US embassy cable - 03ROME1957

UNCLAS SECTION 01 OF 02 ROME 001957 
 
SIPDIS 
 
AIDAC 
 
FROM U.S. MISSION IN ROME 
 
SENSITIVE 
 
                       UNCLASSIFIED 
 
PAGE 02        ROME  01957  01 OF 02  071320Z 
STATE FOR U/S LARSON, A/S PRM DEWEY, IO A/S HOLMES, EUR/WE, 
IO/EDA SWINNICK, E FOR CPENCE 
USDA/FAS FOR U/S PENN, MCHAMBLISS AND RTILSWORTH 
USAID FOR ADMINISTRATOR NATSIOS AND JBRAUSE, AA/DCHA WINTER, 
D/DCHA/OFDA BMCCONNELL, D/DCHA/FFP LANDIS 
USUN FOR AMBASSADOR NEGROPONTE AND MLUTZ 
GENEVA FOR RMA 
BRUSSELS FOR USEU 
NSC FOR JDWORKEN 
 
E.O.  12958:  N/A 
TAGS: EAID, AORC, PREF, EAGR, AORC, PREF, EAGR, EU, WFP, UN, EU    EAID, WFP, UN 
SUBJECT: "TWINNING" - WORLD FOOD PROGRAM UPDATE 
 
REF: (A) ROME 00007 
 
SENSITIVE BUT UNCLASSIFIED - PLEASE TREAT ACCORDINGLY 
 
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SUMMARY 
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1. (SBU) AS A FOLLOW UP TO REF A, US MISSION RECENTLY 
DISCUSSED WITH WFP'S JOHN POWELL THE LATEST THINKING RELATED 
TO  "TWINNING" EFFORTS AIMED AT EXPANDING WORLD FOOD 
PROGRAM'S FUNDING BASE. TWINNING INVOLVES THE ESTABLISHMENT 
OF A MECHANISM/STRATEGY TO MATCH NON-TRADITIONAL DONORS OF 
FOOD AID COMMODITIES WITH EITHER TRADITIONAL OR PREFERABLY 
NON-TRADITIONAL DONORS OF CASH FOR THE DELIVERY OF 
HUMANITARIAN ASSISTANCE IN FOOD EMERGENCIES. WFP HAS SEEN 
                       UNCLASSIFIED 
 
PAGE 03        ROME  01957  01 OF 02  071320Z 
ITS EMERGENCY PORTFOLIO (INCLUDING IRAQ) FOR 2003 EXPAND 
FROM USD 2 BILLION (2002 LEVEL) TO USD 4 BILLION. POWELL 
ASSURED THAT WFP IS VIGOROUSLY PURSUING TWINNING - AND IS 
HOPEFUL OF AN EVIAN G8 ENDORSEMENT OF THE CONCEPT. END 
SUMMARY. 
 
--------------------------------------------- --- 
WFP'S "ROLLING" EVOLUTION OF A TWINNING STRATEGY 
--------------------------------------------- --- 
 
2. (SBU) JOHN POWELL WALKED US MISSION STAFF THROUGH WFP'S 
EVOLVING TWINNING STRATEGY AS FOLLOWS: 
 
A) DONORS TO THE UNITED NATIONS WORLD FOOD PROGRAM (WFP) 
PRESENTLY MAKE THEIR CONTRIBUTIONS IN THE FORM OF FOOD 
COMMODITIES, SERVICES (SUCH AS SHIPPING AND TRANSPORT) AND 
CASH, ALL OF WHICH ARE NECESSARY TO MOVE FOOD FROM A DONOR 
TO SPECIFIC BENEFICIARIES. CASH IS THE MOST FLEXIBLE. 
 
DONORS OF COMMODITIES ARE ASKED TO PROVIDE THE CASH NEEDED 
TO MEET THE COSTS ASSOCIATED WITH THEIR CONTRIBUTION. THESE 
INVOLVE THE TRANSPORT, HANDLING AND STORAGE COSTS OF MOVING 
THE FOOD FROM THE DONOR COUNTRY TO THE BENEFICIARIES, WHO 
MAY BE LOCATED IN A LANDLOCKED COUNTRY IN ANOTHER CONTINENT. 
DONORS ARE ALSO ASKED TO PAY A PRO RATA SHARE OF THE OTHER 
OPERATIONAL AND SUPPORT COSTS ASSOCIATED WITH THE SET UP AND 
MANAGEMENT OF THE OPERATION SUCH AS MONITORING THE 
DISTRIBUTION OF THE FOOD TO MAKE SURE THAT IT ACTUALLY 
REACHES THOSE FOR WHOM IT WAS INTENDED. 
 
