REPORT OF THE 33ND FAO CONFERENCE, INCLUDING THE

UNCLAS SECTION 01 OF 08 ROME 004027

SIPDIS

FROM THE U.S. MISSION TO THE UN AGENCIES IN ROME

USDA FOR U/S PENN, U/S BOST, JBUTLER, MCHAMBLISS, LREICH,
RHUGHES
STATE FOR IO A/S SILVERBERG, DAS LAGON, DAS MILLER,
IO/EDA, OES/O, OES/E, E, EB;
USAID FOR EGAT, DCHA/OFDA, DCHA/FFP
PASS USTR
NEW DELHI FOR LEE BRUDVIG

E.O. 12958: N/A
TAGS: EAGR AORC EAID ETRD SENV KUNR FAO WFP
SUBJECT: REPORT OF THE 33ND FAO CONFERENCE, INCLUDING THE
CONTIGUOUS 129TH AND 130TH FAO COUNCIL SESSIONS

REF: (A) STATE 209955, (B) ROME 3976, (C) ROME 3980

--------------
Summary
--------------


1. At the meetings of the Conference and Council of the
UN Food and Agriculture Organization (FAO),held in Rome
from 16 to 28 November 2005, member governments discussed
international anti-hunger, food policy and agricultural
trade issues, and the key institutional questions of the
organization's budget, leadership and reform. Secretary
of Agriculture Mike Johanns led the U.S. delegation to
the Conference. Among the significant developments at the
Conference were:

-- re-election of Jacques Diouf, uncontested candidate
from Senegal, as Director General (DG) for a third and
(by his own announcement) final term;

-- approval of a budget appropriation of $765.7 million
for the 2006-07 biennium -- a 2.2% nominal increase --
with the U.S. and Japan voting against the resolution;

-- acceptance of the rationale and general principles of
the DG's reform proposals, with phased and conditional
implementation of restructuring for FAO headquarters and
field offices;

-- agreement on terms of reference and oversight
mechanisms for the Independent External Evaluation (IEE)
of FAO, with initiation of work subject to available
voluntary contributions;

-- election of the American-educated former Iranian
Permanent Representative, Prof. Mohammad Noori-Naeini, as
Independent Chair of the FAO Council;

-- election or re-election of members to four FAO
governing bodies (Council, Program Committee, Finance
Committee, Committee on Constitutional and Legal Matters)
and six members to the Executive Board of the World Food
Program (WFP); and

-- postponement until the November 2006 Council of
consideration of a potentially contentious measure that
would, among other things, authorize FAO to accord
benefits to registered partners (including same-sex
partners) of FAO employees, if the laws of the country of
nationality of the FAO employee recognized the
partnership.

End summary.

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Overview
--------------


2. The 33rd biennial ministerial-level meeting of FAO
member governments --- known as the FAO Conference -- was
held in Rome from 19 to 26 November 2005. A 3-day
preparatory meeting of the organization's 49-member
executive body, the FAO Council, preceded the Conference.
An additional Council meeting that included newly elected
members was held on 28 November, principally to elect new
members and officers for various governing committees.
The U.S. delegation included USDA Secretary Mike Johanns,
U/S J.B. Penn, U/S Eric Bost, and Ambassador Tony Hall.
Reftel contains the full delegation list. This cable
covers highlights of the FAO meetings that were of
particular relevance and interest to the USG. The full
set of meeting documents is available from the Council
and Conference links on FAO's home page, www.fao.org.

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Secretary Johanns' Statement

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3. In his Conference plenary remarks, Secretary Johanns
stressed the importance of agriculture in the upcoming
WTO Ministerial, and the opportunity the Hong Kong
meeting represents for developing countries to share in
the benefits of expanded global trade. He noted
countries' uneven progress toward the Millennium
Development Goal for poverty reduction, and pointed to
the need to fully implement the Monterrey Consensus by
creating a genuine partnership between developed and
developing countries. The Secretary highlighted
establishment of the Millennium Challenge Account and USG
commitments to increase its development assistance, with
special focus on Africa and humanitarian emergencies.


4. Secretary Johanns emphasized that the developing
world stands to gain enormously under the Doha Round, and
that agricultural trade is a critical component in the
negotiations -- hence the recent U.S. proposal to
increase market access, reduce trade-distorting domestic
support, and eliminate export subsidies. He affirmed the
U.S. commitment to helping developing countries
participate in a liberalized trading regime by promoting
worldwide science-based standards, such as those of the
Codex Alimentarius Commission and the Internal Plant
Protection Convention. He urged that these two bodies
receive adequate funding under FAO's budget.


