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Cablegate: Austrian Trade Delegate Views On Iranian Political And

VZCZCXRO3212
RR RUEHAG RUEHAST RUEHBC RUEHDA RUEHDE RUEHDF RUEHDIR RUEHFL RUEHIK
RUEHKUK RUEHKW RUEHLA RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK
RUEHYG
DE RUEHVI #2948/01 3481447
ZNR UUUUU ZZH
R 141447Z DEC 07
FM AMEMBASSY VIENNA
TO RUEHC/SECSTATE WASHDC 9161
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCNIRA/IRAN COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 VIENNA 002948

SIPDIS

SIPDIS, SENSITIVE BUT UNCLASSIFIED

E.O. 12958: N/A
TAGS: PGOV ETRD EINV PREL IR AU
SUBJECT: AUSTRIAN TRADE DELEGATE VIEWS ON IRANIAN POLITICAL AND
ECONOMIC SITUATION

REF: VIENNA 1604

VIENNA 00002948 001.2 OF 002

Summary
-------

1. (SBU) A former Austrian trade delegate to Iran recently told
Emboff that financial sanctions are effective in the banking sector,
but less successful in deterring Austrian companies from trading
with Iranian counterparts. In the view of the trade official, U.S.
sanctions were counterproductive, because they ultimately undermined
the position of pro-U.S. factions in Iranian society. Austrian
exports to Iran are declining, not because of sanctions, according
to our interlocutor, but because of a general deterioration of
Iran's economy. End summary.

2. (SBU) During a recent informal meeting with Emboff, a former
representative of the Austrian Economic Chamber (Wirtschaftskammer
Oesterreich-WKO)in Tehran discussed his impressions of the current
Iranian economic and political situation. The trade rep had just
returned from a three year tour in Tehran where he promoted Austrian
trade and investment in Iran.


Iranians Predisposed to U.S., But Not To Sanctions
--------------------------------------------- -----

3. (SBU) In the opinion of the trade rep, U.S. policy towards Iran
was "counter-productive and wrong." Although many Iranians were
positively inclined towards the U.S., USG policy had damaged the
Iranian economy, making it difficult for most Iranians not to
support the regime. According to our contact, many Iranians
believed that increased commercial relations between Iran and the
West could improve the political climate. The trade delegate's
Iranian interlocutors often expressed concern that the U.S. was
unfairly siding with an "inhumane" regime in Saudi Arabia against
Iran. Most Iranian Shiites, according to the trade rep, considered
themselves more open and democratic than their Sunni counterparts.
There is a democratic movement in Iran, which hopes the 2009
elections will usher in regime change and an era of reforms.


Financial Sanctions Effective
-----------------------------

4. (SBU) Commenting on financial sanctions targeting Iranian banks,
the trade rep maintained that almost no bank is willing to finance
or guarantee investments in Iran. Also effective, to a certain
extent, were U.S. warnings that it might implement the Iran
Sanctions Act (ISA) against companies that invest in Iran's energy
sector. However, our interlocutor criticized the ISA as "a breach
of international law," allowing extra-territorial application of
U.S. laws.


Austrian Business Prefers "Business As Usual"
---------------------------------------------

5. (SBU) According to our contact, the WKO and other European
business lobbying groups will continue to support legitimate
European trade and investments in Iran, as long as UN, European, and
national laws are upheld. It was difficult to do business in the
"cumbersome" government-controlled oil and gas sector.
Nevertheless, our interlocutor maintained that there were attractive
opportunities for investments and trade in other sectors,
particularly in those that have been recently privatized.

6. (SBU) Austrian exports to Iran continue to decline, not so much
because of international sanctions, according to the trade rep, but
because of a general deterioration in Iran's economic situation.
Austrian exports to Iran decreased by 15.6% to Euro 339 million in
2006, and decreased by another 9.6% in the first three quarters of
2007.

7. (SBU) Our contact expressed hope that relations between the U.S.
and Iran could improve, particularly following elections in both
countries. He predicted that the 2009 presidential elections in
Iran could usher in more political and economic reforms. Our
contact maintained that many opinion leaders in Iran are
increasingly discontent with the government's economic performance,
as well as Ahmadinejad's "lunacy."


Comment
-------

8. (SBU) Austria has historically enjoyed excellent commercial
relations with Iran, even in the immediate aftermath of the 1979
revolution. While the comments are the trade rep's private views,
they echo the views expressed to us from various government and

VIENNA 00002948 002.2 OF 002


business leaders: economic sanctions are not the most appropriate
means to effect regime change in Iran. On the contrary, many
Austrian policy makers argue that intensified trade and economic
cooperation would facilitate political reforms.

KILNER#

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