B) MOST DONORS TO WFP ARE COUNTRIES; AND ALL MAJOR DONORS 
                       UNCLASSIFIED 
 
PAGE 04        ROME  01957  01 OF 02  071320Z 
ARE MEMBERS OF THE OECD. SOME DEVELOPING COUNTRIES ARE 
EMERGING AS DONORS. THESE EMERGING DONORS ARE WILLING TO 
PROVIDE THE FOOD COMMODITIES BUT ARE UNABLE TO PROVIDE THE 
ASSOCIATED CASH. INDIA, FOR INSTANCE, DONATED ONE MILLION 
TONS OF WHEAT TO AFGHANISTAN. BUT IT REQUIRES MORE THAN  USD 
200 MILLION TO DELIVER THAT AMOUNT OF COMMODITIES TO 
BENEFICIARIES IN AFGHANISTAN. AND INDIA SIMPLY DOES NOT HAVE 
THE CASH. OTHER POTENTIAL DONORS INCLUDE REPUBLIC OF SOUTH 
AFRICA, PAKISTAN, CHINA, THAILAND, VIET NAM, BRAZIL AND THE 
UKRAINE, TO NAME A FEW. THERE ARE IMMENSE POSSIBILITIES - IF 
A MECHANISM CAN BE FOUND TO ENABLE PROSPECTIVE DONORS TO 
GIVE WHAT THEY HAVE, WHICH IS FOOD. 
 
C) THE CONCEPT OF TWINNING IS TO ESTABLISH A FINANCIAL 
FACILITY THROUGH WHICH CASH COULD BE MATCHED WITH THE 
COMMODITY CONTRIBUTIONS OF EMERGING DONORS THEREBY 
LEVERAGING SUBSTANTIAL ADDITIONAL QUANTITIES OF FOOD. THE 
LEVERAGE RATIO IS OFTEN HIGH. FOR EXAMPLE, A CASH DONATION 
OF USD 2 MILLION WOULD LEVERAGE 20,000 TONS OF RICE FROM 
INDIA TO SUPPORT VICTIMS OF THE CONFLICT IN SRI LANKA TO 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ2919 
 
PAGE 01        ROME  01957  02 OF 02  071321Z 
ACTION SSO-00 
 
INFO  LOG-00   AID-00   ANHR-00  EUR-00   E-00     UTED-00  TEDE-00 
      IO-00    NSCE-00  OIC-02   SS-00    TEST-00  PRM-00   SAS-00 
        /002W 
                  ------------------611CA6  071321Z /38 
P 071321Z MAY 03 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC PRIORITY 9708 
USDA FAS WASHDC PRIORITY 2662 
INFO EU MEMBER STATES COLLECTIVE 
AMEMBASSY KUWAIT 
AMEMBASSY NEW DELHI 
AMEMBASSY BANGKOK 
AMEMBASSY MOSCOW 
AMEMBASSY PRETORIA 
AMEMBASSY COLOMBO 
USEU BRUSSELS 3209 
USMISSION GENEVA 
USMISSION USUN NEW YORK 
 
UNCLAS SECTION 02 OF 02 ROME 001957 
 
SIPDIS 
 
AIDAC 
 
FROM U.S. MISSION IN ROME 
 
SENSITIVE 
 
                       UNCLASSIFIED 
 
PAGE 02        ROME  01957  02 OF 02  071321Z 
STATE FOR U/S LARSON, A/S PRM DEWEY, IO A/S HOLMES, EUR/WE, 
IO/EDA SWINNICK, E FOR CPENCE 
USDA/FAS FOR U/S PENN, MCHAMBLISS AND RTILSWORTH 
USAID FOR ADMINISTRATOR NATSIOS AND JBRAUSE, AA/DCHA WINTER, 
D/DCHA/OFDA BMCCONNELL, D/DCHA/FFP LANDIS 
USUN FOR AMBASSADOR NEGROPONTE AND MLUTZ 
GENEVA FOR RMA 
BRUSSELS FOR USEU 
NSC FOR JDWORKEN 
 
E.O.  12958:  N/A 
TAGS:     EAID, AORC, WFP, UN, PREF, EAGR, EU 
SUBJECT: "TWINNING" - WORLD FOOD PROGRAM UPDATE 
 
MAKE THE TRANSITION TO PEACE. THIS TRANSACTION WOULD 
OTHERWISE COST AROUND USD 6 MILLION.  TWINNING IS THEREFORE 
A MECHANISM THAT CAN BRING DEVELOPING COUNTRIES INTO THE 
DONOR COMMUNITY IN A VERY SIGNIFICANT WAY. TWINNING WOULD 
ENABLE DEVELOPING COUNTRIES TO BECOME SUBSTANTIAL 
STAKEHOLDERS IN THE FINANCING OF HUMANITARIAN OPERATIONS 
ACROSS THE WORLD, A BURDEN HITHERTO BORNE MAINLY BY OECD 
COUNTRIES. FINALLY, THIS MECHANISM WOULD BE USED TO DIRECT 
FOOD ASSISTANCE TO SPECIFIC CATEGORIES OF PEOPLE, MAINLY 
VICTIMS OF MAN-MADE OR NATURAL DISASTER. THESE ARE PEOPLE 
WITHOUT THE MEANS TO HELP THEMSELVES. AS A CONSEQUENCE, 
TRANSACTIONS OF THIS KIND WOULD NOT BE TRADE DISTORTING. 
 
