VZCZCXYZ0008
RR RUEHWEB

DE RUEHUNV #0578/01 3041420
ZNR UUUUU ZZH
R 301420Z OCT 08
FM USMISSION UNVIE VIENNA
TO RUEHC/SECSTATE WASHDC 8614
INFO RUCNDT/USMISSION USUN NEW YORK 1377

UNCLAS UNVIE VIENNA 000578 
 
SENSITVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: SNAR UN KCRM
SUBJECT: UNODC FINANCIAL-GOVERNANCE WORKING GROUP 
 
REF: State 112722 
 
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SUMMARY 
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¶1.  (SBU) Co-chairs of the Open-ended Intergovernmental Working 
Group on Improving Governance and Financial Situation of the UNODC 
(FinGov) convened a two-hour informal meeting with key members on 
October 23 to discuss options of improving the financial stability 
of UNODC. The options included requesting a large allocation from UN 
New York for UNODC's regular budget (RB), ways of increasing the 
General Purpose Fund (GPF); the adoption of thematic and regional 
programming by UNODC; and the establishment of separate funding 
mechanisms for the UN Convention on Transnational Organized Crime 
(UNTOC) and the UN Convention against Corruption (UNCAC). Counselor 
delivered Reftel talking points. The meeting ended without definite 
conclusions. 
 
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Disagreement on the Regular Budget 
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¶2.  (SBU) Disagreement persisted regarding the size of the UNODC's 
share of the UN's regular budget (RB). Argentina, Cuba, Pakistan and 
Egypt vigorously advocated an increase in the UNODC's RB. All stated 
current levels were inadequate and hampered the organization's 
ability to carry out its mandates with integrity and independence. 
Egypt had a somewhat subtler approach: it wants UNODC to define its 
core functions which, in Egypt's opinion, should be funded from the 
RB. These representatives referred repeatedly to UNODC's 
Independence Evaluation Unit (IEU), which they described as a core 
function that should be funded by the RB but is not. Cuba criticized 
UNODC for increasingly resembling a private corporation, accountable 
only to buyers with money (i.e., the major donors). 
 
¶3. (SBU) Per reftel, Counselor voiced USG opposition to any request 
to New York for a bigger allocation for the UNODC regular budget. 
Japan and Canada urged UNODC to conduct a thorough review of its 
internal management, and streamline its operations to eliminate 
inefficiencies. Furthermore, they agreed with the U.S. that it is 
UNODC Executive Director Costa's responsibility to make the case for 
additional funds to the Secretary General and the Controller in UN 
New York. Canada seemed to have softened its previous position, 
stating it is willing to consider increased allocation for the RB if 
it could be thoroughly justified. 
 
¶4. (SBU) Many delegations--including Germany, Norway, Egypt and 
Pakistan--repeatedly brought up the question of "core" versus 
"non-core" activities. The IEU again was cited as an example of a 
"core" activity that should be funded by RB funds. These delegations 
all argued for the need for a clear articulation of "core" 
activities as a way to justify the case for an increase in RB 
funds. 
 
¶5.  (SBU) Disagreement also persisted over how member states should 
advance a recommendation for increased RB funds. While Cuba and 
others asserted that the fight for funds was a matter for the 5th 
Committee in NY, they also agreed that the Drug Commission (CND) and 
the Crime Commission (CCPCJ) could put forth formal recommendations 
for increased RB funds. Russia disagreed, stating that the two 
Commissions were not competent to make such a request. Russia 
expressed its belief that any request for RB funds should go through 
the General Assembly (GA). 
 
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Skepticism on Proposals to Increase GPF 
--------------------------------------- 
 
¶6.  (SBU) All delegations in attendance agreed on the need for 
improved reporting and transparency regarding the use of GPF. Many 
expressed continued frustration with the manner in which the UNODC 
reports its GPF expenditures. Canada bluntly stated the hope that 
Canadian "auditors don't look too closely at the UNODC reports." 
Canada expressed the sentiment shared by others that better 
reporting would help raise confidence in UNODC, and could lead to 
increased GPF donations. Pakistan similarly expressed confusion 
regarding how GPF is spent.  Egypt expressed a desire for all 
reports--including UNODC reports to donors--be made available to all 
member states. (Note: In a subsequent conversation, a senior UNODC 
official indicated to Counselor that such reports could not be 
shared without the permission of the donors. End Note.) 
 
