The roles of inequality and finance in an evolving UN

Twice in the last two weeks I've been asked to give inputs on the subject of why the UN doesn't work more in developed countries or why the UN is not able to hold developed countries more to account. Speaking from my personal point of view, as I am now rather than a UN Women or UN one, I've answered that this question isn't the right one to be asking. In fact, that such questions are being asked in this way has led me to believe that there may be two fundamental points that require some highlighting, particularly now.

The right question to ask is what purpose does the UN serve today versus its purpose thirty or forty years ago? And if this purpose has evolved, then has the way the UN works fully evolved with it or do we have more and maybe major changes to make? The question of the role of the UN in developed countries, which indeed arises, is just an offshoot of that deeper one. There are lots of other questions that arise too.

It's not insightful to argue that the UN needs reform or even that it needs continuous reform. The UN reflects the world and the world changes so of course it must too. But there are moments that facilitate change more and moments that facilitate it less. The SG's Our Common Agenda, with the impressive minds who've driven and are driving it, is one of the first kind of moment, a genuinely important opportunity for change which we should embrace and make sure not to waste.

It is probably also not insightful to argue that change in the UN is overdue. The reality is that in the almost 30 years I have worked in development, the approach and working methods of the UN Development System hasn't changed that much. Our workplans have more or less the same format. We set targets and measure performance in pretty similar ways. We still transfer cash to the same sorts of organisations with the same sorts of agreements. Over the years some issues have gained prominence (like climate change) and others become less prominent (like polio eradication), but the way of working is largely the same. I suspect if you took someone working at country level in the UN development entity in the 1980s and parachuted her into a country office for one of the development entities today she'd more or less recognise the approach and wouldn't need long to get up to speed.

If things aren't broken then you shouldn't fix them. Certainly that something hasn't changed much for a long time can be entirely appropriate. But there are significant differences between the development context this hypothetical development professional of the 1980s worked in and the one we have today. They are big enough to make it hard to believe that there isn't more change needed.

I want to highlight two such differences. This is not because no one else has thought of them but instead because I fear they are sometimes lost in the complexity of the discussion of UN reform and they are important.

The first is that today's biggest development challenges are mainly to do with inequalities and addressing inequalities is an inherently political undertaking. This is a different lens to 30-40 years ago when development challenges were largely thought of as reflecting limited government capacity.

I remember the period during which the "human-rights based approach" was being developed. It was something I was quite involved in. When I was head of gender and human rights at UNICEF I would get caught up in debates with very expert and experienced UN staff who would argue that every development challenge arose from a capacity gap and therefore all our work should at its heart be about capacity development. This always made me uncomfortable as someone coming from a human rights background because it seemed to me that the most disadvantaged people I had come across (who were refugees, minorities and women mainly) were disadvantaged because people had made bad decisions that affected them, not because people wanted to help them but didn't know how.

Nevertheless, however true this idea of the limited capacity of government as the defining challenge of the development system was in the past (which is a historical discussion that I don't want to address here), it surely isn't true now. Outside of the specificities crisis contexts (and even in some of them) most governments I have experience of working with have a lot of extremely impressive people who know exactly how to get things done. The machineries of government in low and low-middle income countries are vastly more capable than thirty or forty years ago. The recent experience of national-level COVID response challenges the assumption that governments of countries considered "developed" are always better at doing things than those of countries considered "developing".

I won't rehearse the discussion about the harms of inequality and the centrality of inequality to human development. It is squarely the focus of one of the Sustainable Development Goals. Others have made the point about how fundamential inequality is convincingly (try Inequality kills | Oxfam International). It's been argued that the reality of inequality means that most poor people don't even live in poor countries. Of course, inequality and poverty are linked and it depends what you mean by each. Discussions about the relative positioning of each risk becoming semantic. But if you want people to have enough nutritious food, for all children to go to good schools, for everyone to have a decent standard of healthcare and so on it is increasingly recognised that the best and fastest way to do so is to decrease inequalities. There is plenty of the things we all need to go around most of the time. The problem is that they are not adequately shared out.

If we accept that the UN Development System needs to complete a transition from an assumption of the centrality of capacity-deficit as a driver of work to one of the centrality of inequality, then what changes? Lots of things.

One is that the role of the UN in high- income or high-middle income countries starts to look different because they can be very unequal and have extremely poor people in them that need help (see for example the excellent work of the current Special Rapporteur on Extreme Poverty Olivier de Schutter or his predecessor Philip Alston). In an inequality-focused UN Development System why would the UN not have Sustainable Development Cooperation Frameworks with OECD countries just as it has with Low-Income or Low-Middle-Income ones (and it is worth noting that UN entities are already starting to have some kind of programmatic activities in OECD countries, like UN Women's Safe Cities and Second Chance Education programmes)? An inequality lens also suggests that the walls between different parts of the UN System, in particular its political institutions, the human rights institutions and the development system, should become more porous. It is in fact quite hard to think of any aspect of thhe UN's work that doesn't change somehow. So even if stressing the centrality of inequality seems obvious, the import of actually doing so is entirely non-trivial.

My first point then is that if you clear away the clutter and accept the basic premise that the UN Development System needs to go much further in a journey from forefronting capacity development to forefronting reduction of inequalities, all sorts of questions crop up about the ways in which we work. An implied need for significant change emerges and that's a good thing. Reducing inequality is really important. It represents a shared challenge for the human family. We need a supranational contribution to fixing it and if not the UN then who?

Ultimately what the UN does is up to Member States. What its governing bodies tell it to do is the reality and what people think it ought to do is hypothetical. But the marching orders have been given and it seems reasonable for the UN Development System to conclude that in order to conform with them it must make reducing inequality its primary objective among the range of objectives it pursues.

