US embassy cable - 04MADRID4197

S E C R E T SECTION 01 OF 02 MADRID 004197 
 
SIPDIS 
 
FOR EUR/PRA, EUR/WE 
 
E.O. 12958: DECL: 11/25/2014 
TAGS: PARM, PREL, MASS, MOPS, PINR, IR, SP, Non-Proliferation Issues 
SUBJECT: SPAIN: BRIEFING ON IRAN PROCUREMENT ATTEMPTS IN 
EUROPE 
 
REF: A. MADRID 03446 
     B. MADRID 02800 
 
Classified By: Kathleen Fitzpatrick, Political Counselor, 
Reasons 1.4. (B) & (D) 
 
1. (S) SUMMARY:  Dr. Thomas Zarzecki of INR/SPM, accompanied 
by poloff, provided an intelligence briefing to an 
interagency GOS audience on October 25 on arms procurement 
attempts in European countries by state sponsors of 
terrorism, especially Iran.  The well-received briefing 
sparked discussion about joint US-Spanish non-proliferation 
efforts and the problems posed by brokers using Spain as a 
transshipment point.  In side meetings, GOS officials raised 
specific questions about the Spanish entity Telstar, and we 
stressed the need to further investigate the activities of 
Izar Construcciones in providing military equipment to Iran. 
END SUMMARY. 
 
2. (C) Poloff and Dr. Zarzecki met with an interagency GOS 
delegation composed of MFA Deputy Director General of 
International Disarmament Affairs Marcos Rodriguez Cantero 
and his assistant Luis Gomez Nogueira; Director General of 
International Economic Relations Javier Hergueta Garcia; 
Ministry of Interior Commissioner General for Information 
Jesus Lira Calvo; Ministry of Defense officials Maria Jose 
Mateo, Raphael Lopez, and Jose Quevedo Ruiz; and Ministry of 
Industry, Tourism, and Trade Deputy Director General of 
Nuclear Energy Ana Belen Manzano Negro. 
 
3.  (S) Poloff began by noting that the briefing followed a 
discussion of the issue by  Secretary Powell and Foreign 
Minister Moratinos earlier this year, and underlined USG's 
desire to frame specific recent proliferation cases that the 
USG had raised with the GOS within the context of our 
understanding of Iran's overall European arms procurement 
efforts.  The briefing covered the consistent efforts by Iran 
and other state sponsors of terrorism to acquire military and 
dual-use equipment in Spain and other European countries 
(NOTE:  This was a slightly modified version of the briefing 
that Zarzecki provided to Italian government officials in 
March 2004.  END NOTE.) 
 
4.  (S) The briefing was well received by GOS officials. 
Deputy DG Rodriguez stated that Spain's existing control 
regime for military goods was sufficiently strong to prevent 
any such Iranian purchase efforts.  He noted that controlling 
dual-use items was more problematic.  The GOS had recently 
approved a catchall regulation in Spain's new export control 
laws that would assist GOS efforts in this area.  MOD 
official Lopez reiterated Rodriguez, sentiment, and he and 
Quevedo noted that some of the military goods under 
discussion were US-origin items transshipped through Spain to 
Iran and other destinations.  Poloff and Dr. Zarzecki agreed 
that the GOS and USG needed to work together to stem the flow 
of US-origin items transshipped through Spain (as in the case 
of the Spanish firm Winter Aircraft Products, which has 
brokered US-origin fighter aircraft spare parts to Iran in 
the past), but that most of the items mentioned in the 
briefing and in past demarches were of Spanish-origin and not 
sourced in the US.  While the overall issue of Spain as a 
transshipment country was undoubtedly important, the focus of 
the current briefing was on the activities of firms, 
particularly Izar, that were conducting business on Spanish 
soil. 
 
5. (S) Before and after the briefing, Zarzecki had two 
pull-asides with GOS officials.  DG Hergueta raised the issue 
of USG sanctions recently imposed on the Spanish firm Telstar 
under the Iran Non-Proliferation Act, asking the USG to 
identify the specific equipment exported by Telstar that 
triggered the sanctions.  He said the GOS was eager to 
resolve this issue, noting that Telstar had a good reputation 
in the GOS for obeying export control regulations and was 
happy to cooperate in the further investigation of this case. 
  He also noted that Telstar's business in the US would be 
hurt by the sanctions and that any violations of export 
controls by Telstar were likely inadvertent.  We agreed to 
work with GOS on the case and provide the requested 
information as soon as possible. 
 
6. (S) In a side meeting, Zarzecki also underlined to MOD 
official Lopez USG concerns regarding Izar's activities with 
Iran.  Zarzecki noted that the previously-shared information 
on the travel of an Izar delegation to Iran in January 2004 
to negotiate military sales indicated serious intent on the 
part of the firm, and required further investigation (ref A 
and B)--a request which Lopez took seriously. 
 
7. (S) COMMENT:  The intelligence briefing seemed to open the 
door to further exchanges with GOS officials on specific 
non-proliferation matters, and underlined USG interest in 
preventing Iranian military and dual-use procurements. 
Embassy plans to follow-up on several specific cases: 
providing GOS with releasable information when received from 
Washington on Telstar information; receiving a GOS update on 
the status of their investigation into Winter Aircraft 
Products (ref A); and, as necessary, continued engagement on 
Izar's relationship with Iran.  END COMMENT 
 
8. (C) Zarzecki has cleared on this cable. 
ARGYROS