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

UNCLAS SECTION 01 OF 04 ROME 004561 
 
SIPDIS 
 
FROM U.S. MISSION TO UN AGENCIES IN ROME 
 
STATE FOR IO/EDA AND IO/S 
USDA FOR FAS/HUGHES AND REICH 
USDA FOR APHIS/GREIFER 
 
PARIS FOR UNESCO, VIENNA FOR UNVIE 
 
                       UNCLASSIFIED 
 
PAGE 02        ROME  04561  01 OF 04  201017Z 
E.O. 12958:  N/A 
TAGS: AORC EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR WFPOAORC WFPOAORC WFPOAORC WFPO
SUBJECT: FAO FINANCE AND PROGRAM COMMITTEES CONSIDER 
MEDIUM TERM PLAN FOR 2004-09 
 
 
¶1.   SUMMARY: THE FAO FINANCE AND PROGRAM COMMITTEES MET 
AT FAO HEADQUARTERS IN ROME SEPTEMBER 9-13, 2002.  THE 
MAIN TOPIC IN THE JOINT SESSION WAS THE MEDIUM TERM PLAN 
(MTP) 2004-09 AND PRIORITIZATION OF RESOURCES.  THE 
DIRECTOR GENERAL MADE A STRONG BID FOR INCREASED 
RESOURCES TO IMPLEMENT THE OBJECTIVES ENDORSED AT THE 
WORLD FOOD SUMMIT:FIVE YEARS LATER MEETING LAST JUNE, A 
BID MOST DONORS CONSIDERED UNREALISTIC.  CANADA SPARKED 
DISCUSSION WITH AN OFFER, WHICH WAS DECLINED, TO HIRE AN 
EXPERT GROUP OF CONSULTANTS TO SET PRIORITIES FOR THE 
FAO. 
 
¶2.  IN THE PROGRAM COMMITTEE MEMBERS SPLIT ALONG 
PREDICTABLE NORTH/SOUTH LINES IN SUPPORT FOR INCREASES IN 
THE VARIOUS PROGRAMS CONTAINED IN THE MEDIUM TERM PLAN. 
CAIRNS GROUP PROGRAM COMMITTEE MEMBERS TOOK THE LEAD IN A 
SUCCESSFUL EFFORT TO BOLSTER SUPPORT FOR THE PLANT-HEALTH 
STANDARD SETTING ACTIVITIES OF THE INTERNATIONAL PLANT 
PROTECTION CONVENTION (IPPC). 
 
  ¶3.  THE FINANCE COMMITTEE, OF WHICH THE UNITED STATES 
IS A MEMBER, DWELT ON THE CONTINUED DETERIORATION IN 
FAO'S FINANCES. THE FAO MAY BE FORCED TO BORROW 
EXTERNALLY BY YEAREND IF U.S. ARREARS ARE NOT REDUCED 
SUBSTANTIALLY.  THE MOST CONTROVERSIAL TOPIC WAS THE 
REPORT PRESENTED BY THE OUTGOING EXTERNAL AUDITOR WHICH 
                       UNCLASSIFIED 
 
PAGE 03        ROME  04561  01 OF 04  201017Z 
CONTAINED SHARP CRITICISM OF INTERNAL CONTROLS.  FINALLY, 
FAO WILL PUSH FOR ADOPTION OF ITS SPLIT ASSESSMENT SCHEME 
(USD/EUROS) BY THE NEXT CONFERENCE. 
 
¶4.  THE FINANCE AND PROGRAM COMMITTEES ARE TENTATIVELY 
SCHEDULED TO MEET AGAIN MAY 5-9, 2003.  THE FINANCE 
COMMITTEE WILL MEET IN AN ADDITIONAL, EXTRAORDINARY 
SESSION OCTOBER 7-8, 2002 TO REVIEW THE WORLD FOOD 
PROGRAM'S AUDITED ACCOUNTS.  END SUMMARY. 
 
