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Viewing cable 09LONDON1750, S) TREASURY A/S COHEN URGES UK TO TAKE IRAN SANCTIONS; PRESS INTERPAL
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Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
09LONDON1750 | 2009-07-30 13:50 | 2011-02-02 21:00 | SECRET//NOFORN | Embassy London |
VZCZCXRO0253
PP RUEHBC RUEHDBU RUEHDE RUEHDIR RUEHFL RUEHKUK RUEHKW RUEHLA RUEHNP
RUEHROV RUEHSL RUEHTRO
DE RUEHLO #1750/01 2111350
ZNY SSSSS ZZH
P 301350Z JUL 09
FM AMEMBASSY LONDON
TO RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 3007
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUCNIRA/IRAN COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
S E C R E T SECTION 01 OF 05 LONDON 001750
NOFORN SIPDIS
TREASURY FOR A/S COHEN E.O. 12958: DECL: 07/20/2019
TAGS: EFIN KTFN PTER ECON IR UK
SUBJECT: (S) TREASURY A/S COHEN URGES UK TO TAKE IRAN SANCTIONS; PRESS INTERPAL
Classified By: RICHARD ALBRIGHT, ECON MINISTER COUNSELOR, FOR REASONS 1 .4 B&D
1.(S/NF) David Cohen, Assistant Secretary for Terrorist Financing and Financial Crimes, Treasury, on July 17 pressed his counterparts in HM Treasury (HMT), the Foreign and Commonwealth Office (FCO) and the Cabinet Office to invoke domestic measures now against Iran. The British response was united in agreeing on shared U.S.-UK objectives and the need for stepped up action against the Islamic Republic of Iran Shipping Line (IRISL) and Bank Mellat. They noted, however, that for legal and political reasons the UK's vehicle for the sanctions, the 2008 Counter Terrorism Act (CT Act), required Parliamentary approval, which could not reasonably be obtained before Parliament ends its session on July 21. The officials agreed to review the recent USG report on Interpal with an eye towards UK sanctions. Cohen also discussed USG efforts to raise awareness on North Korean activities and Afghanistan-Pakistan terrorist finance efforts. HMT officials described plans for a surge in action against Al-Qaeda financiers, taking advantage of current weakness in their fundraising efforts. END SUMMARY
2.(U) Treasury Assistant Secretary Cohen held meetings with Nick Joicey, HMT's Director of International Finance, James Robertson, Head of Financial Crime Team, and Virginia Fenton, Financial Sanctions Unit; Neil Wigan, Deputy Director, Middle East, North Africa and North America at the Cabinet Office (NSC equivalent) and Jonathan Chorley, Counter Terrorism issues; and Antony Phillipson, Iran Coordinator, FCO. Cohen was accompanied by Richard Albright, Economic Minister Counselor, Dana Murray, Embassy Political Officer, and notetaker.
HM Treasury: Iran Sanctions Ready . . . But not Yet ----------------------------- ---------------------
3.(S/NF) Joicey confirmed to A/S Cohen the July 13 conversation between Secretary Geithner and Chancellor Darling in which the latter said HMG was prepared to take CT Act measures against IRISL and Bank Mellat, but that such steps under the law required Parliamentary approval for the measures to remain in place. Parliament is in recess July 21 - October 12. Joicey explained the measures HMT proposed initially generated internal cabinet debate regarding different definitions of nuclear proliferation and ballistic missile support. The differences were sorted out just prior to the Iranian election. The post election uncertainty, combined with the arrest of Iranian staff of the UK embassy, caused HMG to consider the timing of the signal that new sanctions against Iranian companies would send. Joicey explained that internal UK concerns have been addressed and the measures are ready to go forward, but that HMG would not submit them for parliamentary review until October when Parliament resumes. Cohen questioned whether HMG could enact the measures before the recess. This would allow them to take effect over the break, freezing the required 28 day parliamentary approval period while the MPs were out. Joicey said the UK had considered this option following the Geithner-Darling meeting, but felt it would be considered a snub of Parliament's prerogative to scrutinize the measures in a timely fashion, and could jeopardize HMG's ability to obtain approval once Parliament returns. As this is the first time HMG is taking measures under the November 2008 CT Act, the government wants to avoid complicating passage with debate over process.
4.(S/NF) A/S Cohen explained the powerful message sanctioning IRISL and Bank Mellat would send to Iran about its actions and the need to take the offer of engagement seriously. Waiting until October would miss an opportunity to strengthen the dual-track message to Iran, and would also permit IRISL and Bank Mellat to continue facilitating proliferation and other nefarious activity, Cohen stressed. Joicey replied that the legal environment was still unsettled. The European Court of Justice's recent decision on Bank Melli was welcome, but the UK had a difficult domestic case regarding their Control Order regime. Because of the shifting landscape, Joicey said, the UK finds it difficult to predict how courts (and the public) will react to HMG actions. Robertson stressed that the risk of legal challenges is very high, so the UK wants to act cautiously to get things right.
