CHEMICAL WEAPONS CONVENTION (CWC) - DISCUSSIONS ON

UNCLAS SECTION 01 OF 03 THE HAGUE 002699

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)
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WINPAC FOR WALTER

E.O. 12958: N/A
TAGS: PARM PREL CWC
SUBJECT: CHEMICAL WEAPONS CONVENTION (CWC) - DISCUSSIONS ON
2005 BUDGET

This is CWC-125-04.

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SUMMARY
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1. (U) It was apparent at the October 12-15 Executive
Council that member states remain divided on the
Director-General's budget and program proposal for 2005.
While the differences are not great, whether on the level of
increase or specifics in the program, it will still require
some time and effort to reach an agreement. The budget will
be raised at the upcoming special EC on November 24, but
chances for agreement there are slim. Instead, the special
EC likely will be the starting point for final budget
negotiations, which will probably take place on the margins
of the November 29-December 3 Conference of States Parties.
End Summary.

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LEVEL OF BUDGET INCREASE
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2. (U) In the run-up to the recent EC, the co-facilitators
(Gordon Eckersley of Australia and Ian Mundell of Canada)
held numerous consultations to allow delegations to raise
questions and objections to the DG's proposed budget and
program for 2005. While the positions of various States
Parties were not widely divergent, there remained differences
that needed to be bridged. Moreover, the Technical
Secretariat (TS) had failed to provide responses to numerous

SIPDIS
questions from SPs (including the U.S.),which provided a
justification for a continuing impasse. Finally, and most
importantly, the clear focus of attention for delegations at
the EC was on the proposed technical change to allow
conversion of the Rabta facility in Libya.


3. (U) However, with the CSP now looming, SPs have less
leeway to avoid coming to grips with the budget and programme
for 2005. On the most important issue, the level of the
overall budget increase, work will need to be done to bridge
a clear gap. In its opening statement, the U.S. expressed
its support for the DG's proposed increase of 4.8 percent.
From sidebar conversations and opening statements, all other
delegations appear to want a reduction in the proposed
overall budget increase, although they remain frustratingly
silent about what particular level of increase they could
support.


4. (U) The EU, in its opening statement, indicated their
position is an increase significantly lower than 4.8 percent.
However, the French indicated in sidebar discussions there
is not really a consensus within the EU. Some delegations
want a severe cut in the overall level, while others want a
more moderate reduction. The FRG delegation indicated the EU
is looking for a number with a "3" in front of it. The
Netherlands indicated that it is pretty satisfied with the
overall request, but has concerns over long-term
consultancies. Austria indicated it shared the common
concerns expressed about the methodology for calculating
salaries and common staff costs and other issues. Most
delegations informally thought that an increase of only 3.8
percent might be acceptable, and Russia indicated that it
agreed with the EU position.

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FACILITATORS' REPORT
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5. (U) The Council received an oral status report from the
co-facilitators. Eckersley informed the EC that there were
three main items outstanding on the draft budget:
-- the core objectives language, which might be adjusted,
-- the resources to be agreed upon to complete these
objectives (e.g., the overall budget level),and
-- the terms of the decision at CSP.


6. (U) The specific terms to be included in the budget
decision that Eckersley mentioned were:
-- RBB is an on-going process and the core and subordinate
objectives and indicators may be adjusted in future budget
documents,
-- the TS should conduct an analysis of its current
methodology for certain forecasting in the budget (i.e.
salaries and staff costs),
-- the relevance of the staffing levels (e.g., if the 507
ceiling is necessary),and
-- contingencies for unforeseen expenditures.


7. (U) In comments from the floor, most SPs expressed
appreciation for the first budget in an RBB format, called
for a possible reduction in the overall requested budget
increase, indicated concerns about the TS increase in General
Temporary Assistance (GTA),the use of consultants, and
salaries and staff costs. Several delegations, including the
NAM, continue their drumbeat for an increase for
International Cooperative Assistance (ICA) and the equal or
balanced distribution of the budget among programs. (Note:
Such statements might have been made to set up the following
possible budget trade-off: increased ICA would allow the NAM
to support increased Article VI inspections, specifically
DOC/PSF facilities, sought in the DG's proposed program. End
Note.)


8. (U) The common concerns held by most dels were
-- salary and staff costs (Note: It may be that if the TS
revises its estimates on the salary calculations and adjusts
the time period used to calculate the exchange rate, the
resulting savings might be enough to achieve a 1% reduction.
At this time, it appears most SPs would be satisfied with
such an outcome. End note.)
-- General Temporary Assistance/Temporary Assistance
Contracts,
-- consultancies (termination of the consultant for
Universality),and
-- the exchange rate used for salary increase calculations.


9. (U) Most delegations were in favor of converting the
security guard force to fixed-term posts, but within the
existing 507 personnel ceiling. (Mundell expressed concern
several times over the fact that eleven of these posts would
be going from Chapter 1 to Chapter 2 of the budget, though he
was the only person to voice that concern.)


10. (U) Pakistan said it would join consensus on the budget,
not indicating any interest in the "numbers" included in the
request, but expressing serious concerns over the language
for the core objectives in a budget using RBB. It was also
apparent in informal discussions that they did not seem very
energized on the idea of reaching a consensus early, with
most indicating there would probably be "a lot of activity"
at the CSP.


11. (U) In response to the oral report and the comments made
from the floor, DG Pfirter responded that the TS had taken
good notes and would do its best to provide the information
requested. He indicated that the best budget does not over-
or under-estimate the resources required to fulfill the
organizations goals. The DG requested SPs not to cut the
budget "too close to the bone" and then request him to find
additional savings. He emphasized that the decision by
member states on the tenure policy was proving to be very
costly for the organization.


12. (U) The EC agreed to report language noting that several
issues needed further work, in particular in the context of
implementing RBB, the further consideration of the OPCW's
objectives and further discussion of a small number of other
specific elements and related resource requirements. The
report language also requests the TS to review promptly the
parameters for making key budget estimates to assess the
scope for effective program implementation at a funding level
lower than initially requested. The key factors would include
the current disbursement rate against approved budget
allocations for 2004, recent decisions on salary levels and
related staff benefits in the UN Common System, updated
USD/Euro exchange-rate information, and the latest available
outlook for local inflation and labor-market conditions.


13. (U) (Comment: The co-facilitators do not appear to have
a solid game-plan on how to move ahead in the run-up to the
CSP, and the delegation will continue to press them to move
the process forward. When asked informally about their plan
of action for the upcoming weeks, neither facilitator had a
firm course of action other than holding additional
consultations. They thought they would have proposed
language on the core objectives in about three weeks. They
also indicated they would await the revised budget document
from the TS, which would give them direction on how many
additional consultations would be needed and when they would
need to be scheduled. End Comment.)


14. (U) The Indian, Pakistani, and Iranian dels made
objections to noting the Medium-Term Plan for 2005-2007 due
to the fact that the language on the objectives used in the
2005 draft budget were still open for discussion and both
documents should contain the same language. The Council
therefore decided to further consider the Draft Medium-Term
Plan for 2005-2007 at a meeting prior to CSP-9.


15. (U) Ito sends.
SOBEL