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07/t Text/Tags: TAGS: PTER ECON OVIP AMGT ASEC SY LE IR IS
07/s Text/Subject: SUBJECT: APHSCT TOWNSEND’S NOVEMBER 12 MEETING WITH
07/r Text/Ref:
07 Text: *** Maschinell erstellte Kleinschreibung, nur Satzanfaenge gross. ***

S e c r e t section 01 of 04 tel aviv 004604

Sipdis

The white house for aphsct frances fragos townsend
treasury for under secretary stuart levey

nsc for malvesti
state for nea, nea/ipa (maher), s/ct (ambassador crumpton)
joint staff for j-5
hq useucom for ecj-5 (klothe)
pentagon for osd desk (anderson)

E.o. 12958: dng: co 11/24/2026
Tags: pter, econ, ovip, amgt, asec, sy, le, ir, is
Subject: aphsct townsend’s november 12 meeting with
chief focuses on lebanon, syria and iran

Classified By: Classified by Charge Gene Cretz. Reasons: 1.4 (b) (d).

——-
summary
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¶1. (S) During a November 12 meeting, Chief MeirDagan told Assistant to the President for Homeland Securityand Counterterrorism (APHSCT) Frances Fragos Townsend thatUSG efforts to designate Iranian banking facilities haveproven effective and are forcing the Iranians to move theirfunds to banks in the Gulf States and the Far East. Daganurged the U.S. to continue activity in this direction,noting that SWISS and Japanese banks are forgoing businesswith Iran. Dagan warned that Iran and the Hizballah aretrying to bring the Siniora government down in Lebanon, andthat Hizballah’s next step is to rally Shiites in thestreets to put more pressure on the GOL. Dagan said heanticipates that this current effort will ultimately leadto violence and the murder of some of Siniora’s politicalallies. On Syria, Dagan said that Asad is comfortable withthe current situation and has no intent of breaking fromhis strategic alliance with Iran, or stopping his supportof Hizballah and Hamas. Dagan expressed frustration withEuropean attempts to engage Asad with the hope of bringinghim around, predicting that these attempts will fail, andonly encourage Asad to engage in more bad behavior. Dagansaid that the best way to change Asad’s behavior is tothreaten force. He encouraged the U.S. to ratchet uppressure on Syria by designating its Commercial Bank, andasking the Saudis to put pressure on banks in Europe andDubai. Dagan expressed frustration with Europeanreluctance to designate Hizballah as a terrorist group.End summary.

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-dagan: keep up the financial pressure on iran

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¶2. (S) Dagan said that Treasury Department designation ofIranian banking facilities has succeeded in its aims andhas proven very effective. The Iranians are nowpreoccupied with this problem and trying to move funds tobanks in the Gulf States and Far East, specifically India,China ((MLM: Dagan specifically noted Hong Kong)), Taiwan,and Singapore. He added that the Iraniansare also encountering difficulties with European banks.Dagan urged the U.S. to continue to move in thisdirection. He noted that the has sent some of itsown people to Europe to keep up the bank pressure on Iran.He said that Iran’s economic situation is weak, and thatthis is causing bankers and the Iranian middle class toincrease their criticism of Ahmadinejad and his regime. Hesaid that they are increasingly concerned thatAhmadinejad’s policies are going to lead Iran into”financial disaster.” Dagan added that Credit Suisse, UBSand a number of Japanese banks have asked Iran not to dobusiness with them anymore.

¶3. (S) Dagan said that is still having some problemswith banks in the UK, and noted that the Iranians aretrying to buy a Turkish bank there. The Iranians aretrying to move their foreign currency reserves from Europeto the Far East. At the same time, they are also thinkingabout how to do more work with the Euro, even while theyrecognize that they need U.S. dollars. Dagan said that theIranians are finding it difficult now to transfer fundsfrom Sadarat Bank to Hizballah through Lebanon. They arenow transferring the money in cash using couriers thatcarry it by suitcase from Iran to Hizballah recipients.Dagan stressed that Treasury Under Secretary Stuart Levey’sdirect discussions with bankers appears to yield betterresults than when governments deal with one another.

