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

221636Z May 06

UNCLAS SECTION 01 OF 02 PARIS 003450 
 
SIPDIS 
 
FROM USMISSION UNESCO 
 
STATE FOR IO/UNESCO KELLY SIEKMAN, IO/S LISA SPRATT 
STATE FOR NSC GENE WHITNEY 
STATE FOR NSF INTERNATIONAL OFFICE ROSE GOMBAY 
 
E.O. 12958:  N/A 
TAGS: AORC EAID KSCA SOCI UNESCO
SUBJECT:  UNESCO REFORM: NEW STRATEGY UNVEILED ON VOLUNTARY 
CONTRIBUTIONS 
 
 
¶1. This is a Guidance Request, see para 4. 
 
¶2. Summary and Comment:  UNESCO Extrabudgetary Funding Director 
Moller briefed Geneva Group members on the Director general's plans 
for a more strategic approach to extra-budgetary resources; these 
now account for more than half of UNESCO's funding.  The DG's action 
plan includes: outlining in budget documents strategic frameworks to 
include potential extra-budgetary funding opportunities, and holding 
a "unified donor event" at the close of the General Conference. 
Although Geneva Group members welcomed these proposals, the U.S. and 
France stressed the importance of a realistic and effective regular 
budget. 
 
¶3.  Regarding the 2006-2008 budget, Moller reported that only 
limited progress had been made in mobilizing donations to the 25 
million USD supplemental fund; looking forward to the 2008-2010 
exercise, she stressed that the large percentage of UNESCO's budget 
devoted to fixed costs (salaries) highlight a limited margin of 
maneuver. 
 
¶4.  Mission requests guidance/comments on DG's action plan (174 
Ex/inf.4).  Given the Geneva Group's interest in pursuing issues 
relating to overall UN reform, Mission would appreciate being kept 
abreast of USG objectives and positions regarding relevant issues. 
End Summary and Comment. 
 
Extrabudgetary Director Previews Action Plan 
 
¶5.  DCM and Science Officer attended the April meeting of UNESCO's 
Geneva Group, focusing on the Director General's Action plan on 
Extra-budgetary contributions.  The presenter, Birgitte Moller, 
director of cooperation with extra-budgetary funding sources, 
reminded the group that the action plan had been unveiled before the 
last Executive Board in response to a report from the Canadian 
External Auditor.  That report highlighted the need for a strategic 
approach to mobilizing and use of extra-budgetary resources 
(document 174/EX inf.4). 
 
¶6.  In her briefing, Moller stressed to the group that the new 
budget document for 2008-10 (C/5) will feature strategic frameworks 
for each program, whose scope will include potential extrabudgetary 
funding opportunities, and will thus offer a unified strategic 
vision for all UNESCO activities.  Regarding the feasibility of 
advance planning in deploying extra-budgetary resources, Moller 
evoked the idea of holding a "unified donor event" at the General 
Conference, after the budget is adopted, to be followed by 
one-on-one consultations.  She noted that in the current situation, 
one half of UNESCO's resources are deployed without any policy 
debate, or monitoring by UNESCO's governing bodies. 
 
Geneva Group Welcomes Strategic "Shopping List" 
 
¶7.  The Geneva Group co-chair (UK Ambassador) cited overall UN 
reform efforts, saying that the goal should be to have agencies so 
well run that member states are willing to finance regular budgets 
adequate to their needs.  He expressed the hope that inclusion of 
extrabudgetary fund in strategic frameworks would enhance oversight 
by member states. The other Geneva Group co-chair (Japan DCM) 
stressed the "voluntary" nature of extra-budgetary contributions, 
but said that a "good shopping list" of "specific well-structured 
proposals" could increase donor confidence (Japan is a major 
extra-budgetary donor to UNESCO).  Japan stressed the difficulty in 
obtaining un-earmarked multi-year extrabudgetary donations; many 
agreed, including Canada, who asked about the status of the 25 
million dollar supplementary fund (established to enhance the 
2006-2008 Zero nominal growth regular budget). 
 
