US embassy cable - 03AMMAN6456

UNCLAS SECTION 01 OF 04 AMMAN 006456 
 
SIPDIS 
 
DEPT FOR NEA AND PRM; PASS TO USAID 
GENEVA FOR RMA 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PREF, PREL, EAID, KPAL, KWBG, JO 
SUBJECT:  UNRWA DONOR MEETING HIGHLIGHTS INCREASING 
PALESTINIAN REFUGEE NEEDS, GROWING STAKEHOLDER CONSENSUS ON 
NEED FOR CHANGE 
 
REF:  A) AMMAN 4337 
      B) AMMAN 3242 
 
(U) Sensitive but unclassified; please handle accordingly. 
 
1.  (SBU) Summary:  Discussion at the September 23-25 UNRWA 
donor meetings focused on the ever-increasing gap between 
Palestinian refugees' needs and UNRWA's stagnant financial 
base.  Continuing conflict in the West Bank and Gaza have 
led to increased demands for UNRWA services, while chronic 
underfunding of the agency's regular programs and declining 
donor response to UNRWA's emergency appeals have left the 
agency less able to respond.  UNRWA hopes that a planned May 
2004 extraordinary meeting in Geneva will attract new donors 
and new resources from existing donors.  Donors and host 
governments want UNRWA to take another look at management 
and governance issues, including through a donor-financed 
external audit, with some donors arguing that such measures 
are prerequisites to increased contributions.  UNRWA has 
already indicated it does not want governance addressed 
through an external audit or at the Geneva meeting.  End 
summary. 
 
2.  (U) UNRWA held its semiannual meeting of major donors 
and host governments in Amman September 23-24, followed by 
the annual Advisory Commission meeting September 25 and a 
separate September 25 stakeholder meeting to discuss UNRWA's 
plans for an extraordinary, high-level meeting in Geneva in 
May 2004 (ref a).  The U.S. delegation was led by Ambassador 
Gnehm and included PRM PDAS Rich Greene, PRM/ANE Program 
Officer Robert Ward, Regional Refcoord Joan Polaschik and 
Refugee Assistant Ibrahim Bisharat.  A report on key themes 
addressed at the meetings follows. 
 
-------------------------------------------- 
Emergency Programs in the West Bank and Gaza 
-------------------------------------------- 
 
3.  (U) Since the intifada began three years ago, UNRWA has 
requested USD 529.8 million in emergency funding to support 
additional programs in the West Bank and Gaza - of which 
only USD 396.4 million has been funded.  Given growing donor 
fatigue (response to the current emergency appeal is USD 48 
million of USD 102 million requested, including USD 31 
million from the USG), donors questioned whether UNRWA was 
indeed the best vehicle to deliver humanitarian assistance 
and whether emergency programming should be folded into 
UNRWA's general budget as the conflict shows no signs of 
abating.  After some discussion, donors agreed that UNRWA 
was the most efficient vehicle to provide humanitarian 
relief for Palestinian refugees and that support for UNRWA's 
emergency appeals is critical during this period of 
continued conflict.  Donors urged UNRWA to study and report 
on the consequences of shortfalls in funding the emergency 
appeals as a means to generate greater financial support. 
 
4.  (U) UNRWA reported that it is working closely with other 
UN organizations on a consolidated appeal for the West Bank 
and Gaza, which should be ready by mid-November.  As 
suggested by donors, UNRWA's next appeal will be for a full 
12 months.  In response to donor suggestions that UNRWA 
consider folding its emergency programming needs into its 
General Fund budget, UNRWA Commissioner General Peter Hansen 
replied that the situation in the West Bank and Gaza cannot 
in any way be considered normal and the agency's emergency 
programs therefore could not be added to UNRWA's regular 
budget.  He also noted that different donors respond to the 
general budget and to the emergency appeals, meaning that 
consolidating the two budgets could result in diminished 
overall contributions to UNRWA. 
 
