TEHRAN: OPEN FOR BUSINESS; POLICE ON CHARM

C O N F I D E N T I A L SECTION 01 OF 02 BERLIN 000175

SIPDIS

E.O. 12958: DECL: 02/11/2020
TAGS: PGOV PREL IR GM
SUBJECT: TEHRAN: OPEN FOR BUSINESS; POLICE ON CHARM
OFFENSIVE

Classified By: Political M/C George Glass for reasons 1.4 b/d.


1. (C) Summary: A European Iran analyst, who travels
frequently to Iran, recently returned to Germany from a
three-week trip to Tehran during which he met with contacts
and attended an Institute for Politics and International
Studies (IPIS) sponsored conference in mid January. He noted
that the Iranian government seemed to be trying to defuse the
tense situation, that police were friendlier than usual, and
that the "morality police" were not visible. Though the
regime still has supporters, he noted that their strength had
been fading since the June 2009 elections and he said he
thought the opposition, heterogeneous as it may be, now has
the support of the majority. He said the IPIS conference
focused on sending a strong domestic message regarding the
government's plan to increase Iran's role as a regional hub
for trade. He noted that Commercial Attaches in Western
Embassies were still able to meet with Iranian contacts, but
that most other sections weren't. Interestingly he mentioned
that former Austrian Defense Minister Fasselabend still
travels frequently to Iran and maintains contacts close to
Ahmadinejad and other regime insiders. On the topic of
sanctions he noted that French, Chinese and Indian business
delegations were highly visible in Tehran and that German
business needs reassurance, especially from their European
competitors, that the playing field will be level. End
Summary.

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Tehran Police on a Charm Offensive?
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2. (C) On a positive note poloff's contact said he
experienced the regular police in Tehran as "much friendlier"
than usual. He said the police were probably given orders
not to provoke unnecessary conflict, and added that the
"morality police" didn't appear visible - another sign that
the regime doesn't want to "stoke the fires" at the moment.
He interpreted the "debates" shown in early January on
Iranian State television as another effort in this direction
towards defusing tension. The analyst said the only sections
within the Western Embassies which seem to be able to get out
and meet contacts on a regular basis are the commercial
attaches. Businessmen aren't afraid of having contact with
Western Embassies. He said former Austrian Defense Minister
Fasselabend was one exception, who still traveled to Iran and
maintained contacts very close to Ahmadinejad and the Supreme
Leader. Within the MFA he said he had a few meetings at the
"working levels." He found MFA officials thoroughly
unimpressive, but noted that they no longer seemed "enamored"
by the regime.

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Regime Support Fading
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3. (C) On the question of support for the opposition
movement, the analyst said that while the size of the
opposition was unclear at the time of the election in June
2009, subsequent events had caused the opposition to gain
popularity and that they represent a majority of the
population these days. What remained unclear is how
homogenous the opposition really is. He said the opposition
was united in its general desire to remove Ahmadinejad and in
its pursuit of some basic civil rights (freedom of expression
and assembly in particular). He noted that the opposition
contained groups which were generally dissatisfied with the
Islamic republic including those who seek a secularization of
the regime. On the other hand, the opposition also included
many regime supporters who happen not to support the current
government's leadership. Former President Khatami is one of
the centers of this second group, which is itself a loose
network of former regime insiders, whose single common goal
is some form of "democratization" of the Islamic Republic,
without calling into question the "Islamic" nature of the
republic. On the question of the lower and middle classes he
noted that while they had been predominantly Ahmadinejad
supporters, they had started to become disillusioned with the
failures of his populist rhetoric and empty promises and that
some are starting to join the ranks of the opposition
movement.


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Regime Supporters: Splits visible, but Still Recruiting
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4. (C) The analyst added that the regime does still have a
large group of supporters, especially from the conservative
religious side which appreciated the "values and morals"
which the current regime claimed to stand for. Within this

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group, however, he commented on the growing divide between
those scholars associated with Qom based Mofid University and
those associated with Mesba Yasdi and Jannati. He also
remarked on a new "crop" of younger, well educated, radically
conservative, English speaking regime supporters who he
compared to European neo-Nazis and who he said were being
groomed (with not much success so far) to be the new "elite."

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IPIS Conference Uneventful
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5. (C) The analyst mentioned Russian, Chinese, Indian,
Japanese, Turkish and Lebanese participation at the
conference at which both FM Mottaki and Defense Minister
Vahidi spoke. He said neither Mottaki nor Vahidi's
interventions were noteworthy; both seemed to focus their
remarks for domestic consumption, mixing standard anti-Israel
rhetoric with a heavy focus on Iran's goals to expand its
economy and role as a regional trade hub through building
railroad links from India across the country and constructing
new pipelines. He noted that many delegates seemed to want
to hide their nationality during the parts of the conference
that were filmed and that placards only identified speakers
as "Embassy" officials with no reference to their country of
origin. (Note. IPIS also hosted the 2006 Holocaust denial
conference "International Conference on Review of the
Holocaust Global Visision." Contact never mentioned the name
of the January 2010 conference, but upon examination of the
IPIS website it was probably the January 18 Conference on
Persian Gulf Challenges/Regional Mechanisms. End Note.)

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China and India Gearing up for U.S. Competition in Iran
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6. (C) The Iran expert said he had had interesting
conversations on the margins of the conference with some of
the other delegations. He said both the Chinese and the
Indian delegations explained to him why their business
sectors were pouring investments into Iran these days. They
argued that whatever happens, it is in their interest to
cement their network of relationships now so that they are in
a better position to compete against the American business
sector when they reenter the game - either after a military
action or as a result of a negotiated solution.

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What's Irking German Business
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7. (C) On the subject of the German business community's
appetite for more Iran sanctions, the analyst echoed comments
the Embassy has heard from MFA officials saying that German
business is concerned about having a "level playing field."
In particular he said the business community is irked that
Sarkozy manages to carve out an exclusion for Peugeot from
any possible sanctions packet and that German business men
are talking about how UK trade with Iran may be down by 50
percent but it's up by 50 percent with Dubai during the same
period. (Note: According to EU statistical data, from
2004-2008, UK exports to Iran declined 22 percent; UK exports
to UAE increased only 16 percent. However, during the same
period, German exports to the UAE increased a whopping 126
percent. End Note.) On an anecdotal level, he noted that
his hotel was crawling with French and Chinese business
delegations.
Murphy