United Nations

THE UN FINANCIAL CRISIS
 

 Background:   Money shortages are nothing new at the United Nations, which relies exclusively on its member countries for funding.  The problem has plagued the Organization since its founding in 1945. 

Many Member States fail to pay their dues on time and in full for a variety of reasons, ranging from national budgetary technicalities to simple poverty.  Others have withheld payments as a pressure tactic or to make a political point.

The continuing financial crisis includes all of these elements, but its magnitude is increasingly serious. The financial state of the United Nations remains precarious, threatening the Organization's ability to fulfil the mandates given it by its members countries.

The UN runs on assessed contributions from Member States under the terms of its 1945 Charter.  The Organization has never been given authority to borrow from commercial institutions.  Instead it relies on countries to honour their treaty obligations to pay their membership dues in full, on time and without conditions.  Each country’s contribution is calculated, according to a formula approved by all Member States, on the basis of its share of the world economy and ability to pay.

Current Situation:  As of 30 September 2000, Member States owed the United Nations over $3 billion for current and past assessments Ñ $2.5 billion for peacekeeping, $533 million for the regular UN budget, and $54 million for international tribunals.   The largest debtor, the United States, owes the UN $1.9 billion for past and current assessments, two-thirds of the total due.  This debt includes over $430 million for the regular budget and just over $1.5 billion for peacekeeping and international tribunals. 

The UN, in order to deal with recurrent regular budget cash deficits, has been periodically forced to borrow from peacekeeping funds.  As a result, the Organization is unable to reimburse promptly those countries that provide troops and equipment to peacekeeping operations.  As of 31 August 2000, the UN owed 73 countries a total of over $800 million for troops and equipment.  

But because there have been fewer peacekeeping operations in recent years, there has been less and less cash in the peacekeeping account to cover the regular budget deficit.  Last year, peacekeeping assessments fell to $800 million from a high of $3 billion in 1995, leaving a shrinking financial cushion for the Organization.  The new UN missions in Kosovo, Sierra Leone, East Timor and the Democratic Republic of the Congo have raised substantially peacekeeping assessments and cash figures for 2000.  But, if Member States do not pay their shares on time for such large-scale operations, other cash flow problems may result.

On the positive side, more Member States are paying their regular budget assessments in full each year -- 131 countries had paid up at the end of September 2000, with more expected by year’s end, compared with 75 nations at the end of 1994.  

Under Article 19 of the UN Charter, if at the beginning of the year a country owes the same or more than its total gross assessments for the previous two years, it automatically loses its right to vote in the General Assembly.  The United States paid just enough by the end of 1999 to avoid this scenario.  However, its level of unpaid assessments remains high at nearly $1.9 billion at the end of September 2000.

The two-year budget the UN adopted for 2000-2001 is a tough, zero-growth plan that starts off with $100 million less in appropriations than for 1994-95.  Nearly 1,000 posts have been cut, reducing the number of staff to about 8,900, from a high of 12,000 in the mid-1980s.