US MISSION/ROME MEETS WITH FAO ON TRANSITION PLANS

UNCLAS SECTION 01 OF 04 ROME 003257

SIPDIS


AIDAC

FROM U.S. MISSION IN ROME

SENSITIVE

HEADQUARTERS COALITION PROVISIONAL AUTHORITY BAGHDAD
STATE FOR U/S LARSON, PRM A/S DEWEY, IO A/S HOLMES, EUR/NE,
EUR/WE, SA/INS, IO/EDA SWINNICK
USDA/FAS FOR U/S PENN, MCHAMBLISS, RTILSWORTH AND LPANASUK
USAID FOR ADMINISTRATOR NATSIOS, AA/DCHA WINTER, D/DCHA/OFDA
BMCCONNELL, D/DCHA/FFP LANDIS
JOINT STAFF FOR JE/J4/J5
NSC FOR JDWORKEN

E.O. 12958: N/A
TAGS: AORC EAID EAGR IZ FAO WFP
SUBJECT: US MISSION/ROME MEETS WITH FAO ON TRANSITION PLANS
FOR ITS IRAQ OPERATIONS

REF: A) STATE 194739

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

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SUMMARY
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1. (SBU) US MISSION MET ON JULY 11 WITH LAURENT THOMAS, FAO
SENIOR OPERATIONS OFFICER, SPECIAL RELIEF OPERATIONS SERVICE
TO DISCUSS FAO'S TRANSITION PLANS FOR ITS IRAQ OPERATIONS.
FAO IS COGNIZANT OF THE NEED TO KEEP UP A DAILY DIALOGUE
WITH THE COALITION PROVISIONAL AUTHORITY (CPA) IN "MANAGING"
THE TRANSITION. FAO NEITHER WANTS TO PROCEED AT THIS STAGE
WITHOUT PRIOR CONSULTATION WITH CPA NOR TO BE ACCUSED OF NOT
MOVING SWIFTLY ENOUGH TO MAKE THE TRANSITION "HAPPEN" BY THE
UNSCR NOVEMBER 21 DEADLINE. US MISSION SHARES FAO'S VIEW
THAT CFA DEPLOY SOONEST A SENIOR AGRICULTURE OFFICER TO THE
NORTHERN 3 GOVENORATES TO WORK HAND-IN-HAND WITH FAO TO
"GUARANTEE" THE PHASE-OVER. END SUMMARY.

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BACKGROUND
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2. (U) US MISSION MET ON JULY 11 WITH LAURENT THOMAS, FAO
SENIOR OPERATIONS OFFICER, SPECIAL RELIEF OPERATIONS SERVICE
TO DISCUSS FAO'S TRANSITION PLANS FOR ITS IRAQ OPERATIONS
PRESENTLY FUNDED BY THE UN OFFICE FOR IRAQ PROGRAMS (OIP) IN
NEW YORK.


3. (SBU) WORK IN THE NORTH - FAO CURRENTLY HAS PROJECTS
TOTALING USD 671 MILLION THAT HAVE BEEN APPROVED BY OIP. AS
OF 11 JULY, USD 478 MILLION HAD BEEN DISBURSED, AND FAO
EXPECTS THAT AN ADDITIONAL USD 40-60 MILLION WILL BE SPENT
BEFORE OCTOBER 1, WHICH IS THE DELIVERY DEADLINE THAT FAO
HAS GIVEN THE VENDORS/SUPPLIERS FOR THE NORTHERN
GOVERNORATES. PROJECTS FOR THE USD 40-60 MILLION ARE
CURRENTLY BEING JOINTLY SUBMITTED FROM FAO AND THE CPA, WHO
MUST APPROVE EACH PROJECT (AS SPECIFIED UNDER UNSCR 1483)
BEFORE IT IS SUBMITTED FOR APPROVAL TO FAO/HQ AND OIP. THE
ESTIMATED BALANCE OF USD 133-153 MILLION WOULD BE
SUPPLEMENTED BY INCOME THAT FAO IS CURRENTLY GENERATING BY
SELLING EQUIPMENT TO PRIVATE COMPANIES. IN TOTAL, FAO
EXPECTS THERE TO BE A BALANCE OF USD 150-160 MILLION IN THE
13 PERCENT ACCOUNT FOR THE THREE NORTHERN GOVERNORATES WHEN
THE NOVEMBER 21 DEADLINE ARRIVES. ALL OF THESE PROJECTS (IN
FAO'S EYES) WILL BE COMPLETED OR NEARLY COMPLETED BY
NOVEMBER 21.


