FIVE YEARS OF AUSTERITY MEASURES HAVE TAKEN TOLL ON SERVICES OF PALESTINE REFUGEE AGENCY, FOURTH COMMITTEE TOLD

24 November 1997

Press Release
GA/SPD/125

FIVE YEARS OF AUSTERITY MEASURES HAVE TAKEN TOLL ON SERVICES OF PALESTINE REFUGEE AGENCY, FOURTH COMMITTEE TOLD

19971124 Commissioner-General of UNRWA Stresses Importance Of Agency's Work, Cites Untenable Financial Situation

Five years of austerity measures had taken their toll on the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), eroding the level and quality of its services, the Agency's Commissioner-General said this morning, as the Fourth Committee (Special Political and Decolonization) began its consideration of UNRWA's annual report.

For Palestine refugees, UNRWA was a symbol of the international community's commitment and obligation towards them, he told the Committee. The threats to its ability to keep delivering services year after year in a financially utenable situation were a matter of great concern, he said.

Allowing financial burdens to become the Agency's foremost consideration was unfair to the refugees it was mandated to serve, as well as to UNRWA itself, the Observer for Palestine said. Any decrease in its services was unacceptable on humanitarian grounds and also because of the negative signal it would convey to the Palestine refugees.

The representative of Jordan stressed that UNRWA had become a major protagonist in mitigating the refugees' problems and required financial resources. He rejected any effort to reduce its activities by placing them under the responsibility of host countries, such as his own. As long as the Palestinian problem remained, there would be an urgent need for UNRWA to maintain and expand its services.

The representative of Luxembourg, speaking on behalf of the European Union and associated States, said that UNRWA's services made an essential contribution to regional stability. Nevertheless, it had to work in a regional climate of tension and mistrust, marked by the erosion of the Middle- East peace process. Its operations continued to suffer from the restrictions imposed by the Israeli authorities, which seriously hampered their implementation.

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Citing the results of serious terrorist attacks against Israelis, that country's representative said his Government had to take care of the security of its own citizens. Precautions included closures of the West Bank and Gaza when necessary. Generally imposed for relatively short periods, such closures were aimed at protecting Israeli citizens and decreasing the freedom of movement and action of terrorists.

Statements were also made by the representatives of Kuwait, Lebanon, Egypt, Malaysia, Turkey, Canada and the United States, as well as by observers for the Holy See, the League of Arab States and Switzerland. The representative of Norway, as Rapporteur of the Working Group on the financing of UNRWA, introduced that body's report. The Observer of Palestine and the representative of Israel spoke in right of reply.

The Fourth Committee will meet again at 3 p.m. today to continue its consideration of UNRWA's annual report.

Committee Work Programme

The Fourth Committee (Special Political and Decolonization) met this morning to begin its consideration of the activities of the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA). It had before it the report of the Agency's Commissioner-General covering the period from 1 July 1996 to 30 June 1997, as well as his report on the financial situation of UNRWA in 1996 and 1997, budget estimates for 1998-1999, and a report of the Working Group on the financing of UNRWA.

Other documents before the Committee address the following matters: persons displaced as a result of June 1967 and subsequent hostilities; offers by Member States of grants and scholarships for higher education for Palestine refugees; revenues derived from Palestine refugees' properties; and a University of Jerusalem "Al-Quds" for Palestine refugees. A note by the Secretary-General, also before the Committee, forwards the report of the United Nations Conciliation Commission for Palestine.

According to the report of the Commissioner-General of UNRWA (document A/52/13), the past year was a time of considerable challenge and transition for the Agency. While it was able to maintain basic services for Palestine refugees and contribute to improving socio-economic conditions within refugee communities, the severe financial crisis besetting the Agency continued to permeate every aspect of its work. That had an increasingly serious negative impact on programmes of assistance to refugees, with potentially dire repercussions. Managing within the limited resources available and seeking a solution to the continuing financial crisis were major preoccupations of the Agency during the period under review.

The regional environment in which the Agency worked was characterized by a deterioration in the peace process and a marked increase in violence affecting Israel and the occupied territory, the report states. Agency operations in the West Bank and Gaza Strip continued to face constraints arising from measures imposed by the Israeli authorities, who invoked security-related considerations. Despite the difficult circumstances, the Agency worked to restore its headquarters to full operating capacity within the area of operations, following completion of the move from Vienna in July 1996, and embarked on a management review aimed at improving efficiency and effectiveness.

The report states that through its regular programmes, UNRWA continued to provide education, health care, relief assistance and social services to the 3.4 million Palestine refugees registered with the Agency in Jordan, Lebanon, Syria, the West Bank and the Gaza Strip. Agency services included elementary and preparatory schooling, vocational and technical training, comprehensive primary health care; assistance relating to hospitalization,

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environmental health services in refugee camps, relief assistance to particularly needy households, and developmental social services for women, youths and persons with disabilities.

