As the UN Refugee Agency (UNHCR) faces one of its most serious financial crises to date, the agency is struggling to meet even the basic needs of refugees, returning refugees, and other persons of concern to its offices. In the context of a growing trend among donors to fund bilaterally, rather than multilaterally, refugee relief and protection efforts are increasingly hindered by a lack of coordination between bilateral organizations and the UN. MPI Co-Director Kathleen Newland chaired a meeting with Anne Willem Bijleveld, Director of Communications and Information for UNHCR, to discuss the current financial situation, including the impact of bilateral funding on UNHCR activities and UNHCR strategies for the 21st century.

Mr. Bijleveld opened the discussion with comments on UNHCR funding in a global economic and political context. UNHCR, he said, with an annual budget of $800 million, currently operates at the "absolute minimum level". Last year, for instance, an additional $200 million in supplementary programs, concentrated in Afghanistan, pushed the total budget to $1 billion, of which only $900 million was raised. The $100 million shortfall resulted in programs being cut halfway through the year. This year UNHCR faces a similar difficulty. Supplementary programs in countries such as Afghanistan, Angola, Liberia, and Sri Lanka will raise the total needs of the agency close to $1 billion. To avoid cutting programs mid-year, 7% of the operations budget - 10-20% of the administrative budget for UNHCR headquarters - has been cut. Even so, the budget does not include programs that may become necessary in the Middle East or in Côte d'Ivoire, nor does it include enough money to support positive developments in places, like Sudan, Burundi and the Democratic Republic of Congo, which are at critical phases in their peace processes. Peace plans in these countries show promise, but any potential refugee returns must be carefully managed in such delicate circumstances. However, programs for returning refugees are costly and could push the UNHCR budget as high as $1.3 billion.

UNHCR efforts to raise funds have been complicated by budget cuts, recession, and trends towards isolationism and indifference as well as a rise in anti-immigrant and anti-refugee feelings in some UNHCR donor countries. This combination poses real difficulties for meeting global humanitarian needs. Mr. Bijleveld also noted some of the fund-raising complications associated with possible military action in Iraq.

Mr. Bijleveld went on to discuss the issue of bilateral funding in more detail. He emphasized his belief that the bilateralization of humanitarian aid is not inherently negative. The availability of funds to NGOs, for instance, is positive. The issue is making sure that the best use is made of all funds, no matter where they come from, in order to ensure that the basic needs of the refugees are met. The key challenge, therefore, is to ensure that funds are coordinated and channeled to appropriate programs (to avoid continuing to have to make difficult choices between, for example, maintaining a "safe house" for women in Kenya or repairing a water system in a camp). In Europe, ECHO spends about $120 million on humanitarian assistance outside the multilateral framework. The US Department of State similarly spends about $70 million annually. This money needs to be directed to the programs and areas where it is most necessary.

Mr. Bijleveld also noted that there is a significant misperception about European spending on humanitarian aid relative to the United States, which he wanted to correct. There is a widespread sentiment in the United States that European governments contribute too little. In fact, last year the United States contributed $259 million to UNHCR while Europe contributed $384 million. The misperception arises because of the way that funds are donated and distributed. Because almost all US funds are earmarked, they are very visible. Europe, on the other hand, contributes about $130 million in funds that are not tied to any specific program. These funds are particularly valuable to UNHCR, but because they are not earmarked they are less visible. By distributing this money pro rata, UNHCR hopes to correct this misperception and, furthermore, to foster a "healthy competition" of giving between the US and Europe.

A series of questions and comments followed Mr. Bijleveld's remarks.

Q. What success has UNHCR had in attracting new donors?

Though there are few donors from East Asia and the "oil states", UNHCR has attracted many new donors among the EU accession states in Central Europe. As they become part of Europe, these countries want to become more involved. They have been asked to join the Executive Committee of UNHCR. The most recent pledging conference was remarkably substantive and successful. Ireland, which joined the EU ten years ago, is an excellent model for new donors. Over the course of the decade, Ireland has gradually transformed itself from a non-donor to making annual contributions of over $7 million. Likewise, Central European nations who make even small pledges are taking an important step in becoming part of UNHCR.

Q. The number of persons of concern to UNHCR is decreasing, while funding is holding steady. It would be very helpful if the UNHCR made available as much information as possible about financial burden sharing among donors.

The UNHCR is very transparent. All contributions are posted immediately on the UNHCR website. (For more information, please see http://www.unhcr.ch). Mr. Bijleveld urged the same level of transparency amongst the NGO partners of UNHCR.

Q. What is the state of the UNHCR contingency fund?

This question was followed by an extensive off-the-record discussion of funding and possible preparations for humanitarian assistance in Iraq.

