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Cablegate: E.O. 13382: Designation of Two Iranian

O R 181930Z JUL 06
FM SECSTATE WASHDC
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UNCLAS STATE 117616

SIPDIS


E.O. 12958: N/A
TAGS: PARM PREL ETTC EFIN PGOV IR

SUBJECT: E.O. 13382: DESIGNATION OF TWO IRANIAN
MISSILE-RELATED ENTITIES

REF: 05 STATE 120771

1. (U) This is an action request. Please see para 4.

2. (U) Background: On June 29, 2005 the President issued
Executive Order (E.O.) 13382 authorizing the U.S. to block or
"freeze" the assets of weapons of mass destruction (WMD)
proliferators and their supporters (reftel). E.O. 13382
authorizes the Secretary of the Treasury, in consultation
with the Secretary of State, the Attorney General, and other
relevant agencies to designate individuals or entities
determined to be owned or controlled by, or acting or
purporting to act for or on behalf of, directly or
indirectly, those entities or individuals identified in the
Annex of E.O. 13382 or subsequently designated pursuant to
E.O. 13382. In addition, E.O. 13382 authorizes the Secretary
of the Treasury, in consultation with the Secretary of State,
the Attorney General, and other relevant agencies to
designate individuals or entities determined to have
provided, or attempted to provide, financial, material,
technological or other support for, or goods and services in
support of, individuals or entities identified in the Annex
to E.O. 13382 or subsequently designated pursuant to the
Order. Persons that are designated under the Order are
denied access to the U.S. financial and commercial systems,
and U.S. persons, wherever located, are prohibited from
engaging in transactions with them.

3. (U) Background continued: On July 18 the Department of
the Treasury announced the E.O. 13382 designations of two
additional Iranian entities, Sanam Industrial Group and Ya
Mahdi Industries Group. The USG has determined that they are
owned or controlled by, or act or purport to act for or on
behalf of, directly or indirectly, the Aerospace Industries
Organization (AIO), which President Bush identified in the
Annex to E.O. 13382. AIO is a subsidiary of the Iranian
Military of Defense and Armed Forces Logistics, and manages
and coordinates Iran's missile program and oversees all of
Iran's missile industries. In reaching the decision to
designate these entities, the USG took into account the
implications of such a designation on our current diplomatic
efforts, including the P5 1 offer to Iran of future
incentives and cooperation in exchange for Iran's agreement
to take concrete steps to build confidence that it has
abandoned its nuclear weapons efforts. We believe the
decision to proceed with these designations is consistent
with our support for the P5 1 offer to Iran. After six
weeks, Iran has not responded to the P5 1 package, and
therefore, we have no choice but to resume discussions at the
United Nations Security Council. On July 12, P5 1 Ministers
announced that they would seek adoption of a resolution that
makes mandatory Iran's suspension of all enrichment related
and reprocessing activities. Consultations are now underway
in New York. The efforts in the UNSC, as well as these
designations are intended to exert a greater level of
pressure on Iran to make the strategic decision to abandon
its pursuit of nuclear weapons.

4. (U) Action request: Washington requests action
addressees inform appropriate host government officials and
Proliferation Security Initiative Operational Experts Group
(PSI OEG) points of contact that two Iranian entities --
Sanam Industrial Group and Ya Mahdi Industries Group -- have
been designated pursuant to E.O. 13382 and added to the
Office of Foreign Assets Control's (OFAC) List of Specially
Designated Nationals and Blocked Persons (SDN List). Posts
should also provide a copy of the Treasury press release at
para 5 and note that the SDN List can be found at
www.treas.gov/ofac and that a consolidated list of E.O. 13382
designees can be found at
www.treas.gov/offices/enforcement/ofac/progra ms/
wmd/wmd.pdf. Posts should draw from points in paragraph 6 as
needed.

5. (U) Begin Treasury press release.

July 18, 2006

The Department of the Treasury today designated two
additional Iranian companies, Sanam Industrial Group and Ya
Mahdi Industries Group, for their ties to missile
proliferation.

