Iraq food procurement issues - US Mission/Rome

UNCLAS ROME 005702

SIPDIS


FROM U.S. MISSION IN ROME

SENSITIVE

BAGHDAD FOR AMBASSADORS RAPHEL, KENNEDY, AND JLAPENN
USUN FOR AMBASSADOR NEGROPONTE AND MLUTZ
STATE FOR PRM A/S DEWEY, PRM/ANE/EUR/SE, IO A/S HOLMES,
EUR/NE, EUR/WE, SA/PAB, IO/EDA SKOTOK
USDA/FAS FOR U/S PENN, ETERPSTRA, MCHAMBLISS, RTILSWORTH AND
LSCHATZ
USAID FOR AA/DCHA WINTER, AA/ANE, DCHA/OFDA, D/DCHA/FFP
LANDIS
JOINT STAFF FOR JE/J4/J5
NSC FOR EABRAMS, SMCCORMICK, STAHIR-KHEDI AND JDWORKEN
GENEVA FOR RMA LYNCH AND USAID NKYLOH
BRUSSELS FOR USAID PLERNER

E.O. 12958: N/A
TAGS: AORC EAID EAGR PREF FAO WFP WFPO UN EUN
SUBJECT: Iraq food procurement issues - US Mission/Rome
meeting with WFP Deputy Executive Director (Operations) Jean-
Jacques Graisse on December 22, 2003

REF: (A) CPA Administrator Bremer letter to WFP dated 12/20,
(B) WFP Executive Director Morris letter to CPA
Administrator Bremer dated 12/19/03

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


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Summary
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1. (SBU) US Mission/Rome met with WFP Deputy Executive
Director (Operations) Jean-Jacques Graisse on December 22,
2003 to discuss Iraq food procurement next steps in light of
concerns detailed in refs A and B. Graisse, having just
returned from discussions at UN Headquarters NY, highlighted
UN Treasury procedural "glitches" that require vigorous
focus. End summary.

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Background
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2. (U) US Mission Humanitarian Attache Tim Lavelle,
Agricultural Counselor Geoff Wiggin, and USAID Project
Officer Phil Lamade met with WFP Deputy Executive Director
(Operations) Jean-Jacques Graisse on December 22, 2003 to
discuss Iraq food procurement next steps in light of
concerns detailed in WFP Executive Director Morris' letter
to CPA Administrator Bremer dated December 19 (ref B) and
CPA Administrator Bremer's response to WFP (ref A) dated
December 20.


3. (SBU) Graisse, having just returned from meetings at UN
Headquarters New York on December 18-19, recounted that,
despite whatever prior assurances given to the US Permanent
Mission in NY, there are still problems in prompting
efficient and quick action on amendments of letters of
credit both by UN Treasury and Banque National de Paris (BNP
Paribas). As WFP proceeds to renegotiate terms of SCR 1483
food procurement contracts from CF (Commodity plus Freight)
to FOB (free-on-board) with suppliers willing to do so, the
existing letters of credit have to be amended by UN Treasury
and expeditiously processed through BNP Paribas. Graisse
commented that WFP still needs to "extract" agreement from
the UN Treasury on the format for Letter of Credit L/C
amendment requests that WFP submits.


4. (SBU) Unless immediate attention is given to this,
Graisse opined that delays (perhaps as long as one month)
could occur before BNP Paribas released amended letters of
credit. Graisse concluded "this would push us well into 2004
and could engender pipeline problems."


5. (U) Graisse met with U/S Management Catherine Bertini and
apprized her of these procedural "glitches." Bertini
informed Graisse that she would ask Jesse Mabutas, former
WFP head of Administration and Management, and now on her
staff, to focus on the problem.

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CPA Funding for buffer food stocks
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6. (SBU) Graisse reiterated that WFP would need to receive
from CPA the funds necessary to effect the renegotiated
contract terms, i.e. cost of ocean transport as well as land U.S. MISSION
IN ROME

SENSITIVE

BAGHDAD FOR AMBASSADORS RAPHEL, KENNEDY, AND JLAPENN
USUN FOR AMBASSADOR NEGROPONTE AND MLUTZ
STATE FOR PRM A/S DEWEY, PRM/ANE/EUR/SE, IO A/S HOLMES,
EUR/NE, EUR/WE, SA/PAB, IO/EDA SKOTOK
USDA/FAS FOR U/S PENN, ETERPSTRA, MCHAMBLISS, RTILSWORTH AND
LSCHATZ
USAID FOR AA/DCHA WINTER, AA/ANE, DCHA/OFDA, D/DCHA/FFP
LANDIS
JOINT STAFF FOR JE/J4/J5
NSC FOR EABRAMS, SMCCORMICK, STAHIR-KHEDI AND JDWORKEN
GENEVA FOR RMA LYNCH AND USAID

transport to the hubs in Iraq before it could conclude
negotiations with appropriate suppliers, but remarked that
"WFP did not yet have a clear and precise indication of the
modality which would make this exercise possible and
fruitful."


7. (SBU) He also related that WFP would start with the
immediate procurement of some 15 days of buffer stock
commodities with the first tranche of U.S. dollars (USD) 110
million as soon as the tripartite Memorandum of
Understanding (Iraqi Ministry of Trade, CPA and WFP) is
signed and funds received. Note. Greater transparency in
WFP's tendering process related to the procurement of the
proposed three-month food buffer stock will be described
septel. End note.

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Comment
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8. (SBU) Clearly UN Treasury needs to focus on expediting
the L/C amendments by standardizing formats and issuing
swift instructions to its banker BNP. And WFP's reminder
that it will need adequate cash up front from CPA to pay
ocean freight as well as land transport to hubs in Iraq
appears reasonable. Hall


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2003ROME05702 - Classification: UNCLASSIFIED