The various tracks of the Middle East peace process were subjected to considerable strain during the reporting period, the report states. Following the opening by the Government of Israel of an entrance to a tunnel in the vicinity of Al-Aqsa mosque in Jerusalem, several days of intense clashes erupted between Israeli forces and Palestine police and civilians, in which 70 Palestinians and 16 Israelis were killed. The unprecedented exchange of fire between Palestinian police and Israeli forces, which contributed to the high casualty rate, led to the declaration of a state of emergency by the Israeli authorities.

Nevertheless, after hostilities had subsided, negotiations resumed between the two sides on the redeployment of Israeli forces in Hebron, the report states. According to the Israeli-Palestinian Interim Agreement on the West Bank and Gaza Strip of 28 September 1995, those talks had been due to take place in March 1996. The negotiations culminated in the Hebron Protocol, signed on 15 January 1997, under which the Palestinian Authority was given civil and security responsibilities over 80 per cent of the city, with the Israeli authorities remaining in control of the part of the city in which Israeli settlers resided.

Efforts to move the peace forward were, however, interrupted by the controversy surrounding the start of Israeli construction activity at Jebel Abu Ghneim, between Jerusalem and Bethlehem, the report states. By mid-1997, the peace process was widely acknowledged to be in deep crisis, and despite signs of cooperation, the prevailing atmosphere was one of tension and mistrust.

The humanitarian work of UNRWA during the reporting period was overshadowed by concern about its financial situation, which continued to worsen despite vigorous efforts by the Agency to reduce expenditures and seek new sources of funding, the report states. Income continued to fall far short of budgeted needs, necessitating a continuation of previously imposed austerity measures and the introduction of new ones. The Agency ended 1996 with the fourth consecutive year-end deficit in its approved budget, as well as depleted cash and working capital reserves. Taking into account the cumulative deficits in certain extrabudgetary accounts, the Agency could also be considered "technically bankrupt".

The report states that the steady increase in the refugee population owing to natural growth, inflation and the public-sector quality of UNRWA services, which were made available to all those who met eligibility requirements, created a dynamic which inexorably increased the cost of providing a given level of services over time. The cumulative impact of funding shortfalls and austerity

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measures was illustrated by the 29 per cent drop in average expenditure per refugee over the previous four years -- from $110.4 in 1992 to $78.2 in 1996 -- not taking account of the effects of inflation.

In view of the worsening conditions in refugee communities, a reduction in Agency services would not be justifiable on humanitarian grounds, let alone in the political context, the report states. The UNRWA found itself caught between conflicting exigencies. On the one hand, funds were not forthcoming for it to continue to provide services as in the past. On the other, the needs of the refugees, the delicate situation in the region, and the tradition of the Agency's work over four decades militated against any significant adjustments to its programmes.

In view of the foregoing considerations, it was highly regrettable that, shortly after the period covered by the present report, the Agency's critical financial situation obliged it to introduce a series of measures which represented a direct reduction in Agency services, the report states. Those measures included an immediate recruitment freeze for some 250 new teacher posts needed Agency-wide to cope with rising enrolments; reducing international posts by 15 per cent; cancelling non-emergency hospitalization services in the last two months of 1997, except for special hardship cases; discontinuing regular budget allocations for university scholarships, shelter rehabilitation and emergency cash assistance; and introducing a temporary general recruitment freeze. Through the rapid response of donors, it has been possible to revoke some of the announced measures.

The report states that the period under review coincided with the first year of the presence of UNRWA's headquarters in the area of operations. At the principal headquarters location in Gaza, the initial period after the move was devoted to recruiting local staff to fill vacancies, establishing serviceable communications and computer systems, and restoring offices to full working capacity. The success of the move yielded tangible benefits in terms of closer contact with field operations, the refugee community, and host authorities and other interlocutors.

In Jordan, Lebanon and Syria, which together hosted 62 per cent of all registered refugees, UNRWA continued to cooperate with the host authorities in providing services, the report states. Attention was focused on the situation of Palestine refugees in Lebanon, who faced deplorable living conditions and were unable to gain full access to the job market or to avail themselves of public health and education facilities.

The report states that the period in question marked the first phase of the management review, undertaken with the aim of making the Agency more efficient and effective in fulfilling its mission in a changing regional and international environment, and within the broader context of United Nations

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reform. The diagnostic phase of the review involved the use of three consultancies to review the Agency's organizational structure and functions, business processes and budget management. Following internal assessment of the consultants' recommendations, proposals were implemented in a number of areas, including budget preparation and administrative and personnel functions.

