U.S. May Rejoin A U.N. Agency It Once Dismissed As Ineffective

By Patrick Goodenough | December 2, 2009 | 4:57am EST

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

(Editor’s note: Adds statement from UNIDO spokesman saying that a U.S. return to the agency was not discussed.)

(CNSNews.com) – Thirteen years after the United States withdrew from a United Nations agency established to support industrial development – and viewed with suspicion by those preferring to leave that task to the private sector – the Obama administration is reportedly planning to rejoin.

If it does so, one outstanding matter the U.S. will be expected to settle is a sum of more than $100 million the United Nations Industrial Development Organization (UNIDO) says it owes in arrears.

According to a U.N. source in Vienna, U.S. assistant secretary of state for international organizations, Esther Brimmer, held talks in the Austrian capital this week with UNIDO director-general Kandeh Yumkella of Sierra Leone, on the subject of returning to the agency in the coming months.

But a UNIDO spokesman later denied that the U.S. rejoining the agency was on the agenda.

Mikhail Evstafyev described the meeting as “a continuation of an informal exchange of views between Brimmer and the Director-General on matters of mutual interest, including the 7-11 December UNIDO General Conference taking place in Vienna, UNIDO activities and contribution to the U.N. system coherence in the field of energy and climate change, poverty reduction and sustainable development, as well as on the issue of multilateral governance.”

“The subject of the U.S. return to UNIDO was not discussed,” he said.

The U.S. mission in Vienna has not responded to queries sent late on Tuesday.
President Obama came to office pledging deeper engagement with the U.N., an institution he called flawed but indispensable.

Last July, when the administration’s nominee for the post of U.S. representative to international organizations in Vienna, Glyn Davies, appeared before the Senate Foreign Relations Committee, he made no reference to plans to rejoin UNIDO.
“Although we are not members of the United Nations Industrial Development Organization (UNIDO),” he told the committee, “if confirmed I will continue to monitor its activities closely and seek ways to influence its work in areas of interest to the United States, such as climate change.”

The U.S. withdrawal from UNIDO in 1996 cost the agency one-quarter of its then annual budget of some $90 million, and put its future in doubt.
The Clinton administration, prodded by the Republican-controlled Congress, had in fact recommended that UNIDO be shut down altogether, arguing in a document on U.N. reform that the agency had “not been able to define its purpose and function very well, much less become effective in its programmatic activities.”
UNIDO survived the U.S. departure, however, laid off staff and launched a series of far-reaching budgetary and institutional reforms. Some Western governments later cited the Vienna-based agency as an example for other U.N. bodies to emulate.
When the U.S. withdrew, UNIDO said it owed around $68 million in dues accumulated over the previous three years.
In 2009, according to a financial report prepared by Yumkella for presentation to next week's General Conference, U.S. arrears stand at $105.6 million (70.02 million euro).
“Payment of these arrears is being pursued by the Secretariat,” the report states.
UNIDO was set up by the U.N. General Assembly in 1966, at a time when newly-independent former colonies in the developing world were keen on the socialist-inspired notion of public sector responsibility for industrial development. Some of its critics, who believed that role should be played by the private sector, viewed it as unacceptably ideological in nature.
In 1995, just months before then Secretary of State Warren Christopher informed the U.N. in writing that the U.S. intended to leave UNIDO the following year, the agency opened a joint investment office with the government of Cuba – at a time when U.S. lawmakers were urging international organizations to withdraw from the communist state.
The U.S. was not the only country unhappy with UNIDO. Canada withdrew in 1993, while Australia left in 1987, returned in 1992, but withdrew again in 1996. Germany pondered leaving. Britain threatened to withdraw by the end of 1997, but when the Labor Party came to power under Prime Minister Tony Blair that year it reversed the decision.
Yumkella’s predecessor, Carlos Magarinos of Argentina – director-general from 1998-2005 – oversaw the reform process, reducing the agency’s budget by 20 percent by cutting personnel, halving the operational structure and reorganizing its technical services. Magarinos reported later that UNIDO also strengthened working ties with private sector companies and recorded a 150 percent growth in voluntary contributions in five years.
Magarinos pressed hard early this decade for the U.S. to return to UNIDO, without success.
In a 2001 German newspaper interview, he said industrialized countries had an interest in promoting the development process in poor countries, because “the current world situation will not permit any confrontation between the developed and the developing world.”
UNIDO argued that in the cases of very poor countries, the pressing need for industrial development could not be left to the private sector alone because countries without resources offer no attraction to foreign investors. Without such investment they would continue to be reliant on foreign aid, it said.
Today, UNIDO says it focuses its activities on poverty reduction, making globalization more inclusive through trade capacity-building, and environmental sustainability.
Next week’s five-day General Conference will bring together hundreds of officials from the agency’s 173 member states, including some heads of state and governments, as well as business leaders, researchers and others.
Yumkella, who is viewed as a rising star at the U.N., is expected to win a second four-year term as director-general.

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