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2003-09-17 10:54:00
Embassy The Hague
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						UNCLAS SECTION 01 OF 07 THE HAGUE 002338 




E.O. 12958: N/A

REF: A. A: STATE 259237 (NOTAL)

B. B: STATE 245962

This is CWC-92-03.






E.O. 12958: N/A

REF: A. A: STATE 259237 (NOTAL)

B. B: STATE 245962

This is CWC-92-03.

and --------------

1. (SBU) There will be one major topic for discussion at
EC-34 (budget), a number of key issues of importance to the
U.S. on which there may be substantial discussion (U.S.
destruction deadline extension, Article VII) and one question
that will be difficult to avoid discussing (the ILO decision
on former DG Bustani). The U.S. is favorably placed on the
budget discussion: we are seeking an increase of no more than
7.5% while most delegations are in the 5-6% range or lower.
Reaching agreement on a specific number will be quite
difficult, and may well not be achieved in this EC. The
extent to which the U.S. request for an extension of the 45%
destruction deadline will be an issue will depend much on our
presentation to the other delegations (particularly on the
question of the 100% deadline), and whether we will have
secured Russian agreement to dampen discussion on this
matter. On the Article VII action plan, the U.K. facilitator
is working hard to achieve U.S. goals, but due to objections
from NAM countrie
s, there will not be a draft Plan of Action finalized for
consideration by this EC. Finally, while we may minimize
formal Council discussion of the ILO decision on former DG
Bustani, it will be the elephant in the corner for EC-34, and
there will be repeated informal queries on how the U.S. wants
to respond to the decision. End Summary.

Draft Annotated Agenda Item Three:
Statement by the Director General

2. (U) Del expects the DG's statement will focus on
priorities and his efforts to promote administrative reform.

Draft Annotated Agenda Item Four:

Status of Implementation of the

-------------- 2002 Verification Implementation Report --------------

3. (U) Delegations held no consultations on the 2002
supplemental Verification Implementation Report since

-------------- Report on the project to assist States Parties in
identifying new declarable facilities under Article VI of the
Convention --------------

4. (U) The Council is requested to further consider the
DG's report on this issue (EC-33/S/4 dated 19 June 2003).

-------------- Planned increase in the Article VI Inspection Programme
for 2003 --------------

5. (U) The Council is requested to note the DG's Note on
this topic (EC-34/DG.11, dated 4 Sept. 2003).

-------------- --
Draft Annotated Agenda Item Five:
Recommendation for the Conference of the States
Parties concerning plan of action regarding the
Implementation of Article VII obligations
-------------- --

6. (U) The Council is requested to prepare a recommendation
regarding the implementation of Article VII obligations, with
the objective of fostering the full and effective
implementation of the Convention by all States Parties to
enable CSP-8 to develop a plan of action. Consultations on
this issue began in early August and a draft Plan of Action
is under discussion and includes a timetable for full
compliance by CSP-10 and consideration by the tenth
Conference of remedial measures if necessary. Several
delegations are opposed to the concept of deadlines, a few
are reluctant to agree to the tenth CSP, and several of the
more radical NAM are opposed to consideration of any
reference to Art. XII, including a watered-down reference to
remedial measures. Given this opposition, the Facilitator
(Matthews/UK) indicated he will schedule an additional round
of consultations post-EC-34 and will strive to achieve
consensus during subsequent consultations ahead of CSP-8.

Draft Annotated Agenda Item Six:
Draft Report of the Organization for 2002

7. (U) One consultation took place on the Draft Report of
the OPCW and several technical corrections were made. An
attempt was made to change the statement that all States
Parties had met the 40% destruction deadline for CWPF's. The
Technical Secretariat (TS) argued against this change in
order to be consistent with the VIR. However, the statement
remains technically incorrect at this point because Bosnia
and Herzegovina have yet to begin destruction activities.
Del has not received a revised copy of the document.

Draft Annotated Agenda Item Seven:
Report of the Executive Council on the
Performance of its activities

8. (U) During informal consultations, Del suggested that a
reference to the extension of deadlines for destruction of
Category 1 chemical weapons stockpiles should note that the
CSP had not approved Russia's request for extensions of the
45% and 100% deadlines. The TS proposed to cross-reference
the OPCW report to clarify that point, and Russia did not
object so long as the EC report did not introduce any new
language on the issue. On Facility Agreements, the ROK
requested that the report note that the EC had considered a
draft facility agreement with the ROK, as well as with

9. (U) Iran sought to include references to Review
Conference mandates under confidentiality issues and matters
concerning Article XI as "Matters under consideration by the
Council," and requested a reference to the Review Conference
deliberations on Article XI. Both Iran and India proposed
adding references to ISO as a matter under consideration by
the EC. The TS explained the rules of procedure covering
what activities are included in the list, and it is not clear
whether those proposals will be accepted.

