05/30/2006

Contact: Nicole Mailman
ri@refugeesinternational.org or 202.828.0110

The Office of the UN High Commissioner for Refugees (UNHCR) plans to assist 19.1 million people in 2006 with a budget of US$1.4 billion. Some of these displaced people, who rely on the refugee agency for assisting with daily survival and for returning to their homes or restarting their lives in a third country, will face hardship and disappointment due to program reductions forced by budget shortfalls. In response to the low initial pledges for its 2006 budget, UNHCR has requested that all offices worldwide operate on 80% of their projected budgets for 2006. While this situation may be largely irreversible for 2006, donor governments need to take immediate action to prevent UNHCR programs from suffering such a drastic cut in 2007 and mitigate the problem of under-funding of some supplementary budgets.

Although the 2006 budget for UNHCR is hefty, the agency has in past years dealt with more individuals of concern and larger budgets. UNHCR’s budget reached its highest level in 1996 when its requirements exceeded US$1.4 billion, as it coped with refugee emergencies in former Yugoslavia, the Great Lakes region of Africa and elsewhere. The number of persons of concern to UNHCR peaked in 1995, when 27.4 million individuals were identified. Despite the fact that previous years’ budgets have been larger, worldwide demands for UNHCR’s services are even higher than the 2006 requested budget suggests; UNHCR calculated that to assist all assessed needs this year would cost US$2.4 billion.

Early pledges are crucial to ensuring that UNHCR can start its programs without downscaling in the first quarter of the year, complete agreements with implementing partners and procure necessary goods on schedule. UNHCR is funded almost entirely by voluntary contributions, with the United Nations regular budget covering only 2.9% of needs. After three years of donor countries responding positively to the agency’s request for earlier commitments, UNHCR received merely US$354 million towards its initial 2006 budget request of US$1.22 billion at the donors’ conference in November 2005, a decrease of 12% from the pledges received for the 2005 budget. In contrast to December 2004, when there was a favorable exchange rate, US$24 million were lost from 2006 euro pledges when they were converted from dollars.

Out of the top five government donors over the past five years (a group that includes Japan, the United States, the European Commission, Sweden, and the Netherlands), Japan and the European Commission decreased their contributions at the initial pledging conference in November 2005 compared to 2004, and the US and Netherlands merely matched their 2005 contributions. The top donors are crucial to funding the budget; in 2005, the top five donors were responsible for 61% of the contributions.

As of May 3, 2006, UNHCR had received a total of $634.2 million, 44% of its budget, which is comparable to the portion of the budget UNHCR had in May of last year. Unexpected early giving by the US, however, has disguised shortcomings which may crop up in the latter half of the year. Although France and Spain will increase their donations in 2006, decreased contributions from the United States, Japan and Italy will have the greatest impact on UNHCR’s ability to fund at least 80% of its budget.

As of May 2006, the United States, the largest donor to UNHCR, has contributed more than expected at this stage of the year: $216.6 million, around 34% of the current total contributions by all donors. In recent years, the US has contributed 22-25% of the budget. Its contributions since 2001 have increased each year (except in 2004); in 2005, it donated 32% more than it did in 2001. The US has informed UNHCR that it might be able to contribute only 23% of total 2006 contributions to the agency and has indicated that its giving in 2007 will be similar. Although the US might end up reaching its 2005 funding level in 2006, the lack of increased funding will have a substantial impact.

Japan’s contribution in 2006 will be less than its US$94.5 million contribution in 2005. Out of the top five donors in the past five years, Japan’s contributions since 2001 have gone up by the lowest percentage: 4%. After spending around US$15m towards the tsunami emergency, Japan expects to contribute around $80 million in 2006, similar to its 2004 contribution. The reduction is significant; 2005 contributions made Japan UNHCR’s second largest donor, but as of May 2006, it has contributed US$2.2 million. This amount is only 2.4% of what Japan gave to UNHCR in 2005 and makes it only the 17th highest donor so far this year.

The government of Japan has a fixed pool of multilateral funding from which it pays UN dues and voluntary contributions. The amount of money for multilateral funding has not increased partly because Japan’s economic situation remains stagnant and overall tax revenues have been static. As Japan has been required to give more in UN dues, it has decreased donations to UN agencies across the board by 10-13%. A Japanese official told RI that Japan is looking to Russia and China to pay a greater percentage of UN dues.

Italy has dropped from the 13th largest donor in 2005 to the 23rd and has only donated 12% of its total 2005 contribution as of May 2006. The government of Italy cut its budget for multi-lateral institutions by US$50 million last year. Before the April elections, 50% of these funds were restored, but it is unclear if the remaining half will be made available.

Funding by donor nations to UNCHR’s supplementary programs is crucial. Often donor nations cannot reallocate funding from a well-funded account to one in need of more funding because of national procedures and laws. In the past five years, UNHCR’s highest supplementary budgets have been in 2003 and 2005. In 2003, a significant amount of funding was needed for the Afghanistan and Iraq operations. In 2005, with major funding needed for responding to the tsunami, the Darfur crisis, and returns to south Sudan and Burundi, 26% of the total donor contributions donors went to the supplemental budgets. At the end of April 2006, 40% of the supplemental budget was funded. However, the disparity among the different programs is stark. As of April 2006, funding had surpassed the requested levels for the tsunami response and Pakistan earthquake program, but the agency had received only 16% of the requested support for programs for returning refugees and internally displaced people in the Democratic Republic of the Congo.

During its humanitarian assessments, Refugees International frequently finds gaps in UNHCR support to displaced persons; we tend to attribute these problems to management difficulties or other institutional failings that the agency can overcome within existing means. UNHCR staff, however, often contends that lack of funding, which results in shortages of staff and material resources, is a significant obstacle. We all agree that predictable, consistent funding to UNHCR will enhance its ability to improve the lives of displaced people. The global economy, donor nations’ economic health, national interests and politics heavily influence donor governments’ contributions to UNHCR each year. However, all donors should respect the global assessment and projected needs by UNHCR, communicate early in the year how much they can give and ensure that supplementary programs are evenly funded.

Therefore, Refugees International recommends that:

• Donor governments evaluate how they will distribute contributions throughout 2007 and aim to make significant pledges at the donor conference and during the first quarter of next year.
• Donors focus their attention on contributing funding for under-funded supplementary budgets.
• UNHCR have access to funding for supplementary programs from the recently-established UN Central Emergency Response Fund.
• UNHCR continue to work on diversifying its sources of funding, increasing its income with donations from the Gulf states, the private sector and emerging economies.