U.N. Agency That Deals With ‘Green Energy’ and ‘Green Industry’ Loses Another Major Funder

By Patrick Goodenough | December 1, 2011 | 4:50am EST

United Nations Industrial Development Organization (UNIDO) headquarters in Vienna, Austria. (Photo: UNIDO)

(CNSNews.com) – A Vienna-based United Nations agency is pondering how to get by without one of its biggest donors, following a recent British government decision to withdraw from an organization which it said was ineffective and poorly run.

This week, as delegates to the 174-member United Nations Industrial Development Organization (UNIDO) gathered in the Austrian capital for their General Conference, held every two years, the specter of financial difficulties hung over the event despite an upbeat presentation by the agency’s director-general, Kandeh Yumkella of Sierra Leone.

Amid speeches on such themes as “green energy” and “green industry,” a number of speakers made passing references to Britain’s decision to pull out, while some urged Yumkella to press on with efforts to get “former member states” to return. No names were mentioned, but the former member state UNIDO wants back most is no secret: The United States’ departure in 1996 cost the agency a full 25 percent of its annual budget.

The U.S. withdrawal meant remaining members had to increase their contributions, although the agency also laid off staff and launched a series of far-reaching budgetary and institutional reforms. Britain’s imminent departure will deprive the agency of a further 9.2 percent of its budget.

Under UNIDO’s constitution, Britain’s withdrawal takes effect at the end of 2012, so the U.K. will pay a final assessment of 7.2 million euros ($9.7 million). After that, however, UNIDO will have to find the money elsewhere. (One place it has been looking – for several years, without success – is the U.S., which UNIDO says owes arrears of 69.06 million euros, or $92.8 million at the current exchange rate.)

To make up the shortfall caused by the latest pullout, other members again will have to pay more.

Except for top donor Japan, which will now account for 19 percent of the total budget, down from 22 percent, all other major contributors will see their dues increase next year. Germany’s will rise from 11.9 to 12.2 percent, France’s from 8.7 to 9.3 percent, Italy’s from 7.0 to 7.6 percent, Spain’s from 4.1 to 4.8 percent and China’s from 3.7 to 4.8 percent.

United Nations Industrial Development Organization (UNIDO) Director-General Kandeh Yumkella. (Photo: UNIDO)

In his report to the General Conference, Yumkella said UNIDO had “become stronger and more agile” over the past six years – he has held the post for six years – but conceded that challenges remain.

“This year, we had to absorb the disappointing news of a member state’s departure, and have endeavored to minimize the financial impact on our remaining members while safeguarding our core functions,” he said.

In their speeches, many speakers praised Yumkella’s leadership and the agency’s work in general, while also alluding to financial concerns.

Speaking on behalf of the developing nations’ bloc known as the “G77 plus China,” Iranian ambassador Ali-Asghar Soltanieh – who stepped down as General Conference chairman this week after holding the post for the past two years – urged Yumkella to “continue his efforts with former member states to convince them to rejoin the organization.”

Soltanieh appealed to “all current and former member states in arrears to fulfill their financial commitment towards the organization.”

Thailand’s envoy, speaking on behalf of the Asia group, also asked Yumkella to “continue his effort and contacts with former member states for bringing them back to the organization.”

Brazil’s delegate voiced the hope that “those who left us come back.”

India’s ambassador hoped UNIDO “does not have to pass through another cycle of crisis and recovery,” while the German envoy referred to “the organizational crisis caused by the withdrawal of one member state in a decisive moment,” before assuring UNIDO of Germany’s “commitment to widen and deepen our cooperation.”

The Finnish representative announced a voluntary contribution of about $672,000 while the Italian ambassador also pledged financial support, despite what he described as “the prevailing financial difficulties” Italy was experiencing at home.

Iranian industry ministry Mehdi Ghazanfari meanwhile praised UNIDO for its support for Iran’s industrial development programs, pointing out that “there are a few Western countries, which having certain political motives, are coercing international institutions and other countries to damage the international image of Iran and to hinder its development process.”

‘One of the most reformed U.N. agencies’

UNIDO describes its function as promoting “industrial development for poverty reduction, inclusive globalization and environmental sustainability.”

At the time the U.S. withdrew in 1996, an administration document on U.N. reform said UNIDO had “not been able to define its purpose and function very well, much less become effective in its programmatic activities.”

Australia also left in 1996; Canada had already done so three years earlier.

Last March, the British government’s Department for International Development (DfID) released the results of a review of foreign aid policies, and announced it was stopping all funding to UNIDO and three other U.N. agencies, and was pulling out of UNIDO altogether. (DfID gave another three other U.N. agencies notice to reform urgently, or risk losing their funding.)

In a summary of findings, DfID said its review “could not find any evidence of UNIDO having a significant impact on global poverty. It is small, lacks a strong country level presence and has a narrowly focused role.”

“There are more effective development actors with a greater impact on the ground. Key elements of UNIDO’s work are covered by other U.N. organizations such as the United Nations Development Program and the United Nations Environment Program,” it said. “UNIDO also has a wide range of organizational weaknesses including limited transparency, weak results reporting and weak financial management.”

In a response to the British department, Yumkella described UNIDO as “one of the most reformed U.N. agencies,” and pointed out that an earlier DfID review, in 2005, had “ranked UNIDO highest among standard-setting agencies.”

Britain’s concern about UNIDO doing some of the same things as other U.N. bodies was also raised at the General Conference this week, when Norwegian representative Astrid Versto noted that UNIDO “is working within the same spheres as several other organizations,” and said it was important to “avoid unnecessary duplication.”

Following the British review, the Norwegian government aid agency is currently also assessing its foreign aid programs. Norway has long been one of the U.N.’s biggest per capita contributors.

A Norwegian Agency for Development Cooperation representative said Thursday that an evaluation of selected U.N. organizations had recently been completed.

A draft had been provided to “stakeholders including the U.N. entities that form the subject matter of the report” and their responses were now being processed, he said. The final report should be released by year’s end.

Republican-drafted legislation before the U.S. Congress would allow the U.S. and other countries to fund only those U.N. agencies and activities that they determine are efficient and in the national interest. The Obama administration and congressional Democrats strongly oppose the bill.

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