US embassy cable - 03HANOI2254

UNCLAS SECTION 01 OF 02 HANOI 002254 
 
SIPDIS 
 
STATE FOR PRM, USAID/FFP/EB, IO, EAP/BCLTV 
 
USDA FOR USDA/FAS/CMP & FAA 
 
E.O. 12958: N/A 
TAGS: PREL, EAGR, ECON, EFIN, IZ, VM, UNSC 
SUBJECT: VIETNAM AG EXPORTS TO IRAQ 
 
REF:  (A) Hanoi 00829 
      (B) Hanoi 01766 
      (C) Hanoi 2240 
 
1. This is an action request -- see Paragraph 10. 
 
2. SUMMARY: As noted in Reftels, Vietnam is very 
interested in continuing its agricultural exports to 
Iraq under the Oil-for-Food (OFF) program, and 
whatever replaces the OFF program.  Vietnamese 
contacts, ranging from the Prime Minister to various 
state-owned companies, have contacted Post requesting 
support and guidance.  Post also requests confirmation 
that two Iraqi-Vietnam joint ventures in Vietnam have 
been authorized to proceed.  END SUMMARY. 
 
3. Over the past five years, Iraq has become a very 
important market for Vietnam.  In 2002, Vietnam 
exported more than $800 million of ag commodities to 
Iraq, including 871,000 mt of rice, about 60,000 mt of 
milk powder, and 15,000 mt of tea.  Ref c noted Prime 
Minister's request to Ambassador on September 1 for a 
quick resumption of tea exports, a theme also 
elaborated by Vietnamese Ambassador to Iraq on 
September 4 (septel). 
 
4. RICE: Vietnam Northern Food Corporation (Vinafood 
1) invited Agatt and AgSpec to a meeting on August 27 
to discuss their concerns regarding a new shipment of 
rice to Iraq.  Vinafood said the June 2003 rice 
shipments (Ref a) under OFF's Phase 12 round were 
successfully completed, and that it had recently 
signed a contract to supply 60,000 metric tons of rice 
under OFF's Phase 13.  However, Vinafood is concerned 
that it was not clear which agency (UN or private 
sector) would be inspecting and documenting arrival of 
the rice at the Umm Qasr port. (As noted in REF A, 
that was also a concern with the earlier shipment.) 
Vinafood said COTECNA, a private sector inspection 
company, handled the inspection duties for the June 
shipment. 
 
5. MORE RICE: In addition to the 60,000 metric tons 
that was recently reconfirmed, Vietnam had an old 
contract to supply 250,000 metric tons of rice to Iraq 
(Ref a).  Vinafood asked if the OFF program would be 
requesting the remaining 190,000 metric tons. 
 
6. SUGAR / BAGS: Before the war, Vinafood signed 
contracts to supply 10,000 metric tons of sugar and 
thousands of plastic bags to Iraq.  Those items are 
now warehoused, waiting for further shipping 
instructions. 
 
7. AFTER OFF?: Vinafood also requested information on 
how Iraqi food imports would be handled following the 
end of the OFF program.  Officials expressed a hope 
that the Iraqi ag market would be open to all 
suppliers. 
 
8.  JOINT-VENTURES:  In August 2001, Vietnam (Vinafood 
1) and Iraq (Iraqi Grain Board) announced an agreement 
to establish a rice processing joint venture company 
in Can Tho province.  The rice mill would have an 
annual capacity of 200,000 metric tons, with the goal 
of producing high-quality rice for export to Iraq. 
The joint venture was proposed to last for 50 years, 
and have a total investment capital of $12 million 
($6.6 million from Iraq and $5.4 million from 
Vietnam).  In 2002, the Vietnamese government 
(Ministry of Planning and Investment and the Office of 
the Prime Minister - standard practice for projects 
over $10 million) approved the project.  Another joint 
venture in Phu Tho province, handles tea processing; 
MFA officials told Ambassador that this project was 
funded under repayment of Vietnamese debts to Iraq and 
had been re-approved by the CPA (septel). 
 
9.  PROCEED?:  According to Vinafood, the rice milling 
project was similarly authorized to proceed at a June 
meeting in Jordan with "Dr. Yusef," formerly of the 
Iraqi Grain Board and now a Ministry of Trade 
official.  (Vietnamese Ambassador to Iraq Khai 
separately told Ambassador September 4 that Ambassador 
Robin Raphel had approved this project continuation 
"two months ago.")  Vinafood officials said land for 
the rice mill had been allocated, and the next step 
would be to buy milling equipment via an open and 
international tendering process.  Equipment bids, from 
international suppliers, are due on September 16. The 
mill is expected to open in August 2004. Vinafood 
officials noted that the Iraqi funds to buy the 
equipment were already deposited in a Vietnamese bank 
account. 
10:  Action request:  Please clarify issues regarding 
Phase 13 shipments, Iraq's food import tendering 
system, and the validity of the Iraqi-Vietnamese joint- 
ventures. 
BURGHARDT