DEMARCHE ON IRAN AIR'S ATTEMPT TO ACQUIRE 30 CIVILIAN U.S. ORIGIN COMMERCIAL AIRCRAFT FROM IBERIA AIRLINES

SECRET S E C R E T MADRID 002938 SIPDIS SIPDIS EUR/WE EB/ESC/TFS ISN/CATR EUR/PRA NEA/IR E.O. 12958: DECL: 11/17/2016 TAGS: EAIR, ETRD, ETTC, PARM, PREL, IT, VE, KTFN, SP SUBJECT: DEMARCHE ON IRAN AIR'S ATTEMPT TO ACQUIRE 30 CIVILIAN U.S. ORIGIN COMMERCIAL AIRCRAFT FROM IBERIA AIRLINES REF: A. STATE 186533 B. IIR 7 730 0002 07 C. MADRID 2908 Classified By: AMBASSADOR EDUARDO AGUIRRE FOR REASONS 1.4 (B), (C) & (D ) 1. (S/NF) As promised in Reftel A, FM Moratinos called the Ambassador back to say that he had looked into the potential Iberia-Iran Air deal and that it would not happen. The Ambassador referred to the possible use of shell companies and the Foreign Minister reiterated that the deal would not happen by any means. 2. (S/NF) The Ambassador also raised the demarche during a previously scheduled lunch with Vice President Fernandez de la Vega on November 20. The Vice President said that FM Moratinos had consulted with her before speaking with the Ambassador and that the deal would not happen. The Ambassador again probed delicately on the possibility of the use of shell companies to shield the sale and she remained firm. She acknowledged that Iberia did want to sell the airplanes, but she again stated that any deal with Iran Air would not happen. 3. (S/NF) The Ambassador is seeking a call on the Chairman of Iberia on other (commercial) issues. He will use the opportunity to raise the issue briefly, but it will not be the centerpiece of the meeting. 4. (S/NF) Comment: Barring additional information from Washington, we consider this issue closed. The Vice President is the enforcer within the government and she and the Ambassador have an excellent relationship. If she says the deal is off, we believe the deal is off. Post thanks Washington for the early notification. It was clear from the Ambassador's first conversation that the Foreign Minister was unaware of the potential deal. We do not know whether the Vice President or anyone else in the government had been aware that such a deal might be in the works, but we suspect not at the senior level. Both the Foreign Minister and Vice President immediately recognized the difficulties such a sale by Iberia could represent. AGUIRRE