CHEMICAL WEAPONS CONVENTION (CWC): WRAP-UP FOR 12

UNCLAS SECTION 01 OF 05 THE HAGUE 001451

SIPDIS

BERLIN FOR ITO
STATE FOR AC/CB, VC/CCB, NP/CBM, L/ACV, IO/S
SECDEF FOR OSD/ISP
JOINT STAFF FOR DD PMA-A FOR WTC
NSC FOR CHUPA
COMMERCE FOR BIS (GOLDMAN)
WINPAC FOR FOLEY

E.O. 12958: N/A
TAGS: PARM PREL ABUD CWC
SUBJECT: CHEMICAL WEAPONS CONVENTION (CWC): WRAP-UP FOR 12
MAY - 6 JUNE.

This is CWC-60-03.

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Summary
--------------

Topics:
-- 2003 Cash Flow Problem
-- 2004 Budget Consultations - First Round
-- Timetable for Article VII
-- Khartoum Regional Seminar
-- "On Call" Inspectors
-- Newport Step III Combined Plan
-- VIR Consultations
-- Article IV/V Consultations
-- 15th Data Validation
-- Ambassador Javits Upcoming Travel


1. Details about the 2003 cash flow difficulties emerged
during the first round of 2004 budget consultations and the
OPCW informed member states that they will have to begin
cutting program delivery.


2. Two rounds of 2004 budget consultations were held in June
with senior OPCW management introducing each section of the
budget.


3. Inquiries have been made on two separate occasions by the
Canadian delegation on U.S. plans for follow-up to our call
to set a timetable for compliance with Article VII.


4. The Technical Secretariat has granted a request from the
ICRC to attend the OPCW Regional Seminar in Khartoum. The
ICRC has assured the TS that they are not going to talk about
RCA's and related issues.


5. The Director-General held a meeting with TS staff and
possessor states to discuss the idea of employing "on call"
inspectors as a way to reduce cost.


6. The TS has distributed the Newport Step III Combined Plan.


7. VIR consultations were held on 28 May and U.S. written
comments were circulated by the TS.


8. The German delegation raised the idea of establishing a
contingency fund in the Article IV/V consultations.


9. The 15th OPCW Validation Group met 20-21 May and approved
246 mass spectra and 306 retention indices.


10. Ambassador Javits will travel to Mexico to attend the
OPCW Regional Seminar and preliminary planning has begun for
site visits in July at Tooele, Utah and Pine Bluff, Arkansas.
End Summary.

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2003 CASH FLOW PROBLEM
--------------


11. Details about the continuing severe cash flow
difficulties that the OPCW is experiencing have emerged
during the first round of 2004 budget consultations 3-5 June.


12. On 2 June the bank balance was down to 8 million euros
-- the lowest level ever for the OPCW. The next day Japan
informed the Technical Secretariat that it had just made its
payment. Germany also normally pays in June. This short
term relief, however, is not enough to prevent management
from having to take unspecified actions to cut program
delivery, which they have already begun doing.


13. The reason for the cuts in program delivery is the same
as in past years: too much reimbursement income from CW
possessors was assumed in the budget (3.9 million euros). As
of now, only one million euros has been invoiced to CW
possessors for verification activities under Articles IV and

V. Even though the assumed income total was discounted 40
percent from what the CW possessors told the organization
would be carried out, the amount assumed remains
unrealistically high.


14. Although the audited surplus for 2001 is 3.4 million
euros, this money is not available to assure program delivery
now because of USG insistence that any decision about
possibly authorizing use of the surplus be deferred until the
annual Conference in October.


15. COMMENT: Del urges that Washington consider how to
urgently address this seemingly perennial problem.

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2004 BUDGET CONSULTATIONS -- FIRST ROUND
--------------


16. The budget facilitator (Peter Beerwerth, Germany) held
the first two rounds of consultations on the 2004 budget 3-5
June. Senior management is introducing each section of the
budget.


17. A number of delegations raised questions about the
proposal to recruit and train new inspectors to compensate
for attrition. Acting Director of the Inspectorate Renato
Carvalho presented the case for hiring "Inspector Group C" of
25-30 individuals to compensate for attrition and the 16
inspectors they plan to let go in 2003 in implementation of
the tenure decision. All would be hired at the P-3 level.
Director of Verification Reeps envisions eventually 50
inspectors "on call", or contract inspectors. This year he
hopes to start with 10 at the P-3 level (no taxes reimbursed,
no insurance when not on the job, no retirement). Five will
come from inspectors separated, and five from a vacancy
announcement.


