VZCZCXRO6731
PP RUEHAG RUEHAST RUEHBC RUEHDA RUEHDBU RUEHDE RUEHDF RUEHDIR RUEHFL
RUEHIK RUEHKUK RUEHKW RUEHLA RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR
RUEHVK RUEHYG
DE RUEHVI #1604/01 1661345
ZNR UUUUU ZZH
P 151345Z JUN 07
FM AMEMBASSY VIENNA
TO RUEHC/SECSTATE WASHDC PRIORITY 7668
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCNIRA/IRAN COLLECTIVE

UNCLAS SECTION 01 OF 02 VIENNA 001604 
 
SIPDIS 
 
SIPDIS, SENSITIVE BUT UNCLASSIFIED 
 
E.O. 12958: N/A 
TAGS: PGOV ETRD EINV PREL IR AU
SUBJECT: IRANIAN MINISTER VISITS AUSTRIA 
 
 
Summary 
------- 
 
¶1.  (SBU) During a June 12-13 visit to Austria, the Iranian Minister 
for Economics and Finance, Davoud Danesh Jafari, met with Minister 
of Economics Martin Bartenstein, President of the Economic Chamber 
Christoph Leitl, and Head of the Kontrollbank (Austria's export 
credit agency) Rudolph Scholten.  He also attended a meeting of the 
OPEC Fund for International Development (OFID).  Following his 
meeting with Jafari, Bartenstein voiced concerns about Austria's 
economic relations with Iran due to the regime's pursuit of a 
nuclear program.  Leitl, however, enthusiastically lobbied for 
intensified trade and investment activities between the two 
countries.  Leitl claimed that trade contacts could improve a 
difficult political situation.  End summary. 
 
 
Cool Reception at Ministry of Economics 
--------------------------------------- 
 
¶2.  (SBU) On June 12, Iranian Minister for Economics and Finance, 
Davoud Danesh Jafari met with Minister of Economics Martin 
Bartenstein to discuss Austrian-Iranian commercial relations.  In a 
statement after the meeting, Bartenstein noted that the Iranian 
nuclear program "cast clouds" over Austria's trade relations with 
Iran.  According to Bartenstein, the impact of the UNSC sanctions 
against Iran went beyond the Iranian nuclear and missile program due 
to the international community's concern with Iranian intentions. 
 
¶3.  (SBU) The Head of the MoE's Department for Relations with Non-EU 
Countries, Gabriele Meon-Tschuertz, told us that the ministers only 
discussed general economic relations, with no mention of specific 
companies or projects.  According to our contacts in the Finance 
Ministry, Jafari had no appointments with MoF officials.  The MoF 
was also unaware of any meetings between Jafari and Austrian 
financial institutions.  (The Iranian news agency IRNA had announced 
that Jafari would meet with MoF officials and Austrian banks during 
his visit.)  On June 13, IRNA quoted Jafari as claiming that an 
Iranian bank would soon open in Vienna.  Our contacts at the 
Financial Market Authority told us they were unaware of any 
application from an Iranian bank to begin operations in Austria. 
 
 
Warm Welcome at the Economic Chamber 
------------------------------------ 
 
¶4.  (SBU) The Austrian Economic Chamber, where Jafari's delegation 
met an undisclosed number of Austrian companies, gave Jafari and his 
delegation a much warmer welcome.  In a press statement after the 
meeting, Leitl described Iran as one of Austria's most important 
trade partners in the Middle East.  In Leitl's opinion, Austria and 
Iran could further improve and extend commercial contacts.  Leitl 
opined that in politically difficult times, business performed a 
confidence-building function, "achieving what politics was not able 
to achieve."  (Note: A spokesman for Austria's energy company OMV 
told us that Jafari did not meet with any of its officials.  End 
Note) 
 
 
Iran's Pitch 
------------ 
 
¶5.  (SBU) Following his meetings, Jafari publicly called for 
increased foreign investment in Iran, emphasizing the regime's 
progress on privatization.  He also pointed to Iran's huge oil and 
gas reserves, encouraging foreign companies to invest in the energy 
sector.  Jafari also underscored the opportunities for consumer 
goods exports to a market of 70 million.  Jafari maintained that the 
Iranian Government treated foreign investors on a par with domestic 
investors. 
 
 
Austrian-Iranian Trade Plummets in 2006 
--------------------------------------- 
 
¶6.  (U) According to figures from the Austrian Statistics Office and 
the Economic Chamber, Austrian exports to Iran have doubled since 
¶2002.  However, in 2006, there was a significant downturn in trade 
between the two countries.  Austria's exports to Iran amounted to 
$423 million (16% decline compared to 2005), and imports from Iran 
were $176 million (26% decline).  Iran is only the 39th largest 
export market for Austria, but it is the third largest market in the 
Middle East, behind Saudi Arabia and the UAE. 
 
¶7.  (U) Statistics for the first three months of 2007 indicate 
Iranian exports have risen by 205%, overwhelmingly attributable to 
increased imports of Iranian oil.  Austrian exports to Iran during 
the same period were down 12% compared to the first three months of 
¶2006.  Austria's main exports to Iran include machinery and 
vehicles, chemical and medical equipment, paper, and semi-processed 
goods.  Leitl highlighted new investment opportunities in Iran's 
infrastructure sectors (electricity, rails, water, and sewage), 
 
VIENNA 00001604  002 OF 002 
 
 
factory construction, tourism, and consumer and luxury goods. 
 
 
Comment 
------- 
 
¶8.  (SBU) Bartenstein's comments are significant, in that they 
represent the first time a senior GoA official has publicly warned 
that Iran's nuclear program is complicating its commercial relations 
with Austria across the board.  Nevertheless, many Austrian 
businesses, including OMV, continue to view Iran as a potentially 
lucrative market.  The GoA will continue to try to walk a fine line 
between political support for UNSC sanctions and defense of Austrian 
business interests in Iran. 
 
KILNER#