CHEMICAL WEAPONS CONVENTION (CWC): WRAP-UP FOR

UNCLAS THE HAGUE 001321

SIPDIS

SIPDIS

STATE FOR ISN/CB, VCI/CCB, L/ACV, IO/S
SECDEF FOR OSD/ISP
JOINT STAFF FOR DD PMA-A FOR WTC
COMMERCE FOR BIS (GOLDMAN)
NSC FOR DICASAGRANDE
WINPAC FOR WALTER

E.O. 12958: N/A
TAGS: PARM PREL CWC
SUBJECT: CHEMICAL WEAPONS CONVENTION (CWC): WRAP-UP FOR
WEEK ENDING JUNE 9

This is CWC-48-06.

--------------
ARTICLE VII
--------------


1. (U) Facilitator Maarten Lak (Netherlands) hosted a June 8
informal consultation to present the results of the meeting
of National Authorities in Mexico City, which focused on
national implementation. Lak, Ambassador
Arrospide (CSP Chairman, Peru),Legal Advisor Santiago Onate,
and Mexican DCM Rafael Cervantes all attended the meeting.
Lak reported that attendees were frank in their reporting of
their individual situations, including weakness in
legislation, staffing issues, lack of knowledge, all of which
require tailored approaches to assist the GRULAC states'
efforts. Cervantes noted that over 40 officials attended,
representing GRULAC states across the region as well as the
non-State Party Dominican Republic. National Authorities
from Canada, Spain and the U.S. also attended.


2. (U) Those states that need assistance reported on their
specific needs, and those who could provide assistance made
offers of tailored support. Key problems are lack of
knowledge in Parliaments, which results in implementation
delays, and high turnover in National Authorities staffs.
Mexico presented its national cooperation program designed to
support implementation efforts in Central American states.
Argentina offered to train individuals supporting industry
inspections. There were many questions about how National
Authorities are supposed to function. In sum, the GRULAC
region takes its Article VII obligations very seriously.
Onate added that the region's increased efforts are
particularly apparent in the arena of drafting legislation.


3. (U) The Technical Secretariat then distributed an advance
copy of the Status Report (faxed back to ISN/CB). Lak noted
that EC-46 work will require substantial discussion of what
states should be doing, their successes, problems and
particular cQrns. Delegations need to begin making
distinctions among the remaining states that have yet to
complete their implementation efforts. One or two have yet
to respond to TS inquiries, but many are making significant
progress. The end is in sight. Further, Lak noted that the
EC Chair and Vice Chairs are in a position to talk with
relevant States Parties.


4. (U) Onate then reported on the progress made since the
last progress report. On May 10, Jordan submitted responses
to the legislative questionnaire, its review of its export
controls, and requested a Technical Assistance Visit. On May
18, Burkina Faso's national assembly approved its
legislation. Antigua established its National Authority on
May 25. Bosnia and Herzegovina submitted its implementing
legislation on May 30, which is comprehensive. On May 30,
Moldova submitted its implementing legislation, and Macedonia
reported that it adopted its legislation. TAVs are being
planned for Jordan, Honduras and (jointly with the U.S.)
Suriname.


5. (U) Lak then turned to consideration of the way forward,
given that EC-46 was less than a month away. Germany began
by saying that the only possible way forward was to adopt the
EC-45 draft language. Italy agreed that that draft was not
bad and that it could support its adoption. Russia said it
could be used as a basis for the discussion, but it did not
pay sufficient attention to technical assistance and this
must be included. The UK, supported by Sweden, also agreed
that it could serve as a starting point, but two factors need
to be considered: the debate must begin much earlier and the
text should better reflect the substance of the Conference
decision paragraphs 2-8. Germany, supported by Norway,
strongly protested the UK position; EC-46 report language
must reflect developments since the CSP and need not follow
CSP language. The EC-45 text was fine. Mexico noted
practical difficulties with the German approach, saying that
report language must reflect a consensus view, not just that
of one delegation, and must reflect what happened during the
EC meeting.