Charities --------- LONDON 00001750 002 OF 005
5.(S/NF) HMT is pleased with the recent U.S.-UK dialogue on working to reduce the abuse of the NGO sector by terrorist organizations, while promoting transparent donations and charitable activity. Joicey told Cohen the Interpal case (USG designation of UK-based Palestinian charity in 2003; followed by Lloyd's TSP decision in November 2008 to cease clearing operations for the NGO) had generated a tremendous amount of political interest and debate in the UK. Joicey said Interpal's UK-based fundraising activity occurs in communities where HMG is trying to increase its counter-radicalization efforts and that ministers are concerned about perceptions in parts of the Muslim community that USG and Lloyds' actions were improper. Joicey explained the UK Charity Commission (CC) found no illegal activity by Interpal. Joicey said he hoped the U.S. and UK could pursue a more effective approach on charities in general; i.e., not just blanket action against charities, but targeting inappropriate activity, while enabling the charitable aims of an organization.
6.(S/NF) A/S Cohen stressed the need for the U.S. and UK to coordinate approaches and practices in order to prevent further exploitation and misuse of charities. He urged HMT to look at the new information on Interpal provided by U.S. Treasury through Embassy London on July 15. Joicey questioned whether the U.S. would release further public information on the group. Otherwise, he said, he was concerned that the information available to date enabled opponents to argue that sanctions were an unjustified, non-transparent action. Cohen explained the difficulty of releasing more of the information, but said he'd look into whether we could do so.
7.(S/NF) Cohen said the USG was sensitive to humanitarian needs and described USG actions to provide alternative relief mechanisms in cases where charities were found to be diverting funds, or had been exploited by terrorists. He said President Obama stated in Cairo that we needed a way to ease the burden on Muslims seeking to make charitable donations, and senior levels of the USG are working on that goal. Joicey said high-level attention would be helpful, as PM Brown and Education Secretary Ed Balls have looked at this issue, primarily in the context of providing relief to Gaza as a way to reduce underlying problems.
North Korea -----------
8.(S/NF) A/S Cohen explained how the USG is actively implementing requirements in UN Security Council Resolutions on North Korea, and has made specific designations. U.S. Treasury officials are visiting governments and financial institutions - primarily in the Far East - to explain the risks of doing business with North Korea, and the need for a heightened degree of due diligence. Fenton explained that no UK banks have correspondent banking relationships with North Korean entities (although they are still clarifying the identity of one UK-based bank that is listed as having a correspondent account, but which claims it is not the bank in question.) Cohen encouraged the UK to follow France's lead and send out an advisory to all banks about the risks, as well as to look into increased fraud and deceptive practices coming out of North Korea. Fenton described UK efforts with EU Member States to provide guidance, and said the EU is close to reaching a common position.
UK's Counter Terrorist Finance Strategy ---------------------------------------
9.(S/NF) Joicey explained UK proposals for a coordinated three-month surge in counter-terrorist finance activity against Al-Qaeda, which the UK will discuss further with the USG in Washington in August. The British believe we should capitalize now upon UK intelligence showing a weakened Al-Qaeda Core. Cohen encouraged joint activity, and said USG is also focused on Taliban financing.
Cabinet Meetings: Afghanistan-Pakistan --------------------------------------
10.(S/NF) A/S Cohen, in his meeting with Cabinet Office LONDON 00001750 003 OF 005 officials, described USG efforts to identify donors to terrorist networks in Afghanistan and Pakistan. He detailed plans with the UAE to stem bulk cash-smuggling operations by training customs officials to identify money flows from UAE to Afghanistan-Pakistan and in the reverse direction. He explained that our information shows there is a hard-core element within the Taliban, but that many others are merely mercenaries. Chorley described UK efforts to combine Counter-terrorism and finance approaches to the region, focusing principally on Al-Qaeda and the Taliban. The UK and U.S. analyses of the problems are similar, Chorley said, and the UK is pressing forward plans to challenge Gulf financiers. UK financing is important, but the real money is in the Gulf, he said. The UK is trying to better understand Gulf NGOs and their role in terrorist financing; specifically learning how to better identify abuse of charities. Chorley and Cohen agreed the UK and U.S. need to coordinate more closely, and Chorley said the UK will intensify its own internal operations to address terrorist financing. Cohen agreed the Gulf is a prime area for joint TF efforts. The key will be to get the Saudis to focus more broadly than only on Al-Qaeda and to take action on their own. Cohen also explained the USG's Afghan Threat Finance Cell, taken from Iraq experience, and its usefulness as a model for similar UK efforts.
Iran ----
11.(S/NF) A/S Cohen reiterated to Wigan the usefulness of the UK imposing its domestic sanctions on Iran now as part of the overall engagement strategy, and pointed out how it would help the G-8 take stock in September, rather than having to wait until UK action in October. He also described how UK action now would help firm up Gulf states' resolve. The ultimate question is whether Iran will respond or rebuff engagement efforts, Cohen said. Wigan said the Prime Minister is fully on board with a UK sanctions plan; UK political will is there to show Iran that pressure is real. The problem, however, is the logistical aspects of achieving parliamentary approval, and HMT's fear of losing a legal case, Wigan said. There is little to no concern that Parliament would reject the sanctions measure, as the Conservative opposition does not view this as a restriction on the business community. Wigan emphasized that the British ministries were all on the same page.
