Identifier
Created
Classification
Origin
02ROME4561
2002-09-20 09:52:00
UNCLASSIFIED
Embassy Rome
Cable title:
FAO FINANCE AND PROGRAM COMMITTEES CONSIDER
how-toThis record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 04 ROME 004561
SIPDIS
FROM U.S. MISSION TO UN AGENCIES IN ROME
STATE FOR IO/EDA AND IO/S
USDA FOR FAS/HUGHES AND REICH
USDA FOR APHIS/GREIFER
PARIS FOR UNESCO, VIENNA FOR UNVIE
UNCLASSIFIED
PAGE 02 ROME 04561 01 OF 04 201017Z
E.O. 12958: N/A
TAGS: AORC EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR WFPOAORC WFPOAORC WFPOAORC WFPO
SUBJECT: FAO FINANCE AND PROGRAM COMMITTEES CONSIDER
MEDIUM TERM PLAN FOR 2004-09
UNCLAS SECTION 01 OF 04 ROME 004561
SIPDIS
FROM U.S. MISSION TO UN AGENCIES IN ROME
STATE FOR IO/EDA AND IO/S
USDA FOR FAS/HUGHES AND REICH
USDA FOR APHIS/GREIFER
PARIS FOR UNESCO, VIENNA FOR UNVIE
UNCLASSIFIED
PAGE 02 ROME 04561 01 OF 04 201017Z
E.O. 12958: N/A
TAGS: AORC EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR WFPOAORC WFPOAORC WFPOAORC WFPO
SUBJECT: FAO FINANCE AND PROGRAM COMMITTEES CONSIDER
MEDIUM TERM PLAN FOR 2004-09
1. SUMMARY: THE FAO FINANCE AND PROGRAM COMMITTEES MET
AT FAO HEADQUARTERS IN ROME SEPTEMBER 9-13, 2002. THE
MAIN TOPIC IN THE JOINT SESSION WAS THE MEDIUM TERM PLAN
(MTP) 2004-09 AND PRIORITIZATION OF RESOURCES. THE
DIRECTOR GENERAL MADE A STRONG BID FOR INCREASED
RESOURCES TO IMPLEMENT THE OBJECTIVES ENDORSED AT THE
WORLD FOOD SUMMIT:FIVE YEARS LATER MEETING LAST JUNE, A
BID MOST DONORS CONSIDERED UNREALISTIC. CANADA SPARKED
DISCUSSION WITH AN OFFER, WHICH WAS DECLINED, TO HIRE AN
EXPERT GROUP OF CONSULTANTS TO SET PRIORITIES FOR THE
FAO.
2. IN THE PROGRAM COMMITTEE MEMBERS SPLIT ALONG
PREDICTABLE NORTH/SOUTH LINES IN SUPPORT FOR INCREASES IN
THE VARIOUS PROGRAMS CONTAINED IN THE MEDIUM TERM PLAN.
CAIRNS GROUP PROGRAM COMMITTEE MEMBERS TOOK THE LEAD IN A
SUCCESSFUL EFFORT TO BOLSTER SUPPORT FOR THE PLANT-HEALTH
STANDARD SETTING ACTIVITIES OF THE INTERNATIONAL PLANT
PROTECTION CONVENTION (IPPC).
3. THE FINANCE COMMITTEE, OF WHICH THE UNITED STATES
IS A MEMBER, DWELT ON THE CONTINUED DETERIORATION IN
FAO'S FINANCES. THE FAO MAY BE FORCED TO BORROW
EXTERNALLY BY YEAREND IF U.S. ARREARS ARE NOT REDUCED
SUBSTANTIALLY. THE MOST CONTROVERSIAL TOPIC WAS THE
REPORT PRESENTED BY THE OUTGOING EXTERNAL AUDITOR WHICH
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PAGE 03 ROME 04561 01 OF 04 201017Z
CONTAINED SHARP CRITICISM OF INTERNAL CONTROLS. FINALLY,
FAO WILL PUSH FOR ADOPTION OF ITS SPLIT ASSESSMENT SCHEME
(USD/EUROS) BY THE NEXT CONFERENCE.
4. THE FINANCE AND PROGRAM COMMITTEES ARE TENTATIVELY
SCHEDULED TO MEET AGAIN MAY 5-9, 2003. THE FINANCE
COMMITTEE WILL MEET IN AN ADDITIONAL, EXTRAORDINARY
SESSION OCTOBER 7-8, 2002 TO REVIEW THE WORLD FOOD
PROGRAM'S AUDITED ACCOUNTS. END SUMMARY.
5. COMPOSITION OF COMMITTEES DONE BY REGION
--------------
THE FINANCE AND PROGRAM COMMITTEES ARE COMPOSED OF
REPRESENTATIVES OF EACH REGIONAL GROUP OF MEMBER STATES.
THE FINANCE COMMITTEE (NINE MEMBERS) WAS CHAIRED BY CHILE
AND INCLUDED, IN ADDITION TO THE UNITED STATES,
REPRESENTATIVES OF JAPAN, KUWAIT, PAKISTAN, SENEGAL,
SWITZERLAND, TANZANIA, AND THE UNITED KINGDOM. THE
PROGRAM COMMITTEE (ELEVEN MEMBERS) WAS CHAIRED BY THE
DUTCH PERMREP AND INCLUDED REPRESENTATIVES OF AUSTRALIA,
CAMEROON, CANADA, CHINA, COLOMBIA, LEBANON, MALAYSIA,
MALI, PARAGUAY AND SUDAN. MEMBERS ARE ELECTED BY THE
CONFERENCE FOR TWO-YEAR TERMS, AND THIS WAS THE SECOND
MEETING FOR MOST PARTICIPANTS.
6. DIRECTOR GENERAL CALLS FOR MORE RESOURCES TO
IMPLEMENT THE "INTERNATIONAL ALLIANCE"
-------------- --------------
THE DIRECTOR GENERAL TOLD THE JOINT COMMITTEE THAT THE
FAO FINDS ITSELF IN AN IMPOSSIBLE SITUATION: MEMBERS
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PAGE 04 ROME 04561 01 OF 04 201017Z
STATES ACROSS THE BOARD WANT THE FAO TO DO MORE, BUT THE
ORGANIZATION HAS NOT BEEN GRANTED INCREASED RESOURCES TO
CARRY OUT ITS BROADER MANDATE. THIS CREATES A ZERO SUM
GAME; FAO MUST TAKE FUNDS FROM ONE ACTIVITY TO SUPPORT AN
INCREASE IN ANOTHER. HE ASKED FOR GREATER UNDERSTANDING.
THE DIRECTOR GENERAL ALSO EXPRESSED CONCERN ABOUT THE
FAO'S FINANCIAL SITUATION. HE BLAMED U.S. ARREARS FOR
CAUSING A CASH FLOW CRISIS. IN ADDITION TO MORE THAN USD
95 MILLION IN ARREARS, THE UNITED STATES GENERALLY PAYS
ITS ASSESSMENT IN THE LAST QUARTER OF THE YEAR (ALTHOUGH
IT IS DUE IN FULL AT THE BEGINNING OF THE YEAR.) HE SAID
THERE WERE NO FUNDS FOR $14 MILLION IN ANNUAL AFTER
SERVICE MEDICAL COSTS AMONG OTHER STAFF RELATED EXPENSES.
IF THE FAO WERE TO SPEND OBLIGATIONS UNDER THE TECHNICAL
COOPERATION PROGRAM (TCP) MORE RAPIDLY AS URGED, IT WOULD
BE BANKRUPT. HE URGED ADOPTION OF THE SPLIT ASSESSMENT
SCHEME (EUROS AND U.S. DOLLARS) TO REDUCE THE FOREIGN
EXCHANGE RISK ASSUMED BY THE FAO.
