VZCZCXYZ0000
OO RUEHWEB

DE RUEHTC #0776/01 2661035
ZNR UUUUU ZZH
O 221035Z SEP 08
FM AMEMBASSY THE HAGUE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1973
INFO RUEAIIA/CIA WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY
RUEKJCS/SECDEF WASHINGTON DC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC PRIORITY
RHMFIUU/DTRA ALEX WASHINGTON DC//OSAC PRIORITY

UNCLAS THE HAGUE 000776 
 
SENSITIVE 
SIPDIS 
 
STATE FOR ISN/CB, VCI/CCA, L/NPV, IO/MPR, 
SECDEF FOR OSD/GSA/CN,CP> 
JOINT STAFF FOR DD PMA-A FOR WTC 
COMMERCE FOR BIS (ROBERTS AND DENYER) 
NSC FOR FLY 
WINPAC FOR WALTER 
 
E.O. 12958: N/A 
TAGS: PARM PREL CWC
SUBJECT: CWC: WRAP-UP FOR SEPTEMBER 8-12, 2008 
 
REF: THE HAGUE 755 
 
This is CWC-040-08 
 
------- 
SUMMARY 
------- 
 
¶1. (SBU) Budget negotiations began in earnest 
September 8 and a consultation on the External 
Auditor's Report was held on September 10.  The 
Western European and Others Group (WEOG) met twice, 
once for its regular weekly discussion and again on 
September 11 as the "WEOG PLUS" (including non-WEOG 
European Union Countries, Japan and South Korea) for 
a debrief from members of the visiting team just back 
from the Shchuchye destruction facility in the 
Russian Federation, including ISN/CB Director 
Mikulak. 
 
¶2. (SBU) The U.S. Delegation and others continued to 
push for an early meeting on industry cluster issues 
against the resistance of the Technical Secretariat; 
Ambassador Javits even raised our concerns with the 
Director General.  A meeting has subsequently been 
scheduled for September 29.  The Italian delegation 
invited Amb. Javits, German Amb. Burkart and Delreps 
to discuss the upcoming conference in Florence on low 
concentrations and Other Chemical Production 
Facilities (OCPFs). 
 
¶3. (SBU) ISN/EX Deputy Executive Director Bill 
Amoroso visited September 11-12.  His productive 
round of discussions included two new prospects, a 
possible co-occupant for the Delegation's office and 
standardizing the Del's leases within State's 
Overseas Buildings Operations (OBO). 
 
-------------------- 
BUDGET: VERIFICATION 
-------------------- 
 
¶4. (U) On September 8, budget facilitator Martin 
Strub (Switzerland) chaired the first consultation on 
the draft 2009 budget after the summer break. 
Following Strub's previously-circulated schedule of 
meetings, the consultations focused on the budget for 
the Verification Division.  Horst Reeps (Director, 
Verification) gave an overview of planned activities 
for 2009 and clarified some portions of his 
division's budget.  Reeps reported that he expects 
China and Russia to start making electronic 
declarations in 2009.  In addition to the countries 
already making e-declarations, this would mean that 
over 70% of the total number of annual declarations 
would be provided to the TS electronically.  In 
conjunction with the International Cooperation and 
Assistance Division (ICA), Reeps noted that his 
division will conduct four workshops on e- 
declarations and will hold a number of bilateral 
meetings with national authorities to promote 
providing declarations electronically and to 
introduce the TS's e-declaration software (Electronic 
Data submission for National Authorities, EDNA), 
which will be released by the end of 2008. 
 
¶5. (U) On inspections, Reeps stated that, due to the 
new site selection methodology introduced in January 
2008, the number of inspections to countries with 
more Schedule 3 facilities and OCPFs has increased 
and will continue to do so in 2009.  Before 
addressing the TS's plans for bio-sampling in 2009, 
Reeps posited that sampling and analysis (S&A) at 
Schedule 2 facilities has been successful and useful 
and said that he expects the use of S&A to continue 
smoothly without any problems.  Due to the extremely 
high investment required to develop in-house bio- 
sampling capabilities, Reeps said that the TS instead 
has decided to build up a network of labs and out- 
source bio-sampling.  Reeps' division will bring in 
an expert to assist with development. 
 
