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FM AMEMBASSY THE HAGUE
TO RUEHC/SECSTATE WASHDC 3748
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCNIRA/IRAN COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC

S E C R E T SECTION 01 OF 04 THE HAGUE 000075 
 
NOFORN 
SIPDIS 
 
E.O. 12958: DECL: 02/04/2020 
TAGS: EFIN PREL KTFN IR NL
SUBJECT: NETHERLANDS: TREASURY DAS GLASER PREPARES DUTCH 
FOR ACTION ON IRAN 
 
REF: STATE 9124 
 
Classified By: Pol/Econ Counselor Andrew Mann, reasons 1.4(b,d) 
 
¶1. (S/NF) SUMMARY: Treasury DAS Glaser engaged key Dutch 
decision makers on Iran policy across three ministries 
January 26.  The Dutch expressed support for increasing 
pressure on the Tehran regime.  They assured Glaser the 
Netherlands would support tougher sanctions within the EU, 
although officials remain concerned that foreign companies 
will fill the void when individual Dutch businesses pull out 
of Iran.  Glaser also shared specific information regarding 
Dutch companies doing business with IRGC front companies, 
potentially in violation of EU sanctions.  The Dutch feel 
excluded when senior U.S. officials discuss sensitive policy 
issues in more prominent EU capitals, bypassing The Hague, so 
they appreciated Glaser's consultations, precisely the type 
of outreach that earns goodwill and support from this close 
ally.  END SUMMARY. 
 
-------------------------------------------- 
FOREIGN MINISTRY / ECONOMIC AFFAIRS MINISTRY 
-------------------------------------------- 
 
¶2. (S/NF) Treasury Deputy Assistant Secretary for Terrorism 
Finance and Financial Crimes Danny Glaser and NEA Senior 
Advisor Elisa Catalano met January 26 with Henne Schuwer, 
Foreign Ministry Director for Middle East and North African 
Affairs (NEA A/S equivalent); Rene van Hell, Economic Affairs 
Ministry Deputy Director for Trade Policy and Globalization 
(oversees export control system); and other officials who 
handle Dutch sanctions and Iran policy.  Schuwer prefaced the 
discussion by saying the Netherlands had long been clamoring 
within the EU to begin preparing for tougher "second track" 
steps against Iran.  The Netherlands argued P5-plus-1 actions 
should not catch the EU by surprise.  He conceded that within 
the Government of the Netherlands (GONL), the Ministries of 
Foreign Affairs (MFA), Economic Affairs (EZ), and Finance 
(MoF) each had its own interests to protect, but Foreign 
Minister Maxime Verhagen was committed to sanctions that 
"bite" and are "pinpointed where they will hurt" the Iranian 
regime.  He mentioned he had received Tehran's new ambassador 
to the Netherlands January 25 and, dispensing with usual 
diplomatic pleasantries, had read him the scathing EU 
position regarding the human rights situation in Iran. 
Schuwer said he does not have high hopes for a new, strong UN 
Security Council Resolution (UNSCR) on Iran.  Therefore, he 
said, the U.S., EU, and some like-minded countries would need 
to coordinate on second track action. 
 
¶3. (S/NF) DAS Glaser agreed with Schuwer's assessment and 
said the international community had reached a point in its 
relations with Iran where it needed to emphasize the pressure 
track, while keeping open the option of engagement.  He said 
the primary forum for this pressure remains the UN, and to 
that end the U.S. is pressing for a new resolution by the end 
of March.  Glaser added he, too, did not expect UN action 
would be strong or fast enough to change Iran's behavior. 
Therefore, the U.S. will also look to the EU and coordinated 
national measures among partner countries as means for more 
effective pressure on the Iranian regime.  Glaser explained 
the U.S. had narrowed its focus to three primary Iranian 
vulnerabilities that could yield meaningful impact: the Iran 
Revolutionary Guard Corps (IRGC); financial system; and 
transport.  Glaser also acknowledged broad interest and 
discussion of measures targeted at energy, and Catalano 
provided a summary of discussions with the U.S. Congress on 
Qprovided a summary of discussions with the U.S. Congress on 
that issue. 
 
---- 
IRGC 
---- 
 
¶4. (S/NF) Glaser said the U.S. had already designated the 
IRGC as a whole along with its primary business conglomerate 
Khatam al-Anbya and eight of its subsidiaries, and was 
currently reviewing information related to a longer list of 
other Khatam al-Anbya entities for future designation.  He 
said he hoped to include as many of these companies as 
possible and that the EU would designate them by name as well. 
 
