FAO 137TH COUNCIL: IMPASSE OVER PROPOSED BUDGET LEVEL

UNCLAS SECTION 01 OF 02 UN ROME 000060 SENSITIVE SIPDIS IO/FO FOR ANDERSON/COOK, USDA FOR DOUVELIS E.O. 12958: N/A TAGS: EAGR EAID PREL FAO UN SUBJECT: FAO 137TH COUNCIL: IMPASSE OVER PROPOSED BUDGET LEVEL REF: A. USUN ROME 54 ¶B. STATE 96467 ¶1. (U) This message is sensitive but unclassified. Please handle accordingly. Summary and Action Request -------------- ¶2. (SBU) Members at the September 28-October 2 meeting of the FAO Council could not reach consensus on the level of the organization's budget for the 2010-11 biennium, and whether the entire cost of the Immediate Plan of Action (IPA) reform program should be included in the regular budget financed by assessed contributions or partly through voluntary contributions, as proposed by FAO Management. Members agreed to an informal "Friends of the Chair" process to attempt to resolve outstanding budget issues before the FAO Conference in November (18-23) at which the budget will be approved. Mission will continue advocating strongly for lower expenditures in the budget, but unfortunately has found very little support for the U.S. position of zero nominal growth (ZNG) for the budget. Action request: Mission recommends instructions that would allow flexibility in negotiations permitting us to commit up to a maximum of 7.1 percent increase in the regular ("net appropriation") budget that must also include all the IPA reform costs. Mission would seek the lowest possible budget level. End summary and action request. No Consensus on 2010-2011 Budget -------------- ¶3. (SBU) The 49-member FAO Council met in Rome September 28-October 2 to debate key governance issues, in particular the FAO's proposed biennial Program of Work and Budget (PWB), including how to fully fund far-reaching reforms agreed to by Conference last November. Members debated extensively the merits of the biennial draft PWB that proposes cost increases of 7.1 percent above the current biennium, with an additional increase in assessments of 3.6 percent for financial health issues (e.g., After Service Medical Coverage, and replenishment of a Special Reserve Account). The draft PWB only included 50 percent of the IPA costs, with the remaining USD 19.1 million to be funded through Core Voluntary Contributions. If these IPA costs were to be added to the regular budget, the total increase in assessed contributions would be almost 13 percent. Mission urged during open plenary a ZNG budget that included all IPA costs. While many delegations noted general concern over Management's proposed increase in assessments, only a handful joined us in favoring ZNG, even after our strong advocacy both here and in capitals through demarches. All but Mexico told us privately that they would readily agree to a modest increase in their assessments. Most delegations spoke in favor of the draft budget with Brazil and China advocating an even higher budget level. It seems clear that most members, as well as Management, are willing to reluctantly postpone to another biennium the financial health items contained in the draft PWB. Next Steps -------------- ¶4. (SBU) Given the lack of consensus on the key budget issues, members agreed to establish a Friends of the Chair Group that would meet before the November Conference in an attempt to forge a consensus on the PWB. Mission will also meet with FAO Management to obtain more detailed information on the assumptions used to calculate the proposed cost increases in the draft budget, especially since Management did not provide this information requested by members of the Finance Committee, including the United States, during the July and September meetings. We will also coordinate closely with our Geneva Group and OECD colleagues to press for reductions in the proposed budget and continue to insist that all IPA reform costs be included in the regular budget. UN ROME 00000060 002 OF 002 Comment -------------- ¶5. (SBU) Recognizing the possibility that the November Summit may result in calls by some for even greater increases to the FAO budget to deal with food security, we hope to reach early consensus on an acceptable budget figure that includes 100 percent of the costs of reform. Based on our conversations here, we believe we can help shape consensus around a budget level increase, including all IPA costs, that would not exceed 7.1 percent. COUSIN