FAO: TIME FOR A REASSESSMENT

UNCLAS ROME 004556

SIPDIS


STATE FOR IO/FO, IO/EDA BEHREND AND KOTOK
STATE ALSO FOR E, EB, OES
USAID FOR AA/EGAT SIMMONS, OFDA FOR MENGHETTI
USDA/FAS FOR REICH, HUGHES AND CHAMBLISS
PARIS FOR UNESCO
NAIROBI FOR UNEP
USUN FOR AMBASSADOR NEGROPONTE, LUTZ AND TAMLYN
GENEVA FOR AMBASSADOR MOLEY

SENSITIVE

FROM FODAG

E.O. 12958: N/A
TAGS: AORC EAGR ABUD EAID ETRD SENV KUNR FAO
SUBJECT: FAO: TIME FOR A REASSESSMENT


Sensitive but unclassified -- please protect accordingly.
Not suitable for Internet posting.


1. (SBU) The UN Food and Agriculture Organization (FAO)
serves US national trade, economic development and
humanitarian interests in a wide range of important areas
relating to food and agriculture, where national or
regional action could never be as effective as FAO-led
action. If FAO did not exist, we would have to invent
it. Our contribution -- 22% of the organization's
assessed budget -- is leveraged by the contributions of
other countries. Poor management at FAO in the 1980s led
to considerable USG mistrust and ambivalence -- an
attitude that persists despite significant (though still
incomplete) reforms undertaken since 1993. US Mission
believes it is time to take a fresh look at FAO. We
recommend initiation of a discussion among US
stakeholders to identify top USG priorities for FAO and
outline a strategy to achieve them. To launch that
reassessment, we offer the following discussion paper for
consideration by Washington agencies. End summary.

--------------
"Fiat Panis"
--------------


2. (U) Founded to "raise levels of nutrition, improve
agricultural productivity, better the lives of rural
populations and contribute to the growth of the world
economy," the Rome-based FAO has grown to become one of
the UN's largest specialized agencies.


3. (U) Consistent with its broad mandate, FAO is
engaged in a wide range of activities: printing manuals
on organic farming, booklets on food ethics and reports
on animal genetic resources; providing satellite imagery
of weather conditions; distributing seeds and tools in
emergencies; promoting development of school gardens;
forecasting availability of agricultural commodities and
monitoring implementation of UN fish stocks agreements;
creating models of carbon sequestration and providing
technical support for the World Bank's Consultative Group
on International Agricultural Research (CGIAR); promoting
adoption of interntional food safety standards and
fostering reseach on sterile insects for pest control.


4. (U) What does FAO do best? The U.S. and other major
donors have long stressed the importance of FAO's
normative and standard-setting activities. Hostig the
WTO-recognized food safety and plant healt standard
setting bodies is unquestionably one o the most
important functions of the FAO. US inerests are
strongly served by having international agreement on
these issues. The importance of tese bodies to US trade
and consumer safety can be measured in the millions, if
not billions, of dollars. Similarly, FAO is the only
body with a global mandate for fisheries. The profound -
- possibly irreversible -- depletion of the world's fish
stocks is ever more apparent: coordinated international
action is clearly the only solution.


5. (U) FAO produces the only world-wide compendia of
statistics on agricultural production and natural
resources. Decision makers need this kind of
information, whether the subject matter is global
warming, deforestation or commodity forecasting.


6. (U) FAO's emergency activities -- emergency inputs
to get agricultural production up and running after
natural and man-made disasters, livestock vaccinations to
prevent devastation of herds -- are critical. The USG is
impressed enough with FAO's emergency operations that
USAID now provides almost $10 million in voluntary
contributions to this important work. FAO deserves
credit for helping to ensure that the right agricultural

inputs were in place in Afghanistan, allowing farmers to
take advantage of good growing conditions this year and
produce a bounty crop. In Iraq, the FAO has been
implementing the agricultural component of the Oil-for-
Food program for years. Since the defeat of Saddam
Hussein's regime, FAO has been mobilizing over $1 billion
in agricultural inputs and equipment, playing a vital
role in reconstruction of Iraq's agriculture, water
resources and food security systems.


7. (U) FAO representatives have done outstanding work
in other areas of crisis and underdevelopment, although
this has not been the case everywhere. But in DR Congo,
for example, a team led by Ambassador Hall found the FAO
rep to be performing outstandingly, in close cooperation
with WFP and USAID, in confronting one of the most severe
humanitarian crises on the planet.


