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Cablegate: Iraq: Termination of Fao's Activities Under "Oil-

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

UNCLAS ROME 005549

SIPDIS


FROM U.S. MISSION IN ROME

BAGHDAD FOR AMBASSADORS RAPHEL, KENNEDY AND JLAPENN
USUN FOR AMBASSADOR NEGROPONTE AND MLUTZ
STATE FOR PRM A/S DEWEY, PRM/ANE/EUR/SE, IO A/S HOLMES,
EUR/NE, EUR/WE, SA/PAB, IO/EDA SKOTOK
USDA/FAS FOR U/S PENN, ETERPSTRA, MCHAMBLISS, RTILSWORTH AND
LSCHATZ
USAID FOR AA/DCHA WINTER, AA/ANE, DCHA/OFDA, D/DCHA/FFP
LANDIS
JOINT STAFF FOR JE/J4/J5
NSC FOR EABRAMS, SMCCORMICK, STAHIR-KHEDI AND JDWORKEN
GENEVA FOR RMA LYNCH AND USAID NKYLOH
BRUSSELS FOR PLERNER

E.O. 12958: N/A
TAGS: EAID AORC EAGR PREF IZ FAO
SUBJECT: IRAQ: TERMINATION OF FAO'S ACTIVITIES UNDER "OIL-
FOR-FOOD" PROGRAM AND HANDOVER TO THE COALITION PROVISIONAL
AUTHORITY

1. Summary: In UN Security Council Resolution 1483
(adopted May 22, 2003), the Security Council requested the
Secretary-General to: (a) continue the exercise of his

SIPDIS
responsibilities under resolutions 1472 (2003) and 1476
(2003) for a period of six months following the adoption of
resolution 1483 (2003); and (b) terminate within this time
period, in the most cost-effective manner, the ongoing
operations of the "Oil-For-Food" (OFF) Program, both at
headquarters level and in the field, transferring
responsibility for the administration of any remaining
activity under the Program to the Coalition Provisional
Authority (CPA). FAO has informed US Mission/Rome that they
effectively completed termination and handover of all
activities under OFF in Iraq to the CPA within the November
21, 2003 deadline. End summary.

----------------------
Specific Actions Taken
----------------------

2. FAO has informed US Mission/Rome that the following
specific actions have been taken:

a) OFF activities in the northern governorates (13 percent
account) -- The total confirmed allocation made to FAO for
the implementation of the agriculture program in northern
Iraq since 1997 is USD 776 million, of which the cumulative
delivery amounts to USD 580 million. A total of USD 166.8
million worth of assets, facilities and contracts was handed
over and transferred to the CPA through the appropriate
legal mechanisms in place. Uncommitted funds (approximately
USD 191 million) shall be returned to the Development Fund
for Iraq;

b) Special Projects funded under the OFF Program (59 percent
account) -- Upon the request of the CPA, FAO also
implemented new projects in southern and central Iraq for an
approximate value of USD 238 million. These projects
involved the procurement of a large quantity of urgently
needed inputs to supplement those included in the list of
contracts previously placed by the former Government of
Iraq. Through these projects, USD 185 million worth of
contracts were issued, including USD 45 million worth of
inputs delivered in time for the autumn cereal-planting
season. USD 140 million worth of inputs were not delivered
fully, and as agreed with the Authority, contracts have been
handed over to the CPA for follow-up. Uncommitted funds
(approximately USD 50 million) shall be returned to the
Development Fund for Iraq;

c) Administrative and operational support costs (2.2 percent
account) -- Pursuant to recent directives from the UN
Secretary-General, assets purchased with funds from the 2.2

SIPDIS
percent account that would not be required by the United
Nations for its activities relating to Iraq, either at the
headquarters or in the field, should be transferred to the
CPA for the benefit of the people of Iraq. Accordingly, FAO
is reviewing the inventories of all assets purchased with
2.2 percent account funds, to determine those that should be
transferred to the CPA by December 31, 2003.

--------------------------------------------- ---------
FAO's Responsibilities for Contracts Negotiation under
Resolutions 1472, 1476 and 1483
--------------------------------------------- ---------

3. As of November 21, 2003, 196 contracts for an amount of
USD 711 million, placed by the former Government of Iraq for
agriculture inputs and equipment were renegotiated and
amended by FAO in accordance with the above-mentioned
resolutions. This represents over 95 percent of the
prioritized contracts that were potentially amendable by
FAO.

--------------------
FAO Presence in Iraq

--------------------

4. International staff -- In line with instructions from
the FAO Director-General and those of UNSECOORD, all FAO
international staff have been relocated to Amman, Rome and
home stations. Contracts of international staff will not be
extended beyond December 31, 2003, except for a small core
team that will be responsible for follow-up actions pursuant
to formal handover of the Program.

5. National staff -- All national staff have been
officially informed that their contracts will not be
extended beyond December 31, 2003. "Non-essential" staff
were requested not to report to duty as of November 21,
2003, and a core group of 40 staff members (20 in the
northern governorates and 20 in the center/south) have been
requested to continue general support activities needed for
the orderly termination after November 21. This transition
team has been instructed to work exclusively on handover and
termination related activities, and not to engage in any
operations under OFF.

-------
Comment
-------

6. In US Mission's view, FAO performed its contracting
function, particularly over the past several months, in a
professional and dedicated manner. The contractual
renegotiation process indeed contained "glitches," some of
which were beyond FAO's control. Moreover, FAO was overly
sanguine about its ability to initiate contracting for some
vital inputs, e.g., chemical fertilizer(s) as a case in
point, which were in tight supply internationally and needed
to be delivered in a timely manner. But in spite of the
magnitude of the exercise, compounded by the drastic UN
staff downsizing in the aftermath of August 19, FAO was able
to meet the challenge of an orderly termination and
effective handover of its OFF portfolio to the CPA. And, as
the baton changes hands, it needs to be said that the Iraqi
people have been indeed well served these past six difficult
months by the UN's FAO.

Hall


NNNN
2003ROME05549 - Classification: UNCLASSIFIED

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