SUBDUED BOARD APPROVES IAEA BUDGET INCREASE, EYES

UNCLAS UNVIE VIENNA 000368

SENSITIVE
SIPDIS

FOR IO, ISN; 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: SUBDUED BOARD APPROVES IAEA BUDGET INCREASE, EYES
WORK AHEAD

REF: A. UNVIE 365

B. STATE 80219


1. (SBU) Summary: Budget negotiations at the IAEA concluded
successfully on August 3 with a Board of Governors' agreement
to approve an increase of 5.4 percent. The dozen statements
from a wide range of Member States mostly focused on their
"disappointment" with the end result. They also previewed
the particular budget issues that will affect the IAEA's fall
agenda and the topics for the intended working group on
priorities and resources. Such topics include funding
capital investment projects, sharing (or shrinking) the
burden of safeguards financing, the proper place for
technical cooperation and the statutory legitimacy of Nuclear
Security. The dreary atmosphere in the Board Room today was
partly driven by fatigue, but also serves as a reminder that
any negotiated solution rarely succeeds in satisfying all
parties. Several delegations, including South Africa,
welcomed afterwards the U.S. financial commitment to the IAEA
as reflected in our voluntary pledges and our agreement to
engage constructively on financing technical cooperation.
End Summary.


2. (SBU) Board Members convened August 3 for a subdued,
two-hour special session of the Board of Governors to seal
recommendations to the General Conference to approve the IAEA
2010 budget and indicative levels for 2011. For the most
part, participants used their national statements to
highlight their "disappointment" in this or that aspect of
the final proposal, which entails a 5.4 percent increase in
the IAEA's regular budget (ref a). The U.S. statement was
the most positive, expressing appreciation for Member States'
willingness to come to consensus, support the IAEA in its
expanding mandate and recognize the importance of Nuclear
Security (ref b). Least constructive was the perfunctory
statement read by Argentina on behalf of the Group of 77,
expressing "dissatisfaction" that G-77 concerns were
(supposedly) given short shrift in the final proposal. Egypt
was more thoughtful, stating that we all should have "dug
deep in our pockets" to support an organization that seeks to
advance our shared security. (This was the first time Egypt
publicly suggested that it would have supported a larger
increase than the final figure.) Less helpfully, Egypt went
on to attack the "staggering increase" for Nuclear Safety and
Security, and to reject explicitly that Nuclear Security is a
core mission of the Agency. Australia and others thanked the
U.S. and Japan for extra budgetary contributions to finance
the first phase of planning for the Safeguards Analytical
Laboratory.


3. (SBU) The dozen statements issued at today's meeting
previewed the topics that will likely arise in the fall,
particularly the September General Conference and the
agreement to establish a working group on "priorities and
resource requirements." Topics regarding technical
cooperation will also likely be affected by the budget
negotiations. For example, Egypt's heavy involvement in
budget negotiations and responsibility for drafting the
annual resolution on Technical Cooperation will guarantee the
bleeding of budget issues into other business. Looming
topics as expressed in today's statements include:

- Nuclear Security should be a separate Department from
Safety due to the very different "nature" of its program
activities and should rely on voluntary funds (Iran).

- Nuclear Security is not a core, statutory function of the
IAEA (Egypt).

- It is not fair that the capital investment fund was funded
from voluntary contributions and not from the Regular Budget
(Norway).

- The working group should focus on helping the IAEA postpone
or abandon low priority activities (UK).

- We should follow up on these initial steps to stabilize
resources for Technical Cooperation and ensure continued
"balance" among IAEA activities (South Africa).

- The new Director General - Yukiya Amano of Japan - should
take on efficiency as one of his top tasks (France).


4. (SBU) The Secretariat will take the next nearly six weeks
to prepare the budget proposal for final approval by the

annual General Conference, September 14-18. In the meantime,
Mission will relay to Washington any developing plans for the
working group on priorities and resources, while keeping an
eye on budget-related issues affecting the fall agenda.

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


5. (SBU) The conclusion of marathon negotiations like this
one can be characterized by a sense of victory, if not
euphoria. But the subdued atmosphere in the Board Room today
reflects the sense that major issues remain unaddressed,
including the failure to gain consensus on notional figures
for 2011 and the unresolved capital requirements of the
IAEA's safeguards lab. Member States are depending on
re-engaging in budget negotiations after a short hiatus, as
well as involving themselves in the working group on resource
issues. The numerous expressions of disappointment from
around the room suggested that the past five months of
negotiations led to a truly diplomatic outcome - one without
big winners or big losers, but also one that conveys no
consensus view of the IAEA as it should be.
PYATT