Peace Child Solution to UN Reform: Solve the UN’s Liquidity Crisis:
it’s the economy, stupid….
by DavidR.Woollcombe,FounderandPresident PeaceChildInternational
The United Nations’ Liquidity Crisis in Brief
InJanuaryofthisyear,UNSecretary-General,AntónioGuterres,wrotealettertoallUNMember Staterepresentativesthatmusthavebeenuncomfortableforhimtowrite.Hehadtotellthemthat: “Over the course of the last year, the cash situation (at the UN) has morphed into a full-blown liquidity crisis. As a result, I am forced to implement aggressive cash conservation measures to avert a default….” Thecoreproblem,heexplained,isthat: “Not all Member States pay their assessed contributions in full. In 2023, we collected only 82.3% of the assessments, causing our year-end arrears to rise from $330m to $859m. Additionally, we had to return $114m to Member States as credits. We survived because we started the year with $700m in cash reserves. We started 2024 with $60m and now anticipate running out of all cash by August 2024.”
AttheSummitoftheFutureinSeptember,andUNGAWeek,therewasnosignorpressstatement followinguponthatdirepredictionand,to23rd September2024,139Memberstateshavepaid theirassessedcontributionsinfull,leaving54whichhaven’t,ofwhichtheUSAandChinaarethe biggest:theyowe$3billionand$2billionrespectivelytotheUN’sCoreBudget,anditsPeacekeepingoperations.
Ironically,thisLiquidityCrisiscomesatatimewhentheUNSystemisactuallyspendingmorethan everbefore:$74billionin2022–upfrom$40billionadecadeago. Thetroubleisthatover80%of thatbudgetisin“earmarkedfunds”–fundswhichmemberstatesandothersdesignatefor spendingthroughcertainagencies,oftenonspecificprojectswithinthoseagencies. The“assessed contributions”arewhatkeepsthelightsonandpayforcoresalaries–andthatiswheretheUNis seriouslycash-stressed.IthasmeantthattheSecretariathashadtoimposeaHiringFreeze,and severelycurtailofficialtravel,theprocurementofgoods,servicesandconsultants.Energysaving measureshavebeenimplementedasthepicture [above] shows.
Constructionandmaintenanceprojectshavebeenslowedorcancelledand,inhisJanuary2024 letter,theS-Gsaidthat “Every Secretariat entity will be asked to plan and execute its programme of work within a reduced spending ceiling….”
Thoughtheseactualfiguresarebad,thereputationaldamagefortheUNisexacerbatedbythe evidencethatstaffandvisitorstotheUNseeeveryday:emptyoffices,positionsunfilled,escalators turnedofftosavepowerandmeetingscancelledortransferredonlinetosavefunds. Thisgivesrise toinevitablerumoursthat: “The UN is going broke!” – “It can barely make payroll some months…” –“The UN is way past its sell-by date and will soon go the way of the League of Nations….”
ButveryfewMemberStatesactuallywanttheUNtodisappear.Neitherdothegeneralpublic:ina studypublishedinSeptember2024,PewResearchfoundthat,in35Countries, “58% have a favorable view of the organization, only 31% a negative view.” Despitetheemergenceofother entitiesliketheG20,theShanghaiCooperationOrganisationandBRICS+,mostagreethattheUNis theonlygameintownandmustbepreserved.But,astheS-Gsaysattheendofhisletter: “We simply must find a lasting solution for these recurring liquidity problems.”
Letusreviewwhathe,andmanyothers,havesuggestedthose“lastingsolutions”mightbe:
Solutions proposed to date
TheSecretary-General’ssolutionisto “urge all Member States to meet their financial obligations in full…” Thetwowordsthathe,asadiplomat,isfartoopolitetoincludeare: “ – or else!” Currently, theanswerto “or else?” liesinClause19oftheUNCharterwhichstates: “A UN Member State which is two full years in arrears in the payment of its financial contributions shall have no vote in the General Assembly…”
Severalstudiessuggestthatthispenaltyismuchtootimid:intherealworld,customersareexpectedto settleinvoiceswithin30daysorfacepenaltiesand,ultimately,courtproceedings.TheUNshouldimpose indicativepenaltiesonMemberStateswhofall3or6monthsinarrears,thingslike:exclusionfromthe membersDiningRoom,chairmanshipofcommitteesand,fortheworstoffenders,alossoftherightto voteintheGAandSecurityCouncil Suchthingswouldembarrasstherepresentativesofnon-paying memberstatesandfocustheirmindsongettingtheircapitalstopaytheirdues
However,suchamovemightrequireachangeintheUNCharterwhichfewMemberStateswantto contemplate.Sointernationalresearchersandthinktanksproposeother,morepractical,suggestions: 1. Regulate earmarking / strengthen assessed contributions: Mostcommentatorsfeelthis isanessentialfirststep.TheIntl.PeaceInstitute’sGlobalObservatoryrevealsthat: “88% of UNDP’s income in 2022 was earmarked. For UNICEF, that number was 87%, and the World Food Program, 97 %.” Theycomment: “Funding practices that force UN structures and processes to follow the money provided by a limited number of member states are inherently flawed.” ItalsorequiresUNAgenciestobecome “non-stop fund-raisers” –andthis competitivechaseaftervoluntarycontributionsresultsina “more atomized UN family, with more overlap and duplication, competing for turf.” ItalsoleadssomeUNAgenciestodepart fromtheirstatedmandatetodeliveranyandallprojectsforwhichfundingisavailable.The solutionproposedbyTheSecretary-General’sown“FundingCompact”isthatDonorsshould increasetheircoreresourcestoatleast30%anddoubletheircontributionstopooled resourcesintointeragencyfunds.Butthatideahasconsiderablepush-backfrombothdonor andrecipientcountrieswholikethecosysystemoffinancialpatronagethatthecurrent systemgivesthem.Attheveryleast,theS-Gcouldrequireearmarkedfundspayahigher percentageoftheirtotaltooverheads.
