U.N. Development Program: Background and Issues for Congress

CRS Report for Congress
U.N. Development Program:
Background and Issues for Congress
Lois McHugh
Analyst in International Relations
Foreign Affairs and National Defense Division
The U.N. Development Program (UNDP), established in 1966 by the U.N. General
Assembly, coordinates and provides funding for most U.N. development assistance
programs. In 1996, the U.S. contribution of $52 million (50% lower than the 1995
contribution) reduced the United States from the largest to the seventh largest donor for
the first time since the organization was founded. This report discusses UNDP funding,
programs, and role in international development activities. It describes briefly
Congress’ concerns that UNDP programs lack focus. Congress is also concerned about
the growing role of UNDP in areas such as humanitarian assistance, perhaps to the
detriment of development. The report also discusses the UNDP reform effort under the
American Administrator. The report has not been updated since the beginning of theth

105 Congress.

UNDP, headquartered in New York, is an independently administered agency within
the United Nations system under the direction of the U.N. Economic and Social Council
(ECOSOC). James Gustave Speth, an American, became the Administrator in July 1993
for a four-year term. All UNDP Administrators have been Americans. An Executive
Board, composed of 36 government representatives elected by ECOSOC, meets several
times a year to set agency policy. The United States is on the Executive Board.
Role of UNDP. UNDP was established to coordinate the many development
programs of the various agencies of the U.N. system. In cooperation with the recipient
government, UNDP assesses a country's overall development needs and designs a multi-
year development plan. UNDP funds and coordinates the programs implementing each
plan through its Country Resident Representatives in 132 field offices. The Resident
Representative is the coordinator of all the U.N. system's operational activities. Most
UNDP projects are carried out by other U.N. technical agencies, by local voluntary
agencies, or the local or national government of the recipient country. UNDP's mission,
according to the agency, is to help countries build the national capacity needed to achieve
sustainable human development. UNDP also administers other programs, such as the

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U.N. Volunteers, the U.N. Capital Development Fund, the U.N. Development Fund for
Women, and the U.N. Fellowship Program.
UNDP Funding. Because it is a
Total Government Contributions coordinating agency, UNDP's funding is
to UNDP Core Budgetcomplicated. In CY1995, UNDP received
1992 $1,073.8 million$899.8 million in voluntary contributions

1993909.0 millionfrom governments to its regular "core"

1994928.4 millionbudget. UNDP also manages trust funds
1995899.8 millionestablished and funded voluntarily by some
1996 (est)869.3 milliondonor governments, and cost sharing
programs funded by the international
development banks, by the recipient country,
or by another international agency. In
CY1995, UNDP managed $950 million in
these other programs. The CY1995 budget including all funds was $1.95 billion. The
estimated total budget in CY1996 is $2.1 billion. In recent years, contributions to the
core budget have declined and those to the non-core budget have risen.
UNDP Programs. According to UNDP, programs during the CY1994/1995
biennium, or two-year budget cycle, focused on: alleviating poverty and creating jobs
(31% of all resources); regenerating the environment and managing natural resources
(24%); and governance, such as support for democratic processes, transition to
democracy, enhancing human rights (39%). The remaining funds supported programs
improving conditions for women, disaster prevention, and trade promotion. UNDP states
that 87% of "core" program funds go to the countries with an annual GNP of $750 or less.
In 1994, agency documents indicate that 42% of UNDP core expenditures went to Asia
and the Pacific, 33.8% to Africa, 10.1% to the Arab region, 6.1% to Latin America and
the Caribbean, and 2.1% to Europe. In contrast, of the Trust Funds and UNDP
Administered Funds, 61.1% went to Africa, under 10% to Latin America, and under 1%
to Asia. When all funds are included, the regional breakdown shows Latin America
receiving 41% and Africa and Asia following with about 23% each. Administrator Speth
has indicated that the drop in contributions to the core budget has affected the programs
directed at the very poorest countries.
U.S. Contributions to UNDPU.S. Contributions to UNDP. TheUnited States has traditionally been the largest
($s millions)
contributor to UNDP. The U.S. contribution
FY85 $165.0FY92 $106.3has declined from a high of $165 million in
FY86138.1FY93124.6FY1985 to $52 million in FY1996. Reduced
FY 87 107.5 FY 94 116.0
FY88110.0FY95113.0foreign aid appropriations, which fund U.S.
FY89109.9FY96 52.0 contributions to UNDP, congressional
FY90107.8FY97 78.7language to protect some international
FY91109.0 programs, such as UNICEF, and
Administration intent to provide full funding
for other international agencies, resulted in a
sharp drop in UNDP funding, a level less than one half the 113 million FY1995
contribution. In FY1997, the Administration asked for $78.7 million for UNDP, still
considerably below the FY1995 contribution. P.L. 104-208 included language protecting
the UNDP request level.

