"Donneybrook" between India and several European

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E.O. 12958: N/A
TAGS: EAID EAGR AORC PREF KUNR WFP UN
SUBJECT: "Donneybrook" between India and several European
donors over "twinning" at the WFP Executive Board's Annual
and Second Regular Sessions, Rome, May 28 - June 3, 2003

REF: (A) 01 ROME 5624, (B) ROME 00007

SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY.
NOT SUITABLE FOR INTERNET POSTING.

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SUMMARY
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1. (SBU) At two WFP Executive Board sessions (May 29 and
June 2),the Netherlands and Sweden criticized India and by
inference South Africa, Eritrea and China (WFP emerging
developing country donors) for contributing to WFP while
failing to adequately address hunger at home. The Indian
ambassador gave an eloquent rebuttal reproduced below, and
both non-traditional donors and recipient nations round the
table heaped scorn on the Dutch and the Swedes. Given
unprecedented food aid needs globally, the United States has
strongly encouraged WFP's establishment of procedures for
"twinning" between those non-traditional donors who have
food stocks but cannot pay for transport and those donors
who are able to cover these costs. This major diplomatic
gaffe by the Dutch and the Swedes has brought the matter to
center stage. It is now time for the U.S. and our WFP
colleagues to put our creative hats on and make "twinning"
work. End summary.

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Background
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2. (U) Per ref A, India in October 2001 announced its
intention to donate one million tons of wheat through WFP
for Afghanistan. More recently, India has offered 50,000
metric tons of wheat for Iraq and offered to pay shipping
costs to Um Qasr. Both donations have however run into
Government of India difficulties to pay full cost recovery
(FCR) i.e., internal transport, shipping and handling,
direct support costs, other direct operational costs,
indirect support costs presently fixed at 7 percent, etc. At
the Annual Board's discussion on WFP's Financial Policies
(May 29),the Indian delegate commented that FCR, as
presently structured, inhibited developing countries who
wanted to donate to WFP Appeals from easily doing so.


3. (SBU) Both Sweden and The Netherlands saw meeting hunger
needs worldwide as the duty of OECD countries who were
obligated to address confirmed needs with appropriate aid
commitments (a variation on the mantra that all OECD members
are "obligated" to commit 0.7 percent of their GDP to
meeting the needs of developing countries). But they then
went further. India, South Africa, China, and Eritrea would
be better off, they opined, devoting their resources to
resolving their own domestic hunger problems rather than
seeking to become WFP donors.

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Intervention of the Indian Ambassador on June 2
E

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4. (SBU) On the evening of June 2, under "other business"
the Indian Ambassador to the Rome UN Organizations, H.E.
Himashal Som addressed the Board as follows (text of the
intervention):

(i) (SBU) "Mr. President, at the outset, I would like to
apologise to you because as much as I wish to be brief, due
to the fundamental importance of the issue that I will be
speaking about, I will take a bit of this august assembly's
and your precious time. I seek your kind indulgence.

(ii) (SBU) In the past few days, there have been, for my
Delegation, some extremely distressing developments, that
throw into question the basis of our relationship - indeed,
the relationship of many developing countries like us - with
WFP. At the Annual Session of the Executive Board last
week, some members stated, first obliquely during the
discussion on your Annual Report, and then - as if to affirm
that this is their considered position - during the
deliberations on financial issues, that WFP should be
selective in accepting donations from members. Countries
must first ensure adequate food to their own populations,
they said, before they can presume to join the donors club.
When India - supported by several other countries including
the United States, the Russian Federation and some
developing countries - said that this was a surprising new
development in WFP - and something that was outside its
competence as a humanitarian organization - the members in
question reiterated their stance. My delegation finds this
development pernicious and fraught with serious consequences
to the WFP in particular and to the ECOSOC system in
general.

