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Backgrounder #2672 on United Nations

April 2, 2012

The History of the Bloated U.N. Budget: How the U.S. Can Rein It In

By

Abstract: The 2012–2013 U.N. regular budget is historic because it marks the end of a decade of unprecedented growth of the U.N. budget. However, the U.N. budget process suggests that this will likely be an aberration and that irresponsible budget growth will resume shortly. Until the disconnect between financial obligations and influence over the U.N. budget process is overcome, the U.N. budget will likely continue to grow unchecked. The U.S. should seek to adjust the U.N. scale of assessment to more equitably distribute the costs of the organization among the member states, grant large contributors more influence in budgetary decisions, promote U.N. budgetary restraint by coordinating with other large contributors and, whenever necessary, enforce budget restraint by withholding U.S. contributions..”

Analysis of the history of the United Nations regular budget unequivocally confirms that the growth in the U.N. budget over the past decade has been truly extraordinary, outstripping the previous period of rapid growth in the U.N. regular budget during the mid-1970s and early 1980s. In a welcome development, the sharp increases in the regular budget over the past decade have been arrested, even slightly reversed in the 2012–2013 biennial budget. Regrettably, this does not necessarily indicate a fundamental shift in U.N. budgetary practices. On the contrary, the conditions contributing to budgetary constraint are likely to be transitory. Congress and the Administration should work together to strengthen U.S. influence and secure further U.N. budget reductions.

The U.N. Regular Budget

Earlier this year, the Obama Administration announced that the initial U.N. regular budget for 2012–2013 of $5.15 billion is $263 million lower than the final expenditures for the 2010–2011 budget and nearly $44 million lower than the 2012–2013 budget originally proposed by U.N. Secretary-General Ban Ki-moon. The U.S. Mission to the U.N. claimed in December that this was “only the second time in the last 50 years that the General Assembly has approved a regular budget level below the previous biennia’s final appropriation.”[1]

Although U.N. budgetary information is posted in the organization’s document system, it is difficult to find and its format is not user-friendly. The lack of comprehensive budget data presented in a consistent format in one place has inhibited research and informed policymaking. This paper rectifies this problem by presenting comprehensive data on the U.N. regular budget, compiled by the U.S. Mission to the U.N., in nominal and real terms for the entire history of the organization.

Based on U.N. regular budget data since 1946, the recently adopted 2012–2013 biennial budget is the third initial U.N. regular budget since 1960 that was lower than the final appropriation for the previous budget.[2]

United Nations Regular Budget

The regular budget is only one of many U.N. budgets to which the U.S. contributes on a yearly basis. Indeed, it is not even the largest budget. The U.S. is assessed 22 percent of the U.N. regular budget and more than 27.1 percent of the U.N. peacekeeping budget. The U.S. also provides additional billions in assessed and voluntary contributions to other organizations in the U.N. system each year. In FY 2010, total U.S. contributions to the U.N. system reached record levels for the third year in a row, exceeding $7.691 billion.[3] This is $1.3 billion more than the previous record of $6.347 billion in FY 2009 and $1.6 billion more than the U.S. contributed in FY 2008.

Nonetheless, instilling some budgetary constraint at the U.N., even if only on one budget, is no small feat, especially considering that the U.N. regular budget grew by an astounding 114 percent from the final appropriation of the 2000–2001 budget ($2.53 billion) to the final appropriation of the 2010–2011 budget ($5.42 billion).[4] The rate of budget growth over this period was truly extraordinary, rivaled in the biennial budget era (since 1974) by only the 166 percent increase from the final 1974–1975 appropriation of $606 million to the final 1984–1985 appropriation of $1.61 billion.

However, measuring the U.N. budget in constant dollars reveals its truly extraordinary growth over the past decade. In constant 2005 dollars, the budget grew by 72 percent from 2000–2001 to 2010–2011.[5] By comparison, the budget grew by only 36 percent from the 1974–1975 budget to the final appropriation for the 1984–1985 budget. In other words, inflation accounted for roughly three-quarters of the growth in the regular budget from the mid-1970s through the mid-1980s. By contrast, the budget grew by more than 70 percent in real terms from the final 2000–2001 appropriation budget to the final 2010–2011 appropriation budget.