18. Russia spoke to lay down a marker that no decision has
been taken to allow contract inspectors. (NOTE:
Inspectorate sources say that Russia opposes this move
because it will decrease hiring of new inspectors and they
have many candidates lined up to pack the inspector corps.)
India challenged the need for any new inspectors, especially
if the contractor concept is introduced. Germany also seems
inclined to find budget savings by not hiring new inspectors.


19. Pakistan and the UK challenged the concept of 6 weeks of
inspector training at 3/4 salary plus DSA, arguing that the
new inspectors should be hired and then undergo training.
South Africa was inclined to support.


20. Iran, Italy, the UK, Japan India and Canada questioned
the new line items for consultants that the Director General
has mandated in the budget. Director of Administration
Schulz wants consultant money to design a new rating system
(because he cannot do that in house) and to continue to
evaluate candidates for jobs through external experts. He
cannot speak to other needs. Director of Verification Reeps
says his consultant is "doing very useful work" but he cannot
speak to other requests. Asghar says the DG is prepared to
justify all the requests.


21. Reeps proposes through efficiency savings to increase
the number of Article VI inspections to 150 next year. In
the first 4 months of this year he saved 85-90,000 euros. He
would distribute additional inspections "in a balanced
manner" across all Article VI regimes (percent figures
represent intensity):

2003
2004
Inspectable Percent No.
Percent
Schedule 1 27 59 16 59
Schedule 2 148 26 42
28
Schedule 3 404 4.5 22 5.4
OCPF 3993 1.5 70
1.75

"The Technical Secretariat has some concerns with such a low
frequency of inspection in the OCPF category," Reeps said.
(NOTE: Carvalho added he expects to get 9 percent more
Article IV/V inspector days and 14 percent more Article VI
inspections with no/no budget increase. Japan reacted
positively to this evidence of productivity gains.)

22. Reeps is continuing bilateral consultations on Sampling
and Analysis. Germany, Switzerland, the UK and the United
States are to be followed by the PRC, India, France, and
Japan. He plans to issue a paper by the end of the year
summarizing the results and making a recommendation. Lots of
resources are devoted to Sampling and Analysis (S&A) on an
annual basis so the question of the potential for using these
resources is an important one (when, if ever are we going to
do S&A, Reeps asked). Reeps pointed to para. 3.17, which
says that if/if there is to be sampling and analysis during
inspections in 2004, it could cost 60,000 euros.

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Timetable for Article VII
--------------

23. (U) On two occasions, the Canadian delegation has asked
what, if anything, the U.S. intends to do as a follow-up to
our call during the RevCon for setting up a timetable for
compliance with Art VII. The U.S. has indicated that
something should be ready to adopt at the next CSP in
October. Delegation would be interested in Washington's
views/intentions on this issue.

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Khartoum Regional Seminar
--------------


24. DG's Charge de Cabinet, Raphael Grossi informed the
delegation that Lisa Tabassi in the TS legal office, invited
(or granted a request from) the ICRC to be present during the
upcoming regional group conference in Khartoum. Grossi asked
if we had any problem with this invitation. Delegation
informed him we had no problem with the ICRC generally, and
were certainly not trying to thwart their effort to be
involved in CW issues. Our concern at the RevCon was over
ICRCs effort to spark a public debate on an issue we do not
believe is ready for discussion. Thus we would not object to
their being in Khartoum, as long as they aren't looking to
talk about RCAs and related issues. He said they were not
and, based on this, it is delegation's understanding that
ICRC will in fact be present in Khartoum.

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"On Call" Inspectors
--------------


25. The Director General held a meeting including relevant
members of his staff and all possessor states (except
Albania) at which he circulated a paper containing some of
the details of the proposal to employ "on call" inspectors.
The TS Director of Administration has stated that not having
to pay inspectors' medical insurance, Provident Fund
contributions, etc., as envisioned under this program, would
reduce costs by approximately 40% per inspector. The DG
highlighted the utility of such a program in light of
anticipated increases in verification costs as more
demilitarization become operational.


26. Delegates present were generally noncommittal, but
Russia asked whether the cost reduction envisaged was
absolute or merely represented a shift from reimbursable
Article IV/V costs to assessed contributions. The DG said
that it was an absolute reduction and no increase in assessed
contributions should result. The Indian Ambassador did not
express disagreement with the proposal, but expressed concern
over possible confidentiality issues. The DG explained that
under the TS proposal all confidentiality provisions under
the convention would apply to on call inspectors, and
emphasized that such inspectors would only be used for
demilitarization inspections. The TS was anticipating
phasing in the program, with perhaps ten inspectors being
retained under contract in the first year. The DG also
emphasized that, initially at least, on call inspectors would
be drawn from inspectors who were leaving the TS.