THE DIRECTOR GENERAL ALSO ACKNOWLEDGED THE SHARP
CRITICISM LEVIED BY THE EXTERNAL AUDITORS, ESPECIALLY
REGARDING INTERNAL CONTROLS. FAO HAS ACCEPTED VIRTUALLY
ALL OF THE AUDITORS' RECOMMENDATIONS AND PROVIDED THE
FINANCE COMMITTEE WITH AN ACTION PLAN FOR IMPLEMENTATION.
UNCLASSIFIED
UNCLASSIFIED PTQ4137
PAGE 01 ROME 04561 02 OF 04 201017Z
ACTION IO-00
INFO LOG-00 NP-00 AID-00 CEA-01 CIAE-00 COME-00 CTME-00
DODE-00 ITCE-00 SRPP-00 MEDE-00 EB-00 EXME-00 EUR-00
E-00 UTED-00 VC-00 FRB-00 H-01 TEDE-00 INR-00
ITC-01 L-00 VCE-00 AC-01 NSAE-00 NSCE-00 OES-01
OIC-02 OMB-01 OPIC-01 ACE-00 SP-00 SSO-00 STR-00
TEST-00 TRSE-00 USIE-00 FMP-00 DRL-02 G-00 SAS-00
/011W
-------------- EA41A3 201017Z /38
R 200952Z SEP 02
FM AMEMBASSY ROME
TO SECSTATE WASHDC 5914
INFO USMISSION GENEVA
USMISSION USUN NEW YORK
USMISSION UNVIE VIENNA
AMEMBASSY PARIS
USDA FAS WASHDC 2286
UNCLAS SECTION 02 OF 04 ROME 004561
SIPDIS
FROM U.S. MISSION TO UN AGENCIES IN ROME
STATE FOR IO/EDA AND IO/S
USDA FOR FAS/HUGHES AND REICH
USDA FOR APHIS/GREIFER
PARIS FOR UNESCO, VIENNA FOR UNVIE
UNCLASSIFIED
PAGE 02 ROME 04561 02 OF 04 201017Z
E.O. 12958: N/A
TAGS: AORC EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR WFPOAORC WFPOAORC WFPOAORC WFPO
SUBJECT: FAO FINANCE AND PROGRAM COMMITTEES CONSIDER
MEDIUM TERM PLAN FOR 2004-09
THE ONLY RECOMMENDATIONS REJECTED CONCERNED INCREASED
STAFF, FOR WHICH THERE WAS NO FUNDING, AND MERGING
INTERNAL CONTROLS (AUD) WITH EVALUATIONS (PBEE).
HE ALSO DEFENDED HIS MANAGEMENT OF THE ORGANIZATION'S
FINANCES. IN REVIEWING PAST HISTORY, HE SAID HE HAD NOT
BEEN GIVEN THE RESOURCES HE NEEDED TO CHANGE THE
FINANCIAL REPORTING SYSTEM. IN FACT, THE OVERALL LEVEL
OF THE BUDGET HAD BEEN CUT SHORTLY AFTER HE TOOK OFFICE
IN 1994. DESPITE THESE OBSTACLES, HE TOOK PRIDE IN THE
FACT THAT FAO'S ACCOUNTS HAD BEEN CONSISTENTLY APPROVED
EVERY BIENNIUM WITHOUT ANY RESERVATIONS BY THE EXTERNAL
AUDITORS.
IN CONCLUSION, HE ASSERTED HE WAS ENCOURAGED BY THE
RESULTS OF THE WORLD FOOD SUMMIT MEETING LAST JUNE. IT
HAD RAISED AWARENESS OF HUNGER PROBLEMS AND FORGED NEW
PARTNERSHIPS. HE WAS ALSO ENCOURAGED BY SIGNS OF
REVERSAL IN THE LONG DOWNWARD TREND IN RESOURCES DEVOTED
TO AGRICULTURAL DEVELOPMENT, ESPECIALLY FROM DEVELOPING
COUNTRIES. HE ASKED FOR THE MEMBERSHIP'S INCREASED
FINANCIAL SUPPORT FOR FAO.
7. THE MEDIUM TERM PLAN (MTP) 2004-09 RENEWS FAO'S
REQUEST FOR ADDITIONAL RESOURCES
-------------- --------------
UNCLASSIFIED
PAGE 03 ROME 04561 02 OF 04 201017Z
THIS DISCUSSION MARKED THE KICK-OFF OF THE BUDGET BATTLE.
US PERMREP STATED THE U.S. POSITION WAS STILL TO SUPPORT
ZERO NOMINAL GROWTH (ZNG) NOTING WE HAD ABSTAINED ON
ADOPTION OF A ZERO REAL GROWTH BUDGET (ZRG) AT THE FAO
CONFERENCE LAST NOVEMBER. JAPAN JOINED THE US POSITION.
(COMMENT - THE EU WAFFLED DUE TO LACK OF CONSENSUS ON A
SINGLE POSITION, BUT GERMANY, NOT PRESENT IN THE FINANCE
OR PROGRAM COMMITTEES, IS LIKELY TO SUPPORT US AS WELL -
END COMMENT). THE LATIN AMERICAN REPRESENTATIVE, CHILE,
POINTED OUT THAT THE ADVERSE INTERNATIONAL CONTEXT WILL
BEAR ON INCREASING THE BUDGET. HE TOLD THE U.S. PERMREP
PRIVATELY THAT ARGENTINA WOULD SEEK AN ADJUSTMENT OF ITS
ASSESSMENT DUE TO ITS ECONOMIC REVERSAL. AS IN THE LAST
BUDGET ROUND, SEVERAL MEMBERS CALLED ON THE SECRETARIAT
TO PRODUCE MORE THAN ONE BUDGET SCENARIO TO FACILITATE
MORE REALISTIC PLANNING.
CANADA SPARKED A LIVELY DISCUSSION IN THE JOINT COMMITTEE
ON PRIORITIZATION WITHIN AGREED BUDGET LEVELS. CANADA
OFFERED TO PAY FOR A GROUP OF EXTERNAL EXPERTS TO
EVALUATE THE MTP AND PROPOSE REALLOCATION OF RESOURCES.
THIS WOULD AVOID UNFORESEEN SHIFTS IN RESOURCES FROM THE
REAL GROWTH BUDGET ADVOCATED BY THE DIRECTOR GENERAL IF
THE AGREED LEVEL, AS PAST EXPERIENCE SHOWS, WERE TO BE
MUCH LOWER. IT WOULD ALSO HAVE THE ADVANTAGE OF
INCREASING MEMBER PARTICIPATION IN THE PROCESS. HOWEVER,
MEMBERS OF THE COMMITTEE DECIDED TO LEAVE THE PROCESS IN
THE HANDS OF THE GOVERNING BODIES AND THE FAO
SECRETARIAT.
SIPDIS
MEMBERS' OPINIONS ON PRIORITIZATION SPLIT ALONG
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PAGE 04 ROME 04561 02 OF 04 201017Z
PREDICTABLE NORTH/SOUTH LINES. MANY CALLED FOR A
STRONGER REGIONAL FOCUS IN THE MTP. DEVELOPING COUNTRIES
SUPPORTED THE NEARLY 35 PERCENT INCREASE PROPOSED FOR THE
TECHNICAL COOPERATION PROGRAM (TCP),FAO COUNTRY
REPRESENTATIVES AND THE SPECIAL PROGRAM FOR FOOD SECURITY
(SPFS). OECD COUNTRIES SPOKE ON BEHALF OF THE NORMATIVE
PROGRAMS OF THE ORGANIZATION AND SUPPORTED INCREASES FOR
FISHERIES AND FORESTRY. MANY, INCLUDING THE UNITED
STATES, WERE ESPECIALLY CONCERNED ABOUT INSUFFICIENT
RESOURCES FOR THE INTERNATIONAL PLANT PROTECTION
COMMISSION (IPPC). AT CURRENT RESOURCE LEVELS EVEN
PLANNED ACTIVITIES CANNOT TAKE PLACE.
