AUSTRIAN AMBASSADOR TO TEHRAN FINDS IRAN POSITIVE

C O N F I D E N T I A L SECTION 01 OF 02 UNVIE VIENNA 000280

SIPDIS

E.O. 12958: DECL: 06/16/2023
TAGS: PREL KNNP IR AU EU
SUBJECT: AUSTRIAN AMBASSADOR TO TEHRAN FINDS IRAN POSITIVE
ON ENGAGEMENT

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Classified By: DCM Geoff Pyatt for reasons 1.4 (c) and (e)


1. (C) Summary. On June 10, Austrian Ambassador to Tehran
Michael Postl (please protect) debriefed MsnOff on the
current state of play in Iran on engagement, the nuclear
issue, and the economy. Postl argued that the Iranian
leadership is favorable on engagement with the U.S., but that
it is still trying to figure out the best way to respond to
overtures by the Obama administration. He suggested the use
of "test balloons" to see whether Iran could be a reliable
partner on areas of concern such as Afghanistan and a direct
approach that would make clear that U.S. actions would be
dependant on Iranian responses. Postl noted that he has
tried to convince his interlocutors that rather than
providing a counterproposal to the P5 1, Iran should respond
to the proposal with questions and requests for clarification
in order to start a dialogue. He advises that future
sanctions would be most effective if they focus on oil and
gas or on visa bans for high-level officials to target
Iranian pride and notes that, although past sanctions have
had some effect, the Iranian economy is also affected by
endemic Iranian corruption, the fall in oil prices, and the
worldwide economic slump. End Summary.

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Iran Positive on Engagement, but Cautious
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2. (C) On June 10, Austrian Ambassador to Tehran Michael
Postl-who claims excellent access to Iranian officials, but
uses this access "scarcely"-told MsnOff that Iranian
officials are still grappling with recent U.S. overtures to
Iran. The Nowruz message was a surprise to Iranian
officials, but Postl believed that the key pieces of the
message that worked well with the Iranian people were
addressing both the leadership and the people of Iran and
referring to the Islamic Republic of Iran. Postl noted that
the leadership is still thinking about how to "handle" the
message and that Iranians do not like to give in quickly.
The government's new strategy is to demand actions from the
U.S., but in private, Postl has been told that if the U.S.
moves, Iran promises actions in response (NFI). Although
Postl left Iran the day after President Obama's Cairo speech,
he noted that initial reactions were positive, but that most
people in Iran were more focused on the domestic elections
than the speech. He did note that he personally found the
mention of Mossadeq in the President's speech "astounding"
and that Austria and the EU found this portion of the speech
very positive. However, although President Obama is young
and can tell Iran that we need to move beyond the past,
Iranians have a harder time doing so, in Postl's opinion.


3. (C) Postl believes that Iran is positive on engagement,
but that the issue needs to be explored through "test
balloons." Some potential tests might include increasing the
level of IAEA inspections and moving NATO resupply for
Afghanistan through Iran. He suggests telling Iran directly
that these actions are a test of whether Iran can be a
reliable partner to make clear to the leadership that future
cooperation will be dependant upon Iran's actions. He
suggested that another possible opening might be the release
of the Irbil detainees, but argued that if the U.S. does
release them, Washington should make it clear to Tehran that
this is a deliberate gesture tied to our strategic goal of a
new relationship with Iran.


4. (C) Postl's Iranian interlocutors have expressed some
confusion about the messages they have received from the U.S.
and the West more generally. For instance, Postl claimed the
Iranian leadership was very pleased with the meeting with U/S
Burns last July and found him very open, but very negative
remarks by the Secretary General of the UK's Foreign and
Commonwealth Office soon followed. This has made it hard for
Iran to decide how to respond, especially given the Iranian
tendency to look for conspiracy in everything. Elaborating
on the difficulties of starting engagement in the context of
mistrust, Postl shared an anecdote about when the Israelis
requested that he pass a message to Iran on their behalf.
(Comment: Postl felt comfortable sharing the anecdote
because Iran months later disclosed to the press that they
had rejected an Israeli letter, but would not share the
contents other than that it was a "positive" message. End
Comment.) He went to the designated interlocutor, who was
someone close to Ahmadinejad and believes that the person
wanted to accept the letter and read its contents, but there
was a watchdog present and the interlocutor refused to
receive it. If he could "do it all over again," Postl said
that he would have first contacted the person to tell him
about the letter and its contents and then scheduled a second

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meeting to pass the letter if the interlocutor would be
willing to receive it. He believed that this would have
allowed the person to find a way to take the letter if he had
wanted to.