¶5. COMPOSITION OF COMMITTEES DONE BY REGION 
  -------------------------------------------- 
THE FINANCE AND PROGRAM COMMITTEES ARE COMPOSED OF 
REPRESENTATIVES OF EACH REGIONAL GROUP OF MEMBER STATES. 
THE FINANCE COMMITTEE (NINE MEMBERS) WAS CHAIRED BY CHILE 
AND INCLUDED, IN ADDITION TO THE UNITED STATES, 
REPRESENTATIVES OF JAPAN, KUWAIT, PAKISTAN, SENEGAL, 
SWITZERLAND, TANZANIA, AND THE UNITED KINGDOM.  THE 
PROGRAM COMMITTEE (ELEVEN MEMBERS) WAS CHAIRED BY THE 
DUTCH PERMREP AND INCLUDED REPRESENTATIVES OF AUSTRALIA, 
CAMEROON, CANADA, CHINA, COLOMBIA, LEBANON, MALAYSIA, 
MALI, PARAGUAY AND SUDAN.  MEMBERS ARE ELECTED BY THE 
CONFERENCE FOR TWO-YEAR TERMS, AND THIS WAS THE SECOND 
MEETING FOR MOST PARTICIPANTS. 
 
¶6.   DIRECTOR GENERAL CALLS FOR MORE RESOURCES TO 
IMPLEMENT THE "INTERNATIONAL ALLIANCE" 
--------------------------------------------- ----- 
 
THE DIRECTOR GENERAL TOLD THE JOINT COMMITTEE THAT THE 
FAO FINDS ITSELF IN AN IMPOSSIBLE SITUATION: MEMBERS 
                       UNCLASSIFIED 
 
PAGE 04        ROME  04561  01 OF 04  201017Z 
STATES ACROSS THE BOARD WANT THE FAO TO DO MORE, BUT THE 
ORGANIZATION HAS NOT BEEN GRANTED INCREASED RESOURCES TO 
CARRY OUT ITS BROADER MANDATE.  THIS CREATES A ZERO SUM 
GAME; FAO MUST TAKE FUNDS FROM ONE ACTIVITY TO SUPPORT AN 
INCREASE IN ANOTHER.  HE ASKED FOR GREATER UNDERSTANDING. 
 
THE DIRECTOR GENERAL ALSO EXPRESSED CONCERN ABOUT THE 
FAO'S FINANCIAL SITUATION.  HE BLAMED U.S. ARREARS FOR 
CAUSING A CASH FLOW CRISIS.  IN ADDITION TO MORE THAN USD 
95 MILLION IN ARREARS, THE UNITED STATES GENERALLY PAYS 
ITS ASSESSMENT IN THE LAST QUARTER OF THE YEAR (ALTHOUGH 
IT IS DUE IN FULL AT THE BEGINNING OF THE YEAR.)  HE SAID 
THERE WERE NO FUNDS FOR $14 MILLION IN ANNUAL AFTER 
SERVICE MEDICAL COSTS AMONG OTHER STAFF RELATED EXPENSES. 
IF THE FAO WERE TO SPEND OBLIGATIONS UNDER THE TECHNICAL 
COOPERATION PROGRAM (TCP) MORE RAPIDLY AS URGED, IT WOULD 
BE BANKRUPT.  HE URGED ADOPTION OF THE SPLIT ASSESSMENT 
SCHEME (EUROS AND U.S. DOLLARS) TO REDUCE THE FOREIGN 
EXCHANGE RISK ASSUMED BY THE FAO. 
 
THE DIRECTOR GENERAL ALSO ACKNOWLEDGED THE SHARP 
CRITICISM LEVIED BY THE EXTERNAL AUDITORS, ESPECIALLY 
REGARDING INTERNAL CONTROLS.  FAO HAS ACCEPTED VIRTUALLY 
ALL OF THE AUDITORS' RECOMMENDATIONS AND PROVIDED THE 
FINANCE COMMITTEE WITH AN ACTION PLAN FOR IMPLEMENTATION. 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ4137 
 
