VZCZCXYZ0000
OO RUEHWEB

DE RUEHTC #1987/01 2551152
ZNR UUUUU ZZH
O 121152Z SEP 06
FM AMEMBASSY THE HAGUE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6770
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 001987 
 
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 SEPTEMBER 8 
 
 
This is CWC-79-06. 
 
-------------------- 
BUDGET CONSULTATIONS 
-------------------- 
 
¶1.  (U) The first budget consultations after the summer break 
were held on September 5.  The first intervention was made by 
the Malaysian delegate who provided delegations with the 
"NAM" position on the budget.  This included: concerns about 
the low level of funding for ICA, concerns about the 
redistribution of industry inspections, a desire to 
reorganize the order of work so that the core objectives 
could be reopened and discussed before the budget is examined 
program by program, and the strong assertion that setting 
policy through the budget process would be unacceptable. 
Iran, Cuba (the soon to be Chair of the NAM), Algeria, 
Pakistan, Nigeria, India, Brazil, and Mexico subsequently 
made interventions to support the NAM view as enunciated by 
Malaysia.  (Comment: This development is clearly troubling as 
it is the first time according to other dels present that a 
regional group has laid out a position in informal 
consultations on the budget.  It also could prove to be 
problematic as it was clear that most of the NAM's points 
were essentially driven by Iran. End Comment) 
 
¶2.  (U) Japan asked why the why the rental subsidy in table 
23 on page 71 had increased by 400%.  The Technical 
Secretariat responded that there was a typographical error in 
 
SIPDIS 
table 23 and that the figures in the 2007 column for 
dependency allowance and rental subsidy had been transposed, 
as had the figures in the same column for medical care 
benefits and death and disability benefits. 
 
¶3.  (U) Iran suggested that all of the items in appendix 7 
should be included in the regular budget and not be in a 
separate appendix.  They also said they were very concerned 
about the distribution proposed for Article VI inspections 
and saw no need for the creation of two new P-2 positions in 
ICA to support Article VII implementation.  Iran observed 
that if the amount budgeted for the two P-2 positions was 
removed, the ICA budget would be less in 2007 than it was in 
¶2006.  Iran objected to the reference to the "significant 
challenges" presented by the tenure policy in paragraph 4.79. 
 The Iranians also asked for a list showing the nationalities 
of all temporary staff listed in table 22, in order to ensure 
that equitable geographic distribution was considered in the 
hiring of temporary staff.  They also said they were opposed 
to the continued use of temporary staff in human resources 
and would asked for a list of all consultants engaged by the 
TS. 
 
SIPDIS 
 
¶4.  (U) The Netherlands asked about the plan to devolve 
training in the TS and what future role the Training Division 
would play.  The Dutch also asked if there were any 
provisions in the budget for the ten-year anniversary 
commemoration of the OPCW.   Budget chief Rick Martin said 
that the goal in devolving training was to get individual 
managers more involved in training decisions and to save 
money. He noted that some divisions, such as the 
Inspectorate, had been designing their own training for some 
time.  Ron Nelson, Director of Administration, added that the 
Training Committee, which is chaired by the Deputy Director 
General, would closely monitor the devolution process to 
ensure that it was effective.  Martin said there was no money 
earmarked for the ten-year anniversary in the budget, but 
that there was a trust fund for voluntary contributions. 
 
¶5.  (U) Italy asked if the transition assistance for 
departing TS employees was new and if there would be any 
changes in the travel office.  Martin said that some 
transition assistance was provided for out of the Human 
Resources budget but that this year the TS had decided to 
specifically earmark 30,000 euros in the budget for 
transition assistance.  Nelson said that the TS was currently 
reviewing tenders to procure a new travel agent which would 
hopefully dramatically improve the quality of travel services 
provided.  He also said that the TS had hired someone to 
revamp the TS internal travel monitoring and voucher system. 
 
