VZCZCXYZ0000
OO RUEHWEB

DE RUEHUNV #0174/01 1071529
ZNR UUUUU ZZH
O 171529Z APR 09
FM USMISSION UNVIE VIENNA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9320
INFO RUEHII/VIENNA IAEA POSTS COLLECTIVE PRIORITY
RUEHNY/AMEMBASSY OSLO PRIORITY 0107
RUEHRO/AMEMBASSY ROME PRIORITY 0441
RUEHGV/USMISSION GENEVA PRIORITY 0878
RHEBAAA/DOE WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEANFA/NRC WASHDC PRIORITY

UNCLAS UNVIE VIENNA 000174 
 
SENSITIVE 
SIPDIS 
 
FOR D, P, T, ISN, IO 
DOE FOR NA-24, NA-25, NA-21 
NSC STAFF FOR CONNERY 
NRC FOR DOANE, SCHWARTZMAN 
 
E.O. 12958: N/A 
TAGS: AORC PREL KNNP IAEA UN
SUBJECT: IAEA BUDGET HAWKS MOBILIZING 
 
REF: A. UNVIE 109 
     ¶B. UNVIE 65 
     ¶C. UNVIE 52 
     ¶D. STATE 34576 
 
¶1. (SBU) Summary: IAEA regional groups have begun clarifying 
their positions on the IAEA draft budget in preparation for 
the April 27-28 meeting of the Program and Budget Committee 
(PBC).  Most Member States have criticized Director General 
ElBaradei's proposed increase of 23 percent, but there are 
both major donors and developing countries that acknowledge 
areas where more resources are justified.  Some budget hawks 
in the large-contributor Geneva Group would prefer to stymie 
the process at its start by asking DG ElBaradei to present a 
new budget that is more "realistic" rather than engage on the 
Secretariat,s proposal.  While awaiting a final U.S. 
position, Mission has urged flexibility in the face of EU 
contributors (France, Germany, UK) pushing a lock-down in 
favor of Zero Real Growth (ZRG).  While inter-agency 
coordination continues, Mission requests authority to assume 
an opening bargaining position at the April 27-28 Program 
Budget Committee (PBC) of support "in principle" for a 
meaningful real increase in the 2010-11 budget to meet the 
IAEA,s increasing responsibilities.  Such a position offers 
the best prospect of keeping budget negotiations open beyond 
the April PBC.  End Summary. 
 
¶2. (SBU) Member States have begun preparing in earnest for 
the April 27-28 meeting of the PBC.  The PBC Agenda includes 
a number of administrative items (to be reported septel), but 
the real action will surround Agenda Item 3: The Agency's 
Draft Program and Budget for 2010-2011.  Most countries have 
developed their initial positions on DG ElBaradei's proposal, 
which envisions a 23 percent increase in the Regular Budget 
(refs A-C).  At this stage, there is little prospect that 
budget negotiations during the PBC will result in a 
recommendation for the June 15-19 meeting of the Board of 
Governors.  Formally, the Board submits a recommendation to 
the General Conference (convenes September 15-19) for 
approval and the budget goes into effect at the beginning of 
the next calendar year (in this case, 2010).  Faced with the 
Secretariat,s proposals for significant year-on-year 
increases in many programs and the launch of a capital 
investment fund, Member States have divided between those 
open to a debate on the budget target and a group of EU 
budget hawks committed to ZRG.  Uncertainty about this 
month,s possible outcomes is heightened also because the 
U.S. - the IAEA's largest contributor - has not indicated a 
position on the budget. 
 
----------------------------------- 
Focus on the Program, Not Just Cost 
----------------------------------- 
 
¶3. (SBU) During an April 15 meeting with Ambassadors from the 
Western European and Others Group (WEOG) to preview the 
PBC, Ambassador Schulte noted that in past years the U.S. 
Permanent Representative would have received instructions to 
support Zero Real Growth (ZRG), but that at present 
Washington was considering a broad range of options, 
including both ZRG and the budget proposed by DG ElBaradei. 
Ambassador Schulte urged WEOG members not to lock into a ZRG 
position, even in this time of financial crisis.  Following 
the meeting, WEOG Members expressed their appreciation for 
the U.S. intervention, since, as one European diplomat put 
it, "something is better than nothing."  A Japanese diplomat 
commented, "that was very nice, but is it supposed to be a 
position?"  Ambassador also used the WEOG meeting to 
reiterate the public statement by Deputy Secretary Steinberg 
(at the recent Carnegie Endowment conference) that the U.S. 
wants to strengthen the IAEA's authorities and ensure that 
the Agency receives the increased resources it needs to carry 
out its rapidly growing responsibilities.  Ambassador Schulte 
drew attention to President Obama's April 5 speech in Prague, 
citing the President's call to strengthen the Nuclear 
Non-Proliferation Treaty, build a new framework for civil 
nuclear cooperation, and secure all vulnerable nuclear 
material around the world within four years. 
 
