UNVIE AMBASSADOR SCHULTE'S OCTOBER 15

S E C R E T BERN 000015

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E.O. 12958: DECL: 01/08/2028
TAGS: PARM IAEA KNNP IR IN SZ
SUBJECT: UNVIE AMBASSADOR SCHULTE'S OCTOBER 15
CONSULTATIONS WITH SENIOR SWISS OFFICIALS

Classified By: Poloff Chris Buck; reasons 1.4(b) and (d).


1. (C) Summary: USUNVIE Ambassador Schulte met October 15
with senior Swiss officials for consultations following
Switzerland's appointment to the IAEA Board of Governors
(BOG) in September. The key Swiss interlocutors were Walter
Steinmann, Director of the Swiss Federal Office of Energy
(Switzerland's new Governor to the IAEA BOG),and MFA State
Secretary Michael Ambuehl. Main topics were Iran, India, and

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the Global Energy Nuclear Partnership (GNEP).


2. (S) Summary Continued: Ambassador Schulte outlined the
P5 1's two-track policy for dealing with the Iran nuclear
problem. MFA State Secretary Ambuehl said that the GOS
naturally agrees with the objective of this approach, but is
not convinced that the P5 1 have developed a fully working
strategy. Ambassador Schulte disagreed, and he re-iterated
the importance of like-minded states -- not least Switzerland
-- demonstrating unity in support of the P5 1 approach.
Ambassador Schulte provided Steinmann and Ambuehl updates on
the U.S.-India civil nuclear cooperation agreement. Swiss
MFA Arms Control Division Chief Andreas Friedrich, who joined
Ambuehl in the meeting, said that, in order to make an
informed decision about how to handle the India agreement
within the NSG, the GOS needs to see the Safeguards Agreement
that India was expected to conclude with the IAEA. Ambuehl
said that the support of DG ElBaradei is very important to
how the GOS views the India deal, as is the potential impact
on nonproliferation, as well as Swiss-U.S. and Swiss-Indian
relations. Ambassador Schulte said that the USG would very
much like to see Swiss participation in GNEP. Steinmann said
that the GOS would study the matter, and that the role of the
IAEA in GNEP would be particularly important for Swiss
decision-making. End Summary.

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IRAN
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3. (S) Ambassador Schulte outlined the P5 1's two-track
policy for dealing with the Iran nuclear problem, emphasizing
the need to maintain pressure on Iran to suspend its
enrichment activities and come to the negotiating table. He
underlined the importance of Iran demonstrating real progress
by mid-November on the "Work Plan" it had agreed to with the
IAEA Secretariat, as well as in talks with EU HighRep Solana
-- above all, the need for the Iranians to meet their
international obligation to suspend their uranium
enrichment-related activities.


4. (S) MFA State Secretary Ambuehl said that the GOS
naturally agrees with the objective of this approach, but is
not convinced that the P5 1 have developed a fully working
strategy. From a "negotiations theory" standpoint, he argued
that "suspension" is the one strong card the Iranians have to
play, and it "therefore is not likely that they will be
willing to play that card at the very beginning" (i.e., prior
to beginning negotiations with the P5 1). Ambuehl assessed
that the Iranians would need some "face saving" opportunity
and would need to have a better idea of "what they would get"
from negotiations, before making a decision to suspend. He
suggested the P5 1 engage in "pre-talks" with the Iranians in
order to prepare the way for Iranian suspension and
subsequent negotiations and that a "step by step" approach
would allow Iran to save face. Ambassador Schulte emphasized
that negotiations without suspension were not on the table,
noting the Iranians' history of using stalling tactics; he
re-iterated the importance of like-minded states
demonstrating unity in support of the P5 1 approach.
Ambassador Schulte emphasized to both Ambuehl and Steinmann
that Switzerland's voice is important in this context.


5. (S) Ambuehl said that the June 2006 offer from the P5 1
was important to Iran but was not sufficient. He said that
former Iranian nuclear negotiator and Supreme Council for
National Security Secretary Larijani had told him that Iran
wants a package that includes a nuclear program, economic
benefits including Western technology, security guarantees,
and political gains including US recognition. Ambuehl also
said that neither Switzerland nor he personally is pursuing a
separate Iran strategy or series of negotiations and that
they have agreed to "do everything" through Solana.

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INDIA
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6. (S) Ambassador Schulte provided Steinmann and Ambuehl
updates on the U.S.-India civil nuclear cooperation
agreement, particularly with regard to IAEA safeguards and
NSG cooperation. He noted that the USG had carefully
reviewed the pros and cons of the deal, and ultimately

decided that it would contribute significantly to nuclear
nonproliferation, as well as to helping India meet its vast
and growing energy needs in a way less harmful to the
environment. Ambassador Schulte observed that IAEA DG
Director ElBaradei had endorsed the agreement.


7. (S) Steinmann and Ambuehl both expressed concerns about
"double standards" they believe could be interpreted into the
India deal. Ambassador Schulte pushed back, reminding them
that the case of India cannot be compared to others: India
had not signed the NPT, and therefore its nuclear program was
not in violation of treaty obligations; moreover, the GOI is
now prepared to bring major portions of its current and
future nuclear program under IAEA safeguards -- again,
something that will contribute to our nonproliferation goals.



8. (S) Swiss MFA Arms Control Division Chief Andreas
Friedrich, who joined Ambuehl in the meeting, said that the
GOS was "uneasy" about the deal and that, in order to make an
informed decision about how to handle the India agreement
within the NSG, the GOS needs to see the Safeguards Agreement
that India was expected to conclude with the IAEA. He
commented that discussion of the India Safeguards Agreement
could risk "opening up" the 1995 Full-scope Safeguards
provision, putting it at risk (as well as the indefinite
extension of the NPT). Friedrich also said that the GOS
would like to know what is meant by "corrective measures" in
the "1-2-3 Agreement". He
assessed that NSG members would not allow for a "blank check"
for India, but might at least agree on fuel supply. Ambuehl
said that the support of DG ElBaradei is very important to
how the GOS views the India deal. He concluded that, if the
Swiss senior political leadership can be convinced that the
India agreement will strengthen nonproliferation, the GOS
will agree. In this context he said he expected that Swiss
bilateral relations with the
United States and India also would be important factors.

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GNEP
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9. (C) Ambassador Schulte outlined USG thinking with regard
to the Global Nuclear Energy Partnership (GNEP),explaining
how we see it as an important initiative for meeting key
nonproliferation and clean energy goals. He said that the
USG would very much like to see Swiss participation in the
GNEP, given Swiss technical capacities and its international
reputation. Steinmann said that the GOS would study the
matter, and that the role of the IAEA in GNEP would be
particularly important for Swiss decision-making on whether
to participate.
CARTER