UNRWA, funding crisis and the way forward

This commissioned report has two main aims: First, providing a description of what UNRWA is, including its history, mandate and services, with particular emphasis on the recent funding deficit and how that has impacted its operations. Second, to explore the future for UNRWA and its services by investigating hypothetical scenarios.

The report traces the roots of UNRWA back to the 1948 Arab–Israeli war when some 750,000 people were uprooted and had to flee, creating the Palestinian refugee problem. In response, UNRWA was established to aid the refugees and continues to exist because no durable solutions to the refugee problem (repatriation, resettlement, integration or compensation) have been found. The report underscores the responsibility of the international community for creating the refugee problem and finding its solution.

The report explains how UNRWA’s mandate has evolved over time and remains anchored in the UN General Assembly. The Agency provides services primarily to registered Palestine refugees in five fields of operation: the West Bank, Gaza, Jordan, Lebanon, and Syria. Its activities cover education; health; relief and social services (RSS); humanitarian assistance through emergency appeals; microfinance; infrastructure and camp improvement; and protection. Education, health, and RSS constitute UNRWA’s main activities, and staff salaries make up the largest share of UNRWA’s budget.

More than 540,00 pupils are enrolled in the 718 UNRWA schools and about 10,000 students attend vocational training centres and teacher training institutes. In total, UNRWA employs about 20,000 teachers, out of close to 30,000 staff in total. The Agency provides basic health services in 143 primary health facilities, with approximately 3,000 staff and conducts a total of 8.5 million consultations annually. UNRWA also provides cash and food assistance to those most in need. This report describes some of the services provided by UNRWA, raising the issue of service eligibility and highlighting that UNRWA is a cost-effective provider of state-like services. However, due to long-lasting funding challenges, the services are not as good as they could otherwise have been. Signs of deteriorating service delivery are described by some reports and observers, and planned reforms are delayed.

A total of 41% of UNRWA’s budget is spent in Gaza, and there is a background of precarity and instability across Gaza, Lebanon, and Syria. This report gives insight into how Palestinian refugees, host countries, and international donors perceive UNRWA, and examines some key dynamics in these relations.

The report finds several explanations for UNRWA’s funding problems:

• Donor fatigue, and aid being channelled elsewhere. One key reason for this is the lack of a political solution to the refugee problem combined with the perpetually growing costs of UNRWA operations;
• Yearly rather than multi-year allocations, as more predictable funding would improve the scope for future planning and would involve less time being spent on fundraising;
• An (often unarticulated) opinion among some donor states that it is time for host governments, particularly Jordan, to assume more responsibility for the Palestinian refugee population;
• Skepticism and outright opposition to UNRWA based on the misunderstanding that its existence helps perpetuate the refugee problem or unfounded claims that the Agency instigates violence, for example, through school curricula with an anti-Israeli edge;
• The interplay between foreign policy and national politics;
• The collapse of the Middle East peace process; and
• Rising global prices, especially for food and energy.

Long-term, stable funding is a precondition for UNRWA’s future functioning at the level it does today. However, despite UNRWA’s fundraising efforts in recent years, the Agency has not succeeded in widening its funding base. New donor countries have been reluctant to join the regular donors, and historic donors are finding it increasingly difficult to raise the required funds. The report discusses the funding challenges and the possible implications of these. The possible scenarios can be grouped according to their focus: a) continued austerity measures; b) a combination of various cuts in services, including structural changes such as applying stricter needs-based criteria; c) models of reorganisation, such as mandating other entities to assume UNRWA responsibilities; d) more positive scenarios such as increased funding or implementing modernisation measures; e) scenarios in which the mandate is altered to become more in line with the international refugee regime; f) changes to the political context in which UNRWA operates; and g) collapse of UNRWA.

In sum, apart from the more optimistic scenarios of increased funding, these options range from bad to worse. Some of the scenarios imply serious political repercussions, while others will not make UNRWA more sustainable nor ensure that they quality of its services is maintained or improved. The most likely way forward appears to be the continuation of current austerity measures, and a consequent deterioration of services. This scenario harms the refugee population in a highly insecure and volatile region. And it raises the question as to when a gradual deterioration of UNRWA’s services will no longer be possible and instead becomes an actual collapse of operations. Above all, this most-likely scenario carries high political risks and uncertainty for the international community in a fragile region and at a time when, globally, there is little capacity to manage major new crises.