Identifier
Created
Classification
Origin
09UNVIEVIENNA109
2009-03-17 14:55:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
UNVIE
Cable title:  

GUIDANCE REQUEST: SEEKING PRINCIPLED SUPPORT FOR

Tags:  AORC PREL KNNP IAEA EAID UN 
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OO RUEHWEB

DE RUEHUNV #0109/01 0761455
ZNR UUUUU ZZH
O 171455Z MAR 09 ZDK
FM USMISSION UNVIE VIENNA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9157
RHEBAAA/DOE WASHDC IMMEDIATE
INFO RUEHXX/GENEVA IO MISSIONS COLLECTIVE PRIORITY
RUEHII/VIENNA IAEA POSTS COLLECTIVE PRIORITY
RUEHRO/AMEMBASSY ROME PRIORITY 0432
RUEHFR/USMISSION UNESCO PARIS PRIORITY
RUCNDT/USMISSION USUN NEW YORK PRIORITY 1540
UNCLAS UNVIE VIENNA 000109 

SENSITIVE
SIPDIS

FOR D, P, T, IO, ISN
DOE FOR NA-24, NA-25, NA-21

E.O. 12958: N/A
TAGS: AORC PREL KNNP IAEA EAID UN
SUBJECT: GUIDANCE REQUEST: SEEKING PRINCIPLED SUPPORT FOR
THE IAEA BUDGET

REF: A. UNVIE 52

B. UNVIE 65

UNCLAS UNVIE VIENNA 000109

SENSITIVE
SIPDIS

FOR D, P, T, IO, ISN
DOE FOR NA-24, NA-25, NA-21

E.O. 12958: N/A
TAGS: AORC PREL KNNP IAEA EAID UN
SUBJECT: GUIDANCE REQUEST: SEEKING PRINCIPLED SUPPORT FOR
THE IAEA BUDGET

REF: A. UNVIE 52

B. UNVIE 65


1. (SBU) Summary: (This is a guidance request. Please see
paras 12-13.) Director General ElBaradei stepped forward
last month with a proposal to increase the IAEA's regular
budget by 23 percent. Member States are generally unhappy
with the proposal, but are waiting on tenterhooks for the
U.S. position. Mission recommends general support for
ElBaradei's proposed budget, noting that the proposal is
conservative but compatible with the Obama Administration's
statements and Mission's proposals to realize them (ref a).
A supportive U.S. stance will not commit us to the full, 23
percent increase, but will prevent other donors from
immediately locking in a zero growth position and removing
all flexibility from budget negotiations. U.S. support also
leaves room to pursue long-standing U.S. policy goals, such
as bringing nuclear security and safety under the umbrella of
the IAEA regular budget. A growth budget would increase the
long-term institutional health that allows the IAEA to
fulfill its role as "nuclear watchdog." Finally, U.S.
support for the draft budget sheds a positive light on U.S.
leadership and promotes global support for the IAEA and its
non-proliferation mandate. While extrabudgetary funding
presents a convenient alternative to increasing the regular
budget, such funds are not well suited to addressing these
broader institutional issues and would increase the IAEA's
reliance on the U.S. taxpayer rather than spreading
responsibilities across all Member States. Instead, the U.S.
should take advantage of the current DG's global stature to
encourage a flexible and substantive debate on the regular
budget. Mission also recommends using the upcoming G8
Non-Proliferation Directors meeting on March 24 in Rome to
encourage budgetary flexibility. Finally, Mission requests
guidance in advance of Ambassador's March 20 meeting with the
Board Vice Chair in charge of budget negotiations to
communicate a U.S. position in support of the draft budget.
End Summary.

