VZCZCXYZ0000
OO RUEHWEB

DE RUEHUNV #0109/01 0761455
ZNR UUUUU ZZH
O 171455Z MAR 09 ZDK
FM USMISSION UNVIE VIENNA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9157
RHEBAAA/DOE WASHDC IMMEDIATE
INFO RUEHXX/GENEVA IO MISSIONS COLLECTIVE PRIORITY
RUEHII/VIENNA IAEA POSTS COLLECTIVE PRIORITY
RUEHRO/AMEMBASSY ROME PRIORITY 0432
RUEHFR/USMISSION UNESCO PARIS PRIORITY
RUCNDT/USMISSION USUN NEW YORK PRIORITY 1540

UNCLAS UNVIE VIENNA 000109 
 
SENSITIVE 
SIPDIS 
 
FOR D, P, T, IO, ISN 
DOE FOR NA-24, NA-25, NA-21 
 
E.O. 12958: N/A 
TAGS: AORC PREL KNNP IAEA EAID UN
SUBJECT: GUIDANCE REQUEST: SEEKING PRINCIPLED SUPPORT FOR 
THE IAEA BUDGET 
 
REF: A. UNVIE 52 
     ¶B. UNVIE 65 
 
¶1. (SBU) Summary:  (This is a guidance request.  Please see 
paras 12-13.)  Director General ElBaradei stepped forward 
last month with a proposal to increase the IAEA's regular 
budget by 23 percent.  Member States are generally unhappy 
with the proposal, but are waiting on tenterhooks for the 
U.S. position.  Mission recommends general support for 
ElBaradei's proposed budget, noting that the proposal is 
conservative but compatible with the Obama Administration's 
statements and Mission's proposals to realize them (ref a). 
A supportive U.S. stance will not commit us to the full, 23 
percent increase, but will prevent other donors from 
immediately locking in a zero growth position and removing 
all flexibility from budget negotiations.  U.S. support also 
leaves room to pursue long-standing U.S. policy goals, such 
as bringing nuclear security and safety under the umbrella of 
the IAEA regular budget.  A growth budget would increase the 
long-term institutional health that allows the IAEA to 
fulfill its role as "nuclear watchdog."  Finally, U.S. 
support for the draft budget sheds a positive light on U.S. 
leadership and promotes global support for the IAEA and its 
non-proliferation mandate.  While extrabudgetary funding 
presents a convenient alternative to increasing the regular 
budget, such funds are not well suited to addressing these 
broader institutional issues and would increase the IAEA's 
reliance on the U.S. taxpayer rather than spreading 
responsibilities across all Member States.  Instead, the U.S. 
should take advantage of the current DG's global stature to 
encourage a flexible and substantive debate on the regular 
budget.  Mission also recommends using the upcoming G8 
Non-Proliferation Directors meeting on March 24 in Rome to 
encourage budgetary flexibility.  Finally, Mission requests 
guidance in advance of Ambassador's March 20 meeting with the 
Board Vice Chair in charge of budget negotiations to 
communicate a U.S. position in support of the draft budget. 
End Summary. 
 
Budget Season Begins 
-------------------- 
 
¶2. (SBU) Following the February 15 release of DG ElBaradei's 
draft 2010-2011 budget, IAEA Member States have focused their 
attention on budget negotiations in the lead-up to the April 
27 meeting of the Program and Budget Committee (PBC). 
Romanian Ambassador Feruta (Board Vice Chair) has begun 
consultations with the IAEA Secretariat and will begin the 
"first round" of budget negotiations with Member States 
starting March 20.  Feruta has made it a priority to speak 
with the U.S. first and has scheduled a March 20 meeting with 
Ambassador Schulte to elicit the U.S. position. 
 
