UNRWA: Where Has All the Money Gone?

1. Historic Overview

At midnight on 14 May 1948, the 30-year British Mandate for Palestine was formally ended by the British Colonial Office. Britain’s chaotic evacuation of its civilian and military personnel—with no arrangements having been made for the orderly transfer of administration of the territory—was immediately followed by an invasion by seven Arab countries vowing to annihilate the newly declared State of Israel. In the course of the 1948 Arab-Israeli War, hundreds of thousands of residents were left displaced and homeless including hundreds of thousands of Jews who were forcibly driven out of East Jerusalem, Hebron, all of the Gush Etzion towns and villages, other communities in the Holy Land where Jews had lived for generations, and from Arab countries from which they were expelled.

The UN General Assembly responded to the world’s latest war refugee crisis by calling upon international organizations such as the International Committee of the Red Cross (ICRC), to provide humanitarian aid to the refugees. Despite the fact that Israel was in the midst of providing for the over 700,000 Jews who either fled from or were expelled from surrounding Arab lands, Israel managed to resettle and house all Jewish refugees, both domestic and foreign, who, despite coming from different countries, native languages, and customs, were settled and fully integrated into the Israeli economy and society.

Of particular note is the fact that those Arabs who stayed in the cities of Haifa, Jerusalem, Abu Ghosh and numerous other locations in Israel both rural and urban, were also settled by Israel and integrated into the Israeli economy and society.

1. Creation of UNRWA

Six months after the war, in November 1948, the United Nations established the United Nations Relief for Palestine Refugees (UNRPR) to extend aid and relief to Arab refugees who did not remain under Israeli sovereignty, and to coordinate the efforts of NGOs and other UN bodies. However, that initial relief undertaking lasted less than a year, and on 8 December  1948, the UN established the ‘United Nations Relief and Works Agency for Palestine Refugees in the Near East’ (UNRWA), as a ‘subsidiary organ of the UN’ pursuant to UN General Assembly Resolution 302 (IV). UNRWA was assigned the assets of the UNRPR and took over the ICRC’s refugee registration records.

Initially, Jewish war refugees within Israel were also included as beneficiaries of assistance under UNRWA until Israel set up its own mechanisms and logistics to absorb Jewish refugees from the war.

• The UNRWA Mandate

According to the UNRWA website, the UN agency was originally mandated to ‘carry out direct relief and works programmes in collaboration with local governments, consult with the Near Eastern governments concerning measures to be taken preparatory to the time when international assistance for relief and works projects is no longer available, and plan for the time when relief was no longer needed.’

However, unlike any other relief agency ever created, UNRWA is the only UN agency consigned to assisting refugees from a specific region or conflict—i.e. exclusively for ‘Palestinian refugees’. All other UN refugee relief efforts globally are handled via the United Nations High Commissioner for Refugees (UNHCR) which has as part of its specific mandate ’to aid its refugees to eliminate their refugee status via local integration into the host country, resettlement in a third country, or repatriation where feasible.’ (Emphasis added.)

No such requirement to resolve the refugee status of beneficiaries applies to UNRWA.

1. Perpetuation of Refugee Status

Another significant difference that distinguishes Palestinian refugees under UNRWA from refugees of all other conflicts served by relief agencies, is UNRWA’s definition of a ‘refugee’: According to the UNRWA mandate, the operational definition of a Palestine refugee is any person whose ‘normal place of residence was Palestine during the period 1 June 1946 to 15 May 1948 and who lost both home and means of livelihood as a result of the 1948 conflict’—and descendants of fathers fulfilling the definition. In practice, that means that ‘Palestinian refugee status’ is inherited!

In May 1951, the roster of UNRWA relief recipients numbered 950,000, however, within four months, that figure was scaled back to 860,000 persons after widespread identity fraud was uncovered, and today, the official figure of displaced Arabs stands at 700,000—although that figure is also in dispute given the records of the 1949 census, and, the report of the UN Mediator on Palestine which arrived at a figure 472,000, and which calculated that only about 360,000 Arab refugees required aid.