Budget Season Begins
--------------


2. (SBU) Following the February 15 release of DG ElBaradei's
draft 2010-2011 budget, IAEA Member States have focused their

attention on budget negotiations in the lead-up to the April
27 meeting of the Program and Budget Committee (PBC).
Romanian Ambassador Feruta (Board Vice Chair) has begun
consultations with the IAEA Secretariat and will begin the
"first round" of budget negotiations with Member States
starting March 20. Feruta has made it a priority to speak
with the U.S. first and has scheduled a March 20 meeting with
Ambassador Schulte to elicit the U.S. position.


3. (SBU) A cluster of EU Members (including the UK, Germany
and France) is already preparing for budget negotiations by
attempting to build momentum against Director General
ElBaradei's proposed 23 percent increase in the regular
budget from the current year to CY2010. An EU meeting March
13 revealed that some Members are pushing for a rapid and
categorical EU common position in favor of zero real growth
(ZRG). Romania has pleaded for flexibility, but this
cooperative approach has not been adopted by other EU
diplomats, one of whom remarked to Ambassador Schulte that
"multilateralism doesn't mean that you decide and the rest of
us agree." The UK has also warned us that a break with "long
standing Geneva Group policy on zero growth" would not be
well received.

ElBaradei Stands Fast
--------------


4. (SBU) DG ElBaradei has continued campaigning for a large
increase in the budget. In a March 10 speech before the
United Nations Association in Vienna (attended by many
ambassadors),ElBaradei raised a friendly hand to Ambassador
Schulte before repeating comments made during the U.S.
presidential campaign supporting a "doubling" of the IAEA
budget. Behind the scenes, ElBaradei is doing more than
paying lip service to U.S. campaign promises. His draft
budget unerringly caters to U.S. priorities in the areas of
nuclear security and safety (such as an effort to incorporate
nuclear security into the regular budget - ref b). Even

moderate increases for nuclear techniques for development (an
area some of the more cynical representatives view largely as
a PR exercise),are channeled to the one program - the
Program of Action for Cancer Therapy - lauded by the U.S. for
its partnerships model.


5. (SBU) Comment: DG ElBaradei has every reason to pursue
the large budget increases he has long coveted. A
Nobel-Prize winner with less than a year left in office,
ElBaradei enjoys maximum international exposure while feeling
minimal obligation to Member States. As one staff member put
it, the DG is "halfway up the mountain." This has helped
prompt ElBaradei to propose the stunning increases, but it
also means he is prepared to engage energetically in
negotiations should the U.S. support him. His global renown
and stature with the G-77 is a definite asset. His
successor, whoever that may be, is unlikely to match
ElBaradei's ability to champion the kinds of structural
changes envisioned in the current draft budget. End Comment.

Options
--------------


6. (SBU) Our meeting with the Romanian Vice Chair on March 20
presents the first time the U.S. will be expected to indicate
a formal - if general - position on the regular budget. One
option for that meeting is to announce the U.S. intention to
maintain the traditional ZRG policy (implying a marginal
increase of approximately 3 percent to maintain purchasing
power parity). This position would quickly cement the ZRG
positions of the other major donors and leave only minimal
room for negotiating minor adjustments in the budget. The
result would be unremarkable negotiations during the April
PBC followed by handy passage of a draft budget during the
June Board that would look much like previous budgets and
leave the IAEA's pressing structural needs unaddressed.


7. (SBU) Such a position would create relief among other
donor states but intense disappointment at the Secretariat
and among those statesmen such as the members of ElBaradei's
Commission of Eminent Persons who believe the IAEA is
seriously underfunded. It would also appear to contradict
President Obama's commitments, compelling us to detail the
fiscal realities requiring us to retreat from the public
pronouncements of January and earlier. The high hopes that
led IAEA staff to trace a gigantic "Yes, We Can" in the snow
this winter would quickly ebb. The U.S. could help assuage
the confusion by committing to significantly increase
extrabudgetary funding, but this voluntary gesture would not
appear to address adequately U.S. public statements that the
IAEA is "understaffed and underresourced." However much IAEA
managers welcome and appreciate extrabudgetary resources,
such funds do not wield the symbolic and institutional
support that comes from a concerted diplomatic effort to
increase the regular budget.



