VZCZCXRO3291
PP RUEHDE RUEHDIR
DE RUEHMK #0714/01 2071435
ZNY SSSSS ZZH
P 261435Z JUL 07
FM AMEMBASSY MANAMA
TO RUEHC/SECSTATE WASHDC PRIORITY 7084
INFO RUEHUNV/USMISSION UNVIE VIENNA PRIORITY 0007
RUCNDT/USMISSION USUN NEW YORK PRIORITY 0092
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY

S E C R E T SECTION 01 OF 02 MANAMA 000714 
 
SIPDIS 
 
SIPDIS 
 
ISN/CPI, T, NEA/ARP, EEB 
 
E.O. 12958: DECL: 07/26/2017 
TAGS: KNNP MNUC ECON PARM IR BA REGION
SUBJECT: BAHRAIN: ENSURING ROBUST IMPLEMENTATION OF 
UNSC-IMPOSED SANCTIONS ON IRAN 
 
REF: A. STATE 101574 
     ¶B. MANAMA 675 
     ¶C. STATE 98419 
 
Classified By: Ambassador William T. Monroe, reasons 1.4(b) and (d). 
 
¶1. (U) This is an action request.  Please see paragraph 10. 
 
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SUMMARY 
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¶2. (C) The Ambassador July 25 urged Central Bank Governor Al 
Miraj to continue his vigilance regarding Bahrain's 
involvement with Iranian financial institutions.  Al Miraj 
said he remained committed to preserving the integrity of 
Bahrain's financial system.  However, he stated that Ahli 
United Bank (AUB) CEO El-Labban had assured him that Future 
Bank's prospective venture to open a branch on Kish Island in 
Iran would be limited to trade-related projects and would 
involve nothing illicit.  Al Miraj proposed a joint meeting 
with El-Labban to explore any legal basis of USG concerns 
regarding the venture as well as broader goals on Iran trade 
restrictions.  Al Miraj doubted that UNSC financial 
prohibitions would deter Iran from its nuclear ambitions. 
Post requests talking points ahead of the aforementioned 
joint meeting with AUB.  End Summary. 
 
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VIGILANCE URGED 
--------------- 
 
¶3. (C) The Ambassador, in his July 25 farewell call to 
Central Bank Governor Rashid Al Miraj, reaffirmed the 
importance of universal and robust implementation of UNSCRs 
1737 and 1747 (per Ref. B).  The Ambassador said that Iran is 
seeking any possible means of escaping the pressures 
currently being brought to bear on its nuclear weapons 
program by the financial restrictions these resolutions 
impose.  He urged the CBB's continued vigilance in this 
regard.  "I can't overstate how important this is from a U.S. 
point of view."  The Ambassador acknowledged that Bahrain's 
UN delegation had submitted its 1737 and 1747 implementation 
reports and noted that the U.S. delegation had responded with 
specific questions regarding several Bank Sepah-related 
transactions.  Al Miraj indicated that he had seen the 
questions but did not elaborate on the status of Bahrain's 
response. 
 
¶4. (C) Al Miraj said he had read the demarche that the 
Ambassador had delivered to Foreign Minister Shaikh Khalid 
(Refs. C and D) and that he wished to assure the Ambassador 
that the CBB was committed to preserving the integrity of 
Bahrain's financial system.  On AUB's interest in Future 
Bank, Al Miraj said AUB was only a minority stakeholder.  He 
said he had discussed U.S. concerns with AUB CEO Adel 
El-Labban and had been assured that AUB's involvement with 
Future Bank transactions would be limited to trade-related 
projects and would involve nothing illicit. 
 
¶5. (C) (Note: El-Labban confirmed to the Ambassador July 24th 
that Future Bank had applied for approval to open a branch on 
the Iranian Kish Island free zone.  El-Labban told the 
Ambassador that Iran had been pressing Future Bank to open a 
branch in Iran, but that a branch on Kish Island would have 
little commercial significance (suggesting it was just a 
gesture to ease pressure from Tehran). 
 
¶6. (C) Al Miraj asked if there was a legal basis for USG 
concerns over AUB's current and prospective additional stake 
in Future Bank.  More broadly, he asked if the USG ultimately 
sought to restrict all commerce with Iran?  If not, what 
commerce, financial ties, with Iran did the USG recognize as 
legitimate?  "Iran is our neighbor and is an important 
commercial market."  He proposed a joint meeting with AUB's 
El-Labban that would allow the CEO to fully discuss the 
issues and hopefully allay Embassy concerns. 
 
¶7. (C) Acting Pol/Econ Chief stressed that, while there were 
financial ties with Iran that could be said to be legitimate, 
it was becoming increasingly difficult to distinguish these 
from the illegitimate.  Deceptive financial practices 
supported by the Iranian Government meant that apparently 
clean transactions could be tainted.  Increasing caution and 
scrutiny in dealing with Iranian institutions was, therefore, 
required. 
 
 
MANAMA 00000714  002 OF 002 
 
 
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FINANCIAL PROHIBITIONS SUFFICIENT? 
---------------------------------- 
 
¶8. (C) The Ambassador noted that UNSCRs 1737 and 1747 were 
having an effect.  "You think so?" Al Miraj asked.  He said 
it was difficult to believe that sanctions could be 
particularly effective so long as "two of the world's biggest 
countries, Russia and China," resisted truly meaningful 
measures.  The Ambassador replied that Russia's suspension of 
assistance had significantly slowed the progress of Iran's 
nuclear program.  He added that North Korea and Libya each 
served as instructive examples of the potential effectiveness 
of financial sanctions in reversing the development of rogue 
nuclear programs. 
 
¶9. (C) Al Miraj said he believed these examples did not apply 
to Iran.  He added that in his view, Iran saw itself as an 
ascending power with an agenda that called for exerting ever 
greater influence in the region.  He doubted that Iranian 
leadership would be deterred from its ambitions by UNSC 
financial prohibitions.  "Iran is belligerent. They have 
ambitions and they are already seeing their ambitions unfold 
in the Middle East." 
 
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COMMENT AND ACTION REQUEST 
-------------------------- 
 
¶10. (S) Although Al Miraj appears to be under no illusions 
regarding Iran's regional ambitions, his recognition of Iran 
as an "important commercial market" reflects a view widely 
held in Bahrain's business community.  The CBB thus far 
assesses that from a due diligence perspective, there are no 
problems with Future Bank's future Kish Island venture (Ref. 
A).  However, the bank is sensitive to potential threats to 
Bahrain's reputation as a tightly-regulated financial center, 
and we should use our upcoming meeting with CBB/AUB officials 
to press our position.  Post requests releasable talking 
points tailored to address Governor Al Miraj's questions 
(para. 6) regarding the legal arguments against the pending 
Future Bank venture on Kish Island and trade/financing with 
Iran.  End Comment. 
 
 
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Visit Embassy Manama's Classified Website: 
http://www.state.sgov.gov/p/nea/manama/ 
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MONROE