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Source: General Assembly
United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA)
10 December 2008

UNRWA Pledging conference
Statement of UNRWA Deputy
Commissioner-General Filippo Grandi
December 10, 2008
Conference Room 4, UN New York

Mr. President, Excellencies, Distinguished Delegates,

I have the honour to represent the Commissioner-General at this year's Pledging Conference for UNRWA. At the outset, allow me to express my appreciation to H.E. Father Miguel d'Escoto Brockmann, President of the General Assembly, for sparing the time to chair this meeting today. His presence among us is testament to the importance of ensuring that the essential needs of the Palestine refugees are adequately funded by UN Member States.

Before turning to the financial situation facing the Agency, I would like to spend a few minutes setting the scene, to explain the context in which we work and report to you on what we consider to be some positive developments. First, the peace processes - between Israel and the Palestinians on the one hand, and Israel and Syria, on the other - are continuing, albeit fitfully and without any clear indications as yet as to what it will mean for the Palestine refugees. Second, the innovative new programmes we have been able to introduce to respond to previously untackled needs among vulnerable groups, such as unemployed youth in Syria and women in Gaza, are a source of pride and satisfaction.

Third, UNRWA's relationships with its stakeholders are strong. Engagement with our 22-member Advisory Commission is more substantive today than it has been for decades. The Commission actively reviews management, budget, programming, and other policy matters, forging a high degree of transparency and shared responsibility. This has helped heighten donor confidence, the crucial ingredient for increased financial support in the highly competitive marketplace for international aid.

UNRWA is aware that the consistent institutional, political and financial support it enjoys is linked to the special status the international community accords the long-unresolved Palestinian question. It is also linked to the interest that the international community has in mitigating conflict and its catastrophic human toll. Palestine refugees have the greatest interest in that regard, as UNRWA is a source of stability, an engine for community development, and a means of self-preservation.

Over the years, UNRWA has proven its value as a relatively low cost and effective agent of human development for millions of refugees. Its achievements in the areas of health, education and social services have been impressive, contributing to the Millennium Development Goals and other internationally-agreed objectives.

We have 480,000 pupils in schools this year at the primary and preparatory levels, and in secondary level education in Lebanon and Jordan. Primary enrollment in our schools is almost universal, and is gender balanced. Demand for a place in one of our nine technical and vocational education centres is so great that, if we had the resources, we could train at least five times as many students for the local job market.

As for health, with respect to key indicators such as infant and maternal mortality, and immunization against infectious diseases, the Palestine refugee population is well ahead of the average in the Middle East. Our microfinance programme, meanwhile, is promoting human and economic development and alleviating poverty through the provision of credit for small businesses and domestic needs. Through our health, education and employment programmes, it is fair to say that the social and economic advancement of Palestinian refugee women has been one of the great unsung stories of the United Nations.

Mr. President,

As most in this room will be aware, UNRWA depends almost entirely on voluntary contributions to fund the services it provides to a refugee population now numbering over 4.6 million. What you may not be so conscious of is the extent of our financial vulnerability to adverse winds. At the best of times, paid-up contributions rarely match planned expenditure. Most years we run a deficit, and are obliged to dip into working capital reserves. And, occasionally, we face a real crisis. This is one of those occasions.

In 2009, our Agency could face a perfect storm. Our cost base was pushed up sharply this year, as staff salaries were obliged to keep pace with salaries of public servants in host countries; these increased substantially in 2008 to reflect fast-rising local costs of living. Since we essentially provide public services, salaries of teachers, medical staff, social workers and other locally recruited personnel account for over 70 percent of our regular expenditure. At the same time, exchange rate trends have lately been working to our disadvantage. After years in which a weak dollar favored our accounts, the wind has turned with a vengeance. Then, of course, we fear there will be the effects of the global financial crisis. Already three donors - one of them a major supporter - foresee deep cuts in their annual contributions. These factors have come together at precisely the time when, after years of debilitating cuts and deterioration in the quality of our services, the refugees were anticipating that they may finally reap the practical benefits of our ambitious, ongoing reform programme.

The bleak financial numbers we face are stark. From a peak of just over $60 million in early 2006, as of the end of this month our cash reserves will be down to $1 million - enough for less than one day's average expenditure. Effectively we are now running on empty. As everyone can understand, driving a complex machine such as ours on little or no fuel dramatically raises the odds, sooner or later, of a breakdown.

Using a conservative forecast for the Dollar/Euro exchange rate - a key determinant of our financial health - on present projections we are looking at a deficit next year in excess of $150 million in the General Fund, our core budget, when anticipated income is set against our needs-based budget figure. We are profoundly grateful to those donors to UNRWA who have recently increased the levels of their support in national currency terms. But I must warn that these are not normal times; and, unless we get significant new or increased pledges in the next six months there will be serious consequences for the refugees.

