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. -------------- Summary -------------- ¶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. -------------- Background -------------- ¶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. -------------- CPA Funding for buffer food stocks -------------- ¶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. -------------- Comment -------------- ¶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 NNNN 2003ROME05702 - Classification: UNCLASSIFIED