 
¶6.  (U) Although the consultation was supposed to cover the 
Office of Confidentiality and Security, there was not enough 
time.  The facilitator announced that the OCS budget would be 
examined at a later date. 
 
¶7.  (U) Budget consultations covering the Inspectorate and 
Verification division budgets were held on the morning of 
September 7.  The primary focus of the consultation was the 
significant increase in the number of OCPF inspections 
planned in 2007.   Horst Reeps, Director of the Verification 
Division, strongly defended the TS plan to significantly 
increase the number of OCPF inspections.  He began the 
consultation by noting that 80% of the TS inspection activity 
was focused on CW inspections. 
 
¶8.  (U) The TS, according to Reeps, was asking for an 
additional 20 industry inspections for 2007 over 2006.  He 
justified the decrease in the number of schedule 1 and 2 
inspections by noting that on average schedule 1 facilities 
had been inspected six times and that the average for 
schedule 2 facilities was two inspections.  Reeps said that 
with the 2007 budget proposal, schedule 1 facilities would be 
inspected every 1.8 years as opposed to every 1.2 years under 
the 2006 budget.  He said that about half of schedule 3 
facilities had not yet been inspected so the TS had not 
proposed reducing the number of schedule 3 inspections.  In 
terms of OCPF inspections, Reeps highlighted the fact that of 
5000 OCPF sites, only 400 will have been inspected by the end 
of 2006.  He also pointed out that the declarations for OCPF 
facilities were not as detailed as the declaration forms for 
scheduled chemical facilities.  For all of these reasons, the 
TS feels a need to increase the number of OCPF inspections in 
 
SIPDIS 
order to raise the confidence level of SPs. 
 
¶9.  (U) Del rep noted that there was no "discount factor" 
built into the Article IV and V income projections for 2007, 
as there had been for previous years.  Del rep asked if this 
was because the TS was more confident about the projections 
for Article IV and V inspection activity.  Ichihiro Akiyama, 
Director of the Inspectorate, said that because there were no 
new CWDF facilities going online and the TS had finalized all 
of its optimization activities in the U.S., the TS was much 
more confident in its projections.  Budget director Martin 
added that he too was confident with the income projections 
for Article IV and V activity. 
 
¶10.  (U) India referred to the NAM position and asserted that 
they still believed that the budget consultations were not 
the proper forum to address dramatically increasing the 
number of OCPF inspections, as this was essentially a policy 
and not a budget issue.  The Germans countered that the CWC 
verification annex requires the TS to provide a breakdown of 
industry inspections and therefore the budget consultations 
were the appropriate forum to discuss the distribution of 
industry inspections.  Japan supported Germany.  The UK also 
supported Germany and added that the First Review Conference 
Report also called for increasing the number of OCPF 
inspections. 
 
¶11.  (U) Iran said that they too supported the NAM position 
and were opposed to discussing a "political issue" such as 
the distribution of industry inspections in the budget 
consultations.  Iran said they would also like more 
information on the cost of sampling analysis.  They also said 
they opposed 5000 inspector days being set aside for 
training, especially for training related to challenge 
inspections.  Cuba and Brazil also supported the NAM position 
on OCPF inspections. 
 
¶12.  (U) Mexico also opposed discussing redistributing 
Article VI inspections in the budget context.  They also 
suggested that given the problems that possessor states were 
having in meeting deadlines that perhaps some of the money 
budgeted for Article VI inspections could be better spent on 
Article IV and V inspections. 
 
¶13.  (U) South Africa said that they too associated 
themselves with the NAM position on the budget.  South Africa 
 
said that it was clear that delegations were uneasy with the 
significant increase in OCPF inspections, but that perhaps a 
more detailed discussion of the issue would serve to put some 
delegations more at ease on the issue. 
 
¶14.  (U) China said that further discussion was needed on the 
OCPF issue and asked if any violations had been detected to 
date at any OCPF facilities.  Reeps responded that no 
violations had occurred to date involving OCPF facilities. 
 