PAGE 01        ROME  04561  02 OF 04  201017Z 
ACTION IO-00 
 
INFO  LOG-00   NP-00    AID-00   CEA-01   CIAE-00  COME-00  CTME-00 
      DODE-00  ITCE-00  SRPP-00  MEDE-00  EB-00    EXME-00  EUR-00 
      E-00     UTED-00  VC-00    FRB-00   H-01     TEDE-00  INR-00 
      ITC-01   L-00     VCE-00   AC-01    NSAE-00  NSCE-00  OES-01 
      OIC-02   OMB-01   OPIC-01  ACE-00   SP-00    SSO-00   STR-00 
      TEST-00  TRSE-00  USIE-00  FMP-00   DRL-02   G-00     SAS-00 
        /011W 
                  ------------------EA41A3  201017Z /38 
R 200952Z SEP 02 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC 5914 
INFO USMISSION GENEVA 
USMISSION USUN NEW YORK 
USMISSION UNVIE VIENNA 
AMEMBASSY PARIS 
USDA FAS WASHDC 2286 
 
UNCLAS SECTION 02 OF 04 ROME 004561 
 
SIPDIS 
 
FROM U.S. MISSION TO UN AGENCIES IN ROME 
 
STATE FOR IO/EDA AND IO/S 
USDA FOR FAS/HUGHES AND REICH 
USDA FOR APHIS/GREIFER 
 
PARIS FOR UNESCO, VIENNA FOR UNVIE 
 
                       UNCLASSIFIED 
 
PAGE 02        ROME  04561  02 OF 04  201017Z 
E.O. 12958:  N/A 
TAGS: AORC EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR WFPOAORC WFPOAORC WFPOAORC WFPO
SUBJECT: FAO FINANCE AND PROGRAM COMMITTEES CONSIDER 
MEDIUM TERM PLAN FOR 2004-09 
 
THE ONLY RECOMMENDATIONS REJECTED CONCERNED INCREASED 
STAFF, FOR WHICH THERE WAS NO FUNDING, AND MERGING 
INTERNAL CONTROLS (AUD) WITH EVALUATIONS (PBEE). 
 
HE ALSO DEFENDED HIS MANAGEMENT OF THE ORGANIZATION'S 
FINANCES.  IN REVIEWING PAST HISTORY, HE SAID HE HAD NOT 
BEEN GIVEN THE RESOURCES HE NEEDED TO CHANGE THE 
FINANCIAL REPORTING SYSTEM.  IN FACT, THE OVERALL LEVEL 
OF THE BUDGET HAD BEEN CUT SHORTLY AFTER HE TOOK OFFICE 
IN 1994.  DESPITE THESE OBSTACLES, HE TOOK PRIDE IN THE 
FACT THAT FAO'S ACCOUNTS HAD BEEN CONSISTENTLY APPROVED 
EVERY BIENNIUM WITHOUT ANY RESERVATIONS BY THE EXTERNAL 
AUDITORS. 
 
IN CONCLUSION, HE ASSERTED HE WAS ENCOURAGED BY THE 
RESULTS OF THE WORLD FOOD SUMMIT MEETING LAST JUNE.  IT 
HAD RAISED AWARENESS OF HUNGER PROBLEMS AND FORGED NEW 
PARTNERSHIPS.  HE WAS ALSO ENCOURAGED BY SIGNS OF 
REVERSAL IN THE LONG DOWNWARD TREND IN RESOURCES DEVOTED 
TO AGRICULTURAL DEVELOPMENT, ESPECIALLY FROM DEVELOPING 
COUNTRIES.  HE ASKED FOR THE MEMBERSHIP'S INCREASED 
FINANCIAL SUPPORT FOR FAO. 
 
¶7.  THE MEDIUM TERM PLAN (MTP) 2004-09 RENEWS FAO'S 
REQUEST FOR ADDITIONAL RESOURCES 
--------------------------------------------- ----------- 
                       UNCLASSIFIED 
 
