WikiLeaks: ‘Stronger Interest’ in US

February 5, 2011

1IRSLhandoutThe head of the British Treasury’s asset freezing unit urged the US to deal with Bermuda directly over the question of blocking Iran’s state fleet from obtaining coverage on the island’s insurance market, says a cable released by WikiLeaks today [Feb.5].

Patrick Guthrie, who helped to coordinate British sanctions against Iran resulting from its nuclear weapons and ballistic missiles programmes, told US Treasury Under Secretary for Terrorism and Financial Intelligence at meetings held in London on November 19-20, 2008 that Bermuda’s Government ”takes a stronger interest” in geopolitical matters when the US was involved.

The cable, sent from the US Embassy in London to the State Department on January 8, 2009, reviewed the November London talks between American Treasury Under Secretary Stuart Levey and British officials which focussed on international sanctions against Iran and cutting off terrorist financing.

Earlier this week other US diplomatic communiques released by the whistle-blowing website highlighted how the international community was anxious to prevent IRISL [Islamic Republic of Iran Shipping Lines] from obtaining coverage in Bermuda after steps were taken to freeze the state fleet out of the British insurance market.

Bermuda later followed the UK’s lead — a move which :provides us with another opportunity to highlight the risks of doing business with IRISL”, US Secretary of State Hillary Clinton said in a February, 2010 cable shortly after the island blocked the state shipper from doing business here.

” … HMT [Her Majesty's Treasury] has held six to seven meetings with UK insurers to explain the dangers of working with Iran, using a script agreed upon by Germany and France,” said the cable released today. “The focus is to highlight the risk to the company of working with the regime or its proxies, and getting them to see if they have the correct risk analysis measures in place. HMG [Her Majesty's Government] is not telling the companies they can’t do business with Iran, but is helping to describe the risk. Guthrie said companies were receptive, but hesitant to cut off relations with Iran without international efforts, and asked for more information from HMT. The companies also said they had seen no evidence of wrongdoing, but admitted they might not recognize it.

“Levey urged HMG to work with the insurers’ umbrella organization to pressure all companies into not renewing contracts with IRISL in February. He said Iran is shaken by the potential threat against IRISL, and this action would be significant. Guthrie suggested the US follow up with Bermuda on insurance issues, as the island takes a stronger interest when the USG [United States Government] is involved.”

The full text of the cable from the US Embassy in London – designated as “Secret” – appears below:

Date: 1/8/2009 15:23

Origin: Embassy London

Classification: SECRET//NOFORN

Destination:

Header: VZCZCXRO2338PP RUEHBC RUEHDE RUEHDIR RUEHFL RUEHKUK RUEHKW RUEHLA RUEHNP RUEHROVDE RUEHLO #0050/01 0081523ZNY SSSSS ZZHP 081523Z JAN 09FM AMEMBASSY LONDONTO RUEATRS/DEPT OF TREASURY WASHDC PRIORITYRUEHC/SECSTATE WASHDC PRIORITY 0857INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITYRUCNIRA/IRAN COLLECTIVE PRIORITYRHEHNSC/NSC WASHDC PRIORITY

Tags: EFIN,KTFN,ECON,IR,UK

S E C R E T SECTION 01 OF 03 LONDON 000050 NOFORN SIPDIS E.O. 12958: DECL: 01/08/2019 TAGS: EFIN, KTFN, ECON, IR, UK SUBJECT: U/S LEVEY ENCOURAGES UK TO TIGHTEN PRESSURE ON IRAN Classified By: Kathleen Doherty, Econ Counselor, for reasons 1.4 B&D

1.(S/NF) Summary: Treasury U/S Stuart Levey told British officials on November 19-20, 2008 he was encouraged by reporting out of Tehran citing the economic restraints brought on by President Ahmadinejad’s mismanagement, and the effect low oil prices was having on Iran’s fiscal situation. However, press reports on increased low enriched uranium were troubling, and Levey stressed the next six months were a critical period, particularly during the U.S. transition. There would be a better chance of making political progress with Iran if we were to continue the pressure, Levey said. Margaret Aldred, of the British Cabinet Office, said financial sanctions are one of the most successful tools, but without political discourse will not shift Iran’s approach. She added, however, that there is no appetite in London for taking the foot off the pedal at this point; the U.S. and UK need to maintain pressure. End Summary

