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DE RUEHRO #0087/01 0221531
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O 221531Z JAN 10
FM AMEMBASSY ROME
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3170
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEHBUL/AMEMBASSY KABUL PRIORITY 0574
RUEHFL/AMCONSUL FLORENCE PRIORITY 3989
RUEHMIL/AMCONSUL MILAN PRIORITY 0433
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RUEHUNV/USMISSION UNVIE VIENNA PRIORITY 0176

C O N F I D E N T I A L SECTION 01 OF 03 ROME 000087 
 
SIPDIS 
 
E.O. 12958: DECL: 01/12/2020 
TAGS: PREL ENRG KNNP PARM IR PGOV
SUBJECT: STAFFDEL KESSLER DISCUSSES IRAN WITH MFA, ENI, PD 
 
REF: ROME 00035 
 
ROME 00000087  001.2 OF 003 
 
 
Classified By: DCM Elizabeth Dibble for reasons 1.4 (b) and (d) 
 
 SUMMARY 
  ------- 
 
 
¶1.  (C)  Staff Director of the House Foreign Affairs 
Committee (HCFA) Dr. Richard Kessler and HCFA staff members 
probed senior MFA and energy and gas parastatal Eni officials 
on Italy's intentions concerning Iran sanctions and prospects 
for effective multilateral action to curb Iran's nuclear 
program.  Opposition Democratic Party (PD) officials 
discussed Iran, Italy's role in Afghanistan, the MEPP, Iraq, 
and nonproliferation with the Staffdel.  End Summary. 
 
 
IRAN DOMINATES MFA TALKS 
------------------------ 
 
¶2.  (C)  A January 8 roundtable discussion with Dr. Kessler 
and three HCFA staff members at the Ministry of Foreign 
Affairs (MFA) included MFA Director General for Multilateral 
Political Cooperation Stefano Ronca, Ronca's Deputy Filippo 
Formica, and  Deputy DG for Economic Cooperation Claudio 
Spinedi.  Office Directors Massimo Marotti 
(Political-Military Security and NATO Affairs); Diego 
Brasioli (G8 Issues and Global Challenges); and Giovanni 
Pugliese (Arms Control and Nonproliferation) also 
participated. After the roundtable the Staffdel had a meeting 
with MFA Deputy SecGen and Political Director Sandro De 
Bernardin.  Post was represented by the Charge, Pol-Mil 
Counselor and Poloff (notetaker). 
 
¶3. (C)  Ronca believes the deteriorating situation in Iran 
will soon come to a head and that the UNSC should convey to 
Iran that delay tactics will not work and support this 
position by readiness to adopt further pressure.  Ronca and 
Spinedi told the Staffdel Italy is ready to explore, with its 
EU colleagues, the possibility of further sanctions, which, 
however, must conform to EU regulations, and not affect the 
legal rights of European companies.  Ronca suggested that the 
Iranian financial, oil and gas, and insurance sectors (but 
not the Central Bank) could be targeted and that the list 
sensitive products on the export ban list could be expanded. 
 
¶4.  (C)  Spinedi, who (with Formica) attended the October 7 
Washington meeting of "Likeminded States on Iran," started by 
briefly alluding to Italy's longstanding complaint of 
exclusion from P5 1.  Spinedi pointed out we needed to 
determine what kind of sanctions would be acceptable to China 
and Russia, adding that even at the beginning of January, 
China's UN ambassador said that China "needed more time," 
which, Spinedi noted, was not a total rejection of tougher 
sanctions.  Spinedi advocated strengthening what already 
exists and deciding where we are willing to exert additional 
pressure (especially in the oil and gas sector).  It would be 
important to determine which technologies others (e.g., China 
and India) are willing to provide and embargo those which 
they cannot.  Spinedi acknowledged that Italy had not yet 
imposed legally binding sanctions, but that the GOI had 
successfully used "moral suasion." 
 
¶5.  (C)  Spinedi noted that sanctions proposed by the U.S. at 
the October 7 Likeminded meeting included targeting the 
Iranian Revolutionary Guard Command (IRGC), but did not 
include an embargo of refined oil and gas products.  Spinedi 
echoed Ronca in saying that in the coming months Italy will 
need to see how the rest of the Europe will approach new 
sanctions. 
 
¶6.  (C)  MFA Deputy SecGen Sandro De Bernardin told the 
Staffdel that Italy was well aware of the danger posed by 
Iran and supported a "firm line."  De Bernardin noted Eni's 
considerable investments in Iran and characterized Italy's 
"moral suasion" efforts to wean Iran away from its nuclear 
ambitions as a "significant success."  On sanctions, De 
Bernardin stated that Italy was prepared to assume its "share 
of responsibility," but that sanctions are a means of 
pressure, not a goal; effective ones must be found. In De 
Bernardin's view, U.S.domestic legislation should not 
negatively affect other countries and the presidential waiver 
has been useful in the past; he hoped it will still figure in 
the future. 
 
¶7.  (C)  Kessler encouraged Italy to continue and reinforce 
 
ROME 00000087  002.2 OF 003 
 
 
their past efforts.  De Bernardin agreed that if Iran gets 
the bomb, then others will seek to acquire nuclear weapons 
too and that the Iranian regime must realize there is a heavy 
price to be paid for persisting in non-compliance. "  De 
Bernardin reiterated Italy's support for openess to dialogue 
in addition to pressure, or the dual-track approach, and that 
"putting Iran in a corner" is not the same as "cutting it 
off" and characterized Italy as a "crucial player," essential 
to catalyzing consensus in Europe. He added that, given 
Iran's critical domestic situation, the regime was not in a 
position to decide anything. 
 
