. 11.)


7. (C) In response, Al-Mahmoud assured the EU-US delegation
that Qatar will continue to support actively all relevant
UNSCR resolutions, including UNSCR 1737 (2006),UNSCR 1747
(2007) and UNSCR 1803 (2008).


8. (C) That said, Qatar will not seek to isolate Iran, he
continued, but to have a friendly relationship with Iran that
is consistent with UNSCR resolutions.

-- Apropos of the latter element, Qatar has denied the
request by Bank Melli Iran to establish a branch office in
Doha (note: previously reported).


9. (SBU) Key Talking points on the Nuclear Issue:

-- The most recent IAEA report (November) was very worrying
and demonstrated how uncooperative Iran is being with the
IAEA. The report confirmed that Iran had failed to suspend
enrichment-related activities and had failed to answer
questions on studies with possible military dimensions.

-- 2009 will be a crucial year. Key is to maintain a focus
on the dual-track strategy to confront Iran with a real
choice between confrontation and cooperation.

-- Need to show that the dual track approach is the right
one. We hope that Iran will begin to engage actively and
credibly and accept the latest offer which was, genuinely,
extremely generous. But the pressure track will remain
important if Iran is to weigh the true costs and benefits of
the situation.

-- What's missing is real pressure. If we don't bring about
a change in Iranian behavior, we will be faced with an
ever-increasing threat. What we must avoid is the
catastrophic alternative between an Iranian bomb and Iran's
bombing, especially since others may be tempted to take
direct action.

-- That means strong public messaging and a credible

DOHA 00000219 003 OF 003


sanctions track. It is important not to send the wrong
signal to the regime that it's business as usual. We need to
send Tehran a clear signal that if they do not change their
policies they will face further isolation, and that
uncooperative behavior will not be rewarded.

-- Important to do all we can to support the UN track. EU
will be reviewing existing asset freeze and visa ban lists.
We (UK, France, Germany, Italy and US) are also working on
coordinated national measures - we need to support the shared
aims of the international community in any way we can. Would
appreciate any support you can give.


10. (SBU) Key Talking Points on Oil and Gas Development

-- Major new deals with Iran, especially those involving
investments in Iran's oil and gas sectors, undermine global
efforts to compel Iran's compliance with its international
obligations.

-- Such deals suggest to the Iranian regime that the
international community is willing to take a "business as
usual" approach with respect to its relations with Iran,
despite Iran's continuing pursuit of nuclear weapons
capability and failure to cooperate fully with the
International Atomic Energy Agency (IAEA).

-- They also undermine the P5 1's June 2008 offer of enhanced
economic and energy engagement as an inducement for Iranian
compliance, impeding efforts to achieve a diplomatic solution
to international concerns.

-- Companies in Qatar should ask themselves whether they want
to do business with a country already under sanctions from
three UNSC Chapter 7 resolutions, sanctions that were
reaffirmed by the UN Security Council on 27 September 2008
with the unanimous adoption of UNSCR 1835.

-- The business and reputational risk presented by engaging
in such deals with Iran is significant, as a result of its
defiance of international normative standards of behavior.
Iran's credit risk rating has gone up, and many banks have
stopped issuing letters of credit to companies seeking to do
business with Iran.

-- We encourage your government to discourage domestic firms
from entering into new energy investments with Iran.


11. (SBU) Key Talking Points on Terrorist Finance

-- Full implementation of UN Security Council Resolutions
(UNSCRs) by all members of the international community is
critical to addressing the threat posed by Iran.

-- We have been working with the banking sector on
implementation of the Iran-related UNSCRs, as this sector is
vulnerable to the risk of facilitating Iranian proliferation
activities as well as potential ML/FT activities. We draw
your attention to the reputational risk involved as well as
the existing penalties in case of illicit activities.

-- Financial vigilance measures are extremely important. A
number of financial vigilance obligations have been defined
against proliferation finance and Iran, as well as AML/FT.

-- We are increasingly concerned that the financial sector is
being exploited for activities by the UN or that Iranian
entities designated by the UN use deceptive activities.

-- To avoid providing financial services prohibited by the UN
Security Council, we ask that you review services Qatar's
financial institutions may provide to Iranian companies or
projects in Iran operated by other companies and its
relationships, in particular correspondent banking
relationship, with Iranian banks as well as financial
institutions controlled by Iranian entities.
LeBaron