US embassy cable - 03ROME1884

UNCLASSIFIED ROME 001884 
 
SIPDIS 
 
STATE FOR IO/EDA SETH WINNICK AND IO/S ABRAHAMS 
USDA FOR FAS/HUGHES AND REICH 
ATHENS FOR CLEVERLY 
MEXICO CITY FOR BRAKEL 
PARIS ALSO FOR UNESCO 
 
FROM FODAG 
 
E.O. 12958:  N/A 
TAGS: AORC, KUNR, FAO 
SUBJECT:  ROME GENEVA GROUP MEETING ON FAO FINANCE AND 
PROGRAM COMMITTEE 
 
1.  SUMMARY:  ROME GENEVA GROUP (GG) MEMBERS ARE DIVIDED ON 
SUPPORTING ZERO NOMINAL GROWTH OR ZERO REAL GROWTH FOR THE 
UN FOOD AND AGRICULTURE ORGANIZATION'S (FAO) UPCOMING 2004- 
2005 BUDGET BUT DO AGREE THAT GOVERNANCE IS A MAJOR PROBLEM: 
THE ORGANIZATION HAS REPEATEDLY FAILED TO BE RESPONSIVE TO 
MEMBER PRIORITIES.  GG COUNTRIES WHICH ARE MEMBERS OF THE 
FINANCE AND PROGRAM COMMITTEES HAVE AN IMPORTANT ROLE IN 
WORKING FOR GREATER FAO ACCOUNTABILITY: THE RECENTLY ISSUED 
JIU REPORT ON FAO MANAGEMENT PROVIDED A GOOD ROAD-MAP FOR 
NEEDED REFORM, PARTICULARLY AS REGARDS FAO COUNTRY 
REPRESENTATIVES.  GG MEMBERS WILL SEEK PROGRAM AND FINANCE 
COMMITTEE ENDORSEMENT OF A TIME-BOUND FAO ACTION PLAN FOR 
IMPLEMENTING THE RECOMMENDATIONS.  END SUMMARY. 
 
2.  THE ROME GENEVA GROUP (MAJOR DONORS) MET APRIL 30, 2003 
AT THE U.S. MISSION TO DISCUSS THE UPCOMING FAO FINANCE AND 
PROGRAM COMMITTEE MEETINGS.  DELEGATES FROM THE U.K., THE 
NETHERLANDS, BELGIUM, NEW ZEALAND, AUSTRALIA, SWITZERLAND, 
JAPAN AND FRANCE ATTENDED.  ITALY, CANADA, SPAIN AND SWEDEN 
SPAIN WERE ABSENT. 
 
FINANCE COMMITTEE 
------------------ 
3. UNDER "FINANCIAL AND BUDGET REPORTS," THE U.S. CALLED 
ATTENTION TO THE FACT THAT CERTAIN FAO DIVISIONS (MOST 
NOTABLY THE INVESTMENT CENTER) HAD OVERSPENT IN THE FIRST 
YEAR OF THE BIENNIUM.  IT WAS NOTED THAT THE FAO WAS IN THE 
PROCESS OF SELECTING A NEW INVESTMENT ADVISOR LONG-TERM 
PORTFOLIO MANAGER (THE FORMER ADVISOR MANAGER HAVING FAILED 
TO MEET THE AGREED BENCHMARKS.)  THE NETHERLANDS NOTED THAT 
BOTH IFAD AND WFP HAVE A NEW INVESTMENT ADVISOR "WITH WHICH 
THEY APPEAR TO BE SATISFIED."  MEMBERS HAD A BRIEF 
DISCUSSION OF THE DIFFERENCE BETWEEN IFAD'S INVESTMENTS 
(WHICH ARE LONG-TERM) AND FAO'S (WHICH ARE MORE SHORT TERM). 
IT WAS NOTED THAT BRAZIL AND ARGENTINA HAD THE LARGEST 
ARREARS TO THE ORGANIZATION.  DO YOU WANT TO MENTION 
ARREARS? 
 