5. The Secretary praised FAO's work to combat avian
influenza. He expressed concern that the DG's reform
proposals seem to shift the organization's focus away
from its traditional standard-setting activities and data
collection and analysis, where FAO's unique advantage
lies. He stressed the need to view reform of FAO in the
broader context of the Independent External Evaluation,
and paced with the budget. He reiterated the importance
the U.S. attaches to FAO's mission and to the effort to
bring developing countries into an expanding circle of
trade and development.

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Secretary Johanns' Other Activities

SIPDIS
--------------


6. On the margins of the FAO events, Secretary Johanns
met with DG Diouf and had bilateral meetings with
counterparts from Australia, Italy, Iraq, Mexico, and the
European Commission. He spoke to a gathering of American
employees of the Rome-based UN agencies, and had the
opportunity to meet other delegation heads at a reception
hosted by Ambassador Hall. The Secretary and Ambassador
Hall attended an audience for agricultural ministers with
Pope Benedict XVI. He met other senior Vatican officials
during a dinner hosted by the U.S. Ambassador to the Holy
See. A press conference organized by the U.S. Mission in
coordination with Embassy Rome provided a setting for the
Secretary to convey USG messages to Italian and

SIPDIS
international media. One article of note by Associated
Press, which garnered about 100 headlines in worldwide
media, quoted Sec. Johanns on the role of economic
relationships with developing countries in the fight
against hunger.

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Ambassador Hall's Statement
--------------


7. Earlier, during the 129th Council discussion on
FAO's Program of Work and Budget (PWB),Ambassador Hall
stressed that the U.S. remains a strong supporter of FAO
and its mission, while underscoring the U.S. budget
position of Zero Nominal Growth for the 2006-07 biennium.
Observing that organizations should focus on those areas
where they can have the most impact, he emphasized that
FAO could make the greatest contribution to food security
through its normative work, including standard-setting
bodies, comprehensive data on agricultural, forest and
fishery products, efforts to control pest outbreaks and
animal diseases, and assistance in recovery from
disasters. Having just returned from a visit to
Guatemala (ref C),he praised FAO's work there.


8. Turning to the budget level for the upcoming
biennium, the Ambassador said the level should be scaled
to members' ability to pay. He noted that 64 members
were currently in arrears. He explained that these
circumstances made a growth budget unrealistic, and
called on member states to be realistic and focus on
efficiencies and increased prioritization in projecting
expenditures and its program of work for the 2006-07
biennium.

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Other Substantive Issues
--------------


9. FAO and the WTO Negotiations: On the eve of the
Council, November 15, DG Diouf chaired a briefing for
permanent representatives to discuss preparations for the
WTO ministerial. He outlined key aspects of FAO's
support to the negotiations: (1) organization of regional
workshops on technical issues, (2) launching of a series
of FAO Trade Policy Technical Notes and Policy Briefs,
(3) publication of "The State of Agricultural Commodity
Markets," (4) strengthening of the FAO Liaison Office in
Geneva, (5) enhancement of the multilingual website on
agricultural trade (www.fao.org/trade),and (6) ongoing
trade-related assistance to developing countries on
compliance, technical standards, and WTO-consistent
agricultural development and intellectual property
policies.


10. International Conference on Agrarian Reform and
Rural Development (ICARRD): The Council supported the
holding of ICARRD in Porto Alegre, Brazil, in March 2006.
Themes that emerged from the discussion included greater
south-south sharing of experiences, learning from both
failed and successful experiences, and the importance of
good governance and other factors, especially markets for
high value products, the availability of finance, and
programs designed to benefit women. The U.S. delegation
stressed: (a) secure property rights and access to
finance, (b) supportive policy frameworks, (c) applied
science and technology, (d) robust domestic markets and
international trade opportunities, (e) enhanced human
capital, and (f) protections for the vulnerable. Brazil
is contributing $450,000 to support ICARRD.


11. Avian Influenza: A presentation highlighting FAO's
response to the threat of avian influenza (AI) attracted
great interest and expressions of support for FAO's
pivotal role in combating AI. See ref B for details.


