United Nations Fiscal Problems Essay Research Paper

United Nations- Fiscal Problems Essay, Research Paper If the United Nations is to remain an effective force in the world?s political spectrum it must reform, and make itself more financially sound and become

United Nations- Fiscal Problems Essay, Research Paper

If the United Nations is to remain an effective force in the world?s political

spectrum it must reform, and make itself more financially sound and become

a more consolidated unit with each country being given equal representation

and opportunity to have their opinions voiced and respected. When the UN

was formed in the post war 40?s its goal was to keep another war from

occurring as well as make the world a better place to live. Problems and

controversies have recently plagued the UN and the veto power held by

certain countries are creating a situation where the smaller countries such as

Canada, have little if any chance to voice their opinions against powers such

as the USA and Russia. Only after all of the financial and representational

barriers are taken down will the UN once again be able to function and work

towards its goals.

The UN must also make the Americans, whom are its biggest

contributor, live up to it?s responsibilities. Only with the participation of the

Americans can the UN ever hope to survive through the next millenium.

The issues of Financial Reform within the UN, dealing with the

Americans, Peace-Keeping, and the Veto power are all inter-related. Veto

countries abuse the powers they are given by refusing to pay, or contributing

little to the UN and allowing the weaker countries to do the dirty work.

Peace Keeping is, perhaps, The most important of the UN?s duties.

But without the funds and equipment of the veto countries Peace Keeping

forces will become only a memory.

The main problem facing the UN, despite the issues with Veto powers,

Peace Keeping, and the Americans, is the organizations financial situation. It

has been forced to begin a lengthy restructuring to make it more cost effective

due to the lack of funds it is encountering.

I. Making The UN More Cost Effective

In a recent UN report entitled, ?Renewing the United Nations: A

Programme for Reform? the UN officials began to address this problem. The

report outlined the course which will be taken in order to balance the budget.

The current budget of the UN is 2.6 billion dollars.1 This total may

seem high, but it is very small when compared to the costs of other programs

instituted around the world. The UN?s budget is currently 1 billion dollars

less than the budget of the Tokyo Fire Department, and $3.7 billion less than

the cost of New York State?s University Program.2 When compared to these

you can really see just how little money the UN operates on. In fact the only

reason that the UN is in financial trouble at all, is because several member

states in the organization have not, as of yet, paid their compulsory dues.

These bills are left unpaid for different reasons, ranging from simple poverty,

as in the case of Somalia, or as a form of putting political pressure upon the

UN, as in the case of the United States.

Since the organization itself is completely reliant upon the money it

receives from it?s members it is almost helpless in its hopes to move forward.

The only way of punishing members who do not pay is to kick them out of

the organization and cut off the benefits they receive.

The current financial reform of the UN is very complex. It will

involve, for the most part, cuts in employee?s and an increased efficiency

from it?s four departments. These departments being Peace and Security;

Economic and Social Affairs; Development Co-operation; and Humanitarian


The 1998-1999 budget shows the introduction of many of the cuts and

changes that are going to be made. During this time 1000 positions are going

to be cut3 with most of these jobs coming out of the Secretariat department.4

The cuts in jobs have, in fact, been occurring since 1986 and have amounted

in a reduction of staff from 12,000 to 90005, which translates into a 20%

reduction in office and general staff, and 40% in upper management.6

In addition to the cutting of jobs many pre-existing departments are

also being consolidated to promote efficiency.

The 3 currently existing Departments in Economical and Social Affairs

are being integrated to form a new united Department.7 This will allow the

old departments to work more closely with each other and improve efficiency.

The programs currently in place that work towards fighting crime, drug

trafficking, money laundering, and terrorism will combine to form a new,

unified, department centered in Vienna, Austria, under the leadership of

Senator Arlacchi, of Italy.8

The Centre for Human Resources and the Office of the High

Commissioner for Human Rights are also being consolidated and are being

placed under the control of Mary Robinson who is currently the President of


As well as these consolidations, the Secretariat arm of the UN will go

from having twelve entities or sections to only having 5.10

When all of these different consolidations are completed significant

savings are expected, and the efficiency of the Organization is also expected

to rise, from the sharing of facilities and resources.

In combination with the previous changes, the UN is also changing its

personnel and administration rules to make the transitions as simple as

possible. The complex system of rules which had often times hindered the

UN Secretariat from completing its work are now being simplified so that the

reforms being instituted will not be stopped from doing their jobs. This

simplification of paperwork will also save the UN money in other ways.

