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

UNCLAS SECTION 01 OF 05 KUWAIT 003496 
 
SIPDIS 
 
STATE ALSO PASS USAID/W 
STATE PLEASE REPEAT TO IO COLLECTIVE 
STATE FOR PRM/ANE, EUR/SE, NEA/NGA, IO AND SA/PAB 
NSC FOR EABRAMS, SMCCORMICK, STAHIR-KHELI, JDWORKEN 
USAID FOR USAID/A, DCHA/AA, DCHA/RMT, DCHA/FFP 
USAID FOR DCHA/OTI, DCHA/DG, ANE/AA 
USAID FOR DCHA/OFDA:WGARVELINK, BMCCONNELL, KFARNSWORTH USAID FOR 
ANE/AA:WCHAMBERLIN 
ROME FOR FODAG 
GENEVA FOR RMA AND NKYLOH 
ANKARA FOR AMB WRPEARSON, ECON AJSIROTIC AND DART 
AMMAN FOR USAID AND DART 
 
E.O. 12958:  N/A 
TAGS: EAID PREF IZ WFP
SUBJECT:  DART: IRAQ'S PUBLIC DISTRIBUTION SYSTEM--COMPLETION OF 
FIRST MONTH 
 
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SUMMARY 
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HAVING BEEN DISRUPTED BY THE WAR IN MARCH OF THIS YEAR, IRAQ'S 
PUBLIC DISTRIBUTION SYSTEM (PDS) RESUMED NATIONWIDE FOOD RATION 
DISTRIBUTION TO 27 MILLION IRAQI'S DURING THE FIRST WEEK OF JUNE. 
THE OVERALL CURRENT DISTRIBUTION OF FOOD AND NON-FOOD ITEMS IN 
THE COUNTRY FOR THE MONTH OF JUNE TOTALS 396,013 METRIC TONS 
(MT).  IN COORDINATION WITH THE WORLD FOOD PROGRAM (WFP), THE 
IRAQI MINISTRY OF TRADE (MOT) COORDINATED THIS FIRST POST- 
CONFLICT PDS RATION DISTRIBUTION, RELYING ON A NATIONWIDE NETWORK 
OF 44,000 FOOD AGENTS TO DISTRIBUTE THE RATIONS TO ALL IRAQI 
CITIZENS.  THE JUNE DISTRIBUTION IS GENERALLY BEING CHARACTERIZED 
AS A "SUCCESS" BY MOT OFFICIALS, WFP, AND RATION RECIPIENTS, 
DESPITE SOME RATION ITEMS MISSING FROM THE RATION BASKET.  IT IS 
ESTIMATED THAT IN 15 OF THE COUNTRY'S 18 GOVERNORATES, WHERE 
SECURITY ALLOWED FOR ADEQUATE DISTRIBUTION AND REPORTING, MORE 
THAN 98 PERCENT OF THE FLOUR/FOOD AGENTS COLLECTED THEIR MONTHLY 
ALLOCATIONS FOR DISTRIBUTION TO FINAL BENEFICIARIES.  THE PDS 
RATION DISTRIBUTION FOR JULY IS UNDERWAY WITH NO SIGNIFICANT 
PROBLEMS REPORTED.  AS OF THE BEGINNING OF JULY, WFP REPORTS THAT 
1,264,743 MT OF FOOD WERE DISPATCHED THROUGHOUT IRAQ SINCE APRIL. 
 
