Identifier
Created
Classification
Origin
09UNVIEVIENNA241
2009-05-27 11:11:00
CONFIDENTIAL
UNVIE
Cable title:  

IAEA/BOARD/GC:TOUR D'HORIZON WITH EGYPTIAN

Tags:  AORC EG IAEA IR IS KNNP PARM PREL TRGY 
pdf how-to read a cable
VZCZCXRO3745
OO RUEHROV
DE RUEHUNV #0241/01 1471111
ZNY CCCCC ZZH
O 271111Z MAY 09
FM USMISSION UNVIE VIENNA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9497
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY 0018
RUEHII/VIENNA IAEA POSTS COLLECTIVE PRIORITY
C O N F I D E N T I A L SECTION 01 OF 04 UNVIE VIENNA 000241 

SIPDIS

DEPT FOR IO/T, ISN/RA, ISN/MNSA

E.O. 12958: DECL: 05/26/2019
TAGS: AORC EG IAEA IR IS KNNP PARM PREL TRGY
SUBJECT: IAEA/BOARD/GC:TOUR D'HORIZON WITH EGYPTIAN
AMBASSADOR

REF: A) UNVIE 220 B) UNVIE 198

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

Summary
--------

C O N F I D E N T I A L SECTION 01 OF 04 UNVIE VIENNA 000241

SIPDIS

DEPT FOR IO/T, ISN/RA, ISN/MNSA

E.O. 12958: DECL: 05/26/2019
TAGS: AORC EG IAEA IR IS KNNP PARM PREL TRGY
SUBJECT: IAEA/BOARD/GC:TOUR D'HORIZON WITH EGYPTIAN
AMBASSADOR

REF: A) UNVIE 220 B) UNVIE 198

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

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


1. (C) Ambassador and DCM had a generally positive exchange
of views May 19 with Egyptian Ambassador Fawzi on priority
issues for the June Board of Governors meeting and in
anticipation of Egypt becoming the NAM Chair in July. The
President's upcoming visit to Cairo and the perception that
U.S.-Egypt relations are "back in order," in addition to the
positive atmosphere of the NPT Prepcom, have reverberated
well with the Egyptians in Vienna. Cairo's unease at
potential U.S.-Iran rapprochement may also play to our
advantage in the Board. Fawzi led us to believe there can be
room for cooperation with Egypt on Board issues, though he
was cynical about disagreements on the Middle East in the
IAEA General Conference. Fawzi professed, perhaps
disingenuously, to be happy with the content of the
Safeguards Implementation Report (SIR) on Egypt and planned
to take a low-key approach to the issue (ref a). He
appreciated the Ambassador's recommendation that the U.S.
statement on the SIR report welcome continued Egyptian
cooperation with the investigation. Fawzi seemed more open
minded on fuel assurance issues than in the past, though he
was skeptical of dealing with all three fuel bank proposals
on the Board's June agenda. He sought more
information/details from the Secretariat on the proposals and
viewed the Russian proposal as the least problematic.
Regarding verification issues, Fawzi nodded in agreement that
the DG's report on Iran was a "special case" and should
continue to be released, distinguishing this from the Syria
report. He was receptive to the Ambassador's overtures to
work together on the budget but argued for a "moderate" (as
opposed to a "meaningful" or "significant") increase and for
"diversification" of priorities, i.e. not an exclusive focus

on nuclear security.


2. (C) As to the General Conference, Cairo had been awaiting
the conclusion of the NPT Prepcom before developing its
annual resolution. Fawzi saw no point to early consultation
with Israel given last year's outcome. He expected that the
Arab Group would soon agree to submit a separate agenda item
on Israeli Nuclear Capabilities (INC),as in the past (Note:
without a reference to "threat." End note.) Reflecting on
the NPT Prepcom, he observed that consensus in Vienna on
Middle East issues would help pave the way for the 2010
Revcon. While stressing that this was not a proposal, he
queried whether the U.S. would vote for a single GC
resolution on a Middle East NWFZ that included reference to
Israel, which he suggested might be the bottom line
requirement for other Arab delegations to agree to set aside
their annual run at an INC resolution. End Summary.

U.S.-Egypt Re-set
--------------


3. (C) Fawzi was generally very positive about U.S.-Egypt
relations being back "in order" and looked forward to the
President's June visit. He regarded Egypt's upcoming
three-year tenure as NAM Chair, beginning July 16, as more of
a burden than an "honor." He also took the opportunity to
snipe that "your new best friend" Iran was competing with
Qatar for the next NAM Chairmanship after Egypt. Fawzi
admitted that the prospect of U.S.-Iran rapprochement was
worrisome to some in Cairo (Comment: The Egyptians have
clearly been thrown off balance and it will be interesting to
see how this will translate in the Board, i.e. will Egypt as
the new NAM Chair be less of an apologist for Iran than
outgoing Cuba? End Comment).