4. UNDER "OVERSIGHT MATTERS" MEMBERS DISCUSSED FOLLOW-UP TO 
THE RECOMMENDATIONS OF THE EXTERNAL AUDITOR, NOTING THE 
SERIOUSNESS OF MANY OF THE EXTERNAL AUDITOR'S FINDINGS, AND 
THE IMPORTANCE OF FAO COMPLIANCE.  THERE WAS NO SPECIFIC 
DISCUSSION OF ANY RECOMMENDATION, WITH THE EXCEPTION OF 
APPOINTMENT OF A NEW INTERNAL AUDITOR.  IN THIS CONTEXT, IT 
WAS NOTED THAT FAO HAS NOT YET ADVISED CONCERNING THE 
APPOINTMENT A NEW INTERNAL AUDITOR (AGENDA ITEM 10). 

5. UNDER "FINANCIAL POLICY MATTERS," MEMBERS DISCUSSED THE 
PROPOSAL FOR A SPECIAL FUND FOR EMERGENCY AND REHABILITATION 
ACTIVITIES.  THE NETHERLANDS STATED THAT A CLEARER PROPOSAL 
WAS NECESSARY.  HE NOTED THAT OTHER UN AGENCIES ACTIVE IN 
EMERGENCIES "SEEMED TO MANAGE" AND ASKED WHETHER THE 
ESTABLISHMENT OF SUCH A FUND HAD BEEN ONE OF THE 
RECOMMENDATIONS OF LAST YEAR'S EVALUATION OF FAO'S EMERGENCY 
ACTIVITIES.  (THE FUNDING IS TO COME FROM, INTER ALIA, 
DIRECT CONTRIBUTIONS FROM DONORS; RETENTION/TRANSFER OF FUND 
BALANCES AS AUTHORIZED BY DONORS; TRANSFER OF A SHARE OF 
FUNDS FROM THE DIRECT OPERATING COST RECOVERY ACCOUNT.) IS 
IT IMPORTANT TO NOTE THAT FAO IS ASKING TO SPEND MONEY THEY 
DON'T REALLY HAVE YET?    UNDER DISCUSSION OF THE COSTS OF 
THE WFS5YL (SOME USD 2 MILLION IN REGULAR BUDGET RESOURCES, 
USD 2 MILLION IN VOLUNTARY CONTRIBUTIONS), AUSTRALIA 
SUGGESTED THAT MEMBERS ASK ABOUT THE IMPACT ON THE REGULAR 
PROGRAM AS A RESULT OF HAVING DIVERTED ACTIVITIES IN SUPPORT 
OF WFS5YL. MEMBERS ALSO NOTED THAT CONTRIBUTIONS FOR (NON- 
EMERGENCY) TECHNICAL COOPERATION ACTIVITIES HAVE DECLINED 
AND OTHER CHAPTERS OF THE BUDGET WERE BEING CALLED ON TO 
ABSORB THE FIXED COSTS NO LONGER COVERED BY SUPPORT COST 
INCOME.  THIS IS A LONG-TERM PROBLEM WHICH MUST BE 
ADDRESSED. 
(THERE WAS ALSO THE DISCUSSION HERE OF THE LONG TERM PROBLEM 
OF BUILDING UP THE INFRASTRUCTURE FOR ALL THESE FIELD 
OPERATIONS, BUT NOT HAVING THE BUDGET TO SUPPORT THEM) 
 
