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CONFIDENTIAL CONFIDENTIAL//NOFORN SECRET SECRET//NOFORN UNCLASSIFIED UNCLASSIFIED//FOR OFFICIAL USE ONLY

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### Viewing cable 10ROME87, STAFFDEL KESSLER DISCUSSES IRAN WITH MFA, ENI, PD

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Reference ID | Date | Classification | Origin
--- | --- | --- | ---
10ROME87 | 2010-01-22 15:03 | CONFIDENTIAL | Embassy Rome

`

    VZCZCXRO5383
    OO RUEHAG RUEHROV RUEHSL RUEHSR
    DE RUEHRO #0087/01 0221531
    ZNY CCCCC ZZH
    O 221531Z JAN 10
    FM AMEMBASSY ROME
    TO RUEHC/SECSTATE WASHDC IMMEDIATE 3170
    INFO RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
    RUEHBUL/AMEMBASSY KABUL PRIORITY 0574
    RUEHFL/AMCONSUL FLORENCE PRIORITY 3989
    RUEHMIL/AMCONSUL MILAN PRIORITY 0433
    RUEHNP/AMCONSUL NAPLES PRIORITY 4216
    RUEHUNV/USMISSION UNVIE VIENNA PRIORITY 0176

` `

    C O N F I D E N T I A L SECTION 01 OF 03 ROME 000087

    SIPDIS

    E.O. 12958: DECL: 01/12/2020
    TAGS: PREL ENRG KNNP PARM IR PGOV
    SUBJECT: STAFFDEL KESSLER DISCUSSES IRAN WITH MFA, ENI, PD

    REF: ROME 00035

    ROME 00000087  001.2 OF 003

    Classified By: DCM Elizabeth Dibble for reasons 1.4 (b) and (d)

     SUMMARY
      -------

    ¶1.  (C)  Staff Director of the House Foreign Affairs
    Committee (HCFA) Dr. Richard Kessler and HCFA staff members
    probed senior MFA and energy and gas parastatal Eni officials
    on Italy's intentions concerning Iran sanctions and prospects
    for effective multilateral action to curb Iran's nuclear
    program.  Opposition Democratic Party (PD) officials
    discussed Iran, Italy's role in Afghanistan, the MEPP, Iraq,
    and nonproliferation with the Staffdel.  End Summary.

    IRAN DOMINATES MFA TALKS
    ------------------------

    ¶2.  (C)  A January 8 roundtable discussion with Dr. Kessler
    and three HCFA staff members at the Ministry of Foreign
    Affairs (MFA) included MFA Director General for Multilateral
    Political Cooperation Stefano Ronca, Ronca's Deputy Filippo
    Formica, and  Deputy DG for Economic Cooperation Claudio
    Spinedi.  Office Directors Massimo Marotti
    (Political-Military Security and NATO Affairs); Diego
    Brasioli (G8 Issues and Global Challenges); and Giovanni
    Pugliese (Arms Control and Nonproliferation) also
    participated. After the roundtable the Staffdel had a meeting
    with MFA Deputy SecGen and Political Director Sandro De
    Bernardin.  Post was represented by the Charge, Pol-Mil
    Counselor and Poloff (notetaker).

    ¶3. (C)  Ronca believes the deteriorating situation in Iran
    will soon come to a head and that the UNSC should convey to
    Iran that delay tactics will not work and support this
    position by readiness to adopt further pressure.  Ronca and
    Spinedi told the Staffdel Italy is ready to explore, with its
    EU colleagues, the possibility of further sanctions, which,
    however, must conform to EU regulations, and not affect the
    legal rights of European companies.  Ronca suggested that the
    Iranian financial, oil and gas, and insurance sectors (but
    not the Central Bank) could be targeted and that the list
    sensitive products on the export ban list could be expanded.

