UNIDO GENERAL CONFERENCE: YUMKELLA WINS REELECTION

UNCLAS SECTION 01 OF 03 UNVIE VIENNA 000572

SENSITIVE
SIPDIS

DEPT FOR IO/T, EB/IFT/ODF, L/PIL

E.O. 12958: N/A
TAGS: KUNR ETRD EIND EAID UNIDO UNDP UNEP AORC KGHG
IR, UN
SUBJECT: UNIDO GENERAL CONFERENCE: YUMKELLA WINS REELECTION
BUT LOSES A POT OF GOLD


1. (SBU) Summary: Working-level Mission Officers and Acting
UN Counselor attended the December 7 - 11 UNIDO General
Conference as informal guests, sitting at the rear and
dispensing with name plates. The overall tone of the
five-day Conference was positive. Resolutions reflected this
year's theme - "greening industry" - though work also
included bread-and-butter tasks such as approving the budget.
The Iranian Ambassador was elected Chair of the Conference
but withdrew from the spotlight after issuing a perfunctory
call for "changing the world order." UNIDO's Director
General, Kandeh Yumkella of Sierra Leone, handily won a
second four-year term. He lost a major battle, however, over
the use of 12 million Euros in unspent balances. (Yumkella
had tried to retain the funds for long overdue management
reforms, but the UK blocked consensus and insisted that the
surplus be returned to Member States upon request.) Aside
from this hiccough, the General Conference revealed UNIDO's
continuing evolution as a dynamic organization with a vastly
improved reputation and wildly popular Director General.
(During the course of the Conference, MsnOff parried several
requests that the U.S. rejoin the organization.) The next
UNIDO General Conference will be held two years from now, at
the end of 2011, possibly in Bali. End Summary.

The UNIDO General Conference: Tone and Substance
-------------- ---


2. (SBU) The UNIDO General Conference runs much like similar
meetings at other international organizations, with a
ceremonial "Plenary" characterized by lengthy speeches, and a
simultaneous "Main Committee" where resolutions are
negotiated and the true work of the Conference takes place.
UNIDO's biennial conference attracted three Prime Ministers
(Tanzania, Lesotho and Kenya) and two Deputy Prime Ministers
(Russia and China). Most EU delegations were represented by
local ambassadors. The five-day Conference ran December 7 -
11 and was, according to some participants, quite a bit
longer than necessary.


3. (SBU) Statements by African heads of delegation were
enthusiastic and solidly supportive of DG Yumkella, while the
Latin Americans tended to criticize the pace of program
delivery and attention paid to their region (relative to
Africa). Japan, Russia and the EU emphasized energy issues
and environmental measures. The EU called for greater
efficiency, system-wide coherence, and the primacy of
results-based management. Partnerships were another theme,
including the approval of a joint G-77 / EU resolution to
expand UNIDO's partnership with UNDP. Negotiations over
other resolutions occasionally stumbled in the Main
Committee, but the bulk passed without serious contention.
The most important event during the GC was the reelection by
acclamation of UNIDO's capable and charismatic Director
General Yumkella to a second (and final) four-year term.


4. (SBU) Yumkella used his statement before the GC to look
back on his successful first term; a period during which
UNIDO had increased the volume of Technical Cooperation while
attracting increased funding. Looking forward, Yumkella
hoped to take further steps to "modernize" UNIDO and increase
partnerships. Expounding on the theme of this year's
conference, "greening industry," Yumkella underscored UNIDO's
special role in increasing industrial production in the
developing world while fighting climate change and
identifying environmentally-sound solutions.


5. (SBU) (Note: Acting UN Counselor and a Mission intern
attended the UNIDO General Conference as informal guests,
sitting at the back without name plates. Our attendance was
noticed, however, and elicited both direct and indirect pleas
that the U.S. rejoin the organization. End Note.)

Iran in the Chair
--------------


UNVIE VIEN 00000572 002 OF 003



6. (SBU) Iranaian Ambassador Soltanieh was visibly pleased by
his appointment as GC Chairman. He delivered opening remarks
expressing appreciation for "the confidence placed in him and
his country" and affirming his mission to promote sustainable
industrial development in pursuit of a new economic order and
global equality. He noted UNIDO's role in poverty reduction
and development, and highlighted the need to increase energy
access. Following this initial appearance, Soltanieh yielded
the dais to his twelve Vice Chairs, who took turns presiding
over the remainder of the Conference. (Note: Soltanieh has
preached similar themes of "changing the international order"
at the IAEA and is a self-designated leader in the struggle
to wrest control over key issues from the hands of the West).

Surpised Yumkella Loses a 12 Million Euro Surplus
-------------- --------------


7. (SBU) On December 10, the penultimate day of the
Conference, conflict came to a head over an issue of unspent
balances. The balances amounted to 12.1 Million Euros that
had trickled in unexpectedly from Member States catching up
on late payments. Bucking UNIDO's financial rules (which
mandate that unspent balances be returned to Member States),
DG Yumkella proposed to channel 3 million toward Technical
Cooperation projects and the remaining 9.1 million to a long
overdue "change management" project. The project, designed
by international consultancy firm Deloitte, is generally
well-regarded by Member States and includes much needed
software upgrades. But the UK, supported by Russia and
Mexico, demanded the return of their portion of the surplus
via an "opt-out" clause. Member States negotiated into the
night on December 10, eventually agreeing to the opt-out
clause and putting an end to Yumkella's vision of change
management.


8. (SBU) Yumkella maintained a stolid poker face as the
defeat played out, but was reportedly less sanguine in
private. He is undoubtedly well aware that given UNIDO's
biennial budget cycle, there may be no opportunity to revisit
change management for another two years. Austrian Ambassador
Boeck, who spent several weeks attempting to build consensus
among Member States around funding the project, was also
bitterly disappointed. German DCM Kemmerling, who similarly
supported the proposal, described the UK's blocking maneuver
as a narrow-minded "vote of no-confidence" in Yumkella.


9. (SBU) (Note: Germany and most other Member States maintain
that UNIDO is desperately in need of the upgrades that will
allow them effectiveness in program delivery. This would
include, for example, an Enterprise Resource Platform, which,
as seen in a similar project at the IAEA, carries a
multi-million Euro price tag. The IAEA funded a significant
portion of its ERP through a similar surplus reallocation in
2008, which no doubt contributed to Yumkella's misplaced
confidence in performing a similar maneuver. End Note.)

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


10. (SBU) Yumkella's reelection was expected, but his defeat
over the issue of unspent balances came as something of a
surprise. He had clearly expected Member States to allow him
to use the funds to move forward with his goal of modernizing
the organization. Other than this telling (and
fiscally-driven) defeat, the General Conference revealed
UNIDO's continuing recovery from the U.S. withdrawal and
related financial crisis of the early nineties. It has by
now evolved into a focused, dynamic and well-regarded
organization. The willingness of Member States to work
across blocs is another welcome aspect of relations among
UNIDO Member States. The issues of results-based management,
for instance, which attracted so much acrimony at the IAEA,
was the subject of general approval at the UNIDO General
Conference. Yumkella must take care, however, to focus on
UNIDO's unique niche and avoid any perception that UNIDO is

UNVIE VIEN 00000572 003 OF 003


overstepping its mandate or duplicating the efforts of other
UN agencies. Careful orchestration of UNIDO's activities
will avoid a repeat of the British rebellion that "robbed"
Yumkella of an important investment in the future.
DAVIES