IAEA/DG RACE: ECHAVARRI MAKES A STRONG SHOWING

S E C R E T UNVIE VIENNA 000209

SIPDIS

DEPT FOR D(S),P, T, IO, ISN
PARIS ALSO FOR USOECD
DOE FOR NA-20
NSC FOR CONNERY
NRC FOR DOANE, SCHWARTZMAN

E.O. 12958: DECL: 05/06/2019
TAGS: AORC PREL KNNP IAEA SP JA MY SI SF BE
SUBJECT: IAEA/DG RACE: ECHAVARRI MAKES A STRONG SHOWING
WITH WEOG

REF: UNVIE 189 AND PREVIOUS

Classified By: Ambassador Gregory L. Schulte for reasons
1.4 b and d

Summary and Comment
--------------


1. (C) Spanish DG candidate Luis Echavarri emerged the clear
"winner" over Belgian candidate Jean-Pol Poncelet in a joint
meeting of the two candidates with the Western European and
Others Group (WEOG) May 6. Drawing on his 25 years of
experience in the nuclear field, Echavarri demonstrated solid
institutional knowledge of the IAEA and came across as lucid,
well-briefed and cognizant of the challenges facing the
Agency. Poncelet's performance at WEOG was less impressive
than in a bilateral meeting with Ambassador Schulte the
previous day. Reading from prepared notes, he addressed all
the major issues but could not speak extemporaneously beyond
generalities admitting, for example, that he was not familiar
with the IAEA budget. On substance, the two candidates took
similar positions in support of a less political role for the
Director General with respect to Iran, Syria and DPRK,
deferring to the Board and UN Security Council. They were
better versed on nuclear energy issues than on
nonproliferation but, both recognized nuclear safeguards as
the "core" of the IAEA's mandate as well as the importance of
nuclear security. Echavarri fielded a difficult question
from Ambassador Schulte on balancing nonproliferation
concerns against enrichment rights. Both candidates
acknowledged the limits of the nuclear renaissance in
developing countries, Echavarri taking a realistic view that
the IAEA could not and should not build capacity in all of
the 60-odd countries interested in nuclear power. They also
focused on nuclear safety with Echavarri, a former regulator,
who said he is opposed to mandatory IAEA safety standards.
Overall, Echavarri delivered the better performance and was
able to relay his vision for the IAEA in much more concrete
terms than Poncelet.


2. (C) Although this was only the Vienna debut of these two
DG candidates, the consensus after the WEOG meeting was that
the advantage had already gone to Echavarri. Poncelet is
looking like someone who will be dealt out in the early June
straw poll. He also received mixed reviews from two
diplomatic contacts familiar with his past work and is ruled
out by several delegations for his association with the
nuclear industry. Thus, Mission sees little reason from a
Vienna perspective, to accommodate Poncelet's meeting
requests in Washington, where he would like to visit next
week. Slovenian DG candidate Ernest Petric, who met with the
WEOG separately April 29, practically dealt himself out
saying only that he would stay in the race "for some time."
Vienna Ambassadors are most familiar with Petric from among
the three European newcomers, but they give him zero chance.


3. (S) The three European newcomers were all motivated to
enter the DG race as "consensus" candidates hoping to provide
the alternative to the March Minty-Amano deadlock. Echavarri
is emerging as the only one of the three with the potential
to do this and seems to be an attractive "Plan B" should
Amano fail. Amano will have to work hard for the WEOG vote,
some of which may well go to Echavarri. Despite the support
of Amano expressed by Political Director Stanzel in his
recent Washington meetings, for instance, the German
Counselor reported that his Mission is uninstructed and is
keeping an open mind about the candidates, as is the UK.
Keeping Echavarri viable will be difficult, however, if the
NAM/G-77 vote consolidates behind Minty. The Spanish are
still banking on postponing the election as late as possible,
preferably to July, as they calculate Echavarri will need 27
travel days to make the rounds in Board capitals. He is
already slated to visit Moscow May 27 at Russian request.
Ambassador Schulte has recommended to both the Board Chair
and Spanish Mission to hold the election in June, consistent
with the Board rules. The Board Chair is tentatively
planning to convene a Board meeting with all five candidates
at the end of May (a meeting that will likely be a waste to
time),conduct a non-binding straw poll a few days later, and
hold a Special Session for the election before or after the
June Board. Amano also wants an election in June, preferably
but not necessarily before the June Board.


