U.K. Becomes Latest Donor Country to Withdraw from U.N. Development Agency

By Patrick Goodenough | March 2, 2011 | 5:11am EST

Britain’s International Development Secretary Andrew Mitchell, seen here on a recent visit to Somaliland, a self-governing region of Somalia, announced on Tuesday, March 1, 2011 the results of a comprehensive review into the United Kingdom’s foreign aid. (Photo: Official Web site)

(CNSNews.com) – Britain has decided to withdraw from a United Nations agency it says provides poor value for its aid money, making it the latest Western donor to abandon an organization which Washington once recommended be shut down altogether.

The Conservative-led coalition government on Tuesday released the results of a sweeping review of its bilateral and multilateral foreign aid policies, announcing the redirection of funding away from some countries and agencies, towards others deemed to be more deserving, more relevant and better performing.

Four U.N. agencies will stop getting funding outright – the U.N. Industrial Development Organization (UNIDO), International Labor Organization (ILO), U.N.-Habitat and the U.N. International Strategy for Disaster Reduction.

International Development Secretary Andrew Mitchell told parliament that the four were found to be proving “poor value for money” and their work overlapped with other, “more effective” institutions.

The cut in funding is expected to save more than 50 million pounds ($81 million).

The review found another four international organizations wanting, and put them on notice to reform urgently, or risk losing funding. They are the U.N. Educational, Scientific and Cultural Organization (UNESCO), the Food and Agriculture Organization (FAO), the International Organization for Migration (IOM), and the development programs of the Commonwealth.

Some of the U.N. agencies that Britain is targeting are recipients of U.S. funding. In its 2012 budget request, the administration has asked for $112 million for the FAO, $91 million for the ILO, $87.2 million for UNESCO and $1.2 million for U.N.-Habitat.

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Based in Vienna, UNIDO was set up by the U.N. General Assembly in 1966, with the goal of boosting industrial development in developing countries.

Britain is not the first Western nation to withdraw its support from the agency.

Australia pulled out in 1987, returned in 1992, but withdrew again in 1996. Canada left in 1993. Britain threatened to withdraw by the end of 1997, but the incoming Labor government reversed the decision that year.

The U.S. withdrew from UNIDO at the end of 1996.

The previous year, the Clinton administration had proposed that UNIDO be eliminated altogether, arguing in a confidential “non-paper” on U.N. reform proposals that “UNIDO has not been able to define its purpose and function very well, much less become effective in its programmatic activities.”

The document, sent to member states just before the U.N. General Assembly opened its 50th anniversary session and entitled “Readying the United Nations for the 21st Century,” also criticized the “unnecessary multiplication of U.N. entities” with overlapping functions, according to reports on the leaked document published in August 1995.

The U.S. departure from UNIDO deprived the agency of one-quarter of its budget. The agency still claims some 69 million euros ($95 million) in arrears that it says the U.S. accumulated during its years as a member.

After the U.S. withdrawal UNIDO’s new director-general, Carlos Magarinos of Argentina (1998-2005), instituted budgetary and institutional reforms, slashing personnel numbers and reorganizing technical services.

Before the end of his tenure, Magarinos sought to lure the U.S. back to UNIDO, but without success.

He was succeeded as director general by Kandeh Yumkella of Sierra Leone, who remains at the helm today.

‘Limited transparency, weak financial management’

The British government’s Department for International Development (DFID) said on Tuesday that its review of multilateral aid “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,” it continued. “Key elements of UNIDO’s work are covered by other UN organizations such as the United Nations Development Program and the United Nations Environment Program. UNIDO also has a wide range of organizational weaknesses including limited transparency, weak results reporting and weak financial management. U.K. aid is therefore more effectively spent in other parts of the multilateral system.”

DFID said Britain was therefore withdrawing its membership, but would serve out a notice period and pay its contribution of around 7 million pounds ($11.3 million) for the next two years.

Britain accounts for about nine percent of UNIDO’s regular budget.

United Nations Industrial Development Organization (UNIDO) Director-General Kandeh Yumkella meets with U.N. Secretary-General Ban Ki-moon, in New York on July 9, 2010. (U.N. Photo by Evan Schneider)

Yumkella on Tuesday said he was disappointed at the news, saying it was based on a review that contained “inaccuracies which are material to the conclusion reached.”

“Unfortunately, the review overlooks much of UNIDO’s contribution to the international development goals, and some of its negative findings with regard to UNIDO’s organizational strengths are inaccurate,“ he said. “This may in part be because no fact-finding visit to UNIDO headquarters or field operations took place in the course of the review.”

The organization in a statement declared itself to be “one of the most reformed U.N. agencies.”

“It has shed more than fifty percent of its staff, has pegged its budget to zero real growth, and yet has doubled its technical cooperation delivery.”

Yumkella said he hoped Britain may still review its decision to end membership

If the decision does go ahead, he said, “we will continue to engage with the government and DFID in the hope of renewing our partnership at a later stage.”

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