¶3. (SBU) A cluster of EU Members (including the UK, Germany 
and France) is already preparing for budget negotiations by 
attempting to build momentum against Director General 
ElBaradei's proposed 23 percent increase in the regular 
budget from the current year to CY2010.  An EU meeting March 
13 revealed that some Members are pushing for a rapid and 
categorical EU common position in favor of zero real growth 
(ZRG).  Romania has pleaded for flexibility, but this 
cooperative approach has not been adopted by other EU 
diplomats, one of whom remarked to Ambassador Schulte that 
"multilateralism doesn't mean that you decide and the rest of 
us agree."  The UK has also warned us that a break with "long 
standing Geneva Group policy on zero growth" would not be 
well received. 
 
ElBaradei Stands Fast 
--------------------- 
 
¶4. (SBU) DG ElBaradei has continued campaigning for a large 
increase in the budget.  In a March 10 speech before the 
United Nations Association in Vienna (attended by many 
ambassadors), ElBaradei raised a friendly hand to Ambassador 
Schulte before repeating comments made during the U.S. 
presidential campaign supporting a "doubling" of the IAEA 
budget.  Behind the scenes, ElBaradei is doing more than 
paying lip service to U.S. campaign promises.  His draft 
budget unerringly caters to U.S. priorities in the areas of 
nuclear security and safety (such as an effort to incorporate 
nuclear security into the regular budget - ref b).  Even 
 
moderate increases for nuclear techniques for development (an 
area some of the more cynical representatives view largely as 
a PR exercise), are channeled to the one program - the 
Program of Action for Cancer Therapy - lauded by the U.S. for 
its partnerships model. 
 
¶5. (SBU) Comment:  DG ElBaradei has every reason to pursue 
the large budget increases he has long coveted.  A 
Nobel-Prize winner with less than a year left in office, 
ElBaradei enjoys maximum international exposure while feeling 
minimal obligation to Member States.  As one staff member put 
it, the DG is "halfway up the mountain."  This has helped 
prompt ElBaradei to propose the stunning increases, but it 
also means he is prepared to engage energetically in 
negotiations should the U.S. support him.  His global renown 
and stature with the G-77 is a definite asset.  His 
successor, whoever that may be, is unlikely to match 
ElBaradei's ability to champion the kinds of structural 
changes envisioned in the current draft budget.  End Comment. 
 
Options 
------- 
 
¶6. (SBU) Our meeting with the Romanian Vice Chair on March 20 
presents the first time the U.S. will be expected to indicate 
a formal - if general - position on the regular budget.  One 
option for that meeting is to announce the U.S. intention to 
maintain the traditional ZRG policy (implying a marginal 
increase of approximately 3 percent to maintain purchasing 
power parity).  This position would quickly cement the ZRG 
positions of the other major donors and leave only minimal 
room for negotiating minor adjustments in the budget.  The 
result would be unremarkable negotiations during the April 
PBC followed by handy passage of a draft budget during the 
June Board that would look much like previous budgets and 
leave the IAEA's pressing structural needs unaddressed. 
 
¶7. (SBU) Such a position would create relief among other 
donor states but intense disappointment at the Secretariat 
and among those statesmen such as the members of ElBaradei's 
Commission of Eminent Persons who believe the IAEA is 
seriously underfunded.  It would also appear to contradict 
President Obama's commitments, compelling us to detail the 
fiscal realities requiring us to retreat from the public 
pronouncements of January and earlier.  The high hopes that 
led IAEA staff to trace a gigantic "Yes, We Can" in the snow 
this winter would quickly ebb.  The U.S. could help assuage 
the confusion by committing to significantly increase 
extrabudgetary funding, but this voluntary gesture would not 
appear to address adequately U.S. public statements that the 
IAEA is "understaffed and underresourced."  However much IAEA 
managers welcome and appreciate extrabudgetary resources, 
such funds do not wield the symbolic and institutional 
support that comes from a concerted diplomatic effort to 
increase the regular budget. 
 
