Identifier
Created
Classification
Origin
09UNVIEVIENNA219
2009-05-11 12:39:00
CONFIDENTIAL
UNVIE
Cable title:  

IAEA BOARD CHAIR TAKES THE BUDGET IN HAND

Tags:  AORC PREL KNNP IAEA UN 
pdf how-to read a cable
VZCZCXYZ0001
OO RUEHWEB

DE RUEHUNV #0219/01 1311239
ZNY CCCCC ZZH
O 111239Z MAY 09
FM USMISSION UNVIE VIENNA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9442
RHEBAAA/DOE WASHDC IMMEDIATE
RUEANFA/NRC WASHDC IMMEDIATE
INFO RUEHII/VIENNA IAEA POSTS COLLECTIVE PRIORITY
RUEHHE/AMEMBASSY HELSINKI PRIORITY 0122
RHEHNSC/NSC WASHDC PRIORITY
C O N F I D E N T I A L UNVIE VIENNA 000219 

SIPDIS

FOR D, P, T, ISN, IO; DOE FOR NA-24, NA-25, NA-21; NSC FOR
SCHEINMAN, CONNERY; NRC FOR DOANE, SCHWARTZMAN

E.O. 12958: DECL: 10/30/2018
TAGS: AORC PREL KNNP IAEA UN
SUBJECT: IAEA BOARD CHAIR TAKES THE BUDGET IN HAND

REF: A. STATE 41671

B. UNVIE 182

C. UNVIE 201

Classified By: Charge d'Affaires Geoff Pyatt for reasons 1.4 b/d

C O N F I D E N T I A L UNVIE VIENNA 000219

SIPDIS

FOR D, P, T, ISN, IO; DOE FOR NA-24, NA-25, NA-21; NSC FOR
SCHEINMAN, CONNERY; NRC FOR DOANE, SCHWARTZMAN

E.O. 12958: DECL: 10/30/2018
TAGS: AORC PREL KNNP IAEA UN
SUBJECT: IAEA BOARD CHAIR TAKES THE BUDGET IN HAND

REF: A. STATE 41671

B. UNVIE 182

C. UNVIE 201

Classified By: Charge d'Affaires Geoff Pyatt for reasons 1.4 b/d


1. (SBU) Summary: The IAEA Secretariat has developed a new
budget proposal for 2010-2011 that takes the previous
proposal of a 23 percent increase over two years and
"stretches" it over four years. The effort is likely a
face-saving measure that recognizes the reality of the global
economic downturn and the hostile response among many Member
States to the original proposal. Budget hardliners Germany,
France and others used the May 8 meeting as a platform to
call for a revision of the budget proposal based on zero
growth from the CY2009 budget currently in force. Board
Chairwoman Feroukhi rejected these calls, in part because the
stated position of the G-77 and China, constituting a
"majority" of Member States, was one of openness to increases
for some programs. Feroukhi complained that Member States
had not proposed any numbers and asserted that it was time to
get serious about negotiating a budget increase. Feroukhi's
behavior, along with Finland and Romania's activism behind
the scenes, continues to be our best bet for impeding the
budget hardliners' drive for a zero growth budget. Mission
stresses the importance of demarches in Board capitals and
looks forward to Washington guidance for detailed rounds of
budget negotiations starting May 13 (ref C). End Summary.


2. (SBU) Member States were treated to an unexpected and
dramatic revision of the IAEA's 2010-2011 budget proposal
during an "informal meeting" on May 8. In a carefully worded
presentation, Budget Director Carlo Reitano explained that
the Secretariat now proposed to "stretch" the original budget
proposal over four years (two biennia). The stretching
exercise cuts the rate of increase by spreading it over four
years, lengthening the time Member States have for paying the
budget increase. Reitano was careful to avoid the
implication that the Secretariat had scaled back or
reconsidered its original, proposed increase. He stressed
there had been no change in the percentage allocation between

the different programs (safeguards, technical cooperation,
etc.),and that the overall level for the operational portion
of the budget still reached 331 million euros in this new
proposal (albeit over four years instead of two). The
portion of the original proposal dedicated to capital
investment has been front-loaded in the first two years of
this new, "four-year plan," but again, the end result is the
same (it just takes longer to get there).


