The UN’s major donors – led by the United States – have long been accused of influence-peddling and misusing their financial clout not only to grab some of the high ranking jobs in the world body but also threaten funding cuts to push their own domestic agendas.
The Trump administration’s plan to reduce its 22% assessed contributions to the world body – mandatory payments to the UN’s regular budget – has helped resurrect a 1985 suggestion by the late Swedish Prime Minister Olaf Palme who proposed a new system of financing the UN.
The Palme proposal did not renounce the existing “capacity to pay” formula, but suggested there should be a cap of 10 percent maximum for any one country. This cap is intended to reduce the UN’s excessive dependence on funding by the US and a fistful of big donors. The spirit of the Palme proposal is to protect the UN from being unduly influenced by these donors.
According to the current formula, besides the 22% by the US, the percentage for the other major contributors include: Japan pays 9.7 %, China 7.9%, Germany 6.4%, France 4.9 %, UK 4.5%, Italy 3.7% and Russia 3.1%. The poorest countries of the world pay 0.001% of the UN budget, whereas the Least Developed Countries (LDCs), described as the poorest of the poor, have a cap of 0.01% each
Kul Gautam, former UN Assistant Secretary-General and Deputy Executive Director of the UN children’s agency UNICEF, is a strong advocate of the Palme proposal and argues that if UN decision-making is to be freed from excessive vulnerability to, and even being blackmailed by the big donors, it is important for the UN not to be too dependent on any single donor for its overall budget or important projects. In an interview with IPS, he pointed out that former Secretary-General Ban Ki-Moon was compelled to change his report on Saudi Arabia’s blatant targeting of children and civilians in its attacks in Yemen a few years ago, because of the Saudi threat of withholding its funding for the UN. Similarly, in 2005, former Secretary-General Kofi Annan was compelled by then US President George W Bush to appoint an American Executive Director of UNICEF within 72 hours —without any serious vetting by the UNICEF Executive Board. A clear case of influence-peddling, and “cheque book diplomacy,” said Gautam, author of the recently-released book titled “Global Citizen from Gulmi: My Journey from the Hills of Nepal to the Halls of the United Nations”.
James Paul, who served as executive director of the New York-based Global Policy Forum (1993-2012), says Olaf Palme made his proposal for one great reason: “A more even distribution of the assessed contributions would better reflect the fact that this Organization is the instrument of all nations.”
The UN at that time was facing a growing financial crisis, due in large part to a growing debt by the United States. A number of countries agreed with Palme and a high-level UN reform paper took up the idea. The German government argued with Washington that the United States should pay up– or accept a lower assessment. But US Secretary of State George Schultz rejected the idea out of hand, said Paul, author of the newly-released book titled “Of Foxes and Chickens: Oligarchy & Global Power in the UN Security Council.” “Washington wanted to keep its financial strangle-hold. Unfortunately, many other member states preferred to maintain their own dues at a low level. Some were thought to pay less in dues to the world body than the operating cost of their delegation in New York,” he added.
In 2001, the US altered course and agreed to pay the UN most of the outstanding US debt if its regular budget dues rate was lowered to 22%, from 25%. That shift was, of course, far from the Palme idea. Outsize US financial influence continued. “The 2001 changes are very relevant today, as yet another UN financial crisis is upon us and Washington is yet again the main culprit, said Paul”, who for many years was also an editor of the ‘Oxford Companion to Politics of the World’. Could the distribution of dues be changed further in the direction that Palme suggested?
The process leading to the 2001 change proved that under the right circumstances other member states could be persuaded to come up with an additional share of the dues, he noted. Martin Edwards, an Associate Professor and Director of the UN Studies Program at the School of Diplomacy and International Relations at Seton Hall University, says: “Given that the White House is heading us back toward arrears with its desire to ratchet US contributions down, this is an auspicious moment to propose this.” He said the challenge would be to sell it, though, since the intent on the UN side is to diversify the portfolio and limit the influence of donors, they might not jump on it since it means foregoing future influence.
“But, we have a relatively inexperienced US Ambassador arriving in the form of Heather Nauert, and she’s going to face competition from seasoned veteran counterparts. It would be smart to offer it to Nauert and see if she jumps on it to bring a quick win for her boss,” Edwards declared. According to ambassador Anwarul Chowdhury, a former UN Under-Secretary-General: “For the Olof Palme proposal, I would say with pride that as the Deputy Permanent Representative of Bangladesh to UN, I had advocated publicly in 1985 and thereafter that no one Member State should be paying more than 10 percent of the UN budget.” Even at that time, he said, the US was very strongly opposed to the idea.
“I continue to believe very earnestly in the wide-ranging positive impact of the 10 percent ceiling proposal,” declared Chowdhury. Any shortfall caused by capping the US contribution to the UN can be easily made up by other OECD countries (Organization of Economic Cooperation and Development) and the large number of middle-income emerging economies, without putting undue burden on the worlds low-income countries and LDCs. “Please remember that in the larger scheme of international finance, in a world economy of $77 trillion and global military budgets of $1.7 trillion per year, the totality of the UN system’s budget and expenditure for humanitarian assistance, development cooperation, peace-keeping operations, technical assistance and other essential normative functions, amount to about $48 billion per year,” he pointed out.
This is a modest amount to respond to the huge challenges that the UN is asked and expected to help tackle. He said the total UN system-wide spending annually is less than the defense budget of India or France, and less than one month’s US spending on defense. With similar investment, bilateral aid and national budgets of much bigger proportions could hardly achieve results comparable to what the UN and international financial institutions achieve.
Today financing for development landscape is changing rapidly. Many UN activities benefit from private sector financing and philanthropic foundations. Many NGOs rely increasingly in cloud-sourcing and crowd-funding as well as different modalities of public-private partnerships.
Paul told IPS: “Obviously, the Swedish prime minister was generally inclined towards a fiscal system that required the richest participants to pay on a progressive basis.” That’s why his voice on this issue was so influential, because he was balancing that principle against others he considered more important – the viability of the United Nations and the protection of the UN from pressure from the largest payer.
Can the Palme concept be applied today when yet another UN financial crisis has arisen and a US administration of unprecedented hostility to global cooperation is in power? It would be worth trying, said Paul.
And it may be an urgently-needed revision to the post-1945 arrangements and the world order that lay behind them. Other member states would have to agree to accept a larger share of the UN dues to make up for a reduction by Washington, said Paul. “That would be most likely if the shift took place over an extended period – say over ten years. Getting a fairer share of top executive posts might be an incentive to the other UN members, as would a greater democratization of UN policy-making.”
He said complaints that national budgets are over-stretched cannot be taken seriously, since UN dues are a very small number in all national budgets from the poorest to the very richest countries. Affordability is simply not the main issue. Washington might oppose such a change, so as to keep its financial influence intact, but the time has come for the rest of the world to stand up and defend a necessary change to strengthen an institution that they need and want.
The world has changed since 1945 and the United States can no longer pretend to be the world’s “leader.” Adoption of the Palme proposal might be the first step towards other much-needed changes to make the UN stronger and more effective in the years to come, declared Paul.