VZCZCXYZ0002
OO RUEHWEB

DE RUEHAE #0458/01 1511308
ZNR UUUUU ZZH
O 311308Z MAY 06
FM AMEMBASSY ASMARA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8170
RUEHRO/AMEMBASSY ROME IMMEDIATE 1708
INFO RUEHNR/AMEMBASSY NAIROBI PRIORITY 4561
RUEHKM/AMEMBASSY KAMPALA PRIORITY 0988
RUEHDS/AMEMBASSY ADDIS ABABA PRIORITY 5877
RUEHDJ/AMEMBASSY DJIBOUTI PRIORITY 2782
RUEHKH/AMEMBASSY KHARTOUM PRIORITY 0076
RUEHSA/AMEMBASSY PRETORIA PRIORITY 1358
RHEHNSC/NSC WASHDC PRIORITY
RUEHFR/AMEMBASSY PARIS 1303
RUEHLO/AMEMBASSY LONDON 1130
RUEHBS/USEU BRUSSELS
RUEKJCS/SECDEF WASHDC
RUEAIIA/CIA WASHDC
RUEKDIA/DIA WASHDC
RHMFISS/CJTF HOA

UNCLAS ASMARA 000458 
 
SIPDIS 
 
SIPDIS 
 
AIDAC 
 
AID FOR AA/DCHA, AA/AFR and AFR/EA 
AID FOR DCHA/FFP JDWORKEN, TANDERSON, PBERTOLIN 
AID FOR GC 
STATE FOR AF/E AND AF/EPS 
STATE FOR EB 
STATE FOR PRM/AF 
STATE FOR IO 
ROME FOR FODAG RNEWBERG 
NAIROBI FOR REDSO/FFP NESTES 
KAMPALA FOR DSUTHER 
ADDIS FOR USAID/FHA 
DJIBOUTI FOR USAID 
KHARTOUM FOR SHA, CFARNSWORTH 
PRETORIA FOR JWESSEL 
LONDON FOR AFRICA WATCHERS 
PARIS FOR AFRICA WATCHERS 
NSC FOR MELINE 
 
E.O. 12958:  N/A 
TAGS: EAID ECON PHUM PREF EGAD ER ET DJ
SUBJECT:  GSE REMAINS UNYIELDING IN MEETINGS WITH WFP ON 
FOOD AID ISSUES 
 
REFS: (A) Asmara 0383; (B) Asmara 0385; (C) State 81462 
 
¶1. This is an action request.  See para 18. 
 
------- 
SUMMARY 
------- 
 
¶2.  A high-level delegation from WFP/Rome visited Asmara and 
met with Ministers of the Government of the State of Eritrea 
(GSE) and donors.  The visit was prompted by the issues 
previously described in Refs A and B.  Meetings did not 
yield any progress with the GSE insisting that any future 
food aid be provided in conjunction with its still nebulous 
cash for work scheme.  Nor was the GSE prepared to release 
in-country stocks of WFP food back to WFP for redistribution 
in other parts of the region facing food emergencies.  WFP 
is considering its next steps which will likely include a 
dramatic downsizing of its in-country presence and possibly 
litigation over in-country stocks that are not used in 
accordance with previous agreements. 
 
¶3.  The impasse with WFP also has implications for USAID 
Title II commodities that have been provided to Catholic 
Relief Services and Mercy Corps, which have also been 
impounded by the GSE.  Post requests in para 18 further 
guidance from USAID's FFP and GC offices on next steps. 
 
--------------------- 
WFP SENDS IN BIG GUNS 
--------------------- 
 
¶4.  In an effort to achieve progress or closure on the food 
aid impasse described in Refs A and B, WFP/Rome sent a 
delegation led by its Senior Deputy Executive Director, Jean- 
Jacques Graisse, to Asmara from May 27-29.  Graisse met in a 
joint session with the GSE's Minister of National 
Development and Minister of Labor and Social Welfare.  He 
also met with the Ambassador and other key donor 
representatives prior to and subsequent to the GSE meeting. 
 
