Only two years removed from the depths of the global financial crisis, the fiscal policies of some of the world’s biggest economies are shifting in a direction that does not bode well for UN coffers, the majority of whose funding derives from large national budgets. The sudden change of course stands in contrast to policies implemented early on in the unfolding financial crisis when the world’s 20 biggest economies (G20) convened in London, agreeing on a multilateral approach to prop up demand and restore confidence in global markets: national stimulus packages. Regular UN contributions figured into most of the packages, ensuring consistent funding of the world body. Recently, however, promising economic indicators coupled with growing national debts (and the angry electorates they have spawned) have caused governments to focus more on the interests within their borders: “spend our way out of the recession” strategies are being replaced by spending cuts across the board.
Funding in Times of Want
Although UN bodies funded through voluntary funds are almost always vulnerable to global economic downturns, the widespread implementation of austerity measures by major UN donors is even exposing programs funded through assessed contributions to undue financial risk. The downward financial spiral of the UN Environment Programme (UNEP) and the World Food Program (WFP) are cases in point: even despite coordinated implementation of stimulus packages following the 2009 G20 Summit, the WFP has since 2008 suffered funding shortages to the tune of $1.2 billion from the top ten donor states alone. A 2010 UNEP funding document cites “Austerity measures adopted by some European countries” as a significant factor in its recent, considerable drop in funding.
By contrast, UN bodies funded through assessed contributions, such as the regular budget (which funds the UN General Assembly, Security Council and three other main organs) and the peacekeeping budget are typically less susceptible to economic downturns, as participation in the world body is conditioned on payment of assessed dues. Article 19 of the UN Charter works to ensure a steady stream of assessed funds by stipulating that any Member State whose arrears equal or exceed the amount it owes from the preceding two years shall lose its General Assembly vote.
However, the Article 19 protection regular and peacekeeping budgets receive is not guaranteed. Since assessments are based on a number of factors, including the size of one’s economy and position on the Security Council, the bulk of UN funds come from a small fraction of the organization’s 192 members. Indeed, for the 2010-2011 period, assessed dues of the top five contributing countries to regular and peacekeeping budgets account for nearly two-thirds of their respective totals, $5.16 and $8 billion.
Major Contributors and Outstanding Balances
At a recent news conference, Under-Secretary-General for Management Angela Kane told reporters that only 13 Member States had “paid in full all of the assessments that were due and payable.” While recognizing that the global financial crisis “has made it difficult for some Member States to contribute on time and in full,” Ms. Kane noted that $787 million from the regular budget and $3.2 billion from the peacekeeping budget were outstanding. She emphasized that the UN’s “work depends on the Member States supporting us financially and, therefore, it is critical for Member States, and particularly major contributors, to meet their financial obligations.”
Since 2010, these “major contributors”--France, the U.S., Britain, Japan and Germany--have implemented or have plans in place to implement budget-slashing austerity measures. Some political leaders, notably in the U.S., are even considering cutting UN funding altogether if certain reforms are not undertaken. At a January, 2011 hearing on Capitol Hill, Republican Representative Dana Rohrbacher echoed the view of a majority of her colleagues that "The U.N. should be one of our prime targets for reducing expenditures in order to bring down this deficit in the next few years."
One Financial Crisis Leads to UNother
In light of the recent fiscal policy U-turn by top contributors to the UN--from stimulating economies with government funds to slashing government spending--the short-term economic outlook of the world body looks bleak. Programs funded through voluntary contributions are especially vulnerable to shrinking national budgets. Yet UN bodies funded through assessed contributions, although protected by Article 19 of the UN Charter from prolonged financing droughts, are at risk as well. Just as the global financial crisis stemmed from the inability of a handful of major players in the banking industry to pay their debts, so could a similar crisis befall many wings of the UN system as its major contributors enact austerity measures and become less willing to pay their debts.