¶6. (U) The Netherlands suggested revising many of the 
key performance indicators (KPIs) to reflect results 
that the TS can strive for -- instead of results that 
depend more on States Parties rather than the TS. 
South Africa and Iran also spoke in favor of refining 
the KPIs to make them realistic and more measurable. 
Japan noted that a number of KPIs in the draft 2009 
budget are more abstract than in 2008 and also noted 
the need to ensure consistency between the indicators 
in the budget and the TS's performance report.  The 
DDG responded that the TS is trying gradually to 
improve KPIs but maintained that many targets 
naturally are dependent on States Parties' actions. 
 
¶7. (U) China voiced its support for VIS but noted 
that moving to e-declarations poses technical 
challenges and requested support and advice from the 
TS on successful implementation.  China, supported 
later by Iran, also noted its concern at the proposed 
increase in OCPF inspections, stating that refinement 
of declarations and a review of the site selection 
methodology need to be discussed before changing the 
frequency of inspections. 
 
¶8. (U) Delrep and Japan both questioned the large 
under-spend for equipment in 2007 and asked for 
clarification on what happened to the unspent money. 
Reeps responded that the under-spend resulted from a 
supplier's inability to deliver some equipment by the 
end of the year, so the unspent money was transferred 
into the TS's Equipment Special Account for use 
later.  Reeps said that his division adheres to a 
procurement and equipment replacement plan and that 
he expects to spend most of the money budgeted for 
equipment in 2008.  Labib Sahab, Head of Budget and 
Planning, noted when asked that, as of the end of 
July, Verification had spent or obligated just under 
40% of its 2008 equipment budget. 
 
¶9. (U) Aside from stating that developing countries 
need assistance with S&A, Iran reiterated its 
insistence from previous years that "non- 
proliferation" not be included in the budget 
document, arguing that it should be brought in line 
with the Convention and the report of the Second 
Review Conference (RevCon). 
 
---- 
WEOG 
---- 
 
¶10. (SBU) On September 9, Coordinator Ruth Surkau 
(Germany) chaired the weekly meeting of the Western 
European and Others Group (WEOG).  The meeting 
focused on budget consultations, industry issues, and 
Article XI.  The budget facilitator, Martin Strub 
(Switzerland), shared his view that the Technical 
Secretariat (TS) had answered most questions well 
during the first consultation.  Strub highlighted 
that China and Iran had voiced unhappiness with 
increased inspections, especially for Other Chemical 
Production Facilities (OCPFs), and suggested that 
agreement on the number of inspections for 2009 will 
require delicate discussions. 
 
¶11. (SBU) In contrast to Strub, delegates from 
France, the UK and the Netherlands all expressed 
their dismay at the TS's unwillingness or inability 
to answer many questions clearly or coherently.  The 
French delegate said it was not optimistic for future 
consultations given the active nature of Non-Aligned 
Movement (NAM) delegations such as South Africa, 
India, and Iran.  She also portrayed the Iranian 
refusal to accept references to "non-proliferation" 
anywhere in the budget document as "deja vu" from 
last year's budget consultations. 
 
¶12. (SBU) The UK rep noted that the TS was not as 
prepared to answer questions as it should have been, 
particularly following the meeting of the Advisory 
Body on Administrative and Financial matters (ABAF) 
the week before.  The UK also characterized 
Verification Director Reeps' presentation as a bit 
inappropriate at times, citing some personal attacks 
on countries.  Turning to the next budget 
consultation, the UK delegate shared that her 
government views 10 additional OCPF inspections as 
insufficient and will push instead for 20-30 
additional OCPF inspections. 
 
¶13. (SBU) Sweden noted that Cuba had remained silent 
during the consultation and suggested that NAM 
delegations had not been acting in a coordinated 
manner but rather were following national positions. 
The Swedish delegate also observed that the NAM had 
met following the budget consultation, so the bloc's 
coordination might increase in later consultations. 
 
¶14. (U) Moving to industry issues, Surkau reported 
that, according to Bill Kane (Head, Industry 
Verification Branch), the next Industry Cluster 
meeting would probably be planned for late October or 
early November.  The Netherlands, the UK, and the 
U.S. Del all spoke in favor of having the Industry 
Cluster meet sooner, preferably before EC-54, to 
discuss a number of important outstanding issues. 
Italy briefly announced its upcoming Florence seminar 
to discuss OCPFs and low concentrations. 
 
