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WebMemo #1017 on International Organizations

March 18, 2006

The U.S. Should Support Japan's Call to Revise the UN Scale of Assessments

By and

Despite Japan's strong support for the United Nations, its campaign to gain a permanent seat on the United Nations Security Council is in doubt. For one thing, China is adamantly opposed. Yet, this setback has not deterred Japan from continuing to look for meaningful ways to reform the UN. This week, the Japanese government launched a campaign to establish a minimum level of contributions to the UN regular budget for the five permanent members of the Security Council. This is a good idea and one the United States should support.

 

This change would mean little for the United States, the United Kingdom, and France. Each already pays more than the 3 percent or 5 percent that Japan proposes as a minimum. Either amount, however, would mean a significant increase in dues for China and Russia, veto-wielding members that now pay only 2.053 percent and 1.1 percent of the regular budget, respectively.

 

Japan's frustration in not getting support for its permanent membership on the Security Council from countries besides the U.S. is understandable. It is the second largest contributor to the UN regular budget; its 19.468 percent contribution is far above what it would pay based on the current UN formula for calculating country assessments-some nine times that of China, 18 times that of Russia, and nearly 20,000 times that of the countries that pay the lowest assessment level (0.001 percent).

 

Japan is right to suggest that the permanent veto-wielding members of the Security Council should make a financial commitment to the UN commensurate with their privileged status. The United States should join forces with Japan in this effort, which provides an opening for even more meaningful reforms.

 

A Reasonable Proposal

Of all the countries seeking permanent membership on the Security Council, Japan is the strongest candidate. It is a recognized economic power and a responsible actor on the global stage. Its commitments include support for the peacekeeping mission in Iraq, and its regular budget assessment is well above the 15.3 percent combined total that four of the five permanent members of the Council-the UK, France, China, and Russia-contribute. Indeed, projected annual contributions from Russia and China under the 2006/2007 UN regular budget are only $20.9 million and $39 million, respectively, versus $417.9 million for the U.S. and $369.8 million for Japan.

 

Japan was stymied in its effort for a permanent Council seat because it unwisely tied its bid to those of other countries.[1] It has made clear that it would try to reduce its hefty contributions to the UN regular budget if it failed to gain a permanent seat. Still, Japan realizes that reducing its contribution will be difficult because other member states would have to pay more to make up the difference.

 

So Japan has come up with another plan: Enshrine the principle that "you have to pay the costs to be the boss." In other words, make those members that have decision-making power on the Council pay at least 3 percent, and preferably 5 percent, of the biennial UN regular budget, which now stands at $3.8 billion for 2006/2007.[2] Under this proposal, China and Russia would see their annual dues increase to $57 million (3 percent) or $95 million (5 percent), while Japan and many other countries would see their assessments fall.[3]

 

Japan's proposal makes sense. Member states that wield a veto in the Security Council, and therefore great influence, should meet a minimum standard of financial responsibility-one that Japan was willing to assume in hopes of earning a seat itself. That three of the five permanent members already meet this standard strengthens Japan's argument that China and Russia should step forward and assume a greater share of the UN budget's burden.

 

Every nation that aspires to a seat on the Security Council-where the rubber meets the road for international peace and security, Chapter VII interventions, and international sanctions-should be willing to accept a greater financial commitment to the UN than those not on the Council. Given the importance of even a rotating seat on the Security Council, perhaps there also should be a surcharge on peacekeeping budget assessments for the 10 rotating members of the Council, as is already the case for the permanent members.

 

An Overdue Debate

With any luck, Japan's effort to rectify the lopsided assessment scales will spark a broader and long-overdue debate about the budget itself. The General Assembly, which establishes budget and policy priorities for the UN, operates on an egalitarian one-country, one-vote basis. In the vast majority of cases, decisions by the General Assembly are adopted by consensus. When votes are held, most decisions are made by a majority of member states. However, decisions on important matters such as the budget require approval by a two-thirds majority, or 128 of the 191 members, even if those 128 member states contribute little to the UN budget.[4] This is akin to a company's employees having complete control over their salaries: of course the beneficiaries of programming increases want UN budgets to increase.