8. FAO'S FINANCIAL CRISIS COULD RESULT IN EXTERNAL
BORROWING
-------------- --------------
THE MAIN FOCUS OF THE DISCUSSION WAS ON THE EVER WEAKER
FINANCIAL POSITION OF FAO WHICH WAS ATTRIBUTED LARGELY TO
ARREARS OF THE "MAJOR CONTRIBUTOR." THE U.S. TOOK THE
POSITION THAT THE GROWING DEFICIT WAS THE RESULT OF
EXPENDITURES EXCEEDING INCOME. (THE EXTERNAL AUDITOR
NODDED IN AGREEMENT.) THE U.S. PERMREP BRIEFED THE
COMMITTEE ON EFFORTS TO PAY ARREARS (INCLUDING THE
CURRENT YEAR ASSESSMENT WHICH WAS DUE JAN. 1, 2002) AND
AFFIRMED OUR GOAL TO PAY CURRENT YEAR DUES PLUS ARREARS
UNCLASSIFIED
UNCLASSIFIED PTQ4139
PAGE 01 ROME 04561 03 OF 04 201017Z
ACTION IO-00
INFO LOG-00 NP-00 AID-00 CEA-01 CIAE-00 COME-00 CTME-00
DODE-00 ITCE-00 SRPP-00 MEDE-00 EB-00 EXME-00 EUR-00
E-00 UTED-00 VC-00 FRB-00 H-01 TEDE-00 INR-00
ITC-01 L-00 VCE-00 AC-01 NSAE-00 NSCE-00 OES-01
OIC-02 OMB-01 OPIC-01 ACE-00 SP-00 SSO-00 STR-00
TEST-00 TRSE-00 USIE-00 FMP-00 DRL-02 G-00 SAS-00
/011W
-------------- EA41B5 201018Z /38
R 200952Z SEP 02
FM AMEMBASSY ROME
TO SECSTATE WASHDC 5915
INFO USMISSION GENEVA
USMISSION USUN NEW YORK
USMISSION UNVIE VIENNA
AMEMBASSY PARIS
USDA FAS WASHDC 2287
UNCLAS SECTION 03 OF 04 ROME 004561
SIPDIS
FROM U.S. MISSION TO UN AGENCIES IN ROME
STATE FOR IO/EDA AND IO/S
USDA FOR FAS/HUGHES AND REICH
USDA FOR APHIS/GREIFER
PARIS FOR UNESCO, VIENNA FOR UNVIE
UNCLASSIFIED
PAGE 02 ROME 04561 03 OF 04 201017Z
E.O. 12958: N/A
TAGS: AORC EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR WFPOAORC WFPOAORC WFPOAORC WFPO
SUBJECT: FAO FINANCE AND PROGRAM COMMITTEES CONSIDER
MEDIUM TERM PLAN FOR 2004-09
THIS CALENDAR YEAR. THE U.K. PERMREP PRESSED FAO TO LOOK
AHEAD AND PREDICT THE RISK OF EXTERNAL BORROWING AND HOW
MUCH IT MIGHT COST.
9. EXTERNAL AUDITOR'S REPORT SPURS FAO TO REACT WITH A
DETAILED ACTION PLAN
-------------- --------------
THE FAO HAS BEEN STUNG BY THE LENGTHY CRITICISM IN THE
EXTERNAL AUDITOR'S REPORT. FOR ONCE, RATHER THAN GET
DEFENSIVE, THEY HAVE TAKEN ACTION, ESPECIALLY TO IMPROVE
INTERNAL CONTROLS. (COMMENT: A TOP ADVISOR TO THE DG,
TOLD THE U.S. PERMREP THAT THE DG WAS WORRIED ABOUT THE
POTENTIAL IMPACT OF THE REPORT ON PAYMENT OF U.S.
ARREARS. END COMMENT) THE INSPECTOR GENERAL WILL NOT BE
EXTENDED AS HAS BEEN THE DG'S ANNUAL PRACTICE FOR THE
LAST FIVE YEARS ALTHOUGH THE INCUMBENT HAD REACHED
MANDATORY RETIREMENT AGE, AND THE POSITION HAS ALREADY
BEEN POSTED ON THE FAO WEBSITE. THE FAO SECRETARIAT
PRESENTED THE ACTION PLAN CALLED FOR IN THE REPORT
ACCEPTING VIRTUALLY ALL THE EXTERNAL AUDITOR'S
RECOMMENDATIONS. THIS INCLUDES CREATING AN AUDIT
COMMITTEE. IN AN ATYPICAL ROLE REVERSAL, SENEGAL
QUESTIONED INCREMENTAL COSTS THAT MIGHT BE INCURRED BY
CREATION OF AN AUDIT COMMITTEE.
THE UNITED STATES ALSO PRESENTED COMMENTS REGARDING
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PAGE 03 ROME 04561 03 OF 04 201017Z
RECOMMENDATIONS FOR IMPROVING ADMINISTRATION OF THE OIL
FOR FOOD PROGRAM IN IRAQ WHICH WERE WELL RECEIVED. ONE
OF THE MAIN POINTS WAS THAT THE FAO MUST IMPROVE
EMERGENCY OPERATIONS IN SITUATIONS WHERE THE GOVERNMENT
AND OTHER INFRASTRUCTURE HAVE VIRTUALLY COLLAPSED, AS IN
AFGHANISTAN. THE OIL FOR FOOD PROGRAM IS THE LARGEST
EVER ADMINISTERED BY THE FAO.
10. SPLIT ASSESSMENT SCHEME PROPOSED TO AVOID FOREIGN
EXCHANGE LOSSES ESTIMATED TO REACH $35 MILLION 2004-05
-------------- --------------
THE FAO SECRETARIAT PRESSED FOR A DECISION ON THIS
"URGENT" MATTER ALTHOUGH IT WAS FOR DISCUSSION ONLY. THEY
PROJECTED THAT, AT CURRENT EXCHANGE RATES, THE FAO WOULD
BE IN THE HOLE $35 MILLION IF A ZNG BUDGET WERE APPROVED
FOR THE NEXT BIENNIUM. THE EU COULD NOT EXPRESS AN
AGREED POSITION, BUT THE FRENCH ARE KNOWN TO BE STRONGLY
IN SUPPORT OF USING THE EURO. SEVERAL REPRESENTATIVES OF
G-77 COUNTRIES SPOKE IN FAVOR OF THE PLAN. THE MATTER
WILL LIKELY BE RAISED AT THE FAO COUNCIL MEETING IN
OCTOBER/NOVEMBER TO ENABLE THE FAO TO PRESENT THE SCHEME
TO THE CONFERENCE IN 2003 FOR DECISION.
THE UNITED STATES WAS ISOLATED ON PROCEDURAL AND
SUBSTANTIVE GROUNDS. WE ASKED FOR MORE INFORMATION ON
THE EXPERIENCE OF OTHER UN AGENCIES, LIKE IAEA AND
UNESCO, WITH SPLIT ASSESSMENT SCHEMES. WE ALSO REQUESTED
DATA ON THE COST OF IMPLEMENTATION. THE FAO POINTED OUT
THAT THE UNITED STATES IS THE ONLY MEMBER WITH NO FXR
RISK AT PRESENT SINCE WE PAY OUR ASSESSMENT IN OUR
NATIONAL CURRENCY.
UNCLASSIFIED
PAGE 04 ROME 04561 03 OF 04 201017Z
11. PROGRESS REPORTED IN MANAGEMENT OF LONG TERM
INVESTMENT PORTFOLIO AND ORACLE PROJECT
-------------- --------------
ONE OF THE SOURCES OF CONTINUING LOSSES IN INCOME IS THE
FAO'S LONG-TERM INVESTMENT PORTFOLIO. WHILE THIS IS
UNDERSTANDABLE IN THE CURRENT DOWNTURN IN GLOBAL
FINANCIAL MARKETS, FAO HAS SUSTAINED LOSSES THAT EXCEED
EVEN THE TARGETED LEVEL OF LOSSES. THE EXTERNAL
AUDITOR'S REPORT FOCUSED ON DEFICIENCIES IN THE TREASURY
DEPARTMENT AS WELL AS INTERNAL CONTROLS. HOWEVER, THE
FAO HAS MADE PROGRESS. THE ADVISORY COMMITTEE ON
INVESTMENT MET LAST MAY AND OFFERED SOME ADVICE. THE
PROPORTION OF EQUITIES IN THE INVESTMENT PORTFOLIO HAS
BEEN REDUCED. HOWEVER, IT SEEMS THAT THE GROWTH STRATEGY
OF THE INVESTMENT MANAGER IS INAPPROPRIATE FOR THIS PHASE
OF THE MARKET. FAO WAS ADVISED TO FOLLOW UP ON THE ACI
AND EXTERNAL AUDITOR'S RECOMMENDATIONS TO SPLIT THE
PORTFOLIO BETWEEN MANAGERS WITH VALUE AND GROWTH ORIENTED
STRATEGIES.
