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Cablegate: Pa Rejects Usaid Wheat Flour Donations

VZCZCXRO1332
OO RUEHROV
DE RUEHJM #0493/01 0811033
ZNR UUUUU ZZH
O 211033Z MAR 08 ZDK PER MULTI SVC
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0930
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY

UNCLAS SECTION 01 OF 02 JERUSALEM 000493

SIPDIS

SENSITIVE
SIPDIS

NEA FOR FRONT OFFICE; NEA/IPA FOR
GOLDBERGER/SHAMPAINE/STEINGER;
PLEASE PASS TO USAID FOR ME/MEA:BORODIN/SEIFERT AND FOR
DCHA:HESS/GOTTLIEB/NOVICK/BORNS

E.O. 12958: N/A
TAGS: ECON EAGR EAID KWBG PHUM IS
SUBJECT: PA REJECTS USAID WHEAT FLOUR DONATIONS


JERUSALEM 00000493 001.2 OF 002


1. (SBU) Summary: The PA Ministry of Health (MOH) informed
the World Food Program (WFP) and USAID on March 17 that
Palestinian law requires that wheat flour processed more than
six months prior is not suitable for consumption, and
therefore that USD 7.2 million of USAID-donated wheat flour
in West Bank/Gaza warehouses could not be distributed and
would need to be removed or destroyed. WFP notified the MOH
in writing that the wheat flour was fit for human consumption
and that if the six-month rule is imposed, WFP will not be
able to receive any in-kind donations and will have to stop a
major part of its operation in the West Bank and Gaza (WB/G).
In response, Minister of Health Al Mughli notified WFP on
March 19 that the six-month expiration was compulsory given
"storage conditions within the territories" and therefore the
"expired goods are not suitable for consumption." The
Minister instead requested that the WFP advocate on the PA's
behalf with the donor community for cash donations in lieu of
in-kind contributions. The Consul General has spoken to PM
Fayyad, who has intervened to block destruction of the wheat.
USAID, WFP and PA Ministry officials will meet on March 24
to discuss a way forward. End Summary.

PA Rejects USAID-Supplied Flour
-------------------------------

2. (U) On March 11, the Ministry of National Economy
inspected a WFP warehouse in Nablus and found the wheat flour
stored inside to have been processed more than six months
prior. The MOH on March 17 informed WFP that the PA policy
stipulating that wheat flour must be distributed within six
months of production would be applied to humanitarian
shipments, including USAID in-kind food commodities. As a
result of this decision, an estimated 22,900 metric tons of
USAID-donated wheat flour - worth approximately USD 7.2
million - would have to be shipped out of WB/G or destroyed.

3. (U) On March 17, WFP Country Director Christine van
Nieuwenhuyse wrote to Minister of Health Al Mughli asserting
that the wheat flour was "definitely fit for human
consumption." Nieuwenhuyse noted that USAID is by far the
largest donor to WFP programs in WB/G and that it would be
impossible for USAID, or any other donor, to make in-kind
contributions that meet the six-month deadline for
distribution. If the six-month rule is enforced,
Nieuwenhuyse wrote, WFP would have to stop "a major part" of
its work in WB/G, and food fit for human consumption will be
returned to the U.S., "while the most vulnerable people in
(WB/G) will be going hungry." (Note: Since 2007, USAID has
supported the PA with in-kind wheat flour commodity
assistance worth USD 19.8 million and USD 7.9 million in cash
for commodity purchases. End note.)

4. (U) On March 19, Al Mughli replied to WFP that the
six-month expiration was compulsory given "storage conditions
within the territories" and must be applied to humanitarian
food shipments. The Minister asserted that the wheat flour
in question is "not suitable for consumption." Noting that
the ruling made in-kind wheat flour contributions impossible,
the Minister requested that the WFP instead advocate on the
PA's behalf with the donor community for cash donations in
lieu of in-kind contributions. Alternatively, Al Mughli
suggested that WFP provide in-kind donations of wheat,
instead of flour, so that "flour may be produced locally
using the national formula of fortification." According to
WFP contacts, the Ministry of Health then ordered the wheat
flour in question to be destroyed.

PM Fayyad Blocks Destruction of Flour
Ministries to Discuss with WFP on 3/24
--------------------------------------

5. (SBU) According to UN contacts, on March 19, Prime
Minister Fayyad blocked the destruction of the wheat flour.
As of March 20, no USAID-supplied wheat flour supplies have
been destroyed by the PA. However, warehouses containing
USAID wheat flour remain closed in Nablus, Jenin, Hebron, and
Bethlehem.

6. (SBU) The Consul General raised the issue with Fayyad on
March 20 and noted that application of the six-month rule to
humanitarian shipments would almost certainly rule out future
food support from the U.S. While the PM expressed concern
that it would be difficult to treat U.S. wheat flour
differently from other suppliers, he agreed to review the
situation. As a result of the PM's intervention, the
Ministries of Health and Planning will meet with USAID and
WFP officials on March 24 to further discuss the situation.

JERUSALEM 00000493 002 OF 002

7. (U) Copies of the WFP and MOH letters are available on
ConGen Jerusalem's unclassified intelink site at:
http://www.intelink.gov/communities/state/pal econ

8. (U) This cable has been cleared by USAID WB/G.
WALLES

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