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BACKGROUND 
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THE DISTRIBUTION OF WHAT IS NORMALLY ABOUT 500,000 MT PER MONTH 
OF FOOD AND NON-FOOD COMMODITIES IN IRAQ RESTARTED IN EARLY JUNE 
AFTER A TWO AND ONE- HALF-MONTH DISRUPTION DUE TO THE CONFLICT IN 
THE COUNTRY.  THE SIGNIFICANCE OF THE PDS TO THE FOOD SECURITY OF 
THE IRAQI POPULATION CANNOT BE OVERSTATED.  THE RATIONING SYSTEM, 
DESIGNED BY THE FORMER REGIME, STARTED IN THE EARLY 1990S WHEN 
FOOD MARKETS WERE DISRUPTED AS A RESULT OF THE FIRST GULF WAR. 
IT EVOLVED AS THE PRIMARY SOURCE FOR DISTRIBUTED BASIC FOOD AND 
NON-FOOD COMMODITIES RECEIVED UNDER THE UNITED NATIONS OIL-FOR- 
FOOD (OFF) PROGRAM TO ALL IRAQIS STARTED IN 1996.  COMMODITIES 
WERE MOSTLY IMPORTED THROUGH THE OFF PROGRAM, THENAND THEN PARSED 
OUT THROUGH THE PDS.  THIS RATION SYSTEM IS DESIGNED TO COVER 100 
PERCENT OF THE IRAQI POPULATION WITH BASIC FOOD AND NON-FOOD 
SUPPLIES.  SIXTY PERCENT OF THE POPULATION DEPEND ON THESE 
RATIONS AS THEIR ONLY SOURCE OF FOOD.  THE SYSTEM INCLUDES A 
COMPUTERIZED REGISTRATION/RATION CARD SYSTEM--STORING INFORMATION 
ON INDIVIDUAL RATION LEVELS, STORAGE OF LOCAL AND OFF-PURCHASED 
COMMODITIES--PARTICULARLY WHEAT GRAIN--THROUGH LOCAL PUBLIC 
WAREHOUSES AND GRAIN SILOS, AND DISTRIBUTION THROUGH A NATIONWIDE 
RATION AGENT NETWORK.  UNDER THE CURRENT SIX-MONTH EMERGENCY 
OPERATION, WFP PLANS TO IMPORT APPROXIMATELY 2.2 MILLION MT OF 
FOOD COMMODITIES TO IRAQ, LARGELY TO SUPPORT THE PDS. 
 
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JUNE RATION DISTRIBUTIONS 
------------------------- 
 
JUNE IS WIDELY VIEWED AS A SUCCESS.  WFP REPORTS THAT 
APPROXIMATELY 94 PERCENT OF THE FOOD AGENTS COLLECTED THEIR 
MONTHLY ALLOWANCES FOR JUNE.  THREE GOVERNORATES--AL ANBAR, 
DIYALA, AND SALAH-AD-DIN--WERE PLAGUED BY SECURITY CONCERNS THAT 
LIKELY HAMPERED FOOD DISTRIBUTION AND HAVE LED TO UNDERREPORTING. 
INFORMATION THAT WE DO HAVE FROM  THESE THREE GOVERNORATES 
INDICATE THAT ONLY 55 PERCENT OF THE RATION ITEMS THAT SHOULD 
HAVE BEEN DISTRIBUTED WAS ACTUALLY COLLECTED BY THE FOOD AGENTS. 
THE NATIONAL AVERAGE COVERAGE RATE, NOT INCLUDING THESE 
GOVERNORATES, IS A VERY SUCCESSFUL 98 PERCENT.  IN TOTAL, REPORTS 
TO DATE INDICATE THAT 396,013 MT OF COMMODITIES HAVE BEEN 
DISTRIBUTED TO FOOD AGENTS.  AS OF THE END OF JUNE, TOTAL 
DISPATCHES TO IRAQ SINCE IMPORTS RESUMED IN APRIL, STAND AT 
1,264,743 MT.  NO MAJOR PROBLEMS HAVE BEEN REPORTED BY WFP FIELD 
OFFICES FACILITATING AND MONITORING THE DISTRIBUTION PROCESS, 
THOUGH CHALLENGES CONTINUE TO BE RELATED TO SECURITY FOR 
WAREHOUSES, SILOS, AND TRUCK TRANSPORTERS IN THE SOUTHERN AND 
CENTRAL GOVERNORATES.  THE PRINCIPAL CHALLENGE IN THE NORTHERN 
GOVERNORATES IS THE TRANSITION FROM FULL WFP ADMINISTRATION OF 
THE PDS TO LOCAL ADMINISTRATION BY NOVEMBER. 
 
