US embassy cable - 04THEHAGUE467

UNCLAS SECTION 01 OF 03 THE HAGUE 000467 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR AC/CB, NP/CBM, VC/CCB, L/ACV, IO/S 
SECDEF FOR OSD/ISP 
JOINT STAFF FOR DD PMA-A FOR WTC 
COMMERCE FOR BIS (GOLDMAN) 
NSC FOR CHUPA 
WINPAC FOR LIEPMAN 
 
E.O. 12958: N/A 
TAGS: PARM, PREL, CWC 
SUBJECT: CHEMICAL WEAPONS CONVENTION (CWC):  WRAP-UP FOR 
WEEK ENDING 20 FEBRUARY 
 
REF: A. (A) 2003 HAGUE 2944 
     B. (B) STATE 17041 
     C. (C) HAGUE 195 
 
 This is CWC-24-04. 
 
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SCIENTIFIC ADVISORY BORD CHAIR ADDRESSES WEOG 
--------------------------------------------- 
 
1.  (U) Dr. Tom Inch (UK), Chairman of the Scientific 
Advisory Board (SAB), participated in the Western European 
Group (WEOG) meeting on Feb 17 to field questions from WEOG 
delegations on SAB priorities as well as scientific and 
technological developments.  Inch noted that the SAB, as the 
technical advisory arm of the Director-General of the OPCW, 
is in a unique position to analyze how scientific and 
technological developments in the chemical industry and 
destruction affect OPCW verification activities, quite apart 
from the political concerns that often drive States Party 
debate. 
 
2.  (U) Not one to mince words, Inch complained that a focus 
on procedural debates, rather than substantive issues, 
hampers OPCW institutional progress.  He observed that 
delegates lost sight of the object and purpose of the 
Convention.  In particular, he cited "legalistic" 
interpretations by States Parties regarding non-inclusion of 
chemically identical salts of treaty-monitored bases in 
verification as a prime example of States Parties not 
fulfilling the purpose of the Convention by creating a 
verification loophole.  He also noted the migration of States 
Parties towards an emphasis on schedules and verification of 
monitored, known chemicals, rather than attention to the 
General Purpose Criterion.  Having such a focus on schedules 
for verification and associated prohibitions undermines the 
object and purpose of the treaty. 
 
3.  (U) Inch commented that declarations and inspections were 
intended to be confidence-building measures, not the end-all, 
be-all of verification, and that novel agents, scientific and 
technological developments, and inspection tools such as 
on-site sampling and analysis are critical to effective 
verification.  Inch suggested that increased participation of 
the SAB as a "peer review" partner in OPCW inspector 
training, policy development and implementation could be 
useful in ensuring technological and scientific developments 
continue to play a prominent role in the execution of the 
Convention. 
 
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ARTICLE IV/V CONSULTATIONS LAUNCHED 
----------------------------------- 
 
4.  (U) The first round of consultations on stabilizing the 
funding of verification activities under Articles IV and V 
was launched February 19 by facilitator Johan Verboom of the 
Netherlands.  Seventeen delegations participated in the 
discussion, which went into overtime and continued follow-on 
discussions in the halls.  Verboom opened the meeting by 
seeking confirmation that all delegations were prepared to 
enter discussions on the basis of the proposal put forward by 
the Advisory Body on Administrative and Financial Matters 
(ABAF) in November (REF A).  While a few (Mexico, Brazil, 
Italy) said they were still awaiting confirmation from their 
governments, all agreed to focus discussion on the ABAF 
proposal.  Japan noted that as a matter of policy, budget 
surpluses should be returned to States Parties, but that it 
nevertheless was prepared to support the ABAF proposal. 
Given that this approach had supposedly been agreed to in 
advance, the discussions covered a surprisingly wide range of 
views. 
 
5.  (U) Verboom distributed a draft decision at the meeting 
(e-mailed to AC/CB) that, like the ABAF recommendation, 
centered on expanding the Working Capital Fund (WCF) and 
extending the repayment period.  However, the draft differed 
in important respects from the ABAF proposal by not spelling 
out how the fund would be replenished and placing few 
restrictions on its use.  Verboom explained that this 
language was drawn from other UN-affiliated organizations' 
regulations concerning WCFs rather than focusing on the 
unique funding needs that Article IV and V activities impose 
on the OPCW.  The UK led a number of delegations urging that 
the decision hew more closely to the ABAF line.  OPCW 
Director of Administration Herb Schulz sought to retain 
maximum flexibility in using an expanded WCF.  U.S. Del 
stressed that the size of the WCF, measures to capitalize it, 
and regulations governing its drawdown and replenishment 
would have to be carefully delineated (per REF B). 
 
