US embassy cable - 02ROME1962

C O N F I D E N T I A L SECTION 01 OF 02 ROME 001962 
 
SIPDIS 
 
NP/RA, EUR/PRA, EUR/RUS, EUR/WE 
 
E.O. 12958: DECL: 04/19/2012 
TAGS: PREL, ETRD, EU, ETRD, EU, IT, WTO, ITPREL, WTO 
SUBJECT: ITALY WON'T FORCE IRAN WTO ACCESSION ISSUE 
 
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PAGE 02        ROME  01962  01 OF 02  191836Z 
REF: (A) STATE 71421 (B) ROME 1355 
 
CLASSIFIED BY: CLASSIFIED BY ECOUNS KAREN MILLIKEN; REASON 1.5 B/D. 
 
1. (C) SUMMARY AND COMMENT.  ITALY STRONGLY DISAGREES WITH 
USG POLICY ON IRAN'S POTENTIAL ACCESSION TO THE WORLD TRADE 
ORGANIZATION BUT DOES NOT INTEND TO PUSH THE EU TO FORCE THE 
ISSUE AT THE MAY 13 WTO GENERAL COUNCIL MEETING OR 
THEREAFTER, ACCORDING TO MFA'S WTO COORDINATOR.  ALTHOUGH THE 
ITALIANS WILL NOT MAKE AN ISSUE OF IRAN'S WTO AMBITIONS, 
NEITHER CAN WE EXPECT THEM TO CARRY REF A'S SUGGESTED MESSAGE 
TYING CLOSER ECONOMIC TIES TO IMPROVED PERFORMANCE ON THE 
LISTED ISSUES.  ON THE CONTRARY, WE CAN COUNT ON THEM TO 
COMMISERATE WITH THE IRANIANS ABOUT PERCEIVED USG OBSTINACY 
ON WTO AS BENEFITING CONSERVATIVES AT THE EXPENSE OF 
REFORMERS.  END SUMMARY AND COMMENT 
 
2. (C) ITALY ACCEPTS REF A'S STRAIGHTFORWARD MESSAGE THAT WE 
ARE NOT OPEN TO DISCUSSION OF IRANIAN ACCESSION TO THE WTO 
AND, CONSEQUENTLY, ITALY SEES THE MATTER AS A NON-ISSUE FOR 
THE MAY 13 WTO GENERAL COUNCIL MEETING, MAURIZIO ZANINI, 
MFA'S WTO COORDINATOR, TOLD ECONOFF ON APRIL 17.  ECONOFF 
ASKED WHETHER ITALY, LONG A FACILITATOR OF IRAN'S CONTACTS 
WITH THE WEST, WOULD PRESS THE EU TO SPONSOR IRAN IN GENEVA. 
ZANINI REPLIED THAT ITALY PICKS VERY CAREFULLY THE ISSUES ON 
WHICH IT LOOKS TO LEAD THE EU AND, IN THE TRADE AREA, ITALY'S 
SINGLE PROACTIVE ISSUE IS INTELLECTUAL PROPERTY PROTECTION 
FOR GEOGRAPHICALLY DESIGNATED PRODUCTS.  HE SAID ITALY WILL 
NOT SPEND ITS WTO CAPITAL IN THE EU ON IRANIAN ACCESSION. 
 