4. (C) Meanwhile Japan continues high level lobbying in Board

capitals. Vice FM Yabunaka informed Ambassador Schulte and
Australian and Canadian Ambassadors May 5 that he had just
returned from Turkey and India. PM Aso also plans to discuss
Amano's candidacy with Germany, and Putin will be in Japan
May 12. Yabunaka will seek to leverage Russia's desire to
sign a bilateral civil nuclear cooperation agreement to get
support for Amano. He also thought the Philippines would
support Amano. Amano has travelled to Albania, which
reconfirmed its support, and Ghana, where he met with the
President, and will go to Dublin next. His initial goal is
to consolidate support to "survive" the elimination rounds.
Amano assesses that a re-match with Minty is most likely, in
which case Japan will need to work hard for the one
additional vote, which may not shift in his favor until the
final rounds. He believed a race against an EU candidate
(probably Echavarri) was less likely, although Echavarri
could pull in enough votes to finish second; in that case
Amano thinks he could cut a deal with Spain. End Summary and
Comment.

Echavarri: A Viable Alternative
--------------


5. (SBU) Echavarri and Poncelet addressed a packed room of
WEOG Ambassadors May 6; each gave a half-hour presentation of
his candidacy and took a few questions. From the outset,
Echavarri highlighted close collaboration with the IAEA over
the last quarter century while he was in industry, as a
safety regulator and as head of the OECD Nuclear Energy
Agency. He pledged to work together with the Board and
Secretariat to carry out the IAEA's mission and addressed
several important elements, beginning with the role of the
IAEA Director General. Echavarri saw the IAEA as a technical
institution with policy determined by the Board. The DG was
a bridge between the Secretariat and the Board; in that
capacity, he could not be just a technical person but must
confine his policy role only to areas related to the IAEA.
Echavarri argued his experience in running an international
institution with disparate member state views for and against
nuclear energy had prepared him for the IAEA DG position.
Turning to nuclear energy, Echavarri emphasized nuclear
safety and the IAEA's role in helping countries build safety
infrastructure. He stressed that safety required 24/7
attention and noted that the most significant safety
incidents had occurred in large countries with strong
regulatory bodies. As a former regulator, he did not support
mandatory IAEA safety standards that could dilute the
authority and responsibility of national regulatory bodies
and were unenforceable. Echavarri recognized nuclear
security as a growing concern without going into detail. He
also noted the need to balance different countries interests
in nuclear applications, power and non-power. Echavarri saw
nonproliferation as the "core" of IAEA responsibilities and
noted that expansion of nuclear power meant expansion of
safeguards. There should be a push for ratification of the
Additional Protocol, though he acknowledged it cannot be
forced upon countries. International fuel banks were an
important element for the future, he added, that can
reinforce the nuclear nonproliferation regime.


6. (SBU) Echavarri also addressed IAEA management and budget
issues in detail with an emphasis on improving efficiency and
the DG's role in ensuring coordination between departments.
He appreciated the professionalism of the Secretariat having
worked with them closely; sought diversity and competence;
and supported the seven-year contract limit with exceptions.
Echavarri noted that he had spent most of his life managing
technical people in the nuclear field. A believer in
strategic planning, he viewed the IAEA budget as a question
of assessing priorities. With the expansion of nuclear
power, it was reasonable to expect an increase in the IAEA
budget though he recognized the constraints of the financial
crisis. He left the issue of regularizing the TC fund to the
Board and stressed efficient use of resources, whether
regular or extra-budgetary. Finally, he gave a personal
commitment to not go beyond a two term tenure as Director
General (Note: Poncelet neglected to do so in the WEOG, but
had also told Ambassador Schulte that he would subscribe to
term limits. End note.) In response to a question from
Germany concerning what he would change with respect to
management of the IAEA, Echavarri cited the lack of clear
objectives and the need for more coordination across parts of
the Agency. He also recognized differing priorities among

member states and the need to balance interests with respect
to nonproliferation, TC, safety etc. As an example, he
observed that it was wholly unrealistic to expect the IAEA to
provide infrastructure support to 60 counties contemplating
nuclear power, when in reality it was in a position to help
maybe three to five.