THE ORACLE PROJECT NOW SEEMS ON FIRM GROUND. THE
PROBLEMS THAT CAUSED COST OVERRUNS IN THE FIRST PHASE
HAVE BEEN RESOLVED AND THE UPGRADE HAS BEEN INSTALLED.
WORK HAS STARTED ON EXTENDING THE NEW INFORMATION
UNCLASSIFIED
UNCLASSIFIED PTQ4142
PAGE 01 ROME 04561 04 OF 04 201018Z
ACTION IO-00
INFO LOG-00 NP-00 AID-00 CEA-01 CIAE-00 COME-00 CTME-00
DODE-00 ITCE-00 SRPP-00 MEDE-00 EB-00 EXME-00 EUR-00
E-00 UTED-00 VC-00 FRB-00 H-01 TEDE-00 INR-00
ITC-01 L-00 VCE-00 AC-01 NSAE-00 NSCE-00 OES-01
OIC-02 OMB-01 OPIC-01 ACE-00 SP-00 SSO-00 STR-00
TEST-00 TRSE-00 USIE-00 FMP-00 DRL-02 G-00 SAS-00
/011W
-------------- EA41C7 201018Z /38
R 200952Z SEP 02
FM AMEMBASSY ROME
TO SECSTATE WASHDC 5916
INFO USMISSION GENEVA
USMISSION USUN NEW YORK
USMISSION UNVIE VIENNA
AMEMBASSY PARIS
USDA FAS WASHDC 2288
UNCLAS SECTION 04 OF 04 ROME 004561
SIPDIS
FROM U.S. MISSION TO UN AGENCIES IN ROME
STATE FOR IO/EDA AND IO/S
USDA FOR FAS/HUGHES AND REICH
USDA FOR APHIS/GREIFER
PARIS FOR UNESCO, VIENNA FOR UNVIE
UNCLASSIFIED
PAGE 02 ROME 04561 04 OF 04 201018Z
E.O. 12958: N/A
TAGS: AORC EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR WFPOAORC WFPOAORC WFPOAORC WFPO
SUBJECT: FAO FINANCE AND PROGRAM COMMITTEES CONSIDER
MEDIUM TERM PLAN FOR 2004-09
MANAGEMENT SYSTEM TO HUMAN RESOURCES AND PAYROLL, BUT
PROJECT IMPLEMENTATION IS CONTINGENT ON THE AVAILABILITY
OF FUNDS. THE FAO HAS PROPOSED CREATION OF A CAPITAL
BUDGETING FUND AS PART OF THE BUDGET FOR PROJECTS LIKE
ORACLE THAT SPAN SEVERAL BIENNIA. AS IT NOW STANDS, THE
PROJECT CANNOT PROCEED UNTIL THE UNITED STATES PAYS ITS
ARREARS.
12. FAO PROGRAM COMMITTEE
--------------
PROGRAM COMMITTEE MEMBER AUSTRALIA PROVIDED A READOUT ON
THE PROGRAM COMMITTEE TO MISSOFF, HIGHLIGHTING THE
FOLLOWING ISSUES:
-- EVALUATION OF FAO'S EMERGENCY ACTIVITIES: MEMBERS
WELCOMED THE EVALUATION, PARTICULARLY AS IT IS THE FIRST
OF ITS KIND TO EVALUATE AN FAO PROGRAM IN THE CONTEXT OF
THE FAO'S STRATEGIC FRAMEWORK. U.S. COMMENTS ON THE
EMERGENCY ACTIVITIES (DRAFTED BY FODAG SENIOR
HUMANITARIAN COORDINATOR),PROVIDED INFORMALLY TO OTHER
OECD PROGRAM COMMITTEE MEMBERS, WERE WELCOMED AS A
SUBSTANTIVE CONTRIBUTION TO THE DEBATE.
-- STATUS REPORT ON CODEX EVALUATION: PROGRAM COMMITTEE
MEMBERS WELCOMED THE CODEX COMMISSION'S EXECUTIVE
COMMITTEE REPORT AND, IN PARTICULAR, THE INFORMATION
CONTAINED THEREIN ON THE REGIONAL BALANCE ON THE
UNCLASSIFIED
PAGE 03 ROME 04561 04 OF 04 201018Z
EVALUATION TEAM AND CLEARER PROVISIONS FOR CODEX INPUT
INTO THE EVALUATION PROCESS.
-- INTERNATIONAL PLANT PROTECTION CONVENTION: CAIRNS
GROUP MEMBERS TOOK THE LEAD IN STRESSING THE HIGH
PRIORITY OF THE ACTIVITIES OF THE INTERIM COMMISSION, AND
THE NEED TO ASSURE FUNDING FOR THE INTERIM COMMISSION'S
STANDARD SETTING PROGRAM. AUSTRALIA REPORTED THAT THE
PROGRAM COMMITTEE RECEIVED VERBAL ASSURANCES THAT THE
SECRETARIAT WOULD MAKE EFFORTS TO FIND FUNDS WITHIN THE
SIPDIS
EXISTING BUDGETARY AUTHORITY TO COVER THE SHORTFALL IN
THE CURRENT BIENNIUM. CONCERNING IPPC ACTIVITIES IN THE
MEDIUM TERM PLAN, AUSTRALIA WAS SUCCESSFUL IN INSERTING A
REFERENCE TO THE NEED TO COMPLETE FOUR STANDARDS PER YEAR
IN ADDITION TO PROVIDING TECHNICAL ASSISTANCE AND
INFORMATION EXCHANGE.
-- BRIEFING ON SOUTHERN AFRICAN DROUGHT: AT THE REQUEST
OF SUDAN, THE SECRETARIAT BRIEFED THE PROGRAM COMMITTEE
ON THE SITUATION IN SOUTHERN AFRICA AND THE ISSUES
RELATING TO PROVISION OF BIOTECH-ENGINEERED FOOD AID.
THE SECRETARIAT BRIEFING REPORTEDLY HEWED CLOSELY TO THE
AGREED JOINT FAO/WHO/WFP STATEMENT; THE PROGRAM COMMITTEE
REPORT WILL SIMPLY NOTE THAT THE STATEMENT WAS
DISTRIBUTED.
-- FOLLOW-UP TO SPECIAL PROGRAM ON FOOD SECURITY (SPFS)
EVALUATION: THE SECRETARIAT BRIEFED THE PROGRAM
COMMITTEE ON FOLLOW-UP TO THE SPFS EVALUATION.
13. COMMENT
--------------
THE FAO TENDS TO BLAME THE "MAJOR CONTRIBUTOR," I.E. THE
UNITED STATES, FOR FAR TOO MANY OF ITS FINANCIAL PROBLEMS
UNCLASSIFIED
PAGE 04 ROME 04561 04 OF 04 201018Z
AND CONTINUES TO SPEND BEYOND WHAT IT CAN RATIONALLY
AFFORD. THE DIRECTOR GENERAL, URGED ON BY POTENTIAL
BENEFICIARIES, CONTINUES TO PRESS FOR MORE RESOURCES FROM
DONORS THAN HE CAN REASONABLY EXPECT TO OBTAIN. THE RISK
FOR DONORS IS THAT AS RESOURCES ARE SPREAD MORE THINLY,
NORMATIVE ACTIVITIES, LIKE IPPC, CAN BECOME IMPOVERISHED
AND LOSE CRITICAL MASS. WE NEED TO FOCUS OUR EFFORTS ON
WHERE RESOURCES ARE USED AS WELL AS ON THE OVERALL BUDGET
LEVEL. END COMMENT.
