VZCZCXRO9739
RR RUEHAG RUEHBC RUEHDE RUEHIHL RUEHKUK RUEHROV
DE RUEHFR #1708/01 1171629
ZNY SSSSS ZZH
R 271629Z APR 07
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 6817
RUEATRS/DEPT OF TREASURY WASHDC
INFO RUCNMEM/EU MEMBER STATES
RUCNRAQ/IRAQ COLLECTIVE

S E C R E T SECTION 01 OF 02 PARIS 001708 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EB, EUR/WE, NEA 
TREASURY FOR TFI, IA 
 
E.O. 12958: DECL: 04/26/2017 
TAGS: EFIN PREL ETTC PARM IR IQ FR
SUBJECT: FRENCH SUPPORT FOR IRAQ COMPACT, IRAN SANCTIONS 
 
 
Classified by A/DCM Thomas J. White for reasons 1.4 (b) and (d) 
 
¶1.  (C) SUMMARY: Treasury Deputy Secretary Kimmitt met with the 
French April 26 to discuss Iraq and Iran.  Officials remained 
positive about the Iraq Compact's goals, but were unable to 
confirm ministerial participation at the Compact launch due to 
French elections.  On Iran, both of the presidential candidates 
have spoken in equally strong terms, so officials predict France 
will maintain its hard line on sanctions.  END SUMMARY 
 
POLITICAL DISCUSSION AT THE MFA 
------------------------------- 
¶2. (SBU) Participants in the meeting included: 
 
MFA 
Gerard Araud, MFA Deputy Secretary General & Director General 
for Political Affairs and for Security; 
Jean-Pierre Guinhut, Special Coordinator for Iraq; 
Francois-Xavier Carrel-Billiard, Counselor, Office of the 
Minister; 
Philippe Leglise-Costa, Deputy Director, Directorate of Economic 
Affairs; 
Gilles Bonnaud, Deputy Director, Directorate of North Africa & 
Middle East; 
Bernard Chappedelaine, Desk Officer, Directorate of North Africa 
& Middle East; 
Nicolas Kassianides, Desk Officer, Directorate of UN & 
International Organizations; 
Phillipe Errera, Deputy Director, Directorate of Strategic 
Affairs, Security and Disarmament; 
David Bertolotti, Desk Officer, Directorate of Strategic 
Affairs, Security and Disarmament. 
 
USG: 
The Deputy Secretary of the Treasury; 
DCM Tom White; 
TFCO Otto Van Maerssen (notetaker); 
PolOff Rob Waller. 
 
¶3. (SBU) Treasury Deputy Secretary Robert Kimmitt met in Paris 
April 26 with Gerard Araud, Director General of Political 
Affairs at the MFA, to discuss the way forward on Iraq, and Iran 
sanctions. 
 
IRAQ 
---- 
¶4.  (C) Kimmitt thanked the French for their participation to 
date in preparing the International Compact for Iraq. He 
encouraged ministerial representation at its launch in Egypt on 
May 3 (even if by a minister other than the foreign minister), 
given the expected attendance of multiple Iraqi ministers (oil, 
finance, planning, etc.) and ministers from most Preparatory 
Group countries.  Araud said that Ambassador Guinhut would 
attend, but getting a French minister would be very difficult 
given the current electoral campaign.  He promised nevertheless 
to pass Kimmitt's suggestion (that any minister would do) to the 
political level for consideration. 
 
¶5.  (C) Kimmitt urged France to be in a position to endorse 
support for the ICI, since it represents Iraq's transition over 
the next 5 years from receiving development assistance to 
receiving investment flows, thereby tapping its wealth for the 
benefit of all Iraqis.  He also encouraged France to support EIB 
involvement in Iraq projects.  Araud remarked that the EU has 
already committed 1.8 billion euros, and is providing budget 
support.  The USG can rely on the EU.  Guinhut noted that the 
real question is not one of support, but of the security 
situation.  Kimmitt countered that the strategy in Iraq now more 
explicitly links security operations to rebuilding, and Iraqi 
officials are closely engaged in all such operations.  He 
encouraged greater French contribution to Iraq. 
 
IRAN 
---- 
¶6.  (S) Kimmitt noted the importance of Europe continuing to 
take the lead to contain Iran's nuclear ambitions, given the 
existence of ties to Iran that the U.S. lacks.  He noted that 
the USG is moving away from broad country sanctions to targeted 
measures against illicit conduct involving terrorism and 
proliferation.  UN action against Iran appears to be having a 
political effect within Iran.  Nevertheless, the USG remains 
concerned about Iranian banks, including its central bank. 
 
¶7.  (S) Araud said USG pressure on French banks runs close to 
foreign interference, but said that he expected Kimmitt to get a 
stronger reaction from the French Treasury on that point. (Note: 
In fact, per septel the French Treasury did not raise the issue. 
End note.)  He provided a frank readout about a split in views 
 
PARIS 00001708  002 OF 002 
 
 
within the MFA: the economic bureau is concerned about risk to 
the banking system, but the non-proliferation bureau is quite 
happy with the USG approach because it has been effective. 
Araud commented that the French Assistant Secretary for Mideast 
Affairs visited Tehran a week ago, and had heard many in the 
business and political establishment saying that President 
Ahmadi-Nejad is crazy, and that Iran may soon be obligated to 
ration gasoline if it does not change policy. 
 
¶8.  (S) Araud noted that French banks have reduced their 
exposure in Iran.  The GoF is reducing its guarantees of export 
credits by 20 percent, and intends to keep trending down.  Bank 
activities have been halved in one year, dropping from 6 to 2.7 
billion euros of exposure.  France cannot leave overnight, 
especially since companies like Total have interests in selling 
refined products.  Iran is important to Total, and Total is 
important to France.  Araud remarked that the Iranian Ambassador 
has been visiting French banks to encourage them to return to 
doing business with Iran, but that has led nowhere.  The 
political directors will meet in May to discuss the way forward. 
 Araud does not think there is much systemic risk to the banking 
system if other banks are targeted. He assured the Deputy 
Secretary that France is committed to a third resolution should 
 
SIPDIS 
it prove necessary, although every step gets more difficult, 
especially with China. 
 
¶9. (S) Araud mentioned concerns in France about a new U.S. Iran 
Sanctions Act, and said that France has asked that it be raised 
at the next U.S.-EU meeting.  It is important to hit Iran, not 
each other, he said.  Kimmitt acknowledged the concerns, and 
said he intends to continue advocating targeted sanctions as the 
most effective way forward. 
 
¶10. (S) Kimmitt raised the issue of export credits, signaling 
that he hopes to continue a dialogue.  Economic Affairs Deputy 
Director Leglise-Costa said he had seen reports of the OECD ECA 
meeting, where the proposal to adopt a common line was not 
enthusiastically welcomed.  In France, however, in addition to 
the reduction in credit guarantees, export credit controls 
include a requirement that firms acknowledge their obligations 
to perform due diligence regarding their Iranian customers and 
the nature of any transaction. 
 
¶11.  (S) Kimmitt commented that the French may see a change in 
the Chinese position on Iran sanctions, given their expanding 
commercial banking interests in the U.S. market.  Araud 
confirmed that the French have sensed a stiffening, which they 
attributed to the Chinese (and Russians) becoming fed up with 
Iranian intransigence.  He concluded that since both 
presidential candidates have made tough statements about Iran, 
French policy will remain the same after the elections. 
 
¶12.  (U) The Deputy Secretary cleared this message. 
 
Please visit Paris' Classified Website at: 
http://www.state.sgov.gov/p/eur/paris/index.c fm 
 
STAPLETON#