¶15.  (U) France, Australia, and Austria supported the 
increase in OCPF inspections.  The Netherlands asked if there 
were additional costs associated with sampling analysis and 
if the size of inspection teams had to be increased.  Akiyama 
said that inspection teams would have to be larger when 
sampling analysis was conducted but that other costs were 
only marginally higher. 
 
¶16.  (U) The afternoon budget consultation focused on the 
core objectives on the budget.  Despite the fact that the NAM 
delegations had requested the consultation, no delegation 
proposed any changes to the core objectives or performance 
indicators.  Iran said that they had instructions from 
capital that the key outcomes for 2007 found in column 3 on 
page 18-19 should be deleted.  No other delegation supported 
this and most of the WEOG delegations present and Japan 
opposed deleting the outcomes.  The DDG and the facilitator 
also supported the retention of the outcomes, but noted that 
after reviewing the entire budget delegations may want to 
consider revising or making changes to the outcomes.  Iran 
again said they would like to have the outcomes column 
deleted from pages 18-19. 
 
---------------------------- 
REPAYMENT PLAN CONSULTATIONS 
---------------------------- 
 
¶17.  (U) Consultations to review a draft decision document 
(dated August 29, 2006) on creating a repayment mechanism to 
regularize payments of arrears were held on Sept 6. 
Approximately 30 delegations attended the meeting.  The 
facilitators had hoped to get delegates to briefly review the 
decision text and then seek approval of the text at a 
subsequent meeting.  But the meeting quickly devolved into a 
drafting exercise with no clear outcome.  There is still a 
reasonable prospect that a decision text will be ready in 
time for the EC in November, but it will clearly take more 
than one or even two additional consultations to reach an 
agreement. 
 
¶18.  (U) Delegations were generally pleased with the 
preambular language in the draft text, though Iran did 
suggest moving all of PP 5 to replace all of OP 7.  There was 
no clear consensus on this suggestion.  Iran also said that 
the phrase "linked to other measures" found in OP 3 was too 
vague and suggested that a more explicit reference regaining 
voting rights should be made.  Germany and Australia 
suggested that OP 3 could be deleted, as they did not want to 
highlight the word "voluntary."   Iran pushed back and said 
that would like to keep the reference to "voluntary" because 
no SP could be forced into entering a repayment program with 
the TS, but that if the first word in OP 2 were changed from 
"Invite" to "Encourage," Iran could agree to delete OP 3. 
 
¶19.  (U) The UK suggested that repayment period in OP 4 be 
reduced from six years to four years and that the words "by 
the CSP" be added at the end of OP 4c (i).  The UK had told 
us privately that they intended to push for the reduction in 
the allowable repayment period as a tactical move in order to 
have something to give away should Iran and others ask for 
more painful changes later in the negotiations.  Iran asked 
that OP 4a be deleted claiming that it was too onerous for 
SPs to explain the reasons they had fallen into arrears. 
 
¶20. (U) Del rep pushed back and said that SPs needed to know 
why an SP fell into arrears in order to justify to their 
capitals why repayment plans and the eventual return of 
voting rights should be approved.  Del rep also supported the 
UK's tactical call for reducing the repayment period to four 
 
years.  South Africa, Pakistan, and Algeria supported the 
deletion of OP 4a and maintaining a six year window for 
repayment.  Del rep indicated that the U.S. could be flexible 
on the payment period, but would have to have some 
explanation for the reasons an SP fell into arrears before 
being able to approve a repayment plan.  The UK supported the 
U.S.  There was no consensus, but a compromise is likely 
achievable at the next consultation. 
 
¶21.  (U) Iran called for the deletion of OP 6c and OP 7. 
Germany, the UK, and Australia said that they could accept 
the deletion of OP 6 c but would like to retain OP 7.  Iran 
said that perhaps a compromise could be found on OP 7.  The 
UK suggested that the word "approval" be deleted from OP 6 as 
it would prejudge the outcome of negotiations on any 
repayment plan.  Italy supported the UK.  China suggested 
that any references to the return of voting rights should be 
removed from OP 6 and put in a separate OP to avoid 
confusion.  South Africa said they would like to see OP 6b 
deleted and OP 7 redrafted. 
 
