November 18, 2014 | Commentary on United Nations, United Nations Reform, United States Of America

Who Needs UNIDO?

The United States did something highly unusual 18 years ago. It withdrew from the United Nations Industrial Development Organization (UNIDO). The move came after lengthy assessment concluded that UNIDO lacked a clear purpose and was generally ineffective. What made the action all the more remarkable was that it was done at the direction of Democratic President Bill Clinton, whose party is generally regarded as supportive of the U.N. and its affiliated organizations.

Since the 1996 decision, UNIDO has periodically asked the U.S. to rejoin. Recent news reports indicate that the Obama Administration is seriously considering doing so. In early October, Ambassador Laura E. Kennedy, Chargé d'Affaires at the U. S. Mission to International Organizations in Vienna, made a courtesy call on UNIDO Director General Ll Yong. And U.S. representatives have been attending UNIDO Donor meetings in recent weeks.

Certainly it is commonplace for new ambassadors - Kennedy assumed her duties in September -to visit with the heads of international organizations. And attendance at UNIDO meetings does not necessarily indicate that the United States is moving to rejoin the organization. But if such an action is being considered, it would be a mistake.

The U.N. General Assembly established UNIDO in 1966 to "promote and accelerate the industrialization of developing countries." In 1975, the General Assembly endorsed the recommendation that UNIDO be made a U.N. specialized agency. During the debate, Washington voiced doubts about the wisdom of the proposal and strongly opposed policies and positions advanced by the organization, specifically "rejecting the concepts of setting world prices, manipulating the terms of trade, and indexing commodity prices so that they would rise automatically as the prices of some industrial goods rose."

Nonetheless, the United States signed the UNIDO Constitution in 1980. In the transmittal letter to the Senate, the Reagan Administration justified the action on the basis that major donors, including the United States, would have more influence over UNIDO as a specialized agency than as an organ of the General Assembly. The letter pointedly noted that if this expectation was not met, UNIDO's constitution provided an advantage not present in the previous arrangement: a means of withdrawal and termination of U.S. financial support.

Over the next decade, UNIDO continued to be plagued with unsound financial management, ineffectiveness, anti-market economic policy recommendations, and poorly performing projects. In its assessment, the Clinton Administration argued that "UNIDO has not been able to define its purpose and function very well, much less become effective in its programmatic activities." The assessment notified UNIDO of its intent to withdraw, effective December 31, 1996, and urged member states to consider phasing the organization out.

As President Reagan once observed, "The nearest thing to eternal life we will ever see on this earth is a government program." International bureaucracies are no different, and UNIDO continues to exist. But support among Western nations continues to erode. Australia withdrew from UNIDO just a year after the U.S., citing justifications similar to those raised in the U.S. letter. Canada had withdrawn even earlier - in 1993.

The exodus has picked up pace in the last several years. The United Kingdom withdrew in 2012 after its 2011 Multilateral Aid Review concluded that there was no "evidence of UNIDO having a significant impact on global poverty," and that it was beset by "a wide range of organisational weaknesses including limited transparency, weak results reporting and weak financial management," and that it was duplicative of other U.N. organizations.

Lithuania also withdrew in 2012, and New Zealand followed suit in 2013. France and Portugal have sent instruments of denunciation to Secretary-General Ban, and their withdrawals will become effective at the end of 2014. Notably, these decisions were based primarily on the organization's irrelevance and ineffectiveness. As the New Zealand government summarized, "UNIDO's role in the international aid system is marginal ... and its overall performance is mediocre."

These recent analyses by other governments confirm that the organization still suffers from managerial weaknesses, lacks a clear, distinct mission, remains ineffective and provides poor value for money. President Clinton The U.S. demonstrated foresight in withdrawing the U.S. from UNIDO nearly two decades ago. The organization's performance since then provides no reason to reconsider that decision, much less reverse it.

 - Brett D. Schaefer is Jay Kingham Fellow in International Regulatory Affairs in The Heritage Foundation’s Margaret Thatcher Center for Freedom.

About the Author

Brett D. Schaefer Jay Kingham Senior Research Fellow in International Regulatory Affairs
The Margaret Thatcher Center for Freedom

Originally appeared in Real Clear World