US embassy cable - 04THEHAGUE1223

UNCLAS SECTION 01 OF 02 THE HAGUE 001223 
 
SIPDIS 
 
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):  WEEKLY WRAP-UP 
FOR 14 MAY 2004 
 
 
 This is CWC-61-04. 
 
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FINANCIAL REGULATIONS 
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1.  (U)  The May 13 consultations on proposed changes to 
financial regulations chaired by facilitator Peter van Brakel 
(Canada) focused on one issue: proposed language on 
Regulation 5.4 and a period for payment of Article IV/V 
invoices.  The result was inconclusive.  Per Washington 
instructions, the U.S. Del pressed hard for a 90-day period 
for payment of these invoices.  The German delegation tabled 
a specific proposal on instructions from Berlin.  The FRG 
proposed either: 
 
-- Bills payable in full within a period to be negotiated. 
If there is a dispute, the OPCW would set aside the disputed 
amount. 
-- Bills would be payable within 30 or 60 days and only the 
undisputed amounts would be paid.  The rest would be paid 
after the resolution of disputes. 
 
2.  (U)  Italy, Austria and South Korea supported the FRG 
proposal.  France expressed support for the idea, but 
proposed payment after 60 days on undisputed amounts of the 
invoices.  After resolution of the disputes, payment would be 
required in 30 days.  Russia reiterated that due to 
complicated bureaucratic requirements in Moscow, Russia could 
not accept 30 or 60 days for payment of a complete, 
agreed-upon invoice.  Russia did not state that 90 days was 
acceptable, but indicated in a side comment to the U.S. Del 
that this would be acceptable to Moscow. 
 
3.  (U)  The U.S. noted that Washington's practice is partial 
payment of agreed-upon parts of an invoice, which generated a 
lengthy debate on partial payment.  The Russian delegation 
held firm that it could not accept partial payment.  Director 
of Administration Schulz made a strong pitch for partial 
payment and asserted that disputed elements are quite small. 
The FRG emphasized that the goal is to have the Technical 
Secretariat get as much Article IV/V money as soon as 
 
SIPDIS 
possible.  In what was probably an unofficial comment, the 
FRG indicated that it could live with 90 days as long as 
there is partial payment of most of the invoice. 
 
4.  (U)  The participants agreed to send back two proposed 
texts for consideration in capitals (which have since been 
E-mailed to AC/CB).  It was clear there was no/no consensus 
behind either proposal.  However, the goal is to give 
capitals something to work on until the next facilitation on 
June 3.  In a side-bar discussion, Van Brakel asked the U.S. 
to consider holding small meetings with the Russians, Germans 
and possibly the TS in the interim to see if some variation 
of the following options might be acceptable to the key 
players. 
 
5.  (U)  The first option would involve having all Article 
IV/V invoices paid within 90 days.  The possessor states 
would inform the OPCW of any disputed parts of the invoice. 
If there is no resolution of the dispute within one year, the 
possessor state would get the disputed amount as a credit for 
future Article IV/V invoices.  The TS would report to the 
Executive Council on unresolved disputes.  This would be the 
"check" on possessor states to see that they do not abuse the 
right to dispute any or all parts of an invoice.  (Note: Much 
of this was the result of Schulz's plea not to let minor 
disputes deprive the TS of 95% of its Article IV/V money 
ASAP.  Schulz also said that if the possessor state really 
had trouble with invoices and TS practices, that state could 
reduce the amount of its payment on subsequent invoices.  In 
short, the possessor state has a practical "out" and is not 
at the mercy of the TS.) 
 
6.  (U)  The second option is a modified version of the 
partial payment language that was in the May 3 draft 
document.  Article IV/V invoices would be paid within 90 days 
of receipt of the invoice except for those elements that are 
challenged by the possessor states.  The draft text indicates 
the possessor state "shall be allowed a further (30, 60, 90, 
?) days in which to make full payment." 
 
7.  (U)  As indicated previously, timely payment of Article 
IV/V invoices has been connected politically with 
modifications of the Working Capital Fund.  The next set of 
facilitations on that issue are set for May 19.  The U.S., 
FRG and Russian delegations have tentatively agreed to meet 
the week of May 24. 
 
--------------------------------- 
BUDGET MEETING WITH THE DEPUTY DG 
--------------------------------- 
 
8.  (U)  On May 12, members of the delegations of the major 
contributors to the OPCW (U.S., U.K., France, FRG, Japan, 
Italy) met with Deputy DG Hawtin and a number of senior TS 
officials to discuss a range of budget issues.  Hawtin 
informed the group that the draft 2005 budget in 
results-based budgeting format would be out soon, and that 
would have a nominal increase below five per cent.  The DDG 
said that the current plan is for a small increase in the 
number of industry inspections, specifically noting about ten 
additional OCPF inspections.  Hawtin informed the group that 
there had been requests to DG Pfirter for some 20 additional 
positions, and the DG had agreed to only four additional 
posts. 
 
9.  (U)  Acting head of the Inspectorate Carvalho reported 
that the first inspectors on short-term contracts had started 
at Gorniy.  Director of Verification Reeps noted that there 
had been savings with regard to training of inspectors. 
However, he made the cautionary note that this was achieved 
by having a shorter period of training, which could have an 
impact on quality.  (Note: while Reeps was apparently seeking 
to be transparent, we would note that the TS has made steady 
improvement in its training of inspectors.  Based on 
collective experience gained over several years now of 
actually conducting inspections, the latest batch of 
inspectors has the benefit of a much more focused and 
efficient training program.) 
 
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ARTICLE XI 
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10.  (U)  Facilitator Norma Suarez (Mexico) held a May 10 
informal consultation and distributed a 25 November 2003 
draft decision document (previously unseen by this 
delegation) and announced that she would accept constructive 
textual suggestions at the next meeting circa 10 June (faxed 
to AC/CB).  The remainder of the session was given to Bijoy 
Chatterjee, Head of the International Cooperation Branch 
(ICB), who presented an informative overview of International 
Cooperation Activities planned for 2004 (faxed to AC/CB). 
These include the Associates Program, conference support, 
internship support, research projects support, lab 
assistance, equipment exchange, information service, and new 
this year an analytical skills development program.  The 
presentation was well received by delegations, with comments 
following expected lines.  Nonaligned countries lauded the 
ICB's efforts to reach out to member states and called for 
major funding increases.  Others noted ICB's work, but 
remarked that OPCW budgets were restricted and that all TS 
efforts needed to carefully balance TS funding obligations. 
 
11.  (U)  Javits sends. 
SOBEL