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FM USMISSION UNVIE VIENNA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9471
INFO RUEHII/VIENNA IAEA POSTS COLLECTIVE PRIORITY
RUEHDM/AMEMBASSY DAMASCUS PRIORITY 0162
RUEHPG/AMEMBASSY PRAGUE PRIORITY 0114
RUEHUL/AMEMBASSY SEOUL PRIORITY 0304
RUEHSM/AMEMBASSY STOCKHOLM PRIORITY 0169
RUEHTV/AMEMBASSY TEL AVIV PRIORITY 0244
RHEBAAA/DOE WASHDC PRIORITY
RUEANFA/NRC WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

S E C R E T UNVIE VIENNA 000231 
 
SIPDIS 
 
DEPT FOR D(S), P, T, IO, ISN 
DOE FOR NA-20, NA-24, NA-25, AND NE-6 
NSC FOR SCHEINMAN, CONNERY 
NRC FOR DOANE, SCHWARTZMAN 
 
E.O. 12958: DECL: 05/13/2019 
TAGS: ENRG PARM PREL KNPP IAEA IR KN IZ PK
SUBJECT: IAEA:  LOOKING AHEAD TO THE JUNE BOARD 
 
REF: A) UNVIE 220 B) UNVIE 193 C)UNVIE 208 
 
Classified By: Ambassador Gregory L. Schulte for reasons 1.4 b-e 
 
Summary and Action Request 
-------------------------- 
 
¶1. (C) The June 15-19 IAEA Board of Governors meeting will 
take place against the backdrop of impasse over the 2010 
budget and the ongoing race for IAEA Director General, with 
an election likely later in June.  The politics of the DG 
race will distract from the regular June Board meeting's 
overloaded agenda, which includes several of our priorities. 
Given a limited number of deliverables, Mission wishes to 
alert inter-agency stakeholders to the need to "prioritize 
our priorities."  The traditional focus of the June Board is 
on the annual Safeguards Implementation Report (SIR) and the 
budget, which is currently so divisive it will very likely 
not be resolved until later in the summer despite the Board 
Chair's advocacy for progress.  The Board agenda (available 
on govatom) also includes formal discussion of the 
International Nuclear Fuel Bank (INFB), Russian LEU reserve, 
and German "enrichment sanctuary" proposals; verification 
issues in Iran, Syria and the DPRK; a related issue on 
de-restriction of Board documents; and consideration of the 
Agency's annual report, Technical Cooperation Report, and 
provisional General Conference agenda. 
 
¶2. (S) Among these issues, Mission considers Board discussion 
of nuclear fuel assurances to be the area most ripe for 
advancing priority U.S. objectives.  The SIR report could be 
a vehicle for a U.S. statement exhorting the strongest 
support for the IAEA's full use of its safeguards 
capabilities and for ensuring the Agency has all the 
authorities it needs to provide assurances about the absence 
of undeclared activities.  Given the ongoing safeguards 
investigation mentioned in the SIR (ref A), the SIR 
discussion can also provide opportunity to influence Egypt to 
be more cooperative on nonproliferation objectives in the 
Board (ref A.)  Mission assumes the timing of the June Board 
-- in juxtaposition to the presidential election in Iran -- 
makes any progress on Iran unlikely, though we see virtue in 
considering another EU3 3 joint statement on Iran following 
the March Board precedent.  Mission recommends deferral of 
any Board action on Syria until September, when we have 
reason to believe we may be in a stronger position, to avoid 
the risk now of an abortive run at a Board resolution 
detracting from momentum on the Syria investigation.  We do 
not see much prospect for Board action on DPRK beyond strong 
national statements calling for return to the six-party 
process and IAEA verification; we would expect the UN 
Security Council in the event of a nuclear test, with a 
resolution in the September IAEA General Conference to 
follow.  The Secretariat has not been requested to produce a 
report on safeguards compliance in Iraq in advance of the 
June Board (ref B).  Mission recommends downplaying the 
de-restriction issue, placed by the NAM on the agenda as a 
diversion, though we should stand by the precedent of 
releasing the Iran report and continue to argue in favor of 
release of Syria reports.  End Summary and Action Request. 
 
