US embassy cable - 04THEHAGUE2526

UNCLAS SECTION 01 OF 05 THE HAGUE 002526 
 
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 JOECK 
WINPAC FOR LIEPMAN 
 
E.O. 12958: N/A 
TAGS: PARM, PREL, CWC 
SUBJECT: CHEMICAL WEAPONS CONVENTION (CWC):  WEEKLY WRAP-UP 
FOR OCTOBER 1, 2004 
 
 
This is CWC-116-04. 
 
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SOUTH KOREAN POLITICAL CONSULTANT 
--------------------------------- 
 
1.  (SBU) On October 1, South Korean del rep Park Yong Kyu 
informed us that his delegation was recommending to Seoul 
that South Korea not/not support a continuation of the 
political consultancy for General Chong, who is tasked with 
working on universality on the Korean peninsula.  The ROK 
delegation had come to this conclusion after deciding to make 
a determined effort to obtain a permanent senior position in 
the Technical Secretariat.  The current focus of that effort, 
continued Park, is the position of head of the External 
Relations Division, headed by Huang Yu (China).  Continued 
support of Chong's consultancy would weaken the Korean effort 
to get the ERD or some other senior position, commented Park, 
so the delegation was urging Seoul to drop continuation of 
Chong's consultancy.  (Note: while the South Korean MOD may 
have strong objections, we understand that the ROK delegation 
has informed Director-General Pfirter that they are no longer 
supporting continuation of Chong's consultancy.) 
 
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ARTICLE X 
--------- 
 
2.  (U) All comments provided by Washington were articulated 
during the September 29 facilitation and during 
pre-consultation discussions with facilitator Gabrielle 
Kruger (UK).  Kruger indicated all U.S. comments will be 
reflected in a subsequent amended format, which will be 
distributed at the end of the week. On the procedural side, 
Kruger proposed that the deadline for annual submissions 
should be 90 days after the beginning of the calendar year, 
and clarified that all SPs will be required to submit a 
declaration.  No delegation commented on these items.  The TS 
did mention that only 7% of SPs made their submission this 
year. 
 
3.  (U) Per guidance, Del confirmed that all SPs will have 
the right to request each others' declarations.  Hassan 
Mashhadi, Assistance and Protection Branch, reiterated that 
the EC must adopt procedures for dissemination of the 
information in whatever format it takes, whether classified 
or unclassified.  Kruger indicated she would take two actions 
in response to this request.  First, she would include 
instructions and markings on the agreed format reminding 
States Parties that the format and information provided are 
to be unclassified. 
 
4.    (U) Second, procedures will be devised to accommodate 
provision and dissemination of classified information, either 
in the draft decision document or in EC Report language. 
Although no SP commented on this during the consultations, 
Brazil approached the Del afterwards to indicate that it was 
their belief that a SP could make a classified declaration in 
order to protect national security concerns, and that this 
information would not be disseminated.  Del reiterated that 
the declaration is intended to provide transparency and that 
all information submitted by a SP should be available to all 
other SPs. 
 
5.  (U) In the format discussions, Pakistan started the 
meeting by disagreeing with the concept of official format 
for the declaration, saying that the Convention does not 
provide for this.  Iran and Brazil seconded this view, while 
France, South Africa, Czech Republic, and the U.S. disagreed. 
 Pakistan then clarified that it is not opposed to the agreed 
format, but that SPs should not be legally bound by a 
"format."  Pakistan suggested that, like industry 
declarations where OPCW formats exist but SPs use their own 
forms, SPs should have the right to provide Article X 
submissions however they please.  (NOTE:  This argument 
probably will be attractive with those who do not support the 
format but are unwilling to say so.) 
 
6.  (U) Iran had a concern with nearly every open-ended or 
"detailed" question in the document, intending to make it 
more general.  No one supported this view during the 
consultation, but on the margins, Russia informed the Del 
that it shared the Iranian view on the detail to be provided. 
 (NOTE: On the open-ended questions, the Iranian 
interpretation seemed to be a misunderstanding that the text 
required detailed answers rather than leaving it to the SP to 
decide how much information to provide.  Kruger indicated she 
would clarify this with SPs in bilateral conversations.) 
 
-------------------------- 
2005 BUDGET - ARTICLE IV/V 
-------------------------- 
 
7.  (U) Budget consultations on Article IV/V inspections were 
held on September 28. There was limited discussion of the 
discount factor and the declarations of planned destruction 
activities by possessor states. Much of the consultation 
focused on the failure of any of the possessor states to pay 
Article IV/V contributions in 2004. Thus far in 2004, the TS 
has received no payments from possessor states. The U.S. 
failure, though the U.S. was never mentioned by name, to make 
any payments in 2004 was also discussed and the TS expressed 
concern that if the TS does not receive our payment within 
the next two weeks, the TS may be forced to curtail certain 
activities. 
 