HEILEMAN
UNCLASSIFIED
>
2002ROME04561 - Classification: UNCLASSIFIED
SIPDIS
FROM U.S. MISSION TO UN AGENCIES IN ROME
STATE FOR IO/EDA AND IO/S
USDA FOR FAS/HUGHES AND REICH
USDA FOR APHIS/GREIFER
PARIS FOR UNESCO, VIENNA FOR UNVIE
UNCLASSIFIED
PAGE 02 ROME 04561 01 OF 04 201017Z
E.O. 12958: N/A
TAGS: AORC EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR WFPOAORC WFPOAORC WFPOAORC WFPO
SUBJECT: FAO FINANCE AND PROGRAM COMMITTEES CONSIDER
MEDIUM TERM PLAN FOR 2004-09
1. SUMMARY: THE FAO FINANCE AND PROGRAM COMMITTEES MET
AT FAO HEADQUARTERS IN ROME SEPTEMBER 9-13, 2002. THE
MAIN TOPIC IN THE JOINT SESSION WAS THE MEDIUM TERM PLAN
(MTP) 2004-09 AND PRIORITIZATION OF RESOURCES. THE
DIRECTOR GENERAL MADE A STRONG BID FOR INCREASED
RESOURCES TO IMPLEMENT THE OBJECTIVES ENDORSED AT THE
WORLD FOOD SUMMIT:FIVE YEARS LATER MEETING LAST JUNE, A
BID MOST DONORS CONSIDERED UNREALISTIC. CANADA SPARKED
DISCUSSION WITH AN OFFER, WHICH WAS DECLINED, TO HIRE AN
EXPERT GROUP OF CONSULTANTS TO SET PRIORITIES FOR THE
FAO.
2. IN THE PROGRAM COMMITTEE MEMBERS SPLIT ALONG
PREDICTABLE NORTH/SOUTH LINES IN SUPPORT FOR INCREASES IN
THE VARIOUS PROGRAMS CONTAINED IN THE MEDIUM TERM PLAN.
CAIRNS GROUP PROGRAM COMMITTEE MEMBERS TOOK THE LEAD IN A
SUCCESSFUL EFFORT TO BOLSTER SUPPORT FOR THE PLANT-HEALTH
STANDARD SETTING ACTIVITIES OF THE INTERNATIONAL PLANT
PROTECTION CONVENTION (IPPC).
3. THE FINANCE COMMITTEE, OF WHICH THE UNITED STATES
IS A MEMBER, DWELT ON THE CONTINUED DETERIORATION IN
FAO'S FINANCES. THE FAO MAY BE FORCED TO BORROW
EXTERNALLY BY YEAREND IF U.S. ARREARS ARE NOT REDUCED
SUBSTANTIALLY. THE MOST CONTROVERSIAL TOPIC WAS THE
REPORT PRESENTED BY THE OUTGOING EXTERNAL AUDITOR WHICH
UNCLASSIFIED
PAGE 03 ROME 04561 01 OF 04 201017Z
CONTAINED SHARP CRITICISM OF INTERNAL CONTROLS. FINALLY,
FAO WILL PUSH FOR ADOPTION OF ITS SPLIT ASSESSMENT SCHEME
(USD/EUROS) BY THE NEXT CONFERENCE.
4. THE FINANCE AND PROGRAM COMMITTEES ARE TENTATIVELY
SCHEDULED TO MEET AGAIN MAY 5-9, 2003. THE FINANCE
COMMITTEE WILL MEET IN AN ADDITIONAL, EXTRAORDINARY
SESSION OCTOBER 7-8, 2002 TO REVIEW THE WORLD FOOD
PROGRAM'S AUDITED ACCOUNTS. END SUMMARY.
5. COMPOSITION OF COMMITTEES DONE BY REGION
--------------
THE FINANCE AND PROGRAM COMMITTEES ARE COMPOSED OF
REPRESENTATIVES OF EACH REGIONAL GROUP OF MEMBER STATES.
THE FINANCE COMMITTEE (NINE MEMBERS) WAS CHAIRED BY CHILE
AND INCLUDED, IN ADDITION TO THE UNITED STATES,
REPRESENTATIVES OF JAPAN, KUWAIT, PAKISTAN, SENEGAL,
SWITZERLAND, TANZANIA, AND THE UNITED KINGDOM. THE
PROGRAM COMMITTEE (ELEVEN MEMBERS) WAS CHAIRED BY THE
DUTCH PERMREP AND INCLUDED REPRESENTATIVES OF AUSTRALIA,
CAMEROON, CANADA, CHINA, COLOMBIA, LEBANON, MALAYSIA,
MALI, PARAGUAY AND SUDAN. MEMBERS ARE ELECTED BY THE
CONFERENCE FOR TWO-YEAR TERMS, AND THIS WAS THE SECOND
MEETING FOR MOST PARTICIPANTS.
6. DIRECTOR GENERAL CALLS FOR MORE RESOURCES TO
IMPLEMENT THE "INTERNATIONAL ALLIANCE"
-------------- --------------
THE DIRECTOR GENERAL TOLD THE JOINT COMMITTEE THAT THE
FAO FINDS ITSELF IN AN IMPOSSIBLE SITUATION: MEMBERS
UNCLASSIFIED
PAGE 04 ROME 04561 01 OF 04 201017Z
STATES ACROSS THE BOARD WANT THE FAO TO DO MORE, BUT THE
ORGANIZATION HAS NOT BEEN GRANTED INCREASED RESOURCES TO
CARRY OUT ITS BROADER MANDATE. THIS CREATES A ZERO SUM
GAME; FAO MUST TAKE FUNDS FROM ONE ACTIVITY TO SUPPORT AN
INCREASE IN ANOTHER. HE ASKED FOR GREATER UNDERSTANDING.
THE DIRECTOR GENERAL ALSO EXPRESSED CONCERN ABOUT THE
FAO'S FINANCIAL SITUATION. HE BLAMED U.S. ARREARS FOR
CAUSING A CASH FLOW CRISIS. IN ADDITION TO MORE THAN USD
95 MILLION IN ARREARS, THE UNITED STATES GENERALLY PAYS
ITS ASSESSMENT IN THE LAST QUARTER OF THE YEAR (ALTHOUGH
IT IS DUE IN FULL AT THE BEGINNING OF THE YEAR.) HE SAID
THERE WERE NO FUNDS FOR $14 MILLION IN ANNUAL AFTER
SERVICE MEDICAL COSTS AMONG OTHER STAFF RELATED EXPENSES.
IF THE FAO WERE TO SPEND OBLIGATIONS UNDER THE TECHNICAL
COOPERATION PROGRAM (TCP) MORE RAPIDLY AS URGED, IT WOULD
BE BANKRUPT. HE URGED ADOPTION OF THE SPLIT ASSESSMENT
SCHEME (EUROS AND U.S. DOLLARS) TO REDUCE THE FOREIGN
EXCHANGE RISK ASSUMED BY THE FAO.
THE DIRECTOR GENERAL ALSO ACKNOWLEDGED THE SHARP
CRITICISM LEVIED BY THE EXTERNAL AUDITORS, ESPECIALLY
REGARDING INTERNAL CONTROLS. FAO HAS ACCEPTED VIRTUALLY
ALL OF THE AUDITORS' RECOMMENDATIONS AND PROVIDED THE
FINANCE COMMITTEE WITH AN ACTION PLAN FOR IMPLEMENTATION.