1. Today’s UNRWA Refugee Beneficiary Figure

Regardless of whether the original figure of Arab refugees from the 1948 war was 360,000, 472,000, or even 700,000, today, due to its policy of ‘perpetual inheritability of refugee status’, UNRWA cites a whopping figure of 5.4 million ‘Palestinian refugees’ on the dole of UNWRA. And it is this figure that UNRWA points to as it campaigns to wrest additional millions of dollars from donor countries to fund its ‘duty stations’ in the West Bank, Gaza, Jordan, Lebanon and Syria.

UNRWA’s mandate has been repeatedly renewed by the UN General Assembly for the past 70 years, and its current mandate is set to expire on June 30, 2020. But as additional countries join the ranks of those refusing to renew this financial and managerial black hole known as ‘UNRWA’ the continuation of the charade of ‘perpetual refugee-ism’ may be in doubt.

This paper examines the exorbitant, highly inflated rise of UNRWA’s budget demands over the past 10 years, and— more importantly—both the misuse and the utter lack of transparency and accountability as to how those hundreds of millions of dollars have been spent.

1. Donor Funding By Country: 2018

In fiscal year 2018, UNRWA’s revenues totaled a reported $1.11 billion USD. The following table shows who the top 20 donors to UNRWA were in millions of dollars, in 2018:

TOP 20 Donors as of 31 December 2018 in USD:

Donor	Programme Budget				Non Programme Budget				TOTAL	RANK
	Programme Budget	SSNP	In-kind	Total Programme Budget	EA OPT	Syria Appeal	Gaza Major Repair & Reconstruction	Projects
EU (including ECHO)	137,950,421	0	0	137,950,421	17,081,352	23,956,837	0	716	178,989,326	1
Germany	59,996,037	0	0	59,996,037	28,958,257	25,520,992	208,349	62,755,812	177,439,447	2
Saudi Arabia	50,000,000	0	64,875	50,064,875	0	0	10,000,000	99,891,896	159,956,771	3
UK *	59,904,870	0	0	59,904,870	6,387,178	26,026,543	0	435,979	92,754,569	4
Sweden	57,052,683	0	0	57,052,683	4,314,721	3,632,359	0	0	64,999,762	5
USA	60,000,000	0	429,282	60,429,282	0	0	0	0	60,429,282	6
UAE	51,800,000	0	0	51,800,000	2,000,000	0	0	0	53,800,000	7
Qatar	51,000,000	0	0	51,000,000	499,779	0	0	0	51,499,779	8
Kuwait	45,000,000	0	0	45,000,000	0	5,000,000	0	0	50,000,000	9
Japan	22,296,156	5,390,351	0	27,686,507	0	8,000,000	0	9,312,717	44,999,224	10
Norway	16,783,325	0	0	16,783,325	2,341,710	17,153,718	0	0	36,278,753	11
Switzerland	25,665,642	0	0	25,665,642	1,026,694	0	0	1,136,263	27,828,599	12
Canada	15,232,292	0	0	15,232,292	7,745,933	3,767,898	0	0	26,746,123	13
Netherlands	22,357,599	0	0	22,357,599	0	19,582	0	300,575	22,677,756	14
Spain (including Regional Governments)	15,930,607	137,987	0	16,068,594	923,938	783,330	0	1,280,129	19,055,991	15
Turkey	11,500,000	834,210	20,000	12,354,210	6,419,790	0	0	0	18,774,000	16
Italy	10,616,286	0	0	10,616,286	2,272,727	1,138,280	0	3,063,681	17,090,974	17
Australia	14,860,327	0	0	14,860,327	1,133,219	0	0	23,556	16,017,103	18
Belgium (including Government of Flanders)	12,969,711	0	0	12,969,711	2,272,727	0	0	256,355	15,498,794	19
France	10,381,287	568,182	0	10,949,469	1,247,545	1,980,920	0	1,083,759	15,261,693	20
Total	751,297,244	6,930,730	514,157	758,742,131	84,625,571	116,980,458	10,208,349	179,541,438	1,150,097,948

* UK contribution under Syria Appeal includes GBP 5 m (US$ 6.39 m) that will be disbursed in 2019.

VII.              Critical Findings Of DIOS: UN’s Internal Oversight Apparatus

In April 2018, the UN’s Department of Internal Oversight Services (DIOS) released their report covering a wide variety of investigations of improprieties both as to management as well as financial dealings. The report covered the period January through December 2017 and was prepared in conformity with Organizational Directive 14, and the Charter of DIOS. It was submitted to the Advisory Committee on Internal Oversight (ACIO) and the Advisory Commission of UNRWA (AdCom).

