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Cablegate: Greece/Iran: What's Causing Greek Reluctance With

VZCZCXRO3131
OO RUEHBC RUEHBW RUEHDE RUEHDIR RUEHIHL RUEHKUK
DE RUEHTH #0651/01 1341502
ZNY CCCCC ZZH
O 131502Z MAY 08
FM AMEMBASSY ATHENS
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1784
INFO RUCNIRA/IRAN COLLECTIVE PRIORITY
RUCNRAQ/IRAQ COLLECTIVE PRIORITY
RUEHZG/NATO EU COLLECTIVE PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 ATHENS 000651

SIPDIS

ISN, EB, NEA, IO, P, T, TREASURY-TFI

E.O. 12958: DECL: 05/12/2018
TAGS: EFIN ETRD TRGY UNSC KNNP IR GR PREL PGOV AORC
SUBJECT: GREECE/IRAN: WHAT'S CAUSING GREEK RELUCTANCE WITH
FURTHER IRAN SANCTIONS?

REF: A. SECSTATE 48615
B. NEMROFF E-MAIL 05/07/2008

Classified By: A/POLCOUNS JEFFREY HOVENIER. REASONS 1.4 (B) AND (D).

1. (C) SUMMARY: Deputy head of the Greek MFA Middle East
directorate told us Greek reluctance to sign on to further
Iran sanctions stemmed from several factors, including lack
of an EU consensus, doubts about the effectiveness of
sanctions, belief that greater engagement, not less, provided
greater leverage, and incredulity about Israeli and U.S.
estimates of Iranian nuclear intentions. But perhaps the
most important factor was the GOG's unwillingness to defy
Greek shipowners, who have significant dealings with the
Iranians. END SUMMARY.

2. (C) DepPolCouns discussed ref A points on Greece's plans
to submit a 60-day report on compliance with UNSCR 1803 with
MFA A6 Middle East Directorate deputy head Giorgos Ayfantis.
Ayfantis said the GOG understood it had an obligation to
submit the report and that discussions were on-going on how
to do so. The problem was a lack of unity on what to write.
Ayfantis explained that the question of Iran sanctions was
complicated. First, there was no EU consensus and a wide
divergence of opinion. Contrary to reports from Brussels
(ref B), he denied that Greece was joining with the Cypriots
and Portuguese in being the main force undermining EU
sanctions efforts, placing the blame instead on Spain and
Germany, both of whom had big commercial interests in dealing
with Iran and were reluctant to jeopardize those interests
with further sanctions.

3. (C) Secondly, many in the EU, including Greece, were
skeptical about the efficacy of sanctions. Greece and others
agreed on the importance of Iran's not developing a nuclear
weapons capability but doubted further sanctions would help
achieve the goal. FM Bakoyannis opposed sanctions in
principle, believing engagement was a potentially more
fruitful approach. Others in the GOG took the engagement
thesis a step farther, arguing that increasing trade with
Iran could actually make it easier to halt Iran's nuclear
program by giving us greater economic leverage. Also, many
were skeptical that Iran really had an interest in developing
nuclear weapons. Threatening to acquire such weapons,
Ayfantis opined, got Iran further than actually acquiring
them, since the latter would lead to a general consensus on
the need to take retaliatory and defensive measures.
Moreover, Israeli and U.S. predictions about Iran's
intentions were discounted by many due to the experience of
Saddam and WMD.

4. (C) Finally, Ayfantis explained another, particularly
delicate factor shaping the Greek position. This was the
interests of Greek shipowners, who have many dealings with
the Iranians. Greek shipping interests in Iran were under
threat from the Chinese, who were trying to develop their
merchant marine relationship with the Iranians. Greek
shipowners feared that further sanctions would not only
directly impact Greek dealings with Iran, but also push the
Iranians towards the Chinese. The GOG, for its part, had
always been very attentive to the interests of the powerful
Greek shipowners. But Ayfantis explained GOG concern for
their interests was even greater now since the government was
trying to persuade the shipowners to move their headquarters
from their traditional base in London (where Labor-backed tax
increases were becoming more burdensome) to the Greek port
city of Piraeus near Athens.

5. (SBU) During the conversation, Ayfantis noted that recent
Greek Ambassador to Teheran Karafotias would soon take over
as head of the MFA's D1 Directorate for International
Organizations, which overseas, amongst other things, UN
policy. Ayfantis did not offer an opinion on the possible
impact of Karafotias' appointment on sanctions policy, other
than to say that Karafotias brought to the job a wealth of
experience dealing with the Iranians.

6. (C) COMMENT: This is the first we have heard Greek
footdragging on further Iran sanctions linked to the
interests of Greek shipowners. The MFA has usually cited FM
Bakoyannis' principled opposition, but we suspected more was
at play due to Greek persistence. While acknowledgment of
the shipowners' angle is refreshing, it does not bode well
for changing the GOG's mind on Iran sanctions. Past
experience (on such issues as trying to get the GOG to sign a
PSI shipboarding agreement) suggests that when it comes to
Greek shipowners -- who control the largest merchant marine
fleet in the world and a significant portion of Greek GDP --
the GOG is quite deferential.
SPECKHARD

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