IMPROVING FINANCE AND GOVERNANCE AT UNODC

UNCLAS UNVIE VIENNA 000532

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: SNAR KCRM UN AU
SUBJECT: IMPROVING FINANCE AND GOVERNANCE AT UNODC

REF: STATE 92709

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SUMMARY
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1. (U) The open ended Finance and Governance Working Group (FinGov)
of the UNODC will have its first meeting on October 7. This meeting
is intended for member states to submit their position papers, which
the chair (Namibia and Sweden) will use for developing a single
paper that will be circulated for member states comments before the
second meeting a few weeks later. At the request of member states
and to facilitate the FinGov process, UNODC has agreed to provide a
list of its core activities at the end of September. In recent
weeks, Counselor met with other mission counterparts to raise Reftel
points and to hear their views concerning FinGov. Several themes
emerged from these discussions.


2. (U) The EU priority is governance, but the G-77's is finance.
There is a unanimous desire among our interlocutors for more
frequent communication from the Secretariat, and among the
Secretariat, donor and recipient countries on management, budget,
and program issues. However, there are divergent views as to how
this is going to be achieved. Some (G-77 plus China) are adamant on
a mechanism that can make formal decisions. Others (EU) are
proposing an advisory group on program and budget, similar to that
in the CTBTO. Still others (Mexico, U.S.) want an informal
mechanism, such as an extension of the open-ended FinGov WG.


3. (U) On the budget side, the G-77 plus China Group has requested
the UNODC to identify its core functions to help determine what it
would need for its regular budget. In any case, it advocates a
greater percentage allocation of the UN budget for the UNODC,
without increasing the overall UN budget. Apparently, the G-77
position paper in circulation (transmitted to Department on
September 12) may not have 100% G-77 support. A number of key
players (Japan, Canada) have not yet developed their positions.


4. (U) Based on these discussions, Mission recommends that
Washington take the following into consideration in drafting the USG
paper for submission at the October 7 meeting:

(i) Consider other UN agencies that can be models of good governance
and financing;

(ii) Consider the options for an informal governing structure, which
can include one or more of the following: merely frequent
consultations between UNODC and all member states, a few days of
intersessional meetings (without additional costs) on FinGov issues,
or a separate day at the CND and the Crime Commission to discuss
FinGov alone;

(iii) Alternatively, if others insist, we can consider a phased
approach - trying informal consultations first to see how they work,
and then move to a more formal mechanism;

(iv) Develop USG priorities in the UN system, which will allow us to
decide whether we can support the G-77 call for the UNODC to get a
greater percentage allocation from the UN budget;

(v) Review UNGA resolutions 41/213, 42/211, and 45/248 B, to rebut
G-77 claims (in its position paper) that inclusion of our budget
mantra ("subject to extra-budgetary resources" etc.) violates these
resolutions. END SUMMARY.

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GOVERNANCE: G-77 PLUS CHINA
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5. (SBU) The Pakistan chair of the G-77 plus China group (G-77),
Usman Jadoon, is circulating a position paper for comments and
reaction from non G-77 missions. (Note: Mexico told us on
September 26 that there was not yet GRULAC consensus to support this
paper. End Note.) Counselor and USDEL met Jadoon on September 18.
He explained that G-77 is aware of the realities of member states'
constraints, and therefore has crafted positions with a great deal
of flexibility. Although the G-77's preference is to have the WG
tackle first the finance, and then governance, he seemed open to our
proposal to reverse the order.


6. (U) The G-77 is the most vocal group on establishing regular
dialogue between the Secretariat and member states in order to
improve governance. Jadoon emphasized that he worked hard to build
G-77 consensus on positions that are more flexible than some more
extreme G-77 members advocated. For example, he pointed out that
they would be willing to consider different options for a forum for
dialogue as long as the forum has "some formal structure" that will
allow it to make decisions.


7. (U) According to Jadoon, G-77 believes that an informal forum
will serve no purpose other than being a talk shop. He advocated
using the inter-sessional meetings for such purposes, noting that
the inter-sessional meetings took a decision on UN.GIFT, which was
then endorsed by the CCPCJ at its reconvened session. He argued
that the inter-sessionals would incur no additional cost, because
they can utilize the unused three days of the annual CND, which
budgets eight days but uses only five.