During the period under review, UNRWA's contacts with the League of Arab States were intensified and their relationship in support of the Agency's humanitarian activities strengthened, the report states. The Agency participated in a number of high-level meetings with the League. It appreciated the League's strong support for the continuation of UNRWA's humanitarian services and for its appeals for increased contributions to the Agency by Arab League member States and others.

The outlook for the Palestine refugees and UNRWA at mid-1997 was not encouraging, the report states. Frustration and despair within the refugee community, still awaiting a solution to their plight after nearly five decades, were intensified by the poor living conditions and restricted opportunities which so many continued to face.

An addendum to the Commissioner-General's report reviews the Agency's financial situation in 1996 and 1997, and budget estimates for 1998-1999. It states that UNRWA is in a very precarious financial situation. Over the years, the Agency has used its capital to cover annual deficits. That was no longer possible.

Despite significant reductions in expenditure compared to its approved budget for the biennium 1996-1997, the Agency is facing a deficit in its regular activities of some $20 million for the biennium, the report states. The main reason for this deficit is that cash contributions to the Agency are not enough to cover the cash expenditures for its regular programmes.

The report states that the budget for UNRWA is based on its mandate. The Agency's activities focus on support to more than 3.4 million Palestine refugees in Jordan, Lebanon, Syria, the West Bank and the Gaza Strip. It is currently running three substantive programmes providing direct services to Palestine refugees on the fields of education, health care, and relief and social services.

The preparation of the Agency's 1998-1999 budget has been undertaken against a background of increasing needs by the Palestine refugees, the report states. It is based on the level and quality of services that have become the norm for UNRWA, in particular as a result of the fact that the international community over decades has financed services at those standards. At the same time, the very severe financial situation in which the Agency finds itself has

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had a significant influence on the setting of budget targets. In general, no new services have been introduced.

The education programme is the Agency's largest, the report states. It has a total budget of $325.3 million for the biennium 1998-1999, compared to $326.2 million for 1996-1997. The health programme is the Agency's second largest programme, with a total budget of $126.4 million, representing 18.8 per cent of the Agency's expenditures and employing 15 per cent of its staff. The proposed budget for relief services is $70.3 million and the proposed budget for social services is $6.1 million.

The report also reviews the budgets proposed for the Agency's operational and common services. The budget proposed for operational services is $45.5 million and for common services it is $88.2 million.

Included in the Agency's budget is a provision for termination indemnities for 22,000 area staff, the report states. That provision was requested by the Agency's major donors and host governments in March 1995. However, it has not been financially possible for the Agency to provide for this during the biennium 1996-1997.

Also before the Committee is the report of the Working Group on the financing of UNRWA (document A/52/578), which met on 12 September and 14 October to consider recent developments in the Agency's financial situation. It states that the Agency ended its 1996 financial year with a shortfall of $26.7 million, based on total expenditures of $343.3 million and total income of $316.6 million.

In view of that dire situation, the Commissioner-General of UNRWA convened an extraordinary meeting of major donors and host governments at Amman in September 1996, at which the nature and magnitude of the crisis was explained and a special appeal was issued, the report states. Donors responded generously, announcing additional pledges of $14.3 million, including $12.4 million towards the 1996 regular budget. Through additional contributions, the Agency was able to avoid insolvency.

The measures taken by the Agency to get through 1996 included the maintenance of previously imposed austerity measures and the introduction of new ones, the report states. As a result, some activities provided for in the budget approved by the General Assembly for the 1996-1997 biennium were not fully implemented, thus negatively affecting the quality of its humanitarian programmes. In February 1997, the Commissioner-General introduced another round of austerity measures amounting to some $18.7 million a year. The Working Group stresses the responsibility of the international community to ensure the maintenance of UNRWA's services at acceptable levels.

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The Working Group welcomes UNRWA's continuing efforts to implement management reform, the report states. Those include prioritizing activities, taking into account the needs of the refugees and re-examining the way its services are delivered to ensure maximum cost-effectiveness. The Working Group commends the Commissioner-General and his staff for their tireless efforts to maintain the Agency's basic operations despite the constraints on the availability of resources. It urges those governments which have not yet contributed to UNRWA to do so and urges those governments which have so far made only relatively small contributions to contribute more.

Reports of the Secretary-General

The Committee also had before it the report of the Secretary-General on persons displaced as a result of the June 1967 and subsequent hostilities (document A/52/423). The report was submitted pursuant to General Assembly resolution 51/126 of 13 December 1996, by which, among other things, the Assembly reaffirmed the right of all persons displaced as a result of the June 1967 and subsequent hostilities to return to their homes or former places of residence in the territories occupied by Israel since 1967.

The report also states that the Secretary-General has obtained from the Commissioner-General of UNRWA the information available to him on the return of refugees registered with the Agency. As indicated in previous reports on the subject, the Agency is not involved in any arrangements for the return of refugees nor is it involved in any arrangements for the return of displaced persons who are not registered as refugees.

