VZCZCXYZ0007
OO RUEHWEB

DE RUEHUNV #0558/01 2891047
ZNR UUUUU ZZH
O 151047Z OCT 08
FM USMISSION UNVIE VIENNA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8544
INFO RUCNDT/USMISSION USUN NEW YORK 1364
RUEHXX/IO COLLECTIVE

UNCLAS UNVIE VIENNA 000558 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: SNAR KCRM UN AU
SUBJECT: UNODC FINANCE AND GOVERNANCE WORKING GROUP MEETING, OCTOBER 
7, 2008, AND FOLLOW-UP CONSULTATIONS 
 
REF: STATE 92709 
 
------------ 
SUMMARY 
------------ 
 
¶1. (SBU)  At the first meeting of UNODC's Finance and Governance 
Working Group (FinGov) on October 7, delegations presented their 
position papers.  The Secretariat distributed a paper on defining 
"core" activities, which the G-77 considered unsatisfactory.  The 
G-77 and EU agreed on creating a formal mechanism for consultations 
on governance.  The U.S., Japan, and Canada shared the view that any 
such mechanism should be informal.  On finance, the G-77 wanted to 
request higher budget allocation from New York, and opposed any 
financial mantra.  The EU seemed willing to consider the G-77 
position.  The U.S., Canada, and Japan took a stricter stand on 
finance, urging the need for "financial discipline" and the 
inclusion of financial mantra in UNODC resolutions.  FinGov 
co-chairs organized follow-up consultations with key member states 
and Secretariat on October 9 in the hope of resolving the difference 
on definitions of "core" activities.  At that meeting, the 
Secretariat noted the futility of requesting increased budget 
allocation from New York when the SecGen has just asked UNODC for 
cost savings.  The co-chairs will circulate a concept paper, based 
on those two meetings, before the next WG meeting on October 23-24. 
Given the realities of the Vienna-New York budget dynamics as 
explained by the Secretariat on October 9, Washington may want to 
consider supporting the EU and G-77 proposal to request a greater 
allocation from New York for UNODC's regular budget.  Such request 
appears unlikely to bear fruit, but the USG could garner some 
political goodwill among the EU and G-77-plus China that we could 
leverage towards other FinGov goals.  END SUMMARY. 
 
------------------------------ 
THE SECRETARIAT DEFINES "CORE" 
------------------------------ 
 
¶2.  (U) At Cuba's request, the Secretariat prepared and distributed 
a non-paper on UNODC's core activities and functions.  (Non-paper 
e-mailed to Department on 10/3.)   The paper notes the difficulty of 
such definition and cited previous comments and recommendations by 
other UN offices, including the ACABQ, not to pursue such 
definitions.  As a result of such difficulties, the Secretariat 
paper presents four options for defining "core," asking member 
states to choose the option.  The funds required for the "core" 
activities as defined by the four options are as follows, based on 
the 2008-2009 biennium budget of $331.8 million: 
 
(i)  Multilateral core - activities/programs mandated by the two 
Commissions (CND and CCPCJ) and the UNGA, e.g., resolutions adopted 
in these three venues.  Using this definition, "core" activities 
totaled $63.8 million 
 
(ii)  Critical Functions of a Continuing Nature (no field offices) 
- $61.1 million. 
 
(iii)   Critical Functions of a Continuing Nature, including Field 
Offices -- $104.4 million 
 
(iv)  Critical Functions of a continuing nature including field 
offices and other activities -$145.5 million. 
 
-------------- 
CUBA SURPRISES 
-------------- 
 
¶3. (U)  While agreeing with ACABQ's position that it is not for 
FinGov to define "core" and "non-core" activities/functions, Cuba 
pressed the Secretariat to provide details on non-core 
activities/functions.  Several other delegations and the Namibian 
chair, expressed their surprise privately to Counselor after the 
meeting, regarding what appeared to be a change in Cuba's position. 
However, G-77 chair Pakistan explained that Cuba, which had 
previously requested the Secretariat to provide a list of UNODC's 
"core" activities, was dissatisfied with the Secretariat paper, and 
wanted more details.  UNODC agreed to provide more details. 
 
