Identifier
Created
Classification
Origin
09UNVIEVIENNA221
2009-05-11 15:07:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
UNVIE
Cable title:  

IAEA/SAFEGUARDS/BUDGET: LEADING WITH OUR STRONG

Tags:  AORC KNNP IAEA ENRG TRGY 
pdf how-to read a cable
VZCZCXYZ0000
OO RUEHWEB

DE RUEHUNV #0221/01 1311507
ZNR UUUUU ZZH
O 111507Z MAY 09
FM USMISSION UNVIE VIENNA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9448
RHEBAAA/DOE WASHDC IMMEDIATE
UNCLAS UNVIE VIENNA 000221 

SENSITIVE
SIPDIS

IO/T, ISN/MNSA COCKERHAM, IO/UNP, ISN CTR CURRY; NA-243
GOOREVICH; NA-241 SIEMON, O'CONNOR, LAMONTAGNE; AFTAC FOR
CHARLES BRENNAN

E.O. 12958: N/A
TAGS: AORC KNNP IAEA ENRG TRGY
SUBJECT: IAEA/SAFEGUARDS/BUDGET: LEADING WITH OUR STRONG
SUIT BY SECURING CONSENSUS FOR A NEW SAFEGUARDS ANALYTIC
LABORATORY

REF: A. UNVIE 00219

B. SWINDLE-KESSLER EMAIL ON JULY WORKSHOP FORWARDED
TO SSTS

C. MAY 5 PBC REPORT

-------
Summary
-------

UNCLAS UNVIE VIENNA 000221

SENSITIVE
SIPDIS

IO/T, ISN/MNSA COCKERHAM, IO/UNP, ISN CTR CURRY; NA-243
GOOREVICH; NA-241 SIEMON, O'CONNOR, LAMONTAGNE; AFTAC FOR
CHARLES BRENNAN

E.O. 12958: N/A
TAGS: AORC KNNP IAEA ENRG TRGY
SUBJECT: IAEA/SAFEGUARDS/BUDGET: LEADING WITH OUR STRONG
SUIT BY SECURING CONSENSUS FOR A NEW SAFEGUARDS ANALYTIC
LABORATORY

REF: A. UNVIE 00219

B. SWINDLE-KESSLER EMAIL ON JULY WORKSHOP FORWARDED
TO SSTS

C. MAY 5 PBC REPORT

--------------
Summary
--------------


1. (SBU) DDG for Safeguards Olli Heinonen recently told
MsnOff that he has been approached by "many Missions" to
inquire about "stretching out" the funding for the requested
upgrades to the Safeguards Analytical Laboratories (SAL),in
particular replacement of the Nuclear Materials Laboratory
(NML). Heinonen expressed concern that delays in funding NML
would result in additional costs related to short-term fixes
to keep the facility operating, as well as
repairing/replacing old and ailing equipment. Heinonen
believes, therefore, that delay of the NML project would end
up costing the Agency and its Member States more money in the
long run. Heinonen also noted that the decision has largely
been taken to move management of SAL into the Safeguards
Department.


2. (SBU) Comment and Recommendation: Heinonen expressed his
concerns in advance of IAEA Boar of Governors Chair
Feroukhi's May 8 informal meeing on the IAEA budget process,
at which Feroukh asked the Secretariat to lay out a plan for
phaing over two biennia the Agency's requested budget
increase (see Ref A). Although SAL funding was ot proposed
for postponement, Heinonen is clearlyconcerned by the
prospect of a delay. In light f the fundamental importance
to the safeguards rgime of a viable NML sample analysis
capability,Mission recommends we enhance engagement with key
Board Members, in Vienna and in capitals, to secur firm
consensus that replacement of the NML is anecessity and use
that as part of our argument fr moving beyond zero real
growth. Mission beliees achieving consensus that the Agency
must havea viable replacement option is achievable.


3. (BU) Based on technical input regarding the likely est
scenario timeline for the NML project from aU.S. consultant
assisting the IAEA on SAL enhancment, we recommend
Washington consider a possibl two-step endgame on SAL. The

first step is to esure sufficient regular budget funds (the
IAEA Scretariat's proposed 9.325 million Euros in 2010) re
included in the pending 2010/2011 budget for arrying the NML
project forward through design t the construction phase, a
process that the consutant estimates would take until at
least spring 011. The second step -- securing funds for
consruction -- could then take place during negotiatio of
the next budget biennium and would be conduced on a stronger
footing, given the existence the of a detailed design for
the NML, better cost etimates, etc. This approach could
create negotiting space for other safeguards priorities in
th broader ongoing budget debate, because it would, n
effect, remove approximately 21 million euros, urrently
proposed by the Secretariat for 2011, fom the current
biennium budget proposal. Indeed the lack of a detailed
project plan and cost esimate makes it difficult to justify
the higher fgure at this time. And, according to the
estimatd timeline for the full design phase, it would not
result in the delay feared by Heinonen so long a
construction funds are secured (whether regularor
extrabudgetary) by summer 2011 for the next (012/2013)
budget biennium. Some member states ar also exploring
creative financing mechanisms for SAL, including the proposal
by the External Auditor to allow the Agency to borrow from
the Technical Cooperation Fund. Mission will keep Washington
informed as this or other funding concepts take shape. End
summary, recommendation and comment.

