VZCZCXRO1543
RR RUEHDE
DE RUEHAD #2080/01 1400711
ZNY SSSSS ZZH
R 200711Z MAY 06
FM AMEMBASSY ABU DHABI
TO RUEHC/SECSTATE WASHDC 5214
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUEHLO/AMEMBASSY LONDON 1021
RUEHFR/AMEMBASSY PARIS 0985
RUEHOT/AMEMBASSY OTTAWA 0213
RUEHRO/AMEMBASSY ROME 0813
RUEHKO/AMEMBASSY TOKYO 0288
RUEHRL/AMEMBASSY BERLIN 0100
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHNSC/NSC WASHDC S E C R E T SECTION 01 OF 03 ABU DHABI 002080 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
STATE FOR T - U/S RJOSEPH, ACTING A/S SRADEMAKER, PM - A/S 
HILLEN, NEA FO A/S WELCH, GRAY, NEA/ARP MISENHEIMER, 
SWALKER, EB/ESC/TFS DNELSON 
TREASURY FOR U/S LEVEY 
NSD FOR DSTEPHENS 
 
E.O. 12958: DECL: 05/20/2016 
TAGS:          
SUBJECT: UAE FOREIGN MINISTER, U/S LEVEY DISCUSS TARGETED 
FINANCIAL MEASURES AGAINST IRAN 
 
Classified By: Classified by Ambassador Michele J. Sison for reasons 1. 
4 b and d. 
 
 1. (S/NF) Summary.  On April 30 Treasury Under Secretary for 
Terrorism and Financial Intelligence Stuart Levey met with 
UAE Foreign Minister Abdullah bin Zayed Al Nahyan (AbZ) to 
discuss the possibility of imposing targeted financial 
measures to isolate the Government of Iran, in the event the 
United Nations route is unsuccessful.  U/S Levey discussed 
multilateral measures that would financially isolate the 
Iranian regime, with the aim of putting the Iranian 
leadership on the defensive.  AbZ said that he thinks it is 
important for Iran to understand that there is "no way out," 
and that if there is a third option (other than a nuclear 
armed-Iran or outright war) for the international community 
to pursue, then "why not" try that option.  AbZ requested a 
memo on the proposed options, and said he would discuss the 
concept of targeted financial measures against Iran with 
senior members of the UAEG.  AbZ also suggested the U.S. 
coordinate a meeting in Europe with the key players to 
develop these ideas.  He noted that the participation of 
other Gulf countries would be critical to success.  Action 
request contained in para 9.  End summary. 
 
 2. (SBU) U/S Levey was accompanied by David Nelson, Director, 
Office of Terrorism Finance and Economic Sanctions, Bureau of 
Economic and Business Affairs; Matthew Epstein and Kristen 
Hecht, Treasury Financial Analysts; Ambassador; and deputy 
econchief (notetaker). 
 
 3. (S/NF) U/S Levey told AbZ that the USG wants to find an 
option -- other than military confrontation -- in case UN 
diplomacy fails.  He said that the USG has developed a plan 
to financially pressure the Government of Iran (GOI) by 
creating a dynamic where the GOI is shunned by the 
international financial community.  He explained that the 
U.S. and its international partners could pressure the 
Iranian regime by cutting off access to financial 
institutions in Europe, Japan, and the UAE, where most of the 
regime's financial transactions are handled.  The initial 
measures would seek to financially isolate entities and 
individuals engaged in proliferation, terrorist support 
activity, destabilizing Iraq, or corruption, creating a 
dynamic where typically risk-averse organizations (such as 
banks) perceive that the risk of doing business with such 
entities and individuals is simply too high.  He also noted 
that the regime could be further isolated if international 
financial institutions closed GOI bank accounts. U/S Levey 
suggested that if financial institutions cease doing business 
with the GOI and Iran's elite, then the public may begin to 
question Ahmadinejad's policies, and his regime will be put 
on the defensive.  U/S Levey declared that "the goal is not 
to bankrupt Iran, but to exacerbate tensions among Iranian 
elites."  U/S Levey stressed that, in order for these 
measures to be effective, buy-in from all of the major 
financial centers would be essential.  Ultimately, if Iran 
persisted in pursuing WMD, steps could be taken to 
financially isolate the regime more broadly.  He told AbZ 
that the USG is discussing these options with the G-7, 
Austria, the Netherlands, and certain Gulf Cooperation 
Council (GCC) members. 
 
