LEGACY USDA LOCAL CURRENCY FUNDS

UNCLAS SECTION 01 OF 02 WARSAW 000387 SIPDIS USDA FOR FAS OCBD/PSHEIKH, GGROVES, RCROUSHORN, JPHILLIPS; OCRA/SNENON, JKOWALSKI; OFSO DYOUNG BRUSSELS PASS AG MINISTER COUNSELOR; KRAKOW FOR CG EUROPEAN POSTS FOR AGR/ECON UNCLASSIFIED E.O. 12958: N/A TAGS: EAGR ECON ETRD PGOV PL SUBJECT: LEGACY USDA LOCAL CURRENCY FUNDS WARSAW 00000387 001.4 OF 002 ¶1. Summary. The cable requests approval from FAS/W for use of zloty-denominated funds remaining from a series of Section 416(b) commodities' grants from 1989-1993. U.S. Department of Agriculture commodity assistance from that period totaled roughly $194 million, and some $62 million in zloty equivalent was collected on sale of the commodities. Today, just $320,000 remains and the Polish Ministry of Agriculture and Embassy Warsaw have agreed on procedures to fund long term market development to drawdown the account fully by 2012. USDA Warsaw is being reduced from two Americans to one in July 2009. More oversight is beneficial and Embassy FMO can step in to provide needed coverage. End Summary. ¶2. From the 1990's local currency funds were disbursed with the establishment of a Joint Commission and continued with a broad range of USDA technical assistance projects. Funds created the Bronisze wholesale market for fruits and vegetables, the Warsaw Commodity Exchange, development of the infrastructure for Poland's Extension Service, support for 4-H Clubs, and a World Bank Agriculture Structural Adjustment Loan that capitalized major rural banks. The funds represented a major commitment from the people of the United States to assist the transformation of Polish agriculture from communism to the market. There remains widespread appreciation and contacts from the vast list of technical assistance projects funded. ¶3. The bulk of funds were disbursed by 1999. Projects ground to a halt as Poland's EU accession plans began in 2001 that culminated in its full membership in 2004. Wit h diverging policy goals, the fund was used rarely until 2006 when Embassy Warsaw took greater financial control of funds and approved projects on an exchange of letters with the Ministry. The Ministry of Agriculture continued to approve proposed projects regularly until January 2009, when conversations began between the Ministry and Embassy about final goals to close the account. The Agriculture Ministry wishes to be consulted about projects by written request from Embassy Warsaw. The Ministry is still actively requesting programming. The Polish Veterinary Service has asked to have an expert in U.S. food safety teach risk assessment principles at a seminar this fall. Embassy Warsaw disburses funds in accordance with all U.S. government proscribed regulations for management of funds abroad in supporting travel, making grants, and procurements. The Ministry is content for funds to be used in the mutual interest of Poland and the United States, but declines to fund direct marketing activities like food shows. It is willing to fund projects that will eventually lead to enhanced U.S. exports, but only if they bring a win-win benefit to Poland. Embassy Warsaw USDA office evaluates proposals for their potential to positively impact U.S. goals for long range market development and their benefits to Poland and will inform FAS/W OCBD of projects. ¶4. Recently, funds disbursed financed Poland's participation in USDA's Scientific Borlaug Fellows Program. Funds supported a U.S. visit by 28 Agrarian Chamber representatives on a biotechnology review trip to the United States. USDA and Ambassador Victor Ashe have awarded distinguished Poles for their contributions to global agriculture. Professor Henryk Jasiorowski was granted an award in 2008 for his role in the 1978 feeding trial that proved the superiority of U.S. Holstein genetics and founding the Heifer Project International in Central Europe. In July 2009, the position America Attache position is eliminated with the departure of the incumbent and USDA will be represented in the Mission by one American Agricultural Counselor and four local staff. It is beneficial to provide additional Post oversight of the funds by involving State FMO in Warsaw in approval of funds. ¶5. Action Requested. Embassy Warsaw requests FAS/W authorization for Embassy Financial Management Office to undertake financial oversight of the funds, presently residing at Citibank Handlowy in Warsaw, disbursing funds with guidance from USDA Warsaw in accordance with U.S. government procurement and authorization. The Ministry of Agriculture has consented that their oversight will be to request consultations on projects sent to them in writing from the Embassy. At the time of disbursement, purpose and recipient of the funds will be reported to FAS/W stakeholders. USDA Warsaw collects and maintains records relating to the appropriateness of funded programs. USDA FAS/Compliance Review staff should examine the account on their next scheduled visit to Warsaw. ¶6. Comment. The Agriculture Ministry has lately been flexible in providing approval for travel and training on issues of relevance to the United States' trade agenda for Europe. The account should not be immediately liquidated due to the willingness of Poland to allow WARSAW 00000387 002.2 OF 002 the account to evolve in the mutual interest of both sides. End comment. QUANRUD