GERMAN MFA SKEPTICAL ON IAEA BUDGET INCREASE AND

C O N F I D E N T I A L BERLIN 000693 SIPDIS E.O. 12958: DECL: 06/09/2019 TAGS: AORC ENRG IAEA KNNP PREL UN GM SUBJECT: GERMAN MFA SKEPTICAL ON IAEA BUDGET INCREASE AND AMANO'S CANDIDACY FOR IAEA DIRECTOR GENERAL REF: A. STATE 57105 ¶B. BERLIN 673 ¶C. STATE 56783 ¶D. BERLIN 662 Classified By: DEPUTY POLITICAL SECTION HEAD STAN OTTO. REASONS: 1.4 (B ) AND (D). ¶1. (C) SUMMARY: The German MFA, like the Economics Ministry, has strong doubts about the proposed increase in the 2010-2011 IAEA budget. The MFA prefers a zero-growth budget and believes the IAEA could fulfill its current mission and any additional responsibilities by simply being more efficient with its current resources. The MFA believes that the IAEA could save considerable money by taking a "country-based approach" in its nuclear safeguard programs, especially in Western Europe, where the risk of diversion to nuclear weapons purposes is lower and other mechanisms are in place to prevent it. The MFA is also concerned that a budget increase for safeguards will almost certainly elicit a demand from the Non-Aligned Movement (NAM) countries for this to be "balanced" by an equal increase in technical cooperation funds. Meanwhile, the MFA interprets the results of the June 9 straw poll for IAEA director general as showing that the Japanese candidate Amano will never be able to get the requisite 24 votes to win election and that it is necessary to consider alternative candidates. They indicated a clear preference for Echavarri of Spain. END SUMMARY. IN FAVOR OF A ZERO-GROWTH BUDGET -------------- ¶2. (C) Post delivered ref A points to MFA IAEA Unit Chief Martin Langer on June 5 and followed up with him June 9 to get his reactions. Like representatives at the Economic Ministry (ref B),Langer expressed strong doubts about the proposed increase in the 2010-2011 IAEA budget. He argued that the IAEA could fulfill its current mission and any additional responsibilities by simply being more efficient with its current resources. Upon being informed that the U.S. favored a significant real increase in the budget of up to 9.5 percent, Langer wondered if we favored that in each year of the two-year budget or whether that was for the two-year period as a whole. He noted that the IAEA Secretariat's request is for a 9.8% increase in 2010 and then an additional 18.8% increase in 2011, with further double-digit increases planned for 2012 and 2013. Langer indicated that Germany's preference was for a zero-growth nominal budget and that the IAEA's requested increases were far beyond what was acceptable. Before Germany could contemplate any budget increase, the IAEA Secretariat would have to demonstrate that it had made as efficient use of its existing resources as possible. SAVING MONEY BY TAILORING SAFEGUARD ARRANGEMENTS -------------- --- ¶3. (C) With regard to IAEA's system of safeguard agreements, Langer argued that the IAEA could save considerable money by taking a "country-based approach" and stop insisting on a "one-size-fits-all" model for ensuring that nuclear programs are not being diverted to nuclear weapons purposes. In western European countries, for example, where there is less risk of such diversion and other mechanisms in place to provide safeguards (like the European Atomic Energy Community -- EURATOM),Langer questioned whether it made sense for the IAEA to be as active as in other parts of the world where this was not the case. By cooperating more closely with EURATOM and other organizations like it, IAEA could eliminate a lot of redundancies and focus its resources on priority areas. CONCERN ABOUT ELICITING NAM DEMANDS -------------- ¶4. (C) Langer also argued that by increasing the funding for safeguards, the Non-Aligned Movement (NAM) countries would almost certainly demand that this be "balanced" by an equal increase in technical cooperation funds. Langer said that while Germany does not accept this linkage, it was a political reality that would be difficult to ignore. For similar reasons, Langer noted that Germany supports continuing use of extra-budgetary funding to carry out nuclear security activities. While conceding that funding nuclear security through the regular budget would make planning and staffing easier, he expressed concern that this would just invite the NAM countries to demand even more technical cooperation funds. QUESTION NEED FOR MORE IAEA SAFETY PROGRAMS -------------- ¶5. (C) On the issue of nuclear safety, Langer questioned whether there was really a significant increase in demand for IAEA safety programs. He said that, contrary to conventional wisdom, the number of active nuclear power plants is not increasing rapidly. He claimed that the number of plants actually dropped from 439 in 2007 to 438 in 2008. GERMANY LEANING TOWARD ECHAVARRI FOR IAEA DIRECTOR GENERAL -------------- -------------- ¶6. (C) Langer raised the just-completed June 9 straw poll for the next IAEA director general (refs C and D),noting that Amano of Japan had received 20 votes (of a possible 35), Minty of South Africa 11 and Echavarri of Spain 4. Petric of Slovenia and Poncelet had received no votes. Langer thought the poll had demonstrated that Amano would never be able to get the requisite 24 votes to win election and that it was time to start considering alternative candidates. He thought Echavarri had clearly made "the best impression" of all of them. While declining to say how Germany voted, he clearly indicated that it now favored Echavarri. Koenig