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S E C R E T SECTION 01 OF 02 STOCKHOLM 000738 
 
SIPDIS 
 
E.O. 12958: DECL: 11/24/2019 
TAGS: EUN IR PREL SW
SUBJECT: SWEDISH FM CARL BILDT ON IRAN AND SANCTIONS 
 
REF: STATE 120288 
 
Classified By: Ambassador Matthew Barzun for reasons 1.4(b) and (d). 
 
¶1. (S) Summary: Swedish FM Bildt is skeptical but not 
dogmatic about the likely effectiveness of Iran sanctions. 
His experts tell him sanctions on the energy sector will not 
be enforceable, and while sanctions on the financial sector 
would have an immediate effect, Iran would quickly develop 
"work-arounds."  In general, sanctions benefit "the wrong 
guys"; in Iran, the Revolutionary Guards, who control the 
smuggling routes, would likely benefit under a sanctions 
regime.  Iran will not accept the proposed deal involving 
fuel for the Tehran Research Reactor because of fears that 
"we will steal the uranium when they ship it out."  An 
"escrow-type deal" involving Turkey or China could work if 
there were enough time, but Bildt thinks the Iranian 
leadership is presently too divided to make a "rational" 
decision and "impatience" in the West is too high.  "Overall, 
I'm not a fan of sanctions because they are more a 
demonstration of our inability than our ability," Bildt 
stated.  End Summary. 
 
¶2. (S) The Ambassador delivered reftel points to Swedish FM 
Carl Bildt in a November 24 meeting and urged that the EU 
issue a strong statement on Iran at the December 10 European 
Council.  The Ambassador also asked about a November 20 blog 
entry in which Bildt discussed Iran sanctions.  (Note: Bildt 
wrote, "We have to prepare additional measures, sanctions 
that might come into effect.  But that demands analysis and a 
lot of pondering to make sure we do not end up in the wrong 
place.  The history of sanctions is in large part a history 
of failure.")  Bildt replied at length, outlining his views 
on the effectiveness of sanctions, on the Iranian leadership, 
and on the proposed deal involving the Tehran Research 
Reactor (TRR). 
 
-- On the possibility of a new statement by the European 
Council on December 10, Bildt said, "The problem is that 
we've already issued strong statements and I don't want to 
keep saying the same thing. It sounds empty."  Bildt 
continued that he was "skeptical" that another statement on 
Iran would have much effect. 
 
-- Calling the question of sanctions "not easy," Bildt said 
that the only role for sanctions is to support the 
negotiations, and to fulfill that role any proposed sanctions 
must:  a) command sufficient support regionally and globally; 
b) be enforceable; c) actually impact Iran; and, d) that 
impact must be "positive" for the negotiations. 
 
-- The history of Iran sanctions is problematic, Bildt 
continued.  "When we took Iran to the UN Security Council 
last time, they backed out of the Additional Protocol, which 
was our only really good source of information on the nuclear 
program.  We do not want Iran to back out of the IAEA 
completely." 
 
-- Another "downside," he continued, is that sanctions tend 
to strengthen the Iranian Revolutionary Guard Corps (IRGC), 
which is "more and more involved in running the economy." 
Because the IRGC historically made money through its 
smuggling operations, sanctions would simply strengthen the 
hand of those already in charge of the smuggling routes. 
 
-- Overall, sanctions generally strengthen "the wrong guys," 
Bildt argued.  For example, the main effect of the 
oil-for-food program in Iraq was that the entire population 
became dependent on the regime because "Saddam controlled the 
food coupons."  In "Milosevic,s Serbia," the main effect was 
the development of networks of criminality that ran the 
smuggling operations -- "networks we are still dealing with 
today." 
 
-- If there must be sanctions, Bildt continued, then the most 
effective way to implement them would be through the UN 
Security Council.  If UNSC sanctions are not possible in the 
end, "then we would be looking at regional sanctions, either 
on energy or financial instruments."  Swedish experts have 
assessed that sanctions on the energy sector would not really 
work, Bildt stated. 
 
-- With respect to sanctions on Iranian finances, Swedish 
experts assess that they would have an immediate effect that 
would erode over time as the Iranians developed work-arounds. 
 Iran is already developing alternate financial networks via 
Singapore and Brazil, Bildt said, "so if we want the intended 
effects of the sanctions to last for any amount of time, then 
we would need to tie up a lot of knots around the globe." 
 
STOCKHOLM 00000738  002 OF 002 
 
 
 
-- Bildt said Swedish and U.S. experts agree that energy 
sanctions will not work and financial sanctions will erode in 
effectiveness.  Specifically, he said he found general 
agreement with NSC staff he met on the margins of the U.S.-EU 
Summit in early November. 
 
-- Asked about the utility of sanctions in slowing down the 
Iranian weapons program, Bildt said that Europe has already 
"done all it can" to hinder the nuclear trade.  At this 
point, he continued, Europe could only pursue sanctions that 
would impose "either general harm on the population or 
specific harm to certain individuals to compel them to 
negotiate." 
 
-- For sanctions to be effective, they will need to have "a 
broad base, which will weaken the sanctions but strengthen 
their impact," Bildt said.  "If it looks like Iran versus the 
West, then the regime will successfully mobilize the people 
against the United States and the United Kingdom.  But if 
Brazil, Indonesia, and Russia also support a sanctions 
regime, then the leadership will feel isolated," Bildt 
stated. 
 
-- Bildt commented that the Iranian leadership is internally 
so divided that they spend 80 percent of their energy 
fighting each other and only 20 percent on the negotiations. 
Majlis Speaker Larijani has been opposing deals made by 
President Ahmadinejad simply because they were made by 
Ahmadinejad. 
 
-- Turning to the proposed Tehran Research Reactor (TRR) 
deal, Bildt said that the Iranians fear "we will steal the 
uranium when they ship it out of the country, as has happened 
a couple times in the past."  That is why the Iranians 
offered a counterproposal in which fuel rods for the TRR are 
first imported into Iran before any LEU is sent out. 
 
-- Bildt opined that "an escrow-type deal" involving Turkey 
or China might work "if there were a rational negotiating 
partner in Tehran.  But for me, I have real doubt whether the 
internal rivalries will allow the Iranians to deal."  In the 
long run, there might be ways to structure an acceptable 
deal, "but is there enough time in Washington?  And what 
about Paris, another impatient place?" 
 
-- In any case, Bildt said, resolving the TRR would not 
resolve the nuclear issue, although it would clearly be a big 
breakthrough that would give the negotiations more time and 
begin the process of "rebuilding trust." 
 
-- "Overall, I'm not a fan of sanctions because they are more 
a demonstration of our inability than our ability," Bildt 
concluded. 
 
¶3. (C) Comment: Bildt is skeptical about the effectiveness of 
proposed sanctions but he is not dogmatic.  He would, we 
think, change his mind if presented with a well-reasoned 
argument as to why a particular sanctions plan would help 
bring about desired outcomes. 
BARZUN