PAGE 03        ROME  04561  02 OF 04  201017Z 
THIS DISCUSSION MARKED THE KICK-OFF OF THE BUDGET BATTLE. 
US PERMREP STATED THE U.S. POSITION WAS STILL TO SUPPORT 
ZERO NOMINAL GROWTH (ZNG) NOTING WE HAD ABSTAINED ON 
ADOPTION OF A ZERO REAL GROWTH BUDGET (ZRG) AT THE FAO 
CONFERENCE LAST NOVEMBER.  JAPAN JOINED THE US POSITION. 
(COMMENT - THE EU WAFFLED DUE TO LACK OF CONSENSUS ON A 
SINGLE POSITION, BUT GERMANY, NOT PRESENT IN THE FINANCE 
OR PROGRAM COMMITTEES, IS LIKELY TO SUPPORT US AS WELL - 
END COMMENT).  THE LATIN AMERICAN REPRESENTATIVE, CHILE, 
POINTED OUT THAT THE ADVERSE INTERNATIONAL CONTEXT WILL 
BEAR ON INCREASING THE BUDGET.  HE TOLD THE U.S. PERMREP 
PRIVATELY THAT ARGENTINA WOULD SEEK AN ADJUSTMENT OF ITS 
ASSESSMENT DUE TO ITS ECONOMIC REVERSAL.  AS IN THE LAST 
BUDGET ROUND, SEVERAL MEMBERS CALLED ON THE SECRETARIAT 
TO PRODUCE MORE THAN ONE BUDGET SCENARIO TO FACILITATE 
MORE REALISTIC PLANNING. 
 
CANADA SPARKED A LIVELY DISCUSSION IN THE JOINT COMMITTEE 
ON PRIORITIZATION WITHIN AGREED BUDGET LEVELS.  CANADA 
OFFERED TO PAY FOR A GROUP OF EXTERNAL EXPERTS TO 
EVALUATE THE MTP AND PROPOSE REALLOCATION OF RESOURCES. 
THIS WOULD AVOID UNFORESEEN SHIFTS IN RESOURCES FROM THE 
REAL GROWTH BUDGET ADVOCATED BY THE DIRECTOR GENERAL IF 
THE AGREED LEVEL, AS PAST EXPERIENCE SHOWS, WERE TO BE 
MUCH LOWER.  IT WOULD ALSO HAVE THE ADVANTAGE OF 
INCREASING MEMBER PARTICIPATION IN THE PROCESS.  HOWEVER, 
MEMBERS OF THE COMMITTEE DECIDED TO LEAVE THE PROCESS IN 
THE HANDS OF THE GOVERNING BODIES AND THE FAO 
SECRETARIAT. 
 
SIPDIS 
 
MEMBERS' OPINIONS ON PRIORITIZATION SPLIT ALONG 
                       UNCLASSIFIED 
 
PAGE 04        ROME  04561  02 OF 04  201017Z 
PREDICTABLE NORTH/SOUTH LINES.  MANY CALLED FOR A 
STRONGER REGIONAL FOCUS IN THE MTP.  DEVELOPING COUNTRIES 
SUPPORTED THE NEARLY 35 PERCENT INCREASE PROPOSED FOR THE 
TECHNICAL COOPERATION PROGRAM (TCP), FAO COUNTRY 
REPRESENTATIVES AND THE SPECIAL PROGRAM FOR FOOD SECURITY 
(SPFS). OECD COUNTRIES SPOKE ON BEHALF OF THE NORMATIVE 
PROGRAMS OF THE ORGANIZATION AND SUPPORTED INCREASES FOR 
FISHERIES AND FORESTRY.  MANY, INCLUDING THE UNITED 
STATES, WERE ESPECIALLY CONCERNED ABOUT INSUFFICIENT 
RESOURCES FOR THE INTERNATIONAL PLANT PROTECTION 
COMMISSION (IPPC).  AT CURRENT RESOURCE LEVELS EVEN 
PLANNED ACTIVITIES CANNOT TAKE PLACE. 
 
¶8.  FAO'S FINANCIAL CRISIS COULD RESULT IN EXTERNAL 
BORROWING 
--------------------------------------------- ---------- 
THE MAIN FOCUS OF THE DISCUSSION WAS ON THE EVER WEAKER 
FINANCIAL POSITION OF FAO WHICH WAS ATTRIBUTED LARGELY TO 
ARREARS OF THE "MAJOR CONTRIBUTOR."  THE U.S. TOOK THE 
POSITION THAT THE GROWING DEFICIT WAS THE RESULT OF 
EXPENDITURES EXCEEDING INCOME.  (THE EXTERNAL AUDITOR 
NODDED IN AGREEMENT.)  THE U.S. PERMREP BRIEFED THE 
COMMITTEE ON EFFORTS TO PAY ARREARS (INCLUDING THE 
CURRENT YEAR ASSESSMENT WHICH WAS DUE JAN. 1, 2002) AND 
AFFIRMED OUR GOAL TO PAY CURRENT YEAR DUES PLUS ARREARS 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ4139 
 