¶15. (SBU) Surkau announced that Article XI 
facilitator Li Hong (China) plans to hold a 
consultation before the end of September.  The UK 
noted that its national paper on Article XI had been 
written in London and had been circulated only to the 
WEOG, Li Hong, and Kalimi Mworia (Director, 
International Cooperation and Assistance). 
 
------------------------- 
EXTERNAL AUDITOR'S REPORT 
------------------------- 
 
¶16. (U) On September 10, facilitator Takayuki 
Kitagawa (Japan) held the first consultation on the 
External Auditor's Report for 2007; the document had 
been deferred from EC-53 to EC-54 (ref B) to allow 
for consultations on the report.  Ron Nelson 
(Director, Administration) represented the TS and 
responded to delegations' questions. 
 
¶17. (U) A number of delegations asked about the high 
level of under-spend (termed "savings" by the 
External Auditor) for 2007, particularly in 
Verification and International Cooperation and 
Assistance (ICA).  The Netherlands noted that some 
divisions and programs regularly under-spend each 
year and asked what the TS can do to tackle this. 
 
¶18. (U) Nelson explained that the budget is always an 
estimate and not an accounting document, so there 
will always be variances.  According to Nelson, the 
OPCW's annual under-spend rate is in line with the 
average for other international organizations (2-3%). 
Throughout the year, the TS's Budget Committee 
(chaired by the DDG) tracks spending and consults 
with programs showing an under-spend to identify 
areas where they can spend the money or other 
programs to which unspent funds can be transferred. 
Nelson indicated that the under-spend rate for 2008 
will be lower than in 2007. 
 
¶19. (U) South Africa asked what percent of under- 
spend was directly related to late payment by States 
Parties of their annual assessed contributions and 
suggested that a change in the financial rules to 
allow the TS to obligate funds based on estimated 
income (rather than on actual receipts) might give 
the TS more flexibility and offset the effect of late 
payments.  Nelson said that the under-spend in 2007 
was not due at all to late payments.  And, while the 
TS has used its Working Capital Fund only once, 
Nelson admitted that the TS regularly uses the 
previous year's surplus to cover current year 
expenses on the assumption that it will be refunded 
before the end of the year with late payments for 
assessments. 
 
¶20. (U) A number of delegations also asked for 
clarification on the special accounts, especially the 
Equipment Special Account.  Nelson promised to 
circulate a paper explaining the basis for the 
special accounts.  In response to Delrep's request 
for an update on the OPCW's asset management system, 
Nelson said that the TS's current SmartStream system 
has an asset management capability.  The TS is 
consulting with SmartStream's developers to see what 
changes will need to be made to the TS's system. 
 
-------------------- 
BUDGET: INSPECTORATE 
-------------------- 
 
¶21. (U) On September 11, budget facilitator Martin 
Strub (Switzerland) chaired the next planned 
consultation on the Inspectorate Division's budget. 
Jose Carvalho (Head, Inspectorate Management Branch) 
gave an overview of the Inspectorate's new 
initiatives for 2009, including: expanding training 
to accommodate the larger batches of new inspectors, 
automation of mission planning procedures, and 
transfer of the Equipment Store from Verification. 
While delegations raised some technical questions, 
most of the discussion was focused on the number of 
OCPF inspections and inclusion of "non-proliferation" 
in the budget document. 
 
¶22. (U) India, China, Cuba, Iran, South Africa, and 
Brazil all, to varying degrees, questioned the 
proposed increase in OCPF inspections; most contended 
that OCPF inspections should remain static while a 
full discussion of OCPF-related issues is ongoing. 
Iran even claimed that OCPF declarations have been 
decreasing, so OCPF inspections should follow suit. 
The DDG repeatedly noted the Director-General's 
(DG's) obligation to propose a number for all 
inspection types and stated that the 2009 proposal 
reflects his personal view on what is necessary. 
 
¶23. (U) The UK was the first WEOG delegation to speak 
on OCPF inspections.  As expected, the UK delegate 
cited receiving instructions from London that 10 
additional inspections would be insufficient and that 
20-30 would be more appropriate.  The UK delegate 
noted the difference between inspection numbers and 
frequency, arguing that inspections numbers should 
increase while concomitantly discussing the frequency 
of inspections (as called for in the RevCon report). 
Delrep, France, Italy, Ireland, and New Zealand all 
spoke in favor of increasing OCPF inspections while 
concurrently discussing OCPF-related issues. 
 