"As long as Iran's nuclear ambitions continue to threaten the
international community, the United States will use its
authorities to target Iran's efforts to sell and acquire
items used to develop weapons of mass destruction and the
missiles capable of carrying them," said Stuart Levey,
Treasury's Under Secretary for Terrorism and Financial
Intelligence (FTI). "We have now taken steps to financially
isolate thirteen entities tied to Iranian proliferation, and
will continue to act aggressively against this grave threat."

This action was taken pursuant to Executive Order 13382, an
authority aimed at financially isolating proliferators of
weapons of mass destruction, their supporters, and those
contributing to the development of missiles capable of
delivering WMD. Designations under E.O. 13382, which is
administered and enforced by the Treasury's Office of Foreign
Assets Control (OFAC), prohibits all transactions between the
designees and any U.S. person and freezes any assets the
designees may have under U.S. jurisdiction.

Sanam Industrial Group and Ya Mahdi Industries Group are
being designated by OFAC because they are owned or controlled
by, or act or purport to act on behalf of, directly or
indirectly, the Aerospace Industries Organization (AIO),
which the United States Government designated in the annex to
E.O. 13382. AIO is a subsidiary of the Iranian Ministry of
Defense and Armed Forces Logistics, and manages and
coordinates Iran's missile program and oversees all of Iran's
missile industries.

The Sanam Industrial Group, a subordinate to the AIO, has
purchased millions of dollars worth of equipment on behalf of
the AIO from entities associated with missile proliferation.

Ya Mahdi Industries Group is also subordinate to the AIO and
has been involved in international purchases of
missile-related technology and goods on behalf of the AIO.

Background on E.O. 13382

Today's action builds on President Bush's issuance of E.O.
13382 on June 29, 2005. Recognizing the need for additional
tools to combat the proliferation of WMD, the President
signed the E.O. authorizing the imposition of strong
financial sanctions against not only WMD proliferators, but
also entities and individuals providing support or services
to them.

In the annex to E.O. 13382, the President identified eight
entities operating in North Korea, Iran and Syria for their
support of WMD proliferation. E.O. 13382 authorizes the
Secretary of the Treasury, in consultation with the Secretary

SIPDIS
of State, the Attorney General, and other relevant agencies,
to designate additional entities and individuals providing
support or services to the entities identified in the annex
to the Order.

In addition to the eight entities named in the annex of E.O.
13382 and the two named today, the Treasury Department has
designated sixteen entities and one individual as
proliferators of WMD, specifically:

-- Eight North Korean entities on October 21, 2005;
-- Two Iranian entities on January 4, 2006;
-- One Swiss individual and one Swiss entity tied to North
Korean proliferation activity on March 30, 2006; and
-- Four Chinese entities and one U.S. entity tied to Iranian
proliferation activity on June 13, 2006.

The designations announced today are part of the ongoing
interagency effort by the United States Government to combat
WMD trafficking by blocking the property of entities and
individuals that engage in proliferation activities and their
support networks.

End Treasury press release.

6. (U) If raised: Will the designations undercut the P5 1
offer?

-- The package of incentives offered by the P5 1 remains on
the table. However, after six weeks, we have no indications
from Iran that it is prepared to accept the package or
suspend all enrichment related and reprocessing activities.
As a result, we have no choice but to return to the United
Nations Security Council.

-- In reaching this decision to designate these entities, the
USG took into account the implications of such a designation
on our current diplomatic efforts.

-- We believe the decision to proceed with these designations
is consistent with our support for the P5 1 offer to Iran.

-- The UNSC process, these designations, and other efforts
are intended to enhance the effectiveness of our diplomatic
efforts. They are intended to exert greater pressure on Iran
to make the strategic decision to abandon its nuclear weapons
pursuits.

End if raised points.

7. (U) Washington appreciates Posts' assistance. Please
slug replies for ISN, T and Treasury/OFAC.
RICE


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