WHITHER A U.S. VISION FOR FINANCING AND GOVERNING UNODC

UNCLAS UNVIE VIENNA 000386

SIPDIS

C O R R E C T E D C O P Y (REMOVED SENSITIVE CAPTION)

E.O. 12958: N/A

TAGS: PREL SNAR KCRM UNODC CU
SUBJECT: WHITHER A U.S. VISION FOR FINANCING AND GOVERNING UNODC

REF: (A) UNVIE VIENNA 135 (B) UNVIE VIENNA 72 (C) UNVIE VIENNA 361


1. Summary: Following a year of difficult negotiations surrounding
its creation, the UNODC working group on finance and governance
issues (FinGov) is poised to hold its first meeting before mid
September. With Cuban Ambassador Norma Goicochea Estenoz as one of
FinGov's co-chairs, the U.S. faces an accomplished, aggressive, and
dogmatic negotiator who we expect will push the group towards
recommendations contrary to U.S. UN management objectives. In order
to deflect the possibility of the FinGov review working at odds with
U.S. positions on finance and governance, in the short-term, UNVIE
has urged member states and the UNODC Secretariat to use FinGov as a
forum for informal dialogue aimed at increasing communication and
understanding of the UNODC's financial and management situation
rather than as a group focused on micro-managing UNODC's financial
or governance decisions. To this end, UNVIE will host an
expert-level meeting among like-minded countries in order to develop
possible agenda items and objectives before the first FinGov
meeting. Despite these perils, FinGov presents the U.S. with a
unique opportunity to advance our interests in good governance while
at the same time building bridges to new partners, particularly G-77
states, through the process of re-evaluating procedures such as
increasing soft-earmarked contributions and unearmarked
contributions to UNODC's General Purpose Fund (GPF). Finally,
FinGov presents an opportunity to examine the allocation of UN
Regular Budget resources provided to UNODC to determine whether its
slice of the UN pie is commensurate with the important tasks that
have been charged to UNODC. A clear set of U.S. objectives for
UNODC finance and governance issues tabled early on in the FinGov
process would help ensure U.S. priorities in this regard are
advanced in Vienna. End Summary.

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A LOOK BACK AND THE WAY FORWARD
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2. Over the past year, sharp differences have emerged among Vienna
delegations regarding how to manage the UNODC's financial situation.
Disagreements run strongest around the UNODC's share of the UN
Regular Budget. The U.S., supported by Japan, has ensured no formal
recommendations have evolved in Vienna for a New York review of
UNODC's portion of the Regular Budget. The U.S. has also
historically opposed alternative funding mechanisms such as a
voluntary indicative scale assessment or other similar arrangements.
G-77 states, as well as a number of EU partners, have criticized
our approach, with some accusing the U.S. of not taking steps to
ensure the UNODC attains appropriate funding levels to carry out its
mandated functions. On the other hand, U.S. attempts to encourage
states to address some of UNODC's financial difficulties by focusing
on measures to streamline the organization, to increase
efficiencies, and to emphasize the role of the Commissions have not
been embraced by either G-77 countries or a number of EU states.


3. On July 2, 2009, a joint extended bureau meeting of UNODC's two
governing Commissions nominated Spanish Counselor Igacio Ruiz and
Cuban Ambassador Norma M. Goicochea Estenoz as co-chairs of FinGov
and encouraged them to prepare the first meeting's agenda.
Although no date has been set, we expect it will be sometime in
September and that the agenda will likely focus on UNODC's current
financial crisis and UNODC's ongoing attempts to realign its
secretariat (Ref B). (Note: Ambassador Goicochea is a savvy UN
operator with previous experience in New York and an interest in UN
budget issues. But her combative style in Vienna is troublesome to
many delegations - including some within in the G-77. Mission holds
little hope that she will forsake this style when chairing FinGov.
Further, while the U.S. is supportive of Ruiz, his rank, mild
manner, and possible differences with U.S. on some management issues
do not indicate that he will be a strong counter-balance to
Goicochea. End note.)

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SHORT-TERM FINGOV GOALS
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4. Short term U.S. term priorities for FinGov are clear. It will
be critical that we work to channel FinGov towards informal
sessions, with the objective of enhancing member state dialogue with
UNODC on financial and governance issues, as well as encouraging
further development of UNODC initiatives to better manage its
priorities. For example, UNODC has developed a number of thematic
and regional programs that deserve close attention, such as their
Southeast Asia and West Africa initiatives. Approaching programs
from a thematic or regional perspective has helped UNODC to better
integrate its wide range of activities, thereby streamlining
management and avoiding duplication of efforts. FinGov should be a
forum to encourage further such efficiencies and to develop
discussion among states on how they propose to interact - and fund -

UNODC based on its new thematic/regional approach. UNVIE believes
it would be counter to U.S. interests to raise the thorniest of
issues, such as the debate to increase UNODC's share of the UN
Regular Budget, at the outset of the FinGov process. Preventing
discussion on such issues would, in fact, be a concrete FinGov goal
itself. The U.S. delegation began implementing this strategy at the
July 2009 UNODC Major Donors meeting by providing ideas for concrete
FinGov agenda items, including a discussion of UNODC's thematic
approach and a UNODC briefing on a specific thematic area, to the
Spanish FinGov co-chair (Ref C). UNVIE will continue this momentum
by organizing an expert-level meeting of Major Donors in advance of
the first FinGov meeting to flesh out agenda recommendations.