 
-------------------------------- 
G-77 PLUS CHINA GROUP: REGULAR BUDGET FOR CORE FUNCTIONS AND NO 
BUDGET MANTRA 
------------------------------- 
 
¶4. (U) The G-77 Group requested a definition of "core" functions 
which it argued should be funded from the regular budget.  The Group 
opposed the inclusion of the budgetary mantra (e.g., "subject to 
extra budgetary resources,"  "within existing resources.") in 
resolutions. It proposed adopting a thematic approach to 
programming, creating a budgetary and programmatic oversight 
mechanism similar to the ACABQ, and giving the Independent 
 
Evaluation Unit (IEU) financial and "administrative independence." 
On governance the Group seeks, among other things, a regular 
consultation mechanism, abolition of donor-only consultations, and 
authority for inter-sessionals to perform oversight and strategic 
management functions. 
 
--------------------------------------- 
THE EU - GOVERNANCE FIRST, THEN FINANCE 
---------------------------------------- 
 
¶5. (U)  The EU submitted seven proposals, the foremost of which is 
establishing a regular mechanism, to assist the two Commissions, to 
deal with "budget and strategic policy issues." The EU statement 
reflected a balancing act between those more supportive of Costa and 
other states like Sweden and Germany that wanted to take on serious 
management shortcomings.  Such a mechanism should meet regularly, be 
open-ended, have clear terms of reference, and should make 
recommendations.  The EU refers to "complementary bodies" other UN 
organizations have adopted to deal with budget and 
overarching/strategic issues, and implies that they could be models 
for UNODC.  On the finance side, the EU advocates clear and 
transparent reporting on the use of the GPF,  a thematic approach to 
programs, better reporting on programs, strengthening the IEU, 
broadening the donor base and merging the crime and drug funds.  The 
co-chairs described the EU and G-77 positions as having much common 
ground. 
 
--------------------------------------------- ----- 
NORWAY - MORE REGULAR RESOURCES THAN MEETS THE EYE 
--------------------------------------------- ------ 
 
¶6.  (U)  Norway expressed support for EU and G-77 on establishing a 
regular mechanism on governance, as long as it is within UNODC's 
mandate.  As one of the largest donors to the GPF, Norway's 
frustration with its inability to broaden the donor base for the GPF 
has led to its decision to reduce its share of contributions to the 
GPF.  (Note:  According to Norway, it contributed 13%, and three 
Nordic countries contributed more than 33%, to the GPF in 2006-7. 
End Note.)  One important point made by Norway is that its analysis 
of the UNOV budget, which funds certain UNODC functions, indicated 
that UNODC's real regular budget is closer to USD 50 million rather 
than the USD 37 million it states in its 2008-2009 biennium budget. 
 
 
--------------------------------- 
CANADA - DEFENDING FINANCE MANTRA 
--------------------------------- 
 
¶7. (U) Canada would not support any request to increase UNODC's 
share of the regular UN budget without UNODC providing a detailed 
justification of its financial needs and a clear explanation of the 
Secretariat's core activities and the cost of those activities. 
However, it expressed a willingness to discuss alternative funding 
models which will give more predictability and stability to UNODC's 
finances.  Canada defended the inclusion of the financial mantra 
("subject to extra-budgetary resources") in resolutions, and 
underscored its view that UNGA resolutions (cited in the G-77 paper) 
did not prevent the use of such language, noting that the use of 
extra-budgetary resources is common in many UN bodies.  While 
agreeing with the need to improve governance, Canada stressed that 
any mechanism should be informal and open-ended, should not cause 
any major institutional change, nor make decision on overarching 
strategic policy issues, nor micro-manage UNODC. 
 
