UNRWA: Cutting the Fat or Heading for Starvation?

Source: Palestine Economic Pulse, Vol II. No.4, July-August 1997, pp21-22.

Over 34% of the West Bank population and over 74.4% of that of Gaza, (the highest concentration anywhere) are refugees registered with the United Nations Relief and Works Agency (UNRWA). Like the rest of the population, they have witnessed seriously worsening economic conditions over the last four years. Income levels have dropped , unemployment fluctuates from between 30-60% whilst the labor force grew by 4.5% in one year (1995-1996) . In terms of poverty levels and disposable income, these deteriorating conditions have disproportionately affected the 27 refugee camps, (19 in the West Bank and 8 in Gaza). As a controversial `final status' issue, the camps are not eligible for an equitable share of the reconstruction process that has offered at least some hope in other parts of Palestine. Over 90% of all Gazan households are overcrowded which, in the camps, has led to a high prevalence of preventable respiratory diseases amongst children. Observers comment that increases in health spending have not been matched by improvements in health.

UNRWA, established in 1950 works in five areas: West Bank, Gaza, Jordan, Lebanon and Syria. In Palestine alone, (the West Bank, including East Jerusalem and the Gaza Strip), UNRWA provides free education for 188,588 children in 262 schools. It also provides 51 health centers offering a range of services to all registered refugees from mother-and-child health and family planning, to dental services, special care services for diabetes and hypertension, physiotherapy units and laboratories. In line with the Agency's aim to offer more than just relief and welfare services and to, "socially and economically empower the Palestinian refugee population", UNRWA also provides 4 vocational training centers, in-service teacher training for 238 individuals, and on average, around 300 university scholarships per annum. UNRWA has also undertaken a highly successful microenterprise lending program under the Poverty Alleviation Programme, runs 24 women's programs centers which "engage women in remunerative economic activity" and 25 community managed centers offering sports and recreational facilities. All of this, provides employment for some 8,500 Palestinians and requires a budget of around US$140 million per annum, not to mention the other US$200 million or so, needed to keep the rest of the operation - services to the remaining 2,097,997 Palestinian refugees - afloat.

For the last few years, UNRWA has been facing continual financial problems, namely an annual budget deficit of around US$30 million, which the Agency is now prepared to acknowledge as a `crisis'. This is no secret and has been widely disclosed through the local and international press and was debated at the recent informal meeting of major donors and host countries held in Amman, Jordan. According to Lynn Failing, the Public Information Officer at the Gaza Headquarters, this gave UNRWA the opportunity to stress that it is doing everything possible to maintain its current level of services but that further funds are needed. However, global donor priorities, inevitably shift as economic downturns disproportionately afflict diff-erent parts of the world. Palestinian refugees, many of whom live below the poverty line (around US$600 per capita per annum), are nevertheless relatively well-off in comparison to their African counterparts. With their own narrowing budgets, donors are forced to make hard decisions about allocation of `refugee assistance' and UNRWA is no longer high on their list of priorities.

Rex Brynen, of McGill University, who has worked extensively on the Palestinian refugee issue, feels that there are three main problems: cash flow, funding gap and debt. These are complexly interwoven and create a certain confusion in finding a solution. Brynen explains that often, due to internal financial systems, donors delay payments until the end of the year creating long time lapses before the money reaches UNRWA and hence severe cash flow problems. The funding gap he says, arises from the overlapping demands on donor budgets and mean that UNRWA is effectively competing with, amongst others, United Nations High Commission for Refugees and the Red Cross. Failing elaborates, saying that confusion stems from UNRWA's budgets which are based on need and not expected income. Income itself has stagnanted, despite an increase in inflation, increasing hardship and a growing population which has resulted in a reduction of the annual unit expenditure per refugee from US$120 in 1992 to US$90 in 1997. On a more structural level, according to Brynen, there is the problem of `internal' debt whereby some US$40-60 million worth of funds have been diverted from specific projects to fund the general budget. There is, by no means, a calculated decision on the part of the donor community to abandon the Palestinian refugee population but widening claims on limited resources, in addition to local and international political dynamics, have created a series of `dilemmas'.