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GOVERNANCE: EU
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8. (U) Counselor and USDEL met with Germany and Sweden on
September 22. EU presidency France has tasked Germany to develop the
EU position on this working group. Sweden co-chairs the FinGov WG.
The EU focus is on governance rather than on finance. German
Mission's Marcus Bleinroth, who covers governance and budget issues
for all UN agencies in Vienna, considered the UNODC to have less
governance structure than all other UN bodies. On behalf of the EU,
he proposes an on open-ended advisory group, modeled on the CTBTO,
for "informal, limited, but substantive" discussions. It will be a
limited body comprising a mixture of experts from capitals and
missions, will have a chairman who serves two to three years, will
meet for three one-week sessions each year, and will report to the
member states after each session.


9. (SBU) Counselor commented that several features of this proposal
might not be acceptable to all member states. It is a new body, it
is rather formal (U.S. objections),and it is limited (G-77 will
object). Counselor suggested alternatives such as more informal
frequent consultations and extending the FinGov Working Group. We
also discussed using an intersessional meeting day and/or an annual
Commission day just on finance and governance. All agreed that we
should get a better understanding of the UNODC budget cycle and how
it interfaces with New York's. In the meantime, EU will continue
its consultations with other missions. In a brief conversation on
September 29, EU chair French Mission's Sylvan Guetaz indicate to
Counselor that there was no EU consensus on the structure Germany
proposed.

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GOVERNANCE: CANADA, JAPAN, RUSSIA
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10. (U) Canadian Mission's David Nelson commented to Counselor
regarding G-77's frustration on the perceived lack of communication
between Costa and the G-77 countries, and their proposal to call for
more intersessional meetings. He also noted that GRULAC might not
be in agreement with the intersessional issue. Nelson did not
specify any Canadian position on governance, except to say that
Canada could not accept combining the two commissions or the two
funds. Japanese Mission's Katsu Ishikawa and Hideo Eno told
Counselor that Ishikawa was preparing comments to Tokyo on the G-77
position paper, and would advise us of Tokyo's reactions. They had
not yet been approached by the EU. (Note: Former Japanese DCM
Ambassador Sumi handled budget issues for all agencies in Vienna.
His successor arrives October 7, and is unlikely to attend the
FinGov meeting that day. End Note.) Russian Mission's Senior
Counselor Alexey Dronov said his colleagues were still waiting to
hear from Moscow. However, Japan's Ishikawa told us that Russia
favors a regular consultation forum.

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GOVERNANCE: MEXICO
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11. (SBU) GRULAC chair Mexican DCM Ulises Canchola-Gutierrez said
that GRULAC would have its coordination meeting on the G-77 paper on
September 26, which his colleague Guillaume Michel will attend. At
a lunch reception on September 26, Canchola told Counselor that he
had not yet heard about outcome of the GRULAC meeting. However, he
said that GRULAC, as of that point, had no consensus to support the
G-77 position. In general, Mexico wants more communication between
UNODC and all member states, but does not want a new body created to
facilitate such communication. Later in the afternoon, Michel told
us that the morning GRULAC meeting focused only on UNGASS issues.
He promised to let us know when GRULAC reaches a position on FinGov
issues.

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FINANCE: G-77 plus China
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12. (U) This is the higher priority issue for the G-77 plus China
Group. The Group has requested, and the UNODC has agreed, to provide
a list of its core activities which the G-77 believes that member
states should use to determine the amount of regular budget it would
need. Egypt, an active member of the G-77, defined "core
activities" as the basic management and administrative expenses
essential to UNODC. Jadoon clarified that such activities should be
funded by a "core" budget, i.e., regular budget. While the G-77
paper categorically rejects language such as "subject to
extra-budgetary resources" and "within existing resources," Jadoon
was at pains to emphasize that his group, aware of American (and
other) finance sensitivities on UN assessment, is proposing to seek
for UNODC only a higher percentage allocation of the existing UN
budget pie, not a higher amount that will increase the pie (and
consequently the assessment).


