OSLO NEC - THE HIGH COSTS OF FREEZING THE PROJECT

UNCLAS OSLO 000434

SENSITIVE
FOR EUR-IO/EX, M, AND OBO
SIPDIS

E.O. 12958: N/A
TAGS: ABLD PREL AMGT ASEC KLIG NO
SUBJECT: OSLO NEC - THE HIGH COSTS OF FREEZING THE PROJECT

REF: Oslo 375 and previous


1. (SBU) Summary and Action Request: After winning a nail-biting
vote in the City Council, an appeal to the governor, two lower court
cases, and a final Supreme Court appeal, then successfully
concluding four years of negotiations over the purchase price for
the land, we at last have a clear path in Norway to proceed with the
Oslo NEC. While mindful of competing priorities, we urge the
Department to move forward with the modest funding needed for our
NEC redesign. The redesign would lead to issuance of our first
building permit, which in turn would prevent the volatile Oslo City
Council from rezoning or reducing the size of our buildable
property. This would position Oslo as a backup NEC project without
committing us to build at this time. The alternative, withdrawing
our application, would damage U.S. credibility and our bilateral
relationship and potentially leave us with no viable NEC site after
huge investments of money, time, and political capital. Personal
interventions by the Foreign Minister and Minister of Defense in
this process at the request of the Ambassador make this a key
bilateral issue. Public revelation that U.S. urgency for a new NEC
site over the last seven years is gone would handcuff our new
Ambassador immediately upon arrival. End Summary.



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Background
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2. (U) The Department and Post have spent seven years seeking to
address the fact that our lack of adequate setback makes it
impossible to retrofit our aging chancery to meet blast standards.
Following a two-year search for a new property, in 2004 we
identified a ten-acre site in Huseby owned by the Ministry of
Defense.


3. (SBU) The proposal to rezone the Huseby property to allow the
NEC barely prevailed in the City Council in December 2005 after the
Embassy convinced the GON to intervene politically. Tensions were
so high that a City Councillor who switched sides to support us was
later expelled from his party. Our opponents responded by appealing
to the governor, suing in court, appealing, and appealing again to
the Supreme Court. In 2008 the City Council again threatened to
block the NEC, despite our court victories. Only the personal
intervention of the Foreign Minister, at the Ambassador's request,
stopped the Oslo Labor Party from blocking the NEC project. In May
of 2009, the Supreme Court dismissed the plaintiffs' lawsuit,
finally clearing the way for us to proceed, as long as the political
balance in the City Council (guaranteed by the Foreign Minister)
holds.


4. (SBU) Amid the backdrop of courtroom theatrics, negotiations
quietly dragged on for four years over the terms of sale of the NEC
site. The personal involvement of the Minister of Defense and
numerous high-level interventions in Washington eventually led to
concessions on both sides, culminating in the final purchase
agreement that was signed in December 2008.

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Where Things Stand Now
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5. (SBU) Currently we have ownership of a ten-acre site. Our first
building permit, an expensive, laborious, and time-consuming process
that we began in 2008, remains pending with the Oslo Planning and
Building Authority. An estimated USD 300,000 in funds is needed to
modify the design of the NEC to meet the City's requirements. There
is one catch: once the first building permit is approved, it will
remain valid for only three years. On the other hand, until that
permit is issued, the City Council can at any time reverse the
zoning decision. With national elections set for September, it is
uncertain how long we can rely on the intervention of national Labor
Party leaders, such as the Foreign Minister, to protect our
interests in the Oslo City Council. Any sign that the USG is
prepared to wait many years to build after we expressed urgency for
years would undercut our allies and reverse our political
victories.


6. (SBU) The Oslo City Council's anti-NEC majority has been held in
check only by the active intervention of our friends in the GON.
The Council previously voted to suspend processing of our building
permit until all pending litigation had been settled. In June of
2009, the City Council beat back an attempt by our opponents to
reduce the size of our approved NEC site to five acres, but only
with GON pressure on Labor Party councillors, several of whom told
the media they were against the ten-acre NEC but voted for it in
this case only because of government pressure. The City Council
thus remains a wild card; it could revote to overturn its 2005
rezoning decision at any time if we withdraw our application. Once
our first building permit is approved, however, the City Council
would no longer be able to intervene.

7. (SBU) In December 2008, DS reprioritized the NEC building
schedule, moving Oslo from FY 2011 to FY 2020. Fortunately, that
information has not become publicly known in Oslo. While our
chancery's lack of setback makes it literally "unsecurable," we
understand the arguments for first building NEC's where terrorist
threats are higher. Since the security need for an NEC in Oslo is
clear, however, we urge the Department to preserve flexibility and
avoid damage to U.S. credibility.

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Options for the Future
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8. (SBU) After consulting our local attorneys about the
administrative and political issues involved, post sees two
approaches:


A. We could withdraw our building permit application, noting that
redesign requests have funding implications we must consider. This
would lead to negative publicity and bewilderment on the part of the
GON, the City Council, and the media as to why the proposed move of
the embassy to Huseby was so urgent and our security concerns so
great if, in fact, we can wait. Withdrawing our permit in August or
September, or perhaps not until asked by the Oslo Planning and
Building Authority when our design would appear might buy us some
months without the revelation that we are now saying that our
previous cries of urgency, including by the Ambassador to the
Foreign Minister, were exaggerated. When it becomes evident that
our urgency has vanished, we could blame Norway, arguing that years
of uncertainty had damaged the project. The result, however, would
be devastating to our credibility and possibly lead the City Council
to reverse the rezoning. All of our allies up to now (the Foreign
Minister, the Minister of Defense, favorable city councillors,
citizen leaders) would be embarrassed and resent the political pains
they caused and suffered, only to see the USG back out, just as
victory appeared. The search for a new site or attempts to
resurrect this one would be excruciating, as virtually every USG
claim would be suspect. This would be among the first issues facing
a brand new U.S. Ambassador to Norway.


B. We could fund the NEC modifications that the City has requested
and obtain approval of the first building permit. The redesign
could take a few months or longer, with the permit granted in 2010.
At that point the City Council would be prevented from intervening
politically by the existence of a valid building permit. If the
permit were allowed to expire in 2013, we would be no worse off than
we are today. On the other hand, if another NEC project were to
stall and pressures to use building funds expeditiously were to grow
(as has happened in the past),Oslo would be prepared to fill the
gap as a backup option for NEC construction over the next three-year
period.


9. (SBU) As the Department considers its next steps, post wishes to
express its gratitude to OBO Acting Director Adam Namm, EUR-IO
Executive Director Tom Tiernan, and Undersecretary for Management
Pat Kennedy for their resolve in the face of the numerous obstacles
the Oslo NEC project has overcome. We urge approval of Option B,
which offers the most advantages and flexibility to the U.S.
Government.

JOHNSON