(iii) (SBU) Mr. President, you are aware that the Executive
Director, with full support of the Board, from Day One has
spoken about the imperative of extending the donor base of
WFP, about leveraging benefits for the poor, about garnering
resources from everywhere and anywhere to feed the hungry
children of the world. Broadening the resource base of WFP
in order to meet the increasing need for humanitarian
assistance is one of the most important objectives of the on-
going review of the financing policy. The entire membership
of WFP has participated in this exercise and encouraged the
Programme to explore avenues to mobilize additional
resources so as to extend its work to cover larger numbers
of needy people. It now appears, however, that some
traditional donors are having second thoughts about
expanding WFP's donor base and about permitting entry into
what they consider as an elite donors club with restricted
membership. My Delegation regards this as a totally
unwelcome development, creating by implication, as it would,
if successful, a division of the WFP between the rich and
the poor. Indeed, I would go further: we are strongly
critical of such expressions which perpetuate staticism and
vitiates against progress through means that we regard as
blatantly discriminatory.

(iv) (SBU) Mr. President, never, to the best of my
Delegation's knowledge, has it ever been said in the noble
assemblies that constitute the ECOSOC family, that there
should be distinctions between sovereign and equal members
on the basis of degrees of wealth. Never before has it been
suggested that the developing nations cannot be donors
because they have problems of development. Yes Sir, India
has problems of food insecurity, but India is also one of
the great success stories of the Green Revolution. From
being a country periodically visited by famines, India today
provides on an average 10 - 20 million tonnes of food grain
surplus annually, to have a stockpile of around 50 - 70
million tonnes. And this breakthrough in production is not
confined to food grains only - it also applies to fruits,
vegetables and milk.

(v) (SBU) Anyone who knows the least bit about development
economics, will tell you that the problems of production in
a developing country are completely different from the
problems of distribution. And these problems are compounded
when you have to reach food to a billion people spread over
3.3 million square kilometers in hundreds of cities and
towns and more than half a million villages. It is a
problem linked to infrastructure, roads, silos and storage,
distribution depots and to state financing for the public
distribution system, as well as individual resource
capacities of a large section of the population who are
unable to buy food at market prices. It is indeed a mammoth
problem - before which the problems of production, which can
be enhanced and indeed has been so done, through better
seeds, better agricultural practices, better irrigation and
improved agricultural financing, pale into insignificance.
It is perhaps easier to produce more food than to distribute
this equitably. Indeed the problems of distribution - hence
of food insecurity - have nothing to do with food surplus.

(vi) (SBU) You may be aware that India has one of the
largest public distribution systems in the world supplying
18 million tonnes of grain annually at affordable prices to
180 million families through a distribution network of half
a million outlets. In addition, 15 million of the poorest
families are provided food grains at highly subsidised
rates, in our effort to create a hunger-free India. The
Government has also ear-marked 5 million tonnes of grain for
food for work programmes and several schemes are in place to
provide a safety net for the weakest sections of society.

(vii) (SBU) Mr. President, India today has sufficient food
grain resources to share it with those, who like us in the
past, do not have enough food. In doing so, we are moved by
fundamental considerations which are the essence of our
democracy and our foreign policy. We believe that the
social and economic problems of the world are indivisible,
that hunger in any one country affects us all -
individually, as nations, and globally, as human beings.

(viii) (SBU) Today, I am proud to inform this Assembly, that

there is a greater outflow of economic assistance from India
than is received from abroad. For that matter, India
(which, incidentally, in terms of GDP of around USD 3,000
billion, according to the World Bank is the fourth largest
economy in the world),has never been aid-dependent. As the
U.S. Representative correctly pointed out last week, less
than 3 percent of all our total development resources have
come from external sources. Indeed even at its height,
external assistance was less than 1 percent of our GDP. We
are, Mr. President, most grateful for this support, at a
particular phase of our growth and at times of crises, but
now, I am happy to inform you, our Parliament feels that we
can graduate out of even this limited relationship and step
up our own aid to developing countries, especially those in
Africa and in our neighbourhood. Towards this objective, we
are already in the process of pre-paying our external debt
to multilateral agencies and identifying several other
bilateral loans for closure, except for a few from countries
who have been traditionally most supportive and least
conditional. South - South Cooperation has been declared in
our Parliament as one of our most important foreign policy
objectives and we are committed to spend more and more to
help our brothers in Africa and in our neighbourhood. This
is no empty promise: in the last month we had the visits of
the leaders of Zambia and Mozambique to India and both of
them have gone back with pledges for very substantial
credits and technical assistance.

