Identifier
Created
Classification
Origin
09STOCKHOLM464
2009-07-27 12:44:00
CONFIDENTIAL
Embassy Stockholm
Cable title:  

TREASURY COHEN TALKS SANCTIONS WITH THE SWEDES

Tags:  ECON TERR PREL PGOV IR NK SW 
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PP RUEHWEB

DE RUEHSM #0464/01 2081244
ZNY CCCCC ZZH
P 271244Z JUL 09
FM AMEMBASSY STOCKHOLM
TO RUEHC/SECSTATE WASHDC PRIORITY 4566
INFO RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
C O N F I D E N T I A L STOCKHOLM 000464 

SIPDIS

E.O. 12958: DECL: 07/27/2019
TAGS: ECON TERR PREL PGOV IR NK SW
SUBJECT: TREASURY COHEN TALKS SANCTIONS WITH THE SWEDES

Classified By: A/DCM Laura Kirkconnell for reasons 1.4 (b) and (d).

C O N F I D E N T I A L STOCKHOLM 000464

SIPDIS

E.O. 12958: DECL: 07/27/2019
TAGS: ECON TERR PREL PGOV IR NK SW
SUBJECT: TREASURY COHEN TALKS SANCTIONS WITH THE SWEDES

Classified By: A/DCM Laura Kirkconnell for reasons 1.4 (b) and (d).


1. (U) Summary: On June 18, Treasury's Assistant Secretary
(A/S) for Terrorist Financing David Cohen, along with
Treasury and Embassy Stockholm officials, met with Swedish
officials involved with banking and sanctions policy. The
Swedish interlocutors included Deputy Minister of Finance
Mats Odell, MFA Department for International Security
Policy's Sanctions Coordinator Amb. Per Saland, and Members
of Parliament from the Moderate Party, including Ulrika
Karlsson. The key issues of the discussions focused on
sanctions on Iran and North Korea, improving legislation,
combating money laundering and counter terrorist financing.
End Summary.

UNSC Terrorist Listings
--------------


2. (C) The MFA Department for International Security Policy's
Sanctions Coordinator, Amb. Per Saland, told the delegation
that Sweden would like a "window of dialogue" as legal
challenges to UN Security Council counterterrorism sanctions
designations are addressed by European courts. According to
Saland, not all initial UNSC designation decisions were "well
thought-out," making the "mega-review" of existing UNSC
listings very important. Saland said
the EU will accept the UNSC's decisions, but if the EU
receives information countering the basis of listing, then
there must be a mechanism to revisit the UNSC decision.
Sweden would like the renewal resolution for the UN
counterterrorism sanctions regime, set for December, to add
an independent review mechanism for de-listing requests.
Saland said if there is an independent review, it would also
be easier for the UNSC to defend its decisions.


3. (C) Currently, the EU Court of Justice reviews cases on
procedural grounds, not substance, said Saland. But it is
possible that in the future the Court will decide cases on
substance and therefore could reverse a listing decision. To
avoid this, Sweden, along with Germany, the Netherlands,
Denmark, Switzerland, Belgium and others, wants a remedy at
the UN level to reduce the possibility of the EU Court of
Justice ruling on substance. He said the EU nonetheless

lacks a common position on the issue. A/S Cohen expressed
concern that the UNSC would be unwilling to cede
decision-making authority to a secondary body.


4. (C) In a separate lunch meeting, MP Ulrika Karlsson,
Moderate Party senior member of the Justice Committee, asked
about U.S. procedures for listing terrorist entities and
individuals, and related transparency issues. Karlsson
echoed Saland, saying Sweden does not maintain a listing
capability separate from the EU, and lacks the means to
provisionally freeze assets awaiting an EU designation. A/S
Cohen encouraged the Swedes to create a provisional freezing
authority and bring themselves "in-line with other EU
members." Karlsson said this was a good point.

Iran Sanctions: We Must Consider Our Dual-Nationals
--------------


5. (C) In his meeting with Amb. Saland, A/S Cohen said the
U.S. believes dialogue with Iran would be beneficial, but
there must be consequences if Iran refuses sincere offers to
engage. If Iran perceives a loss of international will to
maintain pressure, the regime will not want to engage in
negotiations. Saland told A/S Cohen that EU sanctions
against Iran are aimed at stopping the nuclear program, not
at stopping human rights abuses or terrorism.


6. (C) Saland discussed the domestic procedural aspects of
handling sanctions against Iran and listed reasons why Sweden
cannot do much more than it currently is doing. He said
Sweden cannot take action unless the EU does, following the
UN's lead. Regarding general engagement, the Swedish
government lacks a legal process to pressure its banks and
companies to disengage with Iranian entities. Sweden does
not support the attempt to place exactly the same measure of
vigilance/restrictions on every transaction with Iran. This
is "unacceptable" because legitimate trade exists between
Sweden and Iran. Saland said the Swedish mindset on this
"will not change." He added that Sweden has over 100,000
dual national Iranians (the majority came to Sweden as
refugees) and the government refuses to take any action that
"restricts their liberties." Anything the EU does outside of
the UN, according to Saland, could make things more costly
for the Iranians, but Iranian entities would simply move
business to the UAE or South Asia.


7. (C) In a meeting later that day, Deputy Minister of
Finance, Mats Odell, said that ey to understanding the
Swedish government actions on sanctions was realizing that in
Sweden, the government had to be "absolutely unanimous on
everything"
before proceeding the Foreign Ministry and
Justice Ministry must reach consensus before proceeding on
any decision regarding implementation of UN and EU sanctions.
If a given sanctions issue requires legislation, Odell
explained, additional ministries, including the Finance
Ministry, must be brought into the consensus.