UNCLASSIFIED
UNCLASSIFIED PTQ4137
PAGE 01 ROME 04561 02 OF 04 201017Z
ACTION IO-00
INFO LOG-00 NP-00 AID-00 CEA-01 CIAE-00 COME-00 CTME-00
DODE-00 ITCE-00 SRPP-00 MEDE-00 EB-00 EXME-00 EUR-00
E-00 UTED-00 VC-00 FRB-00 H-01 TEDE-00 INR-00
ITC-01 L-00 VCE-00 AC-01 NSAE-00 NSCE-00 OES-01
OIC-02 OMB-01 OPIC-01 ACE-00 SP-00 SSO-00 STR-00
TEST-00 TRSE-00 USIE-00 FMP-00 DRL-02 G-00 SAS-00
/011W
-------------- EA41A3 201017Z /38
R 200952Z SEP 02
FM AMEMBASSY ROME
TO SECSTATE WASHDC 5914
INFO USMISSION GENEVA
USMISSION USUN NEW YORK
USMISSION UNVIE VIENNA
AMEMBASSY PARIS
USDA FAS WASHDC 2286
UNCLAS SECTION 02 OF 04 ROME 004561
SIPDIS
FROM U.S. MISSION TO UN AGENCIES IN ROME
STATE FOR IO/EDA AND IO/S
USDA FOR FAS/HUGHES AND REICH
USDA FOR APHIS/GREIFER
PARIS FOR UNESCO, VIENNA FOR UNVIE
UNCLASSIFIED
PAGE 02 ROME 04561 02 OF 04 201017Z
E.O. 12958: N/A
TAGS: AORC EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR WFPOAORC WFPOAORC WFPOAORC WFPO
SUBJECT: FAO FINANCE AND PROGRAM COMMITTEES CONSIDER
MEDIUM TERM PLAN FOR 2004-09
THE ONLY RECOMMENDATIONS REJECTED CONCERNED INCREASED
STAFF, FOR WHICH THERE WAS NO FUNDING, AND MERGING
INTERNAL CONTROLS (AUD) WITH EVALUATIONS (PBEE).
HE ALSO DEFENDED HIS MANAGEMENT OF THE ORGANIZATION'S
FINANCES. IN REVIEWING PAST HISTORY, HE SAID HE HAD NOT
BEEN GIVEN THE RESOURCES HE NEEDED TO CHANGE THE
FINANCIAL REPORTING SYSTEM. IN FACT, THE OVERALL LEVEL
OF THE BUDGET HAD BEEN CUT SHORTLY AFTER HE TOOK OFFICE
IN 1994. DESPITE THESE OBSTACLES, HE TOOK PRIDE IN THE
FACT THAT FAO'S ACCOUNTS HAD BEEN CONSISTENTLY APPROVED
EVERY BIENNIUM WITHOUT ANY RESERVATIONS BY THE EXTERNAL
AUDITORS.
IN CONCLUSION, HE ASSERTED HE WAS ENCOURAGED BY THE
RESULTS OF THE WORLD FOOD SUMMIT MEETING LAST JUNE. IT
HAD RAISED AWARENESS OF HUNGER PROBLEMS AND FORGED NEW
PARTNERSHIPS. HE WAS ALSO ENCOURAGED BY SIGNS OF
REVERSAL IN THE LONG DOWNWARD TREND IN RESOURCES DEVOTED
TO AGRICULTURAL DEVELOPMENT, ESPECIALLY FROM DEVELOPING
COUNTRIES. HE ASKED FOR THE MEMBERSHIP'S INCREASED
FINANCIAL SUPPORT FOR FAO.
7. THE MEDIUM TERM PLAN (MTP) 2004-09 RENEWS FAO'S
REQUEST FOR ADDITIONAL RESOURCES
-------------- --------------
UNCLASSIFIED
PAGE 03 ROME 04561 02 OF 04 201017Z
THIS DISCUSSION MARKED THE KICK-OFF OF THE BUDGET BATTLE.
US PERMREP STATED THE U.S. POSITION WAS STILL TO SUPPORT
ZERO NOMINAL GROWTH (ZNG) NOTING WE HAD ABSTAINED ON
ADOPTION OF A ZERO REAL GROWTH BUDGET (ZRG) AT THE FAO
CONFERENCE LAST NOVEMBER. JAPAN JOINED THE US POSITION.
(COMMENT - THE EU WAFFLED DUE TO LACK OF CONSENSUS ON A
SINGLE POSITION, BUT GERMANY, NOT PRESENT IN THE FINANCE
OR PROGRAM COMMITTEES, IS LIKELY TO SUPPORT US AS WELL -
END COMMENT). THE LATIN AMERICAN REPRESENTATIVE, CHILE,
POINTED OUT THAT THE ADVERSE INTERNATIONAL CONTEXT WILL
BEAR ON INCREASING THE BUDGET. HE TOLD THE U.S. PERMREP
PRIVATELY THAT ARGENTINA WOULD SEEK AN ADJUSTMENT OF ITS
ASSESSMENT DUE TO ITS ECONOMIC REVERSAL. AS IN THE LAST
BUDGET ROUND, SEVERAL MEMBERS CALLED ON THE SECRETARIAT
TO PRODUCE MORE THAN ONE BUDGET SCENARIO TO FACILITATE
MORE REALISTIC PLANNING.
CANADA SPARKED A LIVELY DISCUSSION IN THE JOINT COMMITTEE
ON PRIORITIZATION WITHIN AGREED BUDGET LEVELS. CANADA
OFFERED TO PAY FOR A GROUP OF EXTERNAL EXPERTS TO
EVALUATE THE MTP AND PROPOSE REALLOCATION OF RESOURCES.
THIS WOULD AVOID UNFORESEEN SHIFTS IN RESOURCES FROM THE
REAL GROWTH BUDGET ADVOCATED BY THE DIRECTOR GENERAL IF
THE AGREED LEVEL, AS PAST EXPERIENCE SHOWS, WERE TO BE
MUCH LOWER. IT WOULD ALSO HAVE THE ADVANTAGE OF
INCREASING MEMBER PARTICIPATION IN THE PROCESS. HOWEVER,
MEMBERS OF THE COMMITTEE DECIDED TO LEAVE THE PROCESS IN
THE HANDS OF THE GOVERNING BODIES AND THE FAO
SECRETARIAT.
SIPDIS
MEMBERS' OPINIONS ON PRIORITIZATION SPLIT ALONG
UNCLASSIFIED
PAGE 04 ROME 04561 02 OF 04 201017Z
PREDICTABLE NORTH/SOUTH LINES. MANY CALLED FOR A
STRONGER REGIONAL FOCUS IN THE MTP. DEVELOPING COUNTRIES
SUPPORTED THE NEARLY 35 PERCENT INCREASE PROPOSED FOR THE
TECHNICAL COOPERATION PROGRAM (TCP),FAO COUNTRY
REPRESENTATIVES AND THE SPECIAL PROGRAM FOR FOOD SECURITY
(SPFS). OECD COUNTRIES SPOKE ON BEHALF OF THE NORMATIVE
PROGRAMS OF THE ORGANIZATION AND SUPPORTED INCREASES FOR
FISHERIES AND FORESTRY. MANY, INCLUDING THE UNITED
STATES, WERE ESPECIALLY CONCERNED ABOUT INSUFFICIENT
RESOURCES FOR THE INTERNATIONAL PLANT PROTECTION
COMMISSION (IPPC). AT CURRENT RESOURCE LEVELS EVEN
PLANNED ACTIVITIES CANNOT TAKE PLACE.