THE PDS RATION CYCLE NORMALLY TAKES PLACE OVER A PERIOD OF 
APPROXIMATELY 20 DAYS.  FOR JUNE, THE RATION PERIOD CONTINUED 
THROUGHOUT MOST OF THE MONTH AND INTO EARLY JULY FOR THOSE AREAS 
WHERE SECURITY AND OTHER PROBLEMS PREVENTED COMPLETION WITHIN THE 
20 DAYS.  THE JUNE RATION, THAT IS BASED ON AVAILABILITY OF 
STOCKS, CONTAINED 9 KG OF WHEAT FLOUR, 3 KG OF RICE, 2 KG OF 
SUGAR, 0.2 KG OF TEA, 1.0 KG OF VEGETABLE OIL, 0.25 KG OF PULSES, 
0.25 KG OF SOAP, AND 0.5 KG OF DETERGENT.  INFANTS UNDER THE AGE 
OF ONE YEAR RECEIVE 3.6 KG OF INFANT FORMULA, 0.25 KG OF SOAP, 
AND 0.5 KG OF DETERGENT.  THESE QUANTITIES REFLECT AN ABSENCE OF 
ADULT MILK AND LOWER QUANTITIES OF OIL AND PULSES IN A RATION. 
THE JULY RATION MIX INCREASED FOR PULSES AND MILK POWDER, 
ALTHOUGH STILL NOT AT THE FULL RATION LEVEL. 
 
 
-------------------------------- 
ACCESS TO AND QUALITY OF RATIONS 
-------------------------------- 
 
A SERIES OF RADIO AND TELEVISION BROADCASTS FOR THE IRAQI 
POPULACE BEGAN ON MAY 30, EXPLAINING WHAT THE RATION BASKET WOULD 
CONTAIN AND WHEN RATION RECIPIENTS SHOULD GO TO THEIR REGISTERED 
FOOD AGENTS TO COLLECT THE FOOD.  THE DISTRIBUTION OF FALSE 
RATION CARDS WAS REPORTED IN SOME GOVERNORATES, AND A GENERAL 
BELIEF THAT THE RATION WOULD BE EXPANDED BEYOND PREVIOUS LEVELS, 
LED TO UNREALISTIC EXPECTATIONS IN SOME AREAS.  THESE FALSE 
RUMORS ARE ALSO EMERGING FOR THE JULY CYCLE; HOWEVER, THEY ARE 
BEING COUNTEREDCORRECTED BY MOT ANNOUNCEMENTS.  RATION RECIPIENTS 
ARE GENERALLY PLEASED TO BE RECEIVING BETTER QUALITY COMMODITIES 
WITH THE JUNE DISTRIBUTION, AS THERE HAD BEEN A NUMBER OF 
COMPLAINTS OVER THE YEARS ABOUT THE QUALITY OF RATIONS, 
PARTICULARLY RICE AND FLOUR.  RATION RECIPIENTS ARE ESPECIALLY 
PLEASED TO RECEIVE VEGETABLE OIL FOR THE FIRST TIME RATHER THAN 
GHEE.  ON THE OTHER HAND, THERE HAVE BEEN REPORTS THAT THE U.S. 
SOYBEAN-BASED VEGETABLE OIL, UNFAMILIAR TO IRAQI TASTES, IS NOT 
AS WELL LIKED AS OTHER VEGETABLE OILS.  LIKEWISE, THE HIGHLY 
REFINED WHEAT FLOUR FROM THE U.S. IS NOT AS SUITABLE AS MORE 
COARSELY GROUND WHEAT FOR MAKING FLAT BREADS BAKED BY THE TYPICAL 
IRAQI HOUSEHOLD. 
FOR THOSE BENEFICIARIES PREVIOUSLY REMOVED FROM THE PDS, THE MOT 
ESTABLISHED REREGISTRATION PROCEDURES.  BENEFICIARIES WHO HAD 
BEEN REMOVED FROM THE PDS ROLES, LOST THEIR RATION CARDS, WERE 
DISPLACED WITHIN THE COUNTRY, OR HAD CHANGES IN THEIR FAMILY 
STATUS WERE ABLE TO REREGISTER AT THEIR PRESENT LOCATION TO 
ENSURE THEIR PROPER RECEIPT OF RATION COMMODITIES.  THIS IS 
PARTICULARLY NOTEWORTHY IN THE MOST SOUTHERN GOVERNORATES, WHICH 
HAD A NUMBER OF DISENFRANCHISED IRAQIS SUCCESSFULLY REREGISTERED. 
THIS PROCESS, HOWEVER, DID NOT ALWAYS WORK AS PLANNED.  IN 
DIYALA, FOR EXAMPLE, THERE ARE AN ESTIMATED 48,000 INTERNALLY 
DISPLACED PERSONS  WEREPERSONS, MANY OF WHOM WERE NOT ABLE TO 
REGISTER TO RECEIVE THEIR JUNE RATION ON TIME.  THE DANISH 
REFUGEE COUNCIL, AN NGO PARTNERING WITH WFP, IS WORKING WITH THIS 
GROUP TO FACILITATE THE REGISTRATION PROCESS AND TO DISTRIBUTE 
THE JUNE RATIONS. 
 