A.      Challenges to DIOS’ Operational Independence

The international body regulating accreditation and activities of international auditors (The Institute of Internal Auditors) has specified that the Chief Audit Officer in organizations cannot report to the Chief Executive of an organization, but must report to the governing body (board, directors, etc.) to ensure independence, and integrity. The Audit Committee is normally also to be involved. This has highlighted a significant problem for DIOS, and its accreditation, as UNRWA does not have a governing board, nor an audit committee, as such, but rather reports directly to the UN General Assembly.

While UNRWA has an advisory committee on internal oversight, that committee is only advisory in nature, and does not have any mandate to audit or inspect UNRWA. It was created to advise and oversee the operations of DIOS—not UNRWA— and it does not fit the description of an audit committee. The report noted at the outset that there were a number of occasions during the year when DIOS had to insist on maintaining their operational independence and had sought support from the Executive Office for same. UNRWA’s claimed financial ‘fragility’ (see 2018 audited financial statement disclosing $105M USD surplus) was presumed to be the impetus for intrusions upon the operational independence of DIOS. UNRWA’s challenges to the investigations of its own internal oversight mechanism were brought to the attention of the Executive Office, with the expectation that the threat to DIOS’ independence would be addressed.

B.      Integrity of UNRWA Promotions

Among the issues cited by DIOS were instances of promotion of staff to senior positions while at the same time those staff members were facing serious allegations of misconduct that had not been resolved. The internal oversight auditors found that no legal framework existed for having such issues dealt with by UNRWA management, nor was there any provision to delay an appointment while such allegations were pending. Furthermore, there was no procedure by which an integrity check could even be performed for a candidate poised for promotion. The DIOS report cited the need for integrity checks to be made before promotion to very senior positions. Furthermore, they cited the need for management to have the legal capacity to delay an appointment until integrity objections were resolved. Thus, at present, the spectre of cronyism and nepotism looms over UNRWA’s promotion and selection process without regard for resolution of negative-impact factors, or circumstances which, for other global organizations would halt such promotions.

C.      No AdCom Oversight over Financial or Operational Management

The DIOS report further offered the disclaimer that although UNRWA has an advisory commission (AdCom), it is strictly advisory in nature, and has neither charter nor power to inspect or examine financial expenditure, operational management. Furthermore, it does not have any power to be involved in senior appointments or strategic direction.

In consequence of that lack of oversight controls, the report raised the following caveat:

Essentially, again from a historical situation, not by design, UNRWA appears to be unique in the UN system, in not having any board of governors, board of directors or similar body. It appears no other UN body has this situation. Compounding matters, UNRWA does not have an audit committee. These two bodies would normally examine operations, inspect finances, and approve senior appointments.

Those serious governance deficiencies have resulted in UNRWA operating at both the managerial as well as the fiscal level with a significant lack of transparency.

D.      Lack of Centralized Investigations

As DIOS reported in previous years, the conducting of decentralized investigations by individual UNRWA Field Offices has limited the influence of DIOS and hampered the ability to undertake centralized, objective investigations. DIOS’ operational staff is thus hobbled, both in terms of the technical skills of the investigators, and their lack of independence from Field Office Senior Management. In 2017, DIOS discussed with UNRWA Field Offices the proposal to centralize all investigations within DIOS, however, those discussions never bore fruit.

E.       UNRWA Misconduct as Documented by DIOS

The following table breaks down by category allegations of UNRWA misconduct that were investigated by DIOS including physical assault and sexual abuse, as well as violations of UNRWA’s mandate for neutrality in the Arab-Israeli conflict and other irregularities:

Category                                               DIOS          GFO    HQA    JFO    LFO    SFO   WBFO     Total

Number of allegations handled in 2017 (distributed by field office)

F.       15% Increase in Misconduct Allegations

The total numbers of misconduct allegations at UNRWA received by DIOS has continued to increase steadily with most of the increase attributable to an increase in neutrality violations, i.e. the delegitimization, demonization, and teaching of war education against Israel. However, Corporal Punishment cases continued to be the highest type of allegation received among all Field Offices except in Syria. Notably, Breach of Neutrality violations vis-à-vis the Arab-Israeli conflict increased from 16 in 2016 to 55 in 2017.

