S E C R E T UNVIE VIENNA 000193

SIPDIS

ISN/RA FOR DANIEL; NEA/I FOR NOTAR, KENNA; L FOR MITCHELL,
HIRSCH; BAGHDAD FOR FINGARSON, AHN, SWINEY

E.O. 12958: DECL: 04/29/2034
TAGS: AORC IAEA IZ KNNP
SUBJECT: IAEA/IRAQ: FORMALLY FINDING IRAQ IN COMPLIANCE
WITH ITS SAFEGUARDS AGREEMENT

REF: 08 UNVIE 00525

Classified By: AMBASSADOR GREGORY L. SCHULTE FOR REASONS 1.4 (B) AND (D
)

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Summary
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1. (S) Key IAEA officials advised MsnOff in separate
discussions that there is no question within the IAEA
Secretariat that Iraq is in full compliance with its
safeguards obligations. However, Laura Rockwood of the
IAEA's Office of Legal Affairs (OLA) noted that the Agency
has not "formally" communicated that conclusion to member
states and the UNSC. Noting that such a formal conclusion is
a precondition for lifting WMD-related restrictions imposed
on Iraq by the UNSC in 1991 (see paras 7-8 for background),
Rockwood noted that there is no set process on bringing
noncompliance cases to closure. She said one possibility was
a letter request to the IAEA that would trigger a discussion
within the Secretariat on whether the decision should be made
by the Board of Governors or by the Director General.


2. (S) Separately, Ambassador Schulte met with Iraqi
Ambassador to reiterate the USG commitment to assist Iraq in
lifting UNSC restrictions. In this context, Ambassador
Schulte raised the possibility of obtaining a formal finding
of compliance from the IAEA,while noting that we have no
instructions as yet from Washington on how to proceed. The
Iraqi Ambassador expressed willingness to request the
Director General to inform the Board that Iraq is in full
compliance with its safeguards agreement.


3. (S) As Washington weighs strategies for lifting WMD
restrictions in Iraq, Mission recommends pursuing a Board
decision, vice solely relying on a proclamation from the
Director General (DG), to close the case on Iraq's past
noncompliance. Per reftel, Mission notes that in the case of
Libya, USG sought to begin to establish the principle that
the Board, vice the DG on his own, has ultimate authority in
noncompliance cases. Such a precedent is important in the
current context of ongoing Iran and Syrian IAEA safeguards

investigations. The next Board meeting is scheduled for the
week of June 15, but Mission is not optimistic that a
resolution on Iraq could be ripe for adoption at that time
given the short time available for the Secretariat to
generate the necessary report to the Board in advance of the
June Board meeting. End Summary.

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Need a "Formal" Finding of Compliance
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4. (S) Principal Legal Officer from the Office of Legal
Affairs, Laura Rockwood, recalled on April 27 that no
"formal" finding of renewed full safeguards compliance has
been issued on Iraq. Rockwood (and also during a separate
meeting Herman Nackaerts, the Director of Safeguards
Operations B, which is responsible for safeguards in Iraq)
noted that, while the finding may not be "formal," Iraq is
indeed in full compliance with its safeguards agreement.


5. (S) Rockwood said there has never been a case where
noncompliance has been formally and explicitly "overturned."
Even in the case of Libya, the IAEA issued a report noting
how noncompliance has been corrected. The Agency would soon
reflect in the pending annual Safeguards Implementation
Report (SIR) that the IAEA has now determined that Libya's
declarations are "complete," but it did not issue an explicit
formal finding of renewed full compliance and has no plans to
do so. (Note: The "completeness" conclusion is in the
context of Libya's implementation of the Additional
Protocol.)


6. (S) Rockwood suggested the Secretariat would need a
request from a member state to begin the internal discussion
on how to notify member states and the UNSC that Iraq is in
compliance with its safeguards agreement, such as a letter
request. Rockwood noted the options of the DG issuing a
finding that Iraq was in compliance, or the Board making such
a ruling, since it was the Board that found Iraq in
noncompliance in 1991 (GOV/2532). (Comment: Per reftel and
for purposes of setting an appropriate precedent that
precludes any move by DG ElBaradei to prematurely close the
Iran investigation, we pursued a resolution on Libya at the
Board of Governors meeting in September 2008 welcoming
Libya's full cooperation with the IAEA investigation and

supporting a return to routine safeguards implementation.
That action served to highlight the Board's ultimate
authority in noncompliance cases; a point also of potential
relevance in Syria. End Comment.)

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Background
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7. (S) UNSCR 707 (1991), which restricts Iraq from pursuing
most nuclear activities, indicates that the "Agency" must
determine that Iraq is in full compliance with its safeguards
agreement. (The Agency encompasses the Member States and the
IAEA secretariat.) UNSCR 687 (1991) also issues restrictions
on nuclear activities in Iraq, giving the responsibility to
the Director General in establishing a plan for inventorying
and monitoring Iraq's compliance.