7. (SBU) Emphasizing the IAEA's role as a nuclear watchdog,
Ambassador Schulte queried both candidates about their
approach to verification issues in Iran, Syria and the DPRK.
He also cited a press story in which Echavarri is
characterized as having taken the position that
non-proliferation and promotion of nuclear technology,
including the right to enrichment, were on an equal footing.
Iran, Syria and DPRK were complicated with different elements
and Echavarri did not see a role for the IAEA in political
negotiations. The main issues for the IAEA Secretariat were
having access and technical capability to make reports to the
Board and UNSC; the Secretariat was not a political actor.
He recognized the legal framework of NPT rights, including on
enrichment must be respected, but argued that enrichment and
fuel fabrication absent a large nuclear program were
difficult for a country justify. They may nevertheless
insist on indigenous enrichment, making implementation of the
Additional Protocol all the more i
mportant. (Note: This drew private criticism from the French
Ambassador for failing to clearly address Iran and its claims
regarding enrichment. End Note.)

Poncelet: Not Much of a Dark Horse
--------------

8.(SBU) Poncelet's presentation to the WEOG tracked very
closely with his introductory call on Ambassador Schulte the
previous day, but he was much less engaging a public speaker
than he had been in our bilateral meeting. Reading from
notes, Poncelet presented his candidacy as a constructive
proposal with a view toward bridging consensus on the IAEA
Board. He offered the right combination of technical
expertise as a nuclear engineer, political and diplomatic
skills for the job from his previous Ministerial portfolios,
and as a consensus builder in Belgian politics, as well as
multilateral experience. Poncelet noted that he had spent
most of his life in the private sector, was not an "industry"
candidate or lobbyist, and had spent the last two years at
Areva working on sustainable development issues that were
relevant to the IAEA. He was committed to the pursuit of
reliable, safe, secure and competitive nuclear energy for
peaceful purposes and saw the IAEA as balancing two pillars
of non-proliferation and peaceful use. The nuclear
renaissance could not progress, he argued, without
strengthening nonproliferation and disarmament.

9.(SBU) Among the Agency's priorities, Poncelet cited nuclear
energy with particular emphasis on safety and waste
management. Nuclear power could not be introduced overnight
without infrastructure (with some countries he agreed in
discussion with Ambassador Schutle being 20-50 years away).
He supported harmonization of international safety standards,
including binding agreements, and recognized (in passing) the
importance of nuclear security. The Agency's "core business"
was to be a nuclear watchdog and he supported strengthened
safeguards and legal authority, including the AP, as well as
technical capabilities and coercive measures in cases of
noncompliance. Poncelet recommended the introduction of a
modern management culture similar to industry for the IAEA
and streamlining of duplicative TC programs. He saw the
budget in broad terms as a tool to serve the Agency's
objectives, would not comment on the size of any increase,
and called or a fair discussion of the budget with a view to
having a professional, innovative, transparent and
high-performing institution. When asked by Germany for more
specificity, Poncelet acknowledged he did not know enough
about the IAEA budget but would take a critical look, noting
that improving efficiency did not necessarily mean deleting
programs.

10.(SBU) Poncelet's response to Ambassador Schulte's question
on the IAEA watchdog role in Iran, Syria and the DPRK echoed
that of Echavarri ("I'll say the same as him.") He also saw
the Agency as playing a technical and information gathering
role with the DG reporting evidence of noncompliance to the
Board, leaving political steps to the Board and UNSC. He

agreed that sensitive enrichment technology must be limited
and investment in a domestic program is not justifiable
without 40-50 nuclear reactors. In discussion with
Ambassador Schulte, Poncelet noted the Belgian experience
with reprocessing but supported strict limits on use of such
sensitive technology.

11.(C) Although Poncelet made all the right points, his
presentation to the WEOG was uninspiring. In his bilateral
meeting with Ambassador Schulte, Poncelet also came across as
less conversant on nonproliferation than nuclear energy
issues, though he acknowledged "natural" concerns and
emphasized safeguards compliance. He supported multilateral
fuel supply in speaking to the WEOG but was more skeptical
with Ambassador Schulte as to the yet to be demonstrated
political circumstances that would require going outside
market mechanisms. He likened fuel banks to a strategic
reserve that would probably never be used.


