NETHERLANDS: DUTCH CONCERNS ABOUT ROTOR BLADE

S E C R E T THE HAGUE 000444 NOFORN SIPDIS E.O. 12958: DECL: 07/22/2019 TAGS: ETTC PARM PREL ENRG NL IR SUBJECT: NETHERLANDS: DUTCH CONCERNS ABOUT ROTOR BLADE EXPORTS TO IRAN Classified By: ACTING POLECON COUNSELOR SHAWN GRAY FOR REASONS 1.4 (B) and (D) ¶1. (S/NF) SUMMARY: The Dutch export control authority has denied an export license for power plant turbine blades destined for Iran. Dutch officials have formally asked other European countries with companies that produce similar parts to block their export to Iran. The Dutch have asked us informally to ensure U.S. firms, such as General Electric (GE),refrain from supplying these turbine blades to Iran. END SUMMARY. 2.(S/NF) Dutch export control officials at the Ministries of Economic Affairs (MEA) and Foreign Affairs (MFA) asked to meet with EconOff June 30. MEA,s Kees Jan Steenhoek described his office,s decision to block Sulzer Eldim BV,s (Dutch subsidiary of Swiss parent company Sulzer Metco) application to export gas-fired electricity turbine replacement rotor blades to Iran. PolMilOff,s subsequent July 9 meeting with MFA,s export control policy official Josephine Frantzen provided further detail. ¶3. (S/NF) Until 2009, Dutch customs authorities routinely stopped Sulzer Eldim,s Iran-bound shipments, then released them when satisfied the rotor blades were destined for civilian-use electricity production. However, after discovering in January 2009 the UK had blocked a GBP 45 million shipment of similar parts, MEA used a &catch-all8 provision requiring Sulzer Eldim to obtain an export license for the blades, on the grounds the electricity could be diverted to military or nuclear programs. Sulzer Eldim subsequently applied for an export license on a EUR 40 million order. The Dutch recently denied the application and posted this information on the Nuclear Suppliers Group (NSG) Secure Information System as NI-NL-09001. ¶4. (S/NF) The consignee in Iran is a conglomerate that supplies the civilian power sector there, but also has ties to the military. The Dutch review of the case led them to believe the electricity produced by the turbines &might not be used for civilian purposes.8 One of Sulzer Eldim,s directors is an Iranian national. MEA estimates blocking the firm,s exports to Iran could cause it to lose half its revenue. Sulzer Eldim has already laid off some of its 400-person staff, a controversial decision in the economically struggling southern province of Limburg where the company is located. ¶5. (S/NF) The Dutch government has demarched other European capitals -- including Paris, Berlin, and Rome -- where rotor blade manufacturers are located. According to Frantzen, the Italian government had a &positive reaction,8 but the others have not responded. The Dutch do not intend to demarche Washington at this time. However, GE is capable of supplying the blades, and the Dutch hope the USG will not allow GE to export these products to Iran. The Dutch want other countries to be equally vigilant in denying export licenses for these parts so as to maintain cohesion within the NSG and not disadvantage Dutch business interests. The Dutch are particularly concerned German company Siemens will continue to export the blades to Iran. GALLAGHER