wikileaks ico  Home papers ico  Cables mirror and Afghan War Diary privacy policy  Privacy
IdentifierCreatedClassificationOrigin
05DAMASCUS5972 2005-11-16 15:12:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Damascus
Cable title:  

TRANSPORT OF IRAQ-BOUND U.S. WHEAT REMAINS A

Tags:   ECON EAGR ELTN ECIN 
pdf how-to read a cable
This record is a partial extract of the original cable. The full text of the original cable is not available.
					  UNCLAS SECTION 01 OF 02 DAMASCUS 005972 

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: ECON EAGR ELTN ECIN
SUBJECT: TRANSPORT OF IRAQ-BOUND U.S. WHEAT REMAINS A
PERSISTENT PROBLEM

REF: A) DAMASCUS 4187 B) DAMASCUS 4762



1. (SBU) Summary: Over the past three months, Post has
witnessed an incremental increase in the amount of Iraq-
bound, U.S. wheat accumulating at the port of Tartous
awaiting transport from Syria into Iraq. On the surface,
the reason for the delay in wheat transport is a lack of
available trucks. From what others tell Post, however,
trucks are available and other commodities are being
transported to Iraq. Perhaps closer to the truth, the
relationship between the three principal parties - Cargill,
Iraqi Ministry of Transport, and the SARG - continues to
deteriorate and seems to be the largest obstacle to finding
a solution that would reduce the backlog and allow Iraq and
Syria to benefit from wheat transshipments through the
Syrian port. End summary.



2. (SBU) The movement of grain from the Syrian port of
Tartous to Iraq has been a continual problem that Cargill
has encountered since April (reftels). Cargill expressed
repeated frustration at its inability to obtain trucks and
drivers for transport of the wheat from the Syrian port of
entry at Tartous to various points in Iraq. The problem
intensified after the Iraqi Ministry of Transportation (MOT)
took over from Cargill the responsibility for moving the
wheat from Tartous to Iraq, at which point Cargill and the
MOT began to compete directly for trucks, drivers, and grain-
storage facilities. Both Cargill and the MOT have been
unable to consistently obtain the large number of trucks
necessary for wheat transport and both have blamed the other
of sabotaging their efforts to do so, though neither can
offer a satisfactory explanation as to why trucks are
inaccessible. Post contacts report that the MOT
specifically only has access currently to about 30 percent
of the trucks it needs to move grain from the port.



3. (SBU) Cargill's contract in April represented the first
direct commercial sale of U.S. wheat to Iraq in several
years. To transport the 330,000 MT of grain, Cargill
contracted exclusively with a transportation agent, who owns
no trucks himself and must sub-contracts trucks from other
sources. Cargill has relied primarily on this agent and a
U.S.-based USDA grains inspector in who travels regularly to
Tartous, rather than a Cargill employee, to oversee its
interests and ensure that cargo is expeditiously offloaded
and transported. As problems with truck accessibility
intensified, Cargill sent a representative to Tartous who
was initially instructed to not meet with visiting Iraqi MOT
officials to find a means of reducing grain shipment delays.
Comment: Though the Cargill representative did eventually
meet, the meeting was acrimonious and ended with both sides
restating their pre-existing grievances against each other.
End comment.



4. Though Cargill currently controls most of the trucks
moving U.S. wheat from Tartous to Iraq, a recent delegation
from the Iraqi MOT sought to wrest control of the
transportation chain from Cargill. On October 24, at the
insistence of the Iraqi MOT delegation, the Syrian Minister
of Transport Makram Obeid signed a memorandum of
understanding that required Cargill and any other company
carrying GOI-owned cargo to seek approval from the Iraqi MOT
in order to utilize Iraqi trucks for transport of goods.
Also, the Iraqi MOT had previously expressed to us lukewarm
feelings on the transport of grain through Tartous to Iraq,
preferring instead to divert vessels to the port in Umm Qasr
regardless of additional freight fees, insurance costs, and
contracting of security guards to monitor cargo.



5. (SBU) Comment: Post believes that Cargill and the Iraqi
MOT continue to work at cross purposes, despite the fact
that Cargill will fulfill its wheat transport
responsibilities by the end of this week. Specifically,
post contacts have suggested that Cargill shipped the most
recently arrived vessels to the port of Tartous in rapid
succession so that the Iraqis would be unable to discharge
grain at a fast enough rate to avoid demurrage fees,
currently 15,000 USD per ship per day. End comment.



6. (SBU) The SARG has remained relatively passive in its
involvement with the transport of grain to Iraq. Thus far
it has failed to enforce the MOU signed on October 24 and
has not consistently provided Iraqi ships priority for
offloading as it had agreed to do in August. The success of
the MOT's transfer of grain to Iraq in the coming months may
dictate the extent to which it decides to utilize the
Tartous port in the future. If the Iraqi MOT decides to
divert all shipments of grain to Umm Qasr in lieu of
Tartous, the SARG Port Administration stands to lose the
port and offloading fees that it collects from these vessels
in addition to customs fees and secondary revenues like the
lucrative transportation contacts Syrian truckers currently
enjoy.



7. (SBU) Comment. The Iraqi MOT's ability to efficiently
transport its grain will be tested in the upcoming weeks,
especially with additional vessels slated to arrive in
December. The current contract marks the MOT's first
attempt at managing the transportation of wheat into Iraq
from Syria, and based on Post's observation, the MOT's
challenge is not only to obtain trucks in Tartous to ensure
a steady supply of grain into Iraq, but also to ameliorate
business relations with Cargill and convince the SARG to
implement the written commitments it has made to facilitate
Iraq-bound wheat shipments. For its part, the SARG's
seeming indifference to the potential loss of transshipment
revenue is shortsighted but also characteristic.

SECHE