Growrh in UN Regular budget Final Appropriations by 10 Year Period

Thus, the increases in the regular budget over the past decade are unprecedented since the U.N. moved to a two-year regular budget in 1974–1975. In fact, when inflation is taken into account, recent increases basically double any previous budgetary decade since the U.N. moved to a biennial regular budget.

A Tale of Two Growth Spurts

As Chart 1 illustrates, the U.N. regular budget has grown rapidly since the adoption of the two-year budget in 1974, especially from the mid-1970s through the mid-1980s and since the early 2000s. The relatively flat growth from the mid-1980s through the 1990s was precipitated by the U.S. policy of insisting on zero growth in the regular budget and an agreement among the U.N. member states in 1986 to approve the budget by consensus. This agreement was driven by America’s adoption of the 1985 Kassebaum–Solomon Amendment to the Foreign Relations Authorization Act for fiscal years 1986 and 1987, which withheld a portion of U.S. funding to the U.N. regular budget unless major contributors were granted increased influence over budgetary decisions.[6]

UN Regular Budget Growth since 1946

The post-2000 budget surge was facilitated by the U.S. abandoning its zero-growth policy and, later, abrogation of the consensus budget agreement.[7] The U.S. insistence on zero growth in the U.N. regular budget broke down in the early 2000s when the U.S. sought U.N. political missions in Iraq and Afghanistan. The missions were expensive and opened the door to other increases in the U.N. regular budget sought by other U.N. member states in return for their support. Contrary to some claims, the Afghanistan and Iraq missions did not drive the increase in the budget over the past decade. As noted by the U.S. Mission to the U.N., the increases to other parts of the regular budget were substantial and, in dollar terms, outstripped the costs of the political missions:

In 2000–2001 the regular, two-year budget—not counting special political missions, such as those in Iraq and Afghanistan—was $2.4 billion. In 2010–2011, it was $4.2 billion. That is a 75 percent increase, over a period that included a major post-9/11 economic contraction and a global recession.[8]

The cut in the U.N. regular budget for 2012–2013 is a welcome check on the unprecedented growth of the past decade. However, unless significant changes are made, the U.N. budget will likely resume growing for several reasons:

  • In December 2011, the G-77, which includes more than two-thirds of the states in the General Assembly and therefore enough votes to pass the budget, sought to increase the regular budget by more than $600 million. Although temporarily defeated, they clearly support expanding the budget. The G-77 led the effort to violate the consensus-based budget agreement in 2006 and 2007.[9] If they wish to approve budget increases over the objections of the U.S. and other major donors, they may do so again.
  • In the context of ongoing global financial difficulties, the U.S. was able to secure support from the other major U.N. contributors, which historically have been less interested in pressing for U.N. budget constraints when their economies were healthier. Unless the U.S. can convince them of the long-term need to restrain growth in the U.N. budget, these nations—particularly in Europe—will likely return to their historical ambivalence toward budget restraint once they recover from their current budgetary and economic woes.
  • The latest U.N. regular budget, while superficially smaller than the previous budget, made no fundamental programmatic or structural adjustments—e.g., reducing permanent staff, freezing or reducing salaries and other benefits, and permanently eliminating a significant number of mandates, programs, or other activities—that would lower the baseline for future U.N. budget negotiations.[10] Despite the Secretary-General’s proposal to eliminate 44 permanent posts, the 2012–2013 budget actually increased the number of permanent posts by more than a score compared with the previous budget. The failure to arrest growth in U.N. employment, salaries, and benefits is especially problematic because personnel costs account for 74 percent of U.N. spending according to the U.N.’s Advisory Committee on Administrative and Budgetary Questions (ACABQ).[11] Without a significant reduction in the number of permanent U.N. posts or a significant reduction in staff compensation and related costs, real and lasting reductions in the U.N. regular budget will remain out of reach.