12. (C) Asked by Ambassador Schulte about electoral strategy,
Belgian MFA Disarmament Director Werner Bauens, accompanying
Poncelet, presented his candidacy as a counterpoint to Amano
who he assessed to be unelectable given NAM opposition and
the lack of support from two of the P5. He claimed that
"some" had approached Belgium because "things were not
looking good in Vienna." Poncelet could offer a "third way"
to bridge the North-South divide. He predicted a decrease in
support for both Amano and Minty in the straw poll since
neither was ultimately electable. Asked if Poncelet could
draw any support beyond the Western group, the Belgians
believed the NAM vote for Minty was more of a negative vote.
Belgium planned outreach to the NAM, using its still strong
African network as well as to Latin America (voting for
Echavarri was not a given) and to Russia and China. Bauwens
noted that they would not have put Poncelet forward if they
did not believe he was a strong candidate.


13. (C) Comment: Private soundings on Poncelet brought mixed
results. A former Belgian official with ties to the IAEA
thought he was an excellent candidate with a strong technical
background and would learn the safeguards brief quickly.
Another trusted interlocutor, who knew Poncelet well and
confessed to a personal bias, was quite negative. He
described Poncelet as more presentation than substance,
lacking in energy and vision and risk averse based on his
tenure as Defense Minister.

Petric: A Known Entity, but Lacking in Support
-------------- -


14. (SBU) In a separate WEOG meeting April 29 Slovenian DG
candidate Ernest Petric explained, as he had previously in
bilateral consultations with Ambassador Schulte (reftel),
that his government's decision to nominate him was motivated
by the divisive results in March. Such divisions were not
good for the Agency, and coming from a small country with
nothing but good will, Petric endeavored to be the Director
General "for all, not for some." He admitted that the entry
of the other new candidates was a surprise and complicated
the situation with some more "unifying" than others. Petric
nevertheless intended to stay in the race "for some time."
He highlighted his background as a lawyer, like ElBaradei,
and a former Minister of Science and Technology as well as
his knowledge of the Agency, having served as Slovenia's
Permrep 2002-2008 and Board Chair 2006-2007. He also
dismissed concerns about his age.


15. (SBU) Petric acknowledged that stepping into ElBaradei's
shoes would be difficult, and that he would be more dependent
on member states. He pledged to have an open door policy.
Petric did not elaborate an extensive program for the future
of the IAEA but identified some priority areas: nuclear
energy growth, with an emphasis on obligatory IAEA safety
standards and waste management; verification; TC, expressing
skepticism about regularizing TC funding, and support for an
incremental increase of the IAEA budget. Overall, he said,
the Agency was one of the best run UN family institutions.
He noted that years of zero growth had compounded the
Agency's financial problems and he welcomed positive signs
from the U.S. and others on the budget. With respect to
verification, he emphasized legal authority, technical
capacity and human resources and supported universalization
of the AP citing insufficient control of undeclared nuclear

material. Petric also supported multilateral fuel supply
proposals and was surprised by the lack of G-77 enthusiasm,
which he attributed to approaching the issue from a
nonproliferation standpoint and the lack of involvement of
potential recipients. As DG, he pledged to work with the
Board to promote multilateral fuel supply as a "win-win" that
did not diminish anyone's rights. Finally, Petric welcomed
President Obama and Japanese FM Nakasone's recent statements
on disarmament and noted possible additional responsibilities
for the IAEA in this regard.


16. (SBU) Petric fielded a few questions from Sweden, Austria
and Canada on the political role of the Director General and
handling Iran and Syria, more specifically. He noted that
the politicization of Middle East issues at the IAEA was not
new and attributed it to external events. Petric opined that
the Agency should remain as independent as possible and
expected that the next DG would be less political than
ElBaradei. He would take a "lawyer's approach" to Iran and
Syria in so far as legal obligations are not negotiable. He
allowed for the possibility of a special inspection in Syria
and saw it as the Board's prerogative to send this issue to
the UNSC. The DG's role was to supply a clear and realistic
report to inform the Board's decision. He also saw a role
for the DG in trying to temper the GC Middle East debate. In
response to a question from France on relations with the EU
if elected, Petric further noted that "he would not forget
where he comes from" but will consult with all groups
including the G-77 and EU.


17. (C) Comment: Although WEOG members regard Petric as a
known entity and appreciate his no-nonsense style, no one
expects him to garner many - if any - votes. His
presentation to the WEOG does not appear to have changed
anyone's estimation. It is also doubtful that his stance on
Iran and Syria will have much appeal among the NAM/G-77 who
well remember his tenure as Board Chair.
SCHULTE