US embassy cable - 03THEHAGUE1451

UNCLAS SECTION 01 OF 05 THE HAGUE 001451 
 
SIPDIS 
 
BERLIN FOR ITO 
STATE FOR AC/CB, VC/CCB, NP/CBM, L/ACV, IO/S 
SECDEF FOR OSD/ISP 
JOINT STAFF FOR DD PMA-A FOR WTC 
NSC FOR CHUPA 
COMMERCE FOR BIS (GOLDMAN) 
WINPAC FOR FOLEY 
 
E.O. 12958: N/A 
TAGS: PARM, PREL, ABUD, CWC 
SUBJECT: CHEMICAL WEAPONS CONVENTION (CWC): WRAP-UP FOR 12 
MAY - 6 JUNE. 
 
 This is CWC-60-03. 
 
-------- 
Summary 
-------- 
 
Topics: 
-- 2003 Cash Flow Problem 
-- 2004 Budget Consultations - First Round 
-- Timetable for Article VII 
-- Khartoum Regional Seminar 
-- "On Call" Inspectors 
-- Newport Step III Combined Plan 
-- VIR Consultations 
-- Article IV/V Consultations 
-- 15th Data Validation 
-- Ambassador Javits Upcoming Travel 
 
1.  Details about the 2003 cash flow difficulties emerged 
during the first round of 2004 budget consultations and the 
OPCW informed member states that they will have to begin 
cutting program delivery. 
 
2.  Two rounds of 2004 budget consultations were held in June 
with senior OPCW management introducing each section of the 
budget. 
 
3.  Inquiries have been made on two separate occasions by the 
Canadian delegation on U.S. plans for follow-up to our call 
to set a timetable for compliance with Article VII. 
 
4.  The Technical Secretariat has granted a request from the 
ICRC to attend the OPCW Regional Seminar in Khartoum.  The 
ICRC has assured the TS that they are not going to talk about 
RCA's and related issues. 
 
5.  The Director-General held a meeting with TS staff and 
possessor states to discuss the idea of employing "on call" 
inspectors as a way to reduce cost. 
 
6.  The TS has distributed the Newport Step III Combined Plan. 
 
7.  VIR consultations were held on 28 May and U.S. written 
comments were circulated by the TS. 
 
8.  The German delegation raised the idea of establishing a 
contingency fund in the Article IV/V consultations. 
 
9.  The 15th OPCW Validation Group met 20-21 May and approved 
246 mass spectra and 306 retention indices. 
 
10.  Ambassador Javits will travel to Mexico to attend the 
OPCW Regional Seminar and preliminary planning has begun for 
site visits in July at Tooele, Utah and Pine Bluff, Arkansas. 
 End Summary. 
 
---------------------- 
2003 CASH FLOW PROBLEM 
---------------------- 
 
11.  Details about the continuing severe cash flow 
difficulties that the OPCW is experiencing have emerged 
during the first round of 2004 budget consultations 3-5 June. 
 
12.  On 2 June the bank balance was down to 8 million euros 
-- the lowest level ever for the OPCW.  The next day Japan 
informed the Technical Secretariat that it had just made its 
payment.  Germany also normally pays in June.  This short 
term relief, however, is not enough to prevent management 
from having to take unspecified actions to cut program 
delivery, which they have already begun doing. 
 
13.  The reason for the cuts in program delivery is the same 
as in past years: too much reimbursement income from CW 
possessors was assumed in the budget (3.9 million euros).  As 
of now, only one million euros has been invoiced to CW 
possessors for verification activities under Articles IV and 
V.  Even though the assumed income total was discounted 40 
percent from what the CW possessors told the organization 
would be carried out, the amount assumed remains 
unrealistically high. 
 
14.  Although the audited surplus for 2001 is 3.4 million 
euros, this money is not available to assure program delivery 
now because of USG insistence that any decision about 
possibly authorizing use of the surplus be deferred until the 
annual Conference in October. 
 
15.  COMMENT:  Del urges that Washington consider how to 
urgently address this seemingly perennial problem. 
 
---------------------------------------- 
2004 BUDGET CONSULTATIONS -- FIRST ROUND 
---------------------------------------- 
 
16.  The budget facilitator (Peter Beerwerth, Germany) held 
the first two rounds of consultations on the 2004 budget 3-5 
June.  Senior management is introducing each section of the 
budget. 
 
17.  A number of delegations raised questions about the 
proposal to recruit and train new inspectors to compensate 
for attrition.  Acting Director of the Inspectorate Renato 
Carvalho presented the case for hiring "Inspector Group C" of 
25-30 individuals to compensate for attrition and the 16 
inspectors they plan to let go in 2003 in implementation of 
the tenure decision.  All would be hired at the P-3 level. 
Director of Verification Reeps envisions eventually 50 
inspectors "on call", or contract inspectors.  This year he 
hopes to start with 10 at the P-3 level (no taxes reimbursed, 
no insurance when not on the job, no retirement).  Five will 
come from inspectors separated, and five from a vacancy 
announcement. 
 
