France quits UN industry agency, in continuing Western exodus

VIENNA (REUTERS) - France has decided to leave a UN agency that seeks to reduce poverty through industrial development, officials said on Tuesday, joining a growing number of Western countries who have done so and dealing a big blow to the agency's finances.

The French move was a sign of struggling Western economies taking a hard look at their international commitments to help plug budget shortfalls at home. France posted a deficit of 4.8 per cent of economic output last year.

"France has in effect decided to withdraw from Unido," Foreign Ministry spokesman Philippe Lalliot said, referring to the United Nations Industrial Development Organisation (Unido).

He said Paris had decided to pull out of the organisation so the funds could be used to maintain its contributions in other UN organisations, including the overall UN budget for which it is the fourth-largest contributor, and UN peacekeeping operations for which it is the third-largest donor.

"I believe that they (France) have indicated that they have some budgetary constraints, or they are looking at austerity measures," said Unido spokesman Mikhail Evstafyev.

The Vienna-based specialised UN agency was "disappointed" by France's unexpected announcement last week, he said.

He said developing countries will be "suffering because of cuts" in Unido projects caused by the loss of funding from those quitting the 172-nation organisation, whose mandate is to promote "sustainable industrial development" in such states.

France's budget contribution of about US$10 million (S$12 million) accounts for more than 9 per cent of Unido's annual budget, Mr Evstafyev said. "Of course this means that we will have to go back to the drawing board and re-do the budget," he said.

Britain said in 2011 it would leave Unido, while the United States and Canada did so already in the mid-1990s, and Australia even earlier. Mr Evstafyev said Unido was twice as large at around the time when the United States decided to withdraw.

One Western diplomat, who declined to be named, said there were question marks over how some of Unido's projects were run, but he declined to give further details.