US embassy cable - 03ROME2662

UNCLAS  ROME 002662 
 
SIPDIS 
AIDAC 
 
FROM U.S. MISSION IN ROME 
 
SENSITIVE 
 
THE HAGUE FOR AMBASSADOR SOBEL 
STOCKHOLM FOR AMBASSADOR HEIMBOLD 
STATE FOR D/S ARMITAGE, U/S LARSON, AS/SA ROCCA, AS/PRM 
DEWEY, PRM/P, EUR/WE, EUR/NE, IO/EDA WINNICK, E FOR CPENCE 
USAID FOR A/AID NATSIOS, AA/DCHA WINTER, AA/AFR, DCHA/FFP 
LANDIS, PPC/DP, PPC/DC 
USDA/FAS FOR U/S PENN, CHAMBLISS/TILSWORTH/GAINOR 
GENEVA FOR RMA AND NKYLOH/USAID 
BRUSSELS FOR USAID PLERNER AND PRM REP 
USUN FOR MLUTZ 
NSC FOR JDWORKEN 
OMB FOR TSTOLL 
 
E.O.  12958:  N/A 
TAGS: EAID, EAGR, AORC, PREF, KUNR, WFP, UN 
SUBJECT:  "Donneybrook" between India and several European 
donors over "twinning" at the WFP Executive Board's Annual 
and Second Regular Sessions, Rome, May 28 - June 3, 2003 
 
REF: (A) 01 ROME 5624, (B) ROME 00007 
 
SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY. 
NOT SUITABLE FOR INTERNET POSTING. 
 
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SUMMARY 
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1. (SBU) At two WFP Executive Board sessions (May 29 and 
June 2), the Netherlands and Sweden criticized India and by 
inference South Africa, Eritrea and China (WFP emerging 
developing country donors) for contributing to WFP while 
failing to adequately address hunger at home.  The Indian 
ambassador gave an eloquent rebuttal reproduced below, and 
both non-traditional donors and recipient nations round the 
table heaped scorn on the Dutch and the Swedes. Given 
unprecedented food aid needs globally, the United States has 
strongly encouraged WFP's establishment of procedures for 
"twinning" between those non-traditional donors who have 
food stocks but cannot pay for transport and those donors 
who are able to cover these costs. This major diplomatic 
gaffe by the Dutch and the Swedes has brought the matter to 
center stage. It is now time for the U.S. and our WFP 
colleagues to put our creative hats on and make "twinning" 
work. End summary. 
 
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Background 
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2. (U) Per ref A, India in October 2001 announced its 
intention to donate one million tons of wheat through WFP 
for Afghanistan. More recently, India has offered 50,000 
metric tons of wheat for Iraq and offered to pay shipping 
costs to Um Qasr. Both donations have however run into 
Government of India difficulties to pay full cost recovery 
(FCR) i.e., internal transport, shipping and handling, 
direct support costs, other direct operational costs, 
indirect support costs presently fixed at 7 percent, etc. At 
the Annual Board's discussion on WFP's Financial Policies 
(May 29), the Indian delegate commented that FCR, as 
presently structured, inhibited developing countries who 
wanted to donate to WFP Appeals from easily doing so. 
 
3. (SBU) Both Sweden and The Netherlands saw meeting hunger 
needs worldwide as the duty of OECD countries who were 
obligated to address confirmed needs with appropriate aid 
commitments (a variation on the mantra that all OECD members 
are "obligated" to commit 0.7 percent of their GDP to 
meeting the needs of developing countries). But they then 
went further. India, South Africa, China, and Eritrea would 
be better off, they opined, devoting their resources to 
resolving their own domestic hunger problems rather than 
seeking to become WFP donors. 
 
--------------------------------------------- -- 
Intervention of the Indian Ambassador on June 2 
E 
 
--------------------------------------------- -- 
 
4.  (SBU) On the evening of June 2, under "other business" 
the Indian Ambassador to the Rome UN Organizations, H.E. 
Himashal Som addressed the Board as follows (text of the 
intervention): 
 
(i) (SBU) "Mr. President, at the outset, I would like to 
apologise to you because as much as I wish to be brief, due 
to the fundamental importance of the issue that I will be 
speaking about, I will take a bit of this august assembly's 
and your precious time. I seek your kind indulgence. 
 
(ii) (SBU) In the past few days, there have been, for my 
Delegation, some extremely distressing developments, that 
throw into question the basis of our relationship - indeed, 
the relationship of many developing countries like us - with 
WFP.  At the Annual Session of the Executive Board last 
week, some members stated, first obliquely during the 
discussion on your Annual Report, and then - as if to affirm 
that this is their considered position - during the 
deliberations on financial issues, that WFP should be 
selective in accepting donations from members.  Countries 
must first ensure adequate food to their own populations, 
they said, before they can presume to join the donors club. 
When India - supported by several other countries including 
the United States, the Russian Federation and some 
developing countries - said that this was a surprising new 
development in WFP - and something that was outside its 
competence as a humanitarian organization - the members in 
question reiterated their stance.  My delegation finds this 
development pernicious and fraught with serious consequences 
to the WFP in particular and to the ECOSOC system in 
general. 
 