¶7.  (SBU) UNODC officers in attendance expressed dismay over the 
transparency discussion. They reminded member states that the latest 
results-based budget, created to address member state concerns, was 
widely praised for its transparency and clarity. However, UNODC 
watched as GPF contributions promptly declined 6%. UNODC stated that 
it can always create more reports, but there comes a point when the 
entire management and reporting process becomes unsustainable. 
¶8.  (SBU) Egypt, Cuba and Pakistan all agreed that Special Purpose 
Funds (SPF) earmarked for specific projects, distort the role of the 
UNODC. Egypt asserted that SPF donations are in violation of GA 
resolutions. He proposed to have SPF donations heavily "taxed," a 
proposal supported by Cuba and Pakistan. Russia, Japan, U.S. and 
Canada all objected to such a proposal, pointing out that SPF are 
already "taxed," since there is  a 13% program support cost (PSC) 
levy for such donations. (Note: In an earlier meeting, UNODC 
indicated that the average PSC levy for UNODC projects was 6% to 7%. 
We understand that the European Commission had negotiated such a 
rate for its SPF contributions. Counselor underscored that the U.S. 
always pays 13%. End Note.) 
 
¶9.  (SBU) There was little support for the adoption of a voluntary 
indicative scale of contributions (VISC), although France stated if 
it helps broaden the donor base, it would be willing to explore the 
topic. 
 
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Audience Receptive to Thematic Programming 
------------------------------------------ 
 
¶10.  (SBU) Argentina was enthusiastic in its support for this 
proposal. Other delegations also expressed openness to the idea. 
UNODC officials warned of capacity problems if thematic and regional 
programming is not implemented. They are currently considering a 
policy of rejecting any SPF contribution that is less than 500,000 
USD, as they state the costs associated with managing small programs 
are simply too great. However, thematic and regional programming 
could resolve such problems, they said. The UNODC head office will 
set the themes, and the field office will develop the 
programs/projects on the ground. Further, UNODC believes regional 
programming would get more "buy-in" from the recipient countries, as 
they would be the architects of the program, in partnership with 
UNODC. Once a program is developed at the ground level, UNODC would 
approach donor countries for funds. UNODC warned that there could 
not be SPF within such programs, however. The costs associated with 
managing SPF within these programs, they asserted, would be too 
great. 
 
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Separate Funding Mechanisms for UNTOC and UNCAC? 
--------------------------------------------- --- 
 
¶12.  (SBU) Argentina expressed support for the idea, but warned that 
such mechanisms must be compulsory. Argentina pointed to UNESCO as 
an example of how this structure can work. Argentina expressed 
willingness to lead on the issue. Egypt and others were unclear how 
the system would work, and for what purposes. U.S. and Japan 
expressed opposition to compulsory assessments. 
 
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COMMENT 
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¶13.  (SBU) While the meeting ended without definite agreements, it 
did crystallize the positions of various delegations and reveal 
areas of possible cooperation. There seems to be a growing consensus 
that UNODC and its member states need to first define what core 
activities are, and what are not.  UNVIE has yet to find anyone, 
either in UNODC or out, who is willing to give an opinion on this 
topic. And UNODC officials are not nearly as enthusiastic about 
member state attempts to increase the organization's RB 
apportionment as they are about expanding contributions to the 
General Purpose Fund, which allows more spending flexibility than 
the regular budget. Nevertheless, there seemed to be little stomach 
for a VISC mechanism, nor much enthusiasm for a voluntary agreement 
to dedicate general purpose fund contributions. 
 
¶14.  (SBU) However, there seems to be some cross-regional interest 
in thematic and regional programming. Although such funds would 
still be considered earmarked, they may allow for increased UNODC 
flexibility and buy-in by G-77 countries, and the ability for major 
donors to retain control over where earmarked dollars are spent. 
End Comment. 
 
Schulte