----------------------------------- 
Access and Construction of the Wall 
----------------------------------- 
 
5.  (U) UNRWA officials at all levels and from every 
department expressed concern over the continuing difficulty 
in delivering humanitarian aid in the West Bank and Gaza due 
to checkpoints, roadblocks, curfews and closures.  UNRWA 
reported that IDF abuses of UNRWA installations continue to 
be a problem, including the September 24 IDF search of 
UNRWA's Qalqilya hospital.  UNRWA ComGen Hansen told donors 
that UNRWA staff were forced to lie down while IDF soldiers 
kicked in doors, broke glass and fired shots into the 
ceiling, all in search of an injured Palestinian militant 
who turned out not to be in the hospital, as the IDF had 
been informed prior to entering the hospital. 
 
6.  (U) UNRWA is particularly concerned about the impact of 
the Israeli Government's separation fence on refugees and 
the agency's ability to deliver services in the West Bank. 
As noted in UNRWA ComGen Hansen's annual report to the 
General Assembly, the construction of a security fence in 
the West Bank will "impoverish and isolate thousands of 
refugee families and will constitute a new and formidable 
obstacle to the delivery of essential UNRWA services to 
refugees living in the vicinity of the wall, along the 
entire length of its route."  West Bank Director Richard 
Cook told donors that up to 200,000 refugees will be cut off 
from Qalqilya hospital, while refugee children will be cut 
off from their schools, refugee landowners cut off from 
their property, and some UNRWA workers unable to get to 
their place of work, due to the security fence. 
 
--------------------------------------------- -------- 
Humanitarian Consequences of Three Years of Intifada 
--------------------------------------------- -------- 
 
7.  (U) UNRWA reported that three years of conflict have 
resulted in a sharp increase in unemployment, malnutrition, 
and poverty among Palestinian refugees in the West Bank and 
Gaza.  West Bank Director Cook reported that curfews, 
closures, checkpoints, and blockades have completely 
strangled Palestinians' economic activity.  Microenterprise 
and Microfinance Program Director Alex Pollock noted that 
loan repayment rates had fallen to 65 percent, versus a pre- 
intifada repayment rate of 95 to 98 percent.  Over 2,000 
loans had been written off during that time.  In 2000, some 
12,000 loans were made by UNRWA worth over USD 14 million, 
whereas from July 2002-June 2003 8,900 loans were made for 
USD 6 million.  Similarly, UNRWA Education Director Kabir 
Shaikh noted that it was practically pointless to hold 
vocational education training courses in the West Bank and 
Gaza because "there is no economy and no jobs."  In May 
2002, for example, 60 businesses were destroyed in Jenin. 
 
8.  (U) The picture is also bleak on the health front. 
According to ComGen Hansen's report to the General Assembly, 
"The situation in the occupied Palestinian territory has 
caused a significant deterioration of the refugees' health: 
various studies document the increasing prevalence of acute 
and chronic malnutrition as well as iron deficiency anemia 
and low birth weight."  Dr. Fathi Mousa, UNRWA's Director of 
Health, told donors that refugees in the West Bank and Gaza 
are cutting back on food purchases to pay other bills, 
further endangering their health.  He added that diabetes 
and hypertension, both caused in part by poor diet and high 
stress, are on the rise among Palestinian refugees.  In 
addition, three years of violence and conflict have left 
many Palestinian children in need of psychological 
counseling.  One recent study found that two-thirds of Gaza 
children had witnessed a shooting.  Mousa noted that 
children who live in the midst of conflict tend to have 
nightmares, feel insecure, and act aggressively at school 
toward their classmates.  UNRWA has only limited funding 
available for counselors and psychologists. 
 
9.  (U) Deteriorating economic conditions in the West Bank 
and Gaza therefore continue to create new demands for UNRWA 
services.  West Bank Director Cook reported that even 
refugees with steady employment (who are ineligible for 
UNRWA food assistance under long-standing agency rules) now 
ask UNRWA for emergency food assistance because they are 
supporting more members of their extended family. 
Similarly, huge numbers of refugees now seek employment with 
UNRWA - a reversal of the recent market trend away from 
UNRWA employment due to the agency's new noncompetitive 
salary scale.  In the West Bank, for example, 1600 people 
recently applied for 99 UNRWA teaching positions.  West Bank 
and Gaza staff reported that frustration and despair are 
evident among the refugee communities, including in 
unprecedented violent attacks on UNRWA staff by refugees who 
have been rejected for emergency assistance. 
 