The report further states that the Agency would not necessarily be aware of the return of any registered refugees who did not request the provision of services. So far as is known to the Agency, between 1 July 1996 and 30 June 1997, 841 refugees registered with UNRWA returned to the West Bank and 352 to the Gaza Strip. However, some of them might not themselves have been displaced in 1967, but might be members of the family of a displaced registered refugee whom they accompanied.

Also before the Committee was the report of the Secretary-General on Palestine refugees' properties and their revenues (document A/52/372). The report is submitted in pursuance of Assembly resolution 51/129 of 13 December 1996, by which the Assembly reaffirmed that the Palestine Arab refugees were entitled to their property and to the income derived therefrom, in conformity with the principles of justice and equity. The resolution also urges the Palestinian and Israeli sides, as agreed between them, to deal with the important issue of Palestine refugees' properties and their revenues in the framework of the final status negotiations of the Middle East peace process.

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The reports on displaced persons and of refugees' properties indicate that the Secretary-General, on 7 May, addressed notes verbale to the Permanent Representative of Israel to the United Nations requesting information on any action Israel had taken or envisaged taking in implementation of the relevant resolutions.

In the response by Israel to those requests, its Permanent Representative replied that resolutions regarding UNRWA remained rife with political issues irrelevant to the work for which the Agency was responsible and thus remained detached from the new reality in the area.

"The agreements between Israel and the Palestinians mark significant progress in the framework of the peace process", he writes. "Israel believes that this process is the only way to achieve historic reconciliation and lasting peace between the two sides. However, for this process to succeed, it is imperative that both sides abide by their commitments made under the agreements signed by them. Israel calls upon the Palestinian side to live up to its commitments and resume its participation in the negotiations on all outstanding interim matters and on permanent status issues.

"Israel believes that UNRWA can play an important role in promoting the social and economic advancement foreseen in the agreements between Israel and the Palestinians, within the limits of its humanitarian mandate, and accordingly looks forward to continuing the cooperation and good working relationship with UNRWA."

The note verbale also states that Israel considers it essential that the General Assembly consolidate its resolutions regarding UNRWA into one resolution directly related to the Agency's humanitarian tasks.

The report of the Secretary-General on offers by Member States of grants and scholarships for higher education, including vocational training, for Palestine refugees (document A/52/415) states that the Government of Japan awarded 10 fellowships through UNRWA in 1996/1997. The Government of Switzerland contributed $1,463,581 between 1989 and 1995, as well as $240,000 in 1996, to the UNRWA university scholarships programme for secondary school graduates.

The report further states that during the biennium 1996-1997, the United Nations Educational, Scientific and Cultural Organization (UNESCO) granted 71 scholarships in favour of Palestinian students. The World Health Organization (WHO) provided and processed 32 fellowships/study tours for qualified Palestinian candidates in various specializations, with a commutative total of 54 months of study.

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The Committee also had before it the report of the Secretary-General on a University of Jerusalem "Al-Quds" for Palestine refugees (document A/52/503), including his efforts to prepare a functional feasibility study on establishing the proposed university.

At the Secretary-General's request, the Rector of the United Nations University made available a highly qualified expert, Mihaly Simai, to assist in the preparation of the study, the report states. The expert was to visit the area and meet with the competent Israeli officials, bearing in mind that Israel exercises effective authority in the area concerned. The Secretary- General requested that the Government of Israel facilitate the visit of the expert, which would take place at a mutually convenient date.

On 10 October, the Permanent Representative of Israel informed the Secretary-General that Israel had voted consistently against the Assembly's resolution on the proposed university, and its position remained unchanged, the report states. "It is clear that the sponsors of this resolution seek to exploit the field of higher education for political purposes totally extraneous to genuine academic pursuits", he writes. Accordingly, Israel considers that the proposed visit "would serve no useful purpose".

In view of that position by Israel, it has not been possible to complete the functional feasibility study on the proposed university as planned.

The report of the United Nations Conciliation Commission for Palestine, contained in a note by the Secretary-General (document A/52/311), states that the Commission has nothing new to report since submission of its report of 1 October 1996 (document A/51/430, annex). The Commission had earlier reported that it had been unable to find means of achieving progress in implementing a 1948 Assembly resolution which called for Palestine refugees to be given the choice between peaceful repatriation and compensation. The circumstances that had limited its possibilities of action had remained essentially unchanged.