8. (U) In terms of advocacy, FAO speaks for farmers,
the rural poor, and the hungry all over the world. FAO's
DG has repeatedly taken the world's stage to plead the
case of the hungry, and to seek to mobilize donor
support. FAO has also contributed to informed
international discussion of the impact of international
agricultural trade policy on food security in the
developing world. It has also been an active contributor
to international discussions on sustainable development.

--------------
Director General Diouf and the Saouma Legacy
--------------


9. (SBU) Any discussion within the FAO concerning the
state of the organization and the performance of the
current Director General (DG),Dr. Jacques Diouf
(Senegal),begins by comparing Diouf to his predecessor.
Diouf was elected in 1993 after the 18-year, three-term
tenure of Edward Saouma (Lebanon). Diouf inherited an
organization virtually devoid of modern features, such as
computer systems. The FAO's ability to attract first-
rate professional staff was greatly diminished; payroll
costs of a hugely bloated General Service Staff were
high. Under Saouma, Director General term limits had
been abolished and FAO's Technical Cooperation Program
(TCP) established -- considered cynically by some donors
to be no more than a "slush fund" with which to run re-
election campaigns. Saouma had also presided over a
bitter feud with World Food Program (WFP) Director James
Ingram (Australia) over Ingram's (fully justified)
efforts to gain more autonomy for WFP.


10. (SBU) DG Diouf, by contrast, launched a reform
program to slim down and re-focus FAO -- a restructuring
that, according to some observers, was as sweeping as
that undertaken by any major UN agency. Diouf introduced
modern computer systems, embarked on an ambitious
decentralization program, and put in place good senior
management. He presided over 3 biennia of Zero Nominal
Growth (ZNG) in which FAO staff (primarily General
Service) shrank by close to a third. Most FAO staff
admit that ZNG has been, in fact, "healthy" for the
organization. Key FAO programs, to hear most people,
haven't been seriously compromised by frozen budgets and
dropping staff numbers-- but senior officials warn that
continued erosion of the budget in real terms will start
cutting into muscle, not fat.


11. (SBU) With members' urging, a Strategic Framework
was adopted in 1999, more transparent program and budget
documents formulated, and a serious effort made to
improve monitoring and evaluation and a move towards
putting results-based budgeting into place. Members have
played an important role in pushing the reform process:
US efforts to have FAO meet Helms-Biden benchmarks have
resulted in improvements in the organization's internal

oversight operations.


12. (SBU) Under Diouf, US relations with the FAO, which
had deteriorated significantly during the Saouma regime,
improved, and the US regained the Deputy Director General
position (lost to the UK during a particularly low period
in U.S./Saouma relations). We recently also regained one
Assistant Director General position. While we may have
been disappointed in the failure of US candidates to get
some top posts, we have been satisfied with the quality
of the candidates ultimately chosen.


13. (SBU) FAO personnel practices have been one of the
last remnants of what the incoming Director of Human
Resources called "the dark ages." Partly at FODAG
urging, the FAO finally starting advertising D-level
(senior) positions in 2001. (Formerly, the FAO would
advise selected countries privately as to openings.)
This "no-advertisement" policy still holds true, however,
for FAO country and regional representatives. US
representation on the FAO international staff remains an
area of concern. The American citizen presence in
professional positions continues to hover at 12-13%,
below the 16-22% desirable range). Between 2000 and 2002
the number of Americans in senior (D-1 and above)
positions increased from 19 to 23, but the percentage of
Amcits out of the total senior staff is still too low.
Although the low level of US representation may be due at
least in part to a dearth of interested, qualified US
candidates with the requisite language skills and
attrition for economic and family reasons, the FAO has
taken few proactive measures to rectify the problem of
under-representation.

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When did it go sour?
--------------


14. (SBU) The Diouf "honeymoon" was probably over by
1999 when he orchestrated G-77 opposition to a US/UK
effort to have term limits inscribed on the FAO Council
Agenda. A similar effort to have the World Food Summit:
Five Years Later held at the Head of State level (over
the objections of donor countries) reinforced the
uneasiness of donors about Diouf's operating style. The
message on world hunger was important, and Diouf's
tireless advocacy for the world's hungry was genuine and
timely, but where was the substance? At the same time as
the Saouma-era TCP fund was increasing each year, Diouf
inaugurated a new call on the Regular Assessed Budget:
the Special Program for Food Security (SPFS). Heralded
as a groundbreaking step towards food security, SPFS
projects are small-scale pilot projects. An in-house
evaluation in 2002 found design and monitoring problems
with SPFS and noted that Phase II (sustainability) was a
still a distant goal.


