UNRWA DONOR MEETING HIGHLIGHTS INCREASING

UNCLAS SECTION 01 OF 04 AMMAN 006456

SIPDIS

DEPT FOR NEA AND PRM; PASS TO USAID
GENEVA FOR RMA

SENSITIVE

E.O. 12958: N/A
TAGS: PREF PREL EAID KPAL KWBG JO
SUBJECT: UNRWA DONOR MEETING HIGHLIGHTS INCREASING
PALESTINIAN REFUGEE NEEDS, GROWING STAKEHOLDER CONSENSUS ON
NEED FOR CHANGE

REF: A) AMMAN 4337
B) AMMAN 3242

(U) Sensitive but unclassified; please handle accordingly.


1. (SBU) Summary: Discussion at the September 23-25 UNRWA
donor meetings focused on the ever-increasing gap between
Palestinian refugees' needs and UNRWA's stagnant financial
base. Continuing conflict in the West Bank and Gaza have
led to increased demands for UNRWA services, while chronic
underfunding of the agency's regular programs and declining
donor response to UNRWA's emergency appeals have left the
agency less able to respond. UNRWA hopes that a planned May
2004 extraordinary meeting in Geneva will attract new donors
and new resources from existing donors. Donors and host
governments want UNRWA to take another look at management
and governance issues, including through a donor-financed
external audit, with some donors arguing that such measures
are prerequisites to increased contributions. UNRWA has
already indicated it does not want governance addressed
through an external audit or at the Geneva meeting. End
summary.


2. (U) UNRWA held its semiannual meeting of major donors
and host governments in Amman September 23-24, followed by
the annual Advisory Commission meeting September 25 and a
separate September 25 stakeholder meeting to discuss UNRWA's
plans for an extraordinary, high-level meeting in Geneva in
May 2004 (ref a). The U.S. delegation was led by Ambassador
Gnehm and included PRM PDAS Rich Greene, PRM/ANE Program
Officer Robert Ward, Regional Refcoord Joan Polaschik and
Refugee Assistant Ibrahim Bisharat. A report on key themes
addressed at the meetings follows.

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Emergency Programs in the West Bank and Gaza
--------------


3. (U) Since the intifada began three years ago, UNRWA has
requested USD 529.8 million in emergency funding to support
additional programs in the West Bank and Gaza - of which
only USD 396.4 million has been funded. Given growing donor
fatigue (response to the current emergency appeal is USD 48
million of USD 102 million requested, including USD 31
million from the USG),donors questioned whether UNRWA was
indeed the best vehicle to deliver humanitarian assistance
and whether emergency programming should be folded into
UNRWA's general budget as the conflict shows no signs of
abating. After some discussion, donors agreed that UNRWA
was the most efficient vehicle to provide humanitarian
relief for Palestinian refugees and that support for UNRWA's
emergency appeals is critical during this period of
continued conflict. Donors urged UNRWA to study and report
on the consequences of shortfalls in funding the emergency
appeals as a means to generate greater financial support.


4. (U) UNRWA reported that it is working closely with other
UN organizations on a consolidated appeal for the West Bank
and Gaza, which should be ready by mid-November. As
suggested by donors, UNRWA's next appeal will be for a full
12 months. In response to donor suggestions that UNRWA
consider folding its emergency programming needs into its
General Fund budget, UNRWA Commissioner General Peter Hansen
replied that the situation in the West Bank and Gaza cannot
in any way be considered normal and the agency's emergency
programs therefore could not be added to UNRWA's regular
budget. He also noted that different donors respond to the
general budget and to the emergency appeals, meaning that
consolidating the two budgets could result in diminished
overall contributions to UNRWA.

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Access and Construction of the Wall
--------------


5. (U) UNRWA officials at all levels and from every
department expressed concern over the continuing difficulty
in delivering humanitarian aid in the West Bank and Gaza due
to checkpoints, roadblocks, curfews and closures. UNRWA
reported that IDF abuses of UNRWA installations continue to
be a problem, including the September 24 IDF search of
UNRWA's Qalqilya hospital. UNRWA ComGen Hansen told donors
that UNRWA staff were forced to lie down while IDF soldiers
kicked in doors, broke glass and fired shots into the
ceiling, all in search of an injured Palestinian militant
who turned out not to be in the hospital, as the IDF had
been informed prior to entering the hospital.


6. (U) UNRWA is particularly concerned about the impact of
the Israeli Government's separation fence on refugees and
the agency's ability to deliver services in the West Bank.
As noted in UNRWA ComGen Hansen's annual report to the
General Assembly, the construction of a security fence in
the West Bank will "impoverish and isolate thousands of
refugee families and will constitute a new and formidable
obstacle to the delivery of essential UNRWA services to
refugees living in the vicinity of the wall, along the
entire length of its route." West Bank Director Richard
Cook told donors that up to 200,000 refugees will be cut off
from Qalqilya hospital, while refugee children will be cut
off from their schools, refugee landowners cut off from
their property, and some UNRWA workers unable to get to
their place of work, due to the security fence.