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LONGER-TERM RECOMMENDATIONS
TO STRENGTHEN UNODC
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Maintaining Dominance of Commissions
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5. We should encourage the UNODC to focus its work so that it falls
squarely within the Commission on Narcotic Drugs (CND),the
Commission on Crime Prevention and Criminal Justice (CCPCJ) and
(most importantly) anti-crime and drug control convention mandates.
UNODC works best when its charted path has been approved by as many
member states as possible, and when member states are jointly
committed to action in established substantive areas. The
Commissions and Conventions provide such a well-charted path.
Therefore, the U.S. should look strategically at UNODC, and ensure
UNODC's priorities and funding remain within the framework of its
mandate, with the ultimate goal of ensuring that the Commissions
also prioritize UNODC's activities in a similar manner.


6. At the same time, the U.S. needs to take a leadership role in
focusing the CND and the CCPCJ. We should lead by example,
encouraging a limit on Commission meeting days as an efficiency and
cost-saving measure, even as some delegations argue for longer
Commission meetings. We could also push to establish strict
deadlines for submitting draft resolutions. FinGov can be a good
setting to advance these objectives including by urging member
states to refrain from submitting extraneous resolutions that are
not clearly linked to UNODC's updated mandates, such as focusing its
work around regional and thematic programs, and improving member
states' ability to collect, report and analyze data related to drugs
and crime. The U.S. should be prepared to persuade and lead other
member states in refusing to sign on to a resolution unless member
states express intent to financially support any related UNODC
directives.

But Supporting Discussion on Funding Flexibility
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7. FinGov presents a real opportunity for the U.S. to think big in
order to advance U.S. priorities of reforming and empowering the UN
within the UNODC context. Many member states have ambitious visions
for UNODC - some of which are contrary to U.S. interests. For
example, Argentina continues to push a voluntary indicative scale
funding mechanism, and Egypt and others want to "tax" hard earmarked
funds in order to discourage such donations. The U.S. needs to be
equally ambitious; while protecting management gains already
achieved, we should reach out to demonstrate that the U.S. remains
committed to the long-term viability of UNODC and the UN. In this
regard, Mission would welcome USUN and IO advice about whether the
U.S. might support a recommendation to increase the allocation of UN
Regular Budget resources provided to UNODC by the Fifth Committee in
New York. This endorsement would reinvigorate U.S. leadership in
the UNODC context and rebut assertions that the U.S. and other
donors only view UNODC as a contractor to implement donor-driven
projects. While we defer to colleagues in New York regarding the
opportunity costs of such an approach, it is clear from discussions
with U.S. subject experts that UNODC provides a high return on
investment on U.S. priorities. In the FinGov context, this issue
should be raised only after it is clear whether the group will be a
productive forum. Any U.S. signal in FinGov that we might be
convinced of the merits of seeking increased Regular Budget funding
would likely be a key goal of G-77 countries and (if the Department
decides to move in this direction) should only be put forward
following tangible signals that these countries are committed to
working together on finance and governance issues in a serious and
substantive manner. In such a scenario, discussions of Regular
Budget allocations could be a good bridge to the G-77 in Vienna.


8. Even a moderate increase would signal to the world that we take
UNODC's work seriously and help direct its work towards technical
assistance aimed at implementing Convention obligations.
The UNODC currently receives just 1 percent of the UN's total

Regular Budget - an extremely modest sum for an office that is the
guardian and facilitator of the sixteen terrorism Conventions, the
three drug Conventions, and the UN Convention Against Transnational
Organized Crime (UNTOC) and the UN Convention Against Corruption
(UNCAC). The U.S. served as the primary architect of the UNTOC and
UNCAC and has used the UNTOC over 25 times for extradition and
mutual legal assistance requests alone. UNODC efforts to promote
practical application and implementation of the Conventions,
directly supports USG interests. However, lack of a stable and
predictable funding base has limited its abilities to engage a broad
spectrum of countries. By allowing a review of the Regular Budget
to proceed, we could engender considerable good will from the G-77
and others, and use it as leverage to advance other critical USG
priorities.

Soft Earmarks as a Mid-Point Possibility
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9. In the interim, the U.S. should consider allocating an increased
share of existing U.S. funds to "soft earmarks" directed at those
thematic and regional programs which address our priorities. We
could target UNODC activities which are the subjects of
Convention-based obligations. This could include precursor chemical
control, anti-corruption assistance, combating trafficking in
persons, and illicit crop monitoring. Soft-earmarking - not
specifying for which specific projects UNODC must use such
contributions - would help develop a stable source of resources for
UNODC to draw from in implementing projects in U.S.-priority areas
in a manner that would allow the UNODC the flexibility it needs to
operate while ensuring predictability of funding over time. A
number of our EU partners already soft earmark significant
contributions, and their support of this practice signals a
confidence that their funds will be used responsibly and not against
their national prerogatives. FinGov could prove a good forum to
discuss soft earmarking and to learn further about the merits (and
weaknesses) of this funding mechanism.


10. In addition, U.S. could consider working with other major and
emerging donors to provide UNODC with a substantial annual pledge of
"soft earmarked" funds to backstop treaty-based technical assistance
work and other commonly-held priority areas. Again, such an effort
would liberate the UNDOC to more effectively act in such areas while
still being responsive to member states' priorities and policy
guidance. This suggestion does not undermine the continued use of
hard-earmarking. To the contrary; the U.S. should continue to
reserve its prerogative as a donor to contribute to specific
projects that are of the highest priority. Nevertheless, even where
hard-earmarking continues, we should seek to ensure that we are
working within UNODC's more programmatic philosophy whenever
possible.

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Comment
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11. This cable contains only a sampling of some of the issues that
could arise within the FinGov context. Regardless of the issues
raised, in order for FinGov to be a constructive forum the U.S.
needs to be one step ahead, with a strategic, not just tactical,
vision of how we want to engage with member states and the UNODC on
finance and governance issues. UNVIE will continue to provide
Washington with recommended elements to include in this vision of
what the UNODC should look like, from a financial and governance
perspective. End comment.

Pyatt