--------------
"Band-Aid" Fixes More Expensive
In the Long Run
--------------


4. (SBU) Heinonen told MsnOff on May 7 that he has been
approached by "many Missions" to inquire about "stretching
out" the funding for the requested upgrades to the Safeguards
Analytical Laboratories. Heinonen said that if the
replacement of the NML is delayed, it will mean that "hard
decisions" will have to be made about how much more money
will have to be spent in the interim to keep the current
laboratory "hobbling" along, including security and
ventilation upgrades and other renovations. The current

facility cannot be relied upon, especially in light of needed
ventilation and security upgrades, and there is no viable
plan at the moment for using the IAEA's Network of Analytic
Laboratories (NWAL) to replace the NML should it fail before
a replacement is built. (Comment: The U.S. consultant
assisting the IAEA on ECAS planning, Dave Swindle, has
underlined to both Mission and Heinonen that the Secretariat
has no backup plan for how to continue necessary safeguards
work should the NML fail.) Heinonen said the Secretariat
could, if member states demanded, again revisit the options
for where to put the NML or the issue of renovation versus
replacement. However, he did not believe renovation would be
the cost-effective alternative in the long run, nor that
continued delays for revisiting options would be
cost-effective. He said he had discussed the issue with DG
ElBaradei and DDG for Management Waller, who both agreed that
"band-aid" fixes would cost more in the end. Speaking with
Charge on May 11, Waller reported a conversation earlier that
day with the Austrian Research Center Director who indicated
active attention to the long-running issue of host nation
support.


5. (SBU) Heinonen stressed again the risk of delay given the
growing risk that the current NML could go out of service and
thereby bring safeguards implementation to a virtual, albeit
temporary, halt. The lab's aging ventilation system is a
particular concern. (Note: At a briefing to "Friends of SAL"
in March, lab officials noted how an accident with a stored
plutonium reference sample had caused the shut down of the
facility that had analyzed radioactive swipe samples, which
are typically taken inside hot cells.) Heinonen made the
point that member states that have pledged to help analyze
samples through the NWAL so far have not done so, nor have
they agreed to fund SAL. Member states must do one or the
other, he argued. (Note: Unlike the NWAL for environmental
samples, which handles a significant fraction of bulk swipe
samples and most particle samples, all analysis of bulk
nuclear material samples is conducted at SAL's NML. Even if
new NWAL facilities come online for nuclear material
analysis, medium-term projections are that they would only
handle a small percentage of all samples necessary for
routine implementation of safeguards.)

--------------
New Division in Safeguards
--------------


6. (SBU) Heinonen also updated MsnOff regarding the future
of SAL management. Although an internal review as to the
specifics is continuing, he said the DG has already endorsed
moving SAL to the Department of Safeguards (its "management"
currently sits under the Department for Nuclear Sciences and
Applications). According to Heinonen, Gabriele Voigt
(currently the Director of Seibersdorf Laboratories, of which
SAL is a part) will be the initial director of a new analytic
division of the Safeguards Department, at least for a
transitional period, while the IAEA advertises the position
in hopes of getting a "real expert." (Comment:
Administrative details of the move are still not complete,
and the plan will still require formal approval by the DG,
but Heinonen has clearly wired the outcome here to bring SAL
to the Safeguards Department. We understand that proposals
to place SAL under the current Divisions of Technical Support
and Information Management were considered and rejected. The
move will facilitate the communication, management, and
efficiency of SAL, as it will be directly linked to its
customer - the Department of Safeguards. End Comment.)

--------------
July Workshop
--------------


7. (SBU) U.S. Support Program (USSP)-funded consultant David
Swindle has been advising the IAEA on its planning for the
project "Enhancing Capabilities of the Safeguards Analytical
Services" (ECAS),to which the lab upgrade is central. This
consultancy includes both planning for the NML replacement
and selecting contractors for the near-term project on the
Clean Lab Extension (CLE),which aims to enable better
environmental sample analysis and is separate from the NML,
and which will be paid for with 2008-2009 regular budget
funds freed up by delays in other major safeguards projects
(JMOX and Chernobyl). On the NML replacement, Swindle has
proposed, and Heinonen has agreed, that the Agency host a
workshop in late July for IAEA Member States that may be
interested in supporting SAL (Ref B). According to the

current draft scope of the July meeting, the stated
objectives are (1) for the Agency to present plans for the
management of sample analytical services (i.e. the new
Division in Safeguards),(2) for the Agency to present the
alternatives it considered and its preferred approach for
meeting long-term (through 2035) infrastructure needs, (3) to
discuss possible future SAL missions, and (4) to discuss
possible financial support by Member States for SAL. In
consultation with Mission, Swindle envisions the last segment
of the meeting to be an opportunity to discuss any necessary
process for coordinating/securing donors willing to consider
pledges of extrabudgetary funding. Another political
objective of the meeting would be to overcome earlier
perceptions that the Secretatiat's machinations on SAL were
not sufficiently transparent, comprehensive, and
well-reasoned.

--------------
Linkage to Budget Negotiations
--------------


8. (SBU) In the April 27-29 meeting of the Program and
Budget Committee (Ref C),many Board Members expressed
support for SAL and the need for the Agency to maintain an
independent analytical capability. Particularly noteworthy
were statements by the G-77/China and GRULAC, who were
otherwise unreceptive to WEOG priorities in safeguards and
security. This suggests the opportunity for a quid pro quo
where we might obtain an increase for SAL in exchange for
increases in promotional activities of interest to the
G-77/China. However, this does not necessarily match the
full range of U.S. priorities, which include the need to
incorporate management of Nuclear Security into the regular
budget, meet expanding safeguards operational needs, and
support the transition to an "information-driven" safeguards
culture. DDG Waller has suggested privately that a U.S.
offer of extrabudgetary funding for the Agency's capital
investment projects, including SAL, "could significantly
improve the negotiating environment." Mission sees merit in
Waller's approach, and recommends consideration of the United
States making such an offer later in this summer's budget
negotiations, perhaps pursuant to a possible two-step
solution referred to above in paragraph 3.


PYATT