Draft Annotated Agenda Item Eight:
Extension of deadlines for destruction
of Category 1 chemical weapons stockpiles

-------------- Russian Deadline Extension Request --------------

10. (U) The local Russian delegation has no information
about the status of the Russian Federation Request. Del has
received multiple indications that a trip by a limited number
of EC experts and the EC Chairman is planned for the week of
October 6th to Russian demil sites at Kambarka, Schuch'ye,
and Gorniy. The Russian Federation may envisage substantive
discussion of this issue only after such a trip and thus only
after the upcoming Council session.

-------------- A State Party Deadline Extension Request --------------

11. (U) Del anticipates that A State Party will provide a
comprehensive presentation during the destruction informals
on 22 September on its request for an extension of the 45%
destruction deadline. Based on such a presentation, Del
believes it should be possible to join consensus on a
recommendation to the Conference to grant this request.

-------------- U.S. Deadline Extension Request --------------

12. (SBU) Del has encountered no overt opposition to the
U.S. proposal, as outlined in our information paper (Ref B)
and Decision Document, but there has been keen interest and a
distinct discomfort, most notably but not exclusively from
the German delegation, as to how the U.S. intends to
explain/address the issue of creating a 45% deadline which
exceeds the present 100% deadline. Del believes that this
question is going to be foremost in the minds of many other
delegations and anticipates that we will be asked repeatedly,
if only informally "in the hallway," to explain. Del also
does not rule out the possibility of a request for an
explanation to the WEOG.

13. (SBU) Talking points included in the background paper on
this issue are helpful in elaborating U.S. methodology in
deciding to pursue this course of action, but do little to
address concerns about whether a 45% deadline that exceeds
the 100% deadline is consistent with the Convention or is
even logical. Recommendation: Del believes Washington
should give strong consideration to pursuing an extension in
principle of the U.S. 100% deadline. The U.S. demil program
enjoys widespread admiration among delegations (based on
thorough and transparent briefings offered in the past about
the program and its progress), and Del is frankly concerned
that this one element of our request will needlessly create
concern over a request that would otherwise be taken in

14. (SBU) Recommendation: We note that draft guidance
permits the possibility of accepting an extension in
principle of the final deadline as a fallback measure, but
believe that the process would be much smoother and our
request much more positively received if an extension in
principle were part of our initial proposal.

Draft Annotated Agenda Item Nine:
Detailed plans for the destruction of
chemical weapons

-------------- Aberdeen --------------

15. (U) Del believes, based on recent conversations with the
Russian delegation, this document and its counterpart
Facility Agreement will continue to be held hostage by the
Russians pending resolution of their concerns over the
definition of end point of destruction.

Draft Annotated Agenda Item Ten:
Detailed plans for the destruction or
Conversion and verification of chemical
weapons production facilities

-------------- Russian Combined Plans for Conversion
or Destruction --------------

16. (U) The Russian delegation is unaware of the status of
these documents. Del will explore with the Russians their
response to U.S.-requested changes during the session and
respond accordingly.

Draft Annotated Agenda Item Eleven:
Conversion of chemical weapons
Production facilities for purposes
not prohibited under the convention

-------------- Russian Conversion Requests --------------

17. (U) Del has received no information from the local
Russian delegates with respect to this issue. Russian
delegation indicated that further information would only
become available with the arrival of their delegation from

-------------- U.S. Conversion Requests --------------

18. (U) The substance of this request has been agreed and
the TS is, at this time, awaiting our response to their
informal provision of the DG note announcing this TA. As
reported via e-mail, the TS intends to append the actual TA
to the DG's note.

Draft Annotated Agenda Item Twelve:
Facility Agreements

-------------- Belgian facility agreement --------------

19. (U) Del understands that the Belgians intend to defer
consideration of this FA due to ongoing discussions over its
content, presumably with the TS and presumably as a result of
U.S.-proposed changes adopted by Belgium.

-------------- U.S. facility agreement --------------

20. (U) See para 15 above (Under Combined Plans)

-------------- Republic of Korea facility agreement --------------

21. (U) Del understands that the Republic of Korea intends
to defer consideration of this FA due to ongoing discussions
over its content, presumably with the TS and presumably as a
result of U.S.-proposed changes adopted by Republic of Korea.

