US embassy cable - 05CANBERRA323

C O N F I D E N T I A L SECTION 01 OF 03 CANBERRA 000323 
 
SIPDIS 
 
STATE FOR T, NP/MNA, EAP/ANP AND NP/RA 
 
E.O. 12958: DECL: 02/17/2015 
TAGS: PREL, KNNP, AORC, PARM, AS, IR, IAEA 
SUBJECT: NPT ENVOY SANDERS DISCUSSES IRAN WITH AUSTRALIAN 
OFFICIALS 
 
REF: A. STATE 18228 
 
     B. 04 STATE 219260 
     C. CANBERRA 322 
 
Classified By: POLCOUNS WOO LEE FOR REASONS 1.4 (B AND D). 
 
1.  (C) SUMMARY:  At a February 10 luncheon with senior 
Australian officials hosted by the DCM, Ambassador Jackie 
Sanders, Special Representative of the President for the 
Nonproliferation of Nuclear Weapons, discussed how to handle 
Iran's nuclear programs at the IAEA.  GOA officials were 
candid in their assessments of the high probability that the 
EU-3 talks with Iran would fail, that Iran's intimidation 
tactics had been successful with several states at the IAEA, 
and that a strategy had to be pre-prepared for the moment 
when the EU-3 and Iran reached an impasse in order to get 
Iran's non-compliance reported to the UNSC.  Ambassador 
Sanders' consultations on the NPT Review Conference (RevCon) 
reported septel.  End Summary. 
 
PARTICIPANTS 
------------ 
 
2.  (C)  The DCM hosted a lunch for Ambassador Jackie 
Sanders, Special Representative of the President for the 
Nonproliferation of Nuclear Weapons, that included Australian 
Department of Foreign Affairs and Trade (DFAT) First 
Assistant Secretary for International Security David Stuart, 
Ambassador At-Large for Counterterrorism Les Luck, Australian 
Ambassador to Vienna (UN/IAEA Mission) Deborah Stokes, and 
Australian Safeguards and Nonproliferation Office (ASNO) 
Director General John Carlson.  Renick Smith, Special Advisor 
to Ambassador Sanders; Dr. Elizabeth Murphy from the Office 
of Multilateral Nuclear Affairs; John Mentz, Special 
Assistant for Nuclear Nonproliferation Policy from the Office 
of the Secretary of Defense; PolCouns and Polmiloff also 
attended the lunch. 
 
FOCUS ON IRAN 
------------- 
 
3.  (C) Having completed NPT RevCon preparation discussions 
that morning (septel), the DCM suggested focusing mainly on 
Iran over lunch.  Ambassador Sanders led off, expressing her 
appreciation for the GOA's practice of keeping its policy 
disagreements with the USG on the NPT, IAEA or other issues 
in private channels, while generally supporting USG 
initiatives publicly in multilateral fora.  She asked for 
Australian tips on approaching New Zealand (her next stop on 
her swing through Asia) for support at the NPT RevCon. 
Stuart assessed that the Kiwis did understand the need for 
counterproliferation in addition to disarmament, highlighting 
Wellington's cooperation on a variety of issues within the 
Pacific Island Forum (PIF), intervention in the Solomon 
Islands in 2003, and the Proliferation Security Initiative 
(PSI).  Luck offered that the best pitch to make to New 
Zealand would be couched in terms of collective security. 
Iran and others had to be seen no longer as proliferation 
threats in order to enable the disarmament of Nuclear Weapons 
States (NWS) that New Zealand sought under the NPT.  Sanders 
stated that, from her experience at the last two IAEA Board 
of Governors (BOG) meetings in Vienna, New Zealand had been 
good in standing up to Iran.  Stokes added the caveat that 
that was true until the GOI had threatened the Kiwis with the 
loss of trade contracts.  Through its intimidation tactics, 
Iran had met with similar success in softening the stances of 
Japan, South Korea and China, and had "tried it on" with 
Australia, but without success. 
 
4.  (C) Stuart wanted to focus on what would happen when the 
EU-3 negotiating effort with Iran foundered or if the talks 
sputtered along inconclusively.  He found the latter scenario 
worrying, since Iran had been "cheating on the margins" for 
many years.  "We see no evidence that the Iranians are trying 
to get a high price for agreeing to a permanent suspension of 
enrichment," he elaborated, "rather, they are seeking a high 
price for continuing uranium enrichment -- with some sort of 
caveat."  The GOA saw the Iranians as "getting themselves 
into position to be able to make nuclear weapons on short 
notice."  "We agree with you that the Iranians want a 
breakout capacity, and they aren't far from it," Stuart 
concluded.  Carlson pointed out that some GOI officials had 
gone so far as to declare that they already had the capacity 
to build nuclear weapons, although Australia believed this 
was untrue.  Stuart added, "we know the talks are 
foundering," yet all the EU-3 states had a lot at stake in 
seeing the diplomatic process continue.  He and Carlson 
wanted to have a pre-set strategy prepared for what to do 
when the impasse was reached and Iran again claimed its 
"right" to produce the full nuclear fuel cycle. 
 
