VZCZCXRO1025
OO RUEHBC RUEHDE RUEHDIR RUEHKUK
DE RUEHC #7505/01 2551938
ZNY SSSSS ZZH
O P 111935Z SEP 08
FM SECSTATE WASHDC
TO RUEHOT/AMEMBASSY OTTAWA IMMEDIATE 2145
INFO IRAN COLLECTIVE PRIORITY

S E C R E T SECTION 01 OF 02 STATE 097505 
 
SIPDIS 
 
E.O. 12958: DECL: 09/11/2033 
TAGS: KNNP IR PREL PARM PINR EFIN CA XS
SUBJECT: RESPONSE TO CANADIAN REQUEST FOR ADVICE ON 
BLOCKING IRANIAN TRADE 
 
REF: REF: A) OTTAWA 968 
 
Classified By: ISN PDAS Patricia A. McNerney 
for reasons 1.4 (b) and (d). 
 
¶1.  (U)  This is an action request.  Please see paragraph 4. 
 
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SUMMARY 
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¶2.  (S//REL CANADA) On July 15, Canadian Department of 
Foreign Affairs and International Trade Deputy Director for 
Nuclear Non-Proliferation, Shawn Caza, told Embassy Ottawa 
that he was interested in U.S. advice on how Canada could 
enhance its non-proliferation efforts directed at Iran.  In 
response, the Department would like to pass the following 
nonpaper to Caza with suggestions on how to enhance Canada's 
non-proliferation efforts with regard to Iran and possibly 
form the basis for further discussions, which the Department 
would like to propose for the margins of the upcoming 
Financial Action Task Force (FATF) Intersessional. 
 
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OBJECTIVES 
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¶3.  (S//REL CANADA)  Washington requests Embassy Ottawa 
approach Shawn Caza to discuss this issue.  Post should 
pursue the following objectives: 
 
--  Present the following nonpaper to host government 
officials. 
 
--  Notify host government officials that U.S. government 
officials are willing to meet with their counterparts during 
the September 14-15 FATF Intersessional in Ottawa to discuss 
the issue. 
 
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BACKGROUND AND NONPAPER 
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¶4.  (S//REL CANADA) 
 
BEGIN NONPAPER FOR CANADA 
 
In response to Canada's request for suggestions on steps to 
increase pressure on Iran to change course, the U.S. would 
like Canada to consider the following recommendations. 
 
Ideas for consideration: 
 
--  Catch-all Controls.  We understand that Canada has WMD 
catch-all authority, but the U.S. is unsure about how often 
Canada uses its catch-all controls to restrict exports to 
Iranian end users.  In order to augment catch-all controls, 
the U.S. and the EU have taken additional measures to name 
end users and commodities that invoke license requirements. 
Additionally, a robust industry outreach program regarding 
Iranian procurement for its WMD programs should lead to 
increased catch-all inquiries from industry.  The U.S. 
recommends that Canada use its catch-all controls more 
frequently and expansively when warranted. 
 
--  End User List for Exporters.  Recognizing that exporters, 
despite their best efforts, are not always in a position to 
know their end users, the U.S. and Japan publish lists of end 
users in various countries that are involved in WMD programs 
and whose presence in a transaction triggers additional 
licensing requirements. For example, the U.S. list is 
composed of entities whose specified activities carry a risk 
of diverting exported and reexported items to WMD programs. 
In order to make this list more effective, the U.S has 
recently expanded the scope of the Entity List to include 
entities involved in other activities contrary to U.S. 
national security and foreign policy, such as supporting 
terrorism or conventional arms proliferation.  The UK has a 
slightly different list used to inform industry of Iranian 
end-users to which the UK has denied a license in the past 3 
years by either involving the WMD end-use control or refusing 
licenses under the WMD end-use control. The U.S. recommends 
that Canada explore 
the creation of a similar list to control exports to Iran. 
The U.S. list can be found at: 
http://www.bis.doc.gov/entities/default.htm. 
 
 
STATE 00097505  002 OF 002 
 
 
--  Iran-specific list-based controls. As part of the 
regulations published under UNSCR 1737's Iran-specific 
list-based controls, the EU composed a list of items that, 
while not controlled by the multilateral regimes, could 
nevertheless contribute to Iran's enrichment, reprocessing or 
heavy water related activities, or nuclear weapons delivery 
systems.  Items on this list would require a license for 
export.  Further, the EU Common Position for UNSCR 1803 
implementation adds a prohibition on the export of items, not 
otherwise controlled by the regimes, that the EU has 
determined to be able to contribute to those activities.  The 
U.S. urges Canada to consider imposing additional list-based 
controls for exports to Iran. Canada could also consider 
placing Iran on the Area Control List (ACL) which includes 
any country deemed to require an export permit for any good. 
 
--  Outreach to Industry.  Iran uses deceptive tactics and 
front companies to disguise the intent of its proliferation 
activities.  The U.S. is currently enhancing its industry 
outreach efforts to further impede Iranian procurement and 
recommends that Canada engage with its private sector firms 
to educate them about Iran's use of deceptive tactics. 
Iranian efforts to acquire uranium and items for its IR-2 
centrifuge program, such as carbon fiber and filament winding 
machines, are of particular interest. 
 
--  Creation of legal authority to freeze assets.  Executive 
Order (E.O.) 13382, signed by the President on June 28, 2005, 
is an authority that allows the U.S. to block the assets of 
WMD proliferators and their supporters. The E.O. prohibits 
U.S. persons from engaging in transactions with entities and 
individuals targeted by the Order, thereby denying 
proliferators and their supporters access to the U.S. 
financial and commercial systems.  Persons sanctioned under 
this authority are identified publicly and can be found in 
the U.S. Treasury Department's, Office of Foreign Assets 
Control list of Specially Designated Nationals and Blocked 
Persons (SDN list).  This list can be found on 
http://www.treas.gov/ofac.  The U.S. recommends that Canada 
explore the creation of a similar type of legal authority. 
The U.S. is prepared to discuss its non-proliferation related 
legal framework with Canadian authorities and could offer 
assistance. 
 
U.S. government officials are also willing to meet with their 
counterparts in Ottawa during the FATF Intersessional 
September 14-15 to discuss the issue. 
 
END NONPAPER FOR CANADA 
 
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REPORTING DEADLINE 
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¶5.  (U)  Post should report results within seven (7) business 
days of receipt of this cable.  Please slug replies for ISN, 
IO, T, TREASURY, and NEA/IR.  Please include SIPDIS in all 
replies. 
 
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POINT OF CONTACT 
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¶6.   (U) Washington point of contact for follow-up 
information is Kevin McGeehan, ISN/CPI, (202) 647-5408, 
McGeehanKJ@state.sgov.gov. 
 
¶7. (U) Department thanks Post for its assistance. 
RICE