------------------------ 
Budget Positions by Bloc 
------------------------ 
 
¶4. (SBU) Romanian Ambassador Cornel Feruta as Board Vice 
Chairman has completed his first round of budget 
consultations with IAEA Board Members and shared the results 
of his discussion with the U.S.  The EU has proved the most 
problematic, according to Feruta, with France aggressively 
arguing in favor of an EU intervention at the PBC stating, 
"the EU is not in a position to support the proposed budget." 
 The Romanians, supported by the Austrians and the Finns, 
managed to block consensus on this hard-line position.  More 
likely, the EU will present a statement at the PBC indicating 
that it is important to be "realistic" and to "look 
carefully" at the budget proposal.  Aside from the EU 
statement, it appears increasingly likely that some EU 
countries - particularly France - will lead an effort among 
Member States to request the Secretariat to "start over" by 
presenting a new budget proposal based on ZRG.  (Ireland, the 
UK, and most recently Germany have all received instructions 
in support of ZRG.) 
 
¶5. (SBU) Outside the EU, Canada, Mexico and Australia have 
also emerged as budget hard-liners in support of ZRG, or, in 
Australia's case, Zero Nominal Growth (ZNG).  Japan, normally 
a supporter of ZRG, has been coy about its stance in light of 
Japanese Ambassador Amano's candidacy for Director General. 
In contrast, a colleague from (non-Board member) Norway 
signaled to us appreciation for the view that the Agency is 
under-resourced. 
 
¶6. (SBU) G-77 countries have allowed more room for 
flexibility in their approach to the budget, particularly 
regarding proposed increases for Major Programs 1 and 2 
(Nuclear Energy and Nuclear Techniques for Development). 
There are also hard-liners among the G-77, however, who have 
stated outright that they will not accept any increases for 
Major Program 3 (Nuclear Safety and Security).  Egypt and 
Cuba have led the charge against Major Program 3.  Other G-77 
allies, most notably China, may be more willing to negotiate. 
 
 
------------------------- 
Board Chair Gets Involved 
------------------------- 
 
¶7. (SBU) Board Chair Taous Feroukhi met with Ambassador 
Schulte April 16 to speak more privately about the budget. 
Ambassador Schulte solicited Feroukhi's aid in pressing for 
flexibility in budget positions.  Feroukhi admitted that 
ElBaradei's draft budget proposal had been jeopardized by 
Member States' calls for a "do-over."  Feroukhi feared that 
the present proposal would lead quickly to deadlock and the 
PBC would be unable to make a recommendation to the June 
Board.  This would prolong budget negotiations and complicate 
an already difficult June agenda, itself already overshadowed 
by the DG selection process.  Feroukhi suggested that an 
incremental approach to the budget proposal might be more 
palatable to Member States, spreading moderate increases over 
two biennia.  She agreed, however, that such an approach 
risked allowing Member States to "forget" their commitments 
over time and lead to prolonged budget negotiations that 
would dominate Member States' energies from one biennium to 
the next.  DCM noted the need for DG ElBaradei to take a 
leadership role in explaining to member states how additional 
resources might be deployed to advance the IAEA mission. 
Echoing her comments in Washington (ref D), Feroukhi called 
for managing nuclear security resources under the nuclear 
safety pillar, and noted the clear signal from her Washington 
interlocutors that the Obama administration wants to be 
supportive of the IAEA's mission. 
 
------------------------ 
Forestalling a Lock-Down 
------------------------ 
 
¶8. (SBU) COMMENT:  Mission has pressed for flexibility while 
the U.S. develops a position on the budget.  Despite these 
efforts, momentum is clearly building behind an EU-led 
movement to ask the DG to start over by submitting a more 
"realistic" budget proposal based on ZRG.  The G-77 may be 
our ally in keeping some areas for budget growth in play, 
particularly if we can convince heavy hitters like China to 
negotiate with flexibility.  Board Chair Feroukhi and Vice 
Chair Feruta are also working behind the scenes on our 
behalf, and both are strategically placed within the G-77 and 
EU, respectively.  More problematically, our traditional 
allies in Europe and North America are edging closer to a 
hard-line budget position that will prove increasingly 
difficult to budge. 
 
¶9. (SBU) The prospects for rightsizing the IAEA budget to 
match U.S. priorities in nuclear security, safety, and 
safeguards will diminish if our allies on these substantive 
issues lock into opposition on resources.  Mission urges 
Washington inter-agency coordination that will allow for a 
U.S. position at the April 27-28 PBC that indicates, at the 
very least, "in principle" support for a meaningful real 
increase in the 2010-11 budget to meet the IAEA,s increasing 
responsibilities.  Such a position will keep our options open 
as we head into what will likely be a long summer of budget 
negotiations.  END COMMENT. 
PYATT