 4. (S/NF) AbZ, who took detailed notes throughout the meeting 
and focused intently on the U/S while speaking, asked a 
number of detailed questions.  He inquired whether the USG 
had a timeline for when each of the steps would be 
implemented.  U/S Levey responded that the first step would 
be to identify the entities and individuals, but he also 
noted that the U.S. would develop an implementation timeline 
that marries up with the UN process.  AbZ asked whether 
imposing travel bans on Iran's senior officials was an 
option.  U/S Levey responded that it was.  AbZ inquired 
whether the United Nations Security Council (UNSC) might be 
able to impose such a travel ban.  Smiling, AbZ noted that 
the Secretary General of Iran's Supreme National Security 
Council, Ali Larajani, would be in Abu Dhabi on May 2, and 
 
ABU DHABI 00002080  002 OF 003 
 
 
that it could be "very embarrassing" if people like him 
wanted to come and the Gulf countries told them they were not 
welcome.  (Comment: UN mandated travel bans do have 
exceptions for official travel and may not affect all of the 
GOI's key players.  End comment.)  AbZ also asked if 
Hizballah would be on the targeted list of terrorism 
supporters.  U/S Levey responded that the USG would like to 
add Hizballah to the list, and if the group of countries 
involved supported that decision, it would be included. 
Considering the question of whether isolating Iran's elite 
would create the right kind of tension within the regime, AbZ 
noted that Rafsanjani and his son are frustrated with 
Ahmadinejad and they believe that it is already difficult for 
Iranians to do business around the world.  "If Rafsanjani -- 
who is already pissed at Ahmadinejad -- is on the list, then 
you will just isolate him," AbZ declared.  Stating that AbZ's 
comment essentially confirmed the USG's belief that there is 
already tension among the Iranian elite, U/S Levey explained 
that we would consult with our partners as to who should be 
on the list.  U/S Levey and AbZ mused that keeping certain 
regime insiders on or off the list could be perceived by the 
GOI as an insult or as a triumph.  Either you are the enemy 
of the U.S., which could be good or bad PR for the 
individual, or you are ignored by the U.S., which could have 
the same effect.  "This is exactly why we need our friends 
around the table to discuss the tactics that can exacerbate 
tensions in the regime," added U/S Levey. 
 
 5. (S/NF) Thoughtfully considering U/S Levey's proposal and 
the answers to his questions, AbZ said that he believes it is 
important for Iran to understand that there is "no way out." 
"Senator McCain said the smartest thing when he said that 
going to war with Iran is horrible, but Iran having a nuclear 
bomb is worse."  AbZ said that we must ensure that both 
options (war or a nuclear-armed Iran) are difficult.  "If 
there is a way to get Iran out of this in a face-saving way, 
then why not?"  AbZ asked whether Iran could get around these 
efforts by going through China, Russia, South Africa, or 
Latin America.  U/S Levey said that Iran could get around the 
measures in their early stages, but as the plan escalated, 
Iran would be financially cut off.  "Iran needs access to 
dollars, yen, and the Euro, and if it is fully isolated from 
the EU, Japan, the U.S., and the UAE, there would be no other 
way for Iran to access sufficient amounts of those 
currencies," said U/S Levey.  Understanding, AbZ noted with a 
rueful smile, "This is one of those times where I wish the 
UAE was not a major financial hub." 
 
 6. (S/NF) AbZ suggested that the USG coordinate a meeting in 
Europe with all of our international partners to discuss 
potential financial measures against Iran and formulate an 
implementation strategy.  AbZ said that the UAE would welcome 
such a meeting, but that it was also important to have at 
least one or two other Gulf countries involved.  "Having them 
involved will also help them to realize the consequences if 
we do not implement measures such as these.  If we do not do 
this, and if the UNSC fails, then it will be much worse." 
AbZ also told U/S Levey that GCC involvement was critical 
because if the UAE were to block Iranian entities, access to 
UAE financial markets, they would move the money to other 
Gulf countries which are currently trying to increase their 
trade with Iran.  AbZ suggested that Kuwait and Bahrain would 
probably be the first GCC countries that the GOI would move 
money to if closed off from the UAE.  Asking U/S Levey if the 
Europeans are on board with the strategy to financially 
isolate Iran, U/S Levey responded that all the countries he 
presented the strategy to have gone back to their respective 
capitals to discuss the options. 
 
 7. (S/NF) U/S Levey told AbZ that, in the short run, the USG 
hopes the UAE will close any accounts of entities designated 
on the annex to Executive Order 13382.  AbZ asked for a copy 
of the list, and U/S agreed to provide it.  (Note: Embassy 
passed AbZ the Executive Order, the annex, and the list of 
derivative companies on May 1.  End note.) 
 
 
ABU DHABI 00002080  003 OF 003 
 
 
 8. (S/NF) AbZ also requested that U/S Levey provide him with 
a memo outlining the proposed actions.  He said he would take 
the memo to the UAE's senior leaders and discuss the issue 
with them.  "The Iranians are patient and will try every 
trick to achieve their objectives.  We must delay them and 
make it more difficult.  If we can achieve that, it is good 
enough, at least for the time being." 
 
 9. (S/NF) Action Request for Treasury: Please provide a memo 
summarizing the presentation, "Financial Measures to Pressure 
and Isolate the Iranian Regime," with corresponding estimated 
timeline, to the Embassy for passage to AbZ as soon as 
possible. 
 
 10. (U) This cable has been cleared by U/S Levey. 
SISON