IAEA MEMBER STATES REV UP FOR 2011 BUDGET NEGOTIATIONS

UNCLAS UNVIE VIENNA 000004 SENSITIVE SIPDIS FOR IO/GS, IO/MPR, ISN/MNSA, S/SANAC-GOODMAN NSC FOR SCHEINMAN E.O. 12958: N/A TAGS: AORC PREL KNNP IAEA UN SUBJECT: IAEA MEMBER STATES REV UP FOR 2011 BUDGET NEGOTIATIONS REF: A) 09 STATE 119320, B) 09 UNVIE 541 ¶1. (SBU) SUMMARY: With Member States preparing to tackle the open question of the IAEA's 2011 regular budget during the first meeting of the open Working Groug January 13-18, the U.S. will need to clarify soon our goals for the 2011 budget. The Budget Working Group (BWG),open to all Member States, will spend four days identifying priorities within all six IAEA Major Programs as well as programs that should be retired. Major resource issues to be explored include safeguards financing (shielding) and capital investments. In preparation for the BWG, UNVIE engineered a Geneva Group agreement to develop an informal matrix of IAEA activities, with Geneva Group members invited to share their "questions, concerns, priorities" on the IAEA's many programs and subprograms by January 8. Mission continues to highlight the importance of capital investment in 2011, but invites detailed Washington views on programmatic increases and reductions for 2011. For example, the BWG presents a good opportunity to highlight USG priorities in nuclear applications for development (or any other IAEA program). Washington contributions to the Geneva Group matrix are particularly welcome (matrix available from Usha Pitts at pittsue@state.gov). END SUMMARY. ¶2. (SBU) The Geneva Group met December 30 in preparation for an intense round of budget negotiations January 13 - 18 to identify a hierarchy of priorities for the 2011 program of work. In addition to the six Major Programs, the Budget Working Group (BWG) will also delve into broader financing issues, per the following: January 13 - Major Programs 1, 2, 3 January 14 - Major Programs 4, 5, 6; Capital investment January 15 - Safeguards financing (shielding); Balance between assessed and voluntary contributions; Financing the activities of the Agency, Incentive scheme for on-time payments January 18 - Methodology for price adjustments; Opportunities for efficiency gains through management reform; Outcome of the BWG to be passed to the Secretariat ¶3. (SBU) The BWG will not/not discuss the specific level of increase for the 2011 budget at this time. Instead, the Secretariat will propose 2011 budget levels in accordance with the results of the BWG exercise. Nonetheless, some Geneva Group members (particularly Canada) are already expressing a zero growth position while others (like the Netherlands) support the full, 11 percent real increase already laid out in the Agency's budget document for the 2010-2011 biennium. Per guidance in ref A, Msnoff noted to Geneva Group counterparts that the U.S. will not seek ZRG for 2011 and emphasized that capital investment remains a priority (among others). ¶4. (SBU) In sensitivity to these differences of opinion, Geneva Group Members skirted the issue of the 2011 increase and instead focused on strategy and programmatic priorities within each Major Program. France in particular shared detailed views on programs, subprograms and projects within Major Program 1 (Nuclear Energy). Canada expressed strong views on Major Program 5 (Management). The Netherlands was interested in tackling Major Program 4 (Safeguards) and encouraged all members to agree, "verification should not be based on quantity of holdings." Members similarly agreed to counter any G-77 move to delay the process of "de-shielding," which would continue the practice of obligating large contributors to shoulder a larger burden of assessed contributions to "pay for" safeguards. Members observed that discussions regarding Major Programs 4 and 6 (Safeguards, Management of Technical Cooperation) would have little impact unless Member States were willing to delve as deep as the project level. ¶5. (SBU) Geneva Group Members agreed that a matrix of "questions, concerns and priorities" should be distributed as an informal aid to the discussion. While recognizing that differences would come to the light in the matrix, members agreed there were likely many areas where benefits could be derived from sharing views. Members predicted that the G-77 would continue to highlight Major Programs 1, 2 and 6 (Nuclear Energy, Nuclear Applications for Development, Technical Cooperation),and that the Geneva Group should instead attempt to provide as much nuance as possible. Looking ahead, Members agreed to supply the U.S. Mission (co-chair of the Geneva Group) with contributions to the matrix by January 8. The Geneva Group would then meet formally on January 11 to go over the matrix and identify broad areas of agreement in advance of the first meeting of the BWG on January 13. ¶6. (SBU) Comment: Mission will continue to draw on budget guidance laid out in ref A but notes that the BWG will spend the majority of its time on more detailed examination that goes deeper than each Major Program's top line. This Working Group meeting is an opportunity to signal as concretely as we can (but short of binding numbers) U.S. support for reinforced effort in specific operational areas, for example in Nuclear Sciences and Applications (sterile insect techniques, isotope hydrology or cancer therapy). Washington views on 2011 resourcing of any other Major Programs would be helpful in advance of the BWG. PYATT