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OO RUEHWEB

DE RUEHUNV #0491/01 3021524
ZNR UUUUU ZZH
O 291524Z OCT 09
FM USMISSION UNVIE VIENNA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0238
INFO RUEHII/VIENNA IAEA POSTS COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RHEBAAA/DOE WASHDC PRIORITY
RUEANFA/NRC WASHDC PRIORITY

UNCLAS UNVIE VIENNA 000491 
 
SENSITIVE 
SIPDIS 
 
IO FOR ANDERSON; ISN FOR JENKINS; DOE FOR NA-24, NA-25, 
NA-21; NSC FOR SCHEINMAN, HOLGATE, CONNERY; NRC FOR DOANE, 
SCHWARTZMAN 
 
E.O. 12958: N/A 
TAGS: AORC PREL KNNP IAEA UN
SUBJECT: OPPONENTS TO IAEA 2011 BUDGET GROWTH MOBILIZING 
 
REF: UNVIE 368 
 
¶1. (SBU) SUMMARY:  In a speech October 21 at the U.S. 
Institute for Peace, Secretary Clinton implied USG support 
for a further increase in the IAEA's budget and authorities. 
Formal negotiations among Member States to determine the 2011 
level will not begin until later this winter, but the UK and 
other zero growth hawks have already warned Mission that they 
do not welcome another increase.  (Budget negotiations 
earlier this year resulted in a moderate increase of 5.4 
percent for 2010; the increase was a coup for the U.S. and 
was achieved over the objections of our closest allies.)  The 
point of departure for negotiations over the 2011 level is 
unclear; much will depend on the expressed desires of Member 
States and the inclinations of incoming Director General 
Yukiya Amano.  Finnish Ambassador and Budget Group Chair has 
expressed a strong preference for a more member-driven 
process.  For these reasons, Mission urges Washington's early 
consideration of the budget issue, with the goal of 
determining a firm, top-line position by the end of December. 
 Once clear about our goal, USG should take advantage of the 
April Nuclear Security Summit, May NPT RevCon and ongoing 
meetings of the G8 Non-Proliferation Directors Group to 
highlight the importance of resourcing the IAEA.  Securing an 
increase in the 2011 budget is not outside the realm of 
possibility, but our allies are already cementing their 
positions in favor of zero growth.  Bringing them around to a 
more flexible position requires thoughtful argumentation and 
early, frequent, and high-level action.  END SUMMARY. 
 
¶2. (SBU) Public statements by the U.S. Administration over 
the past year clearly affirm the importance of the IAEA's 
mission and the need to transcend the zero-real-growth policy 
applied across the UN system.  This policy approach was 
implemented on the ground in Vienna, leading to Member State 
approval of an increase in the IAEA's 2010 budget. 
Unfortunately, the hard-won, real increase of 2.7 percent 
(5.4 percent nominal, with price adjustment) isolated the 
U.S. from our traditional allies and created a schism among 
major donors that diverted friend and foe alike from priority 
issues such as Iran, Syria and North Korea.  The budget 
controversy also meant that Member States failed to come to a 
strong consensus on indicative figures for the second half of 
the two-year biennium (i.e., 2011).  Instead, the 2009 
General Conference approved the Regular Budget (RB) for 2010, 
per its statutory duty, but labeled the 2011 figures 
"preliminary" and "subject to the outcome of deliberations..." 
 
¶3. (SBU) The 2011 "preliminary" figures envision an 11.4 
percent real increase (approximately 14 percent nominal, with 
price adjustment).  While these figures would fund the Agency 
in 2011 below the level recommended by DG ElBaradei in his 
February 2009 proposal for the biennium 2010-11, they still 
project significant growth and, thereby, run contrary to the 
desires of the mostly European "budget hawks" (UK, France, 
Germany, Italy, Switzerland, et. al.).  France and Germany 
are the least flexible, having adopted positions that are not 
only fiscally conservative, but incorporate a 
near-philosophical rejection of additional resources for 
technical cooperation activities.  Mexico, a "swing state" 
between the OECD and G-77, was recently described by a 
Secretariat observer as "militantly zero growth."  Canada is 
similarly entrenched, stemming from a much-publicized 
position of zero growth for international organizations. 
Mission suspects that the budget hawks are silently supported 
by a minority of middle-income, G-77 countries, such as South 
Africa, Brazil and Argentina.  (Note: This silent split in 
the G-77 renders the larger group useless to the U.S. in 
budget negotiations.  Even if the majority of G-77 Members 
support an increase - as is likely the case - they refuse to 
break G-77 solidarity by vocalizing their opinion.  End 
Note.) 
 
¶4. (SBU) In reftel para 5, commenting on the Board's 
recommendation for the 2010 budget, we noted the unresolved 
capital requirements of the IAEA's safeguards lab and that 
"Member States are depending on re-engaging in budget 
negotiations after a short hiatus."  Indeed, shortly after 
this year's General Conference, European diplomats began 
gingerly approaching us about the 2011 budget.  The questions 
foremost in their minds were: "Will the U.S. support the 2011 
preliminary overall increase of 11.4 percent?  If not, would 
the U.S. support any real increase in the IAEA budget?" 
Spanish Counselor Jose Luis de Guzman pointedly reminded 
MsnOff that the 2011 numbers were "merely preliminary." 
Spain's approach typifies similar overtures in the past month 
from the missions of Switzerland, Germany, Canada and Italy. 
 