27. The DG asked states parties, particularly the
possessors, to consider the document and provide a response
as soon as possible, preferably the following week
(delegation informed him that this was not feasible).
Delegation was also noncommittal in the meeting, but made it
clear that even if our eventual response was positive, there
could be many questions that would need to be asked and
answered before the system was implemented.

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Newport Step III Combined Plan
--------------


28. The Newport Step III (Production Facility) Combined Plan
was circulated by the TS, dated 26 May 2003, thus meeting the
30-day requirement for other delegations to review and adopt
the document before the end of EC-33.

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VIR Consultations
--------------


29. VIR consultations were held on 28 May. US written
comments, along with those of Spain, Iran, Mexico, and
Switzerland, were circulated by the TS. On 29 May, the TS
circulated an extensive corrigendum, highly protected, which
primarily incorporates US changes that could be considered
clearly factual in nature. The more
interpretative/analytical or editorial comments were not
included in the corrigendum, but Del called the attention of
delegates to the parts of the U.S. written comments that had
not been incorporated in the corrigendum as we went over the
report paragraph by paragraph. There was general agreement
that this was a valuable, and efficient, way to proceed. A
number of other States Parties intend to offer comments in
writing. The TS will put all SP written comments together in
a single document and issue it, along with an updated version
of the corrigendum.


30. Per Runn did most of the talking for the TS. He agreed
that our additional point on paragraph 9.4, about the TS
consulting SP's individually on potentially declarable
facilities prior to issuing any lists, was consistent with
Review Conference that the TS would in fact treat as an
instruction from SP's. He agreed on the need to provide more
details on cost-efficient practices in CWPF destruction (para
10.7). Audit non-conformities on OPCW lab (11.6) were
purely administrative, nothing regarding technical capability
of the lab. Details of audits will be provided in the
future. Runn agreed to look for better wording in Annexes 10
and 21. On the whole, it was a quite cooperative and
collegial performance.


31. Swannanoa remains a sticking point as does disagreement
over the number of U.S Category 3 items (Annex 3, footnote
3). Perhaps worth going back in for a bilateral chat with TS.


32. The new Czech EC Chairman, Ambassador Petr Kubernat, ran
an efficient meeting though he is clearly depending on the TS
for the substance of issues.

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Article IV/V Consultations
--------------


33. Art. IV/V consultations on 27 May went well. The
Chairman intends to hold another round of consultations
before the EC in June. The Germans are thinking of trying to
establish some sort of contingency fund, to be realized from
savings as some personnel depart due to tenure policy. They
will try to put something on paper.

--------------
15th Data Validation
--------------

34. Lawrence Livermore National Lab (LLNL) reps Hugh Gregg
and Armando Alcaraz, and National Institute of Science and
Technology (NIST) reps Gary Mallard and Ed White attended the
15th OPCW Validation meeting 20-21 May. 246 mass spectra and
306 retention indices were approved.


35. The Data Validation group (led by Eric Wils) had
received a request from the Secretariat to include
degradation products of scheduled chemicals, primarily
Schedule 1, and riot control agents in the database.


36. LLNL reps met with Nyakoe of the OPCW Office of Internal
Oversight (OIO) and Stefan Mogl, Head of the OPCW Lab. The
OIO is interested in discussing and assessing overall sample
and handling procedures with LLNL and the UK. These
discussions had been previously conducted in 2001 with the
Swiss and Finnish labs. Nuaoke will officially request
LLNL's assistance through the Del. He tentatively plans to
visit LLNL in October 2003.


37. Mogl indicated that OPCW may go to one proficiency test
per year, and more accurately align proficiency tests with
what designated labs might expect in an actual inspection.
In addition, he wants to perform more "off-site sample
handling exercises".

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Ambassador Javits Upcoming Travel
--------------


38. Ambassador Javits will travel to Mexico for two days
starting on 11 June to attend the OPCW First Regional Seminar
on the Role of the Chemical and Other Relevant Industries in
the Implementation of the Chemical Weapons Convention in
Latin America and the Caribbean. He is accompanying
Director-General Pfirter and the Mexican Ambassador to The
Hague, Ambassador Onate.


39. Delegation has begun preliminary planning for Ambassador
Javits to participate in site visits at Tooele, Utah, and
Pine Bluff, Arkansas, the week of 14 July.


40. Javits sends.
RUSSEL