12. Special Event on Gender Equality: A special round
table on gender was convened to raise awareness of the
importance of gender equality in access to productive
resources. The briefing highlighted that gender
inequality is impeding the attainment of Millennium
Development Goal 1, especially in agricultural
production, access to land and microcredit. FAO's Gender
and Development Plan of Action (GAD PoA) aims to work
with countries to achieve equality through improved
access to adequate nutrition and food, natural resources,
markets, credit, and technology, and support of agrarian
reform. In his intervention, U/S Bost congratulated FAO
on its implementation of the GAD PoA report for 2002-
2007, and commended the organization for an active and
productive gender and development program.


13. Special Event on Water for Agriculture in Africa,
the Near East and Small Island Developing States (SIDS):
A special round table was convened to review action taken
to improve water management for agriculture and identify
priorities for action in the short and medium term. It
consisted largely of statements by developing-country
delegates, with little meaningful discussion. DG Diouf's
call for investment in large irrigation schemes at the
opening was not echoed in most subsequent interventions.


14. Awards: Among the honorees were an American FAO
field officer who worked in Cambodia, two Wall Street
Journal reporters, and the Agreement on the International
Dolphin Conservation Program (AIDCP). Ambassador Hall
took the floor to acknowledge the accomplishments of the
awardees, making special note of the success of the AIDCP
in sharply reducing dolphin mortality in tuna fisheries.


15. Keynote: Rev. David Beckmann, President of "Bread
for the World," a U.S. grassroots citizen movement,
delivered the McDougall Memorial Lecture on the first day
of the Conference. Beckmann spoke about building
political will and developing a global alliance to end
hunger.

16. Anniversary Declaration: The Conference adopted a
declaration marking the 60th Anniversary of FAO. The
text was based on a draft prepared by the Secretariat in
October, and further refined through negotiations among
permreps before and during the Conference. The
declaration calls on FAO "to redouble its efforts to
translate the vision of its founders into further actions
to ensure humanity's freedom from poverty and hunger...."


17. Triennial Comprehensive Policy Review (TCPR)
Resolution: Switzerland and the UK, later joined by
Brazil, Belgium, Canada, Dominican Republic, Germany, the
Netherlands, New Zealand and Norway as cosponsors, gained
approval for a resolution that requests FAO to take
appropriate actions to implement UNGA Resolution 59/250
(which calls for strengthening of the operational
activities for development of the UN System, particularly
at the country level).

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Re-election of the Director General
--------------


18. DG Jacques Diouf, the sole candidate, sought a third
term of office. He was re-elected in a secret ballot
with 137 votes in favor, 9 against, and 19 abstentions.
During remarks after his re-election, the DG made it
known that this would be his final term.


19. Comment: Many present interpreted the significant
number of negative votes and abstentions as a signal of
dissatisfaction, primarily from OECD countries, with the
candidate's leadership and with his quest for re-election
in violation of the spirit (if not the letter) of the DG
term limits that were adopted by the previous Conference
but that do not take effect until 2006. End comment.

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Reform of FAO
--------------


20. The DG's reform proposals emerged as one of the most
difficult and time-consuming issues on the Conference
agenda. The DG's proposals had been presented to members
in a series of three documents released since September.
Many members welcomed the spirit of these proposals and
some of the common-sense efficiency and streamlining
measures they contained. Among the more thoughtful
members, however, there was concern that some of the
measures required a more careful deliberative process
involving the FAO governing bodies, that some had
significant budget implications, and that some would
prejudge the findings of the Independent External
Evaluation.


21. Nevertheless, the DG remained insistent that his
reforms be adopted as a single package, and he worked
openly through surrogates among the G-77 countries to
polarize the discussion. Most developed countries
advocated a phased approach that would defer the most
sweeping and costly reforms until interim results from
the IEE would be available. The Nordics took a stance
that was more favorable to the DG, in part because they
felt they instigated the latter's proposals during a
Stockholm ministerial meeting with Diouf in the summer of

2005.


22. To work through the impasse, the Independent Chair
of the Council headed a working group that met for long
hours late into the night. The U.S. delegation sought to
craft a face-saving compromise whereby the DG's reforms
would be accepted in principle, but the sweeping
restructuring of FAO Headquarters and the creation of
numerous new subregional posts would be deferred pending
results of pilot studies and the IEE. The intransigence
of leading G-77 delegates prolonged the debate, but
consensus was finally reached on a resolution that, inter
alia:

-- welcomed the DG's reform initiatives;

-- noted that reforms could be initiated regardless of
budget level, and the DG's intention to seek
extrabudgetary support to meet part of the transition
costs;

-- looked forward to the IEE results;

-- expressed general support for the rationale and
guiding principles of the DG proposals;

-- supported streamlining business processes;

-- endorsed a new Program of Work and Budget (PWB)
chapter structure;

-- requested as a first stage the implementation of
decentralization proposals in one region (presumably
Africa) and the creation of one subregional office in
another region, with a future Council to decide on
further implementation;

-- authorized a first stage in implementation of
headquarters restructuring, but without an increase in
the number of departments; and

-- asked the DG to consult with members about the
possible need for an extraordinary Council session in
June-July 2006.