18.  Russia spoke to lay down a marker that no decision has 
been taken to allow contract inspectors.  (NOTE: 
Inspectorate sources say that Russia opposes this move 
because it will decrease hiring of new inspectors and they 
have many candidates lined up to pack the inspector corps.) 
India challenged the need for any new inspectors, especially 
if the contractor concept is introduced.  Germany also seems 
inclined to find budget savings by not hiring new inspectors. 
 
19.  Pakistan and the UK challenged the concept of 6 weeks of 
inspector training at 3/4 salary plus DSA, arguing that the 
new inspectors should be hired and then undergo training. 
South Africa was inclined to support. 
 
20.  Iran, Italy, the UK, Japan India and Canada questioned 
the new line items for consultants that the Director General 
has mandated in the budget.  Director of Administration 
Schulz wants consultant money to design a new rating system 
(because he cannot do that in house) and to continue to 
evaluate candidates for jobs through external experts.  He 
cannot speak to other needs.  Director of Verification Reeps 
says his consultant is "doing very useful work" but he cannot 
speak to other requests.  Asghar says the DG is prepared to 
justify all the requests. 
 
21.  Reeps proposes through efficiency savings to increase 
the number of Article VI inspections to 150 next year.  In 
the first 4 months of this year he saved 85-90,000 euros.  He 
would distribute additional inspections "in a balanced 
manner" across all Article VI regimes (percent figures 
represent intensity): 
 
                              2003 
2004 
                    Inspectable     Percent           No. 
Percent 
      Schedule 1    27        59                16          59 
      Schedule 2   148        26                42 
28 
      Schedule 3   404         4.5        22          5.4 
      OCPF              3993         1.5        70 
1.75 
 
"The Technical Secretariat has some concerns with such a low 
frequency of inspection in the OCPF category," Reeps said. 
(NOTE:  Carvalho added he expects to get 9 percent more 
Article IV/V inspector days and 14 percent more Article VI 
inspections with no/no budget increase.  Japan reacted 
positively to this evidence of productivity gains.) 
22.  Reeps is continuing bilateral consultations on Sampling 
and Analysis.  Germany, Switzerland, the UK and the United 
States are to be followed by the PRC, India, France, and 
Japan. He plans to issue a paper by the end of the year 
summarizing the results and making a recommendation.  Lots of 
resources are devoted to Sampling and Analysis (S&A) on an 
annual basis so the question of the potential for using these 
resources is an important one (when, if ever are we going to 
do S&A, Reeps asked).  Reeps pointed to para. 3.17, which 
says that if/if there is to be sampling and analysis during 
inspections in 2004, it could cost 60,000 euros. 
 
------------------------- 
Timetable for Article VII 
------------------------- 
23.  (U) On two occasions, the Canadian delegation has asked 
what, if anything, the U.S. intends to do as a follow-up to 
our call during the RevCon for setting up a timetable for 
compliance with Art VII. The U.S. has indicated that 
something should be ready to adopt at the next CSP in 
October.  Delegation would be interested in Washington's 
views/intentions on this issue. 
 
-------------------------- 
Khartoum Regional Seminar 
-------------------------- 
 
24.  DG's Charge de Cabinet, Raphael Grossi informed the 
delegation that Lisa Tabassi in the TS legal office, invited 
(or granted a request from) the ICRC to be present during the 
upcoming regional group conference in Khartoum.  Grossi asked 
if we had any problem with this invitation.  Delegation 
informed him we had no problem with the ICRC generally, and 
were certainly not trying to thwart their effort to be 
involved in CW issues.  Our concern at the RevCon was over 
ICRCs effort to spark a public debate on an issue we do not 
believe is ready for discussion.  Thus we would not object to 
their being in Khartoum, as long as they aren't looking to 
talk about RCAs and related issues.  He said they were not 
and, based on this, it is delegation's understanding that 
ICRC will in fact be present in Khartoum. 
 
-------------------- 
"On Call" Inspectors 
-------------------- 
 
25.  The Director General held a meeting including relevant 
members of his staff and all possessor states (except 
Albania) at which he circulated a paper containing some of 
the details of the proposal to employ "on call" inspectors. 
The TS Director of Administration has stated that not having 
to pay inspectors' medical insurance, Provident Fund 
contributions, etc., as envisioned under this program, would 
reduce costs by approximately 40% per inspector.  The DG 
highlighted the utility of such a program in light of 
anticipated increases in verification costs as more 
demilitarization become operational. 
 
26.  Delegates present were generally noncommittal, but 
Russia asked whether the cost reduction envisaged was 
absolute or merely represented a shift from reimbursable 
Article IV/V costs to assessed contributions.  The DG said 
that it was an absolute reduction and no increase in assessed 
contributions should result.  The Indian Ambassador did not 
express disagreement with the proposal, but expressed concern 
over possible confidentiality issues.  The DG explained that 
under the TS proposal all confidentiality provisions under 
the convention would apply to on call inspectors, and 
emphasized that such inspectors would only be used for 
demilitarization inspections.  The TS was anticipating 
phasing in the program, with perhaps ten inspectors being 
retained under contract in the first year.  The DG also 
emphasized that, initially at least, on call inspectors would 
be drawn from inspectors who were leaving the TS. 
27.  The DG asked states parties, particularly the 
possessors, to consider the document and provide a response 
as soon as possible, preferably the following week 
(delegation informed him that this was not feasible). 
Delegation was also noncommittal in the meeting, but made it 
clear that even if our eventual response was positive, there 
could be many questions that would need to be asked and 
answered before the system was implemented. 
 