Two Guerrillas in the Boardroom 
------------------------------ 
 
¶3. (C) The agenda for the June 15-19 meeting of the IAEA 
Board of Governors is overloaded, by traditional standards. 
Casting a pall over the atmosphere in which the Board will 
address this agenda are the divisive questions of who will 
succeed Mohamed ElBaradei as Director General, and what level 
of financial resources Member States will accord the agency 
in 2010 (in conjunction with a biennium progam and budget for 
2010-11).  Round two of the selection procedure for Director 
General, complicated by expansion of the field from two to 
five candidates, will run in installments before and after 
the Board's regularly scheduled week-long meeting.  The 
uncertainty about DG succession at this time feeds an aura of 
"suspended animation" about the Agency that is reinforced by 
the frustrated safeguards verification cases in Iran and 
Syria (more below).  The program and budget process is, 
ostensibly, even more accurately described as being at an 
impasse.  First attempts May 13-14 by the empowered Board 
Vice Chairman, Romanian Ambassador Cornel Feruta, to lead 
negotiations between states resulted in more observable 
rejectionism than compromise.  States are calling for 
different proposed numbers from the Secretariat rather than 
indicating funding levels on which they are prepared to 
engage.  Board Chair Feroukhi (Algeria) and her Romanian 
deputy are reliably committed to achieving real growth in the 
Agency's resources in this budget cycle, but the path from 
here to there will be marked by confrontation and protracted 
negotiations.  Feroukhi is urging Board member states to 
engage and compromise with a view, probably in vain, toward 
securing in June, per tradition, the Board's recommendation 
on the program and budget (for adoption by the General 
Conference in September).  On both these issues, U.S. 
activism is ongoing and crucial. 
 
Setting Priorities 
------------------- 
 
¶4. (C) Among the priority issues formally before the June 
Board, Mission believes the issue most ripe for progress is 
the "Assurance of Supply" agenda item, which includes three 
sub-items.  We are informed the Secretariat will present 
discussion papers on its own fuel bank concerpt and on the 
Russian LEU reserve proposal; Germany indicated its intention 
to circulate a paper on its "enrichment sancturay" concept. 
The DG must secure authorization from the Board to accept the 
contributed funding, currently held in trust, for development 
of the International Nuclear Fuel Bank (INFB), including 
nearly 50 million USD from the United States.  The Director 
General also requires authorization to conclude model 
agreements with Russia on its LEU reserve proposal; Russia 
has yet to circulate the two relevant texts to the Board.  At 
this writing the Secretariat is signaling it will seek no 
Board decisions in June.  If achievable, however, preliminary 
agreement from the June Board on acceptance of funds and the 
broad outlines of a fuel bank, to be set out in a Secretariat 
discussion paper, would pave the way for the September Board 
of Governors meeting to approve establishment of fuel bank 
mechanisms in advance of the September deadline for the 
Nuclear Threat Initiative challenge grant for the INFB. 
Securing such agreement will not be easy given residual 
G-77/NAM resistance and may come at the expense of other 
priorities, i.e. in order to enlist their support, other 
issues may need to be deferred. 
 
¶5. (S) The June Board's consideration of the annual SIR 
report is traditionally an opportunity to highlight 
strengthening safeguards.  In addition to promoting the 
Additional Protocol, we could help set the stage for later 
consideration of any concrete proposals we may wish to put 
forward on expanding the IAEA's legal authority, resources 
and technical capacity, including support for modernization 
of the Safeguards Analytical Laboratory (SAL) in the ongoing 
budget deliberations.  We would not expect any decisions to 
come out of the June Board on these issues, but the U.S. and 
like-minded should continue to make the case for more robust 
IAEA safeguards and investigative authority in dealing with 
undeclared nuclear activities.  As previewed ref A, Mission 
is also considering using the SIR reporting on Egypt to 
carefully leverage Egyptian cooperation on other safeguards 
issues.  Although the June Board traditionally recommends the 
biennial program and budget for apporval by the General 
Conference, we fully expect the ongoing budget deliberations 
to spill over into the summer, with a special Board meeting 
likely before July 20. 
 
Iran, Syria, DPRK 
----------------- 
 
¶6. (S) Weighing our country-specific verification priorities, 
the June Board would not appear to be a propitious time for 
pursuing Board resolutions on Iran, Syria or DPRK.  The 
Director General's published reports and introductory 
statement on these issues are unlikely to break any new 
ground.  With the Iranian presidential election scheduled the 
weekend before the IAEA meeting, the Board can be expected to 
take a wait-and-see approach.  This could also complicate any 
U.S. national statement on Iran, in terms of creating an 
expectation that we would be conveying a full iteration of 
our policy at a time that we may not want to be seen as 
attempting to influence the Iran election outcome.  We may, 
however, wish to consider another EU3 3 statement at the June 
Board, reiterating our united stance.  Such a statement would 
also help set a further precedent, as in March, for a joint 
EU3 3 approach on Iran in the Board of Governors.  As in 
March, there would have to be Political Director-level 
agreement to pursue such a statement as a point of departure 
for any successful Vienna negotiation of text. The 
desirability and content of a statement will be a function in 
part of whether Iran has accepted the EU3 3 offer of 
negotiations. 
 