Namely in the cost of paper itself. The amount of paper being used by the

UN will decrease by 30% in 1997/98 as compared to the amount used in


The leadership structure of the UN will also be overhauled as well, in

order to provide accountability and help with the reforms that are occurring.

It is hard to imagine that the leadership of the UN, as is, would have had the

power to carry on with the necessary changes that they are undergoing. The

Secretary-General simply does not have the power to institute them as it is

right now. With the change in structure the Secretary-General will be given

the necessary amount of power within the organization to continue on.

A Deputy Secretary-General is being created whom will assist the

Secretary-General. The Deputy will fill in for the Secretary-General in his

absence, share his representational duties, and help him enforce changes that

cut across administrative and sectoral boundaries. This will allow the

Secretary-General to handle emergency situations with ease.12

A Senior Management Group is being formed in order to promote

greater co-operation between the various departments of the UN while these

reforms are taking place13. Executive committees of the sectoral groups,

which were formed in January of 1997 will be strengthened to help. They

will also include all the departments, programmes, and funds of the United


Other, less drastic reforms are also being instituted to increase

productivity and reduce costs inside the UN.

Currently, the UN has 400 efficiency projects in place which are

expected to be completed as of December 31, 1997.15 Many of these are not

major ones, but this does show that the UN is serious about cutting costs.

In order to assure that the necessary funds are available to run the

programs many people rely on for simple survival, a revolving Credit Fund,

which could reach up to $1 billion U.S., is being created consisting, solely of

donations made to it by member states.16 This will allow funds to be

available whenever an emergency arises.

The staff currently employed by the UN will undergo extensive

retraining to increase their own personal productivity and efficiency, and

prepare them for the changes which will occur in their jobs once the reforms

take place. A new Code of Conduct has been added to the Staff rules and

regulations which are currently in place.17

In addition to this, a review of the International Civil Service

Commission is being taken in order to allow this organization to function

more independently. The International Civil Service Commission is made up

of a group of experts on salaries, allowances, compensation, and conditions

of service, representing all the regions inside the UN.18

As well as decreasing costs and increasing efficiency the cuts and

consolidations will also allow the Secretariat to react to international

emergencies quicker due mainly to the removal of the red tape which

previously hindered reaction time.

Repositioning food stocks, creating stand bye service packages, and

creating a Global Supply Chain will also allow the UN to speed up its

response time to emergency situations allowing for greater efficiency in the


With all of the above changes, the United Nations has shown that it is

serious about financial reform within the programs that it runs and, in the

process, has given itself a new lease on life. But while these changes were

necessary, other key changes will have to be made to areas such as peace

keeping in order to remain financially stable. Peace keeping itself is currently

feeling the proverbial ?pinch? as it tries to carry out it?s daunting mandates

with little, if any, financial help from the UN itself.

II. Effects of Financial Problems on Peace Keeping

The most noted function of the United Nations is, without a doubt, the

peace keeping missions that help to promote, and create, world peace in

countries that are currently at war. United Nations peacekeepers have seen

extensive action in places such as Korea, Bosnia-Herzegovina, and Somalia.

Despite the proud history of this renowned institution, it is currently suffering

because of the lack of finances, not due to overspending or high costs but,

like its counterparts in the Secretariat, because of the shortfall of funds

created when member states fail to pay their UN dues.

When you look at the statistics the Peace keeping is actually very

cheap. The $1.4 billion in costs last year20, may seem relatively high, but

once you consider that this total would have amounted to only 1% of the

American military budget and .2% of world military spending21 you can really

see just how efficient these forces are.

The United Nations itself does not have an actual army. It relies solely

on troop and equipment contributions from member countries to make peace

keeping a reality. In return for the donations the UN makes a promise to the

donating country, to fully reimburse them, in fiscal figures. This is where the

peace keeping debt exists.

The total amount currently owed is $1.6 billion, which is indebted to

78 different countries.22 To make the problem worse, most of the countries

that are still owed money are developing ones, who could use the money to

help out their current financial problems.

As of July 31 there were 23,861 UN troops in deployment23 in areas

such as Bosnia and Iraq. In total there are 16 missions underway, with the

costs for these being only $1.3 billion.24

I have included a map of all UN operations, both completed and

uncompleted, so that you can see just exactly where the peace keepers are, or

have been, deployed.