G.      Mismanagement at Cairo Liaison Office

DIOS’s inspection of the UNRWA Cairo Liaison Office in Egypt, revealed a pattern of mismanagement of UNRWA resources, misrepresentation, and ‘conduct not befitting a civil servant’. The findings were similar to the findings of the 2004 broad-based review of the Cairo Liaison Office conducted by DIOS. Pursuant to the issuance of the 2017 report, various actions were taken by management to rectify the situation, but not all recommendations have been implemented.

H.      West Bank Field Office Education and Training Centres

The objective of the DIOS inspection was to provide management with assurance that assets were being properly safeguarded, key business processes were being performed in compliance with relevant rules and regulations, and that operations were efficient and with minimal waste. Although certain internal controls were generally established and functioning, DIOS found that the centres were relying on outdated rules and regulations not relevant to the current programs, and that the centres were developing their own procedures to govern the vocational and technical activities. Furthermore, the absence of structure to manage and administer the centres’ main revenue was also identified. Lastly, the inspection noted various weaknesses in the security and safety conditions.

I.         Procurement and Construction Management Processes

An audit of Procurement and Construction Management Processes for Construction and Maintenance contracts at the Lebanon Field Office disclosed that recommendations were needed for improvements in planning of the procurement process by conducting adequate market research, updating regular cost estimates, and proactive sourcing of vendors.

J.        UNRWA’s ‘Microfinance’ Banking Business

Although apparently not authorized as part of UNRWA’s relief mandate, in 1991, UNRWA created their ‘Microfinance Department’ which not only gives loans to displaced persons residing in their five Field Office locations—but, curiously— also to “other poor or marginalized groups who live and work near them.” No authorization has been cited for running a regional finance enterprise with donors’ money, but in Syria alone, UNRWA has opened up several microfinance branch offices (ie branch banking) to handle this side business. In 2015, the microfinance business granted $37,898,795 in loans but by December 2018, this figure had grown to a whopping $141.3 million of donor funds.

In conjunction with the UN International Computing Centre, DIOS conducted an assessment of UNRWA’s Information Technology Security Posture focusing on infrastructure, and identified 11 high, 10 medium and three low risk categories—security risks related to network, firewall, and windows directory—in their audit of the Microfinance Department.

VIII.            Funding Citizens of Host States

Not only are UNRWA’s beneficiary ranks swelled by the aforementioned ‘inherited refugee’ status of all of those descended from male displaced persons, but also by an oxymoronic category of ‘citizen-refugees’. Indeed, individuals who, rather than remaining ‘homeless’, have obtained citizenship in host countries, nevertheless continue to be classified as ‘refugees’ entitled to UNRWA relief. This is especially true in Jordan, where the vast majority of UNRWA ‘refugees’ hold Jordanian citizenship! And, to a lesser degree, the same scenario presents in Lebanon. Furthermore, this ‘status-based’ basis for receiving UNRWA aid has nothing to do with a ‘need-based’ assistance program.

No real justification exists for millions of dollars’ worth of donor funds going to subsidize beneficiaries who are citizens of Arab states and who can well afford to pay for the very UNRWA benefits they receive.

IX.                Inordinate Population Growth

In December 1982, the UN General Assembly requested that UNRWA issue identification cards to ‘all Palestinian refugees globally and their descendants, irrespective of whether they were recipients of UNRWA rations and services’. Prior to that resolution, UNRWA ID cards were issued ‘per family’, but now the UN sought to increase the Palestinian displaced persons count by issuing the ID cards to individuals. Among the significant aspects of this resolution was the population figure for UNRWA aid recipients being pegged at ‘1.9 million’. Yet, the 2019 figure used by UNRWA in order to convince donor countries of the need to boost their UNRWA donations, is 5.4 million—a 280% increase. To put this statistic in perspective, we compared the population growths of five other countries, both Western and Middle Eastern, during that same period: (Figures in millions)

US:         1983: 233.8 and by 2019: 329.45, i.e. a 140% increase;

UK:         1983: 56.32 and by 2019: 67.7, i.e. a 120% increase;

France: 1983: 55.91 and by 2019: 66.99, i.e. a 120% increase;

Egypt:   1983: 47.6 and by 2019: 100, i.e. a 210% increase;

Syria:     1983: 9.94 and by 2019: 17, i.e. a 170% increase.