--------------
GENEVA GROUP MEETING
--------------


6. (U) At the Geneva Group meeting on June 12, TS budget and
finance chief Rick Martin gave an overview of the process for
the 2007 program and budget. He announced that the Director
General has now asked that the budget be released as an EC
document on June 28, 2006. This is several weeks earlier than
originally planned. After Martin's presentation, Geneva
Group members, who now include the South Korean delegate,
discussed the difficulties in finding a budget facilitator.
Rick Snelsire (U.S.) also briefed members in progress to date
in the Financial Rules Consultations.


7. (U) Martin provided Geneva Group members with a power
point presentation on the budget process for the 2007 budget
(faxed to ISN/CB on 6/12/06). The presentation was similar
to past presentations, but this was largely because the 2007
budget will be similar to the 2006 budget. Martin said the
DG was still hoping for a zero nominal growth budget, but at
the same time because of cost savings in certain areas, still
plans to increase funding for inspector training and a 10%
increase in industry inspections. He said that the
distribution of Article VI inspections had not yet been
finalized, but later told Del rep privately that the 10%
increase would be almost exclusively in OCPF inspections. He
said the 2007 budget would also make allowances for continued
TAVs to support Article VII efforts. (Note: Most of these
changes to the 2007 budget were the direct result of private
U.S. interventions outlining U.S. budget priorities with the
TS earlier in the year. End Note)

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8. (U) On staffing, Martin did not indicate that the TS will
be asking for the funding of additional fixed-term positions.
He emphasized that BFB had asked all department heads to
justify the retention of any temporary positions for which
they were seeking funding. Martin also noted that the UN
would be releasing a new scale of assessments this year for
2007 and this could impact on SP's contributions. The UN
will also release the results of its price survey for The
Hague this year and that could impact on the budget.


9. (U) At present, the TS is using an average increase in
costs rate of 2.2%. Martin explained that this figure was
arrived at by looking at a likely inflation rate of between
1.5% and 2% in the Netherlands combined with an average 5%
inflation rate in developing countries. Additionally, the
UNGA could increase salaries this year as well and that is at
present a significant variable in the budget. On foreign
exchange fluctuations, Martin stated that about 10% of the
OPCW budget is in USD, mostly for Provident fund
contributions, and that currently the TS is planning on using
a USD-EUR rate of 79.7 U.S. cents per Euro. The TS will look
at exchange rates again shortly before EC-47 and make any
necessary adjustments at that point.


10. (U) During the question and answer period the German
delegation asked that more information be included in the
budget, so as to reduce the need for information papers
during the budget consultations. The Germans also asked if
there would be a specific line item in the budget for the ten
year anniversary of the OPCW. Martin said he would take note
of the German concern regarding the amount of information in
the budget. He also said there would be no specific line
item for tenth anniversary commemoration.


11. (U) Del rep said we were pleased to hear that there would
be an increase in funding for inspector training and industry
inspections. Del rep also noted that we were pleased with
quality of BFB's documentation and transparency efforts, but
cautioned that it was important that the TS not change
negotiated core objective language in the 2007 program and
budget as had happened last year.


12. (U) The UK questioned the 2.2% price increase number
being used by the TS. Martin responded that the while the
Dutch government was projecting an inflationary rate of 1%,

the IMF projection for the Euro zone, from where many of the
TS supplies and services are procured, is 2.25% for 2007.

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Martin also said he believed that a 2% salary increase for
staff was likely in the second half of 2007 resulting in an
adjusted increase of 1% for the year.


13. (U) Italy said that it was concerned about the
significant surplus in 2004 and projected for 2005. Martin
said he believed that inflated estimates were largely to
blame for past surpluses. He noted that the TS was now much
more willing to use the WCF and that, combined with more
accurate estimates and earlier payments so far this year,
would help to reduce surpluses.


14. (U) The French said they were pleased with the prospect
of another ZNG budget and the improved budget estimates. The
French asked if there would be continued refinement of
Results Based Budgeting language in the budget and if there
would be any provision of the "OPCW Office in Africa" in the
2007 budget. They also asked if the costs for destruction
activities could be separated from the cost of
non-proliferation activities for delegates' information.
Martin said that there would be no changes in the core
objectives unless delegates decided to change them. He
acknowledged that there was a continued need to refine the
indicators in the budget and tighten up the TS efforts to
measure its success in meeting those indicators. Martin said
there was no provision in the 2007 budget for any type of
OPCW presence in Africa. He said that he could breakdown the
costs between destruction and non-proliferation to some
degree, but that it would be difficult to accurately
breakdown salary costs that would limit the accuracy of any
numbers he could provide.


