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Cablegate: Vietnam Ag Exports to Iraq

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 HANOI 002254

SIPDIS

STATE FOR PRM, USAID/FFP/EB, IO, EAP/BCLTV

USDA FOR USDA/FAS/CMP & FAA

E.O. 12958: N/A
TAGS: PREL EAGR ECON EFIN IZ VM UNSC
SUBJECT: VIETNAM AG EXPORTS TO IRAQ

REF: (A) Hanoi 00829
(B) Hanoi 01766
(C) Hanoi 2240

1. This is an action request -- see Paragraph 10.

2. SUMMARY: As noted in Reftels, Vietnam is very
interested in continuing its agricultural exports to
Iraq under the Oil-for-Food (OFF) program, and
whatever replaces the OFF program. Vietnamese
contacts, ranging from the Prime Minister to various
state-owned companies, have contacted Post requesting
support and guidance. Post also requests confirmation
that two Iraqi-Vietnam joint ventures in Vietnam have
been authorized to proceed. END SUMMARY.

3. Over the past five years, Iraq has become a very
important market for Vietnam. In 2002, Vietnam
exported more than $800 million of ag commodities to
Iraq, including 871,000 mt of rice, about 60,000 mt of
milk powder, and 15,000 mt of tea. Ref c noted Prime
Minister's request to Ambassador on September 1 for a
quick resumption of tea exports, a theme also
elaborated by Vietnamese Ambassador to Iraq on
September 4 (septel).

4. RICE: Vietnam Northern Food Corporation (Vinafood
1) invited Agatt and AgSpec to a meeting on August 27
to discuss their concerns regarding a new shipment of
rice to Iraq. Vinafood said the June 2003 rice
shipments (Ref a) under OFF's Phase 12 round were
successfully completed, and that it had recently
signed a contract to supply 60,000 metric tons of rice
under OFF's Phase 13. However, Vinafood is concerned
that it was not clear which agency (UN or private
sector) would be inspecting and documenting arrival of
the rice at the Umm Qasr port. (As noted in REF A,
that was also a concern with the earlier shipment.)
Vinafood said COTECNA, a private sector inspection
company, handled the inspection duties for the June
shipment.

5. MORE RICE: In addition to the 60,000 metric tons
that was recently reconfirmed, Vietnam had an old
contract to supply 250,000 metric tons of rice to Iraq
(Ref a). Vinafood asked if the OFF program would be
requesting the remaining 190,000 metric tons.

6. SUGAR / BAGS: Before the war, Vinafood signed
contracts to supply 10,000 metric tons of sugar and
thousands of plastic bags to Iraq. Those items are
now warehoused, waiting for further shipping
instructions.

7. AFTER OFF?: Vinafood also requested information on
how Iraqi food imports would be handled following the
end of the OFF program. Officials expressed a hope
that the Iraqi ag market would be open to all
suppliers.

8. JOINT-VENTURES: In August 2001, Vietnam (Vinafood
1) and Iraq (Iraqi Grain Board) announced an agreement
to establish a rice processing joint venture company
in Can Tho province. The rice mill would have an
annual capacity of 200,000 metric tons, with the goal
of producing high-quality rice for export to Iraq.
The joint venture was proposed to last for 50 years,
and have a total investment capital of $12 million
($6.6 million from Iraq and $5.4 million from
Vietnam). In 2002, the Vietnamese government
(Ministry of Planning and Investment and the Office of
the Prime Minister - standard practice for projects
over $10 million) approved the project. Another joint
venture in Phu Tho province, handles tea processing;
MFA officials told Ambassador that this project was
funded under repayment of Vietnamese debts to Iraq and
had been re-approved by the CPA (septel).

9. PROCEED?: According to Vinafood, the rice milling
project was similarly authorized to proceed at a June
meeting in Jordan with "Dr. Yusef," formerly of the
Iraqi Grain Board and now a Ministry of Trade
official. (Vietnamese Ambassador to Iraq Khai
separately told Ambassador September 4 that Ambassador
Robin Raphel had approved this project continuation
"two months ago.") Vinafood officials said land for
the rice mill had been allocated, and the next step
would be to buy milling equipment via an open and
international tendering process. Equipment bids, from
international suppliers, are due on September 16. The
mill is expected to open in August 2004. Vinafood
officials noted that the Iraqi funds to buy the
equipment were already deposited in a Vietnamese bank
account.
10: Action request: Please clarify issues regarding
Phase 13 shipments, Iraq's food import tendering
system, and the validity of the Iraqi-Vietnamese joint-
ventures.
BURGHARDT

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