U.N. Refugee Agency Budget Explodes as U.S. Foots Much of the Bill

Even though it is not planning on helping any more refugees than it did in 2009, the United Nations High Commissioner for Refugees (UNHCR), the world body's front-line humanitarian agency, has increased its planned spending to a little over $3 billion for next year — a 36 percent hike.

The spending increase for 2010 comes atop another whopping increase of 38.4 percent this year, a total jump of 88.2 percent. The combined hikes mean that UNHCR has virtually doubled its budget since 2008 — and intends to keep spending at roughly similar levels in 2011, unless additional refugee emergencies drive the price tag still higher.

Click here to see the projected budget totals.

Along the way, the agency hopes to add an additional 3,000 people to its payroll, raising the total number of staff from 4,824 in 2009 to 7,782 in 2010. Virtually all of these new positions, the agency says, will be located in the field, where UNHCR does its relief work, rather than in its administrative headquarters. UNHCR will be a lot more expensive, but it claims it will also be a lot more efficient.

The spending spiral for UNHCR, which is funded by voluntary pledges, is bound to mean that the U.S., by far the refugee agency's biggest funder, will be writing even bigger checks — as it's already doing. So far this year, the U.S. had contributed about $639.8 million to UNHCR — up by about $129.6 million over 2008.

Click here to see the UNHCR 2009 donors list.

To put that number in perspective, the hike in the U.S. contribution this year was bigger than the full contribution for the entire period of the next largest funder of UNHCR, the European Commission, which had kicked in $120.4 million. Indeed, U.S. funding for UNHCR in 2009 has been substantially more than that of the next eight contributors combined.

(For its part, Saudi Arabia kicks in about 1 percent of the U.S. total.)

U.S. diplomats queried by Fox News declined to provide figures for what kind of further increased contribution the Obama administration might be contemplating for UNHCR for 2010. As one put it, "we don't have a number yet."

But even if the U.S. payout for 2010 stays proportionately in line with the contribution so far for 2009, the U.S. would be shelling out another $230.9 million extra — bringing the total to about $870.7 million. That number would be about 250 percent of what the U.S. was contributing to UNHCR just five years ago.

The UNHCR budget is swelling in the same fashion as a number of other U.N. budgets have suddenly ballooned in the past couple of years. Notably, the World Food Program (WFP), another frontline emergency agency, increased its budget from about $2.7 billion annually in 2007, to a breathtaking $6.3 billion in 2009, a year after an alleged "silent tsunami" of rising food and oil prices changed the emergency relief paradigm. But even though the oil price hikes that spawned the crisis have receded somewhat, WFP spending has stayed near its new plateau.

Click here to read the story on the World Food Program's booming budget.

At the U.N. headquarters itself, Secretary General Ban Ki-moon recently unveiled a planned budget for 2010 and 2011 that totaled $13.9 billion in "regular" and "extra-budgetary" expenditure, or just under $7 billion annually. But that number did not include many high-priced extras, including U.N. peacekeeping — which is ballooning faster than almost any other U.N. expenditure — and which could more than double that total before everything is tallied.

Click here to read the story on the U.N.'s ballooning budget.

U.N. member governments will have their first official discussion of the latest peacekeeping cost numbers sometime in the next few weeks.

What makes the huge growth in the UNHCR budget particularly noteworthy, however, is the fact that it does not represent an expansion in its refugee clientele but a major re-engineering of the way that the agency thinks about doing business. In effect, UNHCR is building out a major new social welfare element to an agency that the public thinks of primarily as a front-line relief group that doles out emergency food and shelter to populations displaced across national borders by drought, famine or war.

That is, to be sure, still by far UNHCR's main line of work — which made it the first U.N. agency to win the Nobel Peace Prize in 1954, and then win it the honor again in 1981.

But since then, UNHCR has added a wide variety of the world's other desperately unfortunate people to its rolls: internally displaced populations, stateless people, returnees to their native lands who still need help. It has also added sub-specializations to its care roster: a special emphasis on children (even though that mandate is already borne by UNICEF), older refugees, people with disabilities.

UNHCR services haves expanded from basic food, health and shelter to such areas as education, lessening the environmental impact of refugee operations, and, as with every other cranny of the U.N., linking whatever it does into the world body's Millennium Development Goals.

The latest twist, however, which is the cause of its latest run-up of planned expenses, is to turn its normal budgeting process on its head, a process that it began on a pilot basis in 2009.