8. (SBU) The second option for the March 20 meeting is to
indicate general U.S. support for Director General
ElBaradei's proposed budget, along with a good faith promise
to negotiate the details with the other Member States. U.S.
support for the draft budget will not automatically lead to a
23 percent increase (just the opposite - it would be hard-won
progress to convince other Members to agree to a 5 - 10
percent increase),but supporting the draft budget does leave
the door open for a more nuanced discussion of programs and
priorities. Supporting the budget also reflects U.S.
endorsement of a harsh reality - detailed in last year's
"2020 Report" - that the IAEA does not have the resources to
do its job properly.


9. (SBU) The likely result of this position would be budget
negotiations that extend through the April 27 PBC and into
the June Board of Governors meeting (and possibly beyond).
None of the Member States are looking forward to this
situation (and the U.S. will not be popular for sparking it),
but it is the only one that allows the U.S. to pursue the
structural changes that will sustain the IAEA's core mandate
on safeguards through broad financial support for the
institution.

Deeper in the Weeds

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


10. (SBU) Looking forward to the April PBC, Member States
will look for ways to cut down on the across-the-board
increases envisioned by the DG. One likely target for
decapitation is the "capital investment fund," a proposal
that accounts for nearly half of the overall budget increase.
This fund drew immediate fire from major donors, who
questioned the need to develop the fund so quickly and with
such an extraordinary influx of cash (i.e., by 27 million
euros in the first year alone). G-77 nations have already
begun asking why Major Program 3 (Nuclear Security and
Safety) should benefit from a 47 percent increase while Major
Programs 2 and 6 (which develop and manage nuclear techniques
for development) are granted only 15 percent.


11. (SBU) Mission looks forward to discussing these more
detailed issues with Washington interagency counterparts. In
addition to the overarching issue of the U.S. position on the
regular budget, we see several other topics that will require
further discussion, including: 1) U.S. preparedness to
support the anchoring of the Nuclear Security Division in the
regular budget, 2) the launching and up-front infusion of
cash into the capital investment fund, 3) increased funding
for safeguards, to keep pace with a growing international
reactor fleet and increasing number of "sensitive cases" to
include Iran, DPRK and now Syria, and 4) the U.S. posture
toward likely G-77 demands for moving the Technical
Cooperation Department further into the regular budget.

Comment and Request for Guidance
--------------


12. (SBU) While the G-77 position remains undefined, most
major contributors would prefer to quickly squelch
ElBaradei's budget proposal and embrace a no-fuss
retrenchment to ZRG. The one way the U.S. can buck this
trend and keep the door open to substantive negotiations is
by indicating general support for ElBaradei's draft budget.
This support does not have to include specifics for the
moment, but it will position the U.S. to make good on calls
for increased resources (should they come available),support
the long term institutional health of the organization, take
advantage of the current DG's strengths, and position the
IAEA to meet its safeguards responsibilities of the future.
These higher goals are not accomplished by year-to-year
extrabudgetary contributions, but only through the
predictability and assurances provided by the regular budget.
ElBaradei and the Secretariat understand that negotiations
will not end with a 23 percent increase, but by the same
token, they should not start at zero.


13. (SBU) One opportunity to argue for "flexibility" in
budget positions is presented by the upcoming G8
Non-Proliferation Directors Group meeting in Rome March 24.
Mission encourages instructions for our delegation to that
meeting that reaffirm the U.S. commitment to find the
resources that the IAEA will need to meet its expanded
safeguards responsibilities in the years ahead. More
immediately, Mission requests guidance in advance of
Ambassador's March 20th meeting with the Romanian Vice Chair
in charge of budget negotiations to communicate a U.S.
position in support of DG ElBaradei's proposal to increase
the IAEA regular budget and build in long-term capital
funding.


PYATT