PAGE 01        ROME  04561  03 OF 04  201017Z 
ACTION IO-00 
 
INFO  LOG-00   NP-00    AID-00   CEA-01   CIAE-00  COME-00  CTME-00 
      DODE-00  ITCE-00  SRPP-00  MEDE-00  EB-00    EXME-00  EUR-00 
      E-00     UTED-00  VC-00    FRB-00   H-01     TEDE-00  INR-00 
      ITC-01   L-00     VCE-00   AC-01    NSAE-00  NSCE-00  OES-01 
      OIC-02   OMB-01   OPIC-01  ACE-00   SP-00    SSO-00   STR-00 
      TEST-00  TRSE-00  USIE-00  FMP-00   DRL-02   G-00     SAS-00 
        /011W 
                  ------------------EA41B5  201018Z /38 
R 200952Z SEP 02 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC 5915 
INFO USMISSION GENEVA 
USMISSION USUN NEW YORK 
USMISSION UNVIE VIENNA 
AMEMBASSY PARIS 
USDA FAS WASHDC 2287 
 
UNCLAS SECTION 03 OF 04 ROME 004561 
 
SIPDIS 
 
FROM U.S. MISSION TO UN AGENCIES IN ROME 
 
STATE FOR IO/EDA AND IO/S 
USDA FOR FAS/HUGHES AND REICH 
USDA FOR APHIS/GREIFER 
 
PARIS FOR UNESCO, VIENNA FOR UNVIE 
 
                       UNCLASSIFIED 
 
PAGE 02        ROME  04561  03 OF 04  201017Z 
E.O. 12958:  N/A 
TAGS: AORC EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR WFPOAORC WFPOAORC WFPOAORC WFPO
SUBJECT: FAO FINANCE AND PROGRAM COMMITTEES CONSIDER 
MEDIUM TERM PLAN FOR 2004-09 
 
THIS CALENDAR YEAR.  THE U.K. PERMREP PRESSED FAO TO LOOK 
AHEAD AND PREDICT THE RISK OF EXTERNAL BORROWING AND HOW 
MUCH IT MIGHT COST. 
 
¶9.  EXTERNAL AUDITOR'S REPORT SPURS FAO TO REACT WITH A 
DETAILED ACTION PLAN 
--------------------------------------------- ---------- 
THE FAO HAS BEEN STUNG BY THE LENGTHY CRITICISM IN THE 
EXTERNAL AUDITOR'S REPORT.  FOR ONCE, RATHER THAN GET 
DEFENSIVE, THEY HAVE TAKEN ACTION, ESPECIALLY TO IMPROVE 
INTERNAL CONTROLS.  (COMMENT:  A TOP ADVISOR TO THE DG, 
TOLD THE U.S. PERMREP THAT THE DG WAS WORRIED ABOUT THE 
POTENTIAL IMPACT OF THE REPORT ON PAYMENT OF U.S. 
ARREARS. END COMMENT)  THE INSPECTOR GENERAL WILL NOT BE 
EXTENDED AS HAS BEEN THE DG'S ANNUAL PRACTICE FOR THE 
LAST FIVE YEARS ALTHOUGH THE INCUMBENT HAD REACHED 
MANDATORY RETIREMENT AGE, AND THE POSITION HAS ALREADY 
BEEN POSTED ON THE FAO WEBSITE.  THE FAO SECRETARIAT 
PRESENTED THE ACTION PLAN CALLED FOR IN THE REPORT 
ACCEPTING VIRTUALLY ALL THE EXTERNAL AUDITOR'S 
RECOMMENDATIONS.  THIS INCLUDES CREATING AN AUDIT 
COMMITTEE.  IN AN ATYPICAL ROLE REVERSAL, SENEGAL 
QUESTIONED INCREMENTAL COSTS THAT MIGHT BE INCURRED BY 
CREATION OF AN AUDIT COMMITTEE. 
 