------------------------------ 
Newport Step III Combined Plan 
------------------------------ 
 
28.  The Newport Step III (Production Facility) Combined Plan 
was circulated by the TS, dated 26 May 2003, thus meeting the 
30-day requirement for other delegations to review and adopt 
the document before the end of EC-33. 
 
------------------ 
VIR Consultations 
------------------ 
 
29.  VIR consultations were held on 28 May.  US written 
comments, along with those of Spain, Iran, Mexico, and 
Switzerland, were circulated by the TS.   On 29 May, the TS 
circulated an extensive corrigendum, highly protected, which 
primarily incorporates US changes that could be considered 
clearly factual in nature.  The more 
interpretative/analytical or editorial comments were not 
included in the corrigendum, but Del called the attention of 
delegates to the parts of the U.S. written comments that had 
not been incorporated in the corrigendum as we went over the 
report paragraph by paragraph. There was general agreement 
that this was a valuable, and efficient, way to proceed.  A 
number of other States Parties intend to offer comments in 
writing.  The TS will put all SP written comments together in 
a single document and issue it, along with an updated version 
of the corrigendum. 
 
30.  Per Runn did most of the talking for the TS.  He agreed 
that our additional point on paragraph 9.4, about the TS 
consulting SP's individually on potentially declarable 
facilities prior to issuing any lists, was consistent with 
Review Conference that the TS would in fact treat as an 
instruction from SP's.  He agreed on the need to provide more 
details on cost-efficient practices in CWPF destruction (para 
10.7).   Audit non-conformities on OPCW lab (11.6) were 
purely administrative, nothing regarding technical capability 
of the lab.  Details of audits will be provided in the 
future.  Runn agreed to look for better wording in Annexes 10 
and 21.  On the whole, it was a quite cooperative and 
collegial performance. 
 
31.  Swannanoa remains a sticking point as does disagreement 
over the number of U.S Category 3 items (Annex 3, footnote 
3).  Perhaps worth going back in for a bilateral chat with TS. 
 
32.  The new Czech EC Chairman, Ambassador Petr Kubernat, ran 
an efficient meeting though he is clearly depending on the TS 
for the substance of issues. 
 
--------------------------- 
Article IV/V Consultations 
--------------------------- 
 
33.  Art. IV/V consultations on 27 May went well.  The 
Chairman intends to hold another round of consultations 
before the EC in June.  The Germans are thinking of trying to 
establish some sort of contingency fund, to be realized from 
savings as some personnel depart due to tenure policy.  They 
will  try to put something on paper. 
 
---------------------- 
15th Data Validation 
---------------------- 
34.  Lawrence Livermore National Lab (LLNL) reps Hugh Gregg 
and Armando Alcaraz, and National Institute of Science and 
Technology (NIST) reps Gary Mallard and Ed White attended the 
15th OPCW Validation meeting 20-21 May.  246 mass spectra and 
306 retention indices were approved. 
 
35.  The Data Validation group (led by Eric Wils) had 
received a request from the Secretariat to include 
degradation products of scheduled chemicals, primarily 
Schedule 1, and riot control agents in the database. 
 
36.  LLNL reps met with Nyakoe of the OPCW Office of Internal 
Oversight (OIO) and Stefan Mogl, Head of the OPCW Lab.  The 
OIO is interested in discussing and assessing overall sample 
and handling procedures with LLNL and the UK.  These 
discussions had been previously conducted in 2001 with the 
Swiss and Finnish labs.  Nuaoke will officially request 
LLNL's assistance through the Del. He tentatively plans to 
visit LLNL in October 2003. 
 
37.  Mogl indicated that OPCW may go to one proficiency test 
per year, and more accurately align proficiency tests with 
what designated labs might expect in an actual inspection. 
In addition, he wants to perform more "off-site sample 
handling exercises". 
 
--------------------------------- 
Ambassador Javits Upcoming Travel 
--------------------------------- 
 
38.  Ambassador Javits will travel to Mexico for two days 
starting on 11 June to attend the OPCW First Regional Seminar 
on the Role of the Chemical and Other Relevant Industries in 
the Implementation of the Chemical Weapons Convention in 
Latin America and the Caribbean.  He is accompanying 
Director-General Pfirter and the Mexican Ambassador to The 
Hague, Ambassador Onate. 
 
39.  Delegation has begun preliminary planning for Ambassador 
Javits to participate in site visits at Tooele, Utah, and 
Pine Bluff, Arkansas, the week of 14 July. 
 
40.  Javits sends. 
RUSSEL