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### Viewing cable 08STATE128877, RESPONSE TO SAUDI REQUEST FOR RECOMMENDATIONS ON

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
08STATE128877 | 2008-12-08 17:05 | 2010-11-28 18:06 | SECRET | Secretary of State

`

    VZCZCXYZ0005
    OO RUEHWEB

    DE RUEHC #8877 3431741
    ZNY SSSSS ZZH
    O 081733Z DEC 08
    FM SECSTATE WASHDC
    TO AMEMBASSY RIYADH IMMEDIATE 0000

` `

    S E C R E T STATE 128877

    SIPDIS
    SECRET//REL SAU

    E.O. 12958: DECL: 12/08/2018
    TAGS: EFIN IR KNNP PARM PINR PREL
    SUBJECT: RESPONSE TO SAUDI REQUEST FOR RECOMMENDATIONS ON
    HOW TO INCREASE THE PRESSURE ON IRAN

    REF: A. RIYADH 1667
         ¶B. STATE 115523

    Classified By: ISN PATRICIA A. MCNERNEY, REASONS 1.4(b) AND (d)

    ¶1.  (U) This is an action request.  Please see paragraph 4.

    -------
    SUMMARY
    -------

    ¶2.  (S//REL SAU) During the week of 13 October and in
    response to ISN Acting Assistant Secretary Patricia
    McNerney's encouragement to help increase pressure on Iran to
    change course, Saudi MFA Undersecretary for Multilateral
    Affairs, Prince Turki Bin Mohamed Bin Saud Al-Kabeer
    requested U.S. recommendations on specific actions Saudi
    Arabia could take (REF A).  Washington would like to provide
    the following non-paper to the Kingdom of Saudi Arabia (KSA),
    which contains suggestions on how to further enhance Saudi
    Arabia,s non-proliferation efforts with regard to Iran.

    ¶3.  On October 16, 2008, the Financial Action Task Force
    (FATF) issued its fourth warning of the serious threat posed
    by Iran's lack of a sufficient anti-money laundering and
    counterterrorist financing regime (REF B). During the same
    plenary meeting, FATF also separately issued guidance on the
    steps that countries should take to implement UNSCR 1803's
    call for vigilance over the activities of financial
    institutions in their territories with all banks domiciled in
    Iran, in order to avoid such activities contributing to
    proliferation sensitive nuclear activities or to the
    development of nuclear weapon delivery systems.  These two
    actions by the FATF, combined with the already widely held
    view that Iranian financial institutions play a key role in
    Iran's proliferation efforts, merit immediate action by
    countries to mitigate these illicit finance risks.

    ----------
    OBJECTIVES
    ----------

    ¶4.  (S//REL SAU) Washington requests Embassy Riyadh approach
    Prince Turki, or other appropriate senior KSA officials, to
    discuss this issue and provide U.S. recommendations.  Post
    should pursue the following objectives:

    -- Present the non-paper at paragraph 5 to KSA officials.

    -- Urge host government to issue a public statement that
    advances the October 2008 FATF statement on Iran, and
    encourage all regional partners to do the same.

    -- Encourage host government to carefully monitor any
    financial and commercial activity with Iran within KSA to
    ensure that Iran does not pursue illicit transactions via the
    KSA.

    -- Encourage host government to use its influence in the GCC
    to invigorate further actions by regional partners to enhance
    vigilance over financial and commercial activity with Iran,
    as is called for by the Financial Action Task Force and
    UNSCRs 1737, 1747, and 1803.

    --------
    NONPAPER
    --------

    ¶5.  (S//REL SAU)  BEGIN NON-PAPER FOR SAUDI ARABIA

    During Acting Assistant Secretary Patricia McNerney's visit
    to Saudi Arabia on 15 October 2008, she raised the issue of
    Iran's nuclear program and the need to increase pressure on
    the Iranian regime to address international concerns
    surrounding its nuclear activities.  Undersecretary for
    Multilateral Affairs Prince Turki Bin Mohamed Bin Saud
    Al-Kabeer requested suggestions on steps the Kingdom of Saudi
    Arabia could take in this regard.

    We believe your government should consider taking action on
    the following key priorities:

    -- National Financial Measures

    -- Export Control Implementation

    -- Express Resolve on the Iranian Threat, and

    -- Full Implementation of UNSCRs, particularly 1803.

    Your vigilance thus far demonstrates your government,s
    recognition that real action must be taken to protect the
    region,s security by preventing Iranian proliferation. We
    believe that if your government implemented the actions
    suggested in this paper, it would not only allow you to
    exercise influential leadership with regional neighbors, it
    would significantly increase the pressure on Iran to
    cooperate with the international community and address its
    concerns.

    We would like to present to you the following recommendations
    and the United States is prepared to work with the KSA to
    assist with the incorporation of these measures into Saudi
    Arabia's nonproliferation system.