4. (SBU) FAO IN BAGHDAD HAS BEEN WORKING CLOSELY WITH THE
CPA IN BAGHDAD, BUT FOR THE NORTH, FAO IS CONCERNED THAT
DISCUSSION REGARDING THE PHASE-OVER FOR THE NORTHERN THREE
GOVERNORATES IS BEHIND SCHEDULE. FAO CURRENTLY HAS 40
INTERNATIONAL STAFF IN IRAQ, ABOUT 60 PERCENT OF WHOM ARE
WORKING IN THE THREE NORTHERN GOVERNORATES. FAO HAS ABOUT
550 NATIONAL STAFF IN THE NORTH, MANY OF WHOM HAVE WORKED
FOR FAO SINCE 1997. IN ADDITION, THERE ARE 4,000-6,000
CASUAL LABORERS WHO ALSO HAVE WORKED FAIRLY STEADILY FOR FAO
OVER THE YEARS. FAO IS IN THE PROCESS OF DEVISING A LAY-OFF
PLAN FOR THESE EMPLOYEES, BUT ANTICIPATES THAT THIS WILL NOT
BE EASY.

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5. (U) AFTER THE PASSING OF UNSC 1472 AND 1476, FAO REVIEWED
THE CONTRACTS THAT HAD BEEN LET BY THE GOVERNMENT OF IRAQ
FOR SOUTH/CENTRAL AND APPROVED BY OIP UNDER THE 59 PERCENT
ACCOUNT. IN REVIEWING AND PRIORITIZING THE CONTRACTS, FAO
CHOSE THE ONES WHERE IT APPEARED THAT THE VENDOR COULD
DELIVER ON OR BEFORE JUNE 3 (THE ORIGINAL DATE OF THE
EXTENSION OF THE OFF PROGRAM) AND WHERE THE FUNDS HAD
ALREADY BEEN PLACED INTO A LETTER OF CREDIT FROM OIP. THESE
CONTRACTS TOTALED APPROXIMATELY USD 185 MILLION. MANY OF
THESE CONTRACTS ARE ALREADY IN THE EXECUTION STAGE; OTHERS
ARE IN THE FINAL STAGES OF NEGOTIATION. FAO IS SEIZED WITH
ENSURING THE TIMELY RECEIPT, STORAGE AND DISTRIBUTION OF
THESE INPUTS, SUPPLIES AND EQUIPMENT.


6. (SBU) THE CONTRACTS RELATED TO THIS USD 185 MILLION DO
NOT INCLUDE AGRICULTURAL PROVISIONS/SUPPLIES FOR THE FALL
AND WINTER. FAO HAS BEEN WORRIED ABOUT THE LEAD TIME
REQUIRED TO PURCHASE SUPPLIES OF SEEDS, PESTICIDES AND
FUNGICIDES FOR CROPS, ANIMAL VACCINES, IRRIGATION EQUIPMENT,
ETC. FOR THE SOUTH/CENTRAL REGIONS AS WE NEAR THE FALL
PLANTING SEASON. THIS CONCERN HAS LESSENED JUST RECENTLY
AS, IN THE LAST TEN DAYS, CPA ASKED FAO TO ASSUME USD 700
MILLION WORTH OF ADDITIONAL CONTRACTS THAT INCLUDES THE
ABOVE ITEMS. AND ON JULY 14, CPA TOLD FAO IT WOULD LIKE IT
(FAO) TO TAKE OVER ALL CONTRACTS IN THE AGRICULTURE SECTOR,
WHICH COULD AMOUNT TO AN ADDITIONAL USD HUNDREDS OF
MILLIONS.


7. (SBU) NOTE: JUST AS WFP HAD TO DO FOR ALL THE CONTRACTS
FOR WHICH IT ASSUMED RESPONSIBILITY, FAO WILL HAVE TO RE-
NEGOTIATE ALL THESE CONTRACTS. IT IS A FORMIDABLE TASK AS
NO ONE CONTRACT IS SIMILAR TO ANOTHER. EACH CARRIES ITS OWN
UNIQUE QUALITIES/PROBLEMS/CHALLENGES. END NOTE.


8. (SBU) IN THE PAST, IRAQ HAD SEVERAL OPERATIONAL
FERTILIZER FACTORIES IN THE SOUTH/CENTRAL REGIONS.
HISTORICALLY, IT DID NOT HAVE TO IMPORT FERTILIZER FOR THE
CROPPING SEASONS UNDER THE OFF PROGRAM. AS, HOWEVER, THE
FERTILIZER FACTORIES ARE PRESENTLY NON-OPERATIONAL, FAO
ASSERTS THAT FERTILIZER CONTRACTS NOW NEED TO BE ADDED TO
THE AGRICULTURAL IMPORT SUPPLY LIST. FAO REPORTS THAT
JORDAN IS A LARGE PRODUCER OF FERTILIZER SO ACQUIRING IT IN
A TIMELY FASHION SHOULD NOT BE DIFFICULT, ONCE ANY CONTRACT
GOES THROUGH THE VARIOUS APPROVAL CHANNELS.

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FAO LIAISON WITH CPA
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9. (SBU) ONE IMPORTANT REQUIREMENT OF ALL UN CONTRACTS IS
THAT THE VENDOR MUST BE ABLE TO DELIVER PRIOR TO NOVEMBER

21. FAO/HQ HAS ASKED ITS STAFF IN BAGHDAD TO RECEIVE IN
WRITING FROM THE CPA THAT IT WILL ASSUME THE FOLLOWING
RESPONSIBILITIES, WHEN GOODS ARRIVE:

-PROVIDE SECURITY FROM THE BORDER POINT TO THE DELIVERY
POINT, AND IF NEEDED, AT THE DELIVERY POINT;
-TAKE OWNERSHIP OF THE GOODS AT THE DELIVERY POINT AND DO

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STRIBUTIONS.

