VZCZCXYZ0000
OO RUEHWEB

DE RUEHTC #1321/01 1641438
ZNR UUUUU ZZH
O 131438Z JUN 06
FM AMEMBASSY THE HAGUE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6000
INFO RUEAIIA/CIA WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC PRIORITY

UNCLAS THE HAGUE 001321 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR ISN/CB, VCI/CCB, L/ACV, IO/S 
SECDEF FOR OSD/ISP 
JOINT STAFF FOR DD PMA-A FOR WTC 
COMMERCE FOR BIS (GOLDMAN) 
NSC FOR DICASAGRANDE 
WINPAC FOR WALTER 
 
E.O. 12958: N/A 
TAGS: PARM PREL CWC
SUBJECT: CHEMICAL WEAPONS CONVENTION (CWC): WRAP-UP FOR 
WEEK ENDING JUNE 9 
 
This is CWC-48-06. 
 
----------- 
ARTICLE VII 
----------- 
 
¶1. (U) Facilitator Maarten Lak (Netherlands) hosted a June 8 
informal consultation to present the results of the meeting 
of National Authorities in Mexico City, which focused on 
national implementation.  Lak, Ambassador 
Arrospide (CSP Chairman, Peru), Legal Advisor Santiago Onate, 
and Mexican DCM Rafael Cervantes all attended the meeting. 
Lak reported that attendees were frank in their reporting of 
their individual situations, including weakness in 
legislation, staffing issues, lack of knowledge, all of which 
require tailored approaches to assist the GRULAC states' 
efforts.  Cervantes noted that over 40 officials attended, 
representing GRULAC states across the region as well as the 
non-State Party Dominican Republic.  National Authorities 
from Canada, Spain and the U.S. also attended. 
 
¶2.  (U) Those states that need assistance reported on their 
specific needs, and those who could provide assistance made 
offers of tailored support.  Key problems are lack of 
knowledge in Parliaments, which results in implementation 
delays, and high turnover in National Authorities staffs. 
Mexico presented its national cooperation program designed to 
support implementation efforts in Central American states. 
Argentina offered to train individuals supporting industry 
inspections.  There were many questions about how National 
Authorities are supposed to function.  In sum, the GRULAC 
region takes its Article VII obligations very seriously. 
Onate added that the region's increased efforts are 
particularly apparent in the arena of drafting legislation. 
 
¶3. (U) The Technical Secretariat then distributed an advance 
copy of the Status Report (faxed back to ISN/CB).  Lak noted 
that EC-46 work will require substantial discussion of what 
states should be doing, their successes, problems and 
particular cQrns.  Delegations need to begin making 
distinctions among the remaining states that have yet to 
complete their implementation efforts.  One or two have yet 
to respond to TS inquiries, but many are making significant 
progress.  The end is in sight.  Further, Lak noted that the 
EC Chair and Vice Chairs are in a position to talk with 
relevant States Parties. 
 
¶4. (U) Onate then reported on the progress made since the 
last progress report.  On May 10, Jordan submitted responses 
to the legislative questionnaire, its review of its export 
controls, and requested a Technical Assistance Visit.  On May 
18, Burkina Faso's national assembly approved its 
legislation.  Antigua established its National Authority on 
May 25.   Bosnia and Herzegovina submitted its implementing 
legislation on May 30, which is comprehensive.  On May 30, 
Moldova submitted its implementing legislation, and Macedonia 
reported that it adopted its legislation.  TAVs are being 
planned for Jordan, Honduras and (jointly with the U.S.) 
Suriname. 
 
¶5. (U) Lak then turned to consideration of the way forward, 
given that EC-46 was less than a month away.  Germany began 
by saying that the only possible way forward was to adopt the 
EC-45 draft language.  Italy agreed that that draft was not 
bad and that it could support its adoption.  Russia said it 
could be used as a basis for the discussion, but it did not 
pay sufficient attention to technical assistance and this 
must be included.  The UK, supported by Sweden, also agreed 
that it could serve as a starting point, but two factors need 
to be considered: the debate must begin much earlier and the 
text should better reflect the substance of the Conference 
decision paragraphs 2-8.  Germany, supported by Norway, 
strongly protested the UK position; EC-46 report language 
must reflect developments since the CSP and need not follow 
CSP language.  The EC-45 text was fine.  Mexico noted 
practical difficulties with the German approach, saying that 
report language must reflect a consensus view, not just that 
of one delegation, and must reflect what happened during the 
EC meeting. 
 