¶5. (S/NF) Schuwer said the Dutch parliament and Minister 
Verhagen were concerned about Iranian authorities blocking 
cell phone and Internet access to quell the opposition 
movement, possibly by using Dutch hardware and software 
products.  He said the GONL was trying to find a way to block 
the export of such products to Iran.  Glaser acknowledged 
that the IRGC has expanded its influence and control over the 
Iranian economy and noted that Khatam al-Anbya maintains 
 
THE HAGUE 00000075  002 OF 004 
 
 
extensive ties within the EU.  He also provided information 
illustrating business relationships between Khatam al-Anbya 
and its subsidiaries with Dutch and Dutch-related companies 
and highlighted the EU's own designation of Khatam al-Anbya 
as a "group of companies."  Glaser offered that the existing 
international sanctions regime provides authorities under 
which some additional targeted measures can already be taken. 
 
 
¶6. (S/NF) Schuwer noted the need for EU coordination on such 
measures to prevent member states from undercutting each 
other.  For example, the Dutch are concerned if they shut 
down exports to Iran of a particular product, a German or 
Italian company will pick up the business instead.  Schuwer 
added that although Minister Verhagen does not adhere to the 
logic that if China and others do not "play along" with Iran 
sanctions then the Netherlands should not either, from 
parliament's and the business community's perspective, the 
more countries "playing" the better. 
 
--------- 
FINANCIAL 
--------- 
 
¶7. (S/NF) Glaser told Schuwer financial measures against Iran 
have had the greatest impact since the targeted measures 
process began in 2006, with informal pressure on and dialogue 
with the international financial community as important as UN 
action (e.g., UNSCR 1803).  He indicated Iran's direct links 
to Europe's formal banking sector had been severed with a few 
exceptions where small institutions continue to provide Iran 
with access to Euros.  To counteract this, Glaser said the 
U.S. wanted to cut off all correspondent banking 
relationships with Iran through either UN or EU action.  He 
explained it should not be difficult to gain support for this 
measure as all large banks have already severed their 
business ties with Iran.  Glaser added that some countries 
have said they are prepared to take this step, others do not 
like to focus exclusively on correspondent banking 
relationships, and others still need to be convinced these 
measures are necessary.  He said the U.S. would participate 
in any effort to cut off these relationships.  Because the 
prospect for this type of financial measure against Iran from 
the UN is dim, EU action in this regard would be important 
and could be aided by the call for countermeasures from the 
Financial Action Task Force (FATF), especially its warning of 
the risks of correspondent banking relationships with Iran. 
 
¶8. (S/NF) Femke Kramer, the Economic Affairs Ministry's 
export control policy advisor, said concern remained within 
the EU that financial measures would harm legitimate exports 
to Iran.  Glaser responded that the cost of doing business 
with Iran will inevitably rise as a result of a new round of 
sanctions, but he emphasized the U.S. was not calling for a 
trade embargo.  He said each jurisdiction would have to 
decide how comprehensive to make its export controls and when 
to grant export licenses. 
 
--------- 
TRANSPORT 
--------- 
 
¶9. (S/NF) Glaser highlighted the effect of pressure to date 
on Iranian transportation sector, noting in particular the 
UK's October 2009 designation of Islamic Republic of Iran 
Shipping Lines (IRISL) that cut off its ships from accessing 
British Protection and Indemnity (P and I) clubs where they 
had previously obtained insurance coverage.  He said this 
move left IRISL scrambling to find appropriate insurance 
coverage for its ships, which it found in a Bermuda P and I 
club.  However, Bermuda quickly enacted similar legislation 
to the UK's and took the same action against IRISL in 
Qto the UK's and took the same action against IRISL in 
mid-January, putting IRISL in a position of potentially not 
being able to procure viable insurance coverage for its 
shipping operations.  Glaser speculated the next logical step 
for the Iranian government would be to self-insure its ships, 
although it has not yet done this.  He suggested if Iran does 
assume the risk of self-insuring, it will be interesting to 
see how the shipping industry reacts. 
 
------ 
ENERGY 
------ 
 
¶10. (S/NF) Glaser cautioned that energy has attracted too 
much attention as the sine qua non for serious action on 
Iran, but should not be ignored because the threat of 
energy-related sanctions has a great psychological impact on 
the regime.  Schuwer noted the Netherlands had a special 
 
THE HAGUE 00000075  003 OF 004 
 
 
interest in measures targeting Iran's energy sector and moves 
by the U.S. Congress to apply "extraterritorial sanctions" on 
European companies dealing with Iran's energy sector.  (Note: 
Royal Dutch Shell, based in The Hague, is the largest Dutch 
multi-national corporation and has proportional influence on 
Dutch foreign economic policy.  End note.)  Catalano 
responded the U.S. considers sanctions on gasoline suppliers 
to the Iranian market to be a relatively unattractive toll 
that is hard to implement.  She added, however, that 
targeting foreign investment in Iran's energy sector more 
broadly could still be a useful measure.  Catalano told 
Schuwer the Administration had successfully delayed final 
Congressional action on the Iran Sanctions Act (ISA) and 
related legislation, but could not stall much longer.  She 
said the U.S. Senate was "highly likely" to pass legislation 
enforcing sanctions on companies selling refined products to 
Iran.  She said the Administration was meeting with key Hill 
staffers to fine tune the language in the bills to allow for 
exemptions for "cooperative countries" in taking on Iran, 
although Congress would determine what qualifies as 
"cooperative."  She predicted language would remain allowing 
the Administration to waive the application of sanctions on 
companies dealing with Iran's energy sector, but with a 
tougher standard than currently exists in ISA. 
 