Rather than roughly estimate its needs, appeal to donor nations for cash, then figure out how to best spend the proceeds, UNHCR has taken the radical step of tallying up all of its needs, including needs it has never before met, in a bottom-up survey called a Global Needs Assessment, and presenting it to donors as the real total they should meet.

Rather than starting with its income limitations, and then determining how far its budget will go, in other words, UNHCR has started with the amount it wants — or feels it needs — to spend, then built its budget to accommodate that perspective. That is a bold step, to put it mildly, at a time of global recession, falling international income, and a weakening U.S. dollar, which is the mainstay of its financial support.

Click here to see the UNHCR budget.

Along with more money to do all the things it wants to do, UNHCR claims that its new budget and planning process will give the agency more flexibility and greater ability to decentralize its operations in the face of burgeoning demand for refugee services, even as it adds to its role as a kind of social welfare agency for the dispossessed.

Those arguments apparently struck home with UNHCR's 78-nation Executive Committee: in early October, they approved the entire budgetary project, including a projected budget for 2011 of $2.78 billion.

The 2011 tally is deemed provisional by UNHCR: meaning that it is subject to further change — and it will likely grow larger.

Where will all the needed funds for this expanded role come from? A UNHCR official says, "the budget for 2010 was discussed in detail with the Executive Committee, which includes all major donors. They committed to supporting the new approach."

He added: "We hope this will lead to the additional funding for the needs identified."

Realistically speaking, the agency also does not expect all of the money to arrive at once; thus the new budget speaks of demanding that subordinate agencies "plan for what they will implement first, and then expand progressively as more funds are made available."

The hope is also that all the money will go where it is intended—something that has not always been safely assumed. One of the annual rituals of UNHCR's accounting cycle is a statement from its external Board of Auditors that it cannot give unqualified approval of the agency's books.

The main reason: that UNHCR is not able to provide "audit certificates," meaning statements that clean audits have been done of funds that the agency hands over to a host of "implementing partners" — meaning other relief agencies, assisting branches of government, or even other parts of the U.N., which help with its relief work on the ground — by a June 29 deadline.

(In all, about 840 such partners were involved with 1,745 UNHCR sub-projects.)

This year, for UNHCR's 2008 accounts, the auditors note that out of a total of $498.6 million of partnership spending that required audit certificates, the paperwork for some $252 million, or 50.5 percent of the total, had not yet arrived.

In other words, the Board of Auditors declared that it could not say the money had been properly spent and accounted for.

Queried by Fox News about the Board of Auditors report, UNHCR officials replied that the problem largely had to do with a scheduling mismatch, rather than any outright missing or misappropriated funds. By the time Fox News raised the issue, UNHCR reported, 94 per cent of the audit certificates had arrived.

UNHCR officials also rejoined that the existence or non-existence of audit certificates was not the only safeguard the agency employed to make sure its funds were properly spent. They were only part of a three-layered approach that the agency took as part of its "internal control framework," including monitoring of partnership programs and a requirement for the "implementing partners" to complete their own reports on the funds and their use.

UNHCR also said that it had further committed itself to tightening up the audit certificate problem.

Even so, the same Board of Auditors report noted that 10 percent of audit certificates required for UNHCR's field work in 2005 — three years earlier — were still outstanding, along with 14 per cent for 2006 and 17 percent for 2007.

When asked by Fox News about these specific continuing discrepancies, and the real amounts involved, UNHCR did not directly reply. Instead, in a written statement, the agency said that "For each of those years we were able to achieve a high compliance rate by the fall of those years."

Whatever the compliance rate — and the amounts where compliance has never been achieved — the issue of UNHCR's failure to police the book-keeping of its "implementing partners" on a schedule that meets its Board of Auditors requirements goes back more than a decade. It is so deep-rooted, in fact, that warnings about the Board of Auditors' continuing unhappiness with audit compliance are actually written into a 2003 guidance manual for the implementing partners — apparently to little avail.

UNHCR's repeated response to such concerns over the years is that it is trying harder than ever to comply with strict financial controls while delivering desperately needed aid to some of the worst afflicted populations in the world, usually suffering in some of the world's worst and remote environments. And there is undoubtedly much truth to that reply.

But with vast new sums of money sluicing through its arteries, much of it likely going to the same often-delinquent implementing partners, the agency is likely to face more, not fewer, questions about the stewardship of its funds in the future

George Russell is executive editor of Fox News.