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DE RUEHUNV #0279/01 1681458
ZNR UUUUU ZZH
O 171458Z JUN 09
FM USMISSION UNVIE VIENNA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9589
RHEBAAA/DOE WASHDC IMMEDIATE
RUEANFA/NRC WASHDC IMMEDIATE
INFO RUEHII/VIENNA IAEA POSTS COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

UNCLAS UNVIE VIENNA 000279 
 
SENSITIVE 
SIPDIS 
 
FOR ISN, IO; DOE FOR NA-24, NA-25, NA-21; NSC FOR 
SCHEINMAN, CONNERY; NRC FOR DOANE, SCHWARTZMAN 
 
E.O. 12958: N/A 
TAGS: AORC PREL KNNP IAEA UN
SUBJECT: DG ELBARADEI FUELS THE BUDGET DEBATE 
 
REF: A. UNVIE 109 
     ¶B. UNVIE 201 
 
¶1. (SBU) Summary:  IAEA Director General ElBaradei intervened 
during a session of the ongoing Board of Governors meeting to 
deliver an impassioned plea in favor of a budget increase. 
ElBaradei said "two decades" of zero growth had restricted 
the IAEA's ability to do its job, and warned that Member 
States would sooner or later bear the responsibility of 
"another Chernobyl," a terrorist attack using radiological 
material, or the disclosure of a clandestine nuclear program. 
 ElBaradei's intervention came on the heels of calls by the 
UK, Germany, France and others to restrict the IAEA's budget 
to zero growth.  The G-77 statement contributed a new 
proposal for calculating increases for the Technical 
Cooperation Fund but otherwise failed to break new ground or 
communicate strong support for a budget increase.  China 
(speaking for the first time in this budget debate), Russia, 
Norway and Turkey gave welcome (but lukewarm) support for an 
increase; only the U.S. indicated broad support.  Mission has 
learned of a "silent split" in the G-77 over the budget 
increase, leading to lackluster statements and hampering our 
efforts to isolate the European budget hawks.  We will need 
to encourage Argentina and Brazil to take a leadership role 
among the G-77 and come out in favor of a budget increase. 
Senior level political discussions will also be necessary to 
prod the European budget hawks - UK, France, Germany - into 
accepting an increase of up to 9.5 percent in the IAEA 
budget.  The upcoming G-8 meeting of Foreign Ministers June 
25-26 represents a prime opportunity to raise the IAEA budget 
issue at a high level.  End Summary. 
 
Board Room Offers an Opportunity to Talk Budget 
--------------------------------------------- -- 
 
¶2. (SBU) On June 16 during the ongoing Board of Governors 
meeting, Member States addressed Agenda Item 4 to approve the 
Report of the Program and Budget Committee (ref a).  Vice 
Chair Kirsti Kauppi (Finland) asked Board Members to refrain 
from using the agenda item to repeat their previous positions 
on the budget, but her request went unheeded and most Member 
States repeated their previous positions.  They remain 
sharply divided over the priority areas for a budget increase 
and even whether there should be any increase above 
inflation.  The U.S. was the only Member State to indicate 
broad support for a budget increase that would address a 
range of priorities.  Norway, the only other Member State 
publicly supportive of an increase, emphasized its support 
for Major Program 3 with a focus on safety.  More positively, 
a broad spectrum of Member States have clearly reached 
consensus on funding for the Seibersdorf Analytical 
Laboratory (SAL) and the establishment of a Major Capital 
Investment Fund (MCIF), albeit on a smaller scale and 
possibly using alternative funding mechanisms such as 
borrowing (ref b). 
 