10.  (U) At the same time, declining donor response to 
UNRWA's emergency appeals has forced the agency to reduce 
its emergency programs.  Whereas UNRWA used to meet 60 
percent of the food needs of refugees in the West Bank, it 
now meets only 40 percent.  UNRWA officials noted that the 
ICRC's recent decision to end its emergency food assistance 
programs at the end of this year will have a further 
negative impact on Palestinians' health.  The West Bank 
field currently has only 25 percent of its needed medical 
supplies.  Child immunization rates in the West Bank and 
Gaza have fallen by five percent over the last three years, 
an indicator that outbreaks of communicable diseases could 
occur if this trend is left unchecked.  In Gaza, 506 refugee 
shelters were destroyed and 1,518 damaged from July 2002- 
June 2003 but UNRWA has been able to implement only 12 
percent of its planned emergency shelter repair programs. 
Hansen added that even with full funding, such as in the 
Jenin reconstruction project, closures and curfews impede 
the agency's ability to respond. 
 
-------------------------------------------- 
General Fund Budget and Chronic Underfunding 
-------------------------------------------- 
 
11.  (U) UNRWA ComGen Hansen was proud of the effort his 
team had made to balance the budget.  UNRWA's latest budget 
for the 2004-2005 biennium, he noted, had been blessed by 
the UN's Advisory Committee on Administrative and Budgetary 
Questions with no comments and cited as a model for other UN 
agencies.  Hansen and many other speakers, however, noted 
with dismay the consequences of chronic underfunding of the 
agency, which receives 94 percent of its income from 
voluntary contributions.  One particularly telling statistic 
is that UNRWA in 2002 spent USD 73 per refugee, whereas in 
1990 it spent USD 99 per refugee.  Although contributions 
have risen over the years, they have not kept pace with 
growth of the Palestinian refugee population. 
 
12.  (U) UNRWA Education Director Kabir Shaikh told donors 
that chronic underfunding of the agency's education programs 
(which account for over 50 percent of UNRWA's budget) has 
resulted in higher pupil/teacher ratios, double shifts in 
schools (one-half day for each student), rental of 
inadequate buildings to serve as schools due to lack of 
funding to construct new ones, and the lack of computers in 
the information age.  In just one example of UNRWA's dire 
education needs, PRM officers noted in a visit to a five- 
year old U.S.-funded UNRWA school in Jordan that the 
teachers had 48 students per class.  The school had no extra- 
curricular activities, no sports or physical education 
programs, and computers that were outdated and did not 
function.  There are 500,000 pupils attending UNRWA's 656 
schools, and that population is growing by at least one 
percent a year.  Over the past decade, the number of UNRWA 
schools has increased by 2.5 percent, while the number of 
its pupils has increased 23 percent. 
 
---------------------- 
External Audit Needed? 
---------------------- 
 
13.  (U) In both the informal "pre" meeting and its official 
statement, the United Kingdom suggested that an independent, 
external audit of UNRWA financed by donors would bring 
confidence that UNRWA is fulfilling its mandate in the most 
efficient manner.  That in turn would make it easier for 
ministers to make the case to their own governments that 
assistance to UNRWA is money well spent.  ComGen Hansen said 
that he welcomed such an audit, expressing confidence that 
UNRWA would receive high marks.  He said there was "no fat" 
in UNRWA's budget, citing as an example that his agency had 
fewer four wheel drives than many NGO's working in the 
region which are many times smaller than UNRWA. 
 
14.  (U) UNRWA Director of External Relations Andrew Whitley 
informed donors in a side meeting that an external audit of 
UNRWA -- paid for by the UN central budget -- is undertaken 
bianually to review the agency's finances and performance. 
None of the donors knew of this biannual audit (yet another 
example of UNRWA's poor communications skills) and asked for 
copies of the most recent one, which were promised by UNRWA. 
Once the donors review the audit, they will consult each 
other to determine whether it satisfies their request for an 
objective external audit.  (Comment:  The U.S. currently is 
reviewing the practice of outside audits of other UN 
agencies and will review the current UNRWA audit before 
taking a decision on the UK's proposal.)  Some donors 
stressed to Whitley that an audit needs to take a hard look 
at the way UNRWA is governed, rather than simply its 
financial performance.  UNRWA representatives said the 
agency opposed such a review, noting that the venue for any 
discussion of UNRWA's governance structure should be the 
UNGA. 
 
