VZCZCXRO1939
OO RUEHBC RUEHDE RUEHDIR RUEHKUK RUEHRN
DE RUEHRO #0667/01 0921502
ZNY SSSSS ZZH
O 021502Z APR 07
FM AMEMBASSY ROME
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7579
RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
INFO RUCNIRA/IRAN COLLECTIVE PRIORITY
RUEHSS/OECD POSTS COLLECTIVE PRIORITY
RUEHRL/AMEMBASSY BERLIN PRIORITY 1745
RUEHLO/AMEMBASSY LONDON PRIORITY 1362
RUEHFR/AMEMBASSY PARIS PRIORITY 2233
RUEHFL/AMCONSUL FLORENCE PRIORITY 2291
RUEHMIL/AMCONSUL MILAN PRIORITY 8520
RUEHNP/AMCONSUL NAPLES PRIORITY 2440
RUEAIIA/CIA WASHDC PRIORITY

S E C R E T SECTION 01 OF 02 ROME 000667 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
STATE FOR ISN; IO; NEA; EEB; EUR/WE, KATHLEEN ALLEGRONE, 
ANDREW YOUNG, AND KEVIN OPSTRUP; ISN/CPI, ANTHONY RUGGIERO 
AND JENNIFER CHALMERS; ISN/RA, RICHARD NEPHEW; IO/T HEATHER 
VON BEHREN 
TREASURY FOR U/S STUART LEVEY, RACHEL LOEFFLER, COLLEEN 
EDDY, AND BEN DAVIS 
EMBASSY PARIS FOR ECON AND OECD 
 
E.O. 12958: DECL: 04/02/2017 
TAGS: EFIN ECON KTTP PARM KN PREL UNSC OECD EXIM
IR, GM, FR, UK, IT 
SUBJECT: ITALY'S EXPORT CREDIT POLICY VIS-A-VIS IRAN STAYS 
THE SAME; MOF SUGGESTS TARGETING IRAN'S CENTRAL BANK 
 
REF: A. DEPT OF TREASURY/EDDY EMAIL 3/30/2007 
     ¶B. STATE 40909 
     ¶C. STATE 40440 
     ¶D. STATE 37801 
     ¶E. ROME 628 
     ¶F. ROME 198 
     ¶G. PARIS 544 
 
ROME 00000667  001.2 OF 002 
 
 
Classified By: Economic Minister Counselor Tom Delare for 
reasons 1.4 (b) and (d). 
 
SUMMARY AND COMMENT 
-------------------- 
 
¶1.  (S/NF)  EcMin discussed UNSCR 1747, Bank Sepah Rome, 
Italy's export credit agency SACE exposure to Iran, and U.S. 
designation of Iran's Defense Industries Organization March 
30 with the Ministry of Finance (MOF).  The MOF confirmed the 
March 27 Bank of Italy (BOI) report of BOI actions taken 
against Bank Sepah, noted that SACE has not changed its 
export credit policy toward Iran, reported that SACE has not 
issued new export credit insurance for Iran, and suggested 
the UN and U.S. next target Iran's Central Bank.  The MOF 
claimed that SACE has reduced its exposure to Iran the past 
year by ten percent. (SACE has not reduced its 4.6 billion 
euro exposure to Iran in absolute terms, since 2005, but only 
as a percentage of its increasing global exposure.)  The MOF 
would not commit to SACE changing its policy on Iran.  End 
summary and comment. 
 
¶2.  (S)  EcMin met March 30 with MOF Director General for 
International Affairs (and SACE President) Ignazio Angeloni 
and Filippo Giansante, advisor to Angeloni, to discuss UNSCR 
1747 and the U.S. designation of the Iran Defense Industries 
Organization (refs C and D).  Angeloni confirmed what BOI 
officials had reported March 27 concerning BOI actions taken 
against Bank Sepah Rome (ref E), but referred us back to BOI 
to discuss whether the GOI had frozen Bank Sepah Rome's fixed 
assets, including the branch building.  EcMin also passed ref 
B points on Iran's Defense Industries Organization (DIO). 
Angeloni stated that he was not aware if DIO was active in 
Italy or with Italian firms, but offered to investigate and 
get back to EcMin. 
 
EXPORT CREDITS TO IRAN 
---------------------- 
 
¶3.  (S)  Angeloni asked for clarification on the USG 
interpretation of UNSCR 1747 language dissuading states and 
international financial institutions from issuing new loans, 
grants, and assistance to Iran.  He remarked that the U.S. 
view would influence how Italy and the EU approach the issue. 
 EcMin emphasized that the U.S. takes an expansive and 
comprehensive view of UNSCR 1747's language, particularly 
with regard to business with Iranian state-owned enterprises. 
 
¶4.  (S)  Angeloni responded that SACE is not conducting "any 
new business" with Iran, given the heightened level of risk. 
However, he added, this is not due to any SACE policy change, 
but is "a matter of practicality."  Angeloni emphasized that 
SACE is "not controlled" by the GOI, but is a joint stock 
company independent from GOI policy and, ultimately, 
answerable to its shareholders. 
 
¶5.  (S)  EcMin pressed Angeloni to have SACE follow the lead 
of the French ECA, COFACE, and issue a public statement to 
tighten export credit policy to Iran and create a screening 
mechanism to review all new business with Iran (ref G). 
Angeloni replied that SACE had been more restrictive than 
France and Germany in its stance toward Iran the past year. 
Italy saw no need to take measures similar to COFACE, when 
SACE had reduced its exposure to Iran by ten percent in 2006, 
 
ROME 00000667  002.2 OF 002 
 
 
and anticipated a further reduction in Iran exposure in 2007. 
 (Comment:  SACE has not reduced its exposure to Iran in 
absolute terms.  Rather, the SACE argument is disingenuous, 
as SACE's Iran exposure appears to have remained steady at 
around 4.6 billion euros since 2005, while SACE has increased 
its total global portfolio from approximately 23 to 28 
billion euros since 2005.  In percentage terms, Iran takes up 
less of the portfolio, but, as far as we can determine, there 
is no change in real terms.  End comment.) 
 
¶6.  (S/NF)  EcMin passed Angeloni declassified intelligence 
that Bank Sepah might now be moving funds through Bank 
Markazi (ref A).  Angeloni thanked us and encouraged the U.S. 
to share additional information of this nature with Italy. 
He added that if the UN and U.S. decided to target Iran's 
Central Bank, it would be a "big hit" against Iran's entire 
financial system. 
 
COMMENT 
------- 
 
¶7.  (S/NF)  As in previous meetings, Angeloni would not agree 
that SACE should change its policy on Iran and significantly 
reduce its exposure to Iran, despite continued UN pressure. 
Angeloni's remark that SACE is a joint stock company that 
makes business decisions independently of GOI policy is 
Angeloni's way of reassuring us that SACE understands the 
serious risk of doing business with Iran and is acting 
accordingly.  However, Angeloni's statement cannot be taken 
at face value, since Angeloni himself, a high-ranking MOF 
official, also serves as SACE's President.  Italy believes 
this fig-leaf permits SACE sufficient cover both to manage 
U.S. and UN pressure and to permit SACE to continue doing 
business with Iran.  We cannot forget that SACE officials 
believe that Iran has traditionally been a "good customer" 
(ref F).  End comment. 
SPOGLI