March 2009 Financing the United Nations EVAMARIA WEISSER Introduction Global problems and crises require global management, a task that the United Nations(UN) undertakes. However, it is an undertaking that also requires the necessary funding. Financing of the UN is a highly political issue. The key points in the delicate debate are the scale of assessments for each member state, the UN budget and perceived managerial inefficiency. It is a debate about the general fairness of sharing the financial burdens and maintaining an equal power division while being independent of national interests. It is also the debate about the UN itself, its demand for reforms and its importance within the international arena. The UN Finance System The financing system of the UN is based on mandatory and voluntary contributions of its 192 member states. The assessed, mandatory contributions apply basically to the regular budget and the peacekeeping operations and only in a small share to the International Tribunals and Capital Master Plan 1 , while the voluntary contributions apply to the different UN funds and programs. Only the UN specialized agencies have a mixed funding of assessed and voluntary contributions. Each member state’s capacity to pay is the basic principle for the assessed contributions. However, the voluntary contributions have no guidelines and limits. The complete UN funding system currently covers approximately US$ 26 billion of the estimated total annual expenses of the UN including all the various bodies, agencies, programs and funds worldwide. It is a funding system whose budget is financed in bigger parts by voluntary contributions. Assessed Contributions to the Regular Budget The regular budget of the UN is assessed with US$ 4.9 billion for the current two-year-period of 2008/2009 after a recently approved readjustment in December 2008. The budget covers the activities, infrastructure and staff of the UN headquarters. As mentioned above, the regular budget is financed by the assessed contributions of each member state. The individual calculated percentage is determined every three years by the General Assembly and its 5 th Committee(Administrative 1 Renovation of the UN headquarters in New York; see FES Fact Sheet October 2008: The Capital Master Plan to Renovate the UN Headquarters and Budgetary). The rate is based on the country’s gross national income average of the last three to six years and is calculated according to particular national debt, per capita income and currency fluctuation. The ceiling rate is fixed at 22%, which is met only by the United States as the biggest donor to the UN budget. The floor rate and minimum due is 0.001% on the UN budget, which applies to the poorest countries. The top donors besides the United States are Japan, Germany, the United Kingdom, France, Italy, Canada, China, Spain, Mexico, Australia and Brazil. The regular budget is adopted for a two-year-period by the General Assembly and its 5 th Committee on the recommendations of the Advisory Committee on Administrative and Budgetary Questions. The adoption of the budget is based on consensus. Nevertheless, in December 2007 the United States was the only country to vote against the 2008/2009 budget. This was the first time that the regular budget was not adopted by consensus. Assessed Contributions to Peacekeeping Operations The budget for peacekeeping operations for the present one-year-period(01 July 2008 – 30 June 2009) is estimated to be US$ 7.1 billion. This budget currently covers 18 peacekeeping operations directed and supported by the Department of Peacekeeping Operations with some 89,000 uniformed personnel. All missions are approved by the UN Security Council. As well as the contributions to the regular budget, the contributions to peacekeeping operations are mandatory. The poorest countries have an effective rate of 0.0001% of the budget of peacekeeping operations. The other developing countries pay 20% of their mandatory contribution. The industrialized countries pay the same contribution rate as they do to the regular budget. Only the five permanent members of the Security Council have an additional burden on top of their normal contribution rate, which underlines their special responsibility as permanent members and compensates for the lower dues from the developing countries. Voluntary and Assessed Contributions to UN Specialized Agencies The 17 Specialized Agencies of the UN are discrete organizations with an independent legal and financial status, membership and staff. They are closely linked