This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 THE HAGUE 002367 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR AC/CB, NP/CBM, VC/CCB, L/ACV, IO/S 
SECDEF FOR OSD/ISP 
JOINT STAFF FOR DD PMA-A FOR WTC 
COMMERCE FOR BIS(GOLDMAN) 
NSC FOR CHUPA 
WINPAC FOR FOLEY 
 
E.O. 12958: N/A 
TAGS: PARM PREL CWC
SUBJECT: CHEMICAL WEAPONS CONVENTION (CWC): 
DIRECTOR-GENERAL'S REVISED BUDGET PROPOSAL ON EVE OF EC-34 
 
 This is CWC-93-03. 
 
¶1.  (SBU)  Summary:  On Sept. 19, OPCW Director-General 
Pfirter made a strong pitch to delegations for an effective 
increase in the 2004 OPCW budget of approximately 7.4%. 
Pfirter assured the delegates that he and the leadership of 
the Technical Secretariat (TS) would work hard to identify 
and implement cost-cutting measures and efficiencies, but 
argued that the increase was imperative for the OPCW to be 
able to perform its core functions.  He also requested 
greater flexibility to be able to more effectively allocate 
resources.  Some of the delegations (including the U.S.) made 
strong statements in support of the DG's request, others 
noted that there would be difficulties convincing national 
governments to concur with a 7.4% budget increase, and others 
simply noted they would need instructions.  While there 
certainly will be substantial discussion of the DG's 
proposal, it is doubtful agreement on a specific number for a 
budget increase will be achieved during the Sept. 23-26 
Executive Council (EC) session.  End Summary. 
 
¶2. (SBU) DG Pfirter participated in the September 19 final 
session of informal consultations on the OPCW Program and 
Budget before the opening of the thirty-fourth Executive 
Council.  He was accompanied by the Deputy Director General 
and Director for Administration.  Pfirter took the lead by 
presenting to the 17 participating delegations a new proposal 
to cut 1% from his initial request for a 8.34% increase in 
the 2004 budget (which totaled 74,291,534 Euros), stating 
that any deeper cuts would cut into the OPCW's core 
activities.  He circulated a note (faxed to AC/CB) further 
explaining and justifying this position for review prior to 
the opening of EC-34.  Pfirter's appeal came after the 
facilitator of the budget group (Beerwerth/FRG) announced 
that delegations were close to concensus on a 6% budget 
increase. 
 
¶3. (SBU) The DG stated that quick agreement by the EC on a 
recommendation to the Conference of State Parties on the 2004 
budget was important to maintain a "solid political 
atmosphere" and demonstrate that the OPCW was putting its 
management back in order and was moving on to address the 
many substantive issues before the EC.  On the necessity of 
the budget increase, he noted that statutory requirements 
alone accounted for a 3.06% rise, and that the CSP's decision 
on adopting a new tenure policy accounted for a further 2.92% 
increase, leaving only 2.36% for new programs endorsed by the 
Conference.  Moreover, he continued, a further 250,000 euros 
would be allocated to International Cooperation and 
Assistance programs, requiring an additional 0.4% reduction 
in other areas.  On top of these constraints, Pfirter cited 
the track record of States Parties falling short of their 
assessed obligations by 2.5%.  All this, he explained, was 
tantamount to a 4% budget reduction. 
 
¶4. (SBU) Pfirter recognized the tight fiscal constraints on 
States Parties, and said he had consulted closely with 
delegates about possible areas for savings.  To the extent 
that additional savings could be found during the year, he 
undertook to provide more funds, up to the 2003 level of 
350,000 euros, for ICA.  He appealed for flexibility to 
enable the Technical Secretariat to deliver the full program 
of core activities within the proposed new budget framework. 
Finally, the DG noted that the OPCW's program was in the 
hands of the States Parties.  If they were not prepared to 
fund a 7.4% increase, they would have to agree on what 
programs to cut. 
 
