VZCZCXYZ0000
PP RUEHWEB

DE RUEHUNV #0120/01 0821557
ZNR UUUUU ZZH
P 231557Z MAR 09
FM USMISSION UNVIE VIENNA
TO RUEHC/SECSTATE WASHDC PRIORITY 9191
INFO RUEHII/VIENNA IAEA POSTS COLLECTIVE PRIORITY
RUEHXX/GENEVA IO MISSIONS COLLECTIVE PRIORITY
RUEHRO/AMEMBASSY ROME PRIORITY 0435
RUEHFR/USMISSION UNESCO PARIS PRIORITY
RUCNDT/USMISSION USUN NEW YORK PRIORITY 1550
RHMCSUU/DEPT OF ENERGY WASHINGTON DC PRIORITY

UNCLAS UNVIE VIENNA 000120 
 
SENSITIVE 
SIPDIS 
 
STATE FOR D, T, IO/T, ISN/MNSA, ISN/NESS, ISN/RA 
DOE FOR NA-20 
 
E.O. 12958: N/A 
TAGS: AORC KNNP IAEA ENRG TRGY EAID
SUBJECT: IAEA BUDGET: BOARD VICE CHAIR PROBES ON U.S. AMBITIONS 
 
REF:  A. UNVIE 65; B. UNVIE 57; C. UNVIE 52 
 
¶1. (SBU) Summary: The Romanian Ambassador, vice chairman of the IAEA 
Board and in charge of budget negotiations, pointedly asked 
Ambassador Schulte on March 20 whether the U.S. position on the IAEA 
budget would reflect U.S. campaign promises.  Ambassador replied 
that Washington was looking closely at options that ranged from the 
traditional, zero real growth (ZRG) position to a "doubling" of the 
IAEA budget, with the Secretariat's proposal as one of the 
intermediate options.  Feruta was frustrated over an early rush by 
EU countries - particularly France - to lock in an inflexible, ZRG 
position.  In a separate conversation, the Japanese Ambassador 
revealed that Japan was looking at a similar range of options from 
ZRG upwards, and that G-8 consensus would be key to Japan's support 
for a large, one-time budget increase.  Mission notes that Japan's 
uncommonly flexible position on the budget supports our observation 
that budget negotiations in Vienna are entering uncommon ground. 
Combined with ElBaradei's bold proposals to increase the Regular 
Budget, the U.S. enjoys a rare opportunity to pursue longstanding 
policy objectives to combat nuclear terrorism and advance practices 
for safe and responsible nuclear power worldwide.  End Summary. 
 
¶2. (SBU) Romanian Ambassador and Vice Chair of the Board of 
Governors Cornel Feruta launched consultations last week with IAEA 
Member States on DG ElBaradei's proposed 24 percent increase in the 
Regular Budget.  As coordinator for budget negotiations among the 
35-member Board, Feruta pressed for an early meeting with the U.S. 
to assess the U.S. position.  In a meeting with Ambassador Schulte 
on March 20, Feruta pointedly asked how U.S. presidential campaign 
promises would be reflected in the U.S. position. 
 
¶3. (SBU) Ambassador explained that the U.S. was exploring a number 
of options that ranged from Zero Real Growth (ZRG) to a "doubling" 
of the IAEA budget, with the Secretariat's proposal as one of the 
intermediate options.  He noted that Member States enjoyed a rare 
opportunity to resource the IAEA properly to carry out its duties in 
safeguards, security and safety.  He recognized that the Regular 
Budget was the best vehicle for sharing these responsibilities among 
all Member States and providing for the institutional health of the 
Agency.  He urged Feruta to encourage other major contributors to 
remain flexible during this first round of budget negotiations. 
 
¶4. (SBU) Aside from his role as budget coordinator, Feruta has been 
privy to internal negotiations among EU countries.  He indicated his 
frustration with an EU rush to establish a common ZRG position. 
Having read past EU statements, Feruta objected to European efforts 
to cement a ZRG position, when in fact it was now time for them to 
"put their money where their mouth is."  During an EU meeting March 
13, Feruta told his EU counterparts that it was hypocritical to call 
for regularized funding of nuclear security and then ignore an 
opportunity to implement it.  According to Feruta, Germany and 
Finland found these arguments compelling, while France remained 
obstinate.  Feruta promised to continue lobbying for flexibility and 
keep the U.S. informed of developments in the EU and G-77 positions. 
 (Note: Egyptian Second Secretary Bassem Hassan told Msnoff that the 
G-77 had started work last week on a common budget position that 
ranged higher than - but did not rule out - ZRG.  End note.) 
 
¶5. (SBU) Feruta said he had personally looked closely at the 
programs targeted for increases.  He emphasized that ElBaradei's 
proposal was essentially "an investment in the future" that 
addressed the IAEA's laboratory needs, support for nuclear security, 
capital investment and support for safeguards.  He singled out the 
issue of nuclear security, claiming that continuing to fund the 
program with extrabudgetary funds falsely implied the issue was not 
an IAEA core activity. 
 
¶6. (SBU) Feruta ends the first round of formal budget consultations 
on April 3.  From there he will communicate the results to Board 
Chair Taous Feroukhi (Algeria), indicating the areas of consonance 
and dissonance.  Feruta would like to see budget negotiations 
settled at the April 27 meeting of the Program and Budget Committee 
(PBC) but acknowledged that negotiations would more likely drag on 
through the summer.  Speaking separately to DCM on March 23, IAEA 
Deputy Director General David Waller expressed concern about the 
initial results of Feruta's consultations, noting that the 
Secretariat was concerned about an EU veto of a long overdue debate 
over IAEA resources. 
 
Japanese Quietly Exploring Options 
---------------------------------- 
 
¶7. (SBU) In a separate conversation, Japanese Ambassador (and DG 
candidate) Yukiya Amano told Ambassador that the Japanese were 
working on a position that included ZRG as one of several options. 
Amano also noted that a one-time increase endorsed by the G-8 would 
be easier for Tokyo to accept than incremental increases over 
several budget cycles.  Amano also suggested that attempts to move 
nuclear security under the umbrella of the Regular Budget would 
require Technical Cooperation concessions for the G-77 Members (who 
have long agitated for greater Regular Budget support for the 
Technical Cooperation Fund). 
 
Comment 
------- 
 
¶8. (SBU) Ambassador Feruta claimed he did not want the job of 
coordinating budget negotiations among Member States but appears 
well poised to do so.  He has already demonstrated a creative 
approach by actively working to stymie French efforts to establish a 
common EU position around ZRG.  Mission recommends using available 
fora at higher levels to encourage flexibility from our local French 
counterparts.  Similarly, Mission notes that strong G-8 consensus 
would be of particular use to Japan, a traditional ZRG hawk that 
might appreciate a convenient vehicle for relinquishing ZRG in favor 
of a more expansive position at a time it hopes to launch a 
potential Japanese DG into a successful tenure.  It is unusual but 
encouraging that Japan would look beyond ZRG and join the U.S. in 
exploring ways to "right size" the IAEA (Japan and the U.S. together 
account for nearly half the IAEA Regular Budget).  Japan's 
flexibility also presents further evidence that we are facing a 
unique confluence of events in Vienna this budget season, 
characterized by Japanese magnanimity, ElBaradei's boldness, G-77 
quiescence, and signs of a growing consensus among global leaders on 
the need to invest in the IAEA's future and strengthen its 
foundations.  End Comment. 
 
SCHULTE