8. (C) Odell continued that the Swedish government is
currently trying to find ways to implement the FATF call for
countermeasures against Iran, and asked A/S Cohen to describe
the current U.S. policy on Iran. A/S Cohen explained how the
FATF's call for countermeasures is consistent with U.S.
policy to hold Iran responsible for its behavior. He noted
that U.S. objectives toward Iran remain to prevent Iran from
acquiring nuclear weapons, and to stop Iran from supporting
international terrorism. What has changed is the new
emphasis on engagement to try to open a dialogue, while still
pursuing sanctions policies to hold Iran responsible for
its international obligations. Odell thanked A/S Cohen for a
"very useful clarification." He explained that Sweden views
the FATF's call in an EU context, and will be discussing how
to respond with its EU counterparts to develop a common
position. He said the EU had met twice on the FATF call
without reaching a decision.

North Korea Sanctions Are Easier
--------------


9. (C) Regarding North Korea, Odell said the Foreign Ministry
had responsibility for responding to UNSC Resolution 1874
calling for members to prevent financial transactions tied to
North Korea's nuclear weapons and missiles programs. With
respect to concrete details on what banks have to do, the
Finance Ministry will get involved. Earlier, Saland told A/S
Cohen that deciding whether or not to enact sanctions against
North Korea was easy compared to other rogue states, as
Sweden has nearly zero trade with North Korea and lacks an
expat community. "North Korea is on another planet, so to
speak." However, it is unlikely the EU will prohibit every
transaction with North Korea.


10. (C) A/S Cohen noted that the Treasury Department is
already advising U.S. banks of what they need to do to comply
with UNSCR 1874. Odell responded that the Swedish Finance
Ministry cannot take preventative measures without a legal
basis, such as an EU position. He said he did not know how
long it would take for the EU to issue relevant legislation,
but promised that Sweden would do its utmost to prevent
Swedish counterparts from taking part in activity related to
North Korea's nuclear program.

Dealing with Internal EU Terrorists
--------------


11. (C) Saland said it is "embarrassing" that the EU lacks
instruments to combat domestic terrorist groups, such as ETA
and IRA. The anti-terrorist funding components of the Common
Foreign and Security Policy (CFSP) are aimed only at
terrorist groups with origins outside the EU. As part of its
EU Presidency agenda, Sweden wants to "fill in this gap" in
late 2009, but is still figuring out how. If implemented,
the Lisbon Treaty will provide a new legal ground (Article
75),outside of the CFSP, for the EU to impose restrictions
on domestic organized crime and terrorism financing.
Meanwhile, the Government of Sweden has no intention of
creating a parallel national system, like that of France, to
go after domestic terrorists. The topic is "politically
dead" due to political rifts. Moderate Party MPs also
indicated that a domestic designation authority was "not an
option."

Sweden's Important Legislative Changes
--------------


12. (C) Sweden's head of delegation to the FATF, Jens
Granlund, reviewed a legislative/regulatory change the
Swedish government is pursuing within Sweden based on the
anti-money laundering and counterterrorist financing
legislation the government passed in March. Normally, she
explained, the supervisory authority would have merely posted
new requirements for financial institutions on a website that the
institutions are required to monitor. In the case of Iran,
in May the authority issued a new directive to all 4,000
banking institutions and business firms calling for increased
vigilance if a company is identified as posing an increased
risk for money laundering


13. (C) The legislation, Granlund continued, incorporates a
new risk-based approach, where the supervisory authority
instructs banks to undertake stricter vigilance. The
supervisory authority doesn't generally enforce the legislation
because
"banks usually comply." Perhaps, she said, the government
could do random controls to check compliance, but the
government has not told the banks that it may do so.


14. (C) A/S Cohen pressed Odell on Sweden's lack of authority
to provisionally freeze assets. Odell responded that the
Finance Ministry views the situation similarly and that the
problem was with the Ministry of Justice. He explained why
it is politically sensitive in Sweden given the risk of
discriminating against ethnic groups and the long-standing
Swedish tradition of transparency in matters related to
actions by the government. He said the Foreign and Justice
Ministries were negotiating "until we have a solution." He
said the Finance Ministry wants to signal that Sweden does
not welcome money laundering and terrorist financing, and
that the government would find a "balanced way" to address
the serious concerns of the Justice and Finance Ministry
regarding personal privacy.


15. (C) One solution, Odell said, would be to improve EU
routine, to reduce the time to achieve
an EU designation, eliminating the need for a national
mechanism to fill the gap. He said the Foreign Ministry
would "probably" work on that during Sweden's EU Presidency,
and that the Finance and Foreign Ministries had the "same
good constructive viewpoint on how sanctions procedures
should be improved."

Combating Child Pornography
--------------


16. (SBU) Remarking about the Swedish private sector's
willingness to protect the financial system from illicit
activity, Odell's political advisor, Sigfrid Leijonhufvud,
concluded by reviewing a successful initiative to get private
sector compliance in stopping the payments system from being
used for internet child pornography. Key, he said, was that
the effort targeted the companies selling child pornography,
rather than individuals using those sites. Every day, he
said, the private sector banking system is given account
numbers for which they must stop payments and block the
customer from the website. He said the Swedish banking
sector has great pride in stopping these payments and Sweden
was talking with the European Commission about the importance
of this effort.
SILVERMAN