THE UNITED STATES ALSO PRESENTED COMMENTS REGARDING 
                       UNCLASSIFIED 
 
PAGE 03        ROME  04561  03 OF 04  201017Z 
RECOMMENDATIONS FOR IMPROVING ADMINISTRATION OF THE OIL 
FOR FOOD PROGRAM IN IRAQ WHICH WERE WELL RECEIVED.  ONE 
OF THE MAIN POINTS WAS THAT THE FAO MUST IMPROVE 
EMERGENCY OPERATIONS IN SITUATIONS WHERE THE GOVERNMENT 
AND OTHER INFRASTRUCTURE HAVE VIRTUALLY COLLAPSED, AS IN 
AFGHANISTAN.  THE OIL FOR FOOD PROGRAM IS THE LARGEST 
EVER ADMINISTERED BY THE FAO. 
 
¶10. SPLIT ASSESSMENT SCHEME PROPOSED TO AVOID FOREIGN 
EXCHANGE LOSSES ESTIMATED TO REACH $35 MILLION 2004-05 
--------------------------------------------- ---------- 
THE FAO SECRETARIAT PRESSED FOR A DECISION ON THIS 
"URGENT" MATTER ALTHOUGH IT WAS FOR DISCUSSION ONLY. THEY 
PROJECTED THAT, AT CURRENT EXCHANGE RATES, THE FAO WOULD 
BE IN THE HOLE $35 MILLION IF A ZNG BUDGET WERE APPROVED 
FOR THE NEXT BIENNIUM.  THE EU COULD NOT EXPRESS AN 
AGREED POSITION, BUT THE FRENCH ARE KNOWN TO BE STRONGLY 
IN SUPPORT OF USING THE EURO.  SEVERAL REPRESENTATIVES OF 
G-77 COUNTRIES SPOKE IN FAVOR OF THE PLAN.  THE MATTER 
WILL LIKELY BE RAISED AT THE FAO COUNCIL MEETING IN 
OCTOBER/NOVEMBER TO ENABLE THE FAO TO PRESENT THE SCHEME 
TO THE CONFERENCE IN 2003 FOR DECISION. 
 
THE UNITED STATES WAS ISOLATED ON PROCEDURAL AND 
SUBSTANTIVE GROUNDS.  WE ASKED FOR MORE INFORMATION ON 
THE EXPERIENCE OF OTHER UN AGENCIES, LIKE IAEA AND 
UNESCO, WITH SPLIT ASSESSMENT SCHEMES.  WE ALSO REQUESTED 
DATA ON THE COST OF IMPLEMENTATION.  THE FAO POINTED OUT 
THAT THE UNITED STATES IS THE ONLY MEMBER WITH NO FXR 
RISK AT PRESENT SINCE WE PAY OUR ASSESSMENT IN OUR 
NATIONAL CURRENCY. 
                       UNCLASSIFIED 
 
PAGE 04        ROME  04561  03 OF 04  201017Z 
 
¶11.  PROGRESS REPORTED IN MANAGEMENT OF LONG TERM 
INVESTMENT PORTFOLIO AND ORACLE PROJECT 
--------------------------------------------- ----------- 
ONE OF THE SOURCES OF CONTINUING LOSSES IN INCOME IS THE 
FAO'S LONG-TERM INVESTMENT PORTFOLIO.  WHILE THIS IS 
UNDERSTANDABLE IN THE CURRENT DOWNTURN IN GLOBAL 
FINANCIAL MARKETS, FAO HAS SUSTAINED LOSSES THAT EXCEED 
EVEN THE TARGETED LEVEL OF LOSSES.  THE EXTERNAL 
AUDITOR'S REPORT FOCUSED ON DEFICIENCIES IN THE TREASURY 
DEPARTMENT AS WELL AS INTERNAL CONTROLS.  HOWEVER, THE 
FAO HAS MADE PROGRESS.  THE ADVISORY COMMITTEE ON 
INVESTMENT MET LAST MAY AND OFFERED SOME ADVICE.  THE 
PROPORTION OF EQUITIES IN THE INVESTMENT PORTFOLIO HAS 
BEEN REDUCED.  HOWEVER, IT SEEMS THAT THE GROWTH STRATEGY 
OF THE INVESTMENT MANAGER IS INAPPROPRIATE FOR THIS PHASE 
OF THE MARKET.  FAO WAS ADVISED TO FOLLOW UP ON THE ACI 
AND EXTERNAL AUDITOR'S RECOMMENDATIONS TO SPLIT THE 
PORTFOLIO BETWEEN MANAGERS WITH VALUE AND GROWTH ORIENTED 
STRATEGIES. 
 