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Humanitarian Consequences of Three Years of Intifada
-------------- --------------


7. (U) UNRWA reported that three years of conflict have
resulted in a sharp increase in unemployment, malnutrition,
and poverty among Palestinian refugees in the West Bank and
Gaza. West Bank Director Cook reported that curfews,
closures, checkpoints, and blockades have completely
strangled Palestinians' economic activity. Microenterprise
and Microfinance Program Director Alex Pollock noted that
loan repayment rates had fallen to 65 percent, versus a pre-
intifada repayment rate of 95 to 98 percent. Over 2,000
loans had been written off during that time. In 2000, some
12,000 loans were made by UNRWA worth over USD 14 million,
whereas from July 2002-June 2003 8,900 loans were made for
USD 6 million. Similarly, UNRWA Education Director Kabir
Shaikh noted that it was practically pointless to hold
vocational education training courses in the West Bank and
Gaza because "there is no economy and no jobs." In May
2002, for example, 60 businesses were destroyed in Jenin.


8. (U) The picture is also bleak on the health front.
According to ComGen Hansen's report to the General Assembly,
"The situation in the occupied Palestinian territory has
caused a significant deterioration of the refugees' health:
various studies document the increasing prevalence of acute
and chronic malnutrition as well as iron deficiency anemia
and low birth weight." Dr. Fathi Mousa, UNRWA's Director of
Health, told donors that refugees in the West Bank and Gaza
are cutting back on food purchases to pay other bills,
further endangering their health. He added that diabetes
and hypertension, both caused in part by poor diet and high
stress, are on the rise among Palestinian refugees. In
addition, three years of violence and conflict have left
many Palestinian children in need of psychological
counseling. One recent study found that two-thirds of Gaza
children had witnessed a shooting. Mousa noted that
children who live in the midst of conflict tend to have
nightmares, feel insecure, and act aggressively at school
toward their classmates. UNRWA has only limited funding
available for counselors and psychologists.


9. (U) Deteriorating economic conditions in the West Bank
and Gaza therefore continue to create new demands for UNRWA
services. West Bank Director Cook reported that even
refugees with steady employment (who are ineligible for
UNRWA food assistance under long-standing agency rules) now
ask UNRWA for emergency food assistance because they are
supporting more members of their extended family.
Similarly, huge numbers of refugees now seek employment with
UNRWA - a reversal of the recent market trend away from
UNRWA employment due to the agency's new noncompetitive
salary scale. In the West Bank, for example, 1600 people
recently applied for 99 UNRWA teaching positions. West Bank
and Gaza staff reported that frustration and despair are
evident among the refugee communities, including in
unprecedented violent attacks on UNRWA staff by refugees who
have been rejected for emergency assistance.


10. (U) At the same time, declining donor response to
UNRWA's emergency appeals has forced the agency to reduce
its emergency programs. Whereas UNRWA used to meet 60
percent of the food needs of refugees in the West Bank, it
now meets only 40 percent. UNRWA officials noted that the
ICRC's recent decision to end its emergency food assistance
programs at the end of this year will have a further
negative impact on Palestinians' health. The West Bank
field currently has only 25 percent of its needed medical
supplies. Child immunization rates in the West Bank and
Gaza have fallen by five percent over the last three years,
an indicator that outbreaks of communicable diseases could
occur if this trend is left unchecked. In Gaza, 506 refugee
shelters were destroyed and 1,518 damaged from July 2002-
June 2003 but UNRWA has been able to implement only 12
percent of its planned emergency shelter repair programs.
Hansen added that even with full funding, such as in the
Jenin reconstruction project, closures and curfews impede
the agency's ability to respond.

--------------
General Fund Budget and Chronic Underfunding
--------------


11. (U) UNRWA ComGen Hansen was proud of the effort his
team had made to balance the budget. UNRWA's latest budget
for the 2004-2005 biennium, he noted, had been blessed by
the UN's Advisory Committee on Administrative and Budgetary
Questions with no comments and cited as a model for other UN
agencies. Hansen and many other speakers, however, noted
with dismay the consequences of chronic underfunding of the
agency, which receives 94 percent of its income from
voluntary contributions. One particularly telling statistic
is that UNRWA in 2002 spent USD 73 per refugee, whereas in
1990 it spent USD 99 per refugee. Although contributions
have risen over the years, they have not kept pace with
growth of the Palestinian refugee population.


12. (U) UNRWA Education Director Kabir Shaikh told donors
that chronic underfunding of the agency's education programs
(which account for over 50 percent of UNRWA's budget) has
resulted in higher pupil/teacher ratios, double shifts in
schools (one-half day for each student),rental of
inadequate buildings to serve as schools due to lack of
funding to construct new ones, and the lack of computers in
the information age. In just one example of UNRWA's dire
education needs, PRM officers noted in a visit to a five-
year old U.S.-funded UNRWA school in Jordan that the
teachers had 48 students per class. The school had no extra-
curricular activities, no sports or physical education
programs, and computers that were outdated and did not
function. There are 500,000 pupils attending UNRWA's 656
schools, and that population is growing by at least one
percent a year. Over the past decade, the number of UNRWA
schools has increased by 2.5 percent, while the number of
its pupils has increased 23 percent.