6.  (U) Peter Beerwerth (Germany) argued that revising 
Financial Regulations was preferable to Verboom's draft 
language "notwithstanding Financial Regulation 6.3 and 6.4" 
to expand the WCF.  Yu Dunhai (China) noted that the draft 
decision made no provision for replenishing the WCF for 
drawdowns of inspector salaries if planned inspections were 
not carried out (the "ficticious income" problem).  Gianpaolo 
Malpaga (Italy) was not convinced that the current size of 
the WCF was not sufficient, despite Schulz's explanation that 
the current, approximate one-month's operating expenses that 
is the standard for international organizations, needed to be 
expanded because of the additional layouts required to cover 
costs of verification under Article IV/V. 
 
7.  (U) COMMENT:  Notwithstanding the many questions and 
objections raised at the initial round of consultations, 
Verboom expressed satisfaction that the groundwork had been 
laid for more detailed discussion in coming weeks.  While 
that process will obviously re-write much of the draft text, 
we agree that the initial session was useful for putting down 
U.S. markers and helping to narrow the scope of future 
consultations.  We are cautiously optimistic that the talks 
will ultimately result in an EC decision that stabilizes 
Article IV/V funding while meeting USG requirements for 
rigorous accounting.  The "ficticious income" problem, 
however, will continue to bedevil OPCW budget planning. 
 
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SOME PROGRESS ON FINANCIAL REGULATIONS 
-------------------------------------- 
 
8.  (U) Facilitator Peter van Brakel (Canada) resumed 
consultations on outstanding revisions to OPCW Financial 
Regulations (REF C) by circulating new language (e-mailed to 
AC/CB) on Regulations 4.11, 6.2, 6.3, and 10.5.  Participants 
in the February 19 discussion succeeded in working through 
that entire agenda, although several points will be 
revisited, as many delegations (including possessor state 
India) did not have instructions, and others (including 
Russia) were not present.  With the caveat that we too did 
not have final guidance, USDel drew on standing guidance and 
consultations with AC/CB to steer the discussion in a 
positive direction. 
 
9.  (U) Participants did not reach agreement on revised 
language for Regulation 6.2 (a), which cites "miscellaneous 
income received during the financial period" as a budget 
credit referring to Article IV and V contributions by 
possessor states.  Beerwerth suggested replacing 
"miscellaneous income" with a reference to "contributions as 
specified under 5.1 actually received in the financial 
period," but Ali Ashgar (Technical Secretariat) was adamant 
that for accounting purposes Article IV and V payments must 
be counted as "miscellaneous income" or "miscellaneous income 
- other" rather than as any kind of "contributions."  Finding 
deadlock on that point, facilitator van Brakel asked whether 
the U.S. would be willing to propose alternate language. 
 
10.  (U) At Del's urging, participants supported retaining 
the formulation "cash surplus" instead of van Brakel's 
proposed "cash balance" in references to the final (audited) 
budget in Regulation 6.3., but agreed to use the term "cash 
balance" in references to the provisional balance during the 
course of a given financial period.  On the margins of the 
discussion, Arya Sandeep (India) asked whether USDel could 
accept van Brakel's proposed change to Article 6.3, which 
stipulates that cash surplus credits are to be applied first 
against arrears of assessed contributions (current practice) 
and then against any arrears of Article IV and V payments (a 
change) before being applied as a credit against future 
assessments.  We said that Washington was still studying that 
issue, and guessed that Russia, if it were present, would 
object.  Sandeep said he did not know where Delhi would come 
out on that point. 
 
11.  (SBU) Following the consultations, Van Brakel promised 
to provide DelOff with an advance look at further proposed 
revisions that he plans to distribute for the next round of 
discussions, scheduled for March 4.  This language, which he 
asked us not to share with other delegations until he had a 
chance to consult with them, will include a change to the 
Financial Rule defining the role of the Office of Internal 
Oversight as well as proposed modifications to Regulations 
12.1, 12.3, 12.4, and 12.7. 
 
12.  (U)  Javits sends. 
 
 
 
SOBEL