13. (U) According to Jadoon, UNODC currently receives an allocation
of about 1% of the UN budget (amounting to $34 million in 2006-2007,
and $37 million in the 2008-2009 biennium). In addition to having
UNODC define "core" activities to determine the appropriate amount
for the "core" or regular, budget, G-77 is willing to consider
voluntary funding (such as through pledging conference) for the
General Purpose Fund, but rejects any kind of voluntary funding for
core activities. Counselor told him of categorical USG opposition
to any kind of voluntary indicative scale of contributions for
funding the regular or other budget.


14. (U) Counselor and USDEL stressed to Jadoon that the USG
earmarks its voluntary contributions to UNODC because the funds come
from different budget line items with very specific
congressionally-prescribed constraints. Therefore, these funds can
be used only for the congressionally-mandated purposes, and cannot
be shifted to the General Purpose Fund (GPF). We warned him that
any disregard of the realities of the U.S. budget process could
negatively affect USG voluntary contributions to the UNODC, without
increasing USG contribution to the GPF. Jadoon suggested that a
thematic approach to voluntary contributions, i.e., having donors
contribute to a thematic program (e.g., demand reduction),rather
than to specific projects (e.g., demand reduction in country x),
could be a compromise solution. (Note: UNODC's Terrorism
Prevention Branch has presented such a thematic program approach to
much acclaim. UNODC Operations Division is also in the process of
organizing its projects into thematic programs. End Note.)

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FINANCE: EU
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15. (U) According to Germany, EU believed that a thematic program
approach to increase transparency, accountability, and reporting
would improve financing. Subsequently Sweden's Jorgen Frotzler
explained to Counselor that the EU believed UNODC could expand its
donor base by more reporting, more accountability, and more
transparency, and the thematic program approach would be one way to
do it. (Note: Sweden co-chairs the FinGov WG with Namibia.
Although Germany is the overall coordinator on FinGov, Sweden is
understandably active on these issues. End Note.) Frotzler said
that the EU would have a coordination meeting on the finance issue
alone next Tuesday, September 30.

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FINANCE: CANADA
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16. (U) According to Canadian Mission's David Nelson, Canada gave
only $600,000 to the General Purpose Fund (GPF). He considered the
1% share of the UN budget that UNODC receives from New York for its
regular budget as too low. However, he said that the UNODC had not
really explained its needs well enough for him to go back to Ottawa
to ask for more than 1% allocation for UNODC. He believes Ottawa
can live with allocating a fixed percentage of voluntary
contributions to the UNODC, and with a pledging conference. In
principle, Canada is against PBIs (that will have to go to the 5th
Committee),but there may be exceptions. In any case, his crime and
drug experts at UNODC meetings have complained about the huge amount
of time spent on debating language such as "subject to
extra-budgetary resources." Therefore, he would like to find a
definitive solution to this issue.

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FINANCE: MEXICO
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17. (SBU) In our conversation on September 26, Canchola told us
that Mexico shares common ground with the U.S. on the financing
issue. Mexico wants the UNODC to become an efficient, effective,
and transparent body in which member states have clear ownership.
Mexico also maintains a ZNG position on the budgets for UN bodies,
including UNODC, IAEA, and the CTBTO in Vienna. He emphasized that
Mexico's current application to join the Geneva Group is a clear
signal of its serious interest in the budget and management issues
in the UN system.

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COMMENT
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18. (SBU) The October 7 meeting will be an information-gathering
meeting for the chair of the Working Group. There will be time
after that to refine USG positions. Nevertheless, we may find it
difficult to hold our budget mantra against the persistent attacks
by G-77 and the weakening resolve of some allies. If we can define
our own funding priorities in the UN system, we may find it possible
to support the G-77 proposal to ask New York to allocate a greater
slice of the UN budget pie to UNODC, without increasing the size of
the pie itself. In any case, such support may or may not persuade
New York, but at least we will have made a goodwill gesture that
could minimize the time and energy we have to spend arguing this
issue at UNODC meetings. End Comment.

SCHULTE