 
¶8. (SBU) The second option for the March 20 meeting is to 
indicate general U.S. support for Director General 
ElBaradei's proposed budget, along with a good faith promise 
to negotiate the details with the other Member States.  U.S. 
support for the draft budget will not automatically lead to a 
23 percent increase (just the opposite - it would be hard-won 
progress to convince other Members to agree to a 5 - 10 
percent increase), but supporting the draft budget does leave 
the door open for a more nuanced discussion of programs and 
priorities.  Supporting the budget also reflects U.S. 
endorsement of a harsh reality - detailed in last year's 
"2020 Report" - that the IAEA does not have the resources to 
do its job properly. 
 
¶9. (SBU) The likely result of this position would be budget 
negotiations that extend through the April 27 PBC and into 
the June Board of Governors meeting (and possibly beyond). 
None of the Member States are looking forward to this 
situation (and the U.S. will not be popular for sparking it), 
but it is the only one that allows the U.S. to pursue the 
structural changes that will sustain the IAEA's core mandate 
on safeguards through broad financial support for the 
institution. 
 
Deeper in the Weeds 
 
------------------- 
 
¶10. (SBU) Looking forward to the April PBC, Member States 
will look for ways to cut down on the across-the-board 
increases envisioned by the DG.  One likely target for 
decapitation is the "capital investment fund," a proposal 
that accounts for nearly half of the overall budget increase. 
 This fund drew immediate fire from major donors, who 
questioned the need to develop the fund so quickly and with 
such an extraordinary influx of cash (i.e., by 27 million 
euros in the first year alone).  G-77 nations have already 
begun asking why Major Program 3 (Nuclear Security and 
Safety) should benefit from a 47 percent increase while Major 
Programs 2 and 6 (which develop and manage nuclear techniques 
for development) are granted only 15 percent. 
 
¶11. (SBU) Mission looks forward to discussing these more 
detailed issues with Washington interagency counterparts.  In 
addition to the overarching issue of the U.S. position on the 
regular budget, we see several other topics that will require 
further discussion, including: 1) U.S. preparedness to 
support the anchoring of the Nuclear Security Division in the 
regular budget, 2) the launching and up-front infusion of 
cash into the capital investment fund, 3) increased funding 
for safeguards, to keep pace with a growing international 
reactor fleet and increasing number of "sensitive cases" to 
include Iran, DPRK and now Syria, and 4) the U.S. posture 
toward likely G-77 demands for moving the Technical 
Cooperation Department further into the regular budget. 
 
Comment and Request for Guidance 
-------------------------------- 
 
¶12. (SBU) While the G-77 position remains undefined, most 
major contributors would prefer to quickly squelch 
ElBaradei's budget proposal and embrace a no-fuss 
retrenchment to ZRG.  The one way the U.S. can buck this 
trend and keep the door open to substantive negotiations is 
by indicating general support for ElBaradei's draft budget. 
This support does not have to include specifics for the 
moment, but it will position the U.S. to make good on calls 
for increased resources (should they come available), support 
the long term institutional health of the organization, take 
advantage of the current DG's strengths, and position the 
IAEA to meet its safeguards responsibilities of the future. 
These higher goals are not accomplished by year-to-year 
extrabudgetary contributions, but only through the 
predictability and assurances provided by the regular budget. 
 ElBaradei and the Secretariat understand that negotiations 
will not end with a 23 percent increase, but by the same 
token, they should not start at zero. 
 
¶13. (SBU) One opportunity to argue for "flexibility" in 
budget positions is presented by the upcoming G8 
Non-Proliferation Directors Group meeting in Rome March 24. 
Mission encourages instructions for our delegation to that 
meeting that reaffirm the U.S. commitment to find the 
resources that the IAEA will need to meet its expanded 
safeguards responsibilities in the years ahead.  More 
immediately, Mission requests guidance in advance of 
Ambassador's March 20th meeting with the Romanian Vice Chair 
in charge of budget negotiations to communicate a U.S. 
position in support of DG ElBaradei's proposal to increase 
the IAEA regular budget and build in long-term capital 
funding. 
 
 
PYATT