8.  (U) The UK delegation began the consultation by asking if 
the TS could provide any information on the level of Russian 
destruction activities proposed for 2005. The UK del also 
asked why future Libyan inspections were not included in the 
2005 budget while Albanian inspections were budgeted, despite 
the fact that no inspections were envisioned until 2006 in 
Albania.  The TS responded that they were soliciting updated 
plans from possessor states and would then revise the budgets 
for inspections accordingly.  The TS hopes to do this in 
October. 
 
9.  (U) The Canadian delegation asked why the discount rate 
had been changed from 18.5% to 10%.  The TS responded that in 
light of 2004 inspection activities a 10% discount would be a 
more accurate reflection of the predicted level of 
inspections.  Inspections in 2004 are expected to be 10.76% 
lower than the level proposed by possessor states, well below 
the 18.5% used for planning purposes in 2004. 
 
10.  (U) Director of Verification, Horst Reeps, noted in his 
presentation on budgeting for Article IV/V inspections that 
thus far no possessor states have paid their Article IV/V 
assessments.  Several delegations (Iran, Canada) then 
expressed concern that the failure of SP's to pay their 
Article IV/V, as well as their overall assessments, may 
impact on overall OPCW activities including inspections. 
Reeps said that should it become necessary to scale back 
activities because of non-payment, the Verification Division 
would first limit inspections of storage facilities, then 
curtail ICA activities, and as a last resort reduce the 
number of Article VI inspections. 
 
11.  (U) Herb Schulz, Director for Administration, said that 
he was confident that certain SP's (read: U.S.) would make 
their payments within two weeks but that with each passing 
day he too was becoming increasingly concerned.  Schulz added 
that using the Working Capital Fund to cover any shortages 
was not a viable option as the current financial regulations 
mandate that any expenditures made from the fund must be 
re-paid to the fund within the same calendar year that they 
are expended.  Schulz also endorsed the idea of creating a 
"currency hedge fund" in which gains from currency 
fluctuations could be placed to cover potential future 
exchange rate losses.  The FRG delegation has been informally 
pushing this idea over the last two weeks. 
 
12.  (U) The German del noted that it was pleased that 
inspection activity was projected to increase by 17% in 2005, 
but questioned the 4.3% increase in Chapter 1 activities as 
opposed to a greater 5.29% increase in Chapter 2 activities, 
especially Administration.  The co-facilitator opined that 
perhaps the scope for cost savings was less in Admin than in 
inspections or verification.  The South African delegate 
asked how many SSA inspectors there were and whether they 
were being utilized in all possessor states.  The TS 
responded that there were currently 10 SSA inspectors and 
that they were serving in all but one (unidentified) 
possessor state. 
 
------------------------------------------- 
2005 BUDGET -- FINAL SCHEDULED CONSULTATION 
------------------------------------------- 
 
13.  (U) Additional open budget consultations scheduled for 
September 28 and 29 were cancelled, as no SPs presented 
topics for discussion to the co-facilitator.  The 
facilitator, as well as several delegations, expressed some 
frustration that the TS had not yet provided information 
documents on the impact of exchange rate fluctuations as well 
as clarifications on the methodologies used to calculate 
salary increases. 
 
14.  (U) The eighth and final scheduled budget consultation 
before the EC took place on September 30.  The 
co-facilitators went to great pains to ensure that 
delegations have had a chance to voice questions and concerns 
regarding the proposed 2005 program and budget.  The result 
has been a number of questions to the TS for clarification 
and exchanges that have ensured full transparency for SPs. 
The consultation on September 30 generated clearer statements 
from delegations.  While many stated that they still needed 
instructions from capitals, some markers were laid down. 
Germany in particular emphasized that it could not agree to 
the proposed 4.8% increase.  Many other delegations, 
including Japan, stressed that the need for cost-saving 
measures (calculations on inflation, exchange rate and salary 
increases) that they asserted justified a lower overall 
increase. 
 
15.  (U) The U.S. spoke first and noted that while we still 
have some concerns about certain items in the budget, most 
notably RBB language, certain administrative costs, and the 
methodology used to calculate salary increases, we are 
generally supportive of the 4.8% budget increase. Del rep 
noted that many of the issues of concern to delegations could 
be addressed in the budget decision document and that these 
differences should not hold up overall consensus on the 
budget.  Del rep also urged the TS to provide delegations 
with several information papers that have been requested. 
Ambassador Javits highlighted the fact that the OPCW is one 
of the few IO's in which the U.S. is supporting a budget 
increase. 
 
16.  (U) The UK delegation said that they generally supported 
the U.S. view, but believed there were still some areas in 
which the TS could realize some savings in non-program areas 
and that an increase slightly lower than 4.8% may be more 
appropriate.  Austria supported the UK position. 
 