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Program of Work and Budget for 2006-07
--------------


23. Setting the budget level for the coming biennium was
the other major contentious issue before the Conference.
Initially, delegates had staked out a range of positions,
with nearly all G-77 countries calling for a Real Growth
budget. Many OECD countries advocated a scenario between
Zero Nominal Growth (ZNG) and Real Growth. The USG
stressed that only ZNG was a realistic scenario, given
members' difficulties in meeting current assessments, as
evidenced by pervasive late payments and mounting
arrears. Japan made a strong plea for a less-than-ZNG
budget.


24. Discussions on the budget took place in a working
group chaired by the Armenian permrep. Sometime after
midnight on Thanksgiving Night the group reached a
conclusion that appeared acceptable to all members except
the U.S. and Japan, viz., a total budgetary appropriation
of $765.7 million. This represented a 2.2% expenditure
increase over the current biennium. Of the $16.6 million
in increased expenditure, $10.6 million would be budgeted
for security costs that were accommodated in the 2004-05
budget, but which the Secretariat claimed could not be
absorbed in 2006-07. Under this scenario the Secretariat
claimed total programs would decrease by $38.6 million.
With the addition of $14.1 million for amortization of
after-service medical coverage (ASMC) and minus
$6 million in anticipated miscellaneous income, the total
assessments to member states would be $773.8 million, a
nominal increase of 2.6%.


25. The U.S. and Japan had offered to support up to
$2.8 million in additional security costs for the 2006-07
biennium, as the Secretariat indicated this was the
amount it might not be able to absorb in the 2004-05
biennium. Other member states were not swayed, and the
budget resolution was brought to a vote during the final
Conference session on November 26. The resolution passed
with 117 members voting in favor, 2 voting against (U.S.
and Japan),and 1 abstention (Argentina).

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Independent External Evaluation (IEE)
--------------


26. The Council (and subsequently the Conference)
endorsed the report of the Intersessional Working Group
(ISWG) that had been making preparations for the IEE
since January 2005. The ISWG had concluded that "all
members have become further convinced that a fully
independent, impartial and professional IEE can make a
unique contribution in building a more effective FAO."
In accepting the ISWG report, the Council:

-- urged all members to contribute funds for the IEE;

-- decided that the IEE be initiated as soon as possible,
subject to availability of funds, in order that the
evaluation report could be completed in time for the
November 2007 Council and Conference;

-- adopted the ISWG's recommendations regarding (1) terms
of reference for a Council Committee (CC) to oversee the
entire evaluation process, (2) terms of reference for the
IEE, and (3) definition of an appropriate supporting role
of the Secretariat;

-- recognized that the Inception Report will provide an
occasion to refine the terms of reference and budget; and

-- appointed Brazilian Ambassador Flavio Perri (who
chaired the ISWG) as chairperson for the CC that would
oversee the IEE process.


27. Comment: The ISWG has been noteworthy for the
degree of consensus and buy-in achieved among all members
on the need for an IEE and on a process to carry it out.
That consensus held together during the Council and
Conference, but was severely tested during discussions of
the DG's reform proposals, when most OECD countries
affirmed that the IEE should come before a major
reorganization, while the G-77 generally wanted to give
the DG a green light for restructuring FAO, with the IEE
to provide insights later on. The resolution on reform
that was finally approved by the Conference (paras 20-22
above) sought to bridge these different views. An
important early task for the CC therefore will be to
decide how the IEE terms of reference should be amended
or adapted so as to provide interim IEE input to the
governing bodies on aspects of the DG's reforms that will
soon be underway. The other major concern for the CC
will be to raise the necessary funds to launch the IEE
promptly. Initial USG contributions to the IEE process
amounting to $250,000 have been approved and were
announced. The total IEE cost is estimated at $4.3
million. End comment.

