US embassy cable - 05VIENNA3024

UNCLAS VIENNA 003024 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
 
TAGS: ECIN, EAIR, EAID, EFIN, AU, UNGA 
SUBJECT: AUSTRIAN VIEWS ON DEVELOPMENT: DEVELOPMENT ISSUES 
 
 
AT THE HLE AND INNOVATIVE SOURCES FOR FINANCING DEVELOPMENT 
 
REF: A) STATE 162146 B) STATE 160880 
 
1.  (U) Econ Unit Chief delivered ref A and B talking points 
 
to Thomas Nader, Director (A/S-level) of the MFA's 
 
Multilateral Development Cooperation Division on September 6 
 
and to Thomas Wieser, Director General (U/S-level) of the 
 
Ministry of Finance's Economic Policy and Financial Markets 
 
Directorate on September 8.  Post also conveyed the USG 
 
position on the declaration on innovative financing (ref A) 
 
to Elisabeth Udof-Strobl, Director General of the Ministry of 
 
Economy's Tourism and Historical Sites Directorate; Manfred 
 
Bialonczyk, Head of the Ministry of Transportation's Aviation 
 
and Navigation Division; and Anna Maria Hochhauser, Secretary 
 
General of the Austrian Chamber of Commerce. 
 
Development Issues in the UN High Level General Assembly 
 
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2.  (SBU) Nader said the GoA supported the USG on the 
 
substance of the three structural changes to the development 
 
chapter: acknowledging the efforts and achievements since the 
 
Millennium Summit and Monterey Conference; recognizing the 
 
multifaceted contributions to development assistance, 
 
especially trade and FDI; and elaborating governance issues 
 
more prominently in the development chapter.  However, from a 
 
procedural standpoint, Nader questioned whether pushing for 
 
modifications "at such a late date" might not encounter 
 
resistance from certain G-77 members and encourage others to 
 
put forward more frivolous and controversial changes. 
 
Declaration on Innovative Sources of Financing 
 
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3.  (SBU) Both Nader and Wieser stated that Austria had not 
 
yet decided whether to support the declaration, because 
 
Austria agreed with some parts of the declaration, e.g., a 
 
reference to ODA targets, but it would not endorse an 
 
international finance facility (IFF).  Nader regretted that 
 
Spain, France, and Germany had not consulted with other EU 
 
Member States before launching this initiative. 
 
4.  (SBU) ODA Targets: Nader noted that Member States had 
 
affirmed their commitment to reach an ODA level of 0.7% of 
 
GDP by 2015, so re-affirming this target would be perfectly 
 
acceptable.  Nader and Wieser noted that current ODA levels 
 
were not sufficient to achieve the Millennium Development 
 
goals.  Innovative financing sources for ODA were necessary, 
 
but donors should concurrently increase and maximize the 
 
benefits of non-ODA sources of assistance, such as trade 
 
liberalization and FDI. 
 
5.  (SBU) Airline Tax: Wieser maintained that the effects of 
 
a small airline tax on consumers and the airline industry 
 
would be marginal.  Austria could support such a tax, but 
 
only if it were universally mandatory, and would thus not 
 
distort competition.  Wieser admitted that there were widely 
 
varying views within the EU on whether and how to implement 
 
an airline tax.  Wieser noted that Chancellor Schuessl had 
 
suggested earlier this summer, in order to provoke a 
 
discussion, that the EU could earmark some of the proceeds 
 
from an airline tax for the EU's general budget revenues, as 
 
well as for ODA.  On September 9, Finance Minister Karl-Heiz 
 
Grasser publicly stated Austria's opposition to a voluntary 
 
airline tax, noting that it would have a negative impact on 
 
passengers and airlines. 
 
6.  (SBU) IFF: Wieser and Nader were adamant that Austria 
 
would not participate in any IFF development schemes.  Wieser 
 
noted that the proposed IFF scheme might effect a decline in 
 
ODA in out-years, as governments pay back the IFF bonds from 
 
their assistance budgets.  Moreover, according to Wieser, the 
 
IFF scheme could crowd out other forms of assistance, e.g., 
 
trade, and there are legitimate concerns about the absorptive 
 
capacities of some developing countries.  Wieser added that 
 
Austria, like the U.S., did not want to pay for current 
 
development assistance out of future aid budgets. 
 
Brown