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. 
 
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SUMMARY 
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¶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. 
 
 
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OBJECTIVES 
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¶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. 
 
 
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NONPAPER 
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¶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 
 
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REPORTING DEADLINE 
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¶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. 
 
 
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POINT OF CONTACT 
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¶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