(ix) (SBU) Pertinently, I would like to point out that in
its Consolidated Appeals for donations, the UN makes no
distinction among categories of donors. It does not
classify donors as "traditional" or "emerging"; nor does it
lay down criteria for acceptance of donations. Other UN
agencies too who depend on voluntary funding, do not
restrict donations to certain categories of members. For
example, IFAD (the International Fund for Agricultural
Development),which depends on voluntary funding, obtains
more than 20 percent of its resources from developing
countries - a fact which the President stresses with pride.
IFAD members have never said "no" to the USD 15 million
contribution from India on the ground that India doesn't
have sufficient financial resources.

(x) (SBU) The recent developments in WFP leave us very
perplexed. Is the attempt to keep out so-called "emerging
donors" part of a concerted strategy of a few countries - in
which case it will have to be countered appropriately at
every fora, at the Chancelleries round the world, at the
various U.N. specialised bodies, and if required, at the
ECOSOC itself - or is this the product of local initiatives
by some who wish to preserve WFP as their exclusive domain?
Forgive me for being so forthright, but what we have heard
in statement and implication, in the past few days - perhaps
we should have noticed veiled signals earlier - has been
deeply disturbing.

(xi) (SBU) Let us remember that the donors' club of WFP is
not like the World Trade Organization or the World Bank,

participation in which carry very obvious benefits. Do you
seriously believe that by rejecting donations from
developing countries, you can influence policy in those
countries? Do you think India would ever accept conditions
to a donation that we are offering? We recognise the
advantages, in terms of transparency and assuredness, of
channelling our donations through WFP, but we must remember
that both in India and in several receiving countries there
are strong lobbies in favour of the bilateral route. It has
been my constant effort to advocate the WFP route and in
this, I have received fullest support of the Executive
Director and his staff who have appreciated our problem in
meeting the principle of full cost recovery.

(xii) (SBU) I would like to highlight the bizarre nature of
some donors' objections by citing a parallel example. India
has the second largest pool of scientific and technical
manpower in the world today. Our capacity in the area of
Information Technology is widely acknowledged. As a group,
persons of Indian origin are in the highest income bracket
of all communities in the USA. I wonder whether the U.S.
would turn back Indian professionals on the ground that many
in India are still illiterate - in the same logic as is
being advocated here that since India has food security
problems, it should not be allowed to be a food donor.

(xiii) (SBU) I have taken a lot of your precious time - but
I did so because I felt that if the logic of the arguments
expounded by some members against countries like India
becoming donors to the WFP were to be accepted, it would
lead to serious polarisation and politicisation within the
WFP. This is a matter which can tear WFP apart. It would
lead to unseemly and fractious debate that would only divert
our attention from our objective of feeding the poor and
hungry. It would be a day of infamy if WFP, moved by
considerations advocated by the few, would shut WFP's doors
to new donors like India. And, Mr. President, for what
reason - indeed what is our sin - that we offered to help
WFP with food donations?

(xiv) (SBU) Mr. President, through you I would like to
assure our most dynamic WFP Executive Director that we have
no intention to weaken the WFP. On the contrary, we want to
strengthen it by joining in with our small support. Mr.
President, we in the developing countries - we in Africa and
Asia - may have hungry stomach but we have hearts full of
compassion. We may ot have much financial resources, but
we have te greatest resource of all - love and self-
respect. We may be poor, but we are taught by our
civilisations to share what little we can spare, with those
who have even less. The WFP, in this globalised world, has
been an inclusive institution, imbued with the most noble
objectives. Let us strive together to achieve our sole goal
- to feed the world's hungry."

End text of H.E. Indian Ambassador Som's intervention.

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Comment
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5. (SBU) Given unprecedented food aid needs globally, the
United States has strongly encouraged WFP's establishment of
procedures for "twinning" between those non-traditional
donors who have food stocks but cannot pay for transport and
those donors who are able to cover these costs. This major
diplomatic gaffe by the Dutch and the Swedes has brought the
matter to center stage. It is now time for the U.S. and our
WFP colleagues to put our creative hats on and make
"twinning" work. Hall
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2003ROME02662 - Classification: UNCLASSIFIED