¶7. (S) Although the Israeli Ambassador is pushing for Board 
action on Syria, Mission has reason to believe we may be in a 
stronger position in September for an initial Board 
resolution on the Syrian safeguards investigation.  For the 
June Board, the U.S. national statement should nevertheless 
convey a strong message marking a year gone by since the 
first and only June 2008 IAEA visit to Al-Kibar with no sign 
of additional Syrian cooperation since then, despite the 
IAEA's repeated requests.  The U.S, in concert with other 
like-minded could also consider signaling our support for any 
prospective special inspection request by stressing the 
importance we attach to the Agency using the full range of 
its safeguards authorities in Syria. 
 
¶8. (S) We do not see much prospect for Board action on DPRK, 
but expect strong national statements from the Core Group and 
others calling on the DPRK to return to the six-party process 
and IAEA verification.  The annual September General 
Conference resolution on DPRK continues to be the main 
vehicle for registering IAEA member states' concern about the 
DPRK nuclear file.  Given the UN Security Council's active 
involvement on DPRK, we do not see Board resolution as adding 
value at this juncture, or as an effective means of 
pressuring non-IAEA member North Korea.  In the event of 
another test, we would expect the UNSC to take the lead as in 
the past.  The Board did not issue a resolution following the 
first DPRK nuclear test, which was condemned in the annual GC 
resolution. 
 
De-restriction:  Not Taking the Bait 
------------------------------------ 
 
¶9. (S) The NAM, abetted by Brazil's "principled" stance at 
the March Board, insisted on the inclusion of de-restriction 
on the June Board agenda as means of airing well-worn 
grievances about safeguards confidentiality and media leaks, 
and to counter Western efforts to release the DG's report on 
Syria.  Aside from a symbolic victory, there is little to be 
gained from engaging this debate as means of exerting 
"pressure" on Syria.  The Syria report is leaked almost 
instantaneously, and pursuing this issue is not a substitute 
for Board action on Syria.  Our primary objective should be 
to hold the line on release of the Iran reports consistent 
with past Board practice and as a matter of transparency on 
an issue of international concern, but otherwise downplay the 
debate.  We should reassert the Board's authority to release 
its own reports on a case-by-case basis as noted in the cover 
note to the DG's report on the de-restriction issue, which 
cites the Board Chair's explicit statement in this regard 
upon adoption of the policy in 1997.  Such a U.S. posture 
would leave the door open for release of future Syria 
reports, especially should the IAEA stand-off with Syria 
escalate, for example, in the wake of any future special 
inspection request.  (Note: The Secretariat formally submits 
DG reports on Iran requested by the Security Council and 
passes a courtesy copy of Iran reports informally to IAEA 
members on the UNSC even when it is not a formal requirement. 
End note.) 
 
¶10. (C) The 1996 Board document/decision circulated by the 
Secretariat on de-restriction does not add much to the 
debate.  The IAEA has no proactive policy for publishing 
de-restricted reports on its website.  The policy of 
de-restriction after two years is applied on a case-by-case 
basis in response to one or two requests a year from 
researchers who seek access to the documents; similar to our 
FOIA process.  The two-year rule includes exceptions for 
confidential information and legal impediments to release as 
well as a blanket exception on non-release of the annual SIR 
report.  In practice, the Secretariat has released some 
safeguards reports on Iraq, for example, dating back to the 
early 1990s.  In short, this process is not comparable to and 
has no bearing on Board decisions on release of the Iran and 
Libya reports -- the Board can make a decision on release 
regardless of the two-year rule on de-restriction.  Clearly, 
the NAM is attempting to conflate these issues.  Our approach 
should be to stand by the Board's prerogatives with respect 
to specific cases while downplaying de-restriction as an 
issue.  To counter likely NAM rhetoric on this agenda item, 
we could note the fact the IAEA Board decisions, unlike UN 
Security Council resolutions or those of other UN bodies, are 
not accessible to the public, i.e. they are only available on 
govatom once incorporated into the record of the meeting, and 
call for greater transparency. 
 
Any Other Business - Pakistan, Gaza 
----------------------------------- 
 
¶11. (C) There is still a possibility of Arab delegations 
raising the Gaza DU issue under AOB though they refrained 
from doing so in the March Board.  Mission would like to draw 
on our previous guidance to not engage such a debate unless 
it spills over into areas outside the IAEA's authority. 
 
 
 
SCHULTE