 

Look at the actual numbers and the lopsided relationship between those making budgetary decisions and those footing the bill becomes clear:

  • The top 8 contributors pay over 72 percent of the UN regular budget. (The U.S. and Japan alone pay nearly 41.5 percent.)
     
  • By comparison, the over 130 members of the hugely powerful Group of 77-which under Charter rules can ram through any budgetary decision and block any meaningful reforms-altogether pay a mere 9.641 percent of the regular budget.[5]
     
  • The 128 lowest-paying countries-two-thirds of General Assembly members-pay less than 1 percent of the UN budget, even though that group alone can, according to UN rules, pass the budget.

This system can lead to perverse outcomes. Consider that the United States will pay 22 percent of the $3.8 billion 2006/2007 biennial regular budget, or about $418 million per year excluding the 27 percent of peacekeeping costs it also pays and its sizeable voluntary contributions to UN technical and specialized agencies. Yet the 48 countries that have the lowest UN assessment-a meager 0.001 percent of the UN regular budget apiece-pay just $18,995 each per year. As a prominent UN expert once said, "Surely it should not cost a nation less to belong to the UN than an individual to go to college or to buy a car."[6]

 

Moreover, the United States and Japan-which each pay about 20 times more than all of the 128 lowest-paying countries combined-can be forced to foot the costs, despite their objections, when the UN budget is increased.

 

Ostensibly, the assessments are tied to a country's ability to pay, which is based largely on its gross domestic product (GDP) and population. However, as Table 1 illustrates, this relationship varies considerably. Among the Permanent Five members of the Security Council, both China and Russia underpay based on nominal and purchasing power parity-adjusted GDP data. The United States underpays based on nominal GDP but overpays based on adjusted GDP numbers. France and the UK are over-assessed based on both numbers. Based on either number, Japan is grossly over-assessed. The G-77 and the group of the 128 lowest contributors are under-assessed-a situation that is preserved by their numerical advantages in the General Assembly.

 

The one-country, one-vote structure of the General Assembly, which ignores financial contributions, creates a free-rider problem wherein countries paying little drive financial decisions. This divorce between obligations and decision making is perhaps the greatest cause of the decades-long intransigence at the UN on real reform. The situation reached a head with the 1985 Kassebaum-Solomon amendment to withhold 20 percent of U.S. assessed contributions until the UN adopted weighted voting, which led to the compromise of consensus-based budgeting that is still used today.

 

Table 1

 

While this consensus-based process has been marginally successful in curtailing large increases in the UN budget-thanks primarily to hard negotiating by the U.S.-it has been ineffective at encouraging the UN Secretariat to set budget priorities or to eliminate obsolete UN mandates and inefficient expenditures. Even in the current pro-reform environment, trimming the UN budget and eliminating obsolete mandates are difficult.

 

Table 1

 

In the end, these problems are unlikely to be solved unless a stronger relationship between budget decisions and financial contributions can be achieved. The bipartisan Gingrich-Mitchell United Nations Task Force was right to call on the United States to work with other member states "to explore ways of giving larger contributors a greater say in votes on budgetary matters without disenfranchising smaller contributors."[7]

 

There are several ways this could be accomplished:

  • Revise the scale of assessments to reflect the egalitarian voting system. Establish equal dues for all member states of slightly more than 0.5 percent of the regular budget. Each country would provide a bit less than $10 million per year under the 2006/2007 budget.
     
  • Give large contributors a greater say in budgetary matters by creating a voting system that is at least partially weighted according to contribution level. This would enhance the influence of large contributors in budgetary matters and, hopefully, create an incentive for low-paying countries to contribute more.
     
  • Adopt a two-tier system whereby the budget requires approval by two-thirds of member states and by states contributing at least 67 percent of the regular budget.
     
