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Cablegate: Wfp's View On the Present Status of Iraq's Public

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

UNCLAS ROME 002768

SIPDIS


SENSITIVE

FROM U.S. MISSION IN ROME

BAGHDAD FOR AMBASSADOR NEGROPONTE AND USAID DIRECTOR
STATE FOR NEA/IR AMBASSADOR RAPHEL, IO A/S HOLMES, IO/EDA
USDA/FAS FOR U/S PENN, ETERPSTRA, MCHAMBLISS, RTILSWORTH AND
LSCHATZ
USAID FOR ADMINISTRATOR NATSIOS, AA/DCHA WINTER, AA/ANE
KUNDER, DCHA/OFDA, D/DCHA/FFP LANDIS
JOINT STAFF FOR JE/J4/J5
NSC FOR JMELINE

E.O. 12958: N/A
TAGS: EAID EAGR AORC IZ WFP IRAQI FREEDOM
SUBJECT: WFP'S VIEW ON THE PRESENT STATUS OF IRAQ'S PUBLIC
DISTRIBUTION SYSTEM

REF: (A) ROME 00973, (B) ROME 00936

SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY.
NOT SUITABLE FOR INTERNET POSTING.

-------
Summary
-------

1. (SBU) US Mission/Rome met with WFP senior officials on
Iraq food commodity operations on June 27 and July 2. If
current ration levels are maintained, the Iraq Public
Distribution System (PDS) is likely to experience shortages
in a number of commodities throughout the coming months,
according to WFP's June 25 "PDS Pipeline Projection." There
will be little or no buffer stock built up within Iraq as of
July 1. Although the Iraqi Ministry of Trade has engaged in
procurement of certain food commodities in recent months,
information currently available indicates that just three
Letters of Credit have been issued, suggesting that the
schedules of listed arrival dates may be somewhat
optimistic. Moreover, the management, structure and systems
of the Ministry of Trade appear to have been disrupted over
the course of the past year. In WFP's view, an overhaul of
management and systems will be required for effective
control of the PDS to be maintained. End summary.

----------
Background
----------

2. (U) More than a year after the recent war and the end of
sanctions, Iraqis continue to depend heavily on the public
food distribution system (PDS). The chronically bad economic
situation has particularly affected the education and health
care sectors, placing children, women and the chronically
sick most at risk.

3. (U) In the immediate aftermath of the war in Iraq in
2003, WFP was instrumental in preventing the collapse of the
vital PDS supply chain, transporting 2.1 million metric tons
of food commodities into the country under what was WFP's
largest relief operation ever.

4. (U) At the end of 2003, CPA/Ministry of Trade (MoT)
officially requested WFP to assist with the procurement and
delivery of food for the PDS to mid-2004 (or until delivery
of commodities was completed). Activities were defined
through a tripartite Memorandum of Understanding signed by
CPA, MoT and WFP in January 2004, and included: (a)
procurement of commodities for the PDS; (b) renegotiation of
some contracts already amended under UN SCR 1483; and (c)
technical support and capacity building for MoT staff.

5. (SBU) Recent events in Iraq indicate a deterioration of
security conditions which, in turn, has led to an increase
in humanitarian needs in crisis areas. Food, however, does
not appear to be an issue. Reports received by WFP from all
18 Iraqi governorates indicate that PDS food distribution to
all Iraqis continues despite shortages.

--------------------------------------------- ------------
Status of 2004 WFP commodity purchases to support the PDS
--------------------------------------------- ------------

6. (U) WFP concluded on 1 April the international
procurement of 1.6 million metric tons (mts) of food, as
follows: wheat, 897,500 mts; rice, 222,500 mts; vegetable
ghee, 121,500 mts; sugar, 201,700 mts; tea, 24,000 mts;
milk, 58,600 mts; salt, 19,670; infant formula, 4,800 mts;
soap, 13,000 mts; and detergent, 56,700 mts. Total,
1,619,970 metric tons, valued at U.S. $581,524,041.


7. (SBU) Over 730,000 mt of commodities have been so far
delivered to all MoT warehouses in the 18 Iraqi governorates
(about 420,000 mts in June). The delivery operation is
expected to be concluded by September 2004.

--------------------------------------------- -------
WFP's analysis of the PDS pipeline and buffer stocks
--------------------------------------------- -------

8. (SBU) The latest Iraq PDS Pipeline projection produced by
WFP, dated June 25, projects shortfalls in a number of the
commodities to be distributed to the Iraqi population in the
monthly food-basket. Of critical importance over the course
of the next three months are Infant Formula, Weaning
Cereals, Pulses and Soap. Procurement of national wheat by
the Ministry of Trade is now ongoing, but projections for
future months' arrivals have not been confirmed.

9. (SBU) For example, MoT projects a total of 681,000 mts of
Oil-For-Food commodities to be delivered into Iraq during
the period June to December. The WFP Pipeline projection
shows 229,866 mts of Oil-For-Food commodity arrivals for the
same period, based on documentation received by WFP
indicating intended or actual dispatch of the commodities
and information on arrivals and discharge of vessels
carrying OFF rice and wheat.

10. (SBU) On buffer stocks, by September 1, the MoT
projection shows a 3-month buffer stock achieved for salt,
with a 2-month buffer stock achieved for milk, tea, pulses
and national wheat. WFP, on the contrary, does not believe
that a 3-month buffer stock will have been created either by
July 1 or by September 1 for any commodity.

