UNODC FINANCE AND GOVERNANCE WORKING GROUP MEETING, OCTOBER

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

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SUMMARY
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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.

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THE SECRETARIAT DEFINES "CORE"
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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.

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CUBA SURPRISES
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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.


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G-77 PLUS CHINA GROUP: REGULAR BUDGET FOR CORE FUNCTIONS AND NO
BUDGET MANTRA
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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.

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THE EU - GOVERNANCE FIRST, THEN FINANCE
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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.

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NORWAY - MORE REGULAR RESOURCES THAN MEETS THE EYE
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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.


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CANADA - DEFENDING FINANCE MANTRA
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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.

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JAPAN - NO INCREASE IN un REGULAR BUDGET AND NO PBIs
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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.

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AUSTRALIA - MORE TRANSPARENCY AND ACCOUNTABILITY
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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.

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GRULAC - VOLUNTARY CONTRIBUTIONS IMPORTANT
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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.

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OTHERS - TURKEY, RUSSIA, AND EGYPT
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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.

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CO-CHAIRS ANNOUNCE NEXT MEETINGS, CLARIFY U.S. QUESTION
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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.

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OCTOBER 9, MORE CONSULTATIONS ON "CORE"
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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.

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COMMENT
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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