¶5.  In the pre-briefing at the Ambassador's residence, the 
Ambassador presented the USG's views on the food aid 
impasse, drawing on the talking points provided in Ref C, 
and urged the delegation to be strong in expressing these 
points in its meeting with the GSE.  The EC Ambassador, also 
present at the meeting, echoed our concerns and Graisse 
indicated that he and his colleagues both understood and 
essentially shared our views and objectives. 
 
----------------------- 
BUT GSE REMAINS UNYIELDING 
-------------------------- 
 
¶6.  In WFP's debriefing for donors following the 
delegation's meeting with the GSE, Graisse reported that no 
significant progress had been achieved and that the GSE 
Ministers held firm to the government line.  While the 
Ministers indicated they were "open to dialogue", the 
dialogue was conditioned on WFP and donors agreeing to the 
GSE's basic plan to monetize food aid and use funds for cash- 
for-work (CFW) activities.  The Ministers did not 
acknowledge that there was a major food crisis looming, 
instead suggesting that a good harvest and good rains meant 
that an emergency program such as originally planned with 
WFP was no longer necessary.  Now, they said, was the time 
for the GSE to shift to a cash-for-work program to break the 
cycle of dependency.  The GSE would only allow for 
continuation of a very small-scale level of food 
distributions, targeted to IDPs, and a few small health 
programs.  They would not consider WFP's suggestions for 
food-for-work (which the GSE termed "not dignified") or 
school feeding (unless schools themselves paid for it). 
 
¶7.  The GSE Ministers claimed that to-date no WFP stocks had 
yet been monetized, and that they were not facing any 
imminent shelf-life issues.  However, the consensus in the 
room was skeptical of these claims, and since WFP has still 
not been given permission to inspect their commodities in 
the GSE warehouses, they cannot verify them.  Various 
reliable partners have reported seeing WFP-donated 
commodities being sold commercially or being used by 
commercial establishments (such as a pasta production 
facility).  However, even if the GSE claims are to be 
believed, in light of the limited distributions the GSE is 
prepared to allow (to IDPs, HIV patients, etc), WFP does not 
envision distribution of more than 1200 - 1500 MT per month. 
At that rate, WFP stocks (approx 60,000 MT) would spoil long 
before they were expended.  But, given that the GSE is, we 
believe, already using those stocks despite the Minister's 
statement to the contrary, that may be a moot point.  The 
bottom line is that the GSE will ultimately be forced to 
account for the bulk of the WFP stocks which will either be 
lost due to GSE appropriation and sale or to spoilage. 
 
¶8.  Graisse briefly engaged donors in a discussion of the 
pros and cons (mostly cons) of a monetization-and-CFW 
approach to meeting Eritrea's food security needs.  He 
noted, for example, that commodities sold in Asmara or 
Massawa were unlikely to make their way to markets in 
remoter areas where needs are greatest, and suggested that 
at the very least sales should be targeted geographically. 
Graisse did not raise these points in his GSE meeting, 
however. 
 
------------------ 
NEXT STEPS FOR WFP 
------------------ 
 
¶9.  Graisse said his next steps were: (1) to report the 
results of his visit to the WFP Executive Board and seek its 
decisions on the way forward; and (2) to draft a letter to 
the GSE Ministers outlining the meeting's results and WFP's 
response. 
 
¶10.  Graisse said that while the Board is highly unlikely to 
accept the GSE's unilateral decision to monetize the food, 
he was also not sanguine that the alternative course -- 
litigation and the issuance of a bill of collection to the 
GSE - would lead to the GSE actually reimbursing WFP. 
Graisse did note, however, that the GSE Ministers did appear 
to understand that they would likely be faced with such a 
bill of collection if they continued on their current 
course.  Graisse also expressed doubt that the Board would 
reach a decision at the next meeting on June 12, as the time 
was too short for all the documentation to be prepared, for 
consultations with capitals and for consensus to be reached. 
He said, however, we would call for special working session 
of the Board later in June to discuss the issue further, and 
to make the necessary operational decisions on the way 
forward. 
 