3. (C) ALTHOUGH CONCEDING THE ESSENTIAL POINT OF OUR 
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PAGE 03        ROME  01962  01 OF 02  191836Z 
DEMARCHE, ZANINI LAMBASTED THE USG POSITION.  HE WANTED TO BE 
SURE THE USG UNDERSTANDS THAT SUCCESS IN BLOCKING CONSENSUS 
ON AN ACCESSION PROCESS FOR IRAN IS NOT TANTAMOUNT TO ITALY 
OR THE EU ADOPTING WHAT HE SEES AS MISGUIDED U.S. POLICY.  HE 
SAID ITALY, ON THE CONTRARY, "SUPPORTS EVERYONE FOR WTO 
ACCESSION.  THE WTO'S MOST COMPELLING ASPECT IS ITS 
INCLUSIVENESS.  WHEN THE ISRAELIS SPEAK, FOR EXAMPLE, THE 
ARABS DON'T WALK OUT."  THE U.S., HE INSISTED, IS ASKING THE 
WRONG QUESTION.  FOR ZANINI, THE QUESTION ISN'T WHETHER 
IRAN'S POLITICAL CONDUCT WARRANTS WTO MEMBERSHIP BUT WHETHER 
THE WORLD IS BETTER OFF WITH IRAN, NOTWITHSTANDING ITS 
POLITICS, SUBJECT TO INTERNATIONAL TRADE RULES.  HE BELIEVES 
IRAN'S EVENTUAL WTO MEMBERSHIP WOULD HELP STABILIZE THE WORLD 
TRADING SYSTEM AND, ESPECIALLY GIVEN MAJOR ITALIAN 
INVESTMENTS IN IRAN, HE WOULD LOOK NO FURTHER FOR 
JUSTIFICATION FOR LAUNCHING AN ACCESSION PROCESS.  IF THE USG 
WANTS TO LOOK FURTHER, HE SUGGESTED, WE MIGHT CONSIDER 
WHETHER ENHANCED STABILITY IN THE TRADING SYSTEM MIGHT NOT 
FOSTER ENHANCED POLITICAL STABILITY AS WELL. 
 
4. (C) ECHOING COMMENTS MADE BY MFA ACTING GULF STATES OFFICE 
DIRECTOR EMANUELE FARRUGGIA TO POLOFF AND ECONOFF, ALSO ON 
APRIL 17, ZANINI SAID THE DISCUSSION OF WTO ACCESSION FOR 
IRAN IS, IN ANY EVENT, LARGELY SYMBOLIC.  MFA SEES THE 
IRANIAN ECONOMY AS YEARS AWAY FROM A SERIOUS WTO RUN AND 
FALLING EVEN FURTHER BEHIND AS WITNESSED BY IRAN'S RECENT 
FAILURE TO ENACT EVEN RUDIMENTARY FOREIGN INVESTMENT 
INCENTIVES (SEE ALSO REF B).  NOTING THAT OUR DEMARCHE MAKES 
NO MENTION OF THE OBVIOUS ECONOMIC BASIS FOR DENYING IRAN WTO 
ACCESSION, FARRUGGIA SAID ITALY IS PRESSING IRAN HARD FOR 
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PAGE 04        ROME  01962  01 OF 02  191836Z 
BOTH ECONOMIC AND POLITICAL REFORM BUT DOES NOT SEE ONE 
EFFORT AS LEVERAGING THE OTHER. 
 
5. (C) IN RESPONSE, EMBOFFS PRESENTED REF A POINTS, 
EMPHASIZING THAT A LINKAGE BETWEEN CESSATION OF IRAN'S 
OBJECTIONABLE BEHAVIOR AND ECONOMIC COOPERATION COULD GIVE 
IRANIAN REFORMERS BOTH A MEANS AND A MOTIVE TO AFFECT THE 
BEHAVIOR OF CONSERVATIVES.  ECONOMIC COOPERATION UNLINKED TO 
POLITICAL BEHAVIOR, WE CONTINUED, COULD LEAVE CONSERVATIVES 
CONVINCED THAT IRAN'S POLITICAL CONDUCT WAS OF NO CONCERN TO 
WESTERN ECONOMIES.  FARRUGGIA ARGUED THE OPPOSITE POINT -- 
THAT WITHHOLDING ECONOMIC COOPERATION WOULD BOLSTER THE 
CONSERVATIVES' CONTENTION THAT IRANIAN RAPPROCHEMENT WITH THE 
WEST IS ONE-SIDED. 
 
6. (C) FARRUGGIA COMMENTED ON TWO OF REF A'S POINTS IN 
PARTICULAR -- IRAN'S EVIDENT NUCLEAR AMBITIONS AND ITS 
SUPPORT FOR VIOLENT OPPOSITION TO THE MEPP.  HE SAID IRAN HAS 
SEEN A NUCLEAR WEAPON CAPACITY AS AN ESSENTIAL NATIONAL 
INTEREST EVER SINCE THE SHAH'S REGIME.  HE FEELS THAT ANY 
EFFORT, THROUGH THE NONPROLIFERATION TREATY OR OTHERWISE, TO 
DISSUADE IRAN FROM PURSUIT OF NUCLEAR WEAPONS MUST TAKE INTO 
ACCOUNT THE VISCERAL PLACE THESE WEAPONS OCCUPY IN THE 
IRANIAN NATIONAL PSYCHE.  ON THE OTHER HAND, HIS FREQUENT 
CONTACTS WITH IRANIAN OFFICIALS HAS NOT LEFT HIM WITH A SENSE 
THAT SUPPORT FOR PALESTINIAN NATIONALISM IS SIMILARLY CENTRAL 
TO THEM. 
 
