Select Committee on European Scrutiny Nineteenth Report




COM(01) 741

Draft Council Decision on the conclusion of an exchange of letters between the European Community and the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) concerning additional funding in 2001 under the current EC­UNRWA Convention for the years 1999­2001.

Legal base:Article 181 EC; consultation
Document originated:7 December 2001
Forwarded to the Council:7 December 2001
Deposited in Parliament:7 January 2002
Department:International Development
Basis of consideration:EM of 25 January 2002 and Minister's letter of 30 January 2002
Previous Committee Report:None
Discussed in Council:19 December 2001
Committee's assessment:Politically important
Committee's decision:Not cleared; further information requested

  9.1  The United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) is responsible for providing basic health, education, and social services to 3.9 million Palestinian refugees in the West Bank and Gaza Strip, Jordan, Syria and Lebanon.

  9.2  Since 1972 the EU and UNRWA have signed ten conventions governing the EC contribution. Each convention has:

  • set out the contribution to the regular budget, which covers education, health and relief and social services programmes, for the forthcoming three year period; and

  • allowed for the annual negotiation of the contribution to the food aid budget.

The draft Council Decision

  9.3  The Commission proposed in early December that the EC should make an additional contribution, of _15 million, to the current funding under the 10th EC-UNRWA Convention. This was in response to a serious financing gap in 2001 in UNRWA's budget, due to a shortfall in income and the crisis in the area, which was placing increased burdens on the Agency.

  9.4  The Council approved the proposal on 19 December.

Justification for the intervention

  9.5  In May 2001 the Secretary General of the United Nations (Mr Kofi Annan) sent a letter of the Commission President, Mr Romano Prodi, in which he drew attention to UNRWA's precarious budgetary situation. In July, the General Affairs Council was asked to provide additional support to help to re-establish financial security and to cope with the new long-term responsibilities imposed on UNRWA by the current crisis. According to the Commission explanatory memorandum, this was having "chronic and lasting effects that will need to be addressed by the health, education and social services financed out of UNRWA's General Fund".

  9.6  In September, Commissioners Patten and Nielson referred in a Commission Communication to the strain on UNRWA caused by the deepening crisis and its shortage of funds for current expenditure. At a meeting of major donors on 24 September UNRWA estimated that it would face a deficit of US$58 million by the end of the year.

  9.7  In her Explanatory Memorandum of 25 January, the Secretary of State for International Development (Clare Short) describes the situation:

"The ongoing violence and the strict restrictions applied by the Israeli authorities on the movement of Palestinian people and goods in the West Bank and Gaza Strip continues to have a severe impact on the Palestinian economy, and the loss of income for many people. This is causing a great hardship, with the poorest communities, often those in refugee camps, the hardest hit. UNRWA's limited resources are under extreme pressure as it seeks to continue to provide essential relief services as well as maintain its on-going regular programme."

  9.8  The Minister then provides further information on the funding situation:

"Towards the end of 2001 contributions and pledges to the General Fund, UNRWA's regular annual budget, were still $33 million short of what was agreed at UN General Assembly. Unless the gap were closed the problem of under-funding would continue to persist year on year (as it has for the last 5 years), cash flow would remain problematic and potentially very disruptive, the quality of services would continue to deteriorate, and morale in the organisation would flag further. In addition, funding for the Emergency Appeals, after a very strong start at the beginning of the Intifada, was waning.

The first two appeals, totalling $83 million, for programmes until June 2001, yielded 80% contributions. The third, for $77 million, covering the remainder of 2001, was only 25% funded. The total funding gap for the emergency appeals was $70 million. If this gap were not filled, planned programmes in the Palestinian camps would be curtailed. The Commission therefore proposed making an additional EC contribution of _15 million in 2001."

The Minister's letter and the Government's view

  9.9  In a letter dated 30 January, the Minister apologises for the Government's failure to inform the Committee of this proposal before it was adopted by the Council. She says that, because of the speed with which the proposal was handled, there was a breakdown in communications. She assures the Committee that the contribution, which would complement a bilateral contribution of $10 million from the UK, was in line with existing policy.

  9.10  The Minister comments that the UK supported the Commission's proposal, believing that the additional EC funding was likely to be used effectively. She adds:

"UNRWA has handled the very difficult situation it faces on the ground in the West Bank and Gaza Strip with speed and efficiency. Its regular and emergency operations are helping to address the growing social and economic hardship in the Palestinian refugee community. UNRWA has also continued its on-going reform initiatives across the broad spectrum of its operations with our and other donors' support. Additional support in late 2001 would strengthen the international community's partnership with UNRWA, and demonstrate again that, as they continue the process to deliver services more effectively and efficiently, we are prepared to give more."


  9.11  It is clear from the Commission's explanatory memorandum on this proposal that the UN informed the Commission in May that UNRWA's budgetary situation was precarious, that in July the General Affairs Council and Commissioner Patten were asked specifically on two separate occasions for support and that the issue was raised again in September. The Secretary of State refers to a shortfall following an agreement at the UN General Assembly.

  9.12  We understand that contributions to UNRWA are voluntary. We presume, therefore, that the EU delayed deciding on how it should respond to the requests for support until the end of 2001, when it could judge what further contributions would be forthcoming from other donors and estimate the shortfall for the year with some accuracy. This would account for the sudden rush in December to speed this top-up through the Council. We also understand that, although recent events have exacerbated the situation, UNRWA has been operating with a deficit for some years.

  9.13  We ask the Secretary of State to clarify what happened and to tell us what steps can be taken to try to ensure that the budget deficit of UNRWA does not continue to be a perennial problem. It would be helpful if, in her reply, she could provide us with fuller information on the identities of other donors and their contributions, and on how it could be ensured that UNRWA has a degree of certainty about the income it can expect.

  9.14  Meanwhile, we shall keep this document under scrutiny.

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