¶11.  Graisse indicated that he expects the Board to agree to 
plans to greatly reduce its staffing in Eritrea.  He noted 
that one sub-office already is in the process of closing. 
He anticipates they will keep a minimal presence -- one 
expatriate and a few local staff - to monitor the small 
level of food distributions that are continuing, and to 
maintain some response capacity should circumstances change 
later. 
 
¶12.  Donor reps encouraged WFP to prepare an effective media 
strategy, especially in light of concerns that despite GSE 
assertions of a good harvests and rains, most donors 
remained concerned about a possible humanitarian crisis at 
some point in the near future in Eritrea.    Graisse 
appreciated that this could be important as things unfold 
but contended that, for the present, he would prefer to try 
to continue to take a low-key approach.  Media strategies 
could come into play after consultation with the Board. 
 
----------------- 
NEXT STEPS FOR US 
----------------- 
 
¶13.  Of the 64,000 MTs or so of WFP stocks being held in GSE 
warehouses, about 42,300 MTs were provided by the USG.  In 
addition, the GSE is holding a total of about 14,800 MTs 
that we have provided to Mercy Corps and Catholic Relief 
Services (CRS) under Title II agreements. 
 
¶14.  Mercy Corps and CRS, whose Title II activities were 
initially planned to extend through FY 07, have been 
instructed by FFP to terminate these activities early -- by 
June 30.  It is highly unlikely, however, that the GSE will 
release any further commodities for food distribution 
between now and then, meaning that 14,800 MTs will either 
have been sold or remain in GSE hands by June 30.  (Note: It 
is not known whether some of these commodities may have 
already been sold or otherwise diverted by the GSE). 
 
¶15.  While Post would not want to close the door entirely to 
the very slim chance that the impasse can be resolved, and 
some mutually-agreeable decision be reached on the 
disposition of USG-donated commodities, it seems highly 
unlikely that this will happen.  Therefore, Post believes 
that presenting the GSE with a bill of collection must be 
the next step, for both the WFP and NGO commodities. 
 
¶16.  Mercy Corps and CRS discussed this issue with the 
Post's USAID/DCHA reps last week.  Both NGOs have stated 
they are not in a good position to present the GSE with a 
bill of collection, as they have little influence, and in 
the case of CRS, it may lead to their being forced to leave 
the country.  (Note: Mercy Corps has already been told to 
leave and is in a hurried process to do so).  They have 
asked therefore that the issue be handled "government-to- 
government." 
 
¶17.  A final consideration is the possibility that a food 
emergency may still arise later in the year.  The GSE puts 
forth that the food security situation is good following 
last year's harvest.  But GSE prohibitions on travel make it 
hard for humanitarian agencies to determine what the real 
food situation is.  Nutritional surveys carried out in 
various locations over the past year do indicate a high 
level of vulnerability.  Therefore, while we cannot make 
further food donations in the current circumstances, and 
until the current impasse is satisfactorily resolved, we do 
need to maintain contingency plans for response should 
circumstances change, and the need arise. 
 
¶18.  Action Requests:  Post requests the following: 
 
¶A.  With regard to WFP, Post supports the recommendation in 
Ref C for WFP to issue the GSE a bill of collection for the 
confiscated/diverted stocks, and urges our Executive Board 
representatives to communicate this to WFP/Rome.  If the 
Board cannot act on this by the June 12 meeting we endorse 
Graisse's idea that a special session be called to address 
it soon after. 
 
¶B.  With regard to Mercy Corps and CRS, Post seeks guidance 
from USAID/FFP and GC as to the most appropriate way 
forward, including their request to be relieved of their 
responsibility to issue a bill of collection to the GSE 
themselves, and make it a government-to-government issue. 
Specific guidance from GC would be appreciated on the 
legalities and procedures that would be involved in issuing 
a bill of collection to the GSE. 
 
DELISI