¶24. (U) Returning to its comments during the first 
budget consultation on September 8, Iran again 
insisted that all references to "non-proliferation" 
should be removed throughout the budget document. 
Claiming to have approved last year's budget -- 
including the use of the term "non-proliferation" 
throughout last year's budget document -- only for 
the sake of compromise, Iran explained that it was 
not "allergic" to non-proliferation but rather to any 
departure from the Convention and "Convention 
language."  At one point, Iran even described the 
TS's use of "non-proliferation" in the budget as 
deviating from the Convention. 
 
¶25. (SBU) Japan, the UK, France, Italy, Ireland, and 
Sweden all spoke in favor of keeping "non- 
proliferation" in the budget document, with Ireland, 
France, and Sweden all citing references to non- 
proliferation in the Convention and the RevCon 
report.  The DDG strongly defended the TS's use of 
"non-proliferation," appearing to take issue 
personally and rejecting Iran's portrayal of the TS 
as "deviant."  Facilitator Strub curtailed further 
discussion on this point, noting the purpose of the 
budget consultation was to discuss the "figures" not 
the choice of language. 
 
---------------------------------- 
WEOG PLUS: SHCHUCHYE VISIT DEBRIEF 
---------------------------------- 
 
¶26. (SBU) On September 11, ISN/CB Office Director 
Robert Mikulak and German Ambassador to the OPCW 
Werner Burkart briefed the "WEOG Plus" (WEOG, non- 
WEOG EU members, Japan, and Korea) on their 
impressions upon returning from the Executive Council 
(EC) visit to Shchuchye that morning.  EC Chair Amb. 
Oksana Tomova (Slovakia) also attended in her 
national capacity and shared her impressions of the 
visit. 
 
¶27. (SBU) Tomova gave the group an overview of the 
visit, which included interactions with the Ministry 
of Foreign Affairs, the Ministry of Defense, the 
Ministry of Industry, and local authorities.  She 
noted that she was particularly struck by the 
impression of Russian preparedness to fulfill treaty 
obligations, Gen. Kholstov's personal responsibility 
and involvement, and the positive impact of the 
chemical weapons destruction facility on the 
surrounding community.  Tomova also reported that the 
visiting delegation had asked questions not only 
specific to Shchuchye, but also related to the 
Russian CW destruction program as a whole, 
particularly the construction and future operations 
of Pochep and Kizner. 
 
¶28. (SBU) Mikulak then gave a more detailed 
explanation of the visit, beginning with his 
impression that the commitment of the Russian 
Federation to its 45% and 100% deadlines was very 
evident, as was the impact of Kholstov's dedicated 
leadership and an improved Russian economy.  In 
Mikulak's view, Russia's 45% deadline is achievable 
if the first and second trains at Shchuchye go into 
operation as scheduled.  In Building 1A, testing with 
simulants should begin in November, followed by 
initial operations in December.  Mikulak did note, 
however, that the processing rates described in the 
Russian pamphlet for Pochep and Kizner do not achieve 
100% destruction by 2012.  During the visit, Mikulak 
also inquired as to what risks or challenges Russia 
foresaw in its destruction schedule.  Kholstov 
replied that Russia does not anticipate technical 
difficulties, but could foresee problems with 
unpredictable donor assistance, a typical remark 
given Russia's history of implying donor 
responsibility for program delays. 
 
¶29. (SBU) Burkart agreed that a huge effort is 
clearly being made in Russia, and described the tone 
of the visit as fairly collegial.  He noted that 
Kholstov was rather vague in his replies to questions 
on the end point of destruction and the capacities 
and operational timelines for Pochep and Kizner.  He 
expressed some reservations that the current 
timelines seem to leave very little room for 
unforeseen technical problems.  He also noted, 
however, that Kholstov did acknowledge that Russia 
does intend to host future visits; Mikulak added that 
Kholstov even said that such visits also help Russia. 
 
¶30. (SBU) Burkart then opened the meeting for 
questions.  Irish Ambassador Richard Ryan expressed 
appreciation for the delegation's willingness to 
brief "WEOG Plus" within hours of returning from a 
long day of travel.  He noted that Ireland had always 
hoped that the first two EC visits to destruction 
facilities would be successful and would provide for: 
interactions with senior State Party officials, the 
opportunity to ask objective and pointed questions, 
and the opportunity to visit each State Party once a 
year.  Ryan also underscored the importance of having 
this "record of commitment" in years to come.  The 
French delegation asked whether the Council could be 
sure of Russia's financial commitment; Burkart 
replied that it was difficult to be absolutely 
certain, although the commitment was quite evident 
now, and noted that Kholstov had explained the 
difficulties Russia faces in moving money within the 
federal budget when donor funds do not appear on 
time.  In closing, Amb. Javits also expressed 
appreciation for the delegation's work, and noted 
that Russia may be learning from the example of 
transparency set by the United States. 
 