    National Financial Measures:

    -- We urge the Saudi Government to issue a public statement
    that advances the October 2008 Financial Action Task Force
    (FATF) statement on Iran. The Saudi statement should
    recommend heightened vigilance and the implementation of
    preventive measures, per FATF,s October statements, by all
    countries with respect to the financial transactions with
    Iran given the significant vulnerability that Iran poses to
    the international financial system. A statement like this
    from your government would send a clear message to your GCC
    partners that the risk arising from Iranian banking
    transactions is real and that action must be taken to protect
    the region,s banking system and prevent Iranian
    proliferation.

    -- On October 16, the FATF issued its fourth warning of the
    serious threat posed by Iran's lack of a sufficient
    anti-money laundering and counterterrorist financing regime.
    In contrast with prior FATF actions on Iran, this statement
    marked a significant escalation in concern about the
    terrorism finance threat emanating from Iran and ratcheted up
    the call for preventive measures that should be implemented
    by FATF members and other jurisdictions to protect their
    financial sectors from this risk.

    -- During the October plenary meeting, FATF also separately
    issued guidance on the steps that countries should take to
    implement United Nations Security Council Resolution (UNSCR)
    1803's call for vigilance over the activities of financial
    institutions in their territories with all banks domiciled in
    Iran, in order to avoid such activities contributing to
    proliferation sensitive nuclear activities or to the
    development of nuclear weapon delivery systems.

    -- Iran uses deceptive tactics and front companies to
    disguise its proliferation activities.  The U.S. recommends
    that Saudi Arabia highlight this fact with its domestic
    businesses and GCC partners.

    -- We also recommend that you reduce Saudi Arabian Industries
    Corporation (SABIC) activities in Iran,s petrochemicals
    market. The U.S. also proposes that Saudi Arabia suspend
    Iran-GCC free trade area talks until Iran accepts the P5 1
    incentives package.

    -- U.S. Executive Order (E.O.) 13382 is an authority that
    allows the U.S. to block the assets of WMD proliferators and
    their supporters and thereby deny them access to the U.S.
    financial and commercial systems. The U.S. recommends that
    Saudi Arabia explore the creation of a similar legal
    authority.

    Export Control Implementation:

    -- Saudi Arabia should begin work on drafting a comprehensive
    export control law and adopt a comprehensive control list
    that meets international standards, including the standards
    set by the four multilateral export control regimes
    (Australia Group, Missile Technology Control Regime, Nuclear
    Suppliers Group, and Wassenaar Group).

    -- A comprehensive export control system will give Saudi
    Arabia the ability to ensure that its trade is secure and
    will encourage high technology investment.

    -- The United States is prepared to support Saudi Arabia in
    this regard, including through our Export Control and Related
    Border Security (EXBS) Program.

    Express Resolve on the Iranian Threat:

    -- Saudi Arabia should exercise leadership with neighbors in
    the region and publicly by expressing concerns about Iran,s
    continued pursuit of a nuclear weapons capability and
    destabilizing activities in the region.

    -- We would appreciate public expressions of support for the
    P5 1 dual track process including encouragement for Iran to
    accept the incentives package.

    -- Saudi Arabia should exercise its influence with China, in
    particular, to persuade China to reduce its growing
    energy/economic cooperation and weapons purchases. Such
    efforts by China run contrary to the spirit of the UNSCRs and
    the P5 1 dual track strategy. A high level Saudi delegation
    could communicate to China Saudi concerns about the threat
    posed by Iran,s actions.

    Full Implementation of UNSCRs:

    -- Full implementation of UNSCRs 1737 (2006), 1747 (2007),
    and 1803 (2008), through vigilance and action against Iran,s
    efforts to circumvent sanctions are key components to
    maintaining pressure on Iran.

    -- A useful step would be for KSA to vigorously implement
    UNSCR provisions such as freezing financial assets and
    imposing travel restrictions on designated entities and
    individuals, prohibit dual-use exports, call for inspections
    of IRISL and Iran Air Cargo shipment, and exercise vigilance
    over any activities of financial institutions in KSA with
    Iranian domiciled banks.

    -- As a reference, the U.S. 60-day report on implementation
    of UNSCR 1803 can be found at:
    www.un.org/sc/committees/1737/memberstatesrep orts.shtml

    END NONPAPER FOR SAUDI ARABIA

    ------------------
    REPORTING DEADLINE
    ------------------

    ¶6.  (U) Post should report results within seven business days
    of receipt of this cable.  Please address replies for ISN,
    IO, T, TREASURY, and NEA/IR. Please include SIPDIS in all
    replies.

    ----------------
    POINT OF CONTACT
    ----------------

    ¶7.   (U) Washington point of contact for follow-up
    information is Nicole Menkhoff, ISN/RA, 202-736-4277,
    MenkhoffN@state.sgov.gov and Kevin McGeehan, ISN/CPI,
    202-647-5408, McGeehanKJ@state.sgov.gov.
    RICE

`