US embassy cable - 03ROME5549

UNCLAS  ROME 005549 
 
SIPDIS 
 
 
FROM U.S. MISSION IN ROME 
 
BAGHDAD FOR AMBASSADORS RAPHEL, KENNEDY AND JLAPENN 
USUN FOR AMBASSADOR NEGROPONTE AND MLUTZ 
STATE FOR PRM A/S DEWEY, PRM/ANE/EUR/SE, IO A/S HOLMES, 
EUR/NE, EUR/WE, SA/PAB, IO/EDA SKOTOK 
USDA/FAS FOR U/S PENN, ETERPSTRA, MCHAMBLISS, RTILSWORTH AND 
LSCHATZ 
USAID FOR AA/DCHA WINTER, AA/ANE, DCHA/OFDA, D/DCHA/FFP 
LANDIS 
JOINT STAFF FOR JE/J4/J5 
NSC FOR EABRAMS, SMCCORMICK, STAHIR-KHEDI AND JDWORKEN 
GENEVA FOR RMA LYNCH AND USAID NKYLOH 
BRUSSELS FOR PLERNER 
 
E.O. 12958:  N/A 
TAGS: EAID, AORC, EAGR, PREF, IZ, FAO 
SUBJECT: IRAQ: TERMINATION OF FAO'S ACTIVITIES UNDER "OIL- 
FOR-FOOD" PROGRAM AND HANDOVER TO THE COALITION PROVISIONAL 
AUTHORITY 
 
1.  Summary:  In UN Security Council Resolution 1483 
(adopted May 22, 2003), the Security Council requested the 
Secretary-General to: (a) continue the exercise of his 
 
SIPDIS 
responsibilities under resolutions 1472 (2003) and 1476 
(2003) for a period of six months following the adoption of 
resolution 1483 (2003); and (b) terminate within this time 
period, in the most cost-effective manner, the ongoing 
operations of the "Oil-For-Food" (OFF) Program, both at 
headquarters level and in the field, transferring 
responsibility for the administration of any remaining 
activity under the Program to the Coalition Provisional 
Authority (CPA).  FAO has informed US Mission/Rome that they 
effectively completed termination and handover of all 
activities under OFF in Iraq to the CPA within the November 
21, 2003 deadline.  End summary. 
 
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Specific Actions Taken 
---------------------- 
 
2.  FAO has informed US Mission/Rome that the following 
specific actions have been taken: 
 
a) OFF activities in the northern governorates (13 percent 
account) -- The total confirmed allocation made to FAO for 
the implementation of the agriculture program in northern 
Iraq since 1997 is USD 776 million, of which the cumulative 
delivery amounts to USD 580 million.  A total of USD 166.8 
million worth of assets, facilities and contracts was handed 
over and transferred to the CPA through the appropriate 
legal mechanisms in place.  Uncommitted funds (approximately 
USD 191 million) shall be returned to the Development Fund 
for Iraq; 
 
b) Special Projects funded under the OFF Program (59 percent 
account) -- Upon the request of the CPA, FAO also 
implemented new projects in southern and central Iraq for an 
approximate value of USD 238 million.  These projects 
involved the procurement of a large quantity of urgently 
needed inputs to supplement those included in the list of 
contracts previously placed by the former Government of 
Iraq.  Through these projects, USD 185 million worth of 
contracts were issued, including USD 45 million worth of 
inputs delivered in time for the autumn cereal-planting 
season.  USD 140 million worth of inputs were not delivered 
fully, and as agreed with the Authority, contracts have been 
handed over to the CPA for follow-up. Uncommitted funds 
(approximately USD 50 million) shall be returned to the 
Development Fund for Iraq; 
 
c) Administrative and operational support costs (2.2 percent 
account) -- Pursuant to recent directives from the UN 
Secretary-General, assets purchased with funds from the 2.2 
 
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percent account that would not be required by the United 
Nations for its activities relating to Iraq, either at the 
headquarters or in the field, should be transferred to the 
CPA for the benefit of the people of Iraq. Accordingly, FAO 
is reviewing the inventories of all assets purchased with 
2.2 percent account funds, to determine those that should be 
transferred to the CPA by December 31, 2003. 
 
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FAO's Responsibilities for Contracts Negotiation under 
Resolutions 1472, 1476 and 1483 
--------------------------------------------- --------- 
 
3.  As of November 21, 2003, 196 contracts for an amount of 
USD 711 million, placed by the former Government of Iraq for 
agriculture inputs and equipment were renegotiated and 
amended by FAO in accordance with the above-mentioned 
resolutions.  This represents over 95 percent of the 
prioritized contracts that were potentially amendable by 
FAO. 
 
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FAO Presence in Iraq 
 
-------------------- 
 
4.  International staff -- In line with instructions from 
the FAO Director-General and those of UNSECOORD, all FAO 
international staff have been relocated to Amman, Rome and 
home stations.  Contracts of international staff will not be 
extended beyond December 31, 2003, except for a small core 
team that will be responsible for follow-up actions pursuant 
to formal handover of the Program. 
 
5.  National staff -- All national staff have been 
officially informed that their contracts will not be 
extended beyond December 31, 2003.  "Non-essential" staff 
were requested not to report to duty as of November 21, 
2003, and a core group of 40 staff members (20 in the 
northern governorates and 20 in the center/south) have been 
requested to continue general support activities needed for 
the orderly termination after November 21.  This transition 
team has been instructed to work exclusively on handover and 
termination related activities, and not to engage in any 
operations under OFF. 
 
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Comment 
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6. In US Mission's view, FAO performed its contracting 
function, particularly over the past several months, in a 
professional and dedicated manner.  The contractual 
renegotiation process indeed contained "glitches," some of 
which were beyond FAO's control.  Moreover, FAO was overly 
sanguine about its ability to initiate contracting for some 
vital inputs, e.g., chemical fertilizer(s) as a case in 
point, which were in tight supply internationally and needed 
to be delivered in a timely manner.  But in spite of the 
magnitude of the exercise, compounded by the drastic UN 
staff downsizing in the aftermath of August 19, FAO was able 
to meet the challenge of an orderly termination and 
effective handover of its OFF portfolio to the CPA.  And, as 
the baton changes hands, it needs to be said that the Iraqi 
people have been indeed well served these past six difficult 
months by the UN's FAO. 
 
Hall 
 
 
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	2003ROME05549 - Classification: UNCLASSIFIED