--------------------------------------------- 
INCREASED COSTS TO FOOD AGENTS/OVERCHARGING 
--------------------------------------------- 
 
RATION RECIPIENTS PAY A NOMINAL FEE TO FOOD AGENTS FOR THE PDS 
RATIONS THEY RECEIVE.  THE JUNE FEE FOR THE SOUTHERN AND CENTRAL 
GOVERNORATES WAS THE EQUIVALENT OF 20 CENTS U.S.--250 IRAQI 
DINARS (ID)--PER RECIPIENT AND IN THE NORTHERN GOVERNORATES THE 
FEE WAS EQUIVALENT TO 40 CENTS U.S.  IN ORDER TO COMPENSATE FOR 
THE HIGHER TRANSPORT AND LOADING/OFF-LOADING COSTS, SOME FOOD 
AGENTS CHARGE MORE THAN THE ALLOWED RATION FEE.  FOOD AGENTS 
CHARGING 600 ID IS NOT UNCOMMON IN SOME GOVERNORATES, WITH 
REPORTS OF AGENTS CHARGING IN EXCESS OF 1,000 ID PER BENEFICIARY. 
 
THIS OVERCHARGING WAS DUE, IN PART, TO THE HIGHER TRANSPORTATION 
COSTS INCURRED BY AGENTS.   THE ALLOWANCE THE MOT PROVIDED TO THE 
FOOD AGENTS FOR TRANSPORTATION COSTS DID NOT TAKE INTO ACCOUNT 
THE INCREASING PRICE OF FUEL OR THE AGENTS MAKING RETURN TRIPS TO 
WAREHOUSES TO COLLECT FOOD THAT HAD ARRIVED AFTER INITIAL PICKUP. 
SOME FOOD AGENTS COMPLAINED THAT IT WAS NO LONGER WORTH THEIR 
WHILE TO CONTINUE WORKING WITH THE PDS.  IN RESPONSE TO THESE 
ISSUES, THE MOT ANNOUNCED THAT THE ALLOWANCE FOR AGENTS WOULD BE 
INCREASED FOR THE JULY PDS CYCLE.  FROM THE 250 ID COLLECTED FROM 
THE RATION RECIPIENTS IN THE SOUTHERN AND CENTRAL GOVERNORATES, 
FOOD AGENTS CAN NOW KEEP 50 ID IN URBAN AREAS AND 60 ID IN RURAL 
AREAS, TO OFFSET THEIR HIGHER TRANSPORTATION COSTS.  IN ADDITION, 
AGENTS ARE NOW ALLOWED TO RETAIN 50 ID PER RECIPIENT AS A PROFIT, 
UP FROM 20 ID IN JUNE.  THESE ADDITIONAL ALLOWANCES REPRESENT AN 
INCREASE OF APPROXIMATELY 240-280 PERCENT OVER THE JUNE CHARGES 
THE AGENTS WERE ALLOWED TO RETAIN.  EQUIVALENT COMPENSATION HAS 
ALSO BEEN INTRODUCED IN THE NORTHERN GOVERNORATES FOR JULY.  IT 
IS HOPED THAT THESE INCREASED AMOUNTS WILL PREVENT AGENTS FROM 
OVERCHARGING.  ENFORCEMENT OF OVERCHARGING BY MOT DID NOT OCCUR 
IN JUNE DUE TO THE MANY ISSUES INVOLVED WITH THE PDS STARTUP, BUT 
BEGAN WITH THE JULY DISTRIBUTION. 
 