¶5. (SBU) The IAEA Secretariat is reportedly in some disarray 
over how to present the 2011 budget at the informal meeting 
of the Program and Budget Committee in February.  One option 
would be simply to leave the preliminary figure of an 11.4 
increase as they are and present nothing new.  Another option 
would be to drop the 2011 preliminary figures and propose new 
figures that are more realistic and closer to zero growth. 
The final decision will fall to incoming Director General 
Amano, who takes the reins December 1.  (COMMENT: Amano's 
desire to avoid an early confrontation with the Europeans and 
take into account Japan's own fiscal constraints may compel 
him to retreat from advocating a double-digit percentage 
increase.  On the other hand, Amano floated with USG 
officials - in several encounters on the margins of the 
General Conference - the ambitious idea of marshalling new 
resources for worldwide nuclear security activities through a 
G-8 appeal modeled on the 2002 "10 Plus 10 Over 10" campaign 
and Global Partnership for cooperative threat reduction.  END 
COMMENT.). 
 
UK: DISPARITY BETWEEN POLICY AND PURSE? 
--------------------------------------- 
 
¶6. (SBU) In Vienna, UK representatives have been the most 
forthcoming about discussing their likely zero growth 
position for 2011.  Former UK Deputy Head of Mission Tim 
Andrews, currently seconded to the IAEA's Office of Nuclear 
Security, noted UK general elections will take place on or 
before June 3, but that both major parties had already staked 
out zero growth positions for international organizations. 
First Secretary Creena Lavery echoed this view, warning 
MsnOff that the U.S. had behaved prematurely and unilaterally 
in its drive for a budget increase last year.  Lavery 
counseled the U.S. to take a conservative approach to the 
budget that would maintain "Geneva Group solidarity" in order 
to 1) maintain a solid front in the face of thorny Middle 
East issues, 2) ensure smooth relations in the run-up to the 
May NPT Review Conference, and 3) support incoming IAEA 
Director General Amano.  Lavery felt the U.S. could do little 
to loosen the UK's zero growth position, though she admitted 
the April 12-13 Nuclear Security Summit in Washington would 
be an opportunity for nudging the UK away from zero growth. 
 
¶7. (SBU) Away from Vienna, calls for robustly resourcing the 
IAEA have come from the highest levels in the UK and seem to 
be at odds with the fiscal conservatism our contacts here 
represent to us.  PM Brown's July 2009 report to Parliament 
entitled "The Road to 2010; Addressing the Nuclear Question 
in the Twenty-First Century" speaks boldly about nuclear 
issues and dedicates an entire chapter to the IAEA.  In this 
report (http://www.cabinetoffice.gov.uk/ 
media/224864/roadto2010.pdf), PM Brown claims the UK is 
"playing a leading role in tackling nuclear challenges" and 
notes his desire to ensure that nuclear material does not 
fall into the hands of terrorist groups or hostile states. 
Chapter Six on "International Governance and the IAEA" 
acknowledges the need for IAEA reform, but also calls for 
strengthening of the safeguards regime.  In a telling comment 
(paragraph 6.3) that seems to contradict a zero growth budget 
position, the Report states that the UK wants the IAEA "to 
maintain and strengthen its position as the lynchpin of the 
international community's efforts to ensure a safe and secure 
nuclear future."  Paragraph 6.11 states the belief that the 
IAEA needs to be "properly resourced."  Paragraph 6.15 calls 
for an expansion of the Nuclear Security Program to ensure 
that the IAEA has the funds and expertise to underpin its 
activities.  Paragraph 6.12 proposes that the UK host a 
senior-level meeting of the Geneva Group of major donors to 
"discuss future funding and staffing requirements of the 
IAEA." 
 
¶8. (SBU) In short, there seems to be ample UK political 
declaration in support of a robust IAEA.  This stance differs 
fundamentally from the approach of France and Germany, two 
large contributors that do not appear to have invested in the 
IAEA at the political level.  Unfortunately, we have not seen 
the UK's political commitment translate into budgetary 
flexibility in Vienna or high-level activism.  (Lavery 
confessed, for example, that there had been no movement on 
the Report's proposal to hold a Geneva Group meeting of 
senior officials from capitals.)  The "Road to 2010" is 
there, however, and should be used to pressure the UK into a 
more flexible position.  Regarding the Nuclear Security 
Summit, Washington may even propose that the UK publicly 
support a regular budget increase for the IAEA as their 
Summit "house gift." 
 
DECIDE EARLY AND LOBBY OFTEN 
---------------------------- 
 
¶9. (SBU) COMMENT: The Secretary's remarks at the U.S. 
Institute for Peace clearly indicate U.S. commitment to 
adequate financing and an expanding mission for the IAEA.  PM 
Brown's report appears to mirror this commitment.  Mission 
admits to some alarm, however, at how quickly the UK and 
other traditional allies in Vienna have moved to draw the 
line at zero growth for 2011.  Clearly, we will need to go 
over the heads of local representatives if we expect London 
and other capitals to "put their money where their mouths 
are."  Washington action to determine our own budget position 
would enable Mission to keep Vienna expectations from 
hardening around zero.  Specifically, Mission advocates that 
USG set its top-line position on the 2011 budget level as 
soon as possible and fix specifics on the position by the 
first week of January.  (Mission will submit a formal 
guidance request septel, but plants this seed now for 
inter-agency consideration.)  Further, the earlier the U.S. 
determines its budget position, the sooner Washington can 
begin incorporating this position into preparations for the 
April Nuclear Security Summit, the May NPT RevCon, and 
meetings of the G8 Non-Proliferation Directors Group.  Though 
it will take months of negotiations throughout 2010 to effect 
even a moderate increase in the 2011 budget, early, emphatic 
and high-level action will put us on the path toward 
achieving the goal.  END COMMENT. 
 
DAVIES