05/26/2006

Contact: Peter H. Gantz
ri@refugeesinternational.org or 202.828.0110

An impasse over the budget at the United Nations threatens to shut down the organization. China and member states of the Group of 77 (G-77), a coalition of developing nations within the UN that began in 1964 with 77 members but now numbers 132, are refusing to support management reform proposals put forward by the Secretary-General, which in turn may provoke a move led by the United States to block approval of the budget and make it impossible for the Secretariat to operate beyond June 30. Sensitive diplomacy between the U.S. and the leaders of the G-77, supported by wealthier nations that want to see the UN realize its full potential, is essential to avert a crisis that would harm people on all continents and from all walks of life.

At the root of the problem are tensions between the wealthier and developing UN member states. These divisions stem in part from a system that assesses each member state’s dues according to national wealth, but gives equal weight to all states’ votes. The U.S. contributes roughly 22% of the UN budget; in fact a small group of countries, led by the U.S. and Japan, shoulders roughly eighty percent of the UN regular budget, while eighty percent of the General Assembly (GA) members contribute less than twenty percent but benefit disproportionately from their contributions. Member states on the less wealthy end of the spectrum see this system as just and democratic; many wealthier member states lament their limited influence over how the UN spends their contributions.  

The current crisis has its roots in December 2005, when the United States successfully lobbied for passage of a two-year UN budget with spending authority limited to $950 million, equal to only six months’ worth of funding. The rationale for the limited spending authority was to allow extra time for assessing UN progress in implementing management and budget reforms before a new vote on the budget, scheduled for June 2006.

While the UN has enacted some reforms, a General Assembly vote in early May halted progress when China and the members of the Group of 77 voted down a number of budget and management reforms proposed by the Secretary-General. The G-77 traditionally wields significant power in the 191-member General Assembly, particularly over the budget. Though the U.S. and other major UN contributors supported the Secretary-General’s reform package, G-77 members perceive it as counter to their interests and a threat to their influence over the budget. A chief source of controversy, for example, is a proposal to move budget decisions from the General Assembly to smaller representative groups of UN members.

The G-77’s blockage of UN reform threatens the reauthorization of UN spending authority, potentially leaving the UN bankrupt. The U.S. and other top donor countries have stated explicitly their opposition to increasing UN spending authority in the absence of substantial progress on UN budgetary and management reforms. Allegations of inefficiency and scandal at the UN have engendered animosity towards the organization in Congress; last year, both the House and the Senate introduced legislation calling for mandatory reductions in U.S. payments to the UN.  In an election year, many Republicans and conservative Democrats may see UN-bashing as a surefire way to rouse voter support.

Even champions of the UN agree that the need for reform is urgent. To change a large and entrenched body like the UN, however, requires a long-term strategy. Even though there are steps that can and should occur in the shorter-term, significant reform will take time.  Congress should have realistic expectations and engage constructively in improving the UN. The Bush administration rightly believes that refusing to make payments to the UN is counterproductive and will inevitably impede reform efforts.

Several scenarios could lead to a UN shutdown in coming months. Clearly the worst case scenario would be the U.S. reacting to the stalled UN reform process by successfully blocking a vote on a new UN budget. This is unlikely for several reasons; neither the State Department nor the White House supports such action, and it is very unlikely other UN member states would actually allow an outright shutdown of the UN. A more likely possibility is that U.S. concerns would result in a process of continuing resolutions, whereby spending authority would be increased incrementally via monthly votes until agreement was reached on UN reform.

A series of continuing resolutions would almost certainly lead to a protracted fight over the budget and the reform process and would greatly damage the UN. For that reason, other UN member states may oppose this option as well and force a definitive up or down vote on a real budget. This might force the U.S. to back down and allow approval of a full budget even in the absence of a reform package, but this outcome might in turn provoke Congressional opposition.

Another possibility is that the General Assembly could discard the traditional consensus approach and pass an increased spending authority resolution over U.S. and other donor objections. Under this scenario, where the U.S. is simply outvoted, Congressional insiders consider it very likely that lawmakers would retaliate with punitive legislation on UN reform, including withholding U.S. contributions to the UN. Observers believe that if the U.S. withholds UN funding it would probably prompt similar action from other major donors, leaving the UN with a nominal budget but little funding to support it.

A UN shutdown would have serious and far-reaching consequences. The UN regular budget, which equaled about $1.4 billion in both 2005 and 2004, funds the organization’s core activities. Without this money, the UN could not pay its staff in New York nor in any other of its eight headquarters locations worldwide. This includes all staff of the General Assembly, the Security Council, and the Economic and Social Council, as well as those working in the various UN departments.

The absence of these core components of the UN would shutter countless specific activities, including support for the UN’s 15 peacekeeping operations and 11 political and peacebuilding missions, which include Sudan, Iraq, and Afghanistan; preparations for the transfer of Darfur peacekeeping duties from the resource-strapped African Union forces to UN peacekeepers; Security Council efforts to find peaceable solutions to disputes over the nuclear plans of both Iran and North Korea; and humanitarian assistance to those still suffering from effects of the Indian Ocean tsunami, the South Asian earthquake and other crises. Put simply, curtailment of the UN’s global work would cause grievous harm to individuals on all continents and from all walks of life.

The General Assembly could still choose to accept the reform package and pass a resolution allowing increased UN spending authority, but this will only happen if the U.S. and the G-77 change tack and engage in more effective diplomacy. It is time for the U.S. and the G-77 to adopt new strategies and new attitudes in order to rein in the crisis and reach a sustainable compromise. Because the calamitous effects of a UN shutdown would impact all member states, they must recognize the necessity of working together to avoid this outcome.

RI therefore recommends that:

• The United States support a constructive approach to the current budget crisis, which clearly must include what has heretofore been absent: sensitive diplomacy with G-77 nations that moves towards a compromise on the Secretary-General’s reform package.
• The U.S. Congress carry out its oversight function by requiring the Bush administration to present something that has also been noticeably absent thus far: a strategic vision and plan for achieving lasting reform of and improvement to the UN, complete with realistic benchmarks for progress and in particular rewards for progress rather than punishment for failure.