 
KEY TO SUCCESS IN AFGHANISTAN 
----------------------------- 
 
¶8.  (C)  With regard to the critical situation in 
Afghanistan, Ronca acknowledged that we must strengthen the 
military aspect of the campaign, but that institution 
building and engaging President Karzai on fighting corruption 
must not be neglected. On the security side, Ronca said that 
Italy will increase its force by 1000 men during the first 
half of 2010 and that its Afghan National Police (ANP) 
training program is a first priority.  As for civilian 
engagement, Italy has committed 465 million euros in various 
civilian sectors, including health, education, and justice. 
Ronca and Marotti stressed the need for better coordination 
of civilian and military activities as an issue that should 
be on the agenda of the January 28 London NATO conference. 
Ronca noted that reaching out to insurgents was a task that 
should also be pursued. The Italians stressed the need for a 
long-term development strategy based on Afghan priorities, 
but which would also include private sector involvement and 
the development of good governance. 
 
 
CENTER LEFT PD AIRS FOREIGN POLICY POSITIONS 
-------------------------------------------- 
 
¶9. (C)  Head of the opposition Partito Democratico's (PD) 
Foreign Policy Department Piero Fassino told the Staffdel the 
PD supports President Obama's initiative  to dialogue and 
build bridges with the Islamic world, but is very concerned 
about the blocked MEPP and the "new wave of terror" in 
Afghanistan.  As for Iran, the PD supports pursuing a 
negotiated solution, but Fassino questioned whether the 
current leadership is in a position to negotiate credibly. 
He suggested it could be useful to change the order of 
priorities in Iran; that is, be more flexible on the nuclear 
issue, but harder on human rights.  According to Fassino, the 
greatest risk with nuclear proliferation is that 
irresponsible governments like the one in Iran could gain 
access to nuclear arms, adding that the PD assessed that 
there was little to fear with nations such as India, Britain, 
and France having nuclear weapons.  He asked whether a 
democratic government in Iran might not have a different 
position on the nuclear program. 
 
¶10.  (C)  Fassino said the PD supports the GOI's increased 
(military) support for Afghanistan, but stressed that 
strengthening civil and governmental institutions and 
economic development are equally important.  On the MEPP, 
Fassino characterized Netanyahu's proposed 10-month 
settlement freeze "a little window of opportunity," but 
questioned whether it was enough, given the Israelis' refusal 
to discuss (the status of) Jerusalem.  As for Iraq, Fassino 
said the stabilization process must be supported; there was 
no alternative. 
 
 
ENI JUSTIFIES IRAN ACTIVITIES 
----------------------------- 
 
¶11.  ( C ) Energy and gas parastatal Eni (Ente Nazionale 
Idrocarburi) officials told the Congressional delegation that 
it is cooperating to address USG concerns over the company,s 
Iran activities, but insisted that it will continue to 
fulfill its contractual obligations there. The company 
officials said that Eni has understood the USG message to 
reduce its presence in Iran, and as a result it has already 
decreased its Iran activities to a minimum level. The Eni 
officials provided the Staffdel with a copy of the November 
16, 2009 CEO Scaroni letter to Ambassador Thorne that states 
the company,s position (A copy of Eni's letter was provided 
to EEB in November). Referencing this letter, the officials 
pointed out that Eni will not undertake new activities in 
Iran, including no new activities by its subsidiaries, Saipem 
 
ROME 00000087  003.2 OF 003 
 
 
and Polimeri Europa. They added that following Scaroni,s 
September 16 meetings in Washington the company also gave up 
plans for an MOU with Iran for development of the phase III 
of the Darquain oil field. The officials stated that while EU 
law prevents the Eni from responding to official requests for 
information on its Iran operations, it has been transparent 
in informing the USG on a voluntary basis. 
 
¶12.  ( C ) The Eni officials stated, however, that Eni 
intends to carry out exploration and development activities 
in Iran that fall under its contractual obligations there. 
The officials acknowledged that this is a &gray area8 due 
to the differences of opinion between the company and the USG 
over what is &new8 activity and what is &old.8 The 
company officials said that they hope to clarify this issue 
with Washington during separate meetings in January with 
senior officials from the State Department and Department of 
Treasury. Pressed for details over the company,s existing 
obligations, the officials said that it is under contract to 
meet certain targets of (oil) production in order to 
guarantee defined levels of production within a given time 
frame. They added that Eni must keep a certain threshold of 
production in order to recover its investments in Iran. They 
also explained that Eni receives periodic (possibly 
scheduled) payments by Iran in oil equivalent amounts that 
correspond to the attained target levels of production. 
 
¶13.  ( C ) The Eni officials admitted the frustrating 
difficulties of operating in Iran, but stated that Eni's 
priority is to recover its investments there while meeting EU 
laws. The officials estimated Eni's total Iran investments at 
around $3 billion dollars, of which they said Eni has already 
recovered already about 60 percent (or about $1.7 billion 
according to one Eni representative). The company officials 
said Eni still needs to recover about $1.4 billion from its 
Iran operations. They added that &if all goes as planned8 
Eni will recover this remainder of its investments by the end 
of 2013 or early in 2014. They further explained that Eni's 
Iran contracts provide the possibility of extensions if the 
company is not able to recover its investments within the 
stipulated time frame. The Eni officials cautioned that the 
company may face EU sanctions if it withdraws from Iran due 
to pressure from USG unilateral sanctions. 
 
¶14.  (U)  Staffdel Kessler has not cleared this cable. 
THORNE