15. (U) After the discussion, several delegations said they
were pleased with the presentation and the increased level of
transparency being demonstrated by the TS. The UK and Italy
expressed concern about the 2.2% price increase number being
used by the TS but conceded that it would be irrelevant if
the TS were able to achieve savings is some areas and present
a ZNG budget to SPs.


16. (U) On the difficulty of finding a facilitator for the
upcoming 2007 budget consultations, several delegations said
that it was imperative the facilitator, or at least one of
the co-facilitators, should be a Geneva Group member.
Unfortunately, none of them volunteered. Del rep said we had
asked numerous delegates from WEOG and the Geneva Group and
had been unable to identify any delegate willing to serve as
facilitator. The UK asked that each Geneva Group member
explain why he/she could not serve as the facilitator or
co-facilitator. Most said they did not have time. The
Germans said after their last "painful" experience as the
facilitator for Article VII, they were reluctant to serve
again. Both the Germans and the Italians tried to push the
Canadian delegate (Peart) to become the facilitator. She
pushed back strongly and said she did not have time. In the
end there was no decision on how the search for a facilitator
should proceed.


17. (U) Del rep made a brief presentation on the state of
play in the Financial Rules consultations, noting that Iran
had now agreed to accept the original amended language
concerning procurement with the word "all" before "States
Party" deleted. Del rep said that he was still waiting to
hear from the Indian delegation. Italy said it was not
comfortable with the change but would not block consensus
should it emerge. All of the other Geneva Group members had
no objections to the amended language on procurement with the
deletion of the word "all." Del rep said he would, as
facilitator, follow up with the Indian delegation.

-------------- --
COURTESY CALL BY NEW RUSSIAN MINISTER COUNSELOR
-------------- --


18. (U) The new Russian Deputy Perm Rep, Minister Counselor
Konstantin Gavrilov accompanied by Counselor Victor
Smirnovsky, paid a courtesy call on the delegation on June 9.

During this largely informal introductory meeting, the
Russians did grudgingly admit that they would probably accept
destruction site visits as had been proposed by the UK at
EC-45. This despite the fact that Gavrilov repeatedly said
that the site visits would merely be "political tourism" in
the Russian view. However, the Russians made clear they were
not going to provide a blank check concerning site visits and
would be very insistent on specific details and arrangements.


19. (U) Smirnovsky took the opportunity to ask about the
possible timing of presentation of a U.S. decision document
text for the extension request, and del rep replied that this
is being worked in Washington. Smirnovsky also repeated the
Russian, or at least Smirnovskly's, legal view that any
extension request to 2012 was required to include a detailed
plan showing the complete destruction of all CW by 2012.
Finally, the Russians also stressed, in a very self-satisfied
manner, that it was now clear many delegations have made a
linkage between Article VII and destruction deadlines that
will be hard to break.

--------------
FINANCIAL RULES: END GAME IMMINENT
--------------


20. (U) Delegations have now agreed on all of the draft
financial rules with the exception of the amended text
proposed by India concerning procurement. India's proposed
amendment would require that vendors selling inspection
equipment to the TS confirm that the piece of equipment being
procured by the TS will be commercially available to all SPs.
At a meeting with interested parties (India, Iran, Germany,
and France) on May 31, the facilitator (Rick Snelsire, U.S.)
proposed that as a compromise between accepting the Indian
proposed amendment and the Franco-German position that no
references to procurement should be in the financial rules,
that delegates consider using previously accepted language
from CSP-8 (C-8/DEC.3, dated October 22, 2003).


