Financing the United Nations VOLKER LEHMANN, ANGELA MCCLELLAN April 2006 Summary Financing the United Nations(UN) has been an issue of ever-returning political strife. Current debates on the scale of assessments and a freeze for the general budget are linked to questions of general fairness of cost-sharing, efficiency and managerial reforms at the UN. Such conflicts are likely to stymie the UN unless more ambitious alternatives to burden-sharing are pursued. Problems with UN Finances The UN system with its various bodies and programs currently has a budget of almost US$ 20 billion per year. While there is still no central data collection mechanism for financial contributions, a general categorization of UN finances can be made as follows: First, member states make payments to the UN system either through assessed, mandatory contributions or through voluntary contributions. Second, these contributions play a different role in financing the various parts of the UN system: Assessed contributions cover the regular budget for the UN, as well as peacekeeping operations. Voluntary contributions go to the UN funds and programs. Finally, both assessed and voluntary contributions are used to finance specialized agencies. Assessed Contributions to the Regular Budget The UN’s current annual regular budget is US$ 1.8 billion. It covers UN activities, staff and basic infrastructure at the UN headquarters. The regular budget is financed by mandatory contributions of UN member states. Dues are calculated according to a scale of assessment agreed upon every three years. Assessments are based on a country’s gross national income, adjusted for its per capita income. As a result, wealthier countries pay more, but there is a cap to the contributions to the UN budget so that no member state pays more than 22 percent. This limit was agreed upon after the United States, which accounts for about 30 percent of the global economy, in 1995 unilaterally decided to limit its contributions. Conversely, for the poorest countries there is a floor rate of 0.001 percent. The regular budget is always adopted for a two-year period. The process begins one year ahead of time when the Secretary-General proposes activities and a spending plan to the General Assembly’s Advisory Committee on Administrative and Budgetary Questions(ACABQ). ACABQ budgetary recommendations are generally accepted as baselines by the General Assembly’s Fifth Committee on administrative and budgetary affairs. Since this committee is composed of delegates from all UN member states and operates by consensus, any one state can hold up a decision. The regular budget, despite its political importance, represents less than ten per cent of all expenditures on the UN system. And while the regular budget has grown only one third over the last decade from about US$ 1.2 billion in 1996 up to US$ 1.8 in 2006, the costs for UN peacekeeping, US$ 1.5 billion in 1996 have more than tripled over the same period. Assessed Contributions to Peacekeeping Operations The budget for UN-peacekeeping operations will reach about US$ 5 billion in 2006. It has to cover the expenses for 15 UN-peacekeeping missions with some 80,000 personnel. Peacekeeping constitutes a separate part of the UN budget for which member states pay assessed contributions following the scheme for the regular budget, but with important modifications. The least developed countries have a lower floor(0.0001 percent), which is compensated by the permanent members of the Security Council who have to pay a higher share. Consequently, the United States has a higher ceiling(25 percent). Peacekeeping budgets are approved per mission and only as long as these missions have a UN Security Council mandate, all of which complicates the UN’s cash flow situation. Voluntary Contributions to Programs and Funds Voluntary Contributions to UN programs and funds were US$ 8.7 billion in 2003(the last year for which the UN released data) and are currently estimated to be around US$ 10 billion. These means support UN