5. (C) On the nuclear issue, Postl has told his
interlocutors that it is wrong for Iran to present a
counterproposal to the latest P5 1 package. Rather, Iran
should react to the P5 1 and ask any questions that they have
for clarification. This kind of approach is necessary to get
to dialogue and build trust. Postl said that he is not sure
why it has taken so long for the Iranians to respond,
although it is possible that they were waiting until after
Iran's presidential elections. He was even less sure that
this is part of a delaying strategy, arguing that now Iran
has reached an "acceptable" level of enrichment, they no
longer have an imminent need to delay. He believes that one
section of the Iranian elite is genuinely interested in
getting past the nuclear issue and moving on, but that no one
is willing to suspend enrichment again. Postl also noted
that he believes that EU High Representative Solana should be
seeing Supreme Leader Khamenei when he goes to Iran instead
of lead nuclear negotiator Jalili, who is a more appropriate
counterpart of Solana's Deputy, Cooper. Postl argued that
Solana seeing Jalili "gives the wrong picture to Iran."

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Economy Still Struggling
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6. (C) Postl noted that the Iranian economy is not going
well and that sanctions have increased the costs of financial
transactions by three to four times. Part of Iran's economic
problems are also due to the world economic crisis, the
reduction in the price of oil, and economic mismanagement in
Iran. Contrary to the accusations of many, Postl believes
that this economic mismanagement is due more to cultural
reasons such as historic problems with nepotism and
corruption than it is due to Ahmadinejad's leadership. In
this vein, Postl was surprised that Iran ratified the UN
Convention Against Corruption. If Iran implemented the
Convention, it would mean serious revision of its own
practices. Although Postl believes that the U.S. should not
be sponsoring democracy or NGOs in Iran, he thought that the
U.S. could make strides toward democracy in Iran by
identifying weaknesses in the Iranian system that allow
corruption and by sponsoring training of Iranian police
forces to prevent corruption at this level. Working with
UNODC after an assessment of where Iran stands with regards
to the Convention would help to identify funding
possibilities for the U.S. and EU in Iran.


7. (C) Postl assesses that two additional types of
sanctions would be most effective in pressuring Iran. First
would be sanctions on gas and oil which would hurt the West,
but he believes that Iran's neighbors would be able to help
take up the slack if Iranian exports were sanctioned. He
also believes that visa bans would have an important effect
on Iran if they targeted high-level officials. Since the
Iranian people are very proud, Postl argued, if their
officials were banned from traveling to other countries, this
would have a greater effect than economic sanctions. He
would, however, recommend exceptions to a visa ban to allow
Iranian officials to attend international conferences and
discussions on nuclear and human rights issues. He noted
that the EU would be more willing to agree to these sanctions
if they were imposed at the Security Council.

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Iranian Fears of Unrest
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8. (C) Postl has noted a stronger military presence in
Iran recently, although he attributed at least some of this
to their upcoming elections. He believed that the Iranian
government was responding to rumors about actors like the
U.S. becoming spoilers for the election. According to Postl,
part of this mistrust emanates from Iran's worry that the
U.S. is still trying to intervene in Iranian affairs and
stability, and Iran "clearly" still thinks that the U.S. and
Israel are involved in unrest on the borders, including by
providing support to the Kurds and Jundallah. In response to
a question by MsnOff about how Iran's fears of U.S.
intervention could be allayed, Postl recommended that the
U.S. declare actions by these groups to be terrorism, but he
admitted that convincing Iran that the U.S. is not involved
could be difficult.
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