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UN to Feel Effects of National Austerity Measures
February 27, 2011
Only two years removed from the depths of the global financial crisis, the fiscal policies of some of the world’s biggest economies are shifting in a direction that does not bode well for UN coffers, the majority of whose funding derives from large national budgets. The sudden change of course stands in contrast to policies implemented early on in the unfolding financial crisis when the world’s 20 biggest economies (G20) convened in London, agreeing on a multilateral approach to prop up demand and restore confidence in global markets: national stimulus packages. Regular UN contributions figured into most of the packages, ensuring consistent funding of the world body. Recently, however, promising economic indicators coupled with growing national debts (and the angry electorates they have spawned) have caused governments to focus more on the interests within their borders: “spend our way out of the recession” strategies are being replaced by spending cuts across the board.
Funding in Times of Want
Although UN bodies funded through voluntary funds are almost always vulnerable to global economic downturns, the widespread implementation of austerity measures by major UN donors is even exposing programs funded through assessed contributions to undue financial risk. The downward financial spiral of the UN Environment Programme (UNEP) and the World Food Program (WFP) are cases in point: even despite coordinated implementation of stimulus packages following the 2009 G20 Summit, the WFP has since 2008 suffered funding shortages to the tune of $1.2 billion from the top ten donor states alone. A 2010 UNEP funding document cites “Austerity measures adopted by some European countries” as a significant factor in its recent, considerable drop in funding.
By contrast, UN bodies funded through assessed contributions, such as the regular budget (which funds the UN General Assembly, Security Council and three other main organs) and the peacekeeping budget are typically less susceptible to economic downturns, as participation in the world body is conditioned on payment of assessed dues. Article 19 of the UN Charter works to ensure a steady stream of assessed funds by stipulating that any Member State whose arrears equal or exceed the amount it owes from the preceding two years shall lose its General Assembly vote.
However, the Article 19 protection regular and peacekeeping budgets receive is not guaranteed. Since assessments are based on a number of factors, including the size of one’s economy and position on the Security Council, the bulk of UN funds come from a small fraction of the organization’s 192 members. Indeed, for the 2010-2011 period, assessed dues of the top five contributing countries to regular and peacekeeping budgets account for nearly two-thirds of their respective totals, $5.16 and $8 billion.
Major Contributors and Outstanding Balances
At a recent news conference, Under-Secretary-General for Management Angela Kane told reporters that only 13 Member States had “paid in full all of the assessments that were due and payable.” While recognizing that the global financial crisis “has made it difficult for some Member States to contribute on time and in full,” Ms. Kane noted that $787 million from the regular budget and $3.2 billion from the peacekeeping budget were outstanding. She emphasized that the UN’s “work depends on the Member States supporting us financially and, therefore, it is critical for Member States, and particularly major contributors, to meet their financial obligations.”
Since 2010, these “major contributors”--France, the U.S., Britain, Japan and Germany--have implemented or have plans in place to implement budget-slashing austerity measures. Some political leaders, notably in the U.S., are even considering cutting UN funding altogether if certain reforms are not undertaken. At a January, 2011 hearing on Capitol Hill, Republican Representative Dana Rohrbacher echoed the view of a majority of her colleagues that "The U.N. should be one of our prime targets for reducing expenditures in order to bring down this deficit in the next few years."
One Financial Crisis Leads to UNother
In light of the recent fiscal policy U-turn by top contributors to the UN--from stimulating economies with government funds to slashing government spending--the short-term economic outlook of the world body looks bleak. Programs funded through voluntary contributions are especially vulnerable to shrinking national budgets. Yet UN bodies funded through assessed contributions, although protected by Article 19 of the UN Charter from prolonged financing droughts, are at risk as well. Just as the global financial crisis stemmed from the inability of a handful of major players in the banking industry to pay their debts, so could a similar crisis befall many wings of the UN system as its major contributors enact austerity measures and become less willing to pay their debts.