--------------------------------------------- ------- 
JAPAN - NO INCREASE IN un REGULAR BUDGET AND NO PBIs 
--------------------------------------------- ------- 
 
¶8.  (U) Japan expressed understanding of others' insistence on the 
"necessity of reviewing the regular budget."  However, it emphasized 
the importance of maintaining the "financial discipline of the UN 
system as a whole."  In Japan's view, the review of UNODC's regular 
budget must not affect the total UN budget "in any form" nor create 
any additional program budget implications (PBIs).  Based on this 
view, Japan considered it "critical and necessary" to have 
"financial mantra" in order to avoid PBIs.   While supporting the 
need for improved governance, Japan is of the view that any 
discussion should be informal and open-ended, and should make use of 
existing mechanism such as the FinGov Working Group. 
 
--------------------------------------------- --- 
AUSTRALIA - MORE TRANSPARENCY AND ACCOUNTABILITY 
--------------------------------------------- --- 
 
¶9. (U) Australia listed its principles on the FinGov WG.  It 
advocated greater transparency and accountability of UNODC's funding 
and operations and greater focus on UNODC working as part of the 
One-UN initiative, and with other partners.  It also urged using 
first existing structures to improve governance and finance, but 
appeared open to new alternatives.  Australia does not oppose 
 
increasing the regular budget per se, but does require thorough 
justification.  It expressed support for larger thematic/geographic 
approach to programming, and urged greater consultation with donors 
and recipients on developing such programs. 
 
------------------------------------------ 
GRULAC - VOLUNTARY CONTRIBUTIONS IMPORTANT 
-------------------------------------------- 
 
¶10. (U) Venezuela, speaking on behalf of GRULAC, expressed the 
Group's support for G-77.  GRULAC wants more than 1 percent of the 
UN general budget to be allocated to UNODC, but does not want to 
discourage voluntary contributions.  The Group also urged first 
focusing on financial resources to implement mandates from 
resolutions.  It expressed belief in "creative" resolutions, and 
correlations between priorities and funds.  GRULAC is also seeking 
better representation on UNODC's staff, and more communications 
between UNODC and Vienna missions. 
 
---------------------------------- 
OTHERS - TURKEY, RUSSIA, AND EGYPT 
---------------------------------- 
 
¶11.  (U) Turkey associated itself with the EU paper, but objected 
specifically to the Para 17 of the paper, which proposed the 
consolidation of the drug and crime funds.  Turkey opposed such 
"premature" consolidation, and stated that it has a more flexible 
position.  Turkey was also of the view that there were "many shared 
points" between the EU and the G-77 paper. 
 
¶12.  (U) Russia noted that RB (Budget and finance) is within the 
competence of the 5th committee, and there is need to "refine" ways 
to the GA.  Russia also commented that UNODC paper on core functions 
indicated that Secretariat did not seem to have a "unified position" 
on "core" definition.  It asked for more detailed information on 
regional offices involved in "core functions."  It also urged closer 
examination of program support charges (PSCs) because they could 
affect final decisions on the regular budget.  It expressed support 
for regular, open-ended consultations, and pledged to be 
constructive in the discussions. 
 
¶13.  (U) Egypt "echoed" the request for more information on "core" 
activities.  Egypt said that different models presented in the 
Secretariat paper should be translated into the posts/ positions in 
each division, e.g., how many posts/positions, and which kind of 
posts/positions. 
 
--------------------------------------------- ---------- 
CO-CHAIRS ANNOUNCE NEXT MEETINGS, CLARIFY U.S. QUESTION 
--------------------------------------------- ---------- 
 
¶14.  (U) The Namibian chair expressed satisfaction that she was 
encouraged by the "common ground" she had heard in the meeting.  She 
announced that there would be eight more meetings, four during the 
October 23-24 period, and four during the November 27-28 period. 
The dates are based on the availability of conference rooms.  If 
necessary, the Chair is prepared to program additional day/s. 
(Note:  November 27 is Thanksgiving.  Counselor will raise this with 
the Chairs.  End Note.)  Based on the input received, the chair 
would draft and circulate a "concept paper" before the October 23-24 
meeting. 
 