Statements

PETER HANSEN, Commissioner-General of UNRWA, introduced that body's report. He said the Agency had now completed a full annual cycle at its new headquarters in Gaza, having moved from Vienna in July 1996. That period had been both rewarding and frustrating. It had been rewarding because having its headquarters in its area of operations, as part of the community it served, close to its official and unofficial interlocutors, and in the middle of the action, enabled the Agency to carry on a meaningful dialogue with its partners. It had been frustrating because there were still obstacles to the movement of United Nations staff. Communications systems also left much to be desired. Being away from a United Nations headquarters left UNRWA somewhat isolated in terms of developments in the United Nations system.

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He said he recognized the security concerns cited by the Israeli authorities. No one could condone the suicide bombings of early 1996 which had started the current wave of strict closures, nor those of July 1997 and September 1997. However, it had been widely recognized that the collective nature of the measures imposed on the Palestinians could not possibly lead to either security or peace.

The Agency faced many difficulties as a result of measures imposed by the Israeli authorities, which they characterized as necessary on security grounds, he said. The system whereby UNRWA's Palestinian staff were required to obtain permits for travel between the West Bank and Gaza or to enter Israel created additional administrative and operational problems for the Agency. Such restrictions were a significant obstacle to the Agency's efficient functioning.

Relations with the Palestinian Authority continued to be very good, which made every effort to accommodate UNRWA's needs, he said. Despite the Palestinian Authority's own budgetary crisis, they strongly supported UNRWA's fund-raising efforts, leading many donors to pledge additional funds for the Agency for 1997.

However, five years of austerity measures had taken their toll on UNRWA. The level and quality of its services had been eroded to a level below that which the international community had willingly financed in preceding decades. The standard of its services could no longer be assured. If UNRWA were to receive in 1998 the same amount as it had in 1997 -- $260 million -- it would still face a deficit of $54 million. A more permanent solution to UNRWA's financial difficulties, one which would ensure its viability in the years ahead, was necessary.

Last year, a management review and reform process had been initiated within the Agency, he said. It had been aimed at putting structures and processes in place which would allow UNRWA to continue to respond to the needs of the Palestine refugees, while simultaneously improving the effectiveness and efficiency of its operations. The Agency had sought outside advice on how that process might best be effected. Accountability and transparency were a priority.

For refugees, UNRWA was a symbol of the international community's commitment and obligation towards them for as long as the refugee question remained, he said. For the Palestine refugees, any diminution in support or services was seen as a dilution of that international commitment. Although Mr. Hansen remained hopeful that the various tracks of the peace process would move forward, he said he was greatly concerned about threats to UNRWA's ability to keep delivering services year after year in a financially untenable situation. The Agency had assisted Palestine refugees through decades of

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turmoil. Programmatic and administrative adaptation had helped UNRWA to deal with many challenges during its lifetime. It must now equip itself to face one of the most demanding phases of its existence.

SVEIN AASS (Norway), Rapporteur of the Working Group on the Financing of UNRWA, introduced that body's report.

M. NASSER AL-KIDWA, Observer for Palestine, said that the reduction in UNRWA's services had a negative impact over the past year. Although some of those reductions had been revoked, they still had a detrimental effect. "We oppose any decrease in the services of UNRWA for humanitarian reasons, and also because of the negative signal this would convey to the Palestine refugees. Allowing financial burdens to become the foremost consideration of the Agency is unfair to the refugees that UNRWA is mandated to serve, and unfair to the administration of the Agency." It should not be forced to operate on the basis of availability of funds. Services and programmes must meet the prevailing needs.

The grave deterioration of the peace process, as well as of the situation on the ground, served as reminders of the urgent need there, he said. That deterioration had resulted in the worsening in the daily life of the Palestinian people, with despair and frustration most prevalent among the refugee population of the occupied territories, including Jerusalem. The refugees continued to face severe socio-economic hardships, including rampant unemployment and deplorable living conditions.

It had been a year since the transfer of UNRWA headquarters to Gaza, which had afforded the Agency many advantages, including proximity to the fields of operation, the establishment of closer relations with the Palestinian leadership at the highest levels, and greater cooperation and coordination with other United Nations agencies in the region, he said. However, its operations in the occupied territories continued to be obstructed by measures imposed by the Israeli authorities, such as the recurrent closures which had restricted the movement of Agency staff and vehicles and affected the provision of services to the Palestine refugees. It remained important for UNRWA to be able to continue its programmes and services in Jordan, Lebanon and Syria.

HASAN ABU-NIMAH (Jordan) said the Palestinian problem was at the heart of the problems in the Middle East. Article 9 of the peace treaty between Jordan and Israel recognized the rights of Palestine refugees. Nevertheless, no tangible result, either bilaterally or multilaterally, had been effected. Jordan, which hosted the largest refugee presence, continued to provide them with services. From 1 July 1996 to 20 January 1997, his Government had provided $30 million to cover services to Palestinians in the areas of health, general services and social services. It had also worked out a strategic plan

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costing $240 million relating to water supply, waste management, health care services, electricity, road projects and other services. The Agency had become a major protagonist in mitigating the refugees' problems and required financial resources. The cumulative effect of the Agency's funding problems and austerity measures was the reduction by 29 per cent in the amount of its services per refugee.