What the U.S. Should Do

With these factors in mind, the Obama Administration and Congress should work together to place America’s diplomats in a stronger position to hold firm on U.N. budgetary restraint and reform. Specifically, the U.S. should establish a stronger relationship between budget decisions and financial contributions by:

  • Establishing a coalition of major U.N. contributors specifically dedicated to budgetary restraint and reform. Other large contributors to the U.N. budget, as exemplified by the Geneva Group,[12] often share U.S. concerns, but rarely stand firmly and consistently with the U.S. on budgetary matters. Current financial and economic pressures focused the major contributors’ attention on restraint during the 2012–2013 budget negotiations. The U.S. should try to forge this ad hoc coalition into a more permanent caucus of countries focused explicitly on budgetary restraint in addition to U.N. reform and improved management and oversight.
  • Demand more influence for major contributors on U.N. budgetary decisions. Although imperfect, the easiest way to accomplish this goal would be to restore the 1986 agreement, adopted by the U.N. General Assembly, that budgetary decisions must be adopted by consensus.[13] Better still, the U.S. should seek agreement among the U.N. member states that budgetary decisions, in addition to the U.N. Charter provision of approval by two-thirds of the member states, must also be approved by member states contributing at least two-thirds of the total contributions to the U.N. regular budget.
  • Using America’s financial leverage. The only time the U.N. has exercised sustained budgetary restraint since 1974 is when the U.S. adhered to a policy of a zero-growth budget backed by the threat of financial withholding in the late 1980s and 1990s. This period began unraveling in the early 2000s and broke down entirely in 2006 and 2007, when a large majority of U.N. member states broke the 20-year agreement to adopt the U.N. budgetary decisions by consensus, which culminated in the adoption of the 2008–2009 regular budget over U.S. objections. The U.N. faced no repercussions for this action because the Kassebaum–Solomon Amendment had been rescinded in the 1990s. Congress should give legislative heft to U.S. budgetary positions at the U.N. by reinstating the zero-growth budget policy goal and mandating withholding if the U.N. adopts budgetary decisions over U.S. objections.
  • Review and adjust the U.N. scale of assessment to more equitably distribute the costs of the organization. The bulk of the U.N. member states simply do not pay enough for growth in the U.N. regular budget to trouble them. For instance, Sierra Leone is assessed 0.001 percent of the U.N. regular budget. The U.S. is assessed 22 percent. Therefore, while Sierra Leone and the dozens of other countries with the same assessment will pay less than $26,000 this year for the U.N. regular budget, the U.S. will pay $567 million. With this in mind, it is unsurprising that the U.S. cares about the size of the U.N. regular budget, while most countries do not. The 128 countries with the lowest assessments pay less than 1.3 percent of the U.N. regular budget combined, yet those countries could approve a budget over the objections of countries paying nearly 99 percent of the budget. This disconnect between financial obligations and voting power makes it very difficult to constrain growth in the budget or enact reforms intended to improve effectiveness, accountability, and oversight without the use of financial withholding. Unless a stronger relationship between budget decisions and financial contributions is achieved, the U.S. will remain a lonely voice calling for budgetary restraint. The U.N. scale of assessment is scheduled for adjustment this fall, and the U.S. should explore options for adjusting the scale to ensure that more countries have an increased financial stake in the budget.[14]

UN Regular Budget Growth since 1946

Conclusion

For decades the U.S. has fought a difficult battle for U.N. budgetary restraint and management reform in an effort to ensure that American taxpayer dollars are not wasted. The U.S. and other major contributors deserve credit for halting the trend of unprecedented increases in the U.N. regular budget over the past decade and adopting a budget for 2012–2013 that is lower than the previous budget. However, the circumstances that led to the current climate of budget restraint are not likely to be repeated. History shows that diplomatic efforts often fall short in U.N. budget discussions unless Congress supports the efforts. The U.S. should promote U.N. budgetary restraint by coordinating with other large contributors and, when necessary, supporting its diplomatic efforts to enforce budget restraint by withholding U.S. contributions.

Brett D. Schaefer is Jay Kingham Fellow in International Regulatory Affairs in the Margaret Thatcher Center for Freedom, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation. He is editor of ConUNdrum: The Limits of the United Nations and the Search for Alternatives (Rowman & Littlefield Publishers, 2009).

Show references in this report

[1] U.S. Mission to the United Nations, “Fact Sheet: Passage of the Fifth Committee Regular Budget for the 2012–2013 Biennium,” December 29, 2011, at http://usun.state.gov/briefing/statements/2011/179785.htm (March 22, 2012).

[2] The discrepancy between the Administration’s claim and the data in the table is likely due to a rounding error arising from a tiny $400 decrease—which was probably calculated as zero—from the final appropriation 1994–1995 budget to the initial 1996–1997 budget.

