SANCTIONS SUCCESS: ITALIAN SHIPPER TO BREAK WITH

S E C R E T ROME 000112 SENSITIVE SIPDIS STATE FOR ISN/T/NEA/IR STATE FOR ISN/CPI MCGEEHAN AND CHALMERS E.O. 12958: DECL: 01/25/2020 TAGS: ECON EFIN ETRD EWWT GM IR IT KNNP PARM PREL SUBJECT: SANCTIONS SUCCESS: ITALIAN SHIPPER TO BREAK WITH IRANIANS REF: A. 08 SECSTATE 104496 ¶B. 08 ROME 1304 ¶C. 08 ROME 1392 ¶D. 08 ROME 1475 ¶E. 08 ROME 1500 ¶F. 09 ROME 0066 Classified By: Deputy Chief of Mission Elizabeth Dibble for reasons 1.4 (b) and (d). ¶1. (C) SUMMARY. In response to the pressure that resulted from a sanctions designation by the U.S. Treasury Department, the Fratelli Cosulich shipping company of Genoa plans to end the company's joint venture with the Islamic Republic of Iran Shipping Lines (IRISL). Action on this long-pending issue appears to have been complicated by the company's connections with senior Italian government officials. Post requests guidance on how this divestment by Fratelli Cosulich would affect their possible exposure to U.S. sanctions. END SUMMARY ¶2. (C) On January 19, 2010, Augusto Cosulich, Managing Director of the Fratelli Cosulich shipping company of Genoa, met with ECONCOUNS to explain his company's relationship with the Iranian state shipping company IRISL. (IRISL has been designated by the U.S. Treasury Department under provisions of E.O. 13382. Post has been urging the GOI to take action on Cosulich/IRISL since 2008. See REFTELS). Cosulich told us that his company planned to immediately divest themselves of their 49% interest in IRITAL (Cosulich's joint venture with IRISL). On January 26, Cosulich followed up by forwarding to Post a copy of the email he sent to his Iranian contacts informing them of his plans to sell his shares of IRITAL and to end the partnership. He told us that the Iranians said they would consider his proposal; he said their response seemed positive. ¶3. (S) Cosulich warned us that even without Cosulich brothers, IRITAL could continue to operate and could possibly form a partnership with another company, perhaps with the Iranian-German engineering firm, IRASCO (based in Italy). Another possibility would be for IRITAL to simply "go dormant" in Italy; the firm would officially continue to exist, but would engage in no activities. Cosulich said that this would be a costly option for the Iranians, but they might choose to do this in order to avoid the embarrassment of a public shut-down of the IRITAL firm. Even after breaking their partnership in IRITAL, Cosulich said he expects his company to continue to serve as shipping agent for Iranian vessels arriving in the port of Genoa. He offered to cooperate with U.S. and/or Italian government efforts to monitor Iranian maritime activity in Italy. He warned that Malta has become a transhipment hub for Iranian maritime cargo. ¶4. (C) COMMENT: Cosulich told us that his brother-in-law is Antonio Bettanini, a Senior Advisor on Institutional, Political and Communication Affairs to Foreign Minister Franco Frattini. It appears to us that this high-level Foreign Ministry connection may have conditioned the GOI's response to this designation: At first MFA officials complained vigorously to us about the designation; later they seemed very cautious about urging Cosulich to break with the Iranians. ¶5. (SBU) ACTION REQUEST: Post requests guidance on how Fratelli Cosulich's divestment from IRITAL would affect its potential designation status under E.O. 13382. Post also requests guidance on whether Cosulich would be exposed to U.S. sanctions if they continue to act as shipping agents for IRISL ships (facilitating on-loading and off-loading of containers and providing other port services). THORNE