 
 
ALSO, A SIGNIFICANT SEGMENT OF THE POPULATION IS SELLING PART OF 
THEIR RATION--GENERALLY WHEAT FLOUR--TO GENERATE ENOUGH MONEY TO 
PAY THEIR RATION FEES OR TO BUY OTHER FOOD COMMODITIES SUCH AS 
FRESH FRUITS, VEGETABLES, AND MEAT.  THE WFP AND MOT'S MONITORING 
AND EVALUATION UNITS CONTINUE TO MONITOR THIS TREND. 
HOWEVER, THERE IS NO INDICATION OF AN ORGANIZED, LARGE-SCALE 
DIVERSION OF FOOD AID FROM THE PDS FOR COMMERCIALIZATION IN URBAN 
MARKETS. 
 
-- ----------------------------------- 
SECURITY--THE SINGLE LARGEST ISSUE 
----------------------------------- 
 
SECURITY REMAINS A SIGNIFICANT CONCERN FOR MOT AND WFP IN MAKING 
THE PDS FULLY FUNCTIONAL.  COALITION FORCES (CF) ARE NOW 
PROTECTING MANY MOT FACILITIES IN THE SOUTHERN AND CENTRAL 
GOVERNORATES, INCLUDING WAREHOUSES AND SILOS.  MOT OFFICIALS ARE 
IN THE PROCESS OF HIRING THEIR OWN GUARD FORCE.  WORKING WITH THE 
MOT, WFP HAS PROVIDED THE COALITION PROVISIONAL AUTHORITY (CPA) 
WITH A COMPLETE LIST OF SILOS, MILLS, AND WAREHOUSES IN THE 
COUNTRY IN AN ATTEMPT TO ENSURE THAT PROPER SECURITY ARRANGEMENTS 
CAN BE MADE.  CPA IS TRAINING MOT GUARDS TO PROTECT WAREHOUSES, 
PARTICULARLY IN BAGHDAD AND AL BASRAH--TWO OF THE MAIN STORAGE 
HUBS PLAGUED BY LOOTING.  ALSO IN AL BASRAH, THE RATION 
REGISTRATION CENTER HAS BEEN BURNT AND 18 TRUCKS DAMAGED.  WFP IS 
HELPING TO GATHER LOST DATA, SUPPLY NEW COMPUTERS, AND ORGANIZE 
COMMERCIAL TRANSPORT FOR THE RATIONS. 
 
IN BAGHDAD, FOR EXAMPLE, NEARLY 500 GUARDS ARE NEEDED TO PROTECT 
RATION ITEMS IN 14 FACILITIES INCLUDING SILOS, WAREHOUSES, AND 
DISTRIBUTION CENTERS.  MANY ARE WITHOUT UNIFORMS AND EVEN FEWER 
HAVE GUNS.  IN A MID-JUNE ASSESSMENT OF SIX FACILITIES, FOUR HAD 
CF PRESENCE.  ONGOING UNREST AND THEFT AT THE AL HURRIYA 
WAREHOUSE MEANT THAT WFP WAS FORCED TO TEMPORARILY WITHDRAW ITS 
PRESENCE UNTIL CF RETURNED AND THE SITUATION STABILIZED. 
 