(iii) (SBU) Mr. President, you are aware that the Executive 
Director, with full support of the Board, from Day One has 
spoken about the imperative of extending the donor base of 
WFP, about leveraging benefits for the poor, about garnering 
resources from everywhere and anywhere to feed the hungry 
children of the world.  Broadening the resource base of WFP 
in order to meet the increasing need for humanitarian 
assistance is one of the most important objectives of the on- 
going review of the financing policy.  The entire membership 
of WFP has participated in this exercise and encouraged the 
Programme to explore avenues to mobilize additional 
resources so as to extend its work to cover larger numbers 
of needy people.  It now appears, however, that some 
traditional donors are having second thoughts about 
expanding WFP's donor base and about permitting entry into 
what they consider as an elite donors club with restricted 
membership.  My Delegation regards this as a totally 
unwelcome development, creating by implication, as it would, 
if successful, a division of the WFP between the rich and 
the poor. Indeed, I would go further: we are strongly 
critical of such expressions which perpetuate staticism and 
vitiates against progress through means that we regard as 
blatantly discriminatory. 
 
(iv) (SBU) Mr. President, never, to the best of my 
Delegation's knowledge, has it ever been said in the noble 
assemblies that constitute the ECOSOC family, that there 
should be distinctions between sovereign and equal members 
on the basis of degrees of wealth.  Never before has it been 
suggested that the developing nations cannot be donors 
because they have problems of development.  Yes Sir, India 
has problems of food insecurity, but India is also one of 
the great success stories of the Green Revolution.  From 
being a country periodically visited by famines, India today 
provides on an average 10 - 20 million tonnes of food grain 
surplus annually, to have a stockpile of around 50 - 70 
million tonnes.  And this breakthrough in production is not 
confined to food grains only - it also applies to fruits, 
vegetables and milk. 
 
(v) (SBU) Anyone who knows the least bit about development 
economics, will tell you that the problems of production in 
a developing country are completely different from the 
problems of distribution.  And these problems are compounded 
when you have to reach food to a billion people spread over 
3.3 million square kilometers in hundreds of cities and 
towns and more than half a million villages.  It is a 
problem linked to infrastructure, roads, silos and storage, 
distribution depots and to state financing for the public 
distribution system, as well as individual resource 
capacities of a large section of the population who are 
unable to buy food at market prices.  It is indeed a mammoth 
problem - before which the problems of production, which can 
be enhanced and indeed has been so done, through better 
seeds, better agricultural practices, better irrigation and 
improved agricultural financing, pale into insignificance. 
It is perhaps easier to produce more food than to distribute 
this equitably.  Indeed the problems of distribution - hence 
of food insecurity - have nothing to do with food surplus. 
 
(vi) (SBU) You may be aware that India has one of the 
largest public distribution systems in the world supplying 
18 million tonnes of grain annually at affordable prices to 
180 million families through a distribution network of half 
a million outlets.  In addition, 15 million of the poorest 
families are provided food grains at highly subsidised 
rates, in our effort to create a hunger-free India.  The 
Government has also ear-marked 5 million tonnes of grain for 
food for work programmes and several schemes are in place to 
provide a safety net for the weakest sections of society. 
 
(vii) (SBU) Mr. President, India today has sufficient food 
grain resources to share it with those, who like us in the 
past, do not have enough food.  In doing so, we are moved by 
fundamental considerations which are the essence of our 
democracy and our foreign policy.  We believe that the 
social and economic problems of the world are indivisible, 
that hunger in any one country affects us all - 
individually, as nations, and globally, as human beings. 
 
(viii) (SBU) Today, I am proud to inform this Assembly, that 
 
there is a greater outflow of economic assistance from India 
than is received from abroad.  For that matter, India 
(which, incidentally, in terms of GDP of around USD 3,000 
billion, according to the World Bank is the fourth largest 
economy in the world), has never been aid-dependent.  As the 
U.S. Representative correctly pointed out last week, less 
than 3 percent of all our total development resources have 
come from external sources.  Indeed even at its height, 
external assistance was less than 1 percent of our GDP.  We 
are, Mr. President, most grateful for this support, at a 
particular phase of our growth and at times of crises, but 
now, I am happy to inform you, our Parliament feels that we 
can graduate out of even this limited relationship and step 
up our own aid to developing countries, especially those in 
Africa and in our neighbourhood.  Towards this objective, we 
are already in the process of pre-paying our external debt 
to multilateral agencies and identifying several other 
bilateral loans for closure, except for a few from countries 
who have been traditionally most supportive and least 
conditional.  South - South Cooperation has been declared in 
our Parliament as one of our most important foreign policy 
objectives and we are committed to spend more and more to 
help our brothers in Africa and in our neighbourhood.  This 
is no empty promise: in the last month we had the visits of 
the leaders of Zambia and Mozambique to India and both of 
them have gone back with pledges for very substantial 
credits and technical assistance. 
 