2.(S/NF) Treasury Under Secretary for Terrorism and Financial Intelligence met November 19-20 to discuss sanctions against Iran and terrorist finance with British officials. Levey, accompanied by Christine Clark, Chief of Staff, and Molly Millerwise Meiners, Senior Advisor, and met with Margaret Aldred, Director, Foreign and Defense Policy, Cabinet Office, Neil Wigan, Deputy Director, Middle East, Cabinet, and Brian Jones, Iran desk Officer. U/S Levey also met with Stephen Pickford, Managing Director International and Finance, HM Treasury, Nick Joicey, Director, International, James Robertson, Head, Financial Crime, Patrick Guthrie, Head, Asset Freezing Unit, and Lucy Rahal, International Policy. In addition, U/S Levey met with Antony Phillipson, Iran Coordinator, Foreign and Commonwealth Office and Stephen McCormick, International Organizations, along with Robertson and Wigan.

Cabinet Office ————–

3.(S/NF) U/S Levey said it is crucial to maintain pressure on Iran’s nuclear program using all tools, including the FATF statement and the U.S. IRISL (Islamic Republic of Iran Shipping Line) designation, to press our case. Levey said the IRISL designation has troubled Iran, and following up by denying the regime access to insurers would be very effective. Aldred explained HMG is meeting British insurers to explain risks to them of investing in, or working with, Iran, and is actively studying the possibility of going after IRISL. Aldred said current international efforts are making life significantly tougher in Iran, which makes it harder for the financial sector to operate, and discourages foreign investment.

4.(S/NF) The political sector, however, is surviving well, and HMG believes Ahmadinejad receives more support from the Supreme Leader than would be expected under the circumstances, Aldred said. She believes it is more likely now that Ahmadinejad will be re-elected than she thought six months ago. Aldred said current measures against Iran’s proliferation efforts are useful, but unclear if they will ever be fully successful. In the short term, the nationalists in Iran can use these measures to rally support against the international community. Aldred doesn’t think pressure against the regime will be successful without parallel political discussion. Levey said that we need to explain to people that the regime’s actions are creating the problems; it is the regime that is isolating Iranians from the world. Aldred said there is some understanding in Iran that they need to change behavior, but the regime will not move until the new administration is in place in Washington.

5.(S/NF) Aldred described HMG’s efforts to pass the Counter Terrorism bill, which gave ministers power to act unilaterally against Weapons of Mass Destruction proliferators. She said HMG was considering how and when to bring the new powers into force, but stressed it is a strong tool to use against Iran. HMG could now require increased due diligence by banks dealing with Iran, but Aldred noted the legal threshold for implementing these measures is still unclear. Wigan explained the new powers could be enacted through a UK domestic determination that an entity or jurisdiction is a risk, or if a multilateral group such as FATF (Financial Assets Task Force) makes a broad declaration that a country is a proliferator of WMD.

6.(S/NF) Aldred asked whether other countries would join the U.S. and UK in putting pressure on the regime. Levey responded that there are opportunities to build multilateral pressure and cited several examples. He also pointed out the LONDON 00000050 002 OF 003 problem of countries such as the UAE and even Malta viewing the UK as open to Iranian subsidiaries, and asked the UK to send a signal to others (i.e., Germans, Austrians, Italians) to take a stronger position.

7.(S/NF) U/S Levey described recently enacted U.S. efforts to cut Iran off from U-turn transactions, but questioned whether certain countries would support France’s proposal of requiring Suspicious Action Reports on all Iranian transactions. Ideally, the U.S. would like to take action multilaterally, Levey explained, so as to have a stronger effect. Levey also drew the link between the Iranian regime’s control of everything within its borders – including banking – and the FATF declaration of October 16 calling for increased scrutiny of Iranian transactions.