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NEXT STEPS
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10. (SBU) FAO IS POSITIVE ABOUT ITS RELATIONSHIP WITH CPA IN
BAGHDAD, BUT STRESSES THAT A CPA AGRICULTURE LIAISON IS
URGENTLY NEEDED IN THE NORTH. FAO FEELS THAT CPA WILL HAVE
TO CONTINUE TO SUPPORT AGRICULTURE AT A HIGH LEVEL FOR A
LONGER PERIOD OF TIME THAN IT (CPA) MAY CURRENTLY
ANTICIPATE, INCLUDING IN THE NORTH, EVEN THOUGH THE LATTER
REGION IS ADMITTEDLY NOT AS "NEEDY" AS THE REST OF THE
COUNTRY.


11. (SBU) ON JULY 14, AMBASSADOR DAN AMSTUTZ, THE CPA SENIOR
ADVISOR FOR AGRICULTURE, COMMUNICATED WITH THE FAO/HQ'S
LAURENT THOMAS, RELATED TO HOW CPA SEES FAO'S EVOLVING
RESPONSIBILITIES. NOTE: THOMAS IS QUITE POSITIVE ON
AMBASSADOR AMSTUTZ'S FORMIDABLE AGRICULTURAL CREDENTIALS AND
"TAKE-CHARGE" QUALITIES. END NOTE.

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FAO PREPARATIONS FOR THE OCTOBER DONOR CONFERENCE
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12. (U) FAO, UNDP AND THE WORLD BANK HAVE NOW COMMENCED AN
OVERALL ASSESSMENT OF THE IRAQI AGRICULTURE SECTOR IN
PREPARATION FOR THE DONORS MEETING ON IRAQ TO BE HELD THIS
OCTOBER. THE FIRST DRAFT OF THE ASSESSMENT IS TO BE
COMPLETED BY AUGUST 15.


13. (U) FAO HAS ALSO PREPARED THE FOLLOWING FINAL DRAFT
WORKING DOCUMENTS ON THE NORTHERN IRAQ AGRICULTURAL SECTOR,
AS FOLLOWS:

A) THREE-VOLUMES, RELEASED IN JUNE 2003:

- SCR 9686 - THREE-YEAR AGRICULTURAL PROGRAM IN THE IRAQI
NORTHERN GOVERNORATES - MAIN REPORT & ANNEXES 1 TO 6
- ANNEX 7 TO THE MAIN REPORT
- TEN WORKING PAPERS (VOLUME 3); AND

B) FOUR-VOLUMES, RELEASED IN JULY 2003:

-PROJECT PROFILES - COMPONENT 1 (VOLUME 4 OF 6) (PART A);
-PROJECT PROFILES - COMPONENT 2 (VOLUME 4 OF 6) (PART B);
-PROJECT PROFILES - COMPONENT 3 (VOLUME 5 OF 6); AND
-PROJECT PROFILES - COMPONENTS 4 AND 5 (VOLUME 6 OF 6).

NOTE. HARD COPIES OF A COMPLETE SET OF THESE REPORTS HAVE
BEEN FEDEXED TO MARY T. CHAMBLISS, DA/EC/USDA/FAS. END NOTE.

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COMMENT
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14. (SBU) FAO HAS AT PRESENT A LARGE AND HEAVY PORTFOLIO -
HELPING SALVAGE THE CURRENT HARVEST BY ACTING AS THE BARLEY
BUYER OF "LAST RESORT;" ACQUIRING FERTILIZER AND PESTICIDES
IN AMPLE AND TIMELY QUANTITIES; ENSURING THAT THERE IS SEED

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ENT REGIONWIDE SPREAD OF
DISEASE; TECHNICAL ASSISTANCE TO REHABILITATION OF
IRRIGATION WORKS; FRUIT TREE AND POULTRY REVIVAL; AND SO ON.
TO KEEP THE TURNOVER TIMETABLE ON-TRACK, DAILY DIALOGUE WILL
BE NEEDED BOTH IN BAGHDAD AND IN THE NORTH. FAO NEITHER
WANTS TO PROCEED AT THIS STAGE WITHOUT PRIOR CONSULTATION
WITH CPA NOR TO BE ACCUSED OF NOT MOVING SWIFTLY ENOUGH TO
MAKE THE TRANSITION "HAPPEN" BY THE UNSCR-IMPOSED NOVEMBER
21 DEADLINE. US MISSION SHARES FAO'S VIEW THAT CFA DEPLOY
SOONEST A SENIOR AGRICULTURE OFFICER TO THE NORTHERN 3
GOVENORATES TO WORK HAND-IN-HAND WITH FAO TO "GUARANTEE" THE
PHASE-OVER.


15. (U) MINIMIZE CONSIDERED. HALL

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2003ROME03257 - Classification: UNCLASSIFIED