Previous shortfalls forced UNRWA to postpone or forego improvements in the scope and quality of services. Today, however, we face the very real prospect of having to make cuts in basic education and health services, and in our social safety net, on which many refugees rely on a daily basis throughout our fields of operation: Jordan, Lebanon, Syria, the Gaza Strip and the West Bank. The social, humanitarian, and potentially political, repercussions in this already volatile region do not need to be spelt out. These new financial pressures come at a precarious time. Refugee needs are growing and becoming increasingly complex. In addition, in three of our fields - Lebanon, the West Bank and Gaza Strip - post-conflict reconstruction and large-scale emergency operations have added significantly to the burden on our already overworked staff.

You have heard in the past about the three-year Organizational Development, or OD plan, launched at the start of 2007 in a bid to bring the Agency into the twenty-first century and transform the way we operate. This initiative, through which we aim to manage all resources more effectively, plan our work more strategically, and improve our ability to monitor and evaluate the delivery of services, is about to enter its critical final year. Thanks to dedicated funds provided by donors and the extraordinary involvement of many of our 28,000 staff, at all levels, implementation is on track. However, these achievements will be threatened if three conditions are not met over the next 12 months.

First, the Agency needs 14 more international staff, to add to the 119 posts currently funded through the UN's regular budget. Last year, the General Assembly gave us six out of the 20 posts we had originally sought. Next year we shall be seeking the balance. To ensure that the OD programme will endure beyond the end of next year, every one of those new posts is essential. Fortunately, the case we have been making here in New York has found a positive response among Member States. In September, the Working Group on the Financing of UNRWA called for these new staffing needs to be met. Then, just last week, we were most gratified to observe the passage by the General Assembly of a resolution calling, inter alia, for the institutional strengthening of the Agency. That resolution calls on the Secretary-General to provide UNRWA with adequate resources from his budget. Hopefully, these strong political messages will be translated into action.

If the OD programme is to fulfill its potential, a second prerequisite is an ERP - an integrated management system capable of uniting all the Agency's different activities and disparate information management systems into one master tool. In this respect, we are lagging several years behind other Funds and Programmes such as WFP and UNICEF. So far, out of the $17 million budgeted cost, only $570,000 has been pledged. The third requirement for success is, naturally, a reversal or at least a mitigation of the dire financial outlook I have already described. Unless our income rises above present projections for 2009 in dollar terms, we will be obliged to freeze recruitment, slash our training budget and postpone needed investments in ICT. This will make it very difficult to continue the progress we have made in fostering accountability for results, revitalizing management through delegated authority and participatory planning. These are key objectives to which management and staff have dedicated much time.

The room to innovate will be compromised. A substantial funding shortfall in the Agency's regular budget will threaten the innovative solutions that have already been implemented in our programmes - such as our Schools of Excellence programme in Gaza and our Youth and Business Initiative in Syria.

Financial shortfalls also negatively affected our emergency appeals in 2008 for the occupied Palestinian territory and northern Lebanon. In the oPt, pledges amounting to 64% of the $237 million requested have been received so far. While this level of funding may be roughly on a par with the UN's global consolidated appeals, I should point out that in Gaza in particular unmet humanitarian needs are large and growing. A tightening blockade has reduced most of Gaza's 1.5 million people, over half of them children under 18, to a state of abject dependence on international assistance. And in the West Bank, where recent episodes of settler violence have shown just how fragile is the situation, further movement restrictions have increased the vulnerability of the population.

Of equal concern has been the poor response to the appeal launched in Vienna last June together with the Lebanese Government and the World Bank for the reconstruction of the destroyed Nahr el-Bared camp. Unless new donors, especially those countries with a stake in the security of the region, come in soon, the future of this crucial project may be in jeopardy.

Mr. President,

Next year marks the 60th anniversary of the establishment of UNRWA by the General Assembly. Sixty years of existence of what was envisaged by your predecessors as a temporary agency, to cope with what was hoped would be a short-term problem, is not a cause for celebration. However, we believe it is an appropriate moment for reflection on the giant strides made by the vast majority of the refugees in improving the quality of their lives over the decades.

Round number anniversaries are also suitable junctures to pause, take stock, and look ahead to where we need to go in the coming years, until a just and durable political solution is reached to the refugees' plight. For this reason, next year we shall be holding a series of commemorative activities and special projects in the Middle East, Europe and North America. The culmination will be a Ministerial meeting here in the General Assembly next September. I urge you all to encourage your Governments to participate at the highest possible level.

In closing, I acknowledge that UNRWA is putting donors under a great deal of pressure at the present time. But I should also remind you that the growing needs of the Palestine refuges for the Agency's core programmes and for its emergency assistance, at bottom, reflect the fact that the Middle East conflict remains unresolved.

The international community, in particular the donors, have made an investment in the Palestine refugees of incalculable value. As the refugees themselves like to remind us, many among the generation of elders forced out of or who fled Palestine in 1948 were paralyzed by their loss and lived out their lives in hardship. Today, their great grandchildren are enterprising, socially mobile and helping promote the social and economic development of their communities, host societies and the region as a whole.

The sustained support of the international community which helped create this dynamic is as important now as at any time in the past. UNRWA hopes it will find the financial and political will amidst the global financial crisis to protect its investment by providing the resources the Agency needs to maintain and improve its services. I trust we can continue to count on your support.

Thank you.

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