Identifier
Created
Classification
Origin
04THEHAGUE765
2004-03-24 08:37:00
UNCLASSIFIED
Embassy The Hague
Cable title:  

CHEMICAL WEAPONS CONVENTION (CWC): WEEKLY WRAP-UP

Tags:  PARM PREL CWC 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 02 THE HAGUE 000765 

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 19 MARCH 2004

This is CWC-38-04.

-----------------------------------
ARTICLE IV/V CONSULTATIONS COLLAPSE
-----------------------------------

UNCLAS SECTION 01 OF 02 THE HAGUE 000765

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 19 MARCH 2004

This is CWC-38-04.

--------------
ARTICLE IV/V CONSULTATIONS COLLAPSE
--------------


1. (U) The facilitator for consultations on improving the
funding mechanism for Article IV and V verification costs,
Johan Verboom (Netherlands),told us on March 18 that he
hoped to reach consensus on a decision document for
consideration at Executive Council Session 36 the following
week. Instead, that day's discussion revealed that
delegations were far from consensus. With obvious
frustration, Verboom cancelled the meeting scheduled for the
following day and said work would resume after EC-36.


2. (U) Initial comments on the March 15 draft decision
(e-mailed to AC/CB) were generally positive, and the extent
of delegates' unease with the draft only became evident
gradually over three hours of consultations. USDel noted
that it was a considerable improvement over earlier drafts,
and would likely be acceptable once questions over the
financing and exact level of the Working Capital Fund (WCF)
were addressed. At USDel's request, the Technical
Secretariat (TS) provided figures on how much of previous

SIPDIS
years' surpluses could be used to plus-up the WCF to a higher
level. The TS explanation was that 2 million Euros from
2001, 3 million from 2002, and an anticipated 5 million from
2003 would be available to fund the WCF.


3. (U) Further queries and misgivings voiced by other
delegations halted the momentum of the discussion and
ultimately forced the issue off the agenda of EC-36.

- Mark Matthews (UK),Ian Mundell (Canada),and several
others called for strengthening the draft formulation that
the costs of verification must be "paid in a timely manner"
by possessor states. Peter Beerwerth (Germany) called for
language requiring repayment within 60 or 90 days of the
receipt of invoices for verification costs. (There followed
discussion about the length of the window and whether the
clock should begin ticking upon carrying out verification
activities or invoicing them.) USDel cautioned that language
imposing a specific deadline for Article IV/V repayments
would require us to hold up and possibly block consensus.

Russia also put down a marker opposing specific deadlines.

- Gianpaolo Malpaga (Italy),seconded by Brazil and France,
persisted in questioning the need to increase the WCF to the
new target level of 10 million Euros. Although Malpaga had
raised this objection in all previous discussions, Verboom
had thought that he was persuaded by the increasingly
detailed explanations of OPCW Director of Administration Herb
Schulz that it was necessary to ensure adequate funding for
OPCW activities over and above the one-month operating
expenses that most organizations' Working Capital Funds
covered. Instead, Malpaga indicated that he would block
consensus on both that point and on doubling the WCF cap from
one-twelfth to two-twelfths of the budget.

- Yu Dunhai (China) re-iterated questions he had raised in
earlier sessions about how the draft decision would resolve
the problem of "fictitious income," payments anticipated from
possessor states for verification activities that were
planned but ultimately not carried out. Canada, Austria, and
others amplified those concerns, despite the fact that the
group had deliberately chosen to focus only on the cash-flow
dimension of the Article IV/V issue at the onset of the
consultations, and not to address the broader problem of
fictitious income.

- Chiho Komuro (Japan) who had voiced support for the draft
decision, asked how replenishment of the WCF would affect the
rule that budget surpluses should be returned to States
Parties. India drew on Verboom's answer to question the
formula by which States Parties would be refunded from the
surplus. This seemingly esoteric issue led to the collapse
of the discussion, as Beerwerth seized on it, discovering "an
inherent problem of inequity." Since some countries failed
to pay their assessments, he explained, they had thereby
reduced past years' surpluses that were to be used to fund
the WCF. Beerwerth insisted that the current draft decision
"will not work" we need to look at the decision in much more
detail," to prevent this inequity. The response was
bewilderment and resignation. Ambassador Marc Vogelaar
(Netherlands) opined to us that delegations were "hiding
behind the complexity" of the issue to block a deal.
Although Verboom and Schulz appealed to delegates not to
derail the "good current proposal in pursuit of a perfect
solution," the consultations collapsed on that note.
Beerwerth told DelOff that he would take the issue up with
AC/CB during his participation in Quad talks in Washington.
Verboom said he would work with the TS and interested
delegations to draft a new text for consideration in April.

--------------
FINANCIAL REGULATIONS
--------------


4. (U) On March 16, facilitator Peter van Brakel (Canada)
held discussions on proposed changes to the financial
regulations. During discussion of regulation 12.1, USDel
raised the proposed language on Rule 12.2.01 provided by
Washington. Russia spoke out in support of the proposal, and
there was general support. Italy, however, expressed an
initial, negative reaction and said it would have to refer
the proposal to Rome. With suggestions from the facilitator
and other delegations (in caps),the consensus was for Rule
12.2.01 to read:

"The primary responsibility for monitoring rests with
management. OIO's role is to assist THE PROGRAM MANAGERS in
improving the monitoring function INITIALLY through the
issuance of policies, guidelines and performance indicators,
and REGULARLY through regular assessment of the quality of
management reports concerning monitoring activities."


5. (U) There were no objections to the proposed change to
regulation 12.3. On regulation 12.4, USDel noted that the
existing language provides the External Auditor full access
to all documents, and any change would imply less than full
access. That met with agreement from all delegations. Italy
suggested one small modification, so that the existing
language is modified to read "Reports on each separate audit,
inspection, evaluation, investigation AND MONITORING shall be
submitted..."


6. (U) Turning to regulation 6.2, USDel noted the proposed
changes to reflect the use of the accrual basis. The FRG
proposed a variation on the first option provided by
Washington. However, there was inconclusive discussion over
whether the proposed change regarding miscellaneous income
should be " ... received during and for the financial period
..." or whether it should simply be "for the financial
period."


7. (U) On regulation 6.3, the FRG proposed Washington's
change to drop the word "assessed" and add a reference to
regulation 5.1. However, Russia raised the issue of
"arrears" under regulation 6.3(c),noting that if there are
disputes on Article IV/V bills, they remain outstanding. The
TS may consider them "arrears," but Russia does not. Several

SIPDIS
delegations expressed appreciation for that view.


8. (U) Javits sends.
SOBEL