US embassy cable - 05PRAGUE183

C O N F I D E N T I A L PRAGUE 000183 
 
SIPDIS 
 
E.O. 12958: DECL: 02/08/2015 
TAGS: ETTC, PREL, EZ, IR 
SUBJECT: CZECH GOVERNMENT UNDER PRESSURE TO IMPROVE TRADE 
TIES WITH IRAN 
 
Classified By: Political Officer Mark Canning for reasons 1.4 b+d. 
 
1. (SBU) Summary:  The Czech government has been looking at 
ways to improve its anemic trade ties to Iran.  The Iranians 
have limited Czech imports in retaliation for broadcasts of 
the Prague-based Radio Farda as well as legislation passed in 
2000, at U.S. request, to bar supplies to the Bushehr nuclear 
power plant in Iran.  The possibility of rescinding the 2000 
law as a conciliatory gesture, on the grounds that it is 
redundant given EU restrictions the Czechs are now subject 
to, was discussed during a recent Czech parliamentary visit 
to Tehran.  The Foreign Ministry insists that such a step is 
not on the agenda.  Instead, the MFA hopes to use the EU to 
pressure the Iranians into giving Czech business equal access 
to Iranian markets. End summary. 
 
2. (SBU) BACKGROUND.  Trade relations between the Czech 
Republic and Iran have been strained since 1998 when 
Prague-based Radio Free Europe/Radio Liberty launched its 
Farsi Service, Radio Farda.  Teheran reacted by imposing an 
unofficial, and rather selective, trade embargo on Czech 
goods.  Separately, in February, 2000, the Czech parliament, 
at the request of the US and the UK, used emergency 
legislative powers to push through a piece of legislation 
that prevented the Czech firm ZVVZ Milevsko from supplying 
air conditioning equipment to the Bushehr nuclear power 
plant.  The equipment was later supplied by the German firm, 
Siemens. END BACKGROUND. 
 
3. (C) Czech businesses have recently been putting pressure 
on the Czech government, particularly the Ministry of Trade 
and Industry and the MFA, to improve trade ties with Iran. 
Matters came to a head recently when a Czech firm, pursuing 
the sale of 100 trams to Iran, was, according to the MFA's 
Iran desk officer for, told that it could forget about the 
sale unless the Czech government did "something positive." 
In response, the MFA undertook a review of existing 
regulations, specifically questioning whether the 2000 Czech 
law concerning exports for Bushehr duplicates EU rules and 
IAEA regulations which ban the export of materials that might 
be used to produce weapons of mass destruction. On February 
2nd, Helena Bambasova, a DAS-level official at the MFA was 
quoted in the press as saying the MFA would recommend 
cancellation of the Bushehr ban as a gesture to the Iranians. 
The MFA's desk officer for Iran confirmed that this was the 
MFA position, and called it a harmless gesture, pointing out 
that the legislation also prevents, or at best complicates, 
plans by Czech nuclear regulators to join IAEA monitoring 
activities at Bushehr. 
 
4. (C) This activity took place in the context of planing for 
a Czech parliamentary delegation visit to Iran, led by 
Foreign Affairs Committee Chairman Vladimir Lastuvka.  On 
their return, Lastuvka told the press that the Iranian side 
remains concerned about the Radio Farda broadcasts, and 
recommended rescinding the 2000 law as a positive gesture; he 
promised a parliamentary bill to do so if the government 
would not submit its own legislation.  However, the same 
February 8 article quoted Foreign Minister Svoboda as saying 
"We cannot cancel the law, or even as a gesture, change our 
policy towards Iran."  The Director of the MFA's Middle East 
section told poloff on February 8 that "there is no plan at 
this time to cancel the law."  He explained that instead, the 
Czechs will ask the EU to use whatever leverage it has in 
Teheran to improve commercial possibilities for Czech 
businesses. 
 
5. (C) Comment. It is generally acknowledged that Teheran's 
relations with Prague are less friendly than its relations 
with any other EU member, due in large part to the presence 
of Radio Farda.  To their credit, none of the Deputies on the 
Iran visit proposed any steps to restrict Radio Farda 
broadcasts from Prague (we are seeking calls with Deputies on 
this trip to discuss further).  We have an active and 
effective dialogue with the Czech government on 
non-proliferation issues, and are pleased with FM Svoboda's 
strong statement against changes in GOCR policy.  We will 
continue to discuss this with senior MFA officials and 
encourage Washington to provide any additional points (e.g., 
whether existing EU and IAEA safeguards make redundant the 
2000 Czech law). 
CABANISS