    ¶4.  (C)  Spinedi, who (with Formica) attended the October 7
    Washington meeting of "Likeminded States on Iran," started by
    briefly alluding to Italy's longstanding complaint of
    exclusion from P5 1.  Spinedi pointed out we needed to
    determine what kind of sanctions would be acceptable to China
    and Russia, adding that even at the beginning of January,
    China's UN ambassador said that China "needed more time,"
    which, Spinedi noted, was not a total rejection of tougher
    sanctions.  Spinedi advocated strengthening what already
    exists and deciding where we are willing to exert additional
    pressure (especially in the oil and gas sector).  It would be
    important to determine which technologies others (e.g., China
    and India) are willing to provide and embargo those which
    they cannot.  Spinedi acknowledged that Italy had not yet
    imposed legally binding sanctions, but that the GOI had
    successfully used "moral suasion."

    ¶5.  (C)  Spinedi noted that sanctions proposed by the U.S. at
    the October 7 Likeminded meeting included targeting the
    Iranian Revolutionary Guard Command (IRGC), but did not
    include an embargo of refined oil and gas products.  Spinedi
    echoed Ronca in saying that in the coming months Italy will
    need to see how the rest of the Europe will approach new
    sanctions.

    ¶6.  (C)  MFA Deputy SecGen Sandro De Bernardin told the
    Staffdel that Italy was well aware of the danger posed by
    Iran and supported a "firm line."  De Bernardin noted Eni's
    considerable investments in Iran and characterized Italy's
    "moral suasion" efforts to wean Iran away from its nuclear
    ambitions as a "significant success."  On sanctions, De
    Bernardin stated that Italy was prepared to assume its "share
    of responsibility," but that sanctions are a means of
    pressure, not a goal; effective ones must be found. In De
    Bernardin's view, U.S.domestic legislation should not
    negatively affect other countries and the presidential waiver
    has been useful in the past; he hoped it will still figure in
    the future.

    ¶7.  (C)  Kessler encouraged Italy to continue and reinforce

    ROME 00000087  002.2 OF 003

    their past efforts.  De Bernardin agreed that if Iran gets
    the bomb, then others will seek to acquire nuclear weapons
    too and that the Iranian regime must realize there is a heavy
    price to be paid for persisting in non-compliance. "  De
    Bernardin reiterated Italy's support for openess to dialogue
    in addition to pressure, or the dual-track approach, and that
    "putting Iran in a corner" is not the same as "cutting it
    off" and characterized Italy as a "crucial player," essential
    to catalyzing consensus in Europe. He added that, given
    Iran's critical domestic situation, the regime was not in a
    position to decide anything.

    KEY TO SUCCESS IN AFGHANISTAN
    -----------------------------

    ¶8.  (C)  With regard to the critical situation in
    Afghanistan, Ronca acknowledged that we must strengthen the
    military aspect of the campaign, but that institution
    building and engaging President Karzai on fighting corruption
    must not be neglected. On the security side, Ronca said that
    Italy will increase its force by 1000 men during the first
    half of 2010 and that its Afghan National Police (ANP)
    training program is a first priority.  As for civilian
    engagement, Italy has committed 465 million euros in various
    civilian sectors, including health, education, and justice.
    Ronca and Marotti stressed the need for better coordination
    of civilian and military activities as an issue that should
    be on the agenda of the January 28 London NATO conference.
    Ronca noted that reaching out to insurgents was a task that
    should also be pursued. The Italians stressed the need for a
    long-term development strategy based on Afghan priorities,
    but which would also include private sector involvement and
    the development of good governance.

    CENTER LEFT PD AIRS FOREIGN POLICY POSITIONS
    --------------------------------------------

    ¶9. (C)  Head of the opposition Partito Democratico's (PD)
    Foreign Policy Department Piero Fassino told the Staffdel the
    PD supports President Obama's initiative  to dialogue and
    build bridges with the Islamic world, but is very concerned
    about the blocked MEPP and the "new wave of terror" in
    Afghanistan.  As for Iran, the PD supports pursuing a
    negotiated solution, but Fassino questioned whether the
    current leadership is in a position to negotiate credibly.
    He suggested it could be useful to change the order of
    priorities in Iran; that is, be more flexible on the nuclear
    issue, but harder on human rights.  According to Fassino, the
    greatest risk with nuclear proliferation is that
    irresponsible governments like the one in Iran could gain
    access to nuclear arms, adding that the PD assessed that
    there was little to fear with nations such as India, Britain,
    and France having nuclear weapons.  He asked whether a
    democratic government in Iran might not have a different
    position on the nuclear program.