¶3. (SBU) The UK, Germany, France, Switzerland and Mexico 
repeated previous positions that called for additional 
savings, cost-cutting measures, and the 2009 budget as a 
point of departure for the 2010-2011 budget.  Spain surprised 
participants by suggesting that some activities of the 
Technical Cooperation Fund (TCF) should be folded into the 
Regular Budget.  Most observers took this to mean Spain would 
consider a budget increase, but Spanish Counselor Jose Luis 
de Guzman later explained to Msnoff that the cost of 
including some TCF activities could be offset by additional 
savings - with the end result of zero real growth (ZRG).  De 
Guzman said he had included the TCF suggestion as an 
incentive for the G-77 to give greater consideration to 
Nuclear Security. 
 
¶4. (SBU) Ireland did not make a statement, but Irish Deputy 
PermRep Conleth Brady took Msnoff aside to plead for fiscal 
austerity, explaining that the Irish government was in dire 
straits financially, that contributions to international 
organizations for 2010 had been frozen, and that any increase 
in the Regular Budget must be taken from Ireland's commitment 
to the TCF.  A vocal budget hawk, Conleth was 
uncharacteristically apologetic about Ireland's position, 
explaining that "under other circumstances, of course we 
would support the U.S." 
 
A New Twist from the G-77 
------------------------- 
 
¶5. (SBU) The G-77 statement repeated the usual support for 
development programs.  More interestingly, the statement 
included a new proposal for calculating TCF increases based 
on 1) the average of the real increase in the Regular Budget 
and the price adjustment, with the stipulation that 2) the 
result never falls below ZRG.  (For example, if the Regular 
Budget real increase is 6 percent and the price adjustment is 
2 percent, TCF would receive a 4 percent increase.)  South 
African Counselor Bennie Lombard enthusiastically explained 
to Msnoff that the formula had been devised to assure the 
predictability of TCF contributions from year to year. 
Pakistani Second Secretary Usman Jadoon was similarly 
enthusiastic, viewing the calculation as a way to take the 
"pain and humiliation" out of TCF negotiations.  Msnoff 
suggested that a long term commitment to a TCF formula would 
be a tall order that would probably not get by the budget 
hawks.  Lombard and Jadoon were receptive to the comment, 
describing their calculation as an opening position, and 
promising to consider applying the TCF calculation as a 
one-time, one-year deal rather than a standing expectation. 
 
A Silent Split 
-------------- 
 
¶6. (SBU) In a separate conversation, Jadoon admitted to 
Msnoff that there was an silent split in the G-77 between 
countries that wanted a budget increase (Pakistan, Egypt, 
possibly the Philippines) and those that paid larger 
assessments and were likely under instructions to avoid an 
increase (Brazil, Argentina, possibly South Africa).  Usman 
mentioned that G-77 countries were awkwardly silent on their 
respective positions, and that this caution was keeping the 
G-77 as a group from energetically confronting the budget 
hawks.  Jadoon suspected he was in the same boat as a number 
of other G-77 countries - supportive of an increase but 
instructed not take a leadership role.  Jadoon suggested to 
Msnoff that the U.S. do more to lobby the Group of Latin 
American Countries (GRULAC) in order to inject more 
enthusiasm into G-77 statements on the budget.  G-77 heavy 
hitters Brazil and Argentina are particularly important. 
 
Tremulous Voices 
---------------- 
 
¶7. (SBU) In contrast to the predictable statements by the 
European budget hawks, new voices were added in cautious 
support for a budget increase.  China spoke for the first 
time in a carefully-worded statement that included the merest 
hint of support for a budget increase.  Turkey also spoke for 
the first time, describing the importance of resourcing the 
Agency.  Russia spoke publicly for only the second time, 
describing the latest budget proposal as "reasonable."  Cuba 
pointed out the flawed logic of asking the Agency to expand 
its role while refusing to commit additional resources. 
Japan spoke conciliatorily about balancing the pressures of 
the budget crisis with adequately resourcing the Agency. 
 
