VZCZCXYZ0000
RR RUEHWEB

DE RUEHGB #3680/01 3261353
ZNR UUUUU ZZH
R 211353Z NOV 08
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 0489
RUEHRC/USDA FAS WASHDC
INFO RUCNRAQ/IRAQ COLLECTIVE
RUEHGV/USMISSION GENEVA 0277

UNCLAS BAGHDAD 003680 
 
USDA FAS FOR OFSO/RVERDONK; OCBD/PSHEIKH; OCRA/CMKINNELL 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON PREF EAID ETRD IZ
SUBJECT: PUBLIC DISTRIBUTION AND FOOD SECURITY 
 
REF: A.  Baghdad 3109 
¶B. Baghdad 3184 
¶C. Baghdad 3498 
 
SENSITIVE BUT UNCLASSIFIED.  PLEASE PROTECT ACCORDINGLY. 
 
¶1. (SBU) SUMMARY: Improved physical security in Iraq has led to 
dramatically improved food security, with the number of "food 
insecure" Iraqis falling to 930,000 in 2008 from a high of more than 
4 million in 2005.  Although Iraq's Public Distribution System (PDS) 
is expensive and woefully inefficient, without it food insecurity 
might be two to three times what it is today.  Indeed, at least a 
quarter of Iraq's internally displaced persons (IDPs) are food 
insecure, mainly because many cannot use their PDS ration cards to 
access food in their areas of displacement.  GOI officials charged 
with reforming the PDS unanimously agree that doing so is crucial. 
However, they argue that internal displacement and food and physical 
security must be addressed before the general population will 
readily accept PDS reform.  END SUMMARY. 
 
Food Security Dramatically Improves 
----------------------------------- 
¶2. (U) Security gains across Iraq have produced a great improvement 
in a crucial humanitarian indicator:  food security.  According to a 
recently released report from the World Food Program (WFP) and the 
GOI's Central Organization for Statistics and Information Technology 
(COSIT), 930,000 Iraqis, or 3.1 percent of the population, are food 
insecure -- i.e., they do not have access to sufficient, safe food 
to meet normal dietary needs.  This is a dramatic improvement over 
past surveys.  Previous post-2003 WFP surveys found that 2.6 million 
Iraqis (or 11 percent) were food insecure in 2003, and the figure 
had climbed to a troubling 4 million (15.4 percent) in 2005. 
 
PDS Reduces Vulnerability 
------------------------- 
¶3. (U) While the recent improvement is certainly encouraging, the 
WFP report also makes clear that without the Public Distribution 
System (PDS), food insecurity would be much higher.  (The PDS is the 
world's largest food ration program; dating to the Iran-Iraq war, it 
provides a basket of basic food and other household commodities to 
virtually every Iraqi household.)  Aside from the 930,000 Iraqis 
currently identified as food insecure, WFP estimates that an 
additional 2.8 million (9.4% of the population) would currently be 
at risk of becoming food insecure if it were not for PDS.  In 2003, 
some 3.6 million would have been at risk without PDS, and in 2005 
that figure would have topped 8.3 million.  In other words, in 2005 
some 12.3 million Iraqis -- or 43 percent -- would have been "in 
dire need of humanitarian food assistance" if it were not for PDS, 
and nearly one in ten Iraqis remains equally dependent on PDS for 
food security today. 
 
¶4. (U) The key role that PDS plays becomes more evident when one 
examines the case of IDPs in Iraq.  While the rate of food 
insecurity nationwide has fallen to 3.1 percent, it is at least 25 
percent (and likely much higher) among IDPs -- mainly because many 
cannot access PDS benefits in their areas of displacement. 
According to UN figures, there are still 2.8 million Iraqi IDPs 
(Reftel A).  Of these, 750,000 receive emergency WFP food aid 
because they cannot use their PDS ration cards.  The GOI is aware of 
this problem and has been working with UN agencies and local 
authorities to seek a remedy.  However, the very rules designed to 
reduce fraud and abuse within the bulky and poorly managed PDS are 
now working against those displaced families that most need the 
benefit. 
 
Two Prerequisites for Successful PDS Reform 
------------------------------------------- 
¶5. (SBU) According to its obligations under the International 
Compact with Iraq and other donor agreements, the GOI remains 
committed to PDS reforms that include eliminating the benefit for 
wealthy Iraqis who do not need it and, over the much longer-term, 
monetizing benefits for those who do.  (Note: The WFP report 
indicated that even among the top income quintile, 22 percent report 
some occasional periods of food insecurity - most likely because 
high physical security costs for themselves and their extended 
families leave less for food. End note.)  The system is wasteful, 
rife with corruption and distorts commodity markets (Reftels B, C). 
It is also tremendously expensive.  PDS cost the GOI more than USD 
3.6 billion in 2008 (nearly 9 percent of the national budget).  The 
initial 2009 budget request projected that the PDS price tag would 
balloon to USD 5.5 billion, although that figure may be trimmed 
thanks to the drop in worldwide food prices.  The system's high 
costs are exacerbated by the unwieldy nature of the program and the 
corruption that is allegedly endemic throughout the system. 
 
¶6. (SBU) For these reasons, GOI officials repeatedly tell us they 
are committed to reform.  However, they are also painfully aware of 
the role the system plays in reducing vulnerability and in 
contributing to reconciliation and social stabilization.  As one 
member of the PM's Advisory Board explained to us, many within the 
GOI consider improved security and the return home of most IDPs to 
be crucial prerequisites PDS reform.  Only when these conditions are 
satisfied will the general public begin to accept significant 
changes to what is a crucial entitlement program for many, he said. 
 
Comment 
------- 
¶7. (SBU) PDS reform is moving forward at a snail's pace, and an 
initial means testing that was scheduled to begin in November has 
been delayed (Ref A).  We are often quick to blame these delays on 
lack of political will or, worse, foot dragging on the part of 
officials who are profiting from the system.  While these factors no 
doubt contribute to the delays on one level, the worries of many 
Iraqi officials regarding the potential social impact on food 
security are genuine.  PDS is an inefficient tool, but it is one the 
GOI and the system's beneficiaries understand and rely on to address 
a potentially significant humanitarian concern.  Reforming it while 
the security and IDP situation remain fragile is possible, but it is 
fraught with risks that the GOI may not be willing to take. 
 
CROCKER