    ¶10.  (C)  Fassino said the PD supports the GOI's increased
    (military) support for Afghanistan, but stressed that
    strengthening civil and governmental institutions and
    economic development are equally important.  On the MEPP,
    Fassino characterized Netanyahu's proposed 10-month
    settlement freeze "a little window of opportunity," but
    questioned whether it was enough, given the Israelis' refusal
    to discuss (the status of) Jerusalem.  As for Iraq, Fassino
    said the stabilization process must be supported; there was
    no alternative.

    ENI JUSTIFIES IRAN ACTIVITIES
    -----------------------------

    ¶11.  ( C ) Energy and gas parastatal Eni (Ente Nazionale
    Idrocarburi) officials told the Congressional delegation that
    it is cooperating to address USG concerns over the company,s
    Iran activities, but insisted that it will continue to
    fulfill its contractual obligations there. The company
    officials said that Eni has understood the USG message to
    reduce its presence in Iran, and as a result it has already
    decreased its Iran activities to a minimum level. The Eni
    officials provided the Staffdel with a copy of the November
    16, 2009 CEO Scaroni letter to Ambassador Thorne that states
    the company,s position (A copy of Eni's letter was provided
    to EEB in November). Referencing this letter, the officials
    pointed out that Eni will not undertake new activities in
    Iran, including no new activities by its subsidiaries, Saipem

    ROME 00000087  003.2 OF 003

    and Polimeri Europa. They added that following Scaroni,s
    September 16 meetings in Washington the company also gave up
    plans for an MOU with Iran for development of the phase III
    of the Darquain oil field. The officials stated that while EU
    law prevents the Eni from responding to official requests for
    information on its Iran operations, it has been transparent
    in informing the USG on a voluntary basis.

    ¶12.  ( C ) The Eni officials stated, however, that Eni
    intends to carry out exploration and development activities
    in Iran that fall under its contractual obligations there.
    The officials acknowledged that this is a &gray area8 due
    to the differences of opinion between the company and the USG
    over what is &new8 activity and what is &old.8 The
    company officials said that they hope to clarify this issue
    with Washington during separate meetings in January with
    senior officials from the State Department and Department of
    Treasury. Pressed for details over the company,s existing
    obligations, the officials said that it is under contract to
    meet certain targets of (oil) production in order to
    guarantee defined levels of production within a given time
    frame. They added that Eni must keep a certain threshold of
    production in order to recover its investments in Iran. They
    also explained that Eni receives periodic (possibly
    scheduled) payments by Iran in oil equivalent amounts that
    correspond to the attained target levels of production.

    ¶13.  ( C ) The Eni officials admitted the frustrating
    difficulties of operating in Iran, but stated that Eni's
    priority is to recover its investments there while meeting EU
    laws. The officials estimated Eni's total Iran investments at
    around $3 billion dollars, of which they said Eni has already
    recovered already about 60 percent (or about $1.7 billion
    according to one Eni representative). The company officials
    said Eni still needs to recover about $1.4 billion from its
    Iran operations. They added that &if all goes as planned8
    Eni will recover this remainder of its investments by the end
    of 2013 or early in 2014. They further explained that Eni's
    Iran contracts provide the possibility of extensions if the
    company is not able to recover its investments within the
    stipulated time frame. The Eni officials cautioned that the
    company may face EU sanctions if it withdraws from Iran due
    to pressure from USG unilateral sanctions.

    ¶14.  (U)  Staffdel Kessler has not cleared this cable.
    THORNE

`