FINDING FUNDING FOR UN COMPOUND IN IRAQ

C O N F I D E N T I A L USUN NEW YORK 000972 SIPDIS SIPDIS E.O. 12958: DECL: 11/07/2012 TAGS: PREL UNSC IZ SUBJECT: FINDING FUNDING FOR UN COMPOUND IN IRAQ Classified By: Ambassador Zalmay Khalilzad for reasons 1.4 (b) and (d). ¶1. (U) This is an action request. Please see paragraph 14. SUMMARY AND COMMENT -------------- ¶2. (C) Absent U.S. intervention, the UN will soon begin the process of requesting Member State approval of approximately 190 million dollars under the UN's 2008-2009 regular budget for construction of the UN Assistance Mission in Iraq (UNAMI) compound - the UN integrated headquarters in Baghdad. For a number of reasons, the Mission believes the UN will encounter considerable political resistance from Member States to this funding request. Such resistance could at a minimum significantly delay action on the project, if not also seriously undermine the prospect of obtaining UN funding for the project, and possibly establish a precedent for funding such projects under the peacekeeping scale with resulting serious financial implications for the USG (i.e., the USG assessment would increase by more than an additional $25 million per year). ¶3. (C) There are at least two possible alternatives to explore. One is to go back to the drawing board and review the UN's efforts over the past year to identify an appropriate property site that meets security criteria -- a process reportedly undertaken in consultation with MNF-I, the GOI, and the property commission handling disposition of property in the IZ -- and see if there is a cheaper alternative. Another is to ask the Government of Iraq to provide some or all of the required funds from the Iraq oil-for-food (OFF) Escrow Account. Such a decision by Iraq is permissible under the terms governing the Escrow Account, and consistent with Iraq's responsibilities as host country and its stated desire to expand the UN presence in Iraq. We have an interest in successfully resolving this funding challenge so as to ensure the UN can expeditiously obtain a secure and integrated compound, permitting the staff increases necessary to allow the UN to play a larger role in Iraq. End summary and comment. BACKGROUND -------------- ¶4. (U) In UN terms, UNAMI is a special political mission (SPM). SPMs are funded by the UN under the regular budget scale (as opposed to the peacekeeping scale, under which the USG pays 26 percent of every UN operation funded from this account). Currently, UNAMI has two compounds in Baghdad, which allow it to fit up to 100 international staff. Expanding the staff to include other UN entities (e.g., UNHCR, IOM, UNICEF),necessitates construction of a significantly larger integrated compound. ¶5. (C) The UN has informed USUN that during the past year the UN has been engaged with the GOI, MNF-I, and the property commission handling the disposition of property in the International Zone (IZ) in an effort to identify a suitable compound within the IZ. As a result of this process, the compound chosen is the old U.S. Embassy. Originally, the UN planned to retrofit the existing structure to meet its security and other specifications, including relocation of four UN sites currently scattered throughout the IZ into one secure facility. But due to the increase in the number and caliber of weapons impacting the IZ and other negative security developments during the past year, the UN's Department of Safety and Security insisted upon a greater level of protection. Therefore, the UN's proposed budget for the compound ballooned to 190 million dollars. This price tag includes tearing down the old U.S. Embassy and building a new, secure facility on the site. (Comment: USUN plans to meet with the Department of Safety and Security and other UN officials this week to review in detail the background of the current UN plan and the factors that resulted in its development. End Comment.) OPPOSITION IN NEW YORK -------------- ¶6. (C) Absent a U.S. effort to stop the process, a 190 million dollar supplemental request to support the new compound will soon be taken up by the ACABQ and the UN General Assembly's Fifth Committee, the two budgetary bodies of the UN. We believe this request will be met with hostility, for a number of reasons. 1) The UN's role in Iraq continues to be controversial both among Member States and within the UN, notwithstanding the Secretary-General's strong statements of support. 