8. FAO'S FINANCIAL CRISIS COULD RESULT IN EXTERNAL
BORROWING
-------------- --------------
THE MAIN FOCUS OF THE DISCUSSION WAS ON THE EVER WEAKER
FINANCIAL POSITION OF FAO WHICH WAS ATTRIBUTED LARGELY TO
ARREARS OF THE "MAJOR CONTRIBUTOR." THE U.S. TOOK THE
POSITION THAT THE GROWING DEFICIT WAS THE RESULT OF
EXPENDITURES EXCEEDING INCOME. (THE EXTERNAL AUDITOR
NODDED IN AGREEMENT.) THE U.S. PERMREP BRIEFED THE
COMMITTEE ON EFFORTS TO PAY ARREARS (INCLUDING THE
CURRENT YEAR ASSESSMENT WHICH WAS DUE JAN. 1, 2002) AND
AFFIRMED OUR GOAL TO PAY CURRENT YEAR DUES PLUS ARREARS
UNCLASSIFIED
UNCLASSIFIED PTQ4139
PAGE 01 ROME 04561 03 OF 04 201017Z
ACTION IO-00
INFO LOG-00 NP-00 AID-00 CEA-01 CIAE-00 COME-00 CTME-00
DODE-00 ITCE-00 SRPP-00 MEDE-00 EB-00 EXME-00 EUR-00
E-00 UTED-00 VC-00 FRB-00 H-01 TEDE-00 INR-00
ITC-01 L-00 VCE-00 AC-01 NSAE-00 NSCE-00 OES-01
OIC-02 OMB-01 OPIC-01 ACE-00 SP-00 SSO-00 STR-00
TEST-00 TRSE-00 USIE-00 FMP-00 DRL-02 G-00 SAS-00
/011W
-------------- EA41B5 201018Z /38
R 200952Z SEP 02
FM AMEMBASSY ROME
TO SECSTATE WASHDC 5915
INFO USMISSION GENEVA
USMISSION USUN NEW YORK
USMISSION UNVIE VIENNA
AMEMBASSY PARIS
USDA FAS WASHDC 2287
UNCLAS SECTION 03 OF 04 ROME 004561
SIPDIS
FROM U.S. MISSION TO UN AGENCIES IN ROME
STATE FOR IO/EDA AND IO/S
USDA FOR FAS/HUGHES AND REICH
USDA FOR APHIS/GREIFER
PARIS FOR UNESCO, VIENNA FOR UNVIE
UNCLASSIFIED
PAGE 02 ROME 04561 03 OF 04 201017Z
E.O. 12958: N/A
TAGS: AORC EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR WFPOAORC WFPOAORC WFPOAORC WFPO
SUBJECT: FAO FINANCE AND PROGRAM COMMITTEES CONSIDER
MEDIUM TERM PLAN FOR 2004-09
THIS CALENDAR YEAR. THE U.K. PERMREP PRESSED FAO TO LOOK
AHEAD AND PREDICT THE RISK OF EXTERNAL BORROWING AND HOW
MUCH IT MIGHT COST.
9. EXTERNAL AUDITOR'S REPORT SPURS FAO TO REACT WITH A
DETAILED ACTION PLAN
-------------- --------------
THE FAO HAS BEEN STUNG BY THE LENGTHY CRITICISM IN THE
EXTERNAL AUDITOR'S REPORT. FOR ONCE, RATHER THAN GET
DEFENSIVE, THEY HAVE TAKEN ACTION, ESPECIALLY TO IMPROVE
INTERNAL CONTROLS. (COMMENT: A TOP ADVISOR TO THE DG,
TOLD THE U.S. PERMREP THAT THE DG WAS WORRIED ABOUT THE
POTENTIAL IMPACT OF THE REPORT ON PAYMENT OF U.S.
ARREARS. END COMMENT) THE INSPECTOR GENERAL WILL NOT BE
EXTENDED AS HAS BEEN THE DG'S ANNUAL PRACTICE FOR THE
LAST FIVE YEARS ALTHOUGH THE INCUMBENT HAD REACHED
MANDATORY RETIREMENT AGE, AND THE POSITION HAS ALREADY
BEEN POSTED ON THE FAO WEBSITE. THE FAO SECRETARIAT
PRESENTED THE ACTION PLAN CALLED FOR IN THE REPORT
ACCEPTING VIRTUALLY ALL THE EXTERNAL AUDITOR'S
RECOMMENDATIONS. THIS INCLUDES CREATING AN AUDIT
COMMITTEE. IN AN ATYPICAL ROLE REVERSAL, SENEGAL
QUESTIONED INCREMENTAL COSTS THAT MIGHT BE INCURRED BY
CREATION OF AN AUDIT COMMITTEE.
THE UNITED STATES ALSO PRESENTED COMMENTS REGARDING
UNCLASSIFIED
PAGE 03 ROME 04561 03 OF 04 201017Z
RECOMMENDATIONS FOR IMPROVING ADMINISTRATION OF THE OIL
FOR FOOD PROGRAM IN IRAQ WHICH WERE WELL RECEIVED. ONE
OF THE MAIN POINTS WAS THAT THE FAO MUST IMPROVE
EMERGENCY OPERATIONS IN SITUATIONS WHERE THE GOVERNMENT
AND OTHER INFRASTRUCTURE HAVE VIRTUALLY COLLAPSED, AS IN
AFGHANISTAN. THE OIL FOR FOOD PROGRAM IS THE LARGEST
EVER ADMINISTERED BY THE FAO.
10. SPLIT ASSESSMENT SCHEME PROPOSED TO AVOID FOREIGN
EXCHANGE LOSSES ESTIMATED TO REACH $35 MILLION 2004-05
-------------- --------------
THE FAO SECRETARIAT PRESSED FOR A DECISION ON THIS
"URGENT" MATTER ALTHOUGH IT WAS FOR DISCUSSION ONLY. THEY
PROJECTED THAT, AT CURRENT EXCHANGE RATES, THE FAO WOULD
BE IN THE HOLE $35 MILLION IF A ZNG BUDGET WERE APPROVED
FOR THE NEXT BIENNIUM. THE EU COULD NOT EXPRESS AN
AGREED POSITION, BUT THE FRENCH ARE KNOWN TO BE STRONGLY
IN SUPPORT OF USING THE EURO. SEVERAL REPRESENTATIVES OF
G-77 COUNTRIES SPOKE IN FAVOR OF THE PLAN. THE MATTER
WILL LIKELY BE RAISED AT THE FAO COUNCIL MEETING IN
OCTOBER/NOVEMBER TO ENABLE THE FAO TO PRESENT THE SCHEME
TO THE CONFERENCE IN 2003 FOR DECISION.
THE UNITED STATES WAS ISOLATED ON PROCEDURAL AND
SUBSTANTIVE GROUNDS. WE ASKED FOR MORE INFORMATION ON
THE EXPERIENCE OF OTHER UN AGENCIES, LIKE IAEA AND
UNESCO, WITH SPLIT ASSESSMENT SCHEMES. WE ALSO REQUESTED
DATA ON THE COST OF IMPLEMENTATION. THE FAO POINTED OUT
THAT THE UNITED STATES IS THE ONLY MEMBER WITH NO FXR
RISK AT PRESENT SINCE WE PAY OUR ASSESSMENT IN OUR
NATIONAL CURRENCY.
UNCLASSIFIED
PAGE 04 ROME 04561 03 OF 04 201017Z
11. PROGRESS REPORTED IN MANAGEMENT OF LONG TERM
INVESTMENT PORTFOLIO AND ORACLE PROJECT
-------------- --------------
ONE OF THE SOURCES OF CONTINUING LOSSES IN INCOME IS THE
FAO'S LONG-TERM INVESTMENT PORTFOLIO. WHILE THIS IS
UNDERSTANDABLE IN THE CURRENT DOWNTURN IN GLOBAL
FINANCIAL MARKETS, FAO HAS SUSTAINED LOSSES THAT EXCEED
EVEN THE TARGETED LEVEL OF LOSSES. THE EXTERNAL
AUDITOR'S REPORT FOCUSED ON DEFICIENCIES IN THE TREASURY
DEPARTMENT AS WELL AS INTERNAL CONTROLS. HOWEVER, THE
FAO HAS MADE PROGRESS. THE ADVISORY COMMITTEE ON
INVESTMENT MET LAST MAY AND OFFERED SOME ADVICE. THE
PROPORTION OF EQUITIES IN THE INVESTMENT PORTFOLIO HAS
BEEN REDUCED. HOWEVER, IT SEEMS THAT THE GROWTH STRATEGY
OF THE INVESTMENT MANAGER IS INAPPROPRIATE FOR THIS PHASE
OF THE MARKET. FAO WAS ADVISED TO FOLLOW UP ON THE ACI
AND EXTERNAL AUDITOR'S RECOMMENDATIONS TO SPLIT THE
PORTFOLIO BETWEEN MANAGERS WITH VALUE AND GROWTH ORIENTED
STRATEGIES.