SIR Report on Egypt
--------------


4. (C) With respect to the June Board, Fawzi's first
observation was that the agenda was overburdened, a view
shared wholeheartedly by Ambassador Schulte. After a lengthy
discussion of the budget and fuel bank issues (see below),
Ambassador raised the SIR report on Egypt. Fawzi admitted to
being incensed by EXPO Director Vilmos Cserveny's
free-lancing in his prepared opening remarks at the NPT
Prepcom that did not reflect the wording of the SIR report on
Egypt, which had not yet been officially released at the
time. Fawzi went so far as to speculate that Cserveny
"wanted to show himself as the next DG." However, he
underscored that Egypt was by no means angry at the content
of the SIR report itself, but at the "process." (Note: In a

UNVIE VIEN 00000241 002 OF 004


separate matter related to the IAEA's process of releasing
the SIR this year, Mission notes that during the May 20
Technical Briefing on the SIR for IAEA member states,
DDG/Safeguards Heinonen opened the presentation by explaining
why the SIR was very briefly available on the IAEA's GOVATOM
website, and then withdrawn, several days before it was
finally released. Heinonen acknowledged that the brief
appearance of the SIR on GOVATOM had led to "much
speculation" about why it was withdrawn, Heinonen explained
that the withdrawal was only due to several editorial
mistakes that needed correction. He stressed that the
substance of the SIR did not change after the brief
appearance/withdrawal on GOVATOM. End note)

5.(C) Ambassador Schulte recalled the U.S. intervention on
the 2005 DG report in which we welcomed Egypt's cooperation
with the IAEA on verification issues raised at the time.
Ambassador Schulte explained that he did not have
instructions, but would recommend Washington take a similar
approach on the uranium contamination issue reported in the
SIR. Asked whether Egypt was working to close this matter,
Fawzi professed to being "very happy" with the content of the
SIR report that clearly closed the 2005 issues and said there
was only one issue. He immediately attempted to downplay the
finding of enriched uranium contamination, explaining that
the Secretariat characterized it as an "ongoing" rather than
a "routine" issue because they no longer like to use the
latter term. Egypt did not know how the contamination
happened but is discussing certain theories with Safeguards
DDG Heinonen with a view to narrowing down the possibilities.
The report otherwise clearly says that Egypt cooperated on
the other issues, though Fawzi admitted it took some time for
the GOE to get organized.


6. (C) Fawzi advised Ambassador Schulte that Egypt's
intervention in the Board on the SIR report would not address
the open issue unless others have questions or comments.
Nevertheless, Egypt intended to abide fully by the wording of
the report. Fawzi had no indication thus far that others
would make an issue of it, but "one never knows." Ambassador
Schulte relayed an exchange with another Ambassador who
implied that the U.S. was being more lenient on Egypt than
Iran, which were totally different cases. Fawzi regretted
that there were so many conspiracy theories out there
including that the Director General pulled the SIR report
after it had been posted on the website to "help Egypt" -
something Fawzi denied ElBaradei would ever do.


7. (C) Ambassador Schulte reiterated that he recommended the
U.S. take a positive approach to Egypt's cooperation. Fawzi
asked that we encourage our allies to do the same, and the
Ambassador reassured him we would encourage them to be fair.

Verification
--------------


8. (C) Ambassador Schulte briefly previewed other
verification issues, noting that short reports were expected
on Iran and Syria given that nothing has happened. The U.S.
would continue to urge cooperation by both countries with the
Secretariat. Ambassador Schulte recalled Fawzi's advice
prior to the March Board that the U.S. not push for public
release of the Syria report and not make to much of this
peripheral issue. However, Fawzi nodded in agreement when
Ambassador Schulte insisted that we would all want the Iran
report to continue to be released as this was a special case.


Fuel Supply
--------------


9. (C) Fawzi was well aware of Ambassador Schulte's
discussion with Egyptian Energy and Electricity Minister
Younes at the Beijing Ministerial on Nuclear Energy in April,
including the Minister's supportive position on fuel supply
assurances. Fawzi questioned whether it was practical for
the Board to attempt to address all three proposals at once.
Ambassador Schulte admitted to being surprised that the
German proposal was on the agenda, and said he would have
preferred to focus on the first two proposals, the
International Nuclear Fuel Bank (INFB) and the Russian
proposal, which were much more concrete and further along.
Fawzi found the Russian proposal acceptable as it was more of
a "national" proposal but noted that the "other one" would
take more time; the Secretariat needed to provide more
information and detail. Ambassador Schulte expected that the
Secretariat would provide a concept paper on the INFB and be
asked by the Board to develop the concept further, and that
Russia would submit the draft model agreements. He agreed

UNVIE VIEN 00000241 003 OF 004


that we were all waiting to see more details. Fawzi seemed
receptive and agreed that the Board should focus on practical
measures rather than the German proposal.

Budget
--------------


10. (C) Noting commonalties in the G-77 and U.S. positions on
a budget increase, Ambassador Schulte suggested that we work
closely together and reconcile differing priorities. Fawzi
was receptive but expressed reluctance at the term
"meaningful" increase, suggesting that "moderate" increase
would be more acceptable to other Board members. Egypt also
took issue with the singular priority accorded to nuclear
security, a point on which Fawzi cited disagreement with
Director General ElBaradei, and argued for "diversification"
of priorities. It was not that Egypt did not see an IAEA
role in nuclear security, but it should not be presented as
the most important mission of the Agency, Fawzi said. He
acknowledged that the budget request for nuclear security
funding was not a large amount and that developing countries
were the largest beneficiaries of nuclear security programs.
Fawzi predictably cited technical cooperation funding with
respect to "diversification" of priorities. Ambassador
Schulte argued that nuclear security was a core part of the
IAEA mission, though not "the" priority, and needed to be
placed on stable footing similar to regular budget funding
for TC overhead costs.