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External Audit Needed?
--------------


13. (U) In both the informal "pre" meeting and its official
statement, the United Kingdom suggested that an independent,
external audit of UNRWA financed by donors would bring
confidence that UNRWA is fulfilling its mandate in the most
efficient manner. That in turn would make it easier for
ministers to make the case to their own governments that
assistance to UNRWA is money well spent. ComGen Hansen said
that he welcomed such an audit, expressing confidence that
UNRWA would receive high marks. He said there was "no fat"
in UNRWA's budget, citing as an example that his agency had
fewer four wheel drives than many NGO's working in the
region which are many times smaller than UNRWA.


14. (U) UNRWA Director of External Relations Andrew Whitley
informed donors in a side meeting that an external audit of
UNRWA -- paid for by the UN central budget -- is undertaken
bianually to review the agency's finances and performance.
None of the donors knew of this biannual audit (yet another
example of UNRWA's poor communications skills) and asked for
copies of the most recent one, which were promised by UNRWA.
Once the donors review the audit, they will consult each
other to determine whether it satisfies their request for an
objective external audit. (Comment: The U.S. currently is
reviewing the practice of outside audits of other UN
agencies and will review the current UNRWA audit before
taking a decision on the UK's proposal.) Some donors
stressed to Whitley that an audit needs to take a hard look
at the way UNRWA is governed, rather than simply its
financial performance. UNRWA representatives said the
agency opposed such a review, noting that the venue for any
discussion of UNRWA's governance structure should be the
UNGA.

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Plans for an Extraordinary Geneva Meeting
--------------


15. (U) In an informal September 23 lunch meeting and
separate September 25 planning meeting, UNRWA and the Swiss
Government briefed stakeholders on plans for a one-time,
high-level meeting in Geneva (ref a). UNRWA is now casting
the meeting as an opportunity for donors and host
governments to discuss the medium-term challenges facing the
agency, "endorse" the direction of the agency and strengthen
its resource base. UNRWA proposed that the meeting include
a "Geneva Declaration" in support of UNRWA's humanitarian
mandate, but several donors expressed concern that such a
statement could prove too political. Senior UNRWA
management - including ComGen Hansen in a side meeting with
PRM PDAS Greene - assured stakeholders that the meeting
would not include a political agenda and would not turn into
a forum for political statements and posturing. UNRWA is
particularly interested in opening the meeting to minor
(less than USD one million per year) and potential donors,
in hopes of increasing their contributions. (Comment: When
pressed for possible new donors, External Relations Director
Whitley cited Russia, Morocco, New Zealand and "eastern
European countries." We are skeptical that these nations -
most of which are aid recipients - will produce any
significant contributions.)


16. (U) The Swiss, who first proposed this meeting in the
spring of 2003, continue to hope that an extraordinary
Geneva meeting would bring more actors (some with new ideas)
and more pressure on UNRWA management to adopt needed
reforms. In both planning meetings, the U.S. delegation
noted any extraordinary meeting should also focus on the
agency's governance structure. The main problem with the
current stakeholder meetings is that they do not produce a
plan of action or even an agreed list of programming
priorities. The U.S. will continue to work with other major
donors and host governments on governance issues over the
coming year.

--------------
Hansen/Greene Meeting on the Margins
--------------


17. (SBU) During a September 23 breakfast meeting, PRM PDAS
Greene cautioned UNRWA ComGen Hansen to keep his public
statements confined to facts and devoid of political
content. Greene noted that the Government of Israel had
complained frequently to USG officials about Hansen's
alleged biased statements critical of the GOI. Hansen
responded that when a wall was being built into Palestinian
territory in the West Bank and the IDF was demolishing homes
in the Gaza strip, these Israeli Government actions
negatively affected refugees and he had a duty to raise
these concerns. However, Hansen acknowledged there was a
need to be balanced in his statements. Greene also
emphasized that UNRWA must continue to exercise extreme
vigilance to ensure that its facilities and programs are not
compromised by terrorists. Hansen responded that UNRWA took
its obligations seriously and looked forward to the
conclusions of the U.S. General Accounting Office (GAO)
review of UNRWA's compliance with section 301 (c) of the
Foreign Assistance Act. He added that UNRWA would be glad
to consider any recommendations that GAO might have on how
UNRWA could do better to comply.

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Comment
--------------


18. (SBU) Debate during and on the margins of these UNRWA
meetings revealed growing agreement among UNRWA, host
governments and donors alike that something must be done to
address the ever-increasing gap between the needs of the
Palestinian refugee population and UNRWA's stagnant
financial base. UNRWA seems to be pinning its hopes on a
high-level meeting in Geneva to attract both new donors and
new resources from its existing donor base. Donors and host
governments, on the other hand, seem eager for changes in
UNRWA's management and governance structure, with some
hinting that such changes are a prerequisite to increased
contributions. UNRWA has already indicated that it does not
want management or governance on the agenda of the Geneva
meeting and likely will resist any effort to include these
issues.


19. (U) PRM PDAS Greene cleared this message.
GNEHM