¶8.  Sweden spoke in favor of a General Conference donor's event, and 
of associating extra-budgetary project planning with UNESCO's 
overall programming exercises.  Italy, another major extra-budgetary 
donor, also supported the idea of a General Conference event that 
would allow flexibility while facilitating planning, and cited the 
need to track results of extra-budgetary projects.  France and the 
U.S. stressed the importance of a realistic core budget in financing 
UNESCO priorities, France noting management problems entailed by a 
large volume of extrabudgetary funds. 
 
25 Million Dollar Budget Fund:  As Yet, "Inconclusive" 
 
¶9.  On the 25 million supplementary fund, Moller described the 
experience as "inconclusive."  So far, the only major contributor is 
Japan, who pledged 1.3 million USD - but earmarked for earthquake 
victims in Pakistan.  France has pledged 400,000 euros; the UK 
100,000 pounds for oversight and evaluation.  Although "We've not 
given up," the battle is not won. Moller acknowledged that UNESCO 
could perhaps press the account more determinedly in its meetings 
with potential donors.  (Note: at a separate event, UNESCO ERC 
officer Kulikowski queried science officer on USG intentions 
regarding the fund.  End Note.) 
 
Field Offices in Search of Strategic Coordination 
 
¶9.  In response to a U.S. question on oversight of the use of 
extra-budgetary resources by field offices, Moller described this as 
a major challenge, given that "there's more and more action" in the 
field with the development of UN country plans.  UNESCO is present 
in many countries, "but not all that present," and there is perhaps 
a tendency to try and do too much.  There is a problem of control, 
she acknowledged; "if a donor wants to pay, we are going to do their 
activity."  This results in a plethora of small of small activities 
that don't necessarily fit with overarching goals.  Efforts to 
restore order sometimes inspire a negative reaction from field 
offices, who accuse headquarters of being dictatorial.  Thus, a 
major challenge is to find the right balance between a global and a 
"bottoms-up" approach. The first step is for headquarters to talk to 
field offices, and that will happen in the context of consultations 
on the medium-term strategy (2008-13) in workshops that the 
strategic planning bureau is holding on programming. 
 
UN Agencies Engaged in Price Cutting Competition? 
 
¶10.  In response to a question posed by Switzerland as to whether 
evaluation/audit costs associated with extrabudgetary projects could 
be paid out of the 13 percent overhead fee UNESCO normally charges, 
Moller acknowledged competition among UN specialized agencies 
resulting in price cutting on overhead fees.  UNESCO is at a 
disadvantage, given that certain fixed costs related to travel 
communication and personnel are normally not worked into its 
extrabudgetary contracts.  The real cost for overhead is in fact 30 
percent, creating an untenable situation now that extra-budgetary 
contributions represent more than 50 percent of UNESCO funding. With 
greater harmonization between extrabudgetary and regular budget 
projects, the problem would be somewhat less pressing, Moller 
posited. 
 
UNESCO Geneva Groups to Engage on UN reform? 
 
¶11.  Japan co-chair briefed on his participation in the recent ELM 
(experts meeting) and CLM (representatives from capitals) meetings 
in Geneva, reporting that the UNESCO Geneva Group was one of the 
most active in the UN system.  The UK co-chair suggested that the 
UNESCO Geneva Group might be more forward leaning in engaging other 
groups within UNESCO, for example the G-77.  This proposal was 
swiftly countered by France and Canada, who stressed the informal 
character of the Geneva Group. 
 
¶12.  The UK co-chair suggested that the group might also explore 
issues relating to broad UN reform efforts that would have impact on 
UNESCO:  during her briefing, extrabudgetary funds director Moller 
had described the DG's engagement in this issue, and his opposition 
to the distinction drawn by some in New York between UNESCO's 
normative work and its efforts in the field.  The UK suggested that 
the UNESCO Geneva Group would have a big stake in the issue of 
system-wide coherence, for example, given UNESCO's broad mandate. 
KOSS