 
-------------------- 
GENEVA GROUP MEETING 
-------------------- 
 
¶6.  (U) At the Geneva Group meeting on June 12, TS budget and 
finance chief Rick Martin gave an overview of the process for 
the 2007 program and budget.  He announced that the Director 
General has now asked that the budget be released as an EC 
document on June 28, 2006. This is several weeks earlier than 
originally planned.  After Martin's presentation, Geneva 
Group members, who now include the South Korean delegate, 
discussed the difficulties in finding a budget facilitator. 
Rick Snelsire (U.S.) also briefed members in progress to date 
in the Financial Rules Consultations. 
 
¶7.  (U) Martin provided Geneva Group members with a power 
point presentation on the budget process for the 2007 budget 
(faxed to ISN/CB on 6/12/06).  The presentation was similar 
to past presentations, but this was largely because the 2007 
budget will be similar to the 2006 budget.  Martin said the 
DG was still hoping for a zero nominal growth budget, but at 
the same time because of cost savings in certain areas, still 
plans to increase funding for inspector training and a 10% 
increase in industry inspections.  He said that the 
distribution of Article VI inspections had not yet been 
finalized, but later told Del rep privately that the 10% 
increase would be almost exclusively in OCPF inspections.  He 
said the 2007 budget would also make allowances for continued 
TAVs to support Article VII efforts. (Note:  Most of these 
changes to the 2007 budget were the direct result of private 
U.S. interventions outlining U.S. budget priorities with the 
TS earlier in the year. End Note) 
 
SIPDIS 
 
¶8.  (U) On staffing, Martin did not indicate that the TS will 
be asking for the funding of additional fixed-term positions. 
 He emphasized that BFB had asked all department heads to 
justify the retention of any temporary positions for which 
they were seeking funding.  Martin also noted that the UN 
would be releasing a new scale of assessments this year for 
2007 and this could impact on SP's contributions.  The UN 
will also release the results of its price survey for The 
Hague this year and that could impact on the budget. 
 
¶9.  (U) At present, the TS is using an average increase in 
costs rate of 2.2%.  Martin explained that this figure was 
arrived at by looking at a likely inflation rate of between 
1.5% and 2% in the Netherlands combined with an average 5% 
inflation rate in developing countries.  Additionally, the 
UNGA could increase salaries this year as well and that is at 
present a significant variable in the budget. On foreign 
exchange fluctuations, Martin stated that about 10% of the 
OPCW budget is in USD, mostly for Provident fund 
contributions, and that currently the TS is planning on using 
a USD-EUR rate of 79.7 U.S. cents per Euro.  The TS will look 
at exchange rates again shortly before EC-47 and make any 
necessary adjustments at that point. 
 
¶10.  (U) During the question and answer period the German 
delegation asked that more information be included in the 
budget, so as to reduce the need for information papers 
during the budget consultations.  The Germans also asked if 
there would be a specific line item in the budget for the ten 
year anniversary of the OPCW.  Martin said he would take note 
of the German concern regarding the amount of information in 
the budget.  He also said there would be no specific line 
item for tenth anniversary commemoration. 
 
¶11. (U) Del rep said we were pleased to hear that there would 
be an increase in funding for inspector training and industry 
inspections.  Del rep also noted that we were pleased with 
quality of BFB's documentation and transparency efforts, but 
cautioned that it was important that the TS not change 
negotiated core objective language in the 2007 program and 
budget as had happened last year. 
 
¶12.  (U) The UK questioned the 2.2% price increase number 
being used by the TS.  Martin responded that the while the 
Dutch government was projecting an inflationary rate of 1%, 
 
the IMF projection for the Euro zone, from where many of the 
TS supplies and services are procured, is 2.25% for 2007. 
 
SIPDIS 
Martin also said he believed that a 2% salary increase for 
staff was likely in the second half of 2007 resulting in an 
adjusted increase of 1% for the year. 
 
¶13.  (U) Italy said that it was concerned about the 
significant surplus in 2004 and projected for 2005.  Martin 
said he believed that inflated estimates were largely to 
blame for past surpluses.  He noted that the TS was now much 
more willing to use the WCF and that, combined with more 
accurate estimates and earlier payments so far this year, 
would help to reduce surpluses. 
 