Yet UNRWA claims nearly a threefold increase in its beneficiary population during those same 36 years— much higher than neighboring Egypt and Syria and several times more than industrialized Western countries.

X.                  Global Palestinian Population Count Falls Short

To assist in the implementation of the aforementioned resolution, the Secretary General established a team of experts including representatives of the Division of Palestinian Rights, the Office of Legal Affairs, the Office for Special Political Affairs, the Department of Political and Security Council Affairs and UNRWA, in order to obtain a ‘global count’ of Palestinian refugees. For the purpose of its work the team considered two broad categories of Palestinians covered by the terms of the resolution: (a) Those registered with UNRWA numbering some 1.9 million persons; (b) Those not so registered.

Twenty replies were received from world governments, with half responding that either there were no Palestinians residing in their countries or that there were no Palestinians who were covered by the resolution. Several governments provided the numbers of Palestinians residing in their countries, but the total of those referred to was less than 500. Nevertheless, the PLO requested that UNRWA proceed with the issuance of individual identity cards to all of those registered with UNRWA.

However. in light of the unexpectedly low figures submitted by world governments, the UN Secretary General determined that he was ‘unable, at this stage, to proceed further with the implementation of the resolution’. He left the door open for the possibility that should significant additional information become available through further replies from governments, the Secretary General would reassess the situation and inform the General Assembly accordingly.

XI.                Bloated Budget, Bloated Staff

In weighing the question of whether UNRWA’s $1.2 billion budget is out of line relative to the beneficiaries they serve, one need only compare that budget to the 2019 budget of UNHCR—the UN’s relief agency serving all other displaced persons from every other conflict around the globe—whose budget stands at $8.6 million. Of equal significance is the fact that UNHCR funds the relief efforts for 20.4 million refugees—four times the number of UNRWA beneficiaries—on that comparatively meager budget. This means UNRWA has approximately $530 per refugee for every $1 available to UNHCR.

Similarly, UNRWA’s bloated staffing numbers defy all logic: 30,000 employees are on the UNRWA payroll, but about half that number only—16,800—are on the payroll of UNHCR.

• Contractors’ Opposition to GRM

Five years ago, an arrangement was carved out between Israel, the UN, and the Palestinian Authority (called the Gaza Reconstruction Mechanism, or ‘GRM’) pursuant to which war-torn areas of Gaza were to be rebuilt, and ‘essential construction materials’—previously banned due to their being used to build tunnels crossing into and under Israel as well as for rockets and other war materiel—would be allowed into Gaza. However, numerous Palestinian organizations immediately objected to this arrangement as being ‘illegal’ and ‘a violation of Palestinian human rights’; that is, they actually opposed a formula under which housing and infrastructure would be greatly improved. They further charged that UNRWA was not transparent nor accountable as to the millions of dollars’ in donor funds funneled through GRM. Notwithstanding the fact that the GRM initiative was essentially dead on arrival, UNRWA claimed GRM housing assistance expenses for over 11,000 families as part of its budget, and further claimed to be coordinating dozens of UNRWA infrastructure projects.

XIII.            UNRWA Contractor Tenders

Among the requirements for bidding on UNRWA infrastructure projects in Jordan and Gaza, is the requirement that the contractor be a ‘member of the Palestinian Contractors Union’. Other UN agencies operating around the world have no such exclusion clauses designed to benefit—or in this case favor—a particular trade consortium. To do so would obviously raise fair play and open competition issues in violation of the UN’s own ‘Guiding Principles on Humanitarian Assistance of 1991’. But the bigger problem with favoring members of that ‘union’ is that Israel has identified 40% of those contractors as security risks to whom projects should not be awarded nor dual-use material transferred.

XIV.            Skewing UNRWA’s Expenditures

One of the devices by which UNRWA’s ‘core programme’ expenses have been disguised, is by deceptive reporting of highly lucrative contracts to local contractors.

Tenders for ‘construction of a retaining wall’ or for the endless ‘camp infrastructure’ and ‘remodeling’ may fall under UNRWA’s otherwise impressive ‘Educational Budget’—  leaving donors to assume that all such expenses are for books, teachers, and actual classrooms rather than the actual make-work projects feeding well-connected contractors.