----------------------------- 
MEETING WITH DIRECTOR-GENERAL 
----------------------------- 
 
¶31. (SBU) On September 12, Amb. Javits met with DG 
Pfirter to discuss a number of issues.  Amb. Javits 
raised the Industry Cluster, noting the need to hold 
a meeting before EC-54 (ref A).  The DG explained 
that his preference was to postpone the Industry 
Cluster meeting until after EC-54 when a number of TS 
papers on industry issues would be ready for 
circulation.  Amb. Javits assured the DG that any 
discussions on S&A or OCPFs would be preliminary and 
would lay the ground for further deliberation after 
the TS papers are released.  Amb. Javits also pointed 
out the need to appoint facilitators and move on the 
industry issues that have been suspended since the 
last Industry Cluster meeting in March and the RevCon 
in April. 
 
¶32. (U) NOTE:  The next Industry Cluster meeting was 
subsequently scheduled for the afternoon of Monday, 
September 29, two weeks before EC-54.  END NOTE. 
 
--------------------------------------------- ------- 
PREPARATIONS FOR FLORENCE SEMINAR ON INDUSTRY ISSUES 
--------------------------------------------- ------- 
 
¶33. (U) On September 11, Amb. Javits and DelReps met 
with Italian Ambassador Gaetano Cortese, Italian 
delegate Giuseppe Cornacchia, and German Ambassador 
Werner Burkart to discuss the upcoming Italian- 
sponsored workshop in Florence on industry issues. 
Cornacchia outlined the proposed agenda for the 2-day 
workshop and explained to Amb. Javits and Amb. 
Burkart their roles as facilitators for discussions 
on low concentrations and OCPFs, respectively. 
 
¶34. (U) TS representatives Steve Wade (Head, 
Declarations) and Bill Kane (Head, Industry 
Verification) will set the stage with historical 
overviews of both issues before moving into 
discussions.  Amb. Javits and Burkart both suggested 
that Kane and Wade, in conjunction with the Italian 
organizers, suggest a list of questions to be 
addressed to better focus the discussions on both 
issues.  Cornacchia stated that Italy is open to 
suggestions to obtain a useful result.  Although they 
have no "preconceived outcome" in mind, they would 
like to see the workshop conclude with a working 
paper with possible solutions, or ideas for a way 
forward, on both issues.  The group agreed that a 
discussion paper to bring back to the OPCW 
consultative process would be a useful result. 
 
--------------------------------------------- ------ 
VISIT OF ISN DEPUTY EXECUTIVE DIRECTOR BILL AMOROSO 
--------------------------------------------- ------ 
 
¶35. (U) ISN Deputy Executive Director Bill Amoroso 
visited The Hague September 11-13.  He met with Amb. 
Javits and Del members with whom he discussed 
transition issues anticipated with the departure of 
the Ambassador.  At the OPCW, Amoroso met with 
Administration Director Ron Nelson and discussed some 
upcoming personnel issues at OPCW. 
 
¶36. (U) At the Embassy, Amoroso met with Financial 
Management Specialist John Vis for an overview of the 
Del's current budget and discussed plans for the new 
fiscal year.  During a meeting with Management 
Counselor Sarah Solberg, the question of why Del 
residential and offices leases were not covered under 
the OBO umbrella was discussed.  Education allowances 
could also be paid out of a central fund, Solberg 
thought.  Amoroso said he would investigate and 
follow up. 
 
¶37. (U) FBI Assistant Legal Attache Tim Wallach had 
expressed an interest in sharing office space at the 
Del, and said the FBI was ready to move ahead.   Both 
Amoroso and Amb. Javits were in favor of pursuing a 
sub-lease arrangement with the FBI.  Wallach will 
look into security issues and confirm personnel 
status.  Further discussion will be needed regarding 
financial terms and a Memorandum of Understanding. 
 
¶38. (U) Javits sends. 
Culbertson