Identifier
Created
Classification
Origin
09UNVIEVIENNA279
2009-06-17 14:58:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
UNVIE
Cable title:  

DG ELBARADEI FUELS THE BUDGET DEBATE

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

DE RUEHUNV #0279/01 1681458
ZNR UUUUU ZZH
O 171458Z JUN 09
FM USMISSION UNVIE VIENNA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9589
RHEBAAA/DOE WASHDC IMMEDIATE
RUEANFA/NRC WASHDC IMMEDIATE
INFO RUEHII/VIENNA IAEA POSTS COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
UNCLAS UNVIE VIENNA 000279 

SENSITIVE
SIPDIS

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

E.O. 12958: N/A
TAGS: AORC PREL KNNP IAEA UN
SUBJECT: DG ELBARADEI FUELS THE BUDGET DEBATE

REF: A. UNVIE 109

B. UNVIE 201

UNCLAS UNVIE VIENNA 000279

SENSITIVE
SIPDIS

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

E.O. 12958: N/A
TAGS: AORC PREL KNNP IAEA UN
SUBJECT: DG ELBARADEI FUELS THE BUDGET DEBATE

REF: A. UNVIE 109

B. UNVIE 201


1. (SBU) Summary: IAEA Director General ElBaradei intervened
during a session of the ongoing Board of Governors meeting to
deliver an impassioned plea in favor of a budget increase.
ElBaradei said "two decades" of zero growth had restricted
the IAEA's ability to do its job, and warned that Member
States would sooner or later bear the responsibility of
"another Chernobyl," a terrorist attack using radiological
material, or the disclosure of a clandestine nuclear program.
ElBaradei's intervention came on the heels of calls by the
UK, Germany, France and others to restrict the IAEA's budget
to zero growth. The G-77 statement contributed a new
proposal for calculating increases for the Technical
Cooperation Fund but otherwise failed to break new ground or
communicate strong support for a budget increase. China
(speaking for the first time in this budget debate),Russia,
Norway and Turkey gave welcome (but lukewarm) support for an
increase; only the U.S. indicated broad support. Mission has
learned of a "silent split" in the G-77 over the budget
increase, leading to lackluster statements and hampering our
efforts to isolate the European budget hawks. We will need
to encourage Argentina and Brazil to take a leadership role
among the G-77 and come out in favor of a budget increase.
Senior level political discussions will also be necessary to
prod the European budget hawks - UK, France, Germany - into
accepting an increase of up to 9.5 percent in the IAEA
budget. The upcoming G-8 meeting of Foreign Ministers June
25-26 represents a prime opportunity to raise the IAEA budget
issue at a high level. End Summary.

Board Room Offers an Opportunity to Talk Budget
-------------- --


2. (SBU) On June 16 during the ongoing Board of Governors
meeting, Member States addressed Agenda Item 4 to approve the
Report of the Program and Budget Committee (ref a). Vice
Chair Kirsti Kauppi (Finland) asked Board Members to refrain
from using the agenda item to repeat their previous positions
on the budget, but her request went unheeded and most Member
States repeated their previous positions. They remain
sharply divided over the priority areas for a budget increase

and even whether there should be any increase above
inflation. The U.S. was the only Member State to indicate
broad support for a budget increase that would address a
range of priorities. Norway, the only other Member State
publicly supportive of an increase, emphasized its support
for Major Program 3 with a focus on safety. More positively,
a broad spectrum of Member States have clearly reached
consensus on funding for the Seibersdorf Analytical
Laboratory (SAL) and the establishment of a Major Capital
Investment Fund (MCIF),albeit on a smaller scale and
possibly using alternative funding mechanisms such as
borrowing (ref b).


3. (SBU) The UK, Germany, France, Switzerland and Mexico
repeated previous positions that called for additional
savings, cost-cutting measures, and the 2009 budget as a
point of departure for the 2010-2011 budget. Spain surprised
participants by suggesting that some activities of the
Technical Cooperation Fund (TCF) should be folded into the
Regular Budget. Most observers took this to mean Spain would
consider a budget increase, but Spanish Counselor Jose Luis
de Guzman later explained to Msnoff that the cost of
including some TCF activities could be offset by additional
savings - with the end result of zero real growth (ZRG). De
Guzman said he had included the TCF suggestion as an
incentive for the G-77 to give greater consideration to
Nuclear Security.


4. (SBU) Ireland did not make a statement, but Irish Deputy
PermRep Conleth Brady took Msnoff aside to plead for fiscal
austerity, explaining that the Irish government was in dire
straits financially, that contributions to international
organizations for 2010 had been frozen, and that any increase
in the Regular Budget must be taken from Ireland's commitment
to the TCF. A vocal budget hawk, Conleth was
uncharacteristically apologetic about Ireland's position,
explaining that "under other circumstances, of course we
would support the U.S."

A New Twist from the G-77
--------------


5. (SBU) The G-77 statement repeated the usual support for
development programs. More interestingly, the statement
included a new proposal for calculating TCF increases based
on 1) the average of the real increase in the Regular Budget
and the price adjustment, with the stipulation that 2) the
result never falls below ZRG. (For example, if the Regular
Budget real increase is 6 percent and the price adjustment is
2 percent, TCF would receive a 4 percent increase.) South
African Counselor Bennie Lombard enthusiastically explained
to Msnoff that the formula had been devised to assure the
predictability of TCF contributions from year to year.
Pakistani Second Secretary Usman Jadoon was similarly
enthusiastic, viewing the calculation as a way to take the
"pain and humiliation" out of TCF negotiations. Msnoff
suggested that a long term commitment to a TCF formula would
be a tall order that would probably not get by the budget
hawks. Lombard and Jadoon were receptive to the comment,
describing their calculation as an opening position, and
promising to consider applying the TCF calculation as a
one-time, one-year deal rather than a standing expectation.