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“we are on the edge of a crisis in lebanon”

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4. (S) Dagan warned that and the U.S. are on “theedge of a crisis” in Lebanon as Syria, Iran and Hizballahare trying to bring down the Siniora government “in stages”through various tactical moves. The Hizballah ministers inPM Siniora’s government had resigned, and Hizballah isplanning to bring Lebanon’s Shiites into the streets toincrease pressure on the GOL. Dagan said that Hizballah’splan has been coordinated well with the Syrians, and thatIran is aware of this plan and has had a part informulating the strategy.

¶5. (S) Dagan said that this effort has two aims:
A) To form a unity government and bring others into it inorder to overwhelm Siniora. Hizballah needs to do thisbefore Lebanese President Lahoud finishes his term. Dagansaid that Michel Aoun is trying to get elected president,and is getting support from the Saudis to this end. Daganclaimed that Aoun is trying to mediate between Siniora,Samir Geagea and the West.
B) To increase Shia representation in the parliament bychanging the electoral law.
Dagan warned that and the U.S. are now witnessingthe beginning of a crisis in Lebanon. He said he would notbe surprised if the end involves violence and the murder ofpeople just below Siniora (“second echelon types”) beforethe UN finishes its investigation into the ofPM Hariri. Dagan said that he does not believe thatHizballah would try to kill Walid Jumblat or Siniora, butmight try to kill Marwan Hamedi and others like him. “Thisis the typical Lebanese way to solve problems,” Daganadded.

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–syria: asad continues to back terrorist groups–

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¶6. (S) Dagan said that based on the intelligence he hascollected, he would estimate that Syrian President Asad issatisfied with the current situation in the region, and hasno intention of stopping his support for Hizballah, Hamasand PIJ. Asad views his alliance with Hizballah and Iranas strategic, a view that justifies allowing PalestinianIslamic Jihad (PIJ) and Hamas to continue to operate fromDamascus, and to send radical Islamic fighters across theborder into Iraq. Dagan claimed that Asad is “happy to seeU.S. soldiers killed in Iraq.”

¶7. (S) Dagan noted that a British delegation led by formerUK FM Douglas Hurd and former MI6 Chief John Scarlett hadvisited Syria to talk with Asad. According to Dagan, Asadmade no concessions to the delegation, and instead assertedthat Lebanon is Syria’s number one priority. Dagan notedthat Asad occasionally calls for peace negotiations with, but then sets unrealistic conditions for startingthem. He explained that this pattern of behavior is doneto ease international pressure on Syria, and expressed hisview that he does not believe that Syria is willing to makepeace with . Instead, Dagan said, the Syrians arenow looking at different ways to engage by force.Dagan acknowledged that is not aware of any Syrianplans to attack in any way at this time, butcautioned that, in comparison with the past, more of Asad’sadvisors are talking about fighting , and usingterrorists in the fight. Dagan claimed that Asad hasappointed “ex-reservists” from the Golan Heights — who arein their eighties — as “resistance fighters.”

¶8. (S) Dagan said that Asad’s new policy and guidelinestowards drive his relations with the Palestinians aswell. He is now encouraging Hamas to “behave” vis-a-visPalestinian President Mahmud Abbas in his drive to form anational unity government. At the same time, Asad isencouraging Khaled Meshal to adopt more radical positions.

¶9. (S) Dagan claimed that Syrian-Iranian intelligencecooperation is enhancing, and pointed to “joint commandposts” staffed by Syrian and Iranian intelligence officers,including personnel from the Iranian Revolutionary GuardCorps (IRGC) and Hizballah.

¶10. (S) Dagan said that Asad is also allowing weapons to betransferred from Iran to Turkey and then to Syria, withtheir ultimate destination being Hizballah. Heacknowledged that suspects this only, and has no”smoking gun” or hard evidence to prove it.