Once again, the amount spent on world peace keeping is not a large

amount. The cost for the average American to finance these missions, after

you take into account the USA?s 31% or $400 million assessed share in peace

keeping, amounts to only the cost of six cans of soda.25 World Military

spending adds up to $778 billion or $134 for every human being on earth.26

When you consider the amounts of money put into war and destruction, how

much money is really too much in stopping all of the destruction from


To make matters worse for the peace keepers, due to the impoverished

fiscal situation of the UN, money has been taken out of the peace keeping

budget just to cover the UN?s regular expenses.27 This further hinders the

UN?s ability to pay back the countries who have donated men and equipment

to this noble cause. Without the funds that are required this important

program will remain in jeopardy.

III. Veto Powers

To truly understand the UN?s financial crisis, you have to understand

the way in which money is collected for the organization. Member states are

accessed a share of the budget based on their national incomes, and their

overall ability to pay this bill. Pay rates for UN members range from the

minimum of a .01% or $106, 508 donation, which is currently being

contributed by 98 countries, to a 25% donation.28

For this reason, most of the money comes out of industrialized

countries such as the United States, Germany, and Japan. If you look at per

capita donations you would see that the 4 Scandinavian countries as well as

many developing countries rank near the top. The average American paid

just $1.11 for the UN, while the average San Marinian paid over $4 for the


In the graph on page 13 you will notice that 7 countries alone handle

much of the UN?s budget. The fact of the matter is that these 7 countries,

who contribute 71% of the UN?s working budget29, are not truly contributing

?too much? to the organization since they also receive the most financial

benefits of the UN itself. The UN invests 64% of its money into these

countries and their businesses, adding $2.4 billion to their economies.30

The financial state of the UN has a great deal to do with another issue

plaguing the organization. This is the issue of veto powers. Currently 5

countries have veto powers; The United States, Great Britain, France, China,

and Russia.31 The veto power gives these countries the right to over rule any

decision made by the other members of the general assembly, after a

democratic vote. One has to wonder how and organization can ever succeed

which allows 5 of its 185 members to have supreme power over the others,

and ever expect to accomplish anything.

The veto countries do provide much of the funding available to the UN,

but in some cases, they don?t even pay this. Countries such as the US refuse

to pay their UN debts causing financial short comings like the one the UN is

currently facing.

The veto countries do not contribute all that many troops to the UN

peace keeping missions either. In the graph which I have included on page

15, you will see just how small a proportion of the UN peace keeping force is

from the veto countries.

In fact, of the 5 veto countries, only Russia ranked in the top ten in

troop contributions. China ranked only 47th on the chart with a total troop

contribution of only 43 men.32

The veto countries can also derail decisions that have been made by the

general council. At the last election for Secretary-General, then

Secretary-General, Boutros Boutros-Ghali was victorious over Kafi Annan,

but could not remain on as Secretary-General because of the fact that the

Americans had been the lone country to vote against him, and being that they

had the veto power, Boutros-Ghali was gone.

This, I believe goes against everything that the UN stands for. The UN

is supposed to be a forum by which every country is allowed to voice their

opinions about world matters. By allowing for veto powers they are giving

the balance of power to 5 countries. This is not what the organization meant

to be.

During the cold war there was a need for the veto. At that time it

allowed Russia the United States and their key allies to have equal say in the

running of the UN. If one side of the conflict were allowed more power it

may have led to a conflict between the two. Now that the cold war is over,

the veto is being used as only as a mean by which to force the veto countries

political views upon the smaller countries in the alliance, such as Canada.

There is also a financial need to get rid of the veto powers. The United

States, as stands, has no practical reason to pay its debt. They cannot be

kicked out of the UN since, if there was a motion to do this, they could just

veto it anyway. With no reason to pay, the US has shown little interest in

doing so.

As long as there are veto powers in the UN, it will never be able to

serve the purpose it was created for. Small countries will continue to be lost

in the political shuffle as they are now.

IV. American Objections

The United States is currently the country which owes the most money

to the United Nations. It is also the one which receives the most benefits.

Currently the United States owes $1.4 billion dollars, which translates

into over half of the UN?s $2.3 billion debt.33

The total Contribution per year that the American government is asked

to pay is $312,000,000 or about 25% of the UN?s total budget.34 This is a

relatively small investment for the Americans once you take into account all

of the benefits the Americans receive from the organization.

Of the $426 million in investments and spending the United Nations

done last year, American companies received 49% or 229 million of it.35 If

you take that figure off of their total payment you will see that the Americans

only paid $83 million in which they weren?t given back in direct business.

The UN creates roughly 30, 607 jobs in the New York area alone as

well as yielding an estimated $1.2 billion in earnings and generating $3.2

billion in spending for the region.36 This is a very significant total. When

you see it from that angle it becomes apparent that the Americans receive

much more from the UN than they put into it.