5.  (C) Ambassador Sanders said the USG fully shared 
Australia's skepticism, noting that Washington had never 
wanted to go down the EU-3 path; Iran should have been 
reported to the UNSC by the November 2003 BOG.  She noted 
that UnderSecretary Bolton would be meeting with G-8 
counterparts the following week and would discuss Iran. 
During bilateral British-Australian political-military talks 
the previous day, Stuart commented, he had asked his British 
counterpart, DG for Defence and Intelligence David Richmond, 
these same questions, but Richmond had not responded 
directly.  Stuart thought the EU-3's goal was to string the 
talks out until they could convince the Iranians to "bite the 
bullet" and stop their illicit nuclear programs, but everyone 
knew the Iranians had systematically cheated for 18 years. 
In addition, he said Richmond had not wanted to consider the 
idea of continuing four-way talks in Vienna with the U.S., 
Canada and Australia.  Richmond had said he would ask when 
back in London, but it was clear he was not interested. 
Sanders was not surprised; she assumed the Brits did not want 
to be challenged on the risk they had taken in the EU-3. 
Luck mentioned that he also had heard that the EU-3 talks 
were "poised to take a serious dive," and that new evidence 
was coming to light that Iran had been cheating, but he did 
not have precise information.  Stuart stated that he had 
asked Richmond and other EU-3 counterparts whether any of the 
EU-3 (Germany in particular) were seeking to lower the bar on 
what would be an acceptable outcome from the GOI, and he had 
gotten different answers.  Mentz offered that the Germans had 
made guarantees to the USG that they would not lower the bar. 
 Stokes commented that the French thought they could solve 
the problem commercially by making nuclear power investments 
and providing reactors to Iran.  Meanwhile, Stuart observed, 
Russian actions had improved: the GOR was now telling Tehran 
it had to permanently suspend its enrichment efforts before 
Russia would provide the fuel.  Stokes said she had found the 
Russians unpredictable, and Carlson thought there was a split 
between the MFA and other ministries in Moscow over what to 
do about Iran.  The GOR as a whole would want to see the EU-3 
effort fail clearly before reporting Iran to the UNSC, he 
averred. 
 
6.  (C) Stuart reported that his office had used the USG 
demarche (Ref B) from October about what the UN Security 
Council could do vis-a-vis Iran before applying sanctions as 
the basis for a policy options paper for Foreign Minister 
Downer.  One option, should the intelligence "firm up," he 
related, would be to go public with Iran's misdeeds, but that 
strategy, post-Iraq, was "fraught."  He agreed with a process 
of incremental steps from Presidential Statements to 
resolutions, appealing to Iran to comply with its 
obligations.  The DCM thought it might be good to produce a 
documentary laying out Iran's history of supporting Hizbollah 
and other terrorists, and then ask viewers to consider what 
it would mean to have a nuclear-armed Iran.  Luck agreed -- 
so long as the USG itself did not make the documentary.  He 
noted that much of the world, and particularly Europe, still 
saw the U.S. as a biased party with respect to Iran due to 
the legacy of the 1979 Embassy hostages situation.  There was 
consensus around the table that part of the EU-3 motivation 
to take on Iran was "to teach the USG how to do diplomacy," 
but Stokes asserted that the Europeans "had no idea how hard 
it would be."  Sanders wondered whether it would take an 
egregious error by the Iranians to actually get them reported 
to the Security Council.  Stuart stated, "We cannot be held 
hostage to waiting for them to make a mistake."  Sanders 
noted that any nation could take an issue that threatened 
international peace and security to the Council.  Stuart 
thought that would be difficult in the absence of a clear 
trigger.  He added that the issue would likely come to a head 
again later in 2005, just as it was time to select a new IAEA 
DG. 
 
7.  (C) If the EU-3 were to state in Vienna that Iran's 
actions needed to be reported to the UNSC, that would be in 
the spirit of what they had agreed to in G-8 statements, 
Stuart pointed out.  Ambassador Stokes lamented that she had 
seen enough of the EU-3's watering down of resolutions to 
know that they could not be relied upon for a solution. 
Stuart expressed his frustration with EU practices in 
general, noting that all along, the goal had been to keep the 
Western countries united vis-a-vis Iran.  Procedurally, 
however, it was now very difficult to keep the EU members 
from completing all their negotiating together before they 
talked to other states, by which time their EU position could 
not be changed.  Iran had responded in the past to a united 
Western position, but that was now much more difficult. 
Sanders suggested that there was no need to get bogged down 
on procedures: nearly everyone, including those on the IAEA 
Secretariat below ElBaradei, agreed that Iran was doing 
 
SIPDIS 
something bad.  It was time to focus on doing something about 
it.  Stuart remarked that the Brits needed the breakdown in 
EU-3 talks to wait until after the expected UK federal 
elections in May. 
 
8.  (C) Luck encouraged the USG to do all it could to go to 
and beyond the EU-3 to develop common thinking and responses 
in preparation for action at the UNSC.  All agreed with 
Carlson and Sanders' comments that it was short-sighted of 
states which had succumbed to Iranian intimidation about 
losing oil and gas contracts, or states which still insisted 
on disarmament as the be-all of the NPT.  How would a 
nuclear-armed Iran make either of those situations better? 
This was why support for USG goals for handling Iran and for 
the NPT RevCon had to be sought at the highest levels in 
capitals, Sanders concluded, to get beyond the narrow "CD 
Mafia" type of mindset. 
 
9.  (U) Ambassador Sanders and the delegation have cleared 
this cable. 
SCHIEFFER