8. (S) Rockwood expressed her private reservations about
whether the timing was right to pursue lifting WMD-related
sanctions in Iraq due to the security situation, but
understood the political sensitivities of denying access to
nuclear technology to developing nations.

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Meeting with Iraqi Ambassador
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9. (S) Ambassador Schulte met with Iraqi Ambassador Tariq
Aqrawi on April 29. Ambassador Schulte reiterated the
commitment of the United States to work with Iraq to help
lift UN restrictions through the U.S.-Iraq Security Agreement
and UNSCR 1859 (2008). Ambassador Schulte shared a list of
nonproliferation-related organizations in Vienna that
presented the GOI possible resources and opportunity to work
on the process to help lift sanctions. This includes the
IAEA, which serves as a resource for safeguards, safety, and
security, the Nuclear Suppliers Group, the Wassenaar
Arrangement, the UN Office of Drugs and Crime, and the Hague
Code of Conduct.


10. (S) Ambassador Aqrawi said the removal of sanctions is
very important. On the Additional Protocol (AP), Ambassador
Schulte noted that Iraq still needs to bring the protocol
into force. Iraq signed the AP on October 9, 2008, but needs
to provide written confirmation that its domestic
requirements for entry into force have been met. Mission
will follow up with our Iraqi colleagues to stimulate an
early response on the AP to the IAEA Secretariat.


11. (S) Ambassador Schulte raised the issue of Iraq's
compliance with its safeguards agreement. The Iraqi
Ambassador immediately responded that indeed Iraq was in
compliance. Ambassador Schulte noted the need for a formal
finding of compliance, according to the IAEA's Office of
Legal Affairs. Ambassador Schulte conveyed that we are
currently discussing with Washington on what the next steps
should be and had no instructions on how to proceed. One
option would be for the Director General to report to the
Board that Iraq is in full compliance, followed by a Board
decision endorsing this finding. Ambassador Aqrawi was eager
to request such a report from the Director General to have
the issue addressed at the June Board of Governors.
(Comment: Iraq is currently a member of the Board of
Governors and will sit as a Board member during the June and
September 2009 Board meetings. End Comment.) Ambassador
Aqrawi thought that such a resolution should not be a
controversial issue for the Board. Ambassador Schulte
reiterated that we need to think about how to proceed before
requesting a report from the Director General, including who
would ask, who would draft the resolution, who would put the
resolution forward, etc.

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Comment and Next Steps
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12. (S) As Washington considers the way forward on lifting
WMD-related restrictions in Iraq, Mission recommends a course
that would help solidify a precedent against ceding to any DG
what Mission believes is a Board prerogative to restore "good
standing" in cases where the Board has found past
noncompliance. Naturally, as in the original finding of
noncompliance, any such action re-establishing Iraq's full
compliance would be predicated on a report from the Director
General.


13. (S) Mission, therefore recommends that the Board decide

Iraq is back in compliance with its safeguards agreement.
The best option would be to get Iraq to request a special
short report from the IAEA to the Board indicating that Iraq
is in full compliance. The Board could then adopt a
resolution noting that the past noncompliance issues are
closed, and the UNSC could act on the basis of that Board
resolution.


14. (S) Mission acknowledges this course raises a question
as to timing. Mission understands that the UN Secretariat
will release a paper in June indicating what steps Iraq
should take to facilitate the lifting of restrictions.
Washington will need to consider timing in Vienna related to
the UN paper, but we understand that a finding of full
compliance with safeguards is already a prerequisite for
lifting restrictions. In addition to the ongoing policy
process (and time constraints) in Washington and USUN/UNSC,
the June Board is already shaping up as a very full agenda.
There is no guarantee that the issue of DG succession will be
behind us by the June meeting. Also, Iran, Syria, possibly
DPRK, the annual Safeguards Implementation Report, and
de-restriction of Board documents such as DG reports on
safeguards issues (e.g., on Syria and Iran) will be on the
June Board agenda, along with possible Board action on one or
more Reliable Access to Nuclear Fuel (RANF) proposals.
Washington will want to consider whether and how all these
various issues can be made to interact to our advantage.
Finally, Mission is not at all certain that the Secretariat
could generate the necessary report before the June Board.
According to Rockwood, there would certainly be internal
debate and consideration as to the Secretariat's view on the
mechanism to bring Iraqi noncompliance to formal closure,
which will also require time. Mission expects Director
General ElBaradei would consider the implications of the
precedent for Iran as well. He might not be highly-motivated
to act quickly to facilitate the precedent that the Board
decides the outcome of noncompliance cases.


15. (S) Finally, Mission notes that whenever we proceed with
any Board action there is a certainty that some member states
will take the opportunity to re-live the Iraq experience in
ways unhelpful to our objectives. Certainly Cuba, perhaps
Egypt on the Board, and Iran and Syria speaking as non-Board
members would use the opportunity to claim U.S. "fabricating"
information about them "just like the U.S. did about Iraq."
However, as this is a routine accusation from these such
quarters, Mission believes that the desire for a good
precedent on Board action would outweigh any concern about
prompting such rhetoric.
SCHULTE