[3] Brett D. Schaefer, “Congress Should Renew the Report Requirement on U.S. Contributions to the U.N. and Reverse Record-Setting Contributions to the U.N.,” Heritage Foundation WebMemo No. 3324, July 22, 2011, at http://www.heritage.org/research/reports/2011/07/congress-should-renew-the-report-requirement-on-us-contributions-to-the-un.

[4] Brett D. Schaefer, “U.S. Must Ensure That U.N. Accounting Gimmicks Result in Real Cuts to Bloated U.N. Budget,” Heritage Foundation Backgrounder No. 2642, January 20, 2012, at http://www.heritage.org/research/reports/2012/01/us-must-ensure-that-un-accounting-gimmicks-result-in-real-cuts-to-bloated-un-budget.

[5] The GDP Price Index was chained to 2005. For the biennial budgets beginning in 1974-1975, the GDP Price Index for the two years covered by the budget were averaged. U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 2012: Historical Tables (Washington, D.C.: U.S. Government Printing Office, 2011), pp. 211–212, Table 10.1, at http://www.gpo.gov/fdsys/pkg/BUDGET-2012-TAB/pdf/BUDGET-2012-TAB.pdf (March 22, 2012).

[6] The 1985 Kassebaum–Solomon amendment to the Foreign Relations Authorization Act for fiscal year (FY) 1986 and FY 1987 withheld 20 percent of U.S. assessed contributions to the U.N. regular budget and specialized agencies until weighted voting on budgetary matters was adopted. Weighted voting was not adopted, but the U.N. did agree in 1986 to the consensus-based budgeting process—giving, in effect, each country an informal veto over the budget—as an informal rule, which helped greatly to constrain budget growth. Congress and the Reagan Administration agreed that the consensus-based budget agreement, while not explicitly meeting the requirements of Kassebaum–Solomon, was sufficient to allow full payment of U.S. assessed contributions to the regular budget.

[7] Brett D. Schaefer, “Time to Rein in the U.N.’s Budget,” Heritage Foundation Backgrounder No. 2368, February 3, 2010, at http://www.heritage.org/research/reports/2010/02/time-to-rein-in-the-uns-budget.

[8] Joseph M. Torsella, remarks at the Council on Foreign Relations, Washington, D.C., January 20, 2011, at http://usun.state.gov/briefing/statements/182321.htm (March 22, 2012).

[9] Brett D. Schaefer, “Congress Should Withhold Funding for Spendthrift U.N.,” Heritage Foundation WebMemo No. 1786, January 29, 2008, at http://www.heritage.org/research/reports/2008/01/congress-should-withhold-funding-for-spendthrift-un.

[10] Schaefer, “U.S. Must Ensure that U.N. Accounting Gimmicks Result in Real Cuts to Bloated U.N. Budget.”

[11] Joseph M. Torsella, remarks on the proposed UN program budget for 2012–13 before the Fifth Committee, U.N. General Assembly, October 27, 2011, at http://usun.state.gov/briefing/statements/2011/176325.htm (March 22, 2012).

[12] The Geneva Group, co-chaired by the U.S. and the U.K., consists of 16 U.N. member states that contribute at least 1 percent of the budgets of the U.N. and its largest affiliated agencies and share similar concerns on administrative and financial matters. Current members of the Geneva Group are Australia, Belgium, Canada, France, Germany, Italy, Japan, Mexico, the Netherlands, Republic of Korea, the Russian Federation, Spain, Sweden, Switzerland, the United Kingdom of Great Britain and Northern Ireland, and the United States of America.

[13] “The Fifth Committee, before submitting its recommendations on the outline of the program budget to the General Assembly in accordance with the provisions of the Charter and the rules of procedures of the Assembly, should continue to make all possible efforts with a view to establishing the broadest possible agreement.” U.N. General Assembly, Resolution 41/213, December 19, 1986. The functional result of this decision was an informal agreement that budgetary decisions should be made by consensus. For a detailed discussion, see Charles M. Lichenstein, “United Nations Reform: Where’s the Beef?” Heritage Foundation Backgrounder No. 567, March 10, 1987, at http://www.heritage.org/research/reports/1987/03/united-nations-reform-wheres-the-beef.

[14] Brett D. Schaefer, “The U.S. Should Push for Adjustment in U.N. Dues,” Heritage Foundation WebMemo No. 2735, December 15, 2009, at http://www.heritage.org/research/reports/2009/12/the-us-should-push-for-adjustment-in-un-dues.

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