15. (SBU) Diouf's actions -- or rather his inactions --
on agricultural biotechnology have also been a cause of
concern to the U.S. Notwithstanding FAO's positive, pro-
science mission statement on biotech, Diouf has observed
that member governments are divided on this issue and he
appears to have decided that he must not take sides. This
has resulted in a noticeable ambivalence in FAO's
message. That said, Diouf signed in August 2002 the
joint WFP-WHO-FAI statement of official UN policy that
biotech does not present a threat to human health. FAO
has talented and dedicated professionals working in this
area who know the science, and are frustrated by the
organization's political leeriness. But there are also
staff members who wholeheartedly endorse a strongly
precautionary approach, such as that advocated by many
European countries.


16. (SBU) Diouf has been more responsive to USG

concerns on other occasions, such as when he dispatched
the ADG for Agriculture to the USDA/USAID conference on
Science and Technology in Agriculture in June 2003,
despite a direct scheduling conflict with the FAO Council
meeting.


17. (SBU) At bottom, however, the USG concern with
Diouf's leadership is not about his stance on any
specific issue, but his overall managerial style. He is
seen as an astute politician, but a poor manager. There
are complaints about his inability to prioritize and
sharpen the organization's focus, though, in fairness, he
faces a near-impossible task in trying the balance the
conflicting aims of 185 member states.

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How to Influence the FAO?
--------------


18. (SBU) FAO is a UN agency operating by consensus,
where in principle all countries have an equal voice. It
can be frustrating to us that we do not always "get our
way," but in reality the organization shows special
deference to the views and concerns of the US and other
large donors. Nevertheless, we can do more to enhance
our influence and realize our objectives. Our concerns
over the need for further improvements in efficiency and
effectiveness are widely shared, at least among OECD
members. A number of key donors are already taking
various approaches to effecting change:

-- Think strategically: The UK has taken this tack with
fairly good success. They have invested extrabudgetary
resources to strengthen FAO systems and support reform
initiatives, such as formulation of FAO's strategic
framework. No more a fan of the SPFS than any other
major donor, they concluded early on that SPFS was here
to stay, and spent money collaborating with FAO through
money and staff aimed at improving the SPFS so that it
supported the DFID (UK aid agency) philosophy on
"livelihoods." The UK "stealth" approach worked. The
last session of Committee on Agriculture endorsed a
proposal for FAO to "integrate a rural livelihood
approach into its existing programs, in particular the
FAO's Special Program for Food Security (SPFS)."

-- Pick your issue: Australia has honed in relentlessly
on increasing funding for the Interim Commission on
Phytosanitary Measures (ICPM). With one person in Rome
working the multilateral food and agriculture portfolio
who cheerfully ignores most other FAO activities,
Australia has indefatigably and successfully worked this
issue through the FAO policy-making bodies and the FAO
Program Committee in conjunction with other like-minded
countries.

-- Pay FAO to do things your way and hope it rubs off:
the Netherlands has adopted this softer approach. Give
the FAO a big check, tell them what you want it spent on
-- in general -- and ask for accounting at the end of the
year. Knowing that Dutch funds are available for, say,
projects supporting gender mainstreaming, FAO line
officers will bring forward such projects. At the end of
the day, given the relatively large amount of funds
involved, the "voluntary" projects of this nature can
come to have formidable influence on the orientation of a
division.

-- Keep a lid on budget growth: This probably best
describes the U.S. approach to influencing the
organization in recent years. ZNG forces the
organization to shrink -- and hopefully, in doing so, to
prioritize. However, ZNG for the coming biennium,
without a mechanism for offsetting exchange rate losses,
would have posed unacceptable costs on the FAO.DA BEHREND AND KOTOK
STATE ALSO FOR E, EB, OES
USAID FOR AA/EGAT SIMMONS, OFDA FOR MENGHETTI
USDA/FAS FOR REICH, HUGHES AND CHAMBLISS
PARIS FOR UNESCO
NAIROBI FOR UNEP
USUN FOR AMBASSADOR NEGROPONTE, LUTZ AND TAMLYN
GENEVA FOR AMB

According to FAO Budget Director, a pure ZNG budget --
one that does not take into account exchange rate losses
-- would have forced the FAO to lay off 900 staff
members. Separation costs alone would cost $60 million.
There is also a potential political cost to harping on a
negatively perceived message of "do more with less," if
that is not balanced by a clear, positive message on
substance. It is this clear and positive message that
the US should articulate.