¶14.  (U) The French said they were pleased with the prospect 
of another ZNG budget and the improved budget estimates.  The 
French asked if there would be continued refinement of 
Results Based Budgeting language in the budget and if there 
would be any provision of the "OPCW Office in Africa" in the 
2007 budget.  They also asked if the costs for destruction 
activities could be separated from the cost of 
non-proliferation activities for delegates' information. 
Martin said that there would be no changes in the core 
objectives unless delegates decided to change them.  He 
acknowledged that there was a continued need to refine the 
indicators in the budget and tighten up the TS efforts to 
measure its success in meeting those indicators.  Martin said 
there was no provision in the 2007 budget for any type of 
OPCW presence in Africa.  He said that he could breakdown the 
costs between destruction and non-proliferation to some 
degree, but that it would be difficult to accurately 
breakdown salary costs that would limit the accuracy of any 
numbers he could provide. 
 
¶15.  (U) After the discussion, several delegations said they 
were pleased with the presentation and the increased level of 
transparency being demonstrated by the TS.  The UK and Italy 
expressed concern about the 2.2% price increase number being 
used by the TS but conceded that it would be irrelevant if 
the TS were able to achieve savings is some areas and present 
a ZNG budget to SPs. 
 
¶16.  (U) On the difficulty of finding a facilitator for the 
upcoming 2007 budget consultations, several delegations said 
that it was imperative the facilitator, or at least one of 
the co-facilitators, should be a Geneva Group member. 
Unfortunately, none of them volunteered.  Del rep said we had 
asked numerous delegates from WEOG and the Geneva Group and 
had been unable to identify any delegate willing to serve as 
facilitator.  The UK asked that each Geneva Group member 
explain why he/she could not serve as the facilitator or 
co-facilitator.  Most said they did not have time.  The 
Germans said after their last "painful" experience as the 
facilitator for Article VII, they were reluctant to serve 
again.  Both the Germans and the Italians tried to push the 
Canadian delegate (Peart) to become the facilitator.  She 
pushed back strongly and said she did not have time.  In the 
end there was no decision on how the search for a facilitator 
should proceed. 
 
¶17.  (U) Del rep made a brief presentation on the state of 
play in the Financial Rules consultations, noting that Iran 
had now agreed to accept the original amended language 
concerning procurement with the word "all" before "States 
Party" deleted.  Del rep said that he was still waiting to 
hear from the Indian delegation.  Italy said it was not 
comfortable with the change but would not block consensus 
should it emerge.  All of the other Geneva Group members had 
no objections to the amended language on procurement with the 
deletion of the word "all."  Del rep said he would, as 
facilitator, follow up with the Indian delegation. 
 
--------------------------------------------- -- 
COURTESY CALL BY NEW RUSSIAN MINISTER COUNSELOR 
--------------------------------------------- -- 
 
¶18.  (U) The new Russian Deputy Perm Rep, Minister Counselor 
Konstantin Gavrilov accompanied by Counselor Victor 
Smirnovsky, paid a courtesy call on the delegation on June 9. 
 
 During this largely informal introductory meeting, the 
Russians did grudgingly admit that they would probably accept 
destruction site visits as had been proposed by the UK at 
EC-45.  This despite the fact that Gavrilov repeatedly said 
that the site visits would merely be "political tourism" in 
the Russian view.  However, the Russians made clear they were 
not going to provide a blank check concerning site visits and 
would be very insistent on specific details and arrangements. 
 
¶19.  (U) Smirnovsky took the opportunity to ask about the 
possible timing of presentation of a U.S. decision document 
text for the extension request, and del rep replied that this 
is being worked in Washington.  Smirnovsky also repeated the 
Russian, or at least Smirnovskly's, legal view that any 
extension request to 2012 was required to include a detailed 
plan showing the complete destruction of all CW by 2012. 
Finally, the Russians also stressed, in a very self-satisfied 
manner, that it was now clear many delegations have made a 
linkage between Article VII and destruction deadlines that 
will be hard to break. 
 
---------------------------------- 
FINANCIAL RULES: END GAME IMMINENT 
---------------------------------- 
 
¶20.  (U)  Delegations have now agreed on all of the draft 
financial rules with the exception of the amended text 
proposed by India concerning procurement.  India's proposed 
amendment would require that vendors selling inspection 
equipment to the TS confirm that the piece of equipment being 
procured by the TS will be commercially available to all SPs. 
 At a meeting with interested parties (India, Iran, Germany, 
and France) on May 31, the facilitator (Rick Snelsire, U.S.) 
proposed that as a compromise between accepting the Indian 
proposed amendment and the Franco-German position that no 
references to procurement should be in the financial rules, 
that delegates consider using previously accepted language 
from CSP-8 (C-8/DEC.3, dated October 22, 2003). 
 
