CHEMICAL WEAPONS CONVENTION (CWC): WEEKLY WRAP-UP

UNCLAS SECTION 01 OF 02 THE HAGUE 001223

SIPDIS

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

E.O. 12958: N/A
TAGS: PARM PREL CWC
SUBJECT: CHEMICAL WEAPONS CONVENTION (CWC): WEEKLY WRAP-UP
FOR 14 MAY 2004


This is CWC-61-04.

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FINANCIAL REGULATIONS
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1. (U) The May 13 consultations on proposed changes to
financial regulations chaired by facilitator Peter van Brakel
(Canada) focused on one issue: proposed language on
Regulation 5.4 and a period for payment of Article IV/V
invoices. The result was inconclusive. Per Washington
instructions, the U.S. Del pressed hard for a 90-day period
for payment of these invoices. The German delegation tabled
a specific proposal on instructions from Berlin. The FRG
proposed either:

-- Bills payable in full within a period to be negotiated.
If there is a dispute, the OPCW would set aside the disputed
amount.
-- Bills would be payable within 30 or 60 days and only the
undisputed amounts would be paid. The rest would be paid
after the resolution of disputes.


2. (U) Italy, Austria and South Korea supported the FRG
proposal. France expressed support for the idea, but
proposed payment after 60 days on undisputed amounts of the
invoices. After resolution of the disputes, payment would be
required in 30 days. Russia reiterated that due to
complicated bureaucratic requirements in Moscow, Russia could
not accept 30 or 60 days for payment of a complete,
agreed-upon invoice. Russia did not state that 90 days was
acceptable, but indicated in a side comment to the U.S. Del
that this would be acceptable to Moscow.


3. (U) The U.S. noted that Washington's practice is partial
payment of agreed-upon parts of an invoice, which generated a
lengthy debate on partial payment. The Russian delegation
held firm that it could not accept partial payment. Director
of Administration Schulz made a strong pitch for partial
payment and asserted that disputed elements are quite small.
The FRG emphasized that the goal is to have the Technical
Secretariat get as much Article IV/V money as soon as

SIPDIS
possible. In what was probably an unofficial comment, the
FRG indicated that it could live with 90 days as long as
there is partial payment of most of the invoice.


4. (U) The participants agreed to send back two proposed
texts for consideration in capitals (which have since been
E-mailed to AC/CB). It was clear there was no/no consensus
behind either proposal. However, the goal is to give
capitals something to work on until the next facilitation on
June 3. In a side-bar discussion, Van Brakel asked the U.S.
to consider holding small meetings with the Russians, Germans
and possibly the TS in the interim to see if some variation
of the following options might be acceptable to the key
players.


5. (U) The first option would involve having all Article
IV/V invoices paid within 90 days. The possessor states
would inform the OPCW of any disputed parts of the invoice.
If there is no resolution of the dispute within one year, the
possessor state would get the disputed amount as a credit for
future Article IV/V invoices. The TS would report to the
Executive Council on unresolved disputes. This would be the
"check" on possessor states to see that they do not abuse the
right to dispute any or all parts of an invoice. (Note: Much
of this was the result of Schulz's plea not to let minor
disputes deprive the TS of 95% of its Article IV/V money
ASAP. Schulz also said that if the possessor state really
had trouble with invoices and TS practices, that state could
reduce the amount of its payment on subsequent invoices. In
short, the possessor state has a practical "out" and is not
at the mercy of the TS.)


6. (U) The second option is a modified version of the
partial payment language that was in the May 3 draft
document. Article IV/V invoices would be paid within 90 days
of receipt of the invoice except for those elements that are
challenged by the possessor states. The draft text indicates
the possessor state "shall be allowed a further (30, 60, 90,
?) days in which to make full payment."


7. (U) As indicated previously, timely payment of Article
IV/V invoices has been connected politically with
modifications of the Working Capital Fund. The next set of
facilitations on that issue are set for May 19. The U.S.,
FRG and Russian delegations have tentatively agreed to meet
the week of May 24.

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BUDGET MEETING WITH THE DEPUTY DG
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8. (U) On May 12, members of the delegations of the major
contributors to the OPCW (U.S., U.K., France, FRG, Japan,
Italy) met with Deputy DG Hawtin and a number of senior TS
officials to discuss a range of budget issues. Hawtin
informed the group that the draft 2005 budget in
results-based budgeting format would be out soon, and that
would have a nominal increase below five per cent. The DDG
said that the current plan is for a small increase in the
number of industry inspections, specifically noting about ten
additional OCPF inspections. Hawtin informed the group that
there had been requests to DG Pfirter for some 20 additional
positions, and the DG had agreed to only four additional
posts.


9. (U) Acting head of the Inspectorate Carvalho reported
that the first inspectors on short-term contracts had started
at Gorniy. Director of Verification Reeps noted that there
had been savings with regard to training of inspectors.
However, he made the cautionary note that this was achieved
by having a shorter period of training, which could have an
impact on quality. (Note: while Reeps was apparently seeking
to be transparent, we would note that the TS has made steady
improvement in its training of inspectors. Based on
collective experience gained over several years now of
actually conducting inspections, the latest batch of
inspectors has the benefit of a much more focused and
efficient training program.)

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ARTICLE XI
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10. (U) Facilitator Norma Suarez (Mexico) held a May 10
informal consultation and distributed a 25 November 2003
draft decision document (previously unseen by this
delegation) and announced that she would accept constructive
textual suggestions at the next meeting circa 10 June (faxed
to AC/CB). The remainder of the session was given to Bijoy
Chatterjee, Head of the International Cooperation Branch
(ICB),who presented an informative overview of International
Cooperation Activities planned for 2004 (faxed to AC/CB).
These include the Associates Program, conference support,
internship support, research projects support, lab
assistance, equipment exchange, information service, and new
this year an analytical skills development program. The
presentation was well received by delegations, with comments
following expected lines. Nonaligned countries lauded the
ICB's efforts to reach out to member states and called for
major funding increases. Others noted ICB's work, but
remarked that OPCW budgets were restricted and that all TS
efforts needed to carefully balance TS funding obligations.


11. (U) Javits sends.
SOBEL