--------------
First Steps
--------------


19. (SBU) In order to achieve our objectives in FAO,
we must first be clear as a government and as a nation
about what it is that we want from the institution and
what it can do for us. Our current mantra -- ZNG, term
limits, Amcit representation, support for standard
setting and biotech -- is the starting point, but now may
be the time to articulate a broader, forward-looking
substantive agenda. To that end, it may be useful to
bring together stakeholders from government (at minimum
USDA, State [IO, EB, OES], AID, Commerce/NOAA, EPA, and
HHS),industry, land-grant universities, and the
humanitarian/NGO community to develop an integrated
vision of what we expect from FAO. A discussion paper
prepared by the National Academy of Sciences or other
appropriate body might be a useful fresh look,
unencumbered by the Saouma legacy and other historical
baggage that may no longer be relevant today. We need a
focused set of thoughts and priorities if we want FAO to
have its own focus and priorities. For example, FAO
could play a major role in mobilizing additional support
and research for the Congo Basin Forest Partnership, a
major USG priority involving FAO competencies.


20. (SBU) An issue that must be decided soon is what
position we will take on a possible third term for DG
Diouf. Although the current DG has yet to announce his
intentions, there is a widespread belief that he will run
again. The USG must conduct a careful cost/benefit
analysis of whether to support him or not. We have made
it clear -- without personalizing the issue -- that we
believe that two terms are sufficient for the head of a
UN agency. Aside from the principle of a limited term,
we must consider whether the organization can continue to
function, reform and succeed under Diouf. If we decide
to oppose Diouf, we will need to ensure a graceful exit,
to begin an immediate search for possible successors, and
to identify a candidate who can garner G-77 support.
If, on the other hand, it emerges that strong G-77
support makes Diouf unstoppable, there may be a high cost
to be out front trying to block his candidacy. We at
least would need a non-US champion and a strategy for
achieving significant G-77 support for a change.

--------------
Some Suggestions
--------------


21. (SBU) In order to jumpstart internal discussions,
this Mission proposes the following list of issues for
priority attention:

-- Reform of FAO personnel in the field. For the FAO to
be effective, FAO personnel in the field must be selected
and evaluated on merit. The effectiveness of field
operations is the clearest measure of FAO success.

-- Scrutiny of what is happening in the field with an eye
toward improving FAO's performance. Washington may
consider tasking embassies/AID missions in selected
countries to report on the strengths and weaknesses of
FAO's presence in their host countries.

-- An FAO stance on biotech that reflects the scientific
consensus on benefits and risks, and the potential for
new technologies to address food security issues in ways
that protect the environment. This connects well with
USDA Secretary Veneman's agricultural S&T initiative.

-- Continued action in addressing food-security needs in
Iraq. FAO needs to understand that success in Iraq
requires sending its best and brightest. FAO
demonstrated results in Afghanistan, as a result of US
carrots and sticks. Second-best efforts are simply not
enough.

-- Increased staffing with Americans. This will entail
continued pressure on FAO's leadership from senior USG
officials, but also intensified efforts to recruit
suitable US candidates, including expanded support for
Associate Professional Officer positions for talented
young professionals. Ambassador Hall is personally very
involved in brokering an agreement between FAO and the
Peace Corps to contribute to this objective. A
memorandum of understanding is nearing completion now.

-- Encouragement of an independent outside evaluation of
FAO (along the lines of the evaluations being performed
at neighboring UN agencies IFAD and WFP.

-- Potential synergies between FAO field activities and
US bilateral and regional projects (AID, Peace Corps,
Central African Regional Partnership for the Environment,
Inter-American Institute for Cooperation on Agriculture).

-- Closer dialogue between FODAG and OECD and G-77
permanent representations in Rome on FAO issues.

-- Stronger emphasis on the interconnections between
FAO's work and that of WTO, UNDP, UNEP and the
international financial institutions.

-- Consideration of the impact of late payment of USG
assessed contributions on US ability to influence FAO.

Hall


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2003ROME04556 - Classification: UNCLASSIFIED