THE HIGHJACKING OF TRUCKS CARRYING PDS COMMODITIES, PARTICULARLY 
OVER A 150-MILE STRETCH FROM SAFWAN (JUST OVER THE KUWAIT BORDER 
TO AN NASIRIYAH) WAS QUITE PROBLEMATIC IN JUNE.  THESE 
HIGHJACKINGS HAVE BECOME INCREASINGLY VIOLENT WITH REPORTS OF 
DEATHS AND MISSING TRUCKERS.  ON A NUMBER OF OCCASIONS, THE 
KUWAIT-OWNED TRUCKS, LADEN WITH WFP FOOD, REFUSED TO TRAVEL. 
COALITION FORCES, WFP, AND TRUCKERS' REPRESENTATIVES CONTINUE TO 
WORK ON WAYS TO REDUCE THE PROBLEM.  BECAUSE THE HIGHJACKINGS ARE 
DIRECTED MORE AT NON-IRAQI TRUCKS, WFP HAS RESTRICTED POINT-OF- 
ENTRY FOR FOOD FROM KUWAIT, TO UMM QASR AND AL BASARH. 
 
----------------------------------------- 
TRANSITION OF PDS TO FULL MOT MANAGEMENT 
----------------------------------------- 
 
THE TRANSFER OF OWNERSHIP FOR PDS COMMODITIES AND PIPELINE 
MANAGEMENT FROM WFP TO MOT CONTINUES.  WFP IN KIRKUK (NINAWA 
GOVERNORATE), FOR EXAMPLE, HAS SIGNED OVER RESPONSIBILITY OF ALL 
COMMODITIES TO THE MOT, AND IS NOW IMPLEMENTING ONLY PRIMARY 
TRANSPORT, OFF-LOADING, AND MONITORING.  BOTH WFP AND MOT SIGN 
THE WAYBILLS FOR RECEIPT AT THE SILO OR WAREHOUSE, AND MOT IS 
THEN RESPONSIBLE FOR COORDINATING FOOD AGENTS' TRANSPORT AND 
DISTRIBUTIONS.  HOWEVER, WFP REMAINS ULTIMATELY ACCOUNTABLE TO 
ITS DONORS FOR ENSURING THAT THE COMMODITIES ARE DISTRIBUTED 
PROPERLY.  HENCE, WFP MAINTAINS ITS MONITORING FUNCTION. 
 
ON JULY 16, CPA PRESENTED A LETTER TO WFP, ACKNOWLEDGING THAT WFP 
AND CPA MUST MOVE QUICKLY TO TRANSFER RESPONSIBILITY FOR THE PDS 
IN THE NORTHERN GOVERNORATES OF AS SULAYMANIYAH, ARBIL, AND DAHUK 
TO IRAQI AUTHORITIES.  CPA DESIGNATED THE FOOD DEPARTMENT IN 
ARBIL AS THE APPROPRIATE LOCAL AUTHORITY, AND WFP HAS BEGUN 
IDENTIFYING CRITICAL NEEDS TO ENSURE A SMOOTH TRANSITION.  THE 
PRINCIPAL CHALLENGE IN THE NORTHERN GOVERNORATES IS THE 
TRANSITION FROM FULL WFP ADMINISTRATION OF THE PDS TO LOCAL 
AUTHORITY ADMINISTRATION BY NOVEMBER. 
 
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CONCLUSION 
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IN BAGHDAD, WFP, MOT, CPA, AND THE DART CONTINUE TO MEET 
FREQUENTLY TO ADDRESS ISSUES RELATED TO THE PDS DISTRIBUTION 
CYCLE.  IDEALLY, BEFORE THE END OF THE CURRENT WFP EMERGENCY 
OPERATION IN OCTOBER, IRAQI AUTHORITIES CAN ASSUME FULL 
RESPONSIBILITY FOR THE PDS OR FIND OTHER MECHANISMS TO ENSURE 
FOOD SECURITY IN THE COUNTRY.  SPELLING OUT THE OPTIONS FOR THIS 
AND STEPS TO IMPLEMENT A TRANSITION IS, IN PART, THE FOCUS OF A 
WORKING GROUP, INCLUDING USAID, CPA, WFP, AND THE MOT. 
 
 
 
 
 
 
 
 
 
 
 
 
                          UNCLASSIFIED