6.  UNDER "BUDGETARY MATTERS," A TOUR DE TABLE OF GENEVA 
GROUP MEMBERS SHOWED THAT THE U.S., JAPAN AND AUSTRALIA HAD 
A ZERO-NOMINAL-GROWTH (ZNG) POSITION.  GERMANY SAID THAT ITS 
POSITION WAS UNCHANGED FROM LAST YEAR (ZNG), NOTING THAT THE 
VERY SMALL DIFFERENCE BETWEEN ZNG AND ZERO-REAL-GROWTH (ZRG) 
IN THE 2002-2003 BUDGET HAD ULTIMATELY MADE IT EASIER TO 
"SWALLOW" A ZRG BUDGET IN 2001.  THE NETHERLANDS AND 
SWITZERLAND WERE "OPEN TO ZRG." FRANCE NOTED THAT THERE WAS 
NO CONSENSUS IN THE EUROPEAN REGIONAL GROUP (ERG) ON ZNG; 
FRANCE AND BELGIUM WERE WITHOUT INSTRUCTIONS: THEY HAVE 
"SYMPATHY FOR ZNG" BUT WERE "DISPOSED TO CONSIDER ZRG."  THE 
U.K. WAS SIMILARLY WITHOUT INSTRUCTIONS, BUT UNLESS ADVISED 
OTHERWISE THE POSITION WAS ZNG.  NEW ZEALAND WAS WITHOUT 
INSTRUCTIONS, NOTED THAT WELLINGTON WAS LOOKING AT ALL UN 
AGENCIES ON A CASE-BY-CASE BASIS BUT NEW ZEALAND'S 
ACCEPTANCE OF ZRG IN 2001 HAD BEEN WITH THE UNDERSTANDING 
THAT THEY WOULD REVERT TO A ZNG POSITION FOR THE 2003-2004 
BUDGET. 
 
7.  UNDER THE ITEM ON THE SPLIT CURRENCY ASSESSMENT, THE 
U.K. ARGUED THAT IT NEEDED TO BE SETTLED THIS YEAR, AND 
STATED THAT THE SECRETARIAT RECOMMENDATION WAS A GOOD ONE. 
THE U.S. NOTED THAT THE SPLIT CURRENCY PROPOSAL MOVED 
EXCHANGE RATE RISK TO MEMBERS AND ADVISED THAT WASHINGTON 
DID NOT SUPPORT THE CHANGE.  THE NETHERLANDS RECALLED THAT 
THE EU COORDINATION GROUP POLICY WAS TO HAVE UN AGENCIES 
BASED IN EUROPE CAST THEIR BUDGETS IN EUROS, BUT THEY "COULD 
GO" WITH A SPLIT ASSESSMENT.  UNDER SCALE OF ASSESSMENTS IT 
WAS NOTED THAT COUNTRIES THAT HAD OBJECTED TO THEIR NEW 
ASSESSED RATE WOULD PROBABLY RAISE THE ISSUE AGAIN. 
 
8.  UNDER "HUMAN RESOURCES MATTERS" MANY DELEGATES 
COMPLAINED ABOUT THE LACK OF COMMUNICATION WITH APPLICANTS 
AND THE LACK OF TRANSPARENCY IN THE FAO RECRUITMENT PROCESS 
WHICH THEN OBLIGED PERMANENT REPRESENTATIONS TO SEEK ANSWERS 
TO QUESTIONS THAT APPLICANTS COULD NOT THEMSELVES OBTAIN 
FROM THE FAO PERSONNEL OFFICE.  THE NETHERLANDS NOTED THAT 
PERMANENT REPRESENTATIONS NEEDED TO BE ASCERTAINING WHETHER 
THE FAO "IS FOLLOWING ITS OWN RULES."   THE U.S. SAID THAT 
IT WOULD NOT SUPPORT A PROPOSED CHANGE OF THE METHODOLOGY 
FOR DETERMINING GEOGRAPHIC DISTRIBUTION, NOTING THAT THE 
PROPOSAL NUMBER TWO WOULD VASTLY INCREASE THE NUMBER OF 
COUNTRIES THAT WERE "EQUITABLY REPRESENTED" AND SHRINK THE 
NUMBER OF "OVERREPRESENTED" COUNTRIES.  THE U.S. ALSO 
QUESTIONED THE CRITERIA FOR SEEKING "EQUITABLE REGIONAL 
REPRESENTATION." JAPAN SUPPORTED THE SECOND METHODOLOGY, 
ARGUING THAT IT WOULD RENDER EVEN MORE DRAMATIC JAPANESE 
UNDERREPRESENTATION.  OTHER COUNTRIES DID NOT COMMENT, BUT 
APPEARED TO BE COMFORTABLE WITH THE SUGGESTION OF THE UK 
THAT A DECISION WAS UNLIKELY TO BE REACHED AT THE CURRENT 
FINANCE COMMITTEE SESSION. 
 
