VZCZCXRO4164
OO RUEHBC RUEHDE RUEHDIR RUEHHT RUEHKUK RUEHTRO
DE RUEHC #8151/01 2930538
ZNR UUUUU ZZH
O 191949Z OCT 09
FM SECSTATE WASHDC
TO IRAN COLLECTIVE IMMEDIATE
RUEHCP/AMEMBASSY COPENHAGEN IMMEDIATE 1112-1114
RUEHLE/AMEMBASSY LUXEMBOURG IMMEDIATE 6107-6109
RUEHNY/AMEMBASSY OSLO IMMEDIATE 8900-8902
RUEHSM/AMEMBASSY STOCKHOLM IMMEDIATE 8288-8290
RUEHTC/AMEMBASSY THE HAGUE IMMEDIATE 6678-6680
RUEHKO/AMEMBASSY TOKYO IMMEDIATE 0920-0922
RUEHHT/AMCONSUL HAMILTON IMMEDIATE 4593-4595
INFO RUEHRL/AMEMBASSY BERLIN IMMEDIATE 4039-4041
RUEHVT/AMEMBASSY VALLETTA IMMEDIATE 7546-7548

UNCLAS SECTION 01 OF 03 STATE 108151 
 
SENSITIVE 
 
C O R R E C T E D C O P Y (SENSITIVE CAPTION ADDED) 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EFIN ETTC KNNP XF ZP ZR IR UK XG XT
SUBJECT: UK DECISION TO BAN THE PROVISION OF INSURANCE TO 
IRISL 
 
REF: A. A) LONDON 002351 
     ¶B. B) STATE 104496 
     ¶C. C) STATE 069339 
 
STATE 00108151  001.2 OF 003 
 
 
 ¶1.  (U) This is an action request. Please see paragraph 3. 
 
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SUMMARY/BACKGROUND 
------------------ 
 
¶2.  (SBU) On October 12, the United Kingdom banned British 
companies from trading with the Islamic Republic of Iran 
Shipping Lines (IRISL) and Iranian Bank Mellat.  This ban was 
implemented under HM Treasury's authority under the Counter 
Terrorism Act (CTA), which entered into force on November 26, 
¶2008.  The ban against IRISL was implemented due to the 
services that the shipping line provides to Iran's Ministry 
of Defense and Armed Forces Logistics (MODAFL), which 
facilitates the transport of cargo for Iran's nuclear and 
ballistic missile programs.  Due to this ban, it is now 
illegal for British Protection and Indemnity (P&I) clubs to 
offer services, including insurance coverage, to IRISL 
vessels.  We understand that other members of the 
International Group of P&I clubs operate in your jurisdiction 
and may be approached by Iran to obtain services lost from 
the UK market.  In order to send a strong message to Iran 
regarding its defiance of its international responsibilities 
and to protect against the risk of 
P&I clubs in your jurisdictions from facilitating 
proliferation-related shipments, Washington requests that 
posts approach host governments and request that they urge 
P&I Clubs in their jurisdictions to refrain from providing 
P&I Club services to IRISL.  P&I Clubs should also recommend 
that their members exercise caution when asked to charter 
their vessels on behalf of IRISL, due to the risk that these 
vessels could be used to support IRISL's illicit activity. 
 
-------------- 
ACTION REQUEST 
--------------- 
 
¶3.  (SBU) Washington requests Posts to pursue the following 
objectives with appropriate host government officials at the 
Office Director-level or higher in each host country's 
Ministry of Foreign Affairs and Ministry of Finance.  Posts 
should also work with representatives from the UK Embassy to 
deliver this demarche in tandem.  HM Government has 
instructed its missions to reach out to U.S. embassies to 
coordinate timing details for this demarche.  The points in 
this demarche have been coordinated with representatives from 
HM Government. 
 
Documents relating to the ban can be found on HM Treasury's 
website at 
http://www.hm-treasury.gov.uk/fin crime policy.htm.  Please 
refer to reftel for more detail about the background of this 
decision by HM Treasury and our demarches related to IRISL. 
 
Host governments and their respective P&I clubs may ask for 
additional information on IRISL's deceptive practices.  Posts 
should draw from the press release issued by the State 
Department on September 10, 2008 regarding IRISL's 
designation under E.O. 13382, which can be found at 
www.state.gov/r/pa/prs/ps/2008/sept/109485.ht m; and the press 
release issued by the Treasury Department on September 10, 
2008, which can be found at 
WWW.TREASURY.GOV/PRESS/RELEASES/HP1130.HTM.  Posts are 
requested to pursue the following objectives: 
 
-- Reinforce the importance of the UK's ban against IRISL and 
Bank Mellat. 
 
-- Provide more information about the implementation of the 
ban in conjunction with HM Government. 
 
STATE 00108151  002.2 OF 003 
 
 
-- Urge host governments to ensure that P&I clubs in their 
jurisdictions refuse any requests to provide P&I Club 
services to IRISL. 
 
----------------------- 
BACKGROUND AND NONPAPER 
----------------------- 
 
¶4.  (SBU) On October 12, 2009, the United Kingdom banned 
British companies from trading with the Islamic Republic of 
Iran Shipping Lines (IRISL) and Iranian Bank Mellat.  This 
ban was implemented under HM Treasury's authority under the 
Counter Terrorism Act (CTA), which entered into force on 
November 26, 2008.  The act prohibits the UK financial sector 
from engaging in business with the two Iranian entities and 
restricts the ability of financial and credit institutions 
(including Protection and Indemnity (P&I) Clubs which provide 
an array of services, namely insurance) from entering into 
new transactions or business relationships, or from 
continuing existing relationships. 
 
