US embassy cable - 03ROME5702

UNCLAS  ROME 005702 
 
SIPDIS 
 
 
FROM U.S. MISSION IN ROME 
 
SENSITIVE 
 
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 USAID PLERNER 
 
E.O. 12958:  N/A 
TAGS: AORC, EAID, EAGR, PREF, FAO, WFP, WFPO, UN, EUN 
SUBJECT: Iraq food procurement issues - US Mission/Rome 
meeting with WFP Deputy Executive Director (Operations) Jean- 
Jacques Graisse on December 22, 2003 
 
REF: (A) CPA Administrator Bremer letter to WFP dated 12/20, 
(B) WFP Executive Director Morris letter to CPA 
Administrator Bremer dated 12/19/03 
 
SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY. 
NOT SUITABLE FOR INTERNET POSTING. 
 
 
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Summary 
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1. (SBU) US Mission/Rome met with WFP Deputy Executive 
Director (Operations) Jean-Jacques Graisse on December 22, 
2003 to discuss Iraq food procurement next steps in light of 
concerns detailed in refs A and B. Graisse, having just 
returned from discussions at UN Headquarters NY, highlighted 
UN Treasury procedural "glitches" that require vigorous 
focus. End summary. 
 
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Background 
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2. (U) US Mission Humanitarian Attache Tim Lavelle, 
Agricultural Counselor Geoff Wiggin, and USAID Project 
Officer Phil Lamade met with WFP Deputy Executive Director 
(Operations) Jean-Jacques Graisse on December 22, 2003 to 
discuss Iraq food procurement next steps in light of 
concerns detailed in WFP Executive Director Morris' letter 
to CPA Administrator Bremer dated December 19 (ref B) and 
CPA Administrator Bremer's response to WFP (ref A) dated 
December 20. 
 
3. (SBU) Graisse, having just returned from meetings at UN 
Headquarters New York on December 18-19, recounted that, 
despite whatever prior assurances given to the US Permanent 
Mission in NY, there are still problems in prompting 
efficient and quick action on amendments of letters of 
credit both by UN Treasury and Banque National de Paris (BNP 
Paribas). As WFP proceeds to renegotiate terms of SCR 1483 
food procurement contracts from CF (Commodity plus Freight) 
to FOB (free-on-board) with suppliers willing to do so, the 
existing letters of credit have to be amended by UN Treasury 
and expeditiously processed through BNP Paribas. Graisse 
commented that WFP still needs to "extract" agreement from 
the UN Treasury on the format for Letter of Credit L/C 
amendment requests that WFP submits. 
 
4. (SBU) Unless immediate attention is given to this, 
Graisse opined that delays (perhaps as long as one month) 
could occur before BNP Paribas released amended letters of 
credit. Graisse concluded "this would push us well into 2004 
and could engender pipeline problems." 
 
5. (U) Graisse met with U/S Management Catherine Bertini and 
apprized her of these procedural "glitches." Bertini 
informed Graisse that she would ask Jesse Mabutas, former 
WFP head of Administration and Management, and now on her 
staff, to focus on the problem. 
 
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CPA Funding for buffer food stocks 
---------------------------------- 
 
6. (SBU) Graisse reiterated that WFP would need to receive 
from CPA the funds necessary to effect the renegotiated 
contract terms, i.e. cost of ocean transport as well as land U.S. MISSION 
IN ROME 
 
SENSITIVE 
 
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 
 
transport to the hubs in Iraq before it could conclude 
negotiations with appropriate suppliers, but remarked that 
"WFP did not yet have a clear and precise indication of the 
modality which would make this exercise possible and 
fruitful." 
 
7. (SBU) He also related that WFP would start with the 
immediate procurement of some 15 days of buffer stock 
commodities with the first tranche of U.S. dollars (USD) 110 
million as soon as the tripartite Memorandum of 
Understanding (Iraqi Ministry of Trade, CPA and WFP) is 
signed and funds received. Note. Greater transparency in 
WFP's tendering process related to the procurement of the 
proposed three-month food buffer stock will be described 
septel. End note. 
 
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Comment 
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8. (SBU) Clearly UN Treasury needs to focus on expediting 
the L/C amendments by standardizing formats and issuing 
swift instructions to its banker BNP. And WFP's reminder 
that it will need adequate cash up front from CPA to pay 
ocean freight as well as land transport to hubs in Iraq 
appears reasonable. Hall 
 
 
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 2003ROME05702 - Classification: UNCLASSIFIED