The second and intertwined point is about money. It is about understanding that there are different sorts of money and that the sort of money afforded to the different entities of the UN is a defining factor in terms of what its institution are and can do. The kind of money is even more important than the amount of money it receives.

It's not always appreciated that broadly speaking all development agencies are at least as concerned about the kind of money they get as how much. This is because of the nature of earmarking and in particular the ratio between earmarked and unearmarked money and the implications of that ratio.

At one point I headed the Save the Children Alliance UN Liaison Office in New York and so had a bird's eye view of the way in which the different national Save the Children organisations worked. It was striking that those Save the Children members with the highest proportion of unearmarked funding (or "free money" as it was called) were vastly more likely to embrace a child rights agenda, address political issues impacting on children, undertake really robust advocacy campaigns and put pressure on their own government and others and argue that they should embrace new policies. In fact, the Save the Children Alliance member with the most unearmarked money as a proportion of its budget was Sweden whose energetic advocacy work earned them the nickname "Radical Barnen" in the Save the Children family, a play on their Swedish name "Radda Barnen".

So it has been no surprise to me as I'm sure it is not to others that in the UN Development System the personality of different UN Development System entities is heavily influenced, even to the point of defined, by that ratio of earmarked to unearmarked money. Put simply, the more an entity's budget is made up of funds for delivering earmarked projects the harder it is for them to find the resources and space to take up and add value on difficult and politically complex issues of inequality and quality of governance and vice versa.

The problem is that since the mid-2000s the financial nature of the UN Development System has shifted dramatically in this regard, but it has done so gradually enough that not everyone has noticed. One set of figures I saw suggested that over that period unearmarked resources had shrunk in real terms, while earmarked funds had grown robustly (driven in large part by humanitarian finance).

This is fundamental if you are seeking to evolve from a capacity-deficit model to an inequality one. If your primary raison d'etre is capacity development it's not such a big problem if your budget is mainly earmarked funds. It's not great, but there are ways to make things work. It's fairly easy to find earmarked funds for training initiatives or advisory services or other capacity development activities and as long as donors accept an adequate overhead, however explicitly, then it is quite possible to keep an organisation running. But if your raison d'etre is reducing inequality then it's a big problem. Effective political engagement and finding appropriate and constructive ways to address drivers of inequality is really hard to projectise.

There are broadly three ways to address this problem of too low a proportion of unearmarked money. First, you can try to push harder or better for more unearmarked funding, find new donors to ask for unearmarked funds or ways to elicit more from existing donors. That is exactly what the UN Developmeent System has been trying to do with mixed results for some time. And time will tell. However, I would argue that we ought to conclude based on results so far that this is at best a partial solution. Doing incrementally different things and expecting more than an incrementally different outcome is hopeful at best. I've never heard of a UN entity that has concluded that it has enough money and so has stopped trying to find ways to raise more. Trying to get more is neither new nor untried. I'm skeptical that there's a lot of places to look the UN hasn't looked or ways of asking it has neglected.

Second, you can try to make sure that if money has to be earmarked at least it can be less earmarked. If earmarking is loose enough (for example, rather than the money being for a specific project it is instead for a particular part of the world like the Pacific or a particular theme like education) then it absolutely starts to look more-or-less like unearmarked money. This can make things better but it's risky. The danger is that sometimes instead of incentivising donors to substitute more earmarked money with less earmarked money, what actually happens is donors shift unearmarked money to less earmarked money. So there's a risk that we shoot ourselves in the foot.

Third, you can just accept less earmarked money. That is very hard to do because it almost certainly entails shrinking and institutions rarely shrink successfully and almost always do so painfully. However, this deserves more consideration than it gets.

Overall there are no easy answers. This should concern us more than it seems to. There is a boiling frog here whereby the Development System's financial personality is gradually being transformed by its donors and that has huge implications for the way the System works and what it can do and more broadly what it is. At the moment it is not being helped by strains on ODA arising from COVID recovery and the war in Ukraine, but the specificities of today shouldn't obscure a long-term trend. We mustn't fool ourselves that once the current headwinds pass everything will be ok again. They won't.

It is surprising to me how often I have discussions with representatives of major donors and partners to whom this seems to be news. We have to keep making this clear so people understand what is happening and appreciate the implications of the decisions which underlie it. I would argue that it is a creeping financial emergency for the UN Development System, yet as a discussion it tends to be contained to quite rarified spaces.

Overall then, my point is that the opportunity of Our Common Agenda demands that we keep two questions front and centre. First, do we need to more intentionally make reduction of inequality the defining objective of the UN Development System, allow the addressing of residual capacity gaps as an objective to move into the wings, and then determinedly follow that path where it leads in terms of our work? If so, then second, what is our strategy for reconciling where that path takes us with the financial reality not of how much money we get but the kind of money we get which, I would argue, is pushing us firmly in the opposite direction?

I've often observed that some of the colleagues I treasure most both inside and outside of the UN work with it not because of what it is but instead because of what they believe it can be. I find that a good thing and I'm grateful to them. The discussion of what the UN could and should be is complex and multifaceted and the participants in it reflect a huge range of perspectives. Unsurprisingly, we easily get bogged down. It will serve us well among all the important issues to keep sight of these two fundamentals: 1) what at its core we are trying to make different and 2) how that aligns with the kind of resources entrusted to us for doing so in order to succeed.

Like all the things we love, the UN is often a source of frustration. Loving it today means being ready to let go of what's familiar, accepting the discomfort that always comes with change, and embracing this moment as one where we can refresh and renew and make a bigger more positive difference, for everyone's benefit, by giving the UN what it needs to do the job that only the UN can do.