  • Raise the minimum contribution level from 0.001 percent so that even the smallest contributors face more of the cost of any budgetary increase. For instance, raising the minimum contribution to 0.1 percent would increase minimum annual dues to about $1.9 million under the 2006/2007 budget-not an insignificant sum but certainly within the capability of countries that value their UN membership. Setting this contribution floor, combined with increases for China and Russia, would reduce the burden on Japan and other large contributors by 15 percentage points, leveling out differences in financial responsibilities.

Reforming the UN assessment scale is a controversial topic, and the U.S. faces significant pressure to avoid it. However, the opportunity for reform of assessments comes around only every three years, and the Fifth Committee of the General Assembly (which handles administrative and budgetary matters) is now working on the assessments scale for 2007-2009.

 

Historically, UN reform efforts have been episodic, there might not be another intersection of the determination to reform and the opportunity to revise the scale of assessments for some time. The United States should seize this opening.

 

Conclusion

America should support Japan's effort to require the five veto-wielding permanent members of the Security Council-states that have the heavy responsibility for UN decision making over peace and security matters-to pay a minimum of 3 percent and preferably 5 percent of the UN's regular budget. This step is long overdue. Even though it will not change the assessment for the United States, it would send a strong message to those who want to join the Council's ranks. With the power to make the tough decisions comes the responsibility to commit enough time, talent, and treasure to make things work.

 

This same logic applies to reform of the UN system as a whole. If the UN is to be a more effective, efficient, and accountable body, privileges must be linked to financial responsibilities. While the issue of UN reform is in the spotlight, now is the time to recognize that the unbalanced relationship between those making budgetary decisions and those footing the bill impedes accountability.

 

Americans sense that the UN's funding structure is grossly unfair, and this feeds their increasingly negative opinion of the UN. According to a Gallup Poll released on Sunday, Americans' opinion of the UN is among the worst ever, with 64 percent of Americans saying the UN is doing a poor job.[8]

 

Congress and Americans across the political spectrum want meaningful UN reform. Certainly, UN member states like Japan and the United States that foot a significant portion of the UN bill deserve greater influence over how those funds are spent; if that is not possible, at least the financial burden should be spread across UN membership more evenly.

 

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, and Janice A. Smith is Special Assistant to the Vice President of Foreign and Defense Policy Studies, at The Heritage Foundation.



[1]Nile Gardiner, Ph.D., and Brett D. Schaefer, "U.N. Security Council Expansion Is Not in the U.S. Interest," Heritage Foundation Backgrounder No. 1876, August 18, 2005, at www.heritage.org/Research/
InternationalOrganizations/bg1876.cfm
.

[2] An alternative approach would be to mandate that permanent members could be assessed no more than four times the amount of the least-assessed permanent member. As the UN is unlikely to reduce the U.S. assessment significantly, Russia and China would have to accept higher assessments.

[3] Because the peacekeeping assessment for permanent members consists of the regular budget assessment plus a surcharge on top of this assessment, this change would sharply increase Chinese and Russian peacekeeping costs. Poor countries receive a discount on their peacekeeping assessment.

[4] Since the late 1980s, the budget has been adopted by consensus to ensure that countries that pick up most of the tab cannot be forced to accept substantial increases in the size of the budget without their consent. However, there is no formal requirement for consensus. The change in procedure is based on a 1986 statement from the president of the General Assembly that it "should continue to make all possible efforts with a view to establishing the broadest possible agreement" on the budget. If budgets were to reach a vote, the 128 member states that pay a total of less than 1 percent of the budget collectively constitute the two-thirds majority needed to pass the budget.

[5] The G-77 is a group of developing nations established in 1964 as a means for the "developing world to articulate and promote its collective economic interests and enhance its joint negotiating capacity on all major international economic issues in the United Nations system." See www.g77.org/main/main.htm.

[6] Edward C. Luck, "Mixed Messages," Brookings Institution, 1999, p. 253.

[7] The U.S. Institute for Peace, "American Interests and UN Reform: Report of the Task Force on the United Nations," June 2005, p. 53 at www.usip.org/un/report/usip_un_report.pdf.

[8]Jeffrey Jones, "Americans' Ratings of United Nations Among Worst Ever," Poll, March 13, 2006, at http://poll.gallup.com/content/?ci=2

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