2. Mergers and “Delivering as ONE”: AFUNDSReportbyStephenBrowneandThomas WeissmanrecommendsthesettingupofanIndependentFundingCommissiontoidentify overlapandrecommendrationalizationsandmergers.Theypointoutthecurrentsemifarcicalsituation:
• 3xUNAgenciesareresponsibleforFood&Agriculture:FAO,WFPandIFAD;
• 6xUN-relatedAgenciescollectDataonTrade:UNCTAD,ITC&theUNDept.ofEconomic andSocialAffairs+thebodiesconnectedtotheUN:theWTO,WorldBankandIMF;
• 29xAgencieshaveprogramsonWater;
• 4xAgencieshaveprogramsonMaternalhealth:UNWomen,UNFPA,UNICEF&WHO; ThisresultsinmeetingsatwhichNGOleaderslikemyselfwatchaghastashoursofdebate arewastedondiscussionsastowhichagencyhasresponsibilityforwhat. “Stop it!” wewant tocry–andsometimesAgencyleadersdo,andtalkpiouslyaboutcost-effectivenessand “delivering as one.” Theliquiditycrisisshouldincentivisecostsavingmeasuresand,indeed, alreadyhas:someNewYorkandGeneva-basedUNagenciesarescheduledtomovetothe expandedUNCampus inNairobi,asrentstherearemuchlowerthanthoseinManhattan.
3. The EU Method:SeveralinterestingideasfornewFundingMechanismswereraisedina 2020PublicationbyAugustoLopezClaros,MajaGroffandArthurDahl.Theyexplored severalmethodologiesstartingwiththatusedbytheEuropeanUnion.TheEUsystem requireseachmemberstatetopayafixedpercentageoftheirGrossNationalIncome(GNI)+ VATtaxreceiptswhicharedeductedautomaticallyatsource.MemberStatesarenotallowed towithholdcontributionseveniftheydisagreewithpolicy.Also,theBudgetissetfor7-year cycles,whichgivestheEUCommissionlevelsoffinancialautonomyofwhichtheUNcanonly dream BUT–theEUisonly27countrieswithlong,sharedhistories,culturesandtax systems.DirectcomparisonswithUNfundingmechanismsarethusprobablyfanciful
4. A Tobin Tax:AnotherpossibilityexploredbyClaros,GroffandDahl–andmanyothers beforethem–isthefinancialtransactionstaxproposedbyJamesTobin.Itbuildsonthe 1936proposalofJohnMaynardKeynesforageneralfinancialtransactiontaxandthe originalrationaleforbothwastodampentherecklessspeculationor“casinocapitalism”of financialmarkets.Tobinhimselfdidnotgivemuchthoughttowhattodowiththetaxon transactionsraisedannually.Butthetax’ssupportersquicklydidthemath,andrealisedthat a0.05%taxontheworld’s$1.3trilliondollardailytransactionswouldyield+/-$600billion ayear–morethanenoughtofulfilalltheUN’smandatesforpeace-keeping,education-, health-,shelter-,water-andnutrition-for-all. Andthat,perhaps,isitsmajordrawback:quite apartfromthefactthatallMemberGovernmentswouldlikelytorefusetoallowtheUNto beindependentlyfunded,lookingatthefinancialinefficienciesinherentinthecurrentUN system,wouldtheUNhavetheabsorbativecapacitytospendthecolossalsumsofmoneya Tobin-taxtypeofinstrumentwouldcollect?Probablynot…
5. The Schwartzberg Proposal: Themostpromisingproposalwehaveseentodateisalsothe simplest:proposedbyJosephSchwartzberginhis2013study, Transforming the United Nations System: Designs for a Workable World, theUNwouldassessMemberState contributionsatafixedpercentoftheirpeoples’averageGrossNationalIncomes(GNIs).The WorldBankreportsthattotalworldGNIin2023wasalittleoverUS$100trillion:0.01%of thiswouldbe$100billion,alittleoverthe$74billionthattheUNspentlastyear. Themain advantageoftheSchwartzbergapproachisitssimplicityandtransparency:everycountry wouldbeassessedonthepeople’saveragepercapitaincome,socountrieslike Liechtenstein,Monacoand Qatarwouldcontributeawholelotmorepercapitathan–say–China,SierraLeoneorNigeria.Buteveryonewouldseeittobefair–anditwouldeliminate thecomplexitywhichbafflesthisauthor,andmanyofthediplomatsIhavespokento.It wouldalsoeliminatetheneedfor“EarmarkedFunds” –whichwouldallowtheUNtopursue itscoremandates,notthepetprojectsofwealthyindividualMemberStatesandtