RUMORS CONTINUE ABOUT SHIPMENT OF U.S. WHEAT

UNCLAS CAIRO 002111

SIPDIS

SENSITIVE
SIPDIS

STATE FOR NEA/ELA, NEA/RA, EB/TPP/ABT
USAID FOR ANE/MEA MCCLOUD AND DUNN
USTR FOR SAUMS
TREASURY FOR NUGENT AND HIRSON
COMMERCE FOR 4520/ITA/ANESA/OBERG

E.O. 12958: N/A
TAGS: ECON EAID ETRD EAG EG
SUBJECT: RUMORS CONTINUE ABOUT SHIPMENT OF U.S. WHEAT

REF: CAIRO 1834

Sensitive but unclassified. Please protect accordingly.

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Spanish Firm Buys Wheat Rejected by Egypt...
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1. (U) The Egyptian media reported on June 28 that the Ministry of
Trade and Industry had received a "refund" of the cost of a 62,000
ton shipment of U.S. wheat that was denied entry into Egypt by the
Egyptian Quarantine Authority because of alleged insect infestation
(reftel). The report quoted Minister of Trade and Industry Rachid
as saying that the ministry had received $13 million for the
shipment, the original cost of the wheat, from the Alfred C. Toepfer
International Company, a German firm that supplied the consignment.
Contacts at the Ministry of Trade confirmed that the wheat had
actually been resold to a Spanish firm for the same price as the GOE
paid. The wheat arrived in Spain on July 4, but according to
information available to FAS Cairo, has not yet passed inspection
and been allowed into Spain.

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...but Rumors Continue
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2. (U) Despite repurchase of the wheat by a Spanish firm, rumor
continues in the Egyptian media about the allegedly infested wheat,
repeating claims that it was "cancerous." On July 5, the Muslim
Brotherhood website posted an unattributed report claiming that some
of the wheat had been allowed into Egypt for "industrial" purposes,
eventually making its way to the Egyptian consumer. The posting
claimed that the wheat was infected with the "Alpha toxin fungus,"
which causes cancer, and that wheat importers, "whether from the
government or private sector" resorted to "tricks and twisted
methods" to allow the wheat into Egypt. The report claims that the
Quarantine Authority found "drugging seeds," fungus, "woodworms" and
poisons upon inspecting the wheat.

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Ulterior Motives?
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3. (SBU) Before the wheat was re-sold to the Spanish firm, a U.S.
Federal Grain Inspection Service (FGIS) official traveled to Egypt
to witness re-fumigation of the wheat. Upon inspection of the
vessel containing the wheat, the FGIS official found no insects,
dead or alive, in the wheat. If the claims of the Egyptian
Quarantine Authority were true, the insects found in the wheat would
have multiplied and would have been immediately apparent upon
inspection of the vessel holds containing the wheat. Despite the
inconsistency of the Egyptian Quarantine Authority's findings and
those of the FGIS official, the wheat was re-fumigated before being
re-exported to Spain.


4. (SBU) Theories abound on the motivations behind the media's
fixation with this story. One theory posits that the story was
created by a rival firm intending to discredit the Alfred C. Toepfer
International Company, which sold the wheat to the Ministry of Trade
and Industry. Other observers speculate that the story was intended
to discredit Minister of Trade and Industry Rachid, as rumors swirl
about his being named Egypt's next prime minister. By tying him
specifically to the U.S., those responsible for the rumors
capitalize on anti-U.S. sentiments, currently running high in Egypt.
Moreover, the allegation that the Ministry of Trade and Industry
made a mistake in purchasing such an important commodity casts
aspersions on Rachid's competence and concern for the average
Egyptian.

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Embassy Response
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5. (SBU) FAS will draft a letter to the Egyptian Quarantine
Authority protesting GOE handling of this matter. The Quarantine
Authority did not use standard communication channels with USDA for
handling disputed agricultural imports. A Quarantine Authority
official initially informed FAS Cairo that the USDA certificate
accompanying the wheat would not be stamped "Refused." Without
informing FAS, Quarantine officials did, in fact, stamp the
certificate "Refused" before the shipment left Egypt.
RICCIARDONE