¶22.  (U) On OP's 8 and 9, Germany suggested that rather than 
granting an exception to financial regulation 5.6 they would 
favor amending financial regulation 5.6.  The facilitator 
noted that in previous consultations most delegations had 
opposed revising the financial regulations and preferred to 
grant one time exceptions to the regulation.  Iran and South 
Africa suggested deleting OP 8 as it was redundant.  Japan 
and the U.S. proposed retaining OP 8. 
 
¶23.  (U) The facilitators will likely review the suggestions 
made by delegations and attempt to craft some form of 
compromise language before the next consultation, which has 
not yet been scheduled.  Del believes that an eventual 
compromise will be found, as most NAM delegations do not want 
to be seen blocking an initiative that would benefit poorer 
countries.  Del will endeavor to prevent the requirements of 
any repayment plan from becoming so watered down as to be 
unenforceable and at the same time ensure that Iran and 
others are not able to push through language that would force 
the U.S. to become the lone spoiler of a repayment plan. 
 
--------------- 
CONFIDENTIALITY 
 
SIPDIS 
--------------- 
 
¶24.  (U)  Facilitator Betsy Sanders held a September 5 
informal consultation on the topic of how to handle long-term 
storage of classified materials held by the TS.  Luis 
Cavalheiro of the TS presented his update, "Non-paper on the 
Development and Implementation of Guidelines Regarding the 
long-Term Handling of Confidential Material."  In response to 
delegations' questions during the spring 2006 consultation, 
Cavalheiro noted that the questions of document "ownership," 
status of electronic copies of official documents, or the 
legal status of electronic originals had been referred to the 
Office of the Legal Advisor (OLA).  Noting that 73 percent of 
the TS holdings were related to Article VI inspections, the 
TS emphasized the importance of deciding what materials 
 
SIPDIS 
should be kept, and what should eventually be destroyed. 
 
¶25.  (U) Canada asked about the practices of other 
international organizations regarding retention/storage of 
classified materials, noting that these could guide us in our 
deliberations.  OLA's Isaac Minta noted that the OPCW's 
Policy on Confidentiality (OPOC) laid out guidelines that 
should provide the basic criteria.  Cavalheiro deferred, 
noting that the OPOC had not touched on the destruction of 
information.  He also noted that the OPCW receives a mixture 
of commercial and governmental information, making the TS 
holdings unique. 
 
¶26.  (U) Canada also questioned whether delegations were 
clear on what we were trying to address.  There are four 
considerations: a) space management, b) TS repository as 
historical record, c) format of repository - electronic 
(takes up little space) or paper; legal status of electronic 
records, and d) CWC implementation, especially verification, 
and what might be needed and over how long a period. 
 
Pakistan agreed, and said that the most important task 
delegations faced was deciding what should be kept and for 
how long. 
 
¶27.  (U) Italy asked who owned the information: the 
submitting SP or the TS?  Germany, supported by Romania and 
South Africa, added that the SP owns any information it 
submitted and must give its concurrence for destruction. 
Italy also noted that material such as initial declarations 
should be retained indefinitely.  The Netherlands added that 
delegations rely on the TS as a repository of information, 
able to retrieve historical documents and decisions to inform 
delegates on the history of negotiations.  Iran indicated 
that perhaps it could accept electronic copies as record 
copies. 
 
¶28.  (U) The facilitator attempted to lead a discussion of 
the types of Article VI information held by the TS with a 
view to whether it should be retained indefinitely, ten 
years, or five years.  Because the TS table had been designed 
for another purpose, the discussion bogged down.  The TS 
promised to provide a more specific table of types of 
information held in storage for the next (October) 
consultation. 
 
¶29.  (U) Javits sends. 
ARNALL