17.  (U) Germany said it could not support a 4.8% budget 
increase.  They noted their satisfaction with the overall 
increase in Chapter I activities, but added that they 
believed savings still needed to be realized.  The three 
particular areas of concern for the Germans included the 
methodology used to calculate the proposed 3.6% salary 
increase for P staff and the 5% increase for G staff. This 
issue must be addressed in the budget decision document and 
changed in 2006.  They also urged the TS to implement the 
ABAF recommendation that the same 12-month period, as close 
to the time of the adoption of the budget, be used for 
calculating exchange rates.  The implementation of this 
recommendation could result in savings in the 2005 budget, 
according to the Germans.  They supported the conversion of 
the guard force to fixed-term status but opposed any increase 
in the authorized fixed-term ceiling of 507 positions.  The 
Germans concluded by observing that there did not appear to 
be significant differences amongst de 
legations and that consensus should be attainable. 
 
18.  (U) Japan supported the FRG and cited the exchange rate 
issue, the inflation index used by the TS, and the salary 
increase methodology as particular issues of concern to their 
delegation. 
19.  (U) Iran supported the overall 4.8% increase but added 
that they believed ICA funding should be further increased. 
The Iranians also said that they would propose some changes 
in the core objectives language. 
 
20.  (U) Norway said that the key issue was the adequate 
provision of resources for verification activities.  They did 
not state their position on the overall 4.8% increase. 
 
21.  (U) China said that while they do have some concerns 
with the budget, they generally support it.  However, they do 
not yet have instructions from Beijing. 
 
22.  (U) Italy supported the German position and said it 
could not support a 4.8% increase.  They also expressed some 
reservations about the guard conversion proposal and accused 
the TS of being less than forthcoming with information 
concerning the methodology used to calculate the proposed 
salary increase.  The Italians also said that delegations 
needed to look more closely at the number of consultants 
engaged by the TS. 
 
23.  (U) The Dutch supported the UK and German views and 
believe further savings are possible. 
 
24.  (U) Canada generally supported the 4.8% increase but is 
also willing to look at further ideas for savings. 
 
25.  (U) South Korea said it is still awaiting instructions, 
but is sympathetic to the concerns expressed by Germany. 
 
26.  (U) Brazil said it is still not convinced that a 4.8% 
increase is necessary and still has concerns about an 
increase in Article VI OCPF inspections. 
 
27.  (U) Denmark noted that it has no formal instructions, 
but generally supports the German view. 
 
28.  (U) Deputy DG Hawtin stated that the 4.8% requested 
increase would be required if the TS is to carry out the 
program proposed by the DG.  He also said that it was 
important the TS actually receive the cash from SPs.  In 
response to requests from several delegations for additional 
information, he stressed that it was essential that 
delegations request specific information and not just 
generally ask for additional information.  The DDG noted that 
the funding budgeted for ICA and verification was adequate to 
carry out the activities programmed. 
 
29.  (U) The DDG said that it would be problematic for the TS 
to convert the 20 security positions from TAC positions to 
fixed-term positions and not increase the authorized 
fixed-term limit from 507 to 527.  He noted that when the 
original 507 ceiling was approved in 1997, it was not 
envisaged that the security function would be included in the 
507 ceiling.  The DDG agreed with dels that the salary 
increase methodology should be reexamined and noted that the 
DG had already promised to do so. 
 
30.  (U) The U.S. observed that we would have to reach 
consensus on issues such as the number of consultants, the 
507 ceiling, etc. but that it would be better to address 
issues such as the salary increase methodology and the use of 
specific inflation indexes in the report language in order to 
move the process further along. 
 
31.  (U) Pakistan countered that we could not simply brush 
such issues under the carpet and it was important that all 
issues raised by other delegations be examined.  He said the 
TS had not provided adequate information to delegations to 
 
SIPDIS 
convince them of the necessity for the budget increase. 
(Note:  This despite the fact that the Pakistanis have not 
attended any budget consultations since July.) 
32.  (U) Japan and the FRG agreed with the U.S. that many of 
the concerns raised during the consultations could be 
addressed in the report language, but there were a few key 
planning parameters, such as the ABAF exchange rate 
calculations and the 507 ceiling, that needed to be addressed 
in the 2005 budget. 
 
33.  (U) The DDG opined that it would be difficult at this 
late date to change the 12 month period used to calculate the 
predicted exchange rate.  He also noted that the basket of 
goods that the OPCW uses is different than those used to 
calculate inflation rates in the Netherlands. 
 
34.  (U) At the conclusion of the consultation, the 
Australian co-facilitator, Gordon Eckersley, suggested that 
it would be necessary to agree on an overall budget increase 
number before the decision language could be formulated. He 
also stated that SPs that have called for changes in the core 
objectives had thus far failed to provide the facilitators 
with proposed language.  He urged delegations with proposed 
changes to approach the facilitators as soon as possible. 
Eckersley left open the option of additional meetings next 
week.  Del will follow up with the co-facilitators next week, 
as well as push the TS to provide additional information we 
had earlier requested. 
 
35.  (U) In connection with results-based budgeting, there 
have been none of the "drafting sessions" on core precepts, 
performance indicators, etc.  The proposal to have report 
language which emphasizes that the current wording of these 
items is not etched in stone, appears to have consensus 
(although we anticipate some further discussion of these RBB 
components). 
 
36.  (U) Javits sends. 
 
 
SOBEL