Hence, the `dilemma' debate at the recent Amman meeting. The discourse was described by UNRWA as a `healthy exchange of views', and yet produced little more than a written expression of determination to `keep the show on the road' with few tangible cash commitments. For Lebanon, where the economic situation is particularly dire, and where refugees have no recourse to other sources of services, UNRWA has launched a special appeal in an attempt to raise some US$11 million to restore previously cut services. Like most UN organizations, UNRWA has been accused of obesity on several occasions, and as a result has undertaken two slimming programs. In 1993 and 1996 respectively, UNRWA undertook two austerity programs making budgetary cuts of US$40 million, and US$9 million which have been maintained ever since. But this is not enough. "We have been cut to the bone", says Lynn Failing, "there simply is no more fat to shed." UNRWA claims that the austerity programs have not gone unnoticed. Charles Petrie, Special Assistant to the Commissioner-General, comments, "we often hear complaints in the camps that people feel abandoned by the international community as they perceive services cut and a decrease in Agency activity."

Not unlike the problems themselves, a solution to UNRWA's crisis will have to be multifaceted and combine a group of changes. The organization itself acknowledges that there is room for internal managerial improvement and hence improved efficiency, although some donor commentators observe that this recognition is not organization-wide. However, Hansen, UNRWA's prominent new Commissioner-General, commis-sioned KPMG and Arthur Andersen, amongst others, to undertake a full managerial evaluation and offer recommendations. Where possible, these recommendations are being heeded but as Failing points out, UNRWA is a huge and complex animal and not easy to overhaul overnight. Other criticisms relate to the range of activities that UNRWA has accumulated over the last 47 years whereby anachronistic training programs, for example, have not been scrapped. UNRWA reportedly still offers training courses on the repair of manual typewriters. Secrecy is another accusation fired at UNRWA on the basis that if donors are not fully aware of the problem, they cannot help. The European Hospital in Gaza is a case in point where donors complain of inadequate project management coupled with serious overrunning of the budget and no real provision of hard facts, figures and explanations as to why. UNRWA denies this lack of accountability pointing out that infrastructural projects often overrun their budgets and that delayed project implementation stemmed largely from exogenous factors such as Israeli closures which delayed procurements and unnecessarily extended contracts.

Whatever the argument, there is a common consensus that a long term solution is not easy to find. Options to consider include, as Brynen suggests, "the introduction of a variation in service entitlement across its area of operations to reflect local need (i.e. more services in Lebanon, fewer in Jordan)." Ultimately, the original post-Oslo implicit supposition, that the Palestinian National Authority (PNA) will take over the provision of these services, will have to be reconsidered. At the moment, the PNA publicly acknowledges that it is unwilling to do so (both for political and logistic reasons) and that donors should not consider funding to the PNA as interchangeable with that to the UNRWA. But perhaps the most pressing challenge for UNRWA at the moment is to demonstrate the real severity of the problem. As Failing explains, "UNRWA has faced financial problems in the past, and we have always managed to `get by'. This has set a precedent of `crying wolf' whereby not everyone is entirely convinced that things really are as bad as we are saying." This is confirmed by donor sources who claim that the more UNRWA throws confusing figures and `projected' rather than `actual' budgets in their faces, the more suspicious they become regarding the actual state of affairs. However, the growing unnerving silence of the Gaza's camps and the turbulent and highly verbal demonstrations in Lebanon, make one thing clear. With increasing economic hardship in the area, inflation levels rising and a rapidly growing refugee population, all those concerned about regional stability and the 'peace process' need to recognize the Palestinian refugee problem as an issue of `now' and not a back-burner item on the agenda of tomorrow.