ElBaradei's Backlash 
-------------------- 
 
¶8. (SBU) These voices of support were so faint compared to 
the strong statements by the budget hawks that Director 
General ElBaradei grew visibly frustrated as the session wore 
on and walked out on the UK Ambassador's intervention.  In a 
surprise intervention at the end of the session, ElBaradei 
claimed he had submitted a budget that was not only realistic 
but "credible."  He mentioned that even in good economic 
times, Member States had resisted a budget increase, and that 
they would eventually "reap what they sowed."  He warned 
Member States not to "come to me in a couple of years, after 
there is another Chernobyl, a terrorist attack, or a country 
develops a clandestine nuclear program - that is your 
responsibility."  Elbaradei asserted that he could not in 
good conscience submit a budget that deprived the Agency of 
the ability to do its job in nonproliferation, safety, 
security and development.  Asking the Agency to "pass the 
hat" was a "bastardization" of an important international 
organization. 
 
¶9. (SBU) ElBaradei also turned the tables on Member States 
who insisted on prioritization, telling them to "do some 
prioritization of their own" in choosing which international 
organizations to support.  ElBaradei singled out the U.S. 
twice during his impromptu intervention, referring to U.S. 
calls for a budget increase and President Obama's expressed 
appreciation for the linkages between poverty and insecurity. 
 He also chided Member States for stressing cost savings, 
saying, "I can keep cutting five dollars here and five 
dollars there, but that's not going to give me the sixty 
million I need."  He repeated that what some states were 
calling "cost savings" were in reality "program cuts." 
Although several ambassadors complained about ElBaradei's 
intemperate remarks, the German DCM welcomed them, telling us 
privately that he was glad the visiting Economics Ministry 
representatives on his delegation had the opportunity to hear 
the DG's impassioned remarks. 
 
¶10. (SBU) Budget issues resurfaced in the subsequent debate 
on the Safeguards Implementation Report (SIR), with several 
delegations questioning the Safeguards Department's recent 
carryover of unspent funds.  Switzerland noted that 10.5 
million Euros remained unspent in 2008 and were carried over 
to 2009, and asked whether the funds would be spent. 
Safeguards Director Olli Heinonen said that most of the 
unspent funds were due to delays in major projects at the 
Rokkasho Reprocessing Plant and the MOX plant in Japan and at 
Chernobyl, as well as in some large contracts, and that most 
of the funds would be spent in 2009. 
 
¶11. (SBU) Speaking privately with DCM, UK delegation member 
and G-8 Non-proliferation Directors Group member Liane 
Saunders welcomed the recent agreement on IAEA resource 
language for the G-8 meeting.  She agreed with DCM that it 
was unhealthy for the E3 and U.S. to be publicly and starkly 
divided, as we were in the most recent round of budget 
negotiations.  She also agreed that we need to reach a 
consensus on IAEA budget needs among the E3 and U.S. 
non-proliferation experts who are charged with coordinating 
international priorities on issues such as safeguards and 
nuclear security.  Echoing what we have heard from other UK 
counterparts, Saunders acknowledged the budgetary 
implications of Prime Minister Brown's public statements in 
favor of strengthening the IAEA, but she also noted the 
reluctance to commit to anything that looks like a "blank 
check" with the DG race still unresolved. 
 
Comment 
------- 
 
¶12. (SBU) Lack of a vigorous and unified G-77 position on the 
budget has emboldened the budget hawks to hunker down on zero 
growth.  This "silent split" in the G-77 explains a lot about 
the slow progress of budget negotiations, which should have 
been concluded by the time of the current Board meeting. 
Stronger support from the G-77 would effectively buttress 
ElBaradei's efforts to shame the budget hawks into an 
increase.  Brazil and Argentina are key to this effort. 
Incipient support from China and Russia - if we strengthen it 
- could also tip the balance in favor of an increase. 
Mission will continue working with Washington to push key 
Member States to support an increase (POC: IO Desk Officer / 
U.S. delegation member Jim DeTemple).  Mission also 
appreciates Washington efforts to work the IAEA budget issue 
through the G-8 venue, and notes the potential to continue 
pursuing high-level support for a budget increase at the 
upcoming meeting of G-8 Foreign Ministers June 25-26. 
 
 
SCHULTE