Increasing contributions from other donors have partly offset the smaller U.S.
funding levels. If contributions to the 1996 budget from other donor countries remain the
same, the U.S. contribution of $78.7 million will place it in 6th place in calendar 1997
after (in millions of U.S. $): Japan $105, Denmark $105, Netherlands $103, Germany
$94, and Norway $79.
Issues for the 105th Congress
Coordinating Development Assistance. Critics have long argued that
UNDP's programs are scattered throughout recipient countries and lack focus. In
addition, the independent governance of U.N. agencies makes coordination difficult and
agencies often run similar or overlapping programs. UNDP has also been given increased
responsibilities to coordinate environmental protection programs and U.N. disaster
response activities in recent years. U.N. Secretary-General Boutros-Ghali focused on
strengthening the coordinating role of UNDP in his effort to streamline the U.N.
economic and social programs. A February 1996 letter from U.S. Ambassador to the
United Nations Albright to the chairman of the U.N. Working Group on Strengthening
the U.N. System proposed consolidating all the U.N. technical/development assistance
functions into fewer agencies under a UNDP umbrella of funds and programs. UNDP
Administrator Speth also proposed a reorganization which would bring all the
development and humanitarian assistance programs under a new Deputy Secretary-
General, absorbing UNDP. Some U.S. critics argue that reducing contributions to UNDP
and other U.N. development entities has encouraged these consolidation measures. The
Department of State argues that reduced contributions undermine the work of
Administrator Speth and threaten his reforms.
Evolving UNDP Role. Some in Congress object to a U.N. role in development
and would limit U.N. activities to specific activities such as humanitarian assistance. The
majority of UNDP members, however, support a strong U.N. development role.
Development experts express concern at the growing percent of development aid devoted
to emergency relief. Currently over 40% of U.N. assistance is directed to people in
humanitarian emergencies. According to UNDP, in all but eight countries, the UNDP
Resident Representative coordinates the U.N. humanitarian assistance. The agency is
also working to improve the ability of the Resident Representative to provide leadership
and coordination in the transition from the emergency assistance phase to the resumption
of development programs. UNDP has established a special fund to provide quick
response to countries where civil crises are building or where reconstruction and
rehabilitation resources are urgently needed. UNDP is also increasingly involved in
programs to strengthen democratic governance.
Agency Reform. Under Administrator Speth, the UNDP Executive Board has
agreed to establish a goal driven budget and to streamline the organization in response
to falling income and rising needs. According to UNDP, between 1992 and the end of
the 1997, administrative costs will be reduced $106 million in real terms, or 12%, and the
number of core staff positions will be reduced by 600 (31% at headquarters and 15%
overall). UNDP has begun independent auditing of country offices. A forthcoming GAO
report on U.N. agencies, including UNDP, is expected to confirm the staff reductions.

According to UNDP, the program reform effort, which began in 1995, provides
greater country incentives for the design of more focused activities. Programs will be
approved on the basis of their likely impact on the recipient countries as well as on the
country's poverty level. These changes, begun by Administrator Speth, will not be
presented and discussed by UNDP members until spring 1997. It is unclear whether they
will be acceptable to the many UNDP members who prefer that aid be given to countries
on a per capita basis.
U.S. Influence. Having an American as UNDP Administrator and making a large
contribution have ensured strong U.S. influence over the organization. The State
Department argues that influence over the direction and program content of UNDP
quarantees that broad U.S. foreign policy interests are supported by UNDP programs.
Nevertheless, some Members argue that UNDP programs can undermine U.S. policy. At
a June 5, 1996 Senate hearing, Members criticized UNDP cooperation with the
authoritarian regime in Burma, coming at a time when U.S. policy calls for minimal
association with the regime. U.N. Ambassador Madeleine Albright defended UNDP
actions as the minimum necessary to ensure aid reached the poorest people in the country.
A private organization also criticized UNDP Administrator Speth for suggesting global
taxes to pay for U.N. development programs, a charge Speth denies. P.L. 104-208, the

1996 Omnibus Appropriation Act, prohibits any such tax.

Historically, other donors have questioned the tradition of having an American as
UNDP Administrator and they are expected to raise the issue this year when Mr. Speth's
term expires. European press reports indicate that there are currently two European
candidates, one Danish and one Dutch, who are being suggested as successors to Mr.
Value of UNDP New York Headquarters. Supporters argue that the large U.S.
contribution has kept UNDP in New York. Since 1994, the German government has an
open offer to pay the costs of moving UNDP to Germany, both as a way for it to play a
more active role in the United Nations, and to fill the empty office buildings in Bonn. On
May 2, 1996, a majority of the members of the New York congressional delegation wrote
to House Foreign Operations Subcommittee Chairman Sonny Callahan expressing
support for the organization, citing the critical need to preserve American leadership in
the agency and keep UNDP in New York. According to the congressional letter, 1995
UNDP expenditures in the New York area alone were about $120 million, including
salaries, more than twice the FY1996 U.S. contribution of $52 million. The UNDP
estimates that it spent over $230 million in the United States in 1995.