11. (C) Fawzi chastised the Secretariat for irresponsibly
putting forward an unrealistic budget increase in a time of
financial crisis. He saw a need to tamp down expectations
and reduce the bottom line. The Secretariat's proposal to
spread out the expense over several years was a face-saving
mechanism but not a solution, he advised. However, Fawzi
seemed receptive to the Ambassador and DCM's argument that
the first year of the Obama Administration was a unique
window of opportunity that should be capitalized upon to
rectify the IAEA budget. He promised to work together to
bridge the gap and advised among the G-77 also speaking to
Brazil, Argentina, South Africa, Malaysia, India (which was
very quiet) and Pakistan, a very active potential spoiler,
though not currently on the Board. (Note: This discussion
occurred before the G-77 submitted an alternative budget
proposal. End Note.)

2009 IAEA General Conference
--------------


12. (C) Fawzi did not have a sense of Egypt's position as of
yet for the September GC as Cairo had been waiting for the
conclusion of the NPT Prepcom before developing language for
its annual Middle East Safeguards resolution. He was
generally cynical, and saw no point to early consultation
with Israel as it had led nowhere last year, i.e. it did not
prevent Israel from tabling amendments from the floor to the
Egyptian text, and in any case was less likely to be fruitful
with the new Israeli government. Although there was no final
decision on a separate Arab group agenda item/resolution, but
Fawzi expected one around the end of this month. He
anticipated that the item/resolution would be entitled
"Israeli Nuclear Capabilities," as last year without the
inflammatory reference to "threat." (Comment: Thus
increasing the chances that it will garner broader support.
End Comment.) This was always the same discussion for the
last 20 years, Fawzi observed, as to whether or not to have
an Arab resolution.


13. (C) Asked for his reaction to the NPT Prepcom, Fawzi
reported that Cairo was neither "happy nor sad," and credited
the U.S. for helping to change the atmosphere and moving to a
more positive footing the "whole international arena," both
in New York and Geneva. He noted that this new approach also
had an impact on our European allies. Egypt would have
preferred the adoption of the Prepcom Chair's statement, saw
it as a good attempt, and hoped that the U.S. Administration
would be ready to make proposals on the Middle East at the
2010 Revcon. (Note: Fawzi did not refer directly to the
lack of a U.S. paper on regional issues at the Prepcom. End
note.) Reflecting further, he observed that progress in the
IAEA General Conference could have a positive effect on the
2010 Revcon. Reaching consensus in Vienna could help pave
the way for the Revcon. He referred in passing to the
European effort to hold a forum on the Middle East. However,
Fawzi also acknowledged that consensus would not be easy to
achieve given diverging views. The Arab Group was most
insistent on their position on establishment of a NWFZ not
being predicated on the peace process; if we wait for the
peace process to end, he argued, all our efforts toward a

UNVIE VIEN 00000241 004 OF 004


NWFZ would be useless. There was more flexibility on
referring to compliance than on this issue of the peace
process as it relates to the NWFZ, he noted.


14. (C) DCM argued that this General Conference should be
different, citing that the Obama Administration had pressed
the "re-set" button by adopting a zero nukes stance. He also
cautioned that it would be unfortunate if the new U.S. team
coming to the General Conference should witness another
rhetorical fist fight rather than a serious forum. While
Middle East issues are important, they should not be
all-consuming, he added. Fawzi acknowledged that "everyone
lost last year" but predicted that it would happen again
unless we address the core issues and release tension on the
Middle East in the General Conference; only then can we deal
with issues such as fuel banks etc. (Comment: In the past
few years Egypt has held the rest of the GC agenda hostage to
Middle East issues. End Comment.) Stressing that he was not
making a proposal, Fawzi observed that other Arab delegations
would not support having only a single resolution on the
Middle East unless that resolution referred to Israel. He
queried whether the U.S. would be prepared to accept that,
inferring that Egypt did not want to propose this without
U.S. acceptance. Ambassador Schulte observed that the U.S.
statement to the NPT Prepcom did not single out Israel among
non-NPT parties. He agreed that the changing dynamic could
contribute to consensus but some countries really did not
want consensus, a point Fawzi admitted.


15. (C) Comment: Although he was clearly speaking on a
personal basis, Fawzi was trying to sketch out a possible
compromise for the GC, but unfortunately he is up against the
same Arab bottom line, singling out Israel -- that being the
whole point of this exercise from their perspective. The
Arab Group also knows that we are at a disadvantage this
year, having only very narrowly squeaked by in a no-action
motion on the Israeli Nuclear Capabilities resolution at the
2008 General Conference, a feat we are highly unlikely to
repeat this year.
SCHULTE