VZCZCXRO4803
PP RUEHBC RUEHDE RUEHDIR RUEHKUK
DE RUEHVI #0270/01 0690634
ZNR UUUUU ZZH
P 100634Z MAR 09
FM AMEMBASSY VIENNA
TO RUEHC/SECSTATE WASHDC PRIORITY 2121
INFO RUCNIRA/IRAN COLLECTIVE

UNCLAS SECTION 01 OF 02 VIENNA 000270 
 
SIPDIS, SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ETRD EINV PREL IR AU
SUBJECT: Austria's Iran Trade Shrinking; Commercial 
Ties Continue 
 
REF: VIENNA 44 
 
Sensitive but unclassified: protect accordingly. 
 
¶1. (SBU) SUMMARY: Austrian trade with Iran fell in 
2008 for the third year in a row, bucking the 
overall expansion of Austrian trade worldwide.  The 
Austrian Kontrollbank (equivalent to the U.S. Ex-Im 
Bank) has further tightened export guarantees for 
Iran in line with UN/EU sanctions.  The presence of 
Austrian firms in Iran is largely unchanged and 
Austria's Economic Chamber (WKO) continues to 
promote business opportunities there.  Oil/gas 
national OMV continues to talk with Iranian partners 
on energy deals, but the GoA has signaled its 
political opposition to new energy deals until the 
diplomatic situation thaws (reftel).  END SUMMARY. 
 
Bilateral Trade Falls Again 
- - - - - - - - - - - - - - 
 
¶2. (U) In 2008, Austrian exports to Iran fell 3.0% 
from 2007; imports from Iran fell 26.5%.  This 
negative trend ran contrary to Austria's overall 
foreign trade development (Austrian exports 
worldwide rose by 2.3% and imports by 4.3%). 
Austria's Iran trade also bucked overall Middle 
Eastern trends:  Austrian exports to Arabic 
countries rose 10%, while imports from those 
countries rose 24% (imports from Iraq rose 106.3%). 
Iran was Austria's third largest trading partner in 
the Middle East (after Iraq and Saudi Arabia) and 
its third largest Middle Eastern export market after 
UAE and Saudi Arabia. 
 
¶3. (U) In 2008, Austrian exports to Iran were EUR 
305.1 million ($449 million at the 2008 average rate 
of EUR.68/$1), accounting for 0.26% of Austrian 
exports worldwide.  Other large export markets in 
the area in 2008 were UAE (EUR 620 million), Saudi 
Arabia (438), Israel (278), and Qatar (127).  The 
product mix of Austrian shipments to Iran was 
consistent with previous years: machinery and 
vehicles (58%), followed by manufactured products 
and chemicals.  Austrian imports from Iran mainly 
comprise fuel/energy (81%), raw materials, and a few 
manufactured products. 
 
¶4. (SBU) Austrian firms' presence in Iran is largely 
unchanged with over 200 Austrian firms active in 
Iran.  The Austrian Economic Chamber (WKO) continues 
to promote exports to Iran.  For instance, the WKO 
is organizing Austrian participation in "group 
exhibitions" at two fairs in Teheran (the Iran Oil 
and Gas Show in April and the Iran Food and 
Hospitality/Iran Food and Beverages Technology/Iran 
Agro in May). 
 
Fewer Export Guarantees / Mostly for Consumer Goods 
- - - - - - - - - - - - - - - - - - - - - - - - - - 
 
¶5.  (SBU) The Austrian Kontrollbank/AKB still 
guarantees transactions for exports to Iran and 
investments in Iran, but has scaled back pursuant to 
UN sanctions and EU regulations (both are 
immediately and directly applicable in Austria). 
Pursuant to UNSC 1747, AKB no longer insures credits 
of Bank Sepah and other listed entities.  Pursuant 
to enhanced European Council sanctions against Iran 
(23 June 2008), AKB stopped providing insurance for 
letters of credit issued by Bank Melli.  Under EU 
Council Regulation 1110/2008 (10 November 2008), the 
AKB now also looks very carefully into any business 
with Bank Saderat.  In April 2007 (following OECD 
measures), AKB lowered Iran's country ranking to 
category 6 (out of 7) meaning the AKB still insures 
short-term transactions with Iran, but prefers 
Austrian customers with long-time experience in Iran 
and covers(?) only projects valued up to EUR 3-4 
million. 
 
¶6. (SBU) As a result of these various restrictions, 
AKB's new export guarantees for shipments to Iran 
fell from EUR 175 million in 2007 to EUR 91 million 
in 2008.  In 2008, the AKB's outstanding guarantees 
vis-a-vis Iran fell from EUR 700 million (of which 
EUR 655 million was at GoA risk and EUR 45 million 
at exporters' own risk) to about EUR 580 million. 
Total promissory guarantee notes issued (guarantee 
commitments by AKB not yet used by exporters) 
contracted sharply from EUR 390 million to EUR 70 
million.  An AKB contact told us the AKB insures 
 
VIENNA 00000270  002 OF 002 
 
 
primarily consumer goods exports, since there are 
alternative ways to insure other goods.  There is no 
demand currently for very large transactions. 
 
Little Foreign Direct Investment 
- - - - - - - - - - - - - - - - - 
 
¶7. (SBU) FDI is low in both directions and largely 
unchanged.  The Austrian National Bank's (OeNB) 
statistics (2006 figures) reportedly still list only 
one Iranian direct investment in Austria and two 
Austrian direct investments in Iran.  The value of 
all three projects reportedly is small (the 
threshold for inclusion in the OeNB statistics is a 
shareholding of at least 10% and a minimum nominal 
equity investment of Euro 72,000).  With the small 
number of investments, the OeNB will not disclose 
statistics in either direction (since they would 
potentially identify individual projects). 
 
Energy Sector is Key Variable 
- - - - - - - - - - - - - - - 
 
¶8. (SBU) Austrian investment in Iran would grow 
substantially if oil/gas national OMV invests in 
"real" energy projects in Iran (as opposed to the 
preliminary discussions which have characterized its 
activities there for the past decade).  OMV has been 
exploring oil fields in Iran since 2001.  In April 
2007, OMV signed a "Heads of Agreement" on potential 
investment in Iran's South Pars gas field (mainly 
for development of LNG infrastructure), but 
negotiations have stalled.  In January 2009, 
Austrian Foreign Miniser Michael Spindelegger (OVP) 
signaled GoA opposiion to any large energy deal 
with Iran unless the current diplomatic situation 
changes (reftel). 
 
KILNER