¶11. (S/NF) Schuwer expressed concern that Congress is also 
pressing the Administration to review past conduct of 
companies that may have run afoul of the ISA.  Catalano 
explained the Administration was committed to this ongoing 
review and would soon have to tell Congress its 
determinations with respect to specific companies' energy 
investments in Iran since 1996.  She also praised Shell as a 
model of excellent cooperation with the U.S. government to 
date.  Schuwer stated, perfunctorily, the Dutch government 
would "protest vigorously the extraterritorial application of 
ISA." 
 
------------------------------------------ 
DUTCH ADVICE ON WORKING IRAN ISSUE WITH EU 
------------------------------------------ 
 
¶12. (S/NF) When Glaser solicited advice on engaging the EU on 
Iran sanctions, Schuwer said the U.S. must reach out beyond 
the "big 3" (France, Germany, UK) to Italy, Sweden, and 
Austria -- member states that typically resist stronger 
action against Iran during internal EU deliberations.  He 
added the U.S. and Europe have different concepts of what 
"consultations" entail.  He said while it is certainly 
helpful for senior U.S. officials to visit Brussels and share 
specific information about Iran policy, the conversation must 
be a two-way exchange rather than coming across as a U.S. 
dictation of its strategy.  Schuwer concluded that type of 
consultation only plays into the hands of the EU member 
states trying to torpedo a tougher EU line on Iran. 
 
---------------- 
FINANCE MINISTRY 
---------------- 
 
¶13. (S/NF) Separately, Glaser and Catalano discussed Iran 
sanctions January 26 with Klaas Knot, Deputy Treasurer 
General and Director of Financial Markets at MoF.  Given the 
MoF's role, the meeting focused on financial measures 
targeting Iran.  Knot opened by underscoring that the 
Netherlands was as keen as the U.S. to implement effective 
sanctions aimed at altering the Iranian regime's behavior. 
Glaser described the current U.S. outreach plan in Europe and 
summarized the status of multilateral efforts to secure 
quickly a new round of strong sanctions targeting Iran.  He 
Qquickly a new round of strong sanctions targeting Iran.  He 
noted the relative effectiveness of financial sanctions to 
date and described the search for additional measures that 
would squeeze Iran even more tightly.  Glaser explained 
cutting off correspondent banking remains the most attractive 
target because: a) an international framework to do this 
already exists via the FATF, and b) most large banks have 
already eliminated these relationships with Iran.  Knot 
described his sense of greater willingness within the EU now 
to adopt stronger Iran sanctions, not just out of 
non-proliferation concerns but also to change the broader 
strategic calculations of the regime in Tehran.  He thanked 
Glaser for coming to The Hague to share U.S. intentions on 
Iran firsthand.  He added the U.S. could "always count on us" 
with respect to Iran and that Dutch policy was "not too far" 
from U.S. policy. 
 
¶14. (S/NF) Knot was joined by Reijer Janssen, MoF Deputy 
Director of Foreign Financial Relations who also oversees the 
GONL's export credit and investment guarantee program. 
Janssen said the MoF had decided in December 2009 to "review" 
 
THE HAGUE 00000075  004 OF 004 
 
 
all of its export credits and investment guarantees involving 
Iran -- code speak meaning the GONL will not support any new 
business with Iran.  He said the MoF did support a few "small 
transactions" in 2009 and wanted to recoup payment on these 
liabilities.  If Iranian entities knew the GONL was pulling 
out all future support for exports/investments to Iran, they 
would have less incentive to pay their Dutch counterparties. 
 
¶15. (S/NF) Glaser also met January 26 with Henk Swarttouw, 
Foreign Ministry Director for Security Policy.  The 
discussion touched on Iran sanctions briefly before 
addressing terrorism finance broadly.  Glaser described the 
various funding sources that terrorists try to access and 
U.S./multilateral efforts to shut off this access.  Glaser 
encouraged Swarttouw to inform post when he or his key staff 
are in Washington so that Treasury could arrange a detailed 
briefing on terrorism finance issues. 
 
¶16. (U) DAS Glaser has cleared this cable. 
LEVIN