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Independent Chair of the FAO Council
--------------


28. The other major election during the Conference was
that for the Independent Chair of the Council. There
were two candidates:

-- Ambassador Mohammad Noori-Naieni (Iran),a well-known,
well-liked and respected permrep with a Ph.D. from
Cornell and over a decade of experience in Rome with FAO,
WFP and IFAD; and

-- Prof. Roelof Rabbinge (Netherlands),a respected
academic and agricultural expert from a country that has
been a major voluntary contributor to FAO's work, but an
individual who had limited previous experience with the
organization or the permrep community in Rome.

In the end, Noori squeaked by with 78 votes, compared to
Rabbinge's 77 votes.


29. Comment: Clearly, Noori's Iranian nationality gave
many members pause, but many of those who voted against
him as signal of distaste for the current regime in
Tehran did not appear displeased that he won. This was a
situation where one candidate's personal charisma and
knowledge of the organization counteracted his
nationality. After the election, Noori sought to
reassure members by reiterating that he would be an
Independent Chair who would indeed be independent from
the Secretariat and from his own government. U.S.
delegates have been able to work well with Noori in the
past, and expect that he will be an effective consensus-
builder in his new role. End comment.

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Other Institutional Matters
--------------


30. Committee elections: The Conference elected chairs
and members of several governing bodies and committees:
-- Program Committee: UK (Chair),Afghanistan, Australia,
Canada, Dominican Republic, India, Jamaica, Libya,
Nigeria, Philippines, and South Africa.

-- Finance Committee: Pakistan (Chair),Cote d'Ivoire,
Denmark, Germany, Italy, Japan, Paraguay, Peru, Qatar,
Italy, USA, and Zimbabwe.

-- Committee on Constitutional and Legal Matters (CCLM):
Belgium, Czech Republic, Gabon, Guatemala, Philippines,
Syria, USA.

-- World Food Program Executive Board (6 of 36 members
selected): Algeria, Austria, Colombia, Slovenia,
Switzerland, and Tanzania.


31. The Council also took action on two matters deferred
from the June 2005 Council:

-- Personal status for Purposes of Staff Entitlement:
The CCLM had recommended that the Council ask the DG to
adopt an administrative directive consistent with the
policy of the UN in New York that determines personal
status for the purpose of staff entitlement by reference
to the law of nationality of the staff member concerned.
This would, inter alia, allow same-sex partners of some
FAO employees to receive staff benefits as spouses. When
it became evident in preliminary discussions that this
measure would be controversial, the Independent Chair of
the Council decided to defer the matter. The Council
requested the CCLM to review further some aspects of the
proposal and report back to it at its regular Session in
November 2006. The Secretariat has advised that it
expects the International Labor Organization (ILO)
Administrative Tribunal to consider this issue in the
context of FAO's existing regulations prior to November
2006, in which case further Council action might not be
required.

-- Agreement between FAO and the World Intellectual
Property Organization (WIPO): The Council approved the
revised and shortened draft agreement submitted by the
WIPO Secretariat. The USG had questioned an earlier
draft that was perceived to have mischaracterized the
nature of intellectual property in the agricultural
context. In its revised form the agreement will help
reinforce links between FAO's work on intellectual
property (i.e., in plant genetic resources) and the
expertise available at WIPO.

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Comment
--------------


32. The November 2005 FAO Council and Conference
broached a number of contentious and difficult issues.
Even if the outcome was not fully consonant with USG
objectives or desires in every case, the discussions and
votes allowed the U.S. and like-minded member states to
lay down clear markers as the organization moves into a
new biennium:

-- On FAO leadership, the Director General gained his re-
election, but the significant number of no votes and
abstentions made it clear that many of the top donors
were dissatisfied and their support cannot be taken for
granted.

-- On the budget, the conservative stance of a number of
OECD Group countries underscored concerns of contributors
about continued budgetary discipline and the need to
address mounting arrears.

-- On FAO reform, the consensus resolution that emerged
accepted concepts and features of the DG's proposals in a
phased and incremental approach, while reaffirming
members' prerogatives to scrutinize major restructuring
of the headquarters and field posts.
-- On the IEE, the need for a comprehensive evaluation
was broadly affirmed, and the importance of IEE findings
in steering future reforms of FAO explicitly recognized.

33. Setting FAO on the path to reform has been time-
consuming and difficult, but the process is now well
underway. As one of the prime movers behind the IEE, the
U.S. has been able to exercise a leadership role in
reform. Further leadership and deft management will be
required to keep the process on track.

CLEVERLEY