¶15.  (U) In their concluding comments, the co-chairs referred to 
FinGov's "recommendation" to the Secretariat to ask ACABQ for a 
greater share of the UN budget.  U.S. sought and received 
clarification that member states had not agreed to such a move. 
Co-chair Sweden explained that that was one of the possible outcomes 
for the Group. 
 
--------------------------------------- 
OCTOBER 9, MORE CONSULTATIONS ON "CORE" 
--------------------------------------- 
 
¶16.  (U) The Namibian chair convened an informal meeting on October 
9 to try to resolve the issue on the definition of "core" 
activities.  UNODC's finance chief and key member states were 
invited to participate.  This included U.S., Japan, Australia, 
Canada, a number of EU countries, Russia, Pakistan, Egypt and Cuba. 
The three G-77 countries argued forcefully that the Secretariat, not 
the member states, should define "core" activities, and  in terms of 
the number of posts/posistions.  Egypt noted that UNODC funds 
certain posts/positions out of regular budget, others out of GPF, 
and still others out of SPF.  So he reasoned that UNODC had already 
gone through some definition of "core," and should share how it made 
these determinations with member states.  Both the Secretariat and 
the Swedish co-chair explained that such allocations of position had 
a historical background, going back to the days when there were two 
separate drug and crime offices.  Therefore the funding allocation 
might not be as logical as one would like.  Counselor made the point 
in reftel, urging that the focus should not be on definition, but on 
 
how to find more creative and strategic funding that would give 
greater flexibility.  Japan agreed with "previous speakers" on the 
difficulty of the definition.  Canada commented that it might be 
impossible for the Secretariat to define "core." 
 
¶17.  (U) UNODC's finance chief pointed out some realities of the UN 
budgeting system.  He said that the Secretary General (SecGen) 
presents a budget proposal that determines UN priorities.  The 
SecGen has just requested the UNODC to identify savings.  Therefore, 
he said, the push for higher allocation of the UN overall budget pie 
would conflict with the SecGen's request.  He also noted that New 
York will not support an increase in regular budget to support 
conventions.  Such support should come from states that are parties 
to the conventions, not the UN, since the UN and Conventions have 
different memberships.  He said that currently the UNODC funds 
conventions (e.g., the COSP in Bali, the current COP) as special 
projects.  What the UNODC seeks, he said, is not more regular 
budget, but assured and predictable GPF.   He also stated that the 
FinGov should not get to the level of detail on posts/positions. 
 
¶18.  (U) In response to the U.S. question on the UNOV budget, 
especially in light of Norway's statement on October 7, he replied 
that the USD 39 million in regular budget funds it receives from 
UNOV supports about USD 230 million in programs (conference 
services, security, etc.) in Vienna, including those of UNODC, 
UNCITRAL, OOSA, UNROD, etc.  In his view, perhaps 15% of this USD 39 
million can be classified as for UNODC only. 
 
-------- 
COMMENT 
-------- 
 
¶19.  (SBU) Vienna's G-77-plus China Group seems to believe that New 
York would grant more money to UNODC if the member states request 
it.  At the October 9 informal, the three G-77 members seemed taken 
aback by the revelations of the UNODC finance chief on the apparent 
conflict between what the G-77 wants and what the SecGen wants.  We 
think Japan expressed "understanding" of the G-77 insistence on 
augmenting the regular budget, in the full expectation it probably 
would not go far.  If this is indeed the case, Mission would urge 
Washington to consider supporting the G-77 position to request New 
York for a greater slice of the UN budget pie.  Given the SecGen's 
overall priority-setting, as explained by the UNODC in the October 9 
meeting, higher allocation for the UNODC would not be likely.  In 
that case, we would risk little in agreeing to theprinciple that 
UNODC should be better resourced from New York, while gaining 
ourselves some political capital with the G-77 and the EU that we 
can use in the future.  END COMMENT. 
 
PYATT