THE ORACLE PROJECT NOW SEEMS ON FIRM GROUND.  THE 
PROBLEMS THAT CAUSED COST OVERRUNS IN THE FIRST PHASE 
HAVE BEEN RESOLVED AND THE UPGRADE HAS BEEN INSTALLED. 
WORK HAS STARTED ON EXTENDING THE NEW INFORMATION 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ4142 
 
PAGE 01        ROME  04561  04 OF 04  201018Z 
ACTION IO-00 
 
INFO  LOG-00   NP-00    AID-00   CEA-01   CIAE-00  COME-00  CTME-00 
      DODE-00  ITCE-00  SRPP-00  MEDE-00  EB-00    EXME-00  EUR-00 
      E-00     UTED-00  VC-00    FRB-00   H-01     TEDE-00  INR-00 
      ITC-01   L-00     VCE-00   AC-01    NSAE-00  NSCE-00  OES-01 
      OIC-02   OMB-01   OPIC-01  ACE-00   SP-00    SSO-00   STR-00 
      TEST-00  TRSE-00  USIE-00  FMP-00   DRL-02   G-00     SAS-00 
        /011W 
                  ------------------EA41C7  201018Z /38 
R 200952Z SEP 02 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC 5916 
INFO USMISSION GENEVA 
USMISSION USUN NEW YORK 
USMISSION UNVIE VIENNA 
AMEMBASSY PARIS 
USDA FAS WASHDC 2288 
 
UNCLAS SECTION 04 OF 04 ROME 004561 
 
SIPDIS 
 
FROM U.S. MISSION TO UN AGENCIES IN ROME 
 
STATE FOR IO/EDA AND IO/S 
USDA FOR FAS/HUGHES AND REICH 
USDA FOR APHIS/GREIFER 
 
PARIS FOR UNESCO, VIENNA FOR UNVIE 
 
                       UNCLASSIFIED 
 
PAGE 02        ROME  04561  04 OF 04  201018Z 
E.O. 12958:  N/A 
TAGS: AORC EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR EAGR EAID EFIN KUNR WFPOAORC WFPOAORC WFPOAORC WFPO
SUBJECT: FAO FINANCE AND PROGRAM COMMITTEES CONSIDER 
MEDIUM TERM PLAN FOR 2004-09 
 
MANAGEMENT SYSTEM TO HUMAN RESOURCES AND PAYROLL, BUT 
PROJECT IMPLEMENTATION IS CONTINGENT ON THE AVAILABILITY 
OF FUNDS.  THE FAO HAS PROPOSED CREATION OF A CAPITAL 
BUDGETING FUND AS PART OF THE BUDGET FOR PROJECTS LIKE 
ORACLE THAT SPAN SEVERAL BIENNIA.  AS IT NOW STANDS, THE 
PROJECT CANNOT PROCEED UNTIL THE UNITED STATES PAYS ITS 
ARREARS. 
 
¶12. FAO PROGRAM COMMITTEE 
---------------------------- 
PROGRAM COMMITTEE MEMBER AUSTRALIA PROVIDED A READOUT ON 
THE PROGRAM COMMITTEE TO MISSOFF, HIGHLIGHTING THE 
FOLLOWING ISSUES: 
-- EVALUATION OF FAO'S EMERGENCY ACTIVITIES:  MEMBERS 
WELCOMED THE EVALUATION, PARTICULARLY AS IT IS THE FIRST 
OF ITS KIND TO EVALUATE AN FAO PROGRAM IN THE CONTEXT OF 
THE FAO'S STRATEGIC FRAMEWORK.  U.S. COMMENTS ON THE 
EMERGENCY ACTIVITIES (DRAFTED BY FODAG SENIOR 
HUMANITARIAN COORDINATOR), PROVIDED INFORMALLY TO OTHER 
OECD PROGRAM COMMITTEE MEMBERS, WERE WELCOMED AS A 
SUBSTANTIVE CONTRIBUTION TO THE DEBATE. 
 
