VZCZCXRO9099
OO RUEHBC RUEHDE RUEHDIR RUEHKUK
DE RUEHRO #0017/01 0041644
ZNY SSSSS ZZH
O 041644Z JAN 07
FM AMEMBASSY ROME
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6847
INFO RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
RUCNIRA/IRAN COLLECTIVE PRIORITY
RUEHGG/UN SECURITY COUNCIL COLLECTIVE PRIORITY
RUEHFL/AMCONSUL FLORENCE 2031
RUEHMIL/AMCONSUL MILAN 8170
RUEHNP/AMCONSUL NAPLES 2169

S E C R E T SECTION 01 OF 02 ROME 000017 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
E.O. 12958: DECL: 01/05/2027 
TAGS: PREL EFIN KNNP IR UNAUS IT
SUBJECT: ITALY LOOKS TO SANCTIONS COMMITTEE FOLLOW-UP ON 
1737 
 
REF: A. A:ROME 3378 
     ¶B. B:STATE 202585 
 
ROME 00000017  001.2 OF 002 
 
 
Classified By: Pol M/C David D. Pearce for reasons 1.4 (b) and (d). 
 
Summary 
------- 
 
¶1.  (S/NF) Pol M/C called MFA Political Director Giulio Terzi 
January 4 to follow up on GOI thinking following passage of 
UNSCR 1737, and in particular next steps on Bank Sepah and 
Iran's Aerospace Industries Organnization (AIO).  Terzi said 
the GOI has no plans to withdraw Bank Sepah's authority to 
operate in Rome but will do everything necessary to follow up 
on the resolution, including freezing assets pursuant to 
international or national decisions (e.g., a US executive 
order).  To this end, Terzi advocated sanctions committee 
follow-up action on both Bank Sepah and AIO.  Such action, he 
said, could effectively forbid the Bank Sepah-AIO operations, 
and turn the Rome Bank Sepah branch into "an empty box".  He 
said an Italian inter-departmental group would meet soon to 
consider next steps on 1737 implementation.  Calls to the 
Ministry of Finance and Bank of Italy showed that holiday 
schedules had interrupted consideration of the issue, with 
the Bank indicating that their own legal review of 
possibilities offered by 1737 would not be complete until 
about January 10.  End Summary. 
 
 
No GOI Plan, Yet, to Shut Down Bank Sepah 
----------------------------------------- 
 
¶2.  (S) Terzi said there was nothing substantively new in 
Italy's position from what he had outlined to Treasury U/S 
Levey December 20 (ref A).  There are no plans, for the 
moment, to block or withdraw the operating authority of Bank 
Sepah as such.  However, GOI will do everything necessary to 
follow up on the resolution, including conditions for 
freezing assets pursuant to international or national 
decisions (e.g. US executive order.) 
 
¶3.  (S/NF) Pol M/C said U/S Levey had made plain our interest 
in designating Bank Sepah.   As a result of his talks here, 
Levey was also attuned to the need to coordinate public 
handling of any such designation carefully with GOI, given 
the importance and centrality of the Italian evidence.  Pol 
M/C stressed that AIO, which we had already designated, 
remains another concern.   Although Russia had removed AIO 
from the resolution's annex, Pol M/C said that we were urging 
others to include it in their national designations. 
 
 
But Sanctions Panel Could Make It "Empty Box" 
--------------------------------------------- 
 
¶4.  (S) Terzi said the Russian UNSC permrep was expected to 
move on appointments to the sanctions committee the week of 
January 8, which will put an actual mechanism in place; the 
sanctions committee would not just be on paper.  Bank Sepah 
and AOI should then be taken up in the committee as an urgent 
question.  Sanctions committee action, he said, could 
effectively forbid the Bank Sepah-AIO operations, and turn 
the Rome bank branch into "an empty box".  Terzi commented 
that sanctions committee action "could be a relief for 
everyone" because it would clarify matters, and he saw no 
reason why its actions could not go beyond what was actually 
in the resolution. 
 
 
No MFA Objection to US Designation of Bank Sepah 
--------------------------------------------- --- 
 
¶5.  (S/NF) Terzi said he and his colleagues had briefed FM 
D'Alema following the December 20 Levey meetings on the 
possibility of US designation of Bank Sepah, and Terzi had 
been confirmed in his views; the minister had issued no 
instructions for him to raise or object to such US action. 
He repeated, however, that the GOI did want coordination with 
the USG on public handling of any announcement. 
 
¶6.  (S) Terzi said the letter from Bank of Italy Governor 
Draghi to D'Alema had been received, and there had been some 
discussions in-house at the MFA.  There will be further MFA 
discussions January 8 and 9 and an inter-departmental meeting 
on the subject January 10. 
 
ROME 00000017  002.2 OF 002 
 
 
 
 
Delayed Consideration at BoI and Finance 
---------------------------------------- 
 
¶7.  (C) Calls to the Ministry of Finance and Bank of Italy 
showed that the holidays had interrupted consideration of 
UNSC 1737 and its policy implications.  Finance deferred 
discussion with us until January 8, while Deputy DG Carosio 
of the Bank of Italy, a participant in earlier discussions 
with Treasury U/S Levey, told Econ M/C that an in-house legal 
review would not be completed before about January 10. 
 
Comment 
------- 
 
¶8.  (S) Terzi was careful to caveat that he was speaking 
before the GOI inter-departmental discussion.  The lack of 
internal discussion at the Ministry of Finance and Bank of 
Italy make it difficult to draw any conclusions about 
positions and outcomes of the interagency review.  From what 
Terzi said, however, it appears the MFA will be looking for, 
and even forward-leaning on, sanctions committee follow-up 
action on Bank Sepah and AIO.   Whether the Ministry of 
Finance and the Bank of Italy are equally cooperative remains 
to be seen.  End Comment. 
BORG