IRISL AND ITS DECEPTIVE PRACTICES 
 
-- IRISL is Iran's national, maritime carrier; it is a global 
operator with a worldwide network of subsidiaries, branch 
offices and agent relationships.  It provides a variety of 
maritime transport services including bulk, break-bulk, 
cargo, and containerized shipping.  These services connect 
Iranian exporters and importers with South America, Europe, 
the Middle East, Asia and Africa. 
 
-- According to information available to the U.S. government, 
IRISL also facilitates shipments of military-related cargo 
destined for MODAFL and its subordinate entities, including 
organizations that have been designated by the United States 
under Executive Order (E.O.) 13382 and designated under UN 
Security Council Resolutions 1737 and 1747. 
 
-- For example, IRISL in 2007 transported a shipment of a 
precursor chemical destined for use in Iran's missile 
program.  The end user of the chemical was Parchin Chemical 
Industries, an entity designated under E.O. 13382 and listed 
in UNSCR 1747 as a subordinate of Iran's Defense Industries 
Organization.  DIO was listed in UNSCR 1737 as an 
overarching, MODAFL-controlled entity that is involved in the 
nuclear program. 
 
-- In order to ensure the successful delivery of 
military-related goods, IRISL has deliberately misled 
maritime authorities through deceptive techniques.  These 
techniques were adopted to conceal the true nature of 
shipments ultimately destined for MODAFL. 
 
-- As international attention over Iran's WMD programs has 
increased, IRISL has pursued new strategies to maintain 
commerce which also afford it the potential to evade future 
detection of military shipments, including: falsifying 
shipping documents in order to hide the true end users of 
shipments; employing the use of generic terms to describe 
shipments so as not to attract the attention of shipping 
authorities; and creating and making use of cover entities to 
conduct official IRISL business. 
 
-- These tactics are exemplified by the case of the M/V 
MONCHEGORSK.  On January 19, 2009, the USS SAN ANTONIO 
conducted a compliant boarding of the M/V MONCHEGORSK in the 
Red Sea.  Owned by a Russian company and registered in 
Cyprus, the MONCHEGORSK bore no overt legal connections to 
Iran.  However, upon examination of the ship's documents, the 
paperwork revealed that it was under charter to IRISL and 
carrying component materials for high-explosive ammunition 
from the Iranian Defense Industries Organization to Syria's 
Industrial Establishment of Defense.  The ship was requested 
by the flag state to divert to Cyprus, where the cargo was 
detained.  The cargo was determined to be in violation of 
UNSCR 1747, which restricts Iran from the "supply, (sale) or 
transfer ( (of) arms or related material."  While this cargo 
was not associated with Iran's or Syria's ballistic missile 
programs, the methodology used indicates a willingness by 
Iran and IRISL to employ evasive measures beyond renaming and 
reflagging in orde 
r to move goods in violation of international sanctions. 
 
STATE 00108151  003.2 OF 003 
 
 
HM TREASURY'S BAN AND ITS EFFECT 
 
-- HM Treasury's ban requires the immediate cancellation of 
P&I insurance contracts with IRISL, but allows a license for 
seven days to permit continued third party coverage for ships 
at sea.  In general, licenses will only be granted to help 
close down existing business - not to continue a business 
arrangement.  Two British clubs provide P&I services for 
IRISL:  North of England and Steamship Mutual.  For all 
practical purposes, these clubs will no longer provide P&I 
Club services to IRISL. 
 
-- As more and more reputable businesses decide to curtail or 
end business relationships with Iran, Iranian entities have 
sought new outlets to access international financial 
services.  In the wake of this decision by the UK, we expect 
IRISL to continue this pattern and seek insurance coverage 
from other P&I Clubs. 
 
-- We understand that other members of the International 
Group of P&I clubs operate in your jurisdiction.  In order to 
send a strong message to Iran regarding its defiance of its 
international responsibilities, and to protect against the 
risk of P&I Clubs in your jurisdiction from facilitating 
proliferation-related shipments, we request that you approach 
P&I clubs in your jurisdiction and urge them to refrain from 
providing any P&I services to IRISL and its vessels.  P&I 
Clubs should also recommend that their members exercise 
caution when asked to charter their vessels on behalf of 
IRISL, due to the risks that these vessels could be used to 
support IRISL's illicit activity. 
 
-- We look forward to working with you on this and other 
related security and counterproliferation matters, and are 
prepared to provide additional assistance as appropriate. 
 
------------------ 
REPORTING DEADLINE 
------------------ 
 
¶5.  (U) Post should report results within seven business days 
of receipt of this cable.  Please slug replies for ISN, T, 
TREASURY, INR, EUR, and NEA.  Please use the caption SIPDIS 
in all replies. 
 
---------------- 
POINT OF CONTACT 
---------------- 
 
¶6.  (U) Washington point of contact for follow-up information 
is Kevin McGeehan, ISN/CPI, (202) 647-5408. 
 
¶7.  (U) Department thanks Post for its assistance. 
CLINTON