Monitoring Policy Making at the United Nations |
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Backgrounder No. 2
Backgrounder No. 2
Published February 1996
1. Who Owes What
At the end of 1995, 94 member states had fully paid their regular budget assessments, but 91 others fell short, of whom 22 made no payment at all. Though the record was dismal, it had improved over 1994. Most countries in arrears were poor, often owing relatively minor sums. This majority, responsible for less than 10% of the UN's budget, had relatively little impact on the organization's survival, though in total they owed $378 million at the end of 1995. By contrast, three relatively large countries--Russia, Ukraine and Belarus--each owed considerable sums. All three had been components of the former Soviet Union and their transitional economies had suffered deep declines since 1990. Faced with high assessments based on rosier times, these government had been hard-pressed to meet their obligations. Political disputes about UN policy may also have been a factor in their past payment performance. Together they owed the UN $692 million. One large and prosperous country--the United States of America--lagged in its payments by $1.23 billion. It's soaring arrears (nearly tripled since the previous year) accounted for 73% of all unpaid assessments to the regular budget. Total US arrears -- to the regular, peacekeeping and international tribunals budgets -- amounted to 53% at the end of 1995, or more than all other countries combined.
TABLE 1 lists the outstanding assessments of the fifteen largest debtors on December 31, 1995. The scale of the US debt stands out dramatically in comparison to the rest.
2. What are Assessments and How are they Collected
The UN pays for its operations with funds collected from its members. Members themselves determine the "assessment" formula in the General Assembly, a formula which is based on a country's share in the world economy. The formula assigns each country a percentage of the UN annual budget. The richest countries must pay the most and the poorest countries the least. There are some adjustments and anomalies, but the system works roughly like a "flat" income tax.
The budget covers programs which have been decided by UN members through decisions of the General Assembly and the Security Council. Since 1986, when the UN adopted "consensus budgeting" at the insistence of Washington, the United States has had an effective veto on every regular budget as well as its Security Council veto on every peacekeeping operation.
According to the assessment formula, the United States must pay 25% of all regular budget costs of the UN. In addition, because permanent members of the Security Council pay a surcharge for peacekeeping operations, the United States is supposed to pay 31% of peacekeeping costs.
Governments are expected to pay their regular budget assessments by January 31 of the budget year. Peacekeeping assessments (issued periodically during the year) fall due one month after being issued. The UN cannot charge interest for late payments, but the Charter states that members can lose their vote in the General Assembly if they fall more than two years behind in their regular budget assessments.
Since all assessments are due as a matter of treaty obligation, no UN budget is ever in "deficit" in the ordinary sense. All budgets are balanced. The problem arises when states fail to pay their assessments. Because the United States has the largest share of assessments (see Tables 3 and Table 4), its arrears create havoc with UN finance. In the late 1980's, facing persistent and growing US arrears, some major countries proposed lowering the US assessment. "Pay up or cut back," they told Washington. But the US government refused.
3. The Yearly Cycle of the Regular Budget: 1994 & 1995
Table 2 shows the assessments and payments for the regular budget in 1994-95. We notice how each year begins with the full assessments due, along with sums due from previous years. Payments accumulate, though at a very uneven rate, month after month, while the total outstanding steadily falls. The table shows the sharp increase in the US proportion of overdue assessments in the regular budget. It shows that other member states actually decreased their overdue assessments considerably in 1995, while the US arrears were rising.
4. How Timely are the Major Powers?
About 84% of the UN budget is paid by just 15 major countries. Of these, only two--Ukraine and the United States--had unpaid regular budget assessments at year's end in 1995. Tables 3 and Table 4 show that in the past two years, a number of other major countries failed to pay their assessments on time. Four countries (Canada, Netherlands, Australia and Sweden) regularly paid on time (by January 31), while a fifth (Belgium) paid regularly in February. Five others (Germany, UK, France, Italy, and Spain) paid typically in March or April. These five were late but not outrageously so (though they would scarcely allow their own taxpayers so much leeway). Wealthy Japan, the second largest payer, proved very slow, waiting until May or July to pay. Russia, Brazil and Ukraine tended to pay later still. Whereas the United States, with the most arrears, is the latest payer of all.
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