----------------------------------------- 
Plans for an Extraordinary Geneva Meeting 
----------------------------------------- 
 
15.  (U) In an informal September 23 lunch meeting and 
separate September 25 planning meeting, UNRWA and the Swiss 
Government briefed stakeholders on plans for a one-time, 
high-level meeting in Geneva (ref a).  UNRWA is now casting 
the meeting as an opportunity for donors and host 
governments to discuss the medium-term challenges facing the 
agency, "endorse" the direction of the agency and strengthen 
its resource base.  UNRWA proposed that the meeting include 
a "Geneva Declaration" in support of UNRWA's humanitarian 
mandate, but several donors expressed concern that such a 
statement could prove too political.   Senior UNRWA 
management - including ComGen Hansen in a side meeting with 
PRM PDAS Greene - assured stakeholders that the meeting 
would not include a political agenda and would not turn into 
a forum for political statements and posturing.  UNRWA is 
particularly interested in opening the meeting to minor 
(less than USD one million per year) and potential donors, 
in hopes of increasing their contributions.  (Comment:  When 
pressed for possible new donors, External Relations Director 
Whitley cited Russia, Morocco, New Zealand and "eastern 
European countries."  We are skeptical that these nations - 
most of which are aid recipients - will produce any 
significant contributions.) 
 
16.  (U) The Swiss, who first proposed this meeting in the 
spring of 2003, continue to hope that an extraordinary 
Geneva meeting would bring more actors (some with new ideas) 
and more pressure on UNRWA management to adopt needed 
reforms.  In both planning meetings, the U.S. delegation 
noted any extraordinary meeting should also focus on the 
agency's governance structure.  The main problem with the 
current stakeholder meetings is that they do not produce a 
plan of action or even an agreed list of programming 
priorities.  The U.S. will continue to work with other major 
donors and host governments on governance issues over the 
coming year. 
 
------------------------------------ 
Hansen/Greene Meeting on the Margins 
------------------------------------ 
 
17.  (SBU) During a September 23 breakfast meeting, PRM PDAS 
Greene cautioned UNRWA ComGen Hansen to keep his public 
statements confined to facts and devoid of political 
content.  Greene noted that the Government of Israel had 
complained frequently to USG officials about Hansen's 
alleged biased statements critical of the GOI.  Hansen 
responded that when a wall was being built into Palestinian 
territory in the West Bank and the IDF was demolishing homes 
in the Gaza strip, these Israeli Government actions 
negatively affected refugees and he had a duty to raise 
these concerns.  However, Hansen acknowledged there was a 
need to be balanced in his statements.  Greene also 
emphasized that UNRWA must continue to exercise extreme 
vigilance to ensure that its facilities and programs are not 
compromised by terrorists.  Hansen responded that UNRWA took 
its obligations seriously and looked forward to the 
conclusions of the U.S. General Accounting Office (GAO) 
review of UNRWA's compliance with section 301 (c) of the 
Foreign Assistance Act.  He added that UNRWA would be glad 
to consider any recommendations that GAO might have on how 
UNRWA could do better to comply. 
 
------- 
Comment 
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18.  (SBU) Debate during and on the margins of these UNRWA 
meetings revealed growing agreement among UNRWA, host 
governments and donors alike that something must be done to 
address the ever-increasing gap between the needs of the 
Palestinian refugee population and UNRWA's stagnant 
financial base.  UNRWA seems to be pinning its hopes on a 
high-level meeting in Geneva to attract both new donors and 
new resources from its existing donor base.  Donors and host 
governments, on the other hand, seem eager for changes in 
UNRWA's management and governance structure, with some 
hinting that such changes are a prerequisite to increased 
contributions.  UNRWA has already indicated that it does not 
want management or governance on the agenda of the Geneva 
meeting and likely will resist any effort to include these 
issues. 
 
19.  (U) PRM PDAS Greene cleared this message. 
GNEHM