--------------------------------------------- ----
Logistical constraints affecting the PDS pipeline
--------------------------------------------- ----

11. (SBU) In the delivery of WFP cargoes to date, a number
of operational constraints have been encountered which
directly impact on the delivery of goods to Iraq:

A. Congestion at border crossings. A heavy flow of
military/commercial transport leaving Iraq on the Turkish
border crossing has severely extended truck turn-around time
in this corridor. WFP has requested that a dedicated lane or
procedure be established to expedite the flow of trucks
designated for food commodities.

B. Security inside Iraq. The security situation in the
country, particularly in the South, has resulted in a
disruption of deliveries to central MoT warehouses. Certain
areas (e.g. Najaf, Karbala) are effectively "no go" areas,
where insecurity is so acute that truck drivers are
unwilling to deliver cargo to these locations.

C. Increase in transport prices. Fuelled in part by the
issues mentioned above, as well as an increased demand for
transport from commercial traffic, transport prices have
spiraled upwards in the course of the past month. Military
and private commercial entities are now paying a premium to
ensure sufficient transport to meet their requirements. WFP,
bound by long-term transport contracts with fixed rates
established in March, is finding its transport companies
unable to provide the contractual supply of trucks. This has
resulted in lower-than-projected dispatch rates, affecting
expected delivery of commodities for the PDS.

D. Port of Umm Qasr bottleneck. Operational, political and
security issues continue to affect the port of Umm Qasr,
rendering discharge of vessels undependable. Confused lines
of authority and control of port management have further
limited efficiency.


--------------------------------------------- -----------
MoT - Operational worries/WFP-assisted capacity building
--------------------------------------------- ---------------
-
12. (SBU) WFP contends that, within the Ministry of Trade,
the disrupted structure and a senior and middle management
with limited official authority has had a direct impact on
operations. Instructions emanating from MoT Baghdad are
often disregarded by MoT representatives at the governorate
level (this has been further exacerbated by a lack of
dependable communications within the country).

13. (SBU) On WFP-assisted/MoT capacity building, there is a
current two-month secondment exercise with WFP in Rome for a
group of ten individuals drawn from the Ministry of Trade
and the Ministry of Transport. CPA had expressed the
intention of creating a Logistics Cell within the MoT, made
up of the individuals currently undergoing this training.
However, more senior officials from the Ministry of Trade
have repeatedly stated their belief in the benefits of
continuing to procure and manage food commodities in
accordance with the systems of the past decade. In WFP's
view, it appears unlikely, therefore, that any immediate
changes will occur in the culture and management of the
Ministry of Trade as a result of the current capacity-
building activities.

--------------------------------------------- -------
WFP recommendations to address the current situation
--------------------------------------------- -------

14. (SBU) The following represent priority areas for action
in order to ensure effective management of the PDS in the
coming months:

A. Continued involvement by USG dedicated food security
personnel with the Ministry of Trade. USAID personnel
specialized in food security and commodity management should
remain intimately involved with Ministry of Trade officials
to oversee management of the PDS and its support functions.

B. Establishment of a Ministry of Trade presence in corridor
countries. The Ministry of Trade would greatly benefit from
re-establishing its coordination offices in key ports and
border crossing points, allowing for greater control of
discharge and onward transport operations.

C. Ensuring sufficient funding to continue procurement
activities. Funding must be available to ensure the
continued procurement of commodities required for the PDS.

D. Establishment of regular and effective data management
systems in Baghdad and at governorate level. A commitment
to technology and systems will be necessary to achieve
integrity of the core data used to manage the PDS. In
addition, strong oversight and mechanisms for reconciling
and addressing data inconsistencies will need to be
introduced.

E. Review of MoT procurement practices. Budgetary and
efficiency considerations will likely dictate a transition
from the current practice of procuring commodities on a CIF
(Commodity, Insurance, Freight) basis to Free on Board/Free
Carrier Alongside (FOB/FCA) contracts, resulting in cost
savings and providing MoT with increased control over the
supply chain.

F. Review and reform of PDS. The new Government of Iraq
will need to carefully examine the continued viability of
the PDS and the possibility of reforming this system to
something more sustainable in the long-term while
maintaining essential social safety nets.


G. Achievement of Buffer Stock. In order to achieve a 3-
month buffer stock of the PDS food-basket commodities by
October 1 (one month's supply plus a three-month buffer
stock), procurement of a total of approximately 1.89 million
MT of additional commodities is required.

--------------------------------------------- --------
Comment from Ambassador Hall to Ambassador Negroponte
--------------------------------------------- --------

15. (SBU) Under Jim Morris' leadership, our WFP colleagues
have shown wonderful commitment to Iraq and have
consistently been upfront and candid with the US Mission in
their assessments of what works and what needs fixing. Given
the number of emergency operations on their plate, they are
not anxious to maintain a major presence in Iraq for any
longer than absolutely necessary. On the PDS procurement-
side, the WFP "curtain" will come down by September and they
will move off the PDS procurement stage. We all need to
ensure that the turnover is smooth and the new government is
positioned to carry out this big job of keeping the PDS
functioning until a better safety net can be devised.

16. (U) Baghdad minimize considered. Hall


NNNN
2004ROME02768 - Classification: UNCLASSIFIED

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