¶21.  (U) Iran originally agreed to accept the CSP-8 language 
provided that the word "all" before "States Party" was 
reinserted.  Germany and France said that the inclusion of 
the word "all" would be a non-starter for their delegations. 
The Iranians then suggested that if the inclusion of the word 
"all" was problematic for France and Germany, perhaps 
delegations should consider returning to the original 
amendment proposed by India in EC-42/DG.5 and remove the word 
"all" and replace it with the word "the".  France and Germany 
said they could agree to the deletion of "all," but not the 
addition of "the".  India and Iran said they would check with 
their capitals. 
 
¶22.  (U) On June 1, the French and German delegations 
informed the facilitator that their capitals could accept the 
Iranian proposal because their capitals believe that the 
deletion of "all States Party" made the rule unenforceable 
and therefore not problematic.  On June 8, the Iranian 
delegation informed the facilitator that Teheran had accepted 
the Iranian delegate's proposal.  The Indian delegate 
informed the facilitator on June 8 that she would push New 
Delhi for a decision as soon as possible. 
 
¶23.  (U) The facilitator previewed the possible compromise 
deal on procurement language with Geneva Group members on 
June 9 and all delegations with the exception of Italy found 
the compromise acceptable.  Italy noted that while it had 
concerns about the compromise language, it would likely not 
block consensus.  The facilitator also checked with budget 
chief Rick Martin who is providing TS support for the 
Financial Rules consultations to see if the TS would have any 
problems with the Iranian-proposed compromise.  Martin said 
that in his view the deletion of the word "all" would make 
the restriction unenforceable and it would therefore have no 
impact on TS procurement activities. 
 
¶24.  (U) The next round of consultations on financial rules 
are tentatively scheduled for June 20.  Should India accept 
the compromise proposed by Iran on India's amendment, which 
appears to be acceptable to all WEOG delegations, the U.S. 
 
would likely find itself isolated if it opposed the 
compromise.  Absent a clear and compelling basis for 
rejecting the compromise, this could put the U.S. in the 
difficult position of breaking consensus on a proposed 
solution that would finally allow the OPCW to adopt financial 
rules. 
 
¶25.  (U) ACTION REQUEST: Del requests permission to join 
consensus on the Iranian proposed compromise to the Indian 
amendment to the draft financial rules found in paras. 
10.6.03(d), 10.6.05(c), and to remove the brackets found in 
para. 10.6.06, provided the word "all" is deleted from paras. 
10.6.03(d) and 10.6.05(c) where it precedes "States Parties" 
(sic). 
 
--------- 
ARTICLE X 
--------- 
 
¶26. (U) Two issues were discussed in this meeting, the 
databank and the Canadian non-paper on "policy guidance for 
APB."  Databank:  There were two concerns on this, Iran was 
concerned the line regarding descriptive information related 
to protective equipment and antidotes would limit the scope 
of the database.  That line will be replaced with a reference 
to the language already in paragraph 5.  China wanted an 
addition to note the databank will be continually updated. 
They also referred to their National Authorities preference 
that the database be available as a link on the external 
server.  Delegations agreed with these items.  The UK will 
revise their paper to reflect these changes and circulate to 
delegations.  There is reason to believe this issue will be 
resolved soon. 
 
¶27. (U) Canada Non-Paper:  Colombia reiterated its concern 
with the language of this document.  Primarily its concern is 
this will lead to micromanagement of the TS and requiring 
advance notice of projects to the EC that could lead to 
politicalization.  Mexico supported Colombia and was 
concerned about setting policy guidelines for one branch and 
not others.  Both countries recognized the value in getting 
more detailed information.  Austria is concerned about who is 
prioritizing programs and what criteria is used.  Iran agreed 
more detail on program and activities is beneficial, and they 
would also like an analysis of finished projects.  They noted 
that Results Based Budgeting can provide that additional 
information as well as give delegations and the EC an 
opportunity to comment on activities.  However, Iran is 
concerned about singling out the Assistance and Protection 
Branch of ICA for attention on this particular issue.  Many 
delegations took up the Iranian point on RBB, including 
India, Japan, and France. 
 
¶28.  (U) The facilitator (Hans Schramml, Austria) noted some 
long-term projects are not financed by the budget, but by 
voluntary contributions.  Most delegations want to balance 
more detailed reporting on projects while avoiding 
micromanaging the TS.  Del rep requested information about 
outstanding requests for assistance to better determine if 
resources are effectively allocated.  This was well received 
by delegations, but slapped down by Gennadi Lutay, head of 
APB, who said that normally all requests are satisfied, but 
some are done in several stages.  The facilitator noted the 
previous head of APB constantly mentioned postponed projects, 
but the TS gave the same answer as before.  India asked if 
the TS has the funds to pay for all requests of assistance, 
and Lutay said this would be discussed in budget meetings. 
 