He said that Jordan rejected any effort to reduce UNRWA's activities by placing them under the responsibility of the host countries, which would have a negative impact on its work and on the refugees. As long as the Palestinian problem remained unresolved, there would be an urgent need for UNRWA to maintain its services and to expand them. If the restrictions imposed by the Israeli authorities lasted a long time, they would have a negative effect on the economies of the host countries.

MANSOUR AYYAD SH. A. AL-OTAIBI (Kuwait) said the health and education services provided to refugees were crucial and should be maintained, insofar as possible, at the current level. A recent Arab League resolution had affirmed the need for UNRWA to continue to provide its services until a solution to the Palestine problem was found.

His country had continued to provide aid to Palestine refugees, supporting UNRWA through its $1.5 million annual donation, he said. That support was provided because of Kuwait's belief in the justice of the cause. The situation in the region had been made worse because of Israeli practices in the area, in the name of Israeli security concerns. Those measures were not justified.

ADNAN MANSOUR (Lebanon) said Lebanon knew the importance of UNRWA's services. The increase in the number of refugees made it necessary to increase UNRWA's services in countries such as his own. The reduction in UNRWA's services would lead to negative economic and social consequences. Its financial crisis must be resolved.

Palestinians were treated in a fair and equitable manner in Lebanon, he said. Their freedom of movement was not limited. According to official statistics, the entry and return of Palestine refugees had increased. Very few such requests had been rejected. His Government hoped that UNRWA would invite officials from donor countries to visit the refugee camps. That would enable them to see the daily living conditions of the refugees and so increase their support for UNRWA, to enhance its abilities to carry out its mission.

YURIKO BACKES (Luxembourg) spoke on behalf of the European Union, as well as for Bulgaria, Czech Republic, Estonia, Romania, Slovakia, Slovenia and Cyprus. She said that through its work and services, UNRWA made an essential contribution to the Middle East peace process and to regional stability.

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Nevertheless, the general climate in the region continued to be marked by tension and mistrust and the Agency had to work in a context affected by the erosion of the peace process. Its operations continued to suffer from the restrictions imposed by the Israeli authorities, which seriously hampered the implementation of UNRWA's programmes.

Despite measures taken to reduce expenditure, widen the resource base and persuade the entire international community to provide more support for its activities, UNRWA had begun its 1997 financial year with a sizeable deficit, she said. The Commissioner-General had been forced to introduce new austerity measures, including reductions in the number of the Agency's programmes and activities. The European Union, fully aware of the grave financial difficulties under which UNRWA laboured, remained its major donor, contributing $144.3 million. The Union thus supplied 45.6 per cent of total contributions to the Agency in 1996.

With the approach of UNRWA's fiftieth anniversary, it should be recalled that the Agency had been created to provide temporary assistance -- not to be a substitute for a political solution to the refugee problem, she said. It was hoped that a solution would be found in the context of a comprehensive, just and lasting settlement, so the Agency might conclude its mandate and transfer its functions to the Palestinian Authority. The Union welcomed the strengthening of relations between the Agency and the Palestinian Authority, which had supported progress in harmonizing UNRWA's services with its Palestinian Authority counterparts in the areas of education, health, emergency aid and social services.

Without the work done by UNRWA, the level of material impoverishment and political frustration among the Palestinian refugee population would be much greater, she said. The international community was urged to give all possible political and financial support to the Agency and its essential work. It was the common responsibility of all Members of the United Nations to provide UNRWA with the appropriate resources to carry out its task under the best possible conditions, until a just, lasting and comprehensive solution was found to the political problems which had led to the presence of Palestine refugees in the Near East.

NABIL A. ELARABY (Egypt) said the hopes of the Arab world were threatened with dissipation, as Israel had adopted a policy of prevarication, preferring words to deeds. All parties seeking peace in the Middle East were aware of the services provided by UNRWA and of their increasing importance at this delicate time. The Palestinian people were subjected to double suffering, because of the denial of self-rule on the one hand, and the hostile policies adopted by Israel on the other. Egypt encouraged all Member States to support UNRWA's services. The major donor countries were urged to continue

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with their contributions until the Palestinian people attained their national political and economic rights.

SHAHRIL EFFENDI ABDUL GHANY (Malaysia) said that UNRWA was one of the United Nations oldest programmes devoted to a single constituency. It had played a tremendous role in planning and executing programmes of assistance to the more than 3.4 million Palestine refugees in the West Bank and the Gaza Strip, as well as in Jordan, Lebanon and Syria. Its presence was critical, and it should remain in existence until a definitive solution was found to the question of Palestine.