21. (U) Iran originally agreed to accept the CSP-8 language
provided that the word "all" before "States Party" was
reinserted. Germany and France said that the inclusion of
the word "all" would be a non-starter for their delegations.
The Iranians then suggested that if the inclusion of the word
"all" was problematic for France and Germany, perhaps
delegations should consider returning to the original
amendment proposed by India in EC-42/DG.5 and remove the word
"all" and replace it with the word "the". France and Germany
said they could agree to the deletion of "all," but not the
addition of "the". India and Iran said they would check with
their capitals.


22. (U) On June 1, the French and German delegations
informed the facilitator that their capitals could accept the
Iranian proposal because their capitals believe that the
deletion of "all States Party" made the rule unenforceable
and therefore not problematic. On June 8, the Iranian
delegation informed the facilitator that Teheran had accepted
the Iranian delegate's proposal. The Indian delegate
informed the facilitator on June 8 that she would push New
Delhi for a decision as soon as possible.


23. (U) The facilitator previewed the possible compromise
deal on procurement language with Geneva Group members on
June 9 and all delegations with the exception of Italy found
the compromise acceptable. Italy noted that while it had
concerns about the compromise language, it would likely not
block consensus. The facilitator also checked with budget
chief Rick Martin who is providing TS support for the
Financial Rules consultations to see if the TS would have any
problems with the Iranian-proposed compromise. Martin said
that in his view the deletion of the word "all" would make
the restriction unenforceable and it would therefore have no
impact on TS procurement activities.


24. (U) The next round of consultations on financial rules
are tentatively scheduled for June 20. Should India accept
the compromise proposed by Iran on India's amendment, which
appears to be acceptable to all WEOG delegations, the U.S.

would likely find itself isolated if it opposed the
compromise. Absent a clear and compelling basis for
rejecting the compromise, this could put the U.S. in the
difficult position of breaking consensus on a proposed
solution that would finally allow the OPCW to adopt financial
rules.


25. (U) ACTION REQUEST: Del requests permission to join
consensus on the Iranian proposed compromise to the Indian
amendment to the draft financial rules found in paras.
10.6.03(d),10.6.05(c),and to remove the brackets found in
para. 10.6.06, provided the word "all" is deleted from paras.
10.6.03(d) and 10.6.05(c) where it precedes "States Parties"
(sic).

--------------
ARTICLE X
--------------


26. (U) Two issues were discussed in this meeting, the
databank and the Canadian non-paper on "policy guidance for
APB." Databank: There were two concerns on this, Iran was
concerned the line regarding descriptive information related
to protective equipment and antidotes would limit the scope
of the database. That line will be replaced with a reference
to the language already in paragraph 5. China wanted an
addition to note the databank will be continually updated.
They also referred to their National Authorities preference
that the database be available as a link on the external
server. Delegations agreed with these items. The UK will
revise their paper to reflect these changes and circulate to
delegations. There is reason to believe this issue will be
resolved soon.


27. (U) Canada Non-Paper: Colombia reiterated its concern
with the language of this document. Primarily its concern is
this will lead to micromanagement of the TS and requiring
advance notice of projects to the EC that could lead to
politicalization. Mexico supported Colombia and was
concerned about setting policy guidelines for one branch and
not others. Both countries recognized the value in getting
more detailed information. Austria is concerned about who is
prioritizing programs and what criteria is used. Iran agreed
more detail on program and activities is beneficial, and they
would also like an analysis of finished projects. They noted
that Results Based Budgeting can provide that additional
information as well as give delegations and the EC an
opportunity to comment on activities. However, Iran is
concerned about singling out the Assistance and Protection
Branch of ICA for attention on this particular issue. Many
delegations took up the Iranian point on RBB, including
India, Japan, and France.


28. (U) The facilitator (Hans Schramml, Austria) noted some
long-term projects are not financed by the budget, but by
voluntary contributions. Most delegations want to balance
more detailed reporting on projects while avoiding
micromanaging the TS. Del rep requested information about
outstanding requests for assistance to better determine if
resources are effectively allocated. This was well received
by delegations, but slapped down by Gennadi Lutay, head of
APB, who said that normally all requests are satisfied, but
some are done in several stages. The facilitator noted the
previous head of APB constantly mentioned postponed projects,
but the TS gave the same answer as before. India asked if
the TS has the funds to pay for all requests of assistance,
and Lutay said this would be discussed in budget meetings.