¶5. (SBU) In the following question and answer period, 
virtually every delegation endorsed the need to fully 
implement the OPCW's core functions of verification and ICA. 
In response to questions, Pfirter: 
 
- estimated that his new budget proposal would entail a 7.9% 
increase in Member States' assessments (as compared to a 9% 
increase in the initial budget proposal); 
 
- explained that ongoing initiatives to cut the costs of 
inspections, verification, and inspectors' salaries would 
likely bear fruit in future years, but were not ready for 
implementation in 2004; 
 
- assured delegates that Action Plans for Universality and 
for National Implementation, and the implementation of 
Results Based Budgeting, would guide future budget planning 
and priorities; 
 
- endorsed the importance of ICA as making an essential 
contribution to the OPCW's goals, benefiting "rich and poor, 
large and small alike;" 
 
- agreed that further savings might well be found, (citing 
death and disability insurance, consultants, accumulated 
leave, official travel, and verification practices), but 
noted that unforeseen liabilities could also emerge (such as 
a challenge inspection or judgments against the OPCW by the 
ILO); 
 
- stressed that funding had to be sufficient to retain a 
measure of operational flexibility. 
 
¶6. (SBU) Ambassador Javits thanked the DG for his forceful 
and cogent presentation, and for its sensitivity to the 
constraints faced by Member States.  He suggested that other 
delegates make clear to capitals that of the increase, some 
6% was attributed to unavoidable, statutory requirements, and 
that some further increase was essential to further the 
common goals of all Member States.  In particular, the 
Ambassador defended the need to fund ICA as an "indispensable 
training tool" for those nations that did not fully 
understand or subscribe to the goals of the Organization.  He 
recognized the need to provide adequate funding to maintain 
the positive momentum generated by the Review Conference and 
urged other delegates to find an early consensus on a budget 
figure. 
 
¶7. (SBU)  The U.K. supported the DG and U.S. statements, 
stating that full program delivery "is close to our hearts," 
but also echoed other delegations in recommending that 
further savings and efficiencies were highly desirable. 
However, the tenor of most delegates' comments reflected 
extremely tight fiscal constraints. 
 
-- Italy flatly stated that it could not support the DG's 
proposed budget increase. 
 
-- Japan, which had consistently cited its Zero Nominal 
Growth policy for funding international organizations, said 
it would seek new instructions on the basis of the DG's 
presentation. 
 
-- Germany and France also said that they would need to 
request instructions.  Both had indicated in informal 
discussions that they could accept a budget increase of only 
5.5%. 
 
-- Russia also had a zero-growth policy as its starting 
point, and observed that the informal consultations had 
identified many areas for potential cuts. 
 
-- Australia reminded the group that its government was 
required to reduce its budget by 1% in real terms every year. 
 
 
-- Canada, which was prepared to fund a 7.5% increase in 
assessments, complained that this was a large bill to pay on 
top of last year's 10% budget increase, the steep 
appreciation of the euro, and late payments by some member 
states. 
 
¶8.  (SBU)  On spending priorities, France and other western 
representatives urged that ICA funding be targeted at 
National Implementation as a priority for developing nations. 
 Spain focused on the need to ensure that the goal of 
Universality be adequately supported (voicing special concern 
about the Mediterranean area) in the DG's revised budget. 
India took the lead for developing countries, reacting 
defensively to mentions of possible changes in ICA funding 
and calling for full implementation of the OPCW's core 
functions.  Iran and others seconded that intervention. 
 
 
¶9. (SBU) In his concluding remarks, Pfirter repeated that the 
TS would continue to search for savings but that sufficient 
 
SIPDIS 
flexibility, as well as funding, was required to efficient 
manage the organization's finances.  He candidly acknowledged 
that "the budget will always be higher than it is today" due 
to the CSP's decision on tenure policy and increase 
verification activities, but promised to faithfully carry out 
core activities within his proposed budget. 
 
¶10. (SBU) Following the formal session, several western 
representatives noted that Pfirter's proposal still seemed to 
contain some fat that could be reduced.  One described the 
DG's approach as "risky," and "overselling his hand."  The 
U.K. rep described some of the numbers in the DG's note as 
"dodgy," and others agreed.  The general sense among those 
delegates was that further reductions would be necessary to 
find room for consensus. 
 
¶11.  (SBU)  Comment: We believe the DG has a good case for 
his proposed budget numbers, and particularly for his request 
to have more flexibility to achieve efficiencies and savings. 
 However, it is clear there is no consensus at this time in 
support of the DG's proposed 7.4% budget increase.  As a 
result, there is little likelihood that agreement will be 
reached at EC-34 on the budget, and budget discussions likely 
will be needed in the run-up to the October CSP. 
 
¶12.  (U)  Javits sends. 
SOBEL