The strict measures imposed by the Israeli authorities to regulate movement to and from the West Bank and Gaza Strip, ostensibly on security grounds, were a matter of serious concern, he said. The restrictions on the movement of Agency staff had negatively affected the work of UNRWA and was a major and costly obstacle to the execution of its mandate in the occupied territory. Also of concern was the Agency's worsening financial situation.

M. BABUR HIZLAN (Turkey) said that despite the natural population growth of the Palestine refugees, UNRWA was presenting a zero-growth budget. As a result, per capita benefits to refugees would continue to decrease. If adequate funds were not made available, it would be possible to meet the objectives of UNRWA's programmes. The outlook was grim. Further reductions in UNRWA's services would mean further deprivation of the Palestine refugees of a minimum level of support and could have an adverse affect on regional stability. The international community had a responsibility to ensure the maintenance of UNRWA's services at an acceptable level.

The Middle East peace process had been the single most important positive development in the region in the recent past, he said. However, an unfortunate and dangerous turn had been taken. The Israeli settlement activities in the occupied territories, in defiance of the relevant Security Council and General Assembly resolutions, along with abhorrent terrorist acts, had placed the peace process under a severe strain. It was in the best interests of all concerned to act with restraint and not to take any action that might completely derail the peace process.

ROBERT R. FOWLER (Canada) said that as coordinator of the Refugee Working Group of the Multilateral Negotiations of the Middle East Peace Process, Canada had a special responsibility to maintain dialogue with the refugees and had led a mission to refugee camps in Lebanon last May. Refugee camp residents had told the mission that their humanitarian conditions were bad and getting worse and that frustrations were growing. They had complained about what they saw as cuts in UNRWA's services and expressed the suspicion that they were directly related to the peace process. Although the residents welcomed the assistance of the international community to improve their

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humanitarian conditions, they said that could not be a replacement for exercise of their right to return.

He said the refugees in Lebanon gave priority to improving the level of education and vocational training, access to employment, the cost of hospital services and the poor conditions of shelter, particularly for refugees displaced from destroyed camps. Although the Mission's mandate had focused on the humanitarian situation of the refugees in Lebanon, both the refugees and the Government of Lebanon brought to its attention the seriousness of the fundamental political issues at the heart of the problem. The Palestinian refugee problem had persisted for 50 years, with little progress towards their return or other manifestations of an agreed resolution.

Funding shortfalls for UNRWA were alarming for host authorities and refugees alike, he said. The Foreign Ministers of Lebanon and Jordan had highlighted the issue in their addresses to the General Assembly as a matter of grave concern to their countries. Canada recognized the concern and the vital interest of the host countries on that subject. While continuity of basic services was essential for the welfare of the refugees and for regional stability, host authorities could not be expected to bear that burden alone. Support by the international community, as embodied in UNRWA, remained vital.

He said that UNRWA had a duty to ensure the highest levels of accountability and transparency, as well to ensure that its services were delivered in the most efficient and cost-effective manner so that refugees might receive the maximum benefit in the highest priority categories of need. Effective service to the refugees required the highest standard of management practice, including a realistic and comprehensive planning framework, taking into account the funding available. Management reform was making the United Nations a better organization, and Canada welcomed the reform measures taken to date by the Commissioner-General. Canada subscribed fully to his vision of "a stronger and more effective partnership between all parties involved in the care of Palestine refugees -- UNRWA, the donor countries, the host authorities and the international community at large".

DAVID TOURGEMAN (Israel) said it was obvious that UNRWA did not operate "disconnected and isolated" from the reality of the serious terrorist attacks against innocent citizens of Israel. Israelis became victims simply because they were Jewish and Israeli. The Government of Israel had to take care of the security of its own citizens. Precautions included closure of the territories in the West Bank and Gaza when necessary. Closures were generally imposed for relatively short periods and then gradually eased. Closures which prevented Palestinian residents of the territories from entering Israel were aimed at defending the citizens of Israel and decreasing the freedom of movement and action of terrorists.

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He said that Israel was aware of the economic and other difficulties which the closures might cause to the Palestinians, including the refugees who could not enter Israel for employment. However, the closures were not a punishment against the Palestinian population but a necessary step to make it difficult for terrorists to penetrate Israel. Those interested in the well- being of the Palestinians, including the refugees, should take part in the battle against the Palestinian terrorists. Stamping out terrorism was a prerequisite for further progress in the negotiating process. Security was the immediate problem for the people of Israel, and it was far from being solved.

In the meanwhile, and until a permanent settlement was reached between Israel and the Palestinians, there was a need to improve the living conditions of the Palestinian refugees, he said. A variety of projects were feasible and desirable, including the provision of resources for the development of small- scale enterprises and infrastructure projects, the building of medical centres for children and improving the squalid conditions of refugee housing. Israel and the Palestine Liberation Organization (PLO) had already agreed on the construction of five industrial parks or zones along the Gaza Strip and the West Bank which would employ thousands of Palestinian workers, including many refugees. They would not need to travel to Israel for work.