(ix) (SBU) Pertinently, I would like to point out that in 
its Consolidated Appeals for donations, the UN makes no 
distinction among categories of donors.  It does not 
classify donors as "traditional" or "emerging"; nor does it 
lay down criteria for acceptance of donations.  Other UN 
agencies too who depend on voluntary funding, do not 
restrict donations to certain categories of members.  For 
example, IFAD (the International Fund for Agricultural 
Development), which depends on voluntary funding, obtains 
more than 20 percent of its resources from developing 
countries - a fact which the President stresses with pride. 
IFAD members have never said "no" to the USD 15 million 
contribution from India on the ground that India doesn't 
have sufficient financial resources. 
 
(x)  (SBU) The recent developments in WFP leave us very 
perplexed.  Is the attempt to keep out so-called "emerging 
donors" part of a concerted strategy of a few countries - in 
which case it will have to be countered appropriately at 
every fora, at the Chancelleries round the world, at the 
various U.N. specialised bodies, and if required, at the 
ECOSOC itself - or is this the product of local initiatives 
by some who wish to preserve WFP as their exclusive domain? 
Forgive me for being so forthright, but what we have heard 
in statement and implication, in the past few days - perhaps 
we should have noticed veiled signals earlier - has been 
deeply disturbing. 
 
(xi) (SBU) Let us remember that the donors' club of WFP is 
not like the World Trade Organization or the World Bank, 
 
participation in which carry very obvious benefits.  Do you 
seriously believe that by rejecting donations from 
developing countries, you can influence policy in those 
countries?  Do you think India would ever accept conditions 
to a donation that we are offering?  We recognise the 
advantages, in terms of transparency and assuredness, of 
channelling our donations through WFP, but we must remember 
that both in India and in several receiving countries there 
are strong lobbies in favour of the bilateral route. It has 
been my constant effort to advocate the WFP route and in 
this, I have received fullest support of the Executive 
Director and his staff who have appreciated our problem in 
meeting the principle of full cost recovery. 
 
(xii) (SBU) I would like to highlight the bizarre nature of 
some donors' objections by citing a parallel example.  India 
has the second largest pool of scientific and technical 
manpower in the world today.  Our capacity in the area of 
Information Technology is widely acknowledged.  As a group, 
persons of Indian origin are in the highest income bracket 
of all communities in the USA.  I wonder whether the U.S. 
would turn back Indian professionals on the ground that many 
in India are still illiterate - in the same logic as is 
being advocated here that since India has food security 
problems, it should not be allowed to be a food donor. 
 
(xiii) (SBU) I have taken a lot of your precious time - but 
I did so because I felt that if the logic of the arguments 
expounded by some members against countries like India 
becoming donors to the WFP were to be accepted, it would 
lead to serious polarisation and politicisation within the 
WFP.  This is a matter which can tear WFP apart.  It would 
lead to unseemly and fractious debate that would only divert 
our attention from our objective of feeding the poor and 
hungry.  It would be a day of infamy if WFP, moved by 
considerations advocated by the few, would shut WFP's doors 
to new donors like India.  And, Mr. President, for what 
reason - indeed what is our sin - that we offered to help 
WFP with food donations? 
 
(xiv) (SBU) Mr. President, through you I would like to 
assure our most dynamic WFP Executive Director that we have 
no intention to weaken the WFP.  On the contrary, we want to 
strengthen it by joining in with our small support.  Mr. 
President, we in the developing countries - we in Africa and 
Asia - may have hungry stomach but we have hearts full of 
compassion.  We may ot have much financial resources,  but 
we have te greatest resource of all - love and self- 
respect.  We may be poor, but we are taught by our 
civilisations to share what little we can spare, with those 
who have even less.  The WFP, in this globalised world, has 
been an inclusive institution, imbued with the most noble 
objectives.  Let us strive together to achieve our sole goal 
- to feed the world's hungry." 
 
End text of H.E. Indian Ambassador Som's intervention. 
 
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Comment 
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5. (SBU) Given unprecedented food aid needs globally, the 
United States has strongly encouraged WFP's establishment of 
procedures for "twinning" between those non-traditional 
donors who have food stocks but cannot pay for transport and 
those donors who are able to cover these costs. This major 
diplomatic gaffe by the Dutch and the Swedes has brought the 
matter to center stage. It is now time for the U.S. and our 
WFP colleagues to put our creative hats on and make 
"twinning" work.  Hall 
NNNN 
	2003ROME02662 - Classification: UNCLASSIFIED