8.(U) Aldred praised U/S Levey for his energy and imagination in taking on this challenge over the past several years, and thanked him for the impact his efforts have had on tackling Iran’s nuclear program through sanctions.

HM Treasury ———–

9.(S/NF) Stephen Pickford described to Levey HMG efforts to strengthen its hand against Iran and future WMD proliferators through the amendments to the Counter Terrorism bill and to send a message to Iran of UK seriousness on this matter. (Embassy note: the CT bill was formally enacted into UK law November 29. End note) Parliament was fully supportive of the government’s action, Pickford said. Robertson described the powers HMG could invoke if either FATF or the UK unilaterally declared Iran a reasonable threat to the UK, and said HMG can use confidential information in its decision-making. HM Treasury can move against individual banks or firms, or a whole class of entities (the latter requiring parliamentary approval), depending on the threshold. Robertson explained that potential legal challenges will hinge upon the proportionality of the sanction or action against the entity. HMT will also have to explain why they are taking action, and why that specific sanction will be invoked. Pickford and Robertson said the UK is not looking to implement the new powers immediately, because they need to have an airtight case that will not be overturned by the courts. Pickford said he hoped a strong FATF statement in February would provide the opportunity for HMG to enact the powers.

10.(S/NF) Pickford told Levey HMT has held six to seven meetings with UK insurers to explain the dangers of working with Iran, using a script agreed upon by Germany and France. The focus is to highlight the risk to the company of working with the regime or its proxies, and getting them to see if they have the correct risk analysis measures in place. HMG is not telling the companies they can’t do business with Iran, but is helping to describe the risk. Guthrie said companies were receptive, but hesitant to cut off relations with Iran without international efforts, and asked for more information from HMT. The companies also said they had seen no evidence of wrongdoing, but admitted they might not recognize it. Levey urged HMG to work with the insurers’ umbrella organization to pressure all companies into not renewing contracts with IRISL in February. He said Iran is shaken by the potential threat against IRISL, and this action would be significant. Guthrie suggested the US follow up with Bermuda on insurance issues, as the island takes a stronger interest when the USG is involved.

11.(S/NF) Pickford said HMT is continuing to pressure the Financial Services Authority to look into Iranian banks operating in London. He said there is not much business activity. In response to U/S Levey’s question as to why HMG doesn’t just shut them down, Robertson replied that, in fact, after being subjected to increased regulatory scrutiny, one of the banks has become the best run bank in the UK. HMG can only close banks for being poorly run or undertaking illegal activity directly (not through its parent.)

Foreign Office ————–

12.(S/NF) U/S Levey described to Phillipson his positive discussions in Dubai with several leaders, but said that Gulf efforts would be strengthened if Saudi Arabia took a stronger position. Phillipson suggested HMG describe to SAG the efforts they are taking, and encourage them to sacrifice a bit as well. Levey agreed this would give comfort to other LONDON 00000050 003 OF 003 Gulf countries who might be stronger if they felt they had broader support. Phillipson echoed Aldred’s statements that sanctions are having an effect in Iran, but are not moving policy. He found it incredible that some Europeans believe that because sanctions are having an economic impact, Iran should be given time to respond. Agreeing, Levey flipped the European argument around, saying the idea should be that since people are hurting, the regime should consider how to adjust its policy and bring relief to its citizens.

13.(S/NF) Phillipson said Germany is still holding back. The major concern is political, pitting one sides’ fears of an effect on the ’09 German elections versus serious foreign policy folks afraid of a nuclear Iran. Phillipson said the UK and France are united, but the rest of Europe is on the other side. All agreed that next steps should include: increased pressure on IRISL, particularly by the EU; efforts against the parent banks; and restricting access to the Euro.

14.(U) This cable was cleared by U/S Levey. Visit London’s Classified Website: XXXXXXXXXXXXTUTTLE

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