While they refuse to pay their fair share of the costs of the UN the

Americans still make sure that they hold a strong presence. The American

diplomats actually lobbied for the cutting of 3000 jobs in order to save

costs,37 which wouldn?t even of been a problem had their country lived up to

its responsibilities.

As is, the Americans are receiving most of the fiscal benefits of the UN

without putting anything into it.

The American government refuses to pay their debt for other varying

reasons. Bob Dole, who recently ran for President of the United States, said

that he would never allow American troops to come under UN control again

and he blamed then Secretary-General, Boutros Boutros-Ghali, for almost

every problem that has ever occurred in the history of the UN.38

Unfortunately he is not the only member of the US government who

shares this view.

American fears towards the UN are based mainly on myths and lies.

Many Americans hold the UN responsible for the killing of 18 American

soldiers in Somalia in 1994.39 The interesting thing about that statement is

that the soldiers themselves were under the leadership of American officials

based in Florida at the time. If those men had of been under UN control they

would never of been sent out on that particular mission.40

There is also a controversy on whether American troops should be

allowed to be sent into action under the UN at all. Michael New, an army

specialist, is in the center of this controversy. He underwent a court martial

because of his refusal to wear the UN logo on his uniform.41 Under

international law he is required to do so.

The biggest opponents in the US to the United Nations however are the

members of the many vigilante militias. Many of these groups are convinced

that the United Nations is out to take over the United States, or make the US

a communist country. They do not understand the workings of the UN and

thus fear it. As a result they often print propaganda such as the article which

I have included along with this project, which is an exert entitled ?The New


The United States plays an integral role in the workings of the United

Nations. Admittedly, they provide the back bone for the entire organization.

Because of the importance of the role it plays in world politics, the US

has to take responsibility, and pay its debts. The UN cannot function without

the Americans, which, in a manner of speaking, they are now. The lack of

American funds has created a desperate state for an organization, which in the

past, has bent over backwards to keep them happy. It is time for the

Americans to step up and except their responsibilities as world leaders, and

show the maturity that must come with responsibility.

V. In Conclusion…

The United Nations is making great strides towards making itself

stronger and more unified as it prepare to enter the next millenium. The UN?s

future is not completely certain though, as one cannot predict what will occur

over the next few years in lieu of the reforms being made and the ever

changing face of the world?s politics.

By creating a new and more efficient structure from which to work, the

United Nations has proven that it is serious about fixing its current fiscal

dilemma. Measures are being taken to make sure that the transitions are

smooth, both in the present, as well as in the future. The UN needs to make

its transition to the leaner organization it hopes to be in the upcoming years as

painless as possible in order to avoid a state of chaos which could potentially

bring the organization to its knees.

Only by becoming more fiscally sound can the United Nations ever

hope to continue on into the next millenium as a strong, united group. The

planned consolidations will make the United Nations much more efficient and

save costs, and the new leadership structure will allow for a more diverse

opinion to be heard and more concise and effective decisions to be made.

Veto powers must be eliminated, however, because they are outdated

and have no place in our post cold war society. Equal representation of all

countries, big or small, must become a priority of the Leaders of the United

Nations. Only after everyone has the right to have their own unique views on

the issues effecting our world today heard and respected will the harmony

necessary to keep the United Nations alive exist. The removal of veto

powers would also force the countries who are abusing their power, such as

the United States, to pay the overwhelming amounts of money they owe the


The United Nations does a lot of good for the world. The peace

keepers have helped many countries end the armed conflicts which once

threatened their very existence, and UN organizations such as UNICEF have

done wonders in helping to feed and medicate the people in Third World


I believe strongly that the United Nations will play an important role in

the world as we head into the next millenium. By undergoing these painful,

yet necessary consolidations and reforms, they have allowed the organization

to strengthen itself.

All of the worlds countries, including the ones currently with veto

powers must work together to make sure that we do not lose this important

commodity, for if we do, we will surely suffer the consequences down the



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Far-Reaching United Nations Reform?; July 16, 1997

www.un.org; ?Prepared For A Changing World?

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www.un.org; ?Facts About Peace-Keeping?; July 31, 1997

www.un.org; ?The UN Financial Crisis?

www.un.org; ?Setting The Record Straight: Some Facts

About the UN?; July, 1997

www.washingtonu.edu; ?UN Bashers Spreading Lies and

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www.jbs.org/voll26.htm; ?UN Pawns?; ?The New

American?; Volume 11; Number 26; December 15, 1995

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