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-dagan: talking with syria rewards bad behavior

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¶11. (S) Dagan said the GOI shares the USG’s frustrationwith the hesitation of European governments to designateHizballah as a terrorist organization. He noted recentvisits by European foreign ministers to Damascus, and saidthey reflect a view — held by Spanish Foreign MinisterMoratinos, as well as the Germans — that dialogue withAsad is the key to luring him away from Iran’s influence.He added that the Egyptians are trying to convince otherArabs to reach out to Asad. Dagan said that he isconvinced they are doomed to failure. He praised the GulfStates for understanding the threat posed by the”Iran-Hizballah-Syria” axis: “They see it as a threat, andas a sign of an oncoming Shia-Sunni conflict. It is notreally a religious war, but that is how they see it, andthey are right to view it as a threat.” Dagan credited theFrench for being less sympathetic to Syria than otherEuropeans, but added that they do not want to cooperate onHizballah as their troops are deployed in Lebanon.

¶12. (S) Dagan cautioned that engaging with Asad innegotiations on the Golan Heights or a Free Trade Agreementwith Europe would only reward aggression. He asserted thatall previous attempts to open dialogue with the Syrianswere misread and viewed by the ruling regime as a rewardfor behaving badly. , he stressed, has engaged withthe Syrians for the past fifty years: “The only thing theSyrians understand is force and pressure.” As an example,he pointed to Syria’s withdrawal from Lebanon, assertingthat it happened only because Asad feared that theinternational community would attack Syria in the wake ofthe Hariri . “Retreat was not due todialogue, but due to fear of brute force,” Dagan said.Dagan added that Syria dropped its support for the PKK whenTurkey threatened to go to war over it.

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dagan urges striking at syrians’ pocketbooks

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¶13. (S) Dagan said that even though the Syrian economy iscollapsing, he does not envision a real change in Syria anytime soon. Townsend commented that we must continue to workwith financial institutions to create problems for the Syrianbanking system similar to those now facing Iran. In responseto a question, Dagan said it wouldhelp if the U.S. would increase pressure on the CommercialBank of Syria, and that he would recommend this himself toTreasury Under Secretary Stuart Levey when they next meet.Clamping down on the Commercial Bank of Syria would beeffective especially as key Syrian government ministers aretrying to invest outside of Syria. Dagan added that thetiming of this effort is very important, and said heexpects that the results of the UN’s investigation into theHariri will implicate Syria.

¶14. (S) Dagan suggested the U.S. could also bring morepressure to bear on Syria by encouraging the Saudis topressure Europe. Noting that the Saudis are consideringbuying 70 Tornado fighter-bombers from the UK, he wonderedaloud if the USG could encourage the Saudis to buy theirarms from the U.S. instead of from the Europeans. Townsendsaid that the USG will encourage the Saudis to put pressureon banks in Dubai, as they are clearinghouses forproliferation activity. Dagan agreed that pressuring Dubaiwould be helpful, especially as the Iranians are trying tobuy up property there. He cautioned, however, that not allSaudis would be inclined to help — securing KingAbdullah’s support would be vital: “If you can get theKing to support you, others will follow. If he threatensto take his money somewhere else, that would be a seriousthreat.” Dagan asked Townsend to have the USG put morebanking pressure on the Syrians: “By hitting Syrian banks,you also hit Hizballah and Iran. It is a very effectivetool that has proven itself.”

¶15. (S) Dagan concluded the meeting by noting thatcooperation between his staff and POL/RES is excellent.

¶16. (U) APHSCT Frances Fragos Townsend cleared on thiscable.

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Cable
Text:

S E C R E T TEL AVIV 04604

SIPDIS
CXTelA:
ACTION: POL
INFO: IPSC PD IMO RES ECON DCM DAO AMB AID ADM RSO
CONS

DISSEMINATION: POL
CHARGE: PROG

APPROVED: CHG:GCRETZ
DRAFTED: POL:MCKEAYS
CLEARED: POL/C:MJSIEVERS, POL/RES:PHUSSEY

VZCZCTVI112
PP RUEHC RUEHXK RUEATRS RHEFDIA RUEAIIA RUEKJCS
RHEHNSC RHMFISS RHEHAAA RUEKJCS
DE RUEHTV #4604/01 3281302
ZNY SSSSS ZZH
P 241302Z NOV 06
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC PRIORITY 7788
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHEFDIA/DIA WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RHMFISS/HQ USEUCOM VAIHINGEN GE PRIORITY
RHEHAAA/WHITE HOUSE WASHDC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY

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