A Silent Split
--------------


6. (SBU) In a separate conversation, Jadoon admitted to
Msnoff that there was an silent split in the G-77 between
countries that wanted a budget increase (Pakistan, Egypt,
possibly the Philippines) and those that paid larger
assessments and were likely under instructions to avoid an
increase (Brazil, Argentina, possibly South Africa). Usman
mentioned that G-77 countries were awkwardly silent on their
respective positions, and that this caution was keeping the
G-77 as a group from energetically confronting the budget
hawks. Jadoon suspected he was in the same boat as a number
of other G-77 countries - supportive of an increase but
instructed not take a leadership role. Jadoon suggested to
Msnoff that the U.S. do more to lobby the Group of Latin
American Countries (GRULAC) in order to inject more
enthusiasm into G-77 statements on the budget. G-77 heavy
hitters Brazil and Argentina are particularly important.

Tremulous Voices
--------------


7. (SBU) In contrast to the predictable statements by the
European budget hawks, new voices were added in cautious
support for a budget increase. China spoke for the first
time in a carefully-worded statement that included the merest
hint of support for a budget increase. Turkey also spoke for
the first time, describing the importance of resourcing the
Agency. Russia spoke publicly for only the second time,
describing the latest budget proposal as "reasonable." Cuba
pointed out the flawed logic of asking the Agency to expand
its role while refusing to commit additional resources.
Japan spoke conciliatorily about balancing the pressures of
the budget crisis with adequately resourcing the Agency.

ElBaradei's Backlash
--------------


8. (SBU) These voices of support were so faint compared to
the strong statements by the budget hawks that Director
General ElBaradei grew visibly frustrated as the session wore
on and walked out on the UK Ambassador's intervention. In a
surprise intervention at the end of the session, ElBaradei
claimed he had submitted a budget that was not only realistic
but "credible." He mentioned that even in good economic
times, Member States had resisted a budget increase, and that
they would eventually "reap what they sowed." He warned
Member States not to "come to me in a couple of years, after
there is another Chernobyl, a terrorist attack, or a country
develops a clandestine nuclear program - that is your
responsibility." Elbaradei asserted that he could not in
good conscience submit a budget that deprived the Agency of
the ability to do its job in nonproliferation, safety,
security and development. Asking the Agency to "pass the
hat" was a "bastardization" of an important international
organization.


9. (SBU) ElBaradei also turned the tables on Member States
who insisted on prioritization, telling them to "do some
prioritization of their own" in choosing which international
organizations to support. ElBaradei singled out the U.S.
twice during his impromptu intervention, referring to U.S.
calls for a budget increase and President Obama's expressed
appreciation for the linkages between poverty and insecurity.
He also chided Member States for stressing cost savings,
saying, "I can keep cutting five dollars here and five
dollars there, but that's not going to give me the sixty
million I need." He repeated that what some states were
calling "cost savings" were in reality "program cuts."
Although several ambassadors complained about ElBaradei's
intemperate remarks, the German DCM welcomed them, telling us
privately that he was glad the visiting Economics Ministry
representatives on his delegation had the opportunity to hear
the DG's impassioned remarks.


10. (SBU) Budget issues resurfaced in the subsequent debate
on the Safeguards Implementation Report (SIR),with several
delegations questioning the Safeguards Department's recent
carryover of unspent funds. Switzerland noted that 10.5
million Euros remained unspent in 2008 and were carried over
to 2009, and asked whether the funds would be spent.
Safeguards Director Olli Heinonen said that most of the
unspent funds were due to delays in major projects at the
Rokkasho Reprocessing Plant and the MOX plant in Japan and at
Chernobyl, as well as in some large contracts, and that most
of the funds would be spent in 2009.


11. (SBU) Speaking privately with DCM, UK delegation member
and G-8 Non-proliferation Directors Group member Liane
Saunders welcomed the recent agreement on IAEA resource
language for the G-8 meeting. She agreed with DCM that it
was unhealthy for the E3 and U.S. to be publicly and starkly
divided, as we were in the most recent round of budget
negotiations. She also agreed that we need to reach a
consensus on IAEA budget needs among the E3 and U.S.
non-proliferation experts who are charged with coordinating
international priorities on issues such as safeguards and
nuclear security. Echoing what we have heard from other UK
counterparts, Saunders acknowledged the budgetary
implications of Prime Minister Brown's public statements in
favor of strengthening the IAEA, but she also noted the
reluctance to commit to anything that looks like a "blank
check" with the DG race still unresolved.

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


12. (SBU) Lack of a vigorous and unified G-77 position on the
budget has emboldened the budget hawks to hunker down on zero
growth. This "silent split" in the G-77 explains a lot about
the slow progress of budget negotiations, which should have
been concluded by the time of the current Board meeting.
Stronger support from the G-77 would effectively buttress
ElBaradei's efforts to shame the budget hawks into an
increase. Brazil and Argentina are key to this effort.
Incipient support from China and Russia - if we strengthen it
- could also tip the balance in favor of an increase.
Mission will continue working with Washington to push key
Member States to support an increase (POC: IO Desk Officer /
U.S. delegation member Jim DeTemple). Mission also
appreciates Washington efforts to work the IAEA budget issue
through the G-8 venue, and notes the potential to continue
pursuing high-level support for a budget increase at the
upcoming meeting of G-8 Foreign Ministers June 25-26.


SCHULTE