¶29. (U) At that point John Makhubalo, head of the 
International Cooperation and Assistance Division, spoke on 
prioritization, noting that the DG makes the final decision. 
The TS strives to meet all SPs requests, though they may ask 
for postponements of up to a year.  Makhubalo also made a 
point to note that they do not make value judgments based on 
whether a SP can or cannot afford to pay any of the costs 
associated with a project.  Though if a SP can afford to pay, 
they will ask them to contribute.  On detailed reports, 
Makhubalo will consult with delegations about the level of 
detail they want, although it will have to be kept in mind 
 
what a requesting SP considers classified information.  He 
noted if they have to go to the EC prior to starting a 
project, it could considerably delay their work. 
 
¶30. (U) Canada indicated they will talk further to interested 
delegations on this issue.  Del rep will raise with him the 
issue of adding a list of "postponed" and "future" stages of 
projects, at the same time the TS presents its more detailed 
report.  The next meeting is on June 30 and will again cover 
Joint Assistance Exercise 2005. 
 
---------------------------- 
INDUSTRY - LATE DECLARATIONS 
---------------------------- 
 
¶31. (U) Facilitator (Larry Denyer, U.S.) met with Brigitta 
Exterkate (TS, Legal Advisor's Office), Leo Espinoza (TS, 
Information Processing and Validation), Atsushi Takakuwa (TS, 
IPV), and Ken Penman (TS, Information Evaluation) regarding 
the concept paper on "nil" declarations.  LAO's opinion is 
that the "nil" concept is legally sound.  Whether it is the 
best option politically or whether it fully solves the 
problem of late declarations are other issues that need to be 
dealt with by the SPs. 
 
¶32. (U) Espinoza expressed concerns over balancing the "nil" 
concept with the burden reduction thrust of C-7/DEC.14 (10 
October 2002).  Also, he is not convinced that "nil" 
declarations is the right solution.  His concern is that this 
would add a large number of SPs to the list of late 
declarers, allowing those who truly have something 
significant to declare to get lost in the "noise."  It was 
suggested that a decision could be taken that would require 
the TS to amend its current reporting on this topic to: (1) 
add to the list of SPs that met the current year's deadline 
those SPs who declared in the previous year but have not done 
so by the deadline in the current year (with necessary 
caveats that these may not actually need to declare); and/or 
(2) include the specific declaration pieces that were 
submitted on-time, to prevent SPs from getting "on-time 
credit" by submitting a partial declaration by the deadline 
and the rest much later. 
 
--------------------------------------------- ------------- 
CONFIDENTIALITY: LONG-TERM STORAGE OF CLASSIFIED MATERIALS 
 
SIPDIS 
--------------------------------------------- ------------- 
 
¶33. (U) The facilitator (Betsy Sanders, U.S.) held a June 7 
informal consultation on the long-term storage of classified 
materials at the OPCW.  TS official Luis Cavalheiro reviewed 
his 2004 paper for newer delegates.  In brief, the TS has no 
mechanism for disposal of classified materials.  Although the 
TS still has storage space available, it will become a 
 
SIPDIS 
problem in the future if it has no mechanism.  Cavalheiro 
presented three possibilities: downgrade (would still have to 
maintain the materials), declassify (would still have to 
maintain the materials), and/or destroy. 
 
¶34. (U) Italy noted that the first two options do not improve 
the situation and recommended that delegations consider 
destruction and to first focus on Article VI-related 
materials.  Materials related to CW destruction are in a 
different category and will need to be kept for a long time. 
Thus, this will need to be considered separately.  Article VI 
efforts are for transparency and record legitimate industry 
activities.  As such, this information should be retained for 
a relatively short period.  Italy asked what percent of 
classified materials are related to Article VI activities. 
France added that, in consideration of the time to maintain 
classified industry-related information, we might consider 
how long industry patents remain in effect.  At that point, 
materials would be publicly available.  Italy noted that Rome 
keeps industry-related materials for five years before 
destroying them.  The U.S. asked why the TS needed to keep 
both the original paper declarations and their official 
electronic copies.  Ireland wondered whether the TS could 
provide a list of types of Art VI-related materials to better 
inform our debate. 
 
¶35. (U) Delegations agreed that at our next session (in about 
two weeks), the TS would invite a Verification Division 
official to inform us about what materials inspections teams 
generate, and whether the bulk might be destroyed after the 
final inspection report is agreed between the State Party and 
the TS. 
 
¶36.  (U) Javits sends. 
BLAKEMAN