PROGRAM COMMITTEE 
----------------- 
9.  GG MEMBERS FOCUSED ON THE PROGRAM OF WORK AND BUDGET AND 
THE QUESTION OF SETTING PRIORITIES.  THE NETHERLANDS NOTED 
THAT THERE SEEMED TO BE CONSENSUS WITHIN THE MEMBERSHIP THAT 
NORMATIVE ACTIVITIES SHOULD BE STRENGTHENED (SUCH AS THE 
CODEX ALIMENTARIUS COMMISSION AND THE INTERIM COMMISSION ON 
PHYTOSANITARY MATTERS (ICPM)); THE REAL GROWTH BUDGET 
RESPONDED TO THIS CALL BY MEMBERS, BUT THE SECRETARIAT 
THREATENED TO CUT BACK THOSE ACTIVITIES IF FORCED TO MOVE TO 
ZRG OR ZNG: WAS THIS AN APPROPRIATE REACTION TO THE 
PRIORITIES EXPRESSED BY MEMBERS?  THE U.K. AGREED THAT 
PRIORITIES SHOULD BE "BUDGET BLIND," I.E., YOU SET YOUR 
PRIORITIES AND THEN APPLY IT TO WHATEVER BUDGET LEVEL TO 
WHICH YOU FINALLY AGREE.  AUSTRALIA NOTED THE NEED TO LINK 
PRIORITIES WITH RESULTS AND EVALUATION.  NEW ZEALAND ARGUED 
THAT MEMBERS HAD STATED CLEARLY THROUGH ALL OF THE 
APPROPRIATE BODIES AND MECHANISMS THAT ICPM NEEDED MORE 
RESOURCES: HOW COULD THE FAO'S ZRG BUDGET REDUCE THIS 
ACTIVITY?  HOW ELSE WERE MEMBERS TO PRIORITIZE?  IN 
DISCUSSION OF THE FAO PAPER ON "PRIORITY SETTING", MEMBERS 
AGREED THAT IT WAS A VALID BASIS TO START FROM BUT NEEDED TO 
BE TAKEN MUCH FURTHER. 
 
10.  UNDER THE FOLLOW-UP TO THE EVALUATION OF THE SPECIAL 
PROGRAM FOR FOOD SECURITY (SPFS), PC MEMBERS NOTED THAT THEY 
HAD VERY CLEARLY TOLD THE SECRETARIAT TO TIGHTEN UP THE 
IMPLEMENTATION BEFORE EXPANDING; THE SECRETARIAT HAD 
EXPANDED IT NONETHELESS.  THE NETHERLANDS ARGUED THAT THERE 
WAS SO MUCH G-77 SUPPORT FOR THE PROGRAM, THE BEST WE CAN DO 
IS MAKE SURE THAT THE ADMINISTRATION IS APPROVED, AND KEEP A 
CAP ON THE BUDGET LEVEL.  THE UK STATED THAT THE PC -- THE 
APPROPRIATE BODY WITHIN FAO TO ADDRESS SUCH AN ISSUE --  HAD 
BEEN IGNORED. THIS AND OTHER POINTS RAISED IN PARA 10 RAISED 
THE QUESTIONS OF WHO SETS PRIORITIES FOR THE ORGANIZATION 
AND HOW TO ACHIEVE STRATEGIC CHANGE WITHIN FAO. 
 