Israel had also pledged to allocate $7 million for the construction of a new terminal between Gaza and Israel to serve the industrial zones, he said. His country would also lay a water pipeline into the industrial zone to be built in Gaza. Israel had already transferred the full amount of its commitment, $10.5 million, to the Holst Fund, established by the World Bank to extend financial aid to the Palestinian Authority.

DAVID L. SCOTT (United States) said his country strongly supported the humanitarian support that UNRWA provided, as well as its efforts to continue to adapt to the changing needs of the refugees in the region. The United States was the largest donor to UNRWA and would continue working closely with the Agency to improve its financial situation. However, his country did not support resolutions which impinged upon negotiations conducted by the parties. While the United States supported UNRWA, it was necessary to avoid prejudging the peace process.

RENATO R. MARTINO, Observer for the Holy See, said that together with UNRWA, the local Catholic Church in the Palestinian autonomous areas and in the occupied territories strove to assist the people of the region, many of whom were refugees. During the last year, those efforts had been negatively affected by the breakdown of the peace process.

The recent "super closure" of Bethlehem had prevented the opening of the Pontifical University in Bethlehem for six weeks, he said. The closure of

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Gaza had made it necessary for one student to fly first to Egypt, then on to Jordan and Tel Aviv before travelling by ground to Bethlehem. Such was the impact of the closure on some students.

With the breakdown in the peace process, unilateral decisions which aimed at improving security had increased the difficulties facing the average Palestinian, he said. Such injustice did not lead to peace. Rather, they created a cycle of action and reaction which could flame into uncontrollable violence. The Holy See called upon the parties to infuse the peace process with a renewed vigour and sense of urgency. It was also important to condemn terrorism in any form.

HUSSEIN A. HASSOUNA, observer for the League of Arab States, said the problems of the Palestinian people should be addressed by the international community. Israel's attitude towards the peace process posed a flagrant challenge to the international community. Its establishment of settlements in the occupied territories, as well as other events, had led to a stalling of the peace process. Refugees had been waiting for more than 40 years for a solution to their problem.

There should be no reduction in UNRWA's services, he said. The problem of budget shortfalls had become critical, and the international community should meet its commitment to Palestine refugees. The role of the Agency and its humanitarian mission were extremely important. The Arab League's ministerial meetings continued to stress the importance of the situation. Everything that could be done to strengthen the role of the Agency should be done.

JEAN-FRANCOIS PAROZ, observer for Switzerland, said the problems facing UNRWA were a result of the serious financial difficulties which this year led the Commissioner-General to take austerity measures. The most severe of those measures -- the announcement of which had created great and understandable emotion among the Palestinian refugee population -- was nullified, fortunately, by the additional contributions made at an ad hoc meeting at Amman in September. Nevertheless, such crisis actions were not satisfying for anyone, least of all the beneficiaries of UNRWA's services.

The Agency, the donor countries and the host countries must find means to respond better to the immediate and longer-term needs of the refugee population, he said. Resources available from traditional donor countries were becoming more rare. That was true for UNRWA, as it was for other humanitarian agencies and institutions, whose needs were also growing. It was hoped that UNRWA would give priority to the implementation of necessary reforms.

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Right of Reply

Mr. AL-KIDWA, Observer for Palestine, speaking in exercise of the right of reply, said the refugee problem was a long-standing one. Hundreds of thousands of Palestinians had been violently thrown out of their homes and were victims of Israeli repression. It was a matter of regret to hear the representative of Israel trying to justify a historical crime by using "imaginary statements", instead of apologizing to the Palestinian people. There would be no lasting solution to the issue unless Israel acknowledged its historic responsibility.

Resolution 194 on the Palestinian people's right of return did not represent an option but the only way to solve the Palestinian problem, he said. Israel had been admitted to the United Nations after agreeing to implement resolutions 194 and 180. What Israel was trying to do was to avoid implementing them and to create a new situation in the territories that would violate international law.

Mr. TOURGEMAN (Israel) said the representative of the Arab League had been wrong and misleading in saying that past Israeli Governments had accepted the refugees' right of return. There had never been such an acceptance, and there would never be such acceptance by an Israeli Government. The slogan of the right of return had grave significance, and no Israeli citizen would ever accept such a thing. More practical solutions should be developed. On the origins of the refugee problem, he said that in the past, some Arab leaders had admitted the role of Arabs in the departure of the refugees.

Mr. AL-KIDWA, Observer for Palestine, said that Palestine regretted the type of statement that had just been made by Israel.

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