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                           CONFIDENTIAL     PTQ2716 
 
PAGE 01        ROME  01962  02 OF 02  191836Z 
ACTION NP-00 
 
INFO  LOG-00   AID-00   AIT-03   AMAD-00  ACQ-00   CEA-01   CIAE-00 
      COME-00  CTME-00  INL-00   DODE-00  SRPP-00  DS-00    EB-00 
      EUR-00   EXIM-01  E-00     VC-00    FRB-00   H-01     TEDE-00 
      INR-00   IO-00    ITC-01   LAB-01   L-00     VCE-00   MOFM-05 
      MOF-01   AC-01    NEA-00   DCP-01   NSAE-00  NSCE-00  OES-01 
      OIC-02   OMB-01   OPIC-01  PA-00    PM-00    PRS-00   ACE-00 
      P-00     SCT-00   SP-00    SSO-00   SS-00    STR-00   TRSE-00 
      T-00     USIE-00  SA-00    EPAE-00  PMB-00   DSCC-00  DRL-02 
      G-00     NFAT-00  SAS-00     /023W 
                  ------------------88ED59  191836Z /38 
P 191732Z APR 02 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC PRIORITY 3357 
INFO IRAN COLLECTIVE 
AMCONSUL FLORENCE 
AMCONSUL MILAN 
AMCONSUL NAPLES 
USMISSION GENEVA 
 
C O N F I D E N T I A L SECTION 02 OF 02 ROME 001962 
 
SIPDIS 
 
NP/RA, EUR/PRA, EUR/RUS, EUR/WE 
 
E.O. 12958: DECL: 04/19/2012 
TAGS: PREL, ETRD, EU, WTO, IT 
SUBJECT: ITALY WON'T FORCE IRAN WTO ACCESSION ISSUE 
 
                       CONFIDENTIAL 
 
PAGE 02        ROME  01962  02 OF 02  191836Z 
 
7. (C) COMMENT.  ITALY GENERALLY SAVORS ITS OCCASIONAL ROLE 
AS WASHINGTON-TEHRAN MESSAGE CARRIER, MOST RECENTLY EVIDENT 
WHEN ITALY CONVEYED IRAN'S CONCERN ABOUT ITS PROFILE IN DOD'S 
NUCLEAR POSTURE REVIEW.   THE ITALIANS, HOWEVER, DRAW THE 
LINE AT ADOPTING AS THEIR OWN THE USG-SUGGESTED LINKAGE 
BETWEEN POLITICAL REFORM AND ECONOMIC COOPERATION.  THE 
ITALIAN ENERGY GIANT ENI, BY ITSELF, HAS TEN BILLION DOLLARS 
AT RISK IN IRAN AND THE GOVERNMENT OF ITALY, ENI'S BIGGEST 
SHAREHOLDER, ISN'T ABOUT TO MAKE IT MORE AT RISK.  MFA WILL 
CONTINUE TO PUSH IRAN ON WMD, BALLISTIC MISSILES, SUPPORT FOR 
TERRORISM, AND THE REST, BUT ECONOMIC RELATIONS WILL CONTINUE 
ALONG A DIFFERENT PATH.  IN PARTICULAR, ITALY HAS LONG 
SUPPORTED IRAN FOR WTO ACCESSION AND WILL CONTINUE TO DO SO, 
ALBEIT NOT TO THE POINT OF PROVOKING AN EU CONFRONTATION WITH 
THE U.S.  WE SHOULD EXPECT, MOREOVER, THAT THE ITALIANS WILL 
COMMISERATE FULLY WITH INEVITABLE IRANIAN COMPLAINTS THAT USG 
OBSTINACY ON WTO ACCESSION PLAYS INTO THE HANDS OF THOSE IN 
IRAN WHO OPPOSE REFORM. 
SEMBLER 
 
                       CONFIDENTIAL 
 
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 2002ROME01962 - Classification: CONFIDENTIAL