3. (SBU) Board Chair Feroukhi had announced the meeting on
48-hours' notice and without previously informing her Vice
Chair for budget negotiations, Romanian Ambassador Cornel
Feruta. She made several statements exhorting Member States
to get serious about the budget. She noted that time was
running short, given the budget is traditionally approved by
the June Board Meeting and "must be adopted" by the September
General Conference. She also expressed frustration that
Member States had not proposed any "numbers" during the April
27-28 meeting of the Program and Budget Committee (PBC),but
only the vaguest of positions. Feroukhi announced that Board
Vice Chair Feruta would begin another round of informal,
detailed budget negotiations early the week of May 11. She
then opened the floor to Member States.


4. (SBU) U.S. Charge opened the discussion with an appeal for
states not to revert to "business as usual" and noting
recent, high-level U.S. statements supporting increased
resources for the IAEA. Predictably, budget hardliners
ignored the substance of the new proposal and simply used the
meeting to call for a new budget based on zero real growth
(ZRG). For example, the German Ambassador colorfully
asserted that a "bitter pill doesn't become any easier to
swallow just because you break it in pieces." He then
asserted that "the majority" of Member States had asked for a
revision of the budget based on ZRG (a claim quickly
dismissed by Feroukhi, who pointed out that the G-77 had not
ruled out increases for "some" major programs.) Further
tough calls from the UK, Canada, France, Australia, Japan and
Mexico threatened to overwhelm a U.S. statement requesting
flexibility and consideration for the possibilities of a
significant increase. Only Egypt weakly asserted that the
G-77 had not coordinated any reaction to the new proposal
(not having known about it) and had refrained from comment
out of respect for Feroukhi's request that we not engage in
substantive discussions.


5. (C) Behind the scenes, Romania continues to keep Mission
informed of developments in the EU and G-77. Romania also
helpfully delayed Feroukhi's announced launch of detailed
budget negotiations to May 13, giving the U.S. time to
finalize a position. Feroukhi privately underlined her
impatience with the call for zero growth and her appreciation
for U.S. effort to keep the door open to some real increase,
even if the eventual compromise is far below the Secretariat
proposal. Finland, for its part, continues to act as a small
but irritating outlier among EU budget hawks. During the
PBC, Finland had prevented the EU from reaching a hardline
consensus on the budget, irritating the European budget hawks
locally and raising complaints in Helsinki about Finland's
uncooperativeness. Ironically, Finland's troublemaking
elicited the admiration - not condemnation - of Helsinki
officials, and Finnish diplomats are currently under
instructions to disrupt any attempt by the budget hawks to
speak "on behalf of the EU." (True to form, Finnish Second
Secretary Jani Raappana informed the German ambassador that
he had come too close to crossing the line during the May 8
meeting.) A veteran of two EU presidencies, Raapana
specifically requested that the U.S. demarche Finland's
Ministry of Industry as a counterbalance to the activities of
the budget hawks in Helsinki.

Comment
--------------


6. (SBU) The new budget "phase-in" proposal likely emerged
from the Secretariat's recognition that no bloc of countries
had embraced Director General ElBaradei's bold attempt to
increase the IAEA's budget by 23 percent in one biennium.
Given this reality, the Secretariat's proposal to "stretch"
the budget is really an attempt to find some kind of support
in the budget negotiations by slowing the rate of increase
and testing Member States' reactions. The Secretariat is
well aware that Member States renegotiate the budget every
biennium and approve its annual installments in the General
Conference each year. Even if the new proposal were
approved, the community could have a chance to revisit the
"four-year" plan halfway through, in 2011. It was a smart
political move, allowing ElBaradei to shake off his moment of
immoderation without suggesting that he was wrong to have
entertained it. From the point of view of the United States,
the new proposal is much like the original in its emphasis on
U.S. priorities, although the suggestion to defer safeguards
funding necessary to enhance detection of undeclared nuclear
activities would need to be reversed.


7. (SBU) Feroukhi, for her part, is clearly determined to
encourage some kind of budget increase for the IAEA. She has
now contradicted the German ambassador publicly on two
occasions, admitting in private that it is her role to "be
provocative." We welcome her activism, given G-77
ambivalence and the increasing momentum of the budget hawks.
Privately, DDG Waller expressed to charge grave concern about
the landslide of criticism he faced on May 8 and the need for
efforts in the G-8 and elsewhere to find some flexibility in
the currently rigid approach of the budget hawks. Per
reftel, Mission stresses the importance of demarches in key
capitals and looks forward to Washington guidance for this
latest round of budget negotiations starting May 13.





PYATT