Draft Annotated Agenda Item Thirteen:
Chemical Industry Issues

22. (U) The Council will consider a decision regarding
"Captive Use," circulated by the facilitator (Ruddock/UK) on
8 Sep 03. The decision applies to Schedule 2 and 3
chemicals, an element considered essential by the U.S. during
consultations. The decision provides for an effective date
of 1 Jan 05 for Schedule 2 chemicals and 1 Jan 06 for
Schedule 3 chemicals to accommodate the Russian need to
substantially change its domestic legal requirements for
declarations. Currently, Russia does not declare Schedule 3
chemicals unless they are shipped off-site as final products.
This decision merely clarifies that once a chemical is
produced above applicable concentration and quantity
thresholds, regardless of subsequent physical handling
activities, the production must be declared. Recommends:
The decision meets U.S. substantive criteria for a decision
and Del recommends joining consensus.

23. (U) The EC is likely to be presented with a decision
text regarding "Clarification of Declarations." Although
this facilitation technically falls under the purview of the
Legal Cluster, it routinely meets during the Industry Cluster
sessions. The facilitator (Williams/US) continues to work
with a few States Parties (India, South Africa, Iran) who
still have concerns with the timelines in the text, but
believes consensus may be achieved prior to the EC's
commencement. The decision codifies a political commitment
by SPs to facilitate TS clarification requests regarding SP
declarations within 60 days. For those issues arising from
ambiguous declarations (e.g., incomplete declarations or
clerical/administrative errors) which affect the
inspectability of a plant site, if no response is received by
the SP to the clarification request, the TS would inform the
EC and consider the plant site inspectable until such time
that an answer, including a partial answer, is provided. The
decision also codifies SP support for the TS to continue its
efforts to engage SPs in releasing confidential information
to facilitate clarification requests when an accredited
representative is either not present in The Hague, does not
attend regular meetings of the OPCW, or lacks secure means of
communicating with their capitals other than diplomatic

Draft Annotated Agenda Item Fourteen:
Fostering of international Cooperation
for Peaceful Purposes in the Field of
Chemical Activities

24. (U) One consultation was held on 12 September.
Delegations were unable to agree on which draft decision
document to begin discussions. Western delegations preferred
a Canada/Sweden document which nearly achieved consensus
during the Sixth Conference; Iran proposed beginning
discussion using a draft it put forward just prior to the
RevCon. At issue is fundamental disagreement regarding trade
restrictions and the impact of the Australia Group on full
and effective implementation of Article XI. No further
consultations are scheduled before EC-34, and no draft
decision will be tabled for discussion.

Draft Annotated Agenda Item Fifteen:
Assistance and Protection Against
Chemical Weapons

25. (U) Consultations are scheduled for 17 September to
discuss a UK draft declaration format for national protective
programs. As this is the first consultation held in months,
no issues under Article X are ripe for decision. Del expects
the facilitator to present an oral report on the status of

Draft Annotated Agenda Item Sixteen:
2002 OIO Report

26. (U) Brazil is no longer seeking to amend the text of
the OIO report. Instead, it provided a number of questions
to the DG on various administrative issues, seeking to cast
doubt about present practices. Brazil has yet to comment on
the responses provided by the DG, and Del understands Brazil
is currently seeking to make a statement at the EC on the OIO
report, possibly requesting that it be noted by the EC as a
national view.

Draft Annotated Agenda Item Seventeen:
2002 External Auditor's Report

27. (U) Consultations were held on 1 September and most
interventions centered on the same specific issues of concern
to the U.S. (Smartstream, materiality, accounting issues,
procurement issues, and frauds and losses). The facilitator
plans to present an oral report to the EC highlighting areas
of concern and more specifically calling on the TS to prepare
a report on the remaining work, cost estimation and likely
timeframe of fully implementing the Smartstream
administrative software. Del informally spoke with the
Director of Administration regarding the U.S. concern on the
2001 cash surplus. However this issue was not raised during
formal consultations.

Draft Annotated Agenda Item Eighteen:
Implementation of the Recommendations of
the External Auditor and OIO

28. (U) The Council is requested to consider the subject
reports. Del understands that Washington has no objections
to the reports.

Draft Annotated Agenda Item Nineteen:
Draft OPCW Programme and Budget for 2004
and all items pertaining to this budget

-------------- 2004 Budget --------------

29. (U) Informal budget consultations resulted in agreement
on the broad outlines of the 2004 budget, but clearly could
not resolve wide variations on a possible budget increase.
On the overall net increase, most delegations' positions fell
in a band between 5.0% maximum increase (Belgium) and 7.5%
(U.S., per Ref A), with Japan and South Africa holding out
for zero nominal growth and the UK arguing for 6.8%.
Stability Pact countries led by France argued for no more
than a 5.5% increase (most of this being non-discretionary).
The facilitator (Beerwerth/FRG) suggested that 6.1% or 6.2%
were at the middle of that range of the delegations' figures
and speculated that final consensus might emerge at around
that level, but there was little support for the proposal.
The facilitator commented that the TS would have considerable
discretion in preparing a revised budget proposal for EC-34
drawing on this guidance.