29. (U) At that point John Makhubalo, head of the
International Cooperation and Assistance Division, spoke on
prioritization, noting that the DG makes the final decision.
The TS strives to meet all SPs requests, though they may ask
for postponements of up to a year. Makhubalo also made a
point to note that they do not make value judgments based on
whether a SP can or cannot afford to pay any of the costs
associated with a project. Though if a SP can afford to pay,
they will ask them to contribute. On detailed reports,
Makhubalo will consult with delegations about the level of
detail they want, although it will have to be kept in mind

what a requesting SP considers classified information. He
noted if they have to go to the EC prior to starting a
project, it could considerably delay their work.


30. (U) Canada indicated they will talk further to interested
delegations on this issue. Del rep will raise with him the
issue of adding a list of "postponed" and "future" stages of
projects, at the same time the TS presents its more detailed
report. The next meeting is on June 30 and will again cover
Joint Assistance Exercise 2005.

--------------
INDUSTRY - LATE DECLARATIONS
--------------


31. (U) Facilitator (Larry Denyer, U.S.) met with Brigitta
Exterkate (TS, Legal Advisor's Office),Leo Espinoza (TS,
Information Processing and Validation),Atsushi Takakuwa (TS,
IPV),and Ken Penman (TS, Information Evaluation) regarding
the concept paper on "nil" declarations. LAO's opinion is
that the "nil" concept is legally sound. Whether it is the
best option politically or whether it fully solves the
problem of late declarations are other issues that need to be
dealt with by the SPs.


32. (U) Espinoza expressed concerns over balancing the "nil"
concept with the burden reduction thrust of C-7/DEC.14 (10
October 2002). Also, he is not convinced that "nil"
declarations is the right solution. His concern is that this
would add a large number of SPs to the list of late
declarers, allowing those who truly have something
significant to declare to get lost in the "noise." It was
suggested that a decision could be taken that would require
the TS to amend its current reporting on this topic to: (1)
add to the list of SPs that met the current year's deadline
those SPs who declared in the previous year but have not done
so by the deadline in the current year (with necessary
caveats that these may not actually need to declare); and/or
(2) include the specific declaration pieces that were
submitted on-time, to prevent SPs from getting "on-time
credit" by submitting a partial declaration by the deadline
and the rest much later.

-------------- --------------
CONFIDENTIALITY: LONG-TERM STORAGE OF CLASSIFIED MATERIALS

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-------------- --------------


33. (U) The facilitator (Betsy Sanders, U.S.) held a June 7
informal consultation on the long-term storage of classified
materials at the OPCW. TS official Luis Cavalheiro reviewed
his 2004 paper for newer delegates. In brief, the TS has no
mechanism for disposal of classified materials. Although the
TS still has storage space available, it will become a

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problem in the future if it has no mechanism. Cavalheiro
presented three possibilities: downgrade (would still have to
maintain the materials),declassify (would still have to
maintain the materials),and/or destroy.


34. (U) Italy noted that the first two options do not improve
the situation and recommended that delegations consider
destruction and to first focus on Article VI-related
materials. Materials related to CW destruction are in a
different category and will need to be kept for a long time.
Thus, this will need to be considered separately. Article VI
efforts are for transparency and record legitimate industry
activities. As such, this information should be retained for
a relatively short period. Italy asked what percent of
classified materials are related to Article VI activities.
France added that, in consideration of the time to maintain
classified industry-related information, we might consider
how long industry patents remain in effect. At that point,
materials would be publicly available. Italy noted that Rome
keeps industry-related materials for five years before
destroying them. The U.S. asked why the TS needed to keep
both the original paper declarations and their official
electronic copies. Ireland wondered whether the TS could
provide a list of types of Art VI-related materials to better
inform our debate.


35. (U) Delegations agreed that at our next session (in about
two weeks),the TS would invite a Verification Division
official to inform us about what materials inspections teams
generate, and whether the bulk might be destroyed after the
final inspection report is agreed between the State Party and
the TS.


36. (U) Javits sends.
BLAKEMAN