2) UNAMI is mandated by the Security Council, but the general membership of the UN will be asked to pay for this new integrated UN compound in Iraq. ¶7. (C) Many Member States will likely argue that this request should be paid under the peacekeeping scale, which means that the U.S. and the rest of the P-5 will pay far more. In the case of the U.S., the difference is between 22 percent of the regular budget scale and 26 percent under the peacekeeping scale. In the case of this specific project, it would mean the USG would pay $49.4 million vice $41.8 million. Moreover, we believe that were this SPM to be funded under the peacekeeping scale, it would encourage G-77 and other delegations to call for moving funding of other SPMs to the peacekeeping scale. This would have substantial financial implications for us and the rest of the P-5. Looking at the projected SPM budged for 2008-9, such a shift in scales would result in an approximate increase in the USG assessment of more than $25 million per year. ¶8. (C) In the past, we have successfully deflected suggestions to move Special Political Missions (which include Iraq and Afghanistan, among others) to the peacekeeping scale, but the task will be more difficult given the nature and cost of this mission. The nature of the Iraq mission and the magnitude of this sum will likely encourage some Member States to reject this proposal or, at the very least, to delay consideration indefinitely, and to propose funding under the peacekeeping scale. USING THE ESCROW ACCOUNT -------------- ¶9. (C) The UN Controller has confirmed to USUN the existence of some 200 million dollars unencumbered excess in the OFF Escrow Account. If Iraq agreed, these funds could be used for the UNAMI compound construction project. We note that, on previous occasions, the Government of Iraq (GOI) has requested that such excess OFF funds should be used for its UN expenses, including contributions to the UN regular budget, the international tribunals for Yugoslavia and Rwanda, the capital master plan for renovation of UN Headquarters and the UN Industrial Development Organization (UNIDO). Finally, the Controller suggested that there would be no opposition from the Secretariat to a request by Iraq to utilize the Escrow Account monies for purposes of this project. Such a request would be processed in the usual manner. OPTIONS -------------- ¶10. (C) OPTION 1: Iraq does not fund any of the 190 million dollar compound through the oil-for-food reserves and the issue winds its way through the UN budgetary process. Under this scenario, we believe that UN approval of the funding request would likely be substantially delayed, thus slowing down planning and construction for a secure compound, which in turn will continue to mean limitations in the size of the UN presence in Iraq. In addition, Fifth Committee consideration of this issue might trigger an attempt by some members to increase the financial responsibility of the P-5 with regard to Special Political Missions by funding such missions under the peacekeeping scale. ¶11. (C) OPTION 2: Iraq funds some or all of the 190 million dollar compound through its oil-for-food reserves. Ideally, Iraq would fund all of the compound through its oil-for-food reserves, allowing this issue to escape the UN budgetary process. However, if Iraq pays for a substantial portion of the compound, the remaining sum is likely to be more acceptable to the budgetary bodies, and therefore to earn expedited approval and avoid the risk of a move to the peacekeeping scale. Assuming GOI concurrence, this option is the most expeditious. ¶12. (C) OPTION 3: We engage Iraq and the UN in the process of taking a fresh look at the sites available in the IZ and elsewhere, with the objective of finding a less expensive alternative, albeit one that meets UN security requirements. TIMING -------------- ¶13. (C) As noted above, we expect that Member States will delay consideration of the UN's current proposal. The possibility exists that this SYG request for funding for the new compound could be considered by the ACABQ as early as November 14. If we intervene to block the UN's consideration of this matter through its normal budgetary process while we explore alternative sites, we are likely to miss the General Assembly's fall 2007 window. Thus the earliest opportunity to reengage that UN budgetary process would be when the General Assembly resumes in March 2008. If we were to pursue and obtain GOI financial support for the current proposal by the end of November, it is more likely that we could obtain UN action before the end of the year. ¶14. (C) ACTION REQUEST: USUN requests the Department to approach Embassy Baghdad, MNF-I and the government of Iraq to explore the pros and cons of these various options, with an eye on our shared goal of expeditiously obtaining a secure integrated compound for the UN so it can deploy the staff necessary to allow the UN mission to take on a larger role in Iraq. END ACTION REQUEST. Khalilzad