-- STATUS REPORT ON CODEX EVALUATION:  PROGRAM COMMITTEE 
MEMBERS WELCOMED THE CODEX COMMISSION'S EXECUTIVE 
COMMITTEE REPORT AND, IN PARTICULAR, THE INFORMATION 
CONTAINED THEREIN ON THE REGIONAL BALANCE ON THE 
                       UNCLASSIFIED 
 
PAGE 03        ROME  04561  04 OF 04  201018Z 
EVALUATION TEAM AND CLEARER PROVISIONS FOR CODEX INPUT 
INTO THE EVALUATION PROCESS. 
-- INTERNATIONAL PLANT PROTECTION CONVENTION:  CAIRNS 
GROUP MEMBERS TOOK THE LEAD IN STRESSING THE HIGH 
PRIORITY OF THE ACTIVITIES OF THE INTERIM COMMISSION, AND 
THE NEED TO ASSURE FUNDING FOR THE INTERIM COMMISSION'S 
STANDARD SETTING PROGRAM.  AUSTRALIA REPORTED THAT THE 
PROGRAM COMMITTEE RECEIVED VERBAL ASSURANCES THAT THE 
SECRETARIAT WOULD MAKE EFFORTS TO FIND FUNDS WITHIN THE 
 
SIPDIS 
EXISTING BUDGETARY AUTHORITY TO COVER THE SHORTFALL IN 
THE CURRENT BIENNIUM.  CONCERNING IPPC ACTIVITIES IN THE 
MEDIUM TERM PLAN, AUSTRALIA WAS SUCCESSFUL IN INSERTING A 
REFERENCE TO THE NEED TO COMPLETE FOUR STANDARDS PER YEAR 
IN ADDITION TO PROVIDING TECHNICAL ASSISTANCE AND 
INFORMATION EXCHANGE. 
-- BRIEFING ON SOUTHERN AFRICAN DROUGHT:  AT THE REQUEST 
OF SUDAN, THE SECRETARIAT BRIEFED THE PROGRAM COMMITTEE 
ON THE SITUATION IN SOUTHERN AFRICA AND THE ISSUES 
RELATING TO PROVISION OF BIOTECH-ENGINEERED FOOD AID. 
THE SECRETARIAT BRIEFING REPORTEDLY HEWED CLOSELY TO THE 
AGREED JOINT FAO/WHO/WFP STATEMENT; THE PROGRAM COMMITTEE 
REPORT WILL SIMPLY NOTE THAT THE STATEMENT WAS 
DISTRIBUTED. 
-- FOLLOW-UP TO SPECIAL PROGRAM ON FOOD SECURITY (SPFS) 
EVALUATION:  THE SECRETARIAT BRIEFED THE PROGRAM 
COMMITTEE ON FOLLOW-UP TO THE SPFS EVALUATION. 
 
¶13.  COMMENT 
------------ 
THE FAO TENDS TO BLAME THE "MAJOR CONTRIBUTOR," I.E. THE 
UNITED STATES, FOR FAR TOO MANY OF ITS FINANCIAL PROBLEMS 
                       UNCLASSIFIED 
 
PAGE 04        ROME  04561  04 OF 04  201018Z 
AND CONTINUES TO SPEND BEYOND WHAT IT CAN RATIONALLY 
AFFORD.  THE DIRECTOR GENERAL, URGED ON BY POTENTIAL 
BENEFICIARIES, CONTINUES TO PRESS FOR MORE RESOURCES FROM 
DONORS THAN HE CAN REASONABLY EXPECT TO OBTAIN.  THE RISK 
FOR DONORS IS THAT AS RESOURCES ARE SPREAD MORE THINLY, 
NORMATIVE ACTIVITIES, LIKE IPPC, CAN BECOME IMPOVERISHED 
AND LOSE CRITICAL MASS.  WE NEED TO FOCUS OUR EFFORTS ON 
WHERE RESOURCES ARE USED AS WELL AS ON THE OVERALL BUDGET 
LEVEL.  END COMMENT. 
 
HEILEMAN 
 
                       UNCLASSIFIED 
 
> 
 2002ROME04561 - Classification: UNCLASSIFIED