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ZNY CCCCC ZZH
O 250832Z JAN 07
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC IMMEDIATE
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE IMMEDIATE
RUCNIRA/IRAN COLLECTIVE IMMEDIATE
RUCNRAQ/IRAQ COLLECTIVE IMMEDIATE

C O N F I D E N T I A L SECTION 01 OF 02 BRUSSELS 000243 
 
SIPDIS 
 
SIPDIS 
 
DEPT PASS TREASURY FOR U/S LEVEY, NSC FOR SINGH 
 
E.O. 12958: DECL: 01/24/2017 
TAGS: PREL ECON EAID EFIN EUN ETRD PARM IR IZ
SUBJECT: DEPSEC KIMMITT VISIT: MEETING WITH FERRERO-WALDNER 
ON IRAN AND IRAQ COMPACT 
 
 
Classified By: POLMINCOUNS LAURENCE WOHLERS FOR REASONS 1.5 (D) AND (E) 
. 
 
SUMMARY 
------- 
1.(C)  On January 22, Deputy Secretary of the Treasury Robert 
Kimmitt and Ambassador Gray discussed Iran sanctions and the 
Iraq Compact with EU Commissioner for External Relations 
Benita Ferrero-Waldner.  Kimmitt underscored U.S. 
expectations that the EU would put in place quickly binding 
EU legislation which would allow member states to fully 
implement UNSC sanctions against Iran.  The EU had still not 
yet done so in the case of similar UNSC sanctions against 
North Korea.  With the EU Foreign Ministers (GAERC) January 
22 political guidance now in hand (septel), Ferrero-Waldner 
explained that DG Relex would propose a set of implementing 
regulations to the 27 member states in early February.  While 
confident that EU FMs would adopt a common position on the 
implementing regulations at the February 12 GAERC, 
Ferrero-Waldner insisted that they would not "go beyond" what 
was in the resolution.  Pressed by the Depsec on designation 
of financial entities, she advised the U.S. to engage the 
German Presidency and the member states.  Kimmitt outlined a 
notional political calendar for completion of the Iraq 
Compact, noting that the new UNSYG was approached about 
wrapping up the process by the end of March.  Ferrero-Waldner 
reiterated EU support for Iraq reconstruction and expressed 
her personal interest in participating in a final Compact 
planning meeting.  Finally, the two compared notes briefly on 
the Transatlantic Economic Partnership concept. END SUMMARY 
 
 
2.(U)  In a cordial and business-like thirty minute meeting 
January 22, Deputy Secretary of the Treasury Robert Kimmitt, 
accompanied by USEU Ambassador Gray, USEU Treasury attache 
and USEU poloff (notetaker) met with European Union 
Commissioner for External Relations Benita Ferrero-Waldner to 
discuss implementation of Iran sanctions and completion of 
the Iraq Compact.  The Commissioner was joined by Cabinet 
staffers Belen Martinez Carbonell and Hubert Gambs, Head of 
Unit for Gulf Countries, Iraq, Iran and Yemen Patricia 
Llombart Cussac, Deputy Head of Unit for Gulf Countries, 
Iraq, Iran and Yemen, and Albertus Straver, desk officer for 
Iran. 
 
Iraq Compact - Completion Endgame 
--------------------------------- 
¶3. (C)  Depsec Kimmitt expressed appreciation for 
Ferrero-Waldner's personal efforts to sustain the EU's 
assistance budget for Iraq.  He noted that the Administration 
would propose a significant increase in U.S. Iraq-related 
spending during the first week of February.  The Deputy 
Secretary and Commissioner agreed that Iraq-led political 
 
SIPDIS 
reconciliation and security efforts were critical to 
internationally-supported reconstruction efforts.  In this 
regard, Kimmitt pointed out the importance of the passage of 
new hydrocarbon law in Iraq, which would give Sunnis new and 
significant access to oil revenue-sharing. 
 
4.(C)  Depsec Kimmitt noted that the new UNSYG Ban Ki-Moon 
had made completion of the Iraq Compact an immediate priority 
objective.  He relayed the USG's suggestion that the SYG 
convene the Compact Preparatory Group (PG) plus Permreps from 
non-PG countries in New York in February with a view toward 
holding a signing conference in March.  Ferrero-Waldner 
welcomed this news, as she had not heard from the UN on the 
Compact since the November 2006 meeting of the PG.  She 
expressed interest in attending a February PG if it coincided 
with her travel to the U.S. for the next Quartet meeting. 
 
Iran Sanctions - EU Next Steps 
------------------------------ 
¶5. (C) Turning to Iran, Depsec Kimmitt praised the January 22 
GAERC conclusions on Iran as "quite an important statement," 
Especially the section calling for a "ban on transactions 
with and freeze the assets of individuals and entities 
covered by the criteria in UNSCR 1737."  Ferrero-Waldner said 
that the EU 27 Member States had had difficult discussions on 
the Iran in the week leading up to the consensus reached at 
the GAERC early in the day.  The end result was an EU 
consensus that the UNSCR 1737 must be implemented as well as 
a political framework for the European Commission to 
undertake the drafting of the required implementing 
regulations.  DG Relex hoped to circulate its draft 
legislative proposal to the member states for consideration 
in early February.  The final text would then be submitted 
through the COREPER (EU Permreps) to the EU FMs for final 
approval at the February 21 GAERC. 
 
BRUSSELS 00000243  002 OF 002 
 
 
 
¶6. (C) Depsec Kimmitt stressed the importance of putting into 
place quickly the necessary authorities for member states to 
take action.  Unlike sanctions of the last thirty years which 
were intended to change national behavior broadly, the new 
sanctions were designed to be conduct-specific, fact-based, 
and targeted.  The United States was disappointed that the EU 
had not yet created the legislative framework required for 
member states to implement UNSCR 1695 on North Korea.  The 
situations with North Korea and Iran proliferation financing 
activity were not dissimilar.  In fact, there was a deepening 
nexus of cooperation between the two proliferators in this 
regard.  Ferrero-Waldner expressed confidence that a common 
EU policy would be reached, but doubted it would fully mirror 
that of the USG; "it was important to implement what is in 
the resolution (1737), and not go beyond it."  Kimmitt warned 
the EU against indulging itself in an overly technical 
interpretation of UNSCR 1737 as the Russians had done in the 
endgame of the UNSC negotiations in order to dilute the 
impact of the resolution at the 11th hour.  Ferrero-Waldner 
remarked that the US should speak to the German Presidency 
and the member states about this, since they would have to 
reach consensus on whatever proposal the Commission drafted. 
(See septel of more positive discussion of this point with 
Common Foreign and Security Policy High Representative Javier 
Solana.) 
 
Transatlantic Economic Partnership - Whose Ideas? 
---------------------------------------- 
¶7. (SBU) Depsec Kimmitt stated that the U.S. supported German 
Chancellor Angela Merkel's proposal for  a Transatlantic 
Economic Partnership.  Ferrero-Waldner wryly noted that she 
had put forward ideas on this concept in 2005, but the U.S. 
had responded with little enthusiasm then.  In any case, she 
urged the USG to take a second look at some of those earlier 
ideas in the context of Merkel's new proposals.  Kimmitt 
suggested that the U.S. and EU should continue using 
mechanisms that are already working well even as we look at 
new ideas in the Merkel initiative that could broaden 
cooperation in the regulatory arena. 
 
¶8. (U)  This cable has been cleared by Deputy Secretary 
Kimmitt. 
 
GRAY 
.