OVERVIEW OF THE EUROPEAN COMMISSION'S 1 BILLION

UNCLAS SECTION 01 OF 02 BRUSSELS 000696

SIPDIS

E.O. 12958: N/A
TAGS: EAID EAGR ETRD EUN SOCI
SUBJECT: OVERVIEW OF THE EUROPEAN COMMISSION'S 1 BILLION
EURO FOOD AID FACILITY

REF: USEU BRUSSELS 01054

BRUSSELS 00000696 001.2 OF 002




1. SUMMARY: In early summer 2008 the European Commission
(EC)
proposed using leftover agriculture support funds to build a 1
billion Euro (USD 1.3 billion) Food Facility to assist
developing
countries struggling under the weight of the international
food
price crisis. However, EU member states later blocked the EC's
initial proposal to utilize surplus agriculture support funds,
sparking a multi-month scramble for resources within the
European
Parliament (EP) and Council. Parliament also lobbied for Food
Facility funding to be additional to existing resources.
Ultimately, member states together with Parliament finalized
a 1
billion Euro package on December 18, 2008. Under this
agreement,
all but 240 million Euro (USD 317 million) that the
Commission is
providing to the facility comes from existing rather than new
funding sources. END SUMMARY.


2. The Facility will operate for three years (2009 - 2011).
Assistance
will focus on emergency-to-development transition periods and
target
programming to improve:

- access to agricultural inputs, such as fertilizers and
seeds,
as well as services, such as the provision of vets and
advisors;

- small-scale measures aiming at increasing agricultural
production,
including microcredit, rural infrastructure, and training and
support to
professional groups in the agriculturalsector; and

- safety nets through social transfers to vulnerable
population groups.

International organizations will receive roughly
half of the anticipated one billion Euro that the EC is making
available.


3. To date, the Commission has moved 708 million Euro
through two
different decisions in 2009. The first tranche, for 314
million
Euro, covered 23 countries, including Afghanistan, Bangladesh,
Burkina Faso, Burma, Burundi, CAR, DRC, Cuba, Eritrea,
Ethiopia,
Gambia, Guinea Bissau, Haiti, Honduras, Kenya, Liberia, Mali,
Mozambique, Pakistan, Palestine, Philippines, Sierra Leone,
and
Zimbabwe. Under this decision, the EC has already signed
agreements
with FAO for 106 million Euro, UNRWA for 39.6 million Euro,
and
UNICEF for 8.2 million Euro. In addition, it will shortly
finalize
agreement with WFP for 38.7 million Euro and UNOPS for 10
million
Euro. The World Bank, IFAD and UNDP are also expected to
receive
funding under this decision in the near future.


4. Subsequently, the EC is making available a second tranche
worth 394
million Euro, which in turn is divided into two different
parcels.
The first provides 194 million Euro for projects and programs
in 23
developing countries, including Benin, Bolivia, Burundi,
Cambodia,
Guatemala, Jamaica, Kenya, Kyrgyz Republic, Laos, Lesotho,
Madagascar, Mozambique, Nepal, Nicaragua, Niger, Palestinian
Territories, Philippines, Senegal, Somalia, Sri Lanka, Togo,
Yemen
and Zambia. The second, valued at 200 million Euro and
launched on
May 26, 2009, will be for non-state actors such as NGOs and

BRUSSELS 00000696 002.2 OF 002


cover 35
developing countries, including Benin, Bolivia, Burundi,
Cambodia,
Guatemala, Jamaica, Kenya, Kyrgyz Republic, Laos, Lesotho,
Madagascar, Mozambique, Nepal, Nicaragua, Niger, Palestine,
Philippines, Senegal, Somalia, Sri Lanka, Togo, Yemen, and
Zambia.
The first 314 million Euro and second 394 million Euro Food
Facility
funding actions contain five overlapping countries, namely
Kenya,
Burundi, Palestine, Philippines, and Mozambique.


5. With only 240 million Euro in additional funds, the
majority of
funding for the Food Facility now comes from existing EC
budget line
items. Member states and Parliament earmarked emergency
response
budget allocations to supply the remaining 760 million Euro
over the
next three years, drawing specifically on the Emergency Aid
Reserve
(ordinarily managed by ECHO, the humanitarian assistance arm
of the
EC),the Flexibility Instrument (designed to respond to
international emergencies),and on the Stability Instrument
(ordinarily
focused on security and post-conflict situations).


6. COMMENT: The Commission initially had high hopes that
the Food
Facility would provide an immediate infusion of new capital
to feed
into the larger EU response to the food price crisis without
having
to draw on already existing budget line items. Even though
the
Commission was not able to convince EU Member States to
donate their
surplus agriculture support funds to address the
international food
crisis, they were able to leverage their initial announcement
and
plans with the international media and donors. The Commission
referenced Food Facility plans through the end of 2008,
providing
much needed coverage from international criticism on the lack
of
resources for food security. Ultimately, roughly 75 percent
of the
Facility's funds come from existing emergency response
budgets, with
the remaining 25 percent representing truly new resources.
While
drawing on these funds will inevitably hamper the EC's
ability to
respond to unforeseen emergency needs over the coming months,
it
does give them considerably more resources for programming
specifically related to more long-term agricultural
development. END COMMENT


MURRAY
.