THE ORACLE PROJECT NOW SEEMS ON FIRM GROUND. THE
PROBLEMS THAT CAUSED COST OVERRUNS IN THE FIRST PHASE
HAVE BEEN RESOLVED AND THE UPGRADE HAS BEEN INSTALLED.
WORK HAS STARTED ON EXTENDING THE NEW INFORMATION
UNCLASSIFIED
UNCLASSIFIED PTQ4142
PAGE 01 ROME 04561 04 OF 04 201018Z
ACTION IO-00
INFO LOG-00 NP-00 AID-00 CEA-01 CIAE-00 COME-00 CTME-00
DODE-00 ITCE-00 SRPP-00 MEDE-00 EB-00 EXME-00 EUR-00
E-00 UTED-00 VC-00 FRB-00 H-01 TEDE-00 INR-00
ITC-01 L-00 VCE-00 AC-01 NSAE-00 NSCE-00 OES-01
OIC-02 OMB-01 OPIC-01 ACE-00 SP-00 SSO-00 STR-00
TEST-00 TRSE-00 USIE-00 FMP-00 DRL-02 G-00 SAS-00
/011W
-------------- EA41C7 201018Z /38
R 200952Z SEP 02
FM AMEMBASSY ROME
TO SECSTATE WASHDC 5916
INFO USMISSION GENEVA
USMISSION USUN NEW YORK
USMISSION UNVIE VIENNA
AMEMBASSY PARIS
USDA FAS WASHDC 2288
UNCLAS SECTION 04 OF 04 ROME 004561
SIPDIS
FROM U.S. MISSION TO UN AGENCIES IN ROME
STATE FOR IO/EDA AND IO/S
USDA FOR FAS/HUGHES AND REICH
USDA FOR APHIS/GREIFER
PARIS FOR UNESCO, VIENNA FOR UNVIE
UNCLASSIFIED
PAGE 02 ROME 04561 04 OF 04 201018Z
E.O. 12958: N/A
TAGS: AORC EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR WFPOAORC WFPOAORC WFPOAORC WFPO
SUBJECT: FAO FINANCE AND PROGRAM COMMITTEES CONSIDER
MEDIUM TERM PLAN FOR 2004-09
MANAGEMENT SYSTEM TO HUMAN RESOURCES AND PAYROLL, BUT
PROJECT IMPLEMENTATION IS CONTINGENT ON THE AVAILABILITY
OF FUNDS. THE FAO HAS PROPOSED CREATION OF A CAPITAL
BUDGETING FUND AS PART OF THE BUDGET FOR PROJECTS LIKE
ORACLE THAT SPAN SEVERAL BIENNIA. AS IT NOW STANDS, THE
PROJECT CANNOT PROCEED UNTIL THE UNITED STATES PAYS ITS
ARREARS.
12. FAO PROGRAM COMMITTEE
--------------
PROGRAM COMMITTEE MEMBER AUSTRALIA PROVIDED A READOUT ON
THE PROGRAM COMMITTEE TO MISSOFF, HIGHLIGHTING THE
FOLLOWING ISSUES:
-- EVALUATION OF FAO'S EMERGENCY ACTIVITIES: MEMBERS
WELCOMED THE EVALUATION, PARTICULARLY AS IT IS THE FIRST
OF ITS KIND TO EVALUATE AN FAO PROGRAM IN THE CONTEXT OF
THE FAO'S STRATEGIC FRAMEWORK. U.S. COMMENTS ON THE
EMERGENCY ACTIVITIES (DRAFTED BY FODAG SENIOR
HUMANITARIAN COORDINATOR),PROVIDED INFORMALLY TO OTHER
OECD PROGRAM COMMITTEE MEMBERS, WERE WELCOMED AS A
SUBSTANTIVE CONTRIBUTION TO THE DEBATE.
-- STATUS REPORT ON CODEX EVALUATION: PROGRAM COMMITTEE
MEMBERS WELCOMED THE CODEX COMMISSION'S EXECUTIVE
COMMITTEE REPORT AND, IN PARTICULAR, THE INFORMATION
CONTAINED THEREIN ON THE REGIONAL BALANCE ON THE
UNCLASSIFIED
PAGE 03 ROME 04561 04 OF 04 201018Z
EVALUATION TEAM AND CLEARER PROVISIONS FOR CODEX INPUT
INTO THE EVALUATION PROCESS.
-- INTERNATIONAL PLANT PROTECTION CONVENTION: CAIRNS
GROUP MEMBERS TOOK THE LEAD IN STRESSING THE HIGH
PRIORITY OF THE ACTIVITIES OF THE INTERIM COMMISSION, AND
THE NEED TO ASSURE FUNDING FOR THE INTERIM COMMISSION'S
STANDARD SETTING PROGRAM. AUSTRALIA REPORTED THAT THE
PROGRAM COMMITTEE RECEIVED VERBAL ASSURANCES THAT THE
SECRETARIAT WOULD MAKE EFFORTS TO FIND FUNDS WITHIN THE
SIPDIS
EXISTING BUDGETARY AUTHORITY TO COVER THE SHORTFALL IN
THE CURRENT BIENNIUM. CONCERNING IPPC ACTIVITIES IN THE
MEDIUM TERM PLAN, AUSTRALIA WAS SUCCESSFUL IN INSERTING A
REFERENCE TO THE NEED TO COMPLETE FOUR STANDARDS PER YEAR
IN ADDITION TO PROVIDING TECHNICAL ASSISTANCE AND
INFORMATION EXCHANGE.
-- BRIEFING ON SOUTHERN AFRICAN DROUGHT: AT THE REQUEST
OF SUDAN, THE SECRETARIAT BRIEFED THE PROGRAM COMMITTEE
ON THE SITUATION IN SOUTHERN AFRICA AND THE ISSUES
RELATING TO PROVISION OF BIOTECH-ENGINEERED FOOD AID.
THE SECRETARIAT BRIEFING REPORTEDLY HEWED CLOSELY TO THE
AGREED JOINT FAO/WHO/WFP STATEMENT; THE PROGRAM COMMITTEE
REPORT WILL SIMPLY NOTE THAT THE STATEMENT WAS
DISTRIBUTED.
-- FOLLOW-UP TO SPECIAL PROGRAM ON FOOD SECURITY (SPFS)
EVALUATION: THE SECRETARIAT BRIEFED THE PROGRAM
COMMITTEE ON FOLLOW-UP TO THE SPFS EVALUATION.
13. COMMENT
--------------
THE FAO TENDS TO BLAME THE "MAJOR CONTRIBUTOR," I.E. THE
UNITED STATES, FOR FAR TOO MANY OF ITS FINANCIAL PROBLEMS
UNCLASSIFIED
PAGE 04 ROME 04561 04 OF 04 201018Z
AND CONTINUES TO SPEND BEYOND WHAT IT CAN RATIONALLY
AFFORD. THE DIRECTOR GENERAL, URGED ON BY POTENTIAL
BENEFICIARIES, CONTINUES TO PRESS FOR MORE RESOURCES FROM
DONORS THAN HE CAN REASONABLY EXPECT TO OBTAIN. THE RISK
FOR DONORS IS THAT AS RESOURCES ARE SPREAD MORE THINLY,
NORMATIVE ACTIVITIES, LIKE IPPC, CAN BECOME IMPOVERISHED
AND LOSE CRITICAL MASS. WE NEED TO FOCUS OUR EFFORTS ON
WHERE RESOURCES ARE USED AS WELL AS ON THE OVERALL BUDGET
LEVEL. END COMMENT.
HEILEMAN
UNCLASSIFIED
>
2002ROME04561 - Classification: UNCLASSIFIED