D) THE PROPOSAL IS TO ESTABLISH A SPECIAL FUND WITHIN WFP 
NAMED "THE G-8 FUND FOR EMERGING DONORS". THE FUND WOULD BE 
FINANCED BY G-8 MEMBERS BUT NON-G-8 MEMBERS WOULD BE INVITED 
TO CONTRIBUTE. THE FUND COULD BE ESTABLISHED AT SAY, USD 500 
                       UNCLASSIFIED 
 
PAGE 03        ROME  01957  02 OF 02  071321Z 
MILLION, WHICH IS EQUIVALENT TO ABOUT ONE QUARTER OF WFP'S 
EXPENDITURE IN 2002. (NOTE. IT WOULD ALSO BE POSSIBLE TO 
CONSIDER THE ESTABLISHMENT OF AN ENDOWMENT FUND. AN 
ENDOWMENT WOULD INVOLVE MUCH LARGER INITIAL CONTRIBUTIONS, 
ESPECIALLY IN THE CURRENT POOR INVESTMENT CLIMATE. IT WOULD, 
HOWEVER, REDUCE THE NEED FOR REGULAR REPLENISHMENT. END 
NOTE.) THE FUND WOULD BE SEPARATELY MANAGED AND ACCOUNTED 
FOR BY WFP; AND IT WOULD BE SUBJECT TO AUDIT ACCORDING TO 
WFP'S FINANCIAL REGULATIONS. 
 
E) THE PROPOSAL MAKES SOUND FINANCIAL SENSE; AND IT AVOIDS 
SETTING UP COSTLY NEW ADMINISTRATIVE STRUCTURES AND 
ARRANGEMENTS. WFP'S OVERHEAD COSTS ARE 7 PERCENT. MOST 
IMPORTANTLY, IT WOULD INCREASE THE NUMBER OF DONORS BEARING 
THE EXTRA-ORDINARY COSTS OF DEALING WITH THE EXPLOSION OF 
HUMANITARIAN CRISES THAT NEED UNPRECEDENTED AMOUNTS OF FOOD 
AID. AS THE UN'S FOOD AID AGENCY, WFP IS ABLE TO ACHIEVE 
ECONOMIES OF SCALE IN ITS OPERATIONS WORLD-WIDE, THEREBY 
KEEPING COSTS LOW; AND IT HAS THE EXPERIENCE TO MANAGE 
TWINNING ARRANGEMENTS WITH EMERGING DONORS. END OF JOHN 
POWELL'S PRESENTATION. 
 
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COMMENT 
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3. (SBU) WFP HAS SEEN ITS EMERGENCY PORTFOLIO (INCLUDING 
IRAQ) FOR 2003 EXPAND FROM USD 2 BILLION (2002 LEVEL) TO USD 
4 BILLION. AS A RULE, DONOR BUDGETS RARELY GROW 
EXPONENTIALLY. INDIA (WHICH OFFERED ONE MILLION TONS OF 
WHEAT FOR AFGHANISTAN IN OCTOBER 2001, HAS NOW OFFERED 
                       UNCLASSIFIED 
 
PAGE 04        ROME  01957  02 OF 02  071321Z 
(APRIL) 50,000 MTS OF WHEAT FOR IRAQ, AND ANNOUNCED THAT IT 
WOULD ARRANGE (PAY) ALL OCEAN SHIPPING CHARGES TO WFP 
DESIGNATED PORTS IN THE REGION. BUT THE GOI CONCEDES THAT IT 
DOES NOT HAVE THE ADDITIONAL CASH TO PAY IN-COUNTRY 
TRANSPORT, SHIPPING AND HANDLING NOR WFP'S SUPPORT COSTS. 
JOHN POWELL IS HOPEFUL THAT A G8 ENDORSEMENT OF THE TWINNING 
CONCEPT/STRATEGY AT THE EVIAN SUMMIT WILL MOVE THESE KINDS 
OF OFFERS ALONG TO FRUITION. HALL 
 
                       UNCLASSIFIED 
 
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 2003ROME01957 - Classification: UNCLASSIFIED