JOINT MEETING OF FINANCE AND PROGRAM COMMITTEES 
--------------------------------------------- -- 
11.  UNDER THE ITEM "INDEPENDENCE OF THE EVALUATION UNIT", 
SWITZERLAND ARGUED THAT THE RECENT CHANGE AT IFAD IN THIS 
REGARD GAVE A POSITIVE EXAMPLE TO WORK FROM.  SWITZERLAND 
SAID THAT HE COULD NOT ENDORSE THE PAPER AS WRITTEN: THE 
EVALUATION UNIT SHOULD REPORT DIRECTLY TO COUNCIL, SHOULD 
WORK CLOSELY WITH THE PROGRAM COMMITTEE, SHOULD HAVE ITS OWN 
BUDGET, FULL RESPONSIBILITY FOR STAFF, AND THE DIRECTOR 
SHOULD BE CHOSEN BY THE FAO COUNCIL.  ALL GG MEMBERS AGREED 
THAT GREATER INDEPENDENCE WOULD BE GOOD; THE NETHERLANDS 
NOTED THAT THE INTERNATIONAL FINANCIAL INSTITUTIONS (IFI'S) 
HAD THIS, BUT WITHIN THE UN SYSTEM IT WAS HARD TO FIND A 
MODEL.  HE ALSO NOTED THE IMPORTANCE OF THE "FEEDBACK LOOP" 
TO PROGRAM MANAGEMENT.  MEMBERS AGREED THAT THE THERE WAS NO 
NEED TO MERGE THE AUDIT AND EVALUATION UNITS.  THE UK ASKED 
ABOUT THE RELATIONSHIP BETWEEN AN EVALUATION UNIT AND THE 
CONTINUAL "AUTO-EVALUATION" THAT PROGRAM MANAGERS ARE 
SUPPOSED TO BE PERFORMING. 
 
12.  THE GG DISCUSSED "REFORM OF DEBATE" AT THE GENERAL 
CONFERENCE (GC).  NEW ZEALAND (WHOSE MINISTER WILL CHAIR THE 
GC) SAID THAT HIS DELEGATION STRONGLY SUPPORTED AN 
INTERACTIVE FORMAT.  HE SAID THAT ROUNDTABLES SHOULD BE ON 
INTERESTING TOPICS, SMALL, AND GIVE MINISTERS AN OPPORTUNITY 
FOR GIVE AND TAKE.  THE NETHERLANDS SAID THAT HE WAS 
"GENERALLY SUPPORTIVE" BUT NOTED THAT SOME ERG MEMBERS HAD 
HAD PROBLEMS COVERING THE PROLIFERATION OF SIDE EVENTS AT 
THE WFS5YL.  IN CONCLUSION, MEMBERS AGREED THAT THEY WOULD 
ASK FOR MORE ALTERNATIVES THAN THE TWO PRESENTED BY THE 
SECRETARIAT IN THE DOCUMENT. 
 
SIPDIS 
 
13.  TURNING TO THE JIU REVIEW OF FAO MANAGEMENT, THE U.S. 
CALLED ATTENTION TO THE CRITICISM OF FAO REGIONAL OFFICES 
(PARTICULARLY GERMANE GIVEN THAT THE FAO WAS SEEKING MORE 
MONEY FOR FAO LOCAL REPRESENTATIVES.)  THE NETHERLANDS 
STATED THAT FAO MIGHT LEARN FROM UNDP, WHICH HAD A GOOD 
PROCESS FOR SELECTING LOCAL REPS; WHO HAS A COUNTRY "FOCUS 
INITIATIVE" WHICH COULD BE EMULATED.  THE GROUP AGREED THAT 
THE JIU RECOMMENDATIONS COULD WELL FORM THE BASIS FOR FUTURE 
FINANCE AND PROGRAM COMMITTEE AGENDAS, GIVEN THE FUNDAMENTAL 
ISSUES RAISED CONCERNING STAFF SELECTION, HUMAN RESOURCES 
MANAGEMENT, DECENTRALIZED OPERATIONS AND FINANCES AND 
PERFORMANCE BASED ALLOCATION.  MEMBERS AGREED THAT THE 
REPORT OF THE JOINT COMMITTEE SHOULD BE AS CLEAR AS POSSIBLE 
IN STATING THAT THE MANAGEMENT RESPONSE WAS NOT SATISFACTORY 
AND ASKING FOR A PLAN OF ACTION (WITH TIMING) ON 
IMPLEMENTING THE RECOMMENDATIONS.  HALL 
 

2003ROME01884 - Classification: UNCLASSIFIED