North Korea -----------
12.(S/NF) The U.S. is focused in Asia on limiting the ability of North Korea to do business with other countries. The goal is to try and contain North Korea's proliferation activity, while pressuring them to relinquish their nuclear weapons program, Cohen said.
XXXXXXXXXXXX Foreign Office: Iran --------------------
14.(S/NF) Phillipson, whom we have found to be a frank and accurate observer of intra-HMG machinations, echoed the others' statements that PM Brown's team is aligned on the need to take action against Iran and pursue a dual-track strategy. The few internal differences remain in the debate over whether to go forward in the absence of EU and UN sanctions cover, with the business departments urging consideration of private sector interests for fear of losing out to Russia and China, Phillipson told Cohen. However, in the case of IRISL and Bank Mellat, all parties are on board, in large part due to the risk Iran poses to the financial sector. Phillipson mentioned the Business and Investment Skills Ministry, through control of export licenses and trade LONDON 00001750 004 OF 005 activity, plays a key role in being able to pressure Iran.
15.(S/NF) The French see eye-to-eye with the UK on Iran, and always have, Phillipson said. Germany is on-board with the policy, but not in practice. Chancellor Merkel and the Foreign Policy staff understand the problem and the right course of action (i.e., sanctions), but the German business community is very powerful, according to Phillipson. They will get behind proposals they know others will block, as they have done with their support for ceasing correspondent banking relationships with Iran, knowing France will not allow it to happen. But Germany won't sanction German Bank EIH. The "E" is a fiction in the E-3 process, Phillipson told Cohen, because Germany's lack of seriousness on Iran impedes fellow EU Member States' ability to act as one. Phillipson also noted a problem of the E-3 coordination process with France and Germany was that some Member States dislike exclusion and are often difficult to bring on board, while other EU Member States hide behind Germany. The UK is currently talking to Spain, Sweden and the Italians to coordinate on Iran. If they can get those three, plus France and Germany, they can make progress. The Italians, however, are inconsistent and are "all over the map" on their Iran policy. If sanctions can't get through the UN, the UK will lead in the EU, using the argument that if Russia and China won't step up, the EU will have to lead, Phillipson said.
16.(S/NF) A/S Cohen stressed the need to act immediately and the harm of waiting until October for the IRISL and Bank Mellat sanctions. Phillipson said the decision on timing was a function of HMG's fear of being legally challenged, and the possibility of a court case being brought before Parliament had a chance to debate the issue. The initial reasons for delaying the sanctions during the immediate post-election period were a) a fear Iranian hard-liners would use this against the UK; b) the UK did not want a potential Mousavi government to be greeted by new sanctions, had he won.
¶17. (S/NF) Phillipson told Cohen it was too soon to tell how things would play out after the election in Iran. The regime is certainly showing its vulnerability, which might be an opportunity in the medium term. But he said it was more likely the regime would close ranks and would not take the risk of upsetting existing order, while still railing against the West. Phillipson said it was dangerous to predict what will occur in Iran, and that the West can't control or know what is happening there. He suggested we "set up our own stall", making policy and sticking to it; and not doing anything to legitimatize Ahmadinejad. Phillipson said we need to let Iran know the ball is in their court, referring to the June 2008 offer the P-5 1 put on the table, and that we need to find another way, without making a concession, to let Iran know they have the next move. One way of doing this would be for the Political Directors (meeting in Paris July 20) to say "we'll be willing to meet in Vienna September 5-12", and see if Iran shows up. Phillipson urged this statement come now, before Ahmadinejad's inauguration, so as to not legitimatize him.
¶18. (S/NF) Using the September G-20 and UNGA as evaluation points, not final assessment points, is also key, Phillipson said. If Iran can't prove its willingness to engage by September, we could use the October-December period to work Russia and China on sanctions. We need to show Russia and China we have tried engagement. Iran and Russian are currently impeding the process, and the U.S. and UK need to take back the lead, Phillipson said. He noted progress in that Russia had acknowledged Iran,s nuclear threat is real, but believe they will not be a target. China doesn't feel the threat is real. The only leverage the West has with China is to indicate they feel China is not stepping up to the plate to handle global responsibilities.
¶19. (S/NF) Curiously, we have not seen an increase in Hezbollah or Hamas activity, Phillipson said. He commented it is difficult for Hamas to demonstrate solidarity with a regime in Tehran that has killed dozens-to-hundreds of Muslims. On the other side, Israelis are watching and waiting. Phillipson didn't think they wanted to take action, but if there was no engagement from Iran or no increased sanctions by Russia and China, then Israel would feel they had to talk up the threat and after talking up the threat, they would feel they needed to take action. A/S Cohen has cleared this cable.