30. (U) The facilitator reached consensus on reducing the
draft 2004 budget in a number of the areas that participating
delegations had explored. None of the proposed cuts affects
the core activities of verification or ICA. The recommended
reductions include funding for consultants, per capita staff
turnover costs, common services, information systems,
inspector training, non-staff costs of destruction
verification, the exchange rate, and P staff salaries. The
facilitator noted that some of these savings were also
recommended in the XIV ABAF report. The facilitator and TS
estimated that these reductions would total roughly 1.7
million Euros.

-------------- Draft Medium-term Plan --------------

31. (U) In a Sept. 16 informal consultation, Del noted that
the draft plan is in Washington for consideration and that we
leave open the right to provide comments in the future.
Though most capitals are still reviewing the document, the
MTP has been well received at OPCW, with delegates commenting
that it is more concise and readable than last year's
version. One delegation pointed to uncertainties about
on-call inspectors, future rates of destruction, and spending
tracks on ICA to question some key assumptions included in
the MTP.

Draft Annotated Agenda Item Twenty:
Proposed Amendments to the OPCW
Financial Regulations

32. (U) Amendments to OPCW financial regulations
recommended by ABAF and the TS have been pending for two
years. Informal consultations the week before EC-34 sought
to identify non-controversial amendments that could find
consensus in the EC. The facilitator cited 12 amendments
recommended by both ABAF and the TS that he believed might
obtain quick agreement. Some of the proposed changes
clarified existing practice or reflected necessary changes.
Others include proposals for the DG, in exceptional
circumstances, to submit supplementary budgetary proposals to
the CSP through the EC; for the EC, rather than the CSP, to
allow the DG to transfer appropriated funds between programs
within a budget chapter; for the DG, with the prior
concurrence of the EC, to enter into commitments for future
financial years; for the DG to authorize the write-off of
losses of funds, stores, equipment and other assets other
than arrears of assessed contributions and the payment of
Article IV and V verification costs not exceeding 500 Euros
per item or 10,000 Euros in a year, without the prior
approval of the EC; for recognizing a monitoring function for
the OIO; and other proposals. Other, more controversial
proposals are to be postponed until after the CSP.

Draft Annotated Agenda Item Twenty:
Proposed Amendments to the OPCW
Financial Regulations

33. (U) Del understands that Washington wishes to have the
Council request the TS revisit the proposed amendments in
light of ABAF comments and produce an updated set of

Draft Annotated Agenda Item Twenty-One:
Financial Issues
-------------- Income and Expenditure Situation of the OPCW --------------

34. (U) The Council is requested to note the DG's reports
on this matter (EC-34/DG.6, dated 24 July 2003, and
EC-34/DG.7, dated 18 August 2003).

-------------- Regularization of contractual agreements --------------

35. (U) The Council is requested to consider the DG's note
on this issue and approve the draft decision
(EC-34/DEC/CRP.3, dated 28 August 2003).

-------------- Working Capital Fund --------------

36. (U) The Council is requested to note the DG's report
for submission to the CSP (EC-34/DG.12, dated 12 Sept. 2003).

-------------- Report of the 14th Session of the ABAF --------------

37. (U) The Council is requested to consider the subject
report (AFAB-14/1, dated 23 June 2003).

-------------- Composition of the ABAF --------------

38. (U) The Council is requested to approve appointments to
ABAF, as noted in the annotated agenda.

Draft Annotated Agenda Item Twenty-Two:
Dates for Regular Sessions of the EC

39. (U) Proposed dates for 2004 EC sessions are March
23-26, July 6-9, Oct. 12-15 and Dec. 14-17.

Draft Annotated Agenda Item Twenty-Three:
Any Other Business

40. (U) This would be the formal point on the agenda at
which delegations would be able to raise the Bustani issue.

-------------- Adjustment of the Director-General's Salary --------------

41. (U) Council is requested to approve the draft decision
on this matter (EC-34/DEC/CRP.1, dated 29 July 2003).

-------------- Credentials of Representatives of the Council --------------

42. (U) The DG's report on this issue has not yet been

-------------- Request to Reclassify Two Posts --------------

43. (U) Del understands that Washington has questions
regarding this proposal, and is working with the TS to ensure
that the requested reclassification has been thoroughly
reviewed and that the posts are currently graded incorrectly.

44. (U) Ito sends.