PARIS (Reuters) - In the modernist but faded headquarters of UNESCO, the U.N. s cultural agency on Paris s elegant Left Bank, more than a few diplomats wandered the corridors on Friday wondering if the organization has a future. The agency, founded in the ashes of World War Two to protect the common cultural inheritance of humanity, was due to elect a new head later in the day. But a sudden announcement that the United States was quitting over anti-Israel bias meant that whoever wins the top job would inherit a body in turmoil, with huge questions over its future funding and mission.  I think it s a catastrophic decision,  said Daniel Rondeau, a former French envoy to the body.  It s a fracture that seriously jeopardizes the very nature of UNESCO - its universal dimension - and the very concept of multilateralism.  Officially known as the United Nations Educational, Scientific and Cultural Organization, UNESCO is best known for designating and protecting archaeological and heritage sites, from the Galapagos Islands to the tombs of Timbuktu. Most of its activities are uncontroversial, but when it comes to, say, resolutions about how religious sites should be run in Jerusalem, every word is studied for accusations of bias. For some of its diplomats, Washington s decision to quit represented a corner being turned, and puts even more pressure on whoever is elected to lead it.  This is the most critical election. There can t be four more years like this,  said a Western diplomat, bemoaning the leadership of outgoing director Irina Bokova of Bulgaria, whose critics say she failed to persuade member states to pay their dues and stop politicizing UNESCO s work. At the heart of its recent problems is a financing crisis since 2011, when UNESCO voted to admit Palestine as a full member state and Washington responded by halting payment of its annual $80 million in dues. The United States and Israel were among just 14 of 194 members to vote against Palestine s membership. Washington says it favors an independent Palestinian state some day, but it must arise from negotiations, and admitting the Palestinians to international bodies beforehand hurts the peace process. Since then, Israel has regularly complained over resolutions about cultural sites in the West Bank and Jerusalem, arguing that they are worded to delegitimize the Jewish state. Israel s foes say it uses U.S. support to deflect bona fide criticism. Without U.S. money, UNESCO, which employs around 2,000 people worldwide, has been forced to cut programs, freeze hiring and fill gaps with voluntary contributions. Its 2017 budget was about $326 million, almost half its 2012 budget.  We need to do less with less. We ve spent too long trying to do too much without the means,  said a UNESCO official, who declined to be identified.  We need to sell ourselves better, but without funding it s difficult to change our image.   Including the United States, which has some $542 million in arrears, the organization is owed almost $650 million, according to figures on its website. At this stage, UNESCO officials still don t know if the United States will make up its arrears before it officially exits on Dec. 31, 2018.  Other major contributors such as Japan, Britain, and Brazil have also yet to pay their dues for 2017, sometimes citing objections to the body s policies.  The fact is that UNESCO was all about solidarity and creating a climate for peace between countries, but nations now use their dues to influence programs,  said a UNESCO-based diplomat.  That needs to change.  Japan, for example, has threatened to withhold dues over the inclusion of the 1937 Nanjing Massacre in the body s  Memory of the World  program. Russia and Ukraine have been at odds over Crimea, with Kiev accusing Moscow of trying to legitimize its annexation of the territory through UNESCO.  Whoever takes over at the helm has to tackle this head on. They need to find ways of getting nations to talk these issues through, but if they can t, then the director-general needs to be able to say  no  and kill these texts,  said a second UNESCO-based diplomat. Unlike at the U.N. Security Council, where five powers wield a veto, UNESCO takes decisions based on majority votes, either of its General Secretariat that includes all 195 nations, or of the 58-member Executive Board. Israel says this creates a built-in majority for states that are hostile to it. Big countries like the United States that provide most of the funding say their single votes give them little input into how their money is spent. Prior to Thursday s U.S. decision to withdraw, UNESCO s board had tried to evade confrontation by voting to postpone divisive Israeli-Palestinian texts until April, diplomats said. All the candidates running to head UNESCO have vowed grassroots reforms and efforts to de-politicize the institution. The final candidates are two former culture ministers from France and Qatar. But even the vote on a new boss is tinged with politics, since Egypt, which has also vied for the top post, and Qatar are on opposite sides in a diplomatic dispute in the Arab world. 