Q. Is it possible that UNHCR might consider switching from a donor-based budget to a needs-based budget? UNHCR has sometimes given the impression in Washington that it operates according to what it can "get" rather than what it needs to do, for example, in Afghanistan.

Finances are always difficult in the beginning of the year. Overall, programs in Afghanistan have been very well funded, receiving $276 million in total. Despite the fact that UNHCR budgeted for 1.2 million returning refugees, rather than the 1.8 million who actually returned, there was a small carry-over that was directed into supplementary programs. Even so, UNHCR needs fresh contributions for Afghanistan. They have borrowed $10 million from the operations budget; a promised $15 million contribution from the United States should cover both the loan and remaining costs. A needs-based budget, however, often has the result of distributing funds so widely, and thinly, that substantial progress on any program is impossible to achieve. Mr. Bijleveld emphasized the importance of balancing a focus on needs with an awareness of available resources. Again, he pointed to contingency funds and the planning process as areas where coordination between UNHCR and NGOs/recipients of bilateral funds could prove very effective.

Q. When High Commissioner Ruud Lubbers began his term, there was a great deal of debate about funding and the focus of the UNHCR on its core mandate, protection, rather than on assistance. What has happened in this debate?

The "UNHCR 2004 Process" addresses this question. A working paper on UNHCR 2004 has just been released and put on the UNHCR website for external input. Protection and assistance are not competing functions. There is a stronger protection focus to UNHCR than there was when the High Commissioner arrived, but the assistance aspect of UNHCR has not been neglected. Moreover, he noted, UNHCR does not need to do everything. By handing over certain activities to other organizations, UNHCR can emphasize its role as catalyst, advocate, and coordinator.

Mr. Bijleveld closed the panel with a detailed discussion of "UNHCR 2004 Process," which was developed by High Commissioner Lubbers. UNHCR developed as a post-war product in the mid-20th century. UNHCR 2004 represents the High Commissioner's vision of UNHCR in the 21st century and uses the opportunity provided by the expiration of the mandate in December 2003 to sketch this out. It focuses on issues of governance and the place of UNHCR in the UN system. Fundamental to the project is a desire to see UNHCR report directly to the UN General Assembly. UNHCR is one of few agencies created directly by the General Assembly. However, the activities of UNHCR are obscured because it reports only through the UN Economic and Social Council (ECOSOC), whereas the High Commissioner would prefer that it report directly to the General Assembly itself. In addition, UNHCR 2004 calls for the integration of UNHCR into a more central place within the UN development group while remaining an important component of the humanitarian system. Towards this end, the UNHCR 2004 calls for stronger ties with UNDP and for training UNHCR staff to become UN Resident Coordinators.

In tandem with 'UNHCR 2004', the High Commissioner has also piloted what is known as the 4R's approach, which calls for stronger partnerships with UNDP, the World Bank, UNICEF and the World Food Program (WFP) as well as for the development of integrated planning systems in post-conflict situations. The "4 R's" concept (repatriation, reintegration, rehabilitation and reconstruction) referenced in 'UNHCR 2004' is bottom-up, country-specific and is generated by the stakeholders in each instance. The coordinated planning system that currently exists will be replaced by an integrated system that would aim to include refugees and internally displaced persons (IDPs) in the development process with the goal of getting refugees and displaced persons to be accepted by development agencies as a part of the development process. As it currently stands, these groups are addressed only in humanitarian programs, being largely excluded from development and poverty-reduction programs. Mr. Bijleveld underscored that this integration is not designed to transform UNHCR into a development agency but to provide UNHCR with an exit-strategy once the needs of its "beneficiaries" move away from the humanitarian arena and toward longer-term concerns.

Afghanistan, Eritrea, Sierra Leone and Sri Lanka represent pilot countries in the 4R process, which has thus far yielded promising results. The host governments, Resident Coordinators, and country teams have all expressed positive experiences with the program, which has developed differently in each country. An advantage to the bottom- up model is the high degree of flexibility it allows to each country. It is working particularly well in Sri Lanka, where the integrated planning process involves humanitarian NGOs, the Asian Development Bank, the World Bank, as well as UNDP, UNHCR, and 8 bilateral donors. As the program continues, UNHCR will phase itself out of the program. In Afghanistan, a unique strength of the integrated process was the ability of UNHCR to facilitate cooperation between development organizations, like the World Bank and UNDP, and the Afghan government. Before the implementation of the integrated process, the relationship between the development groups and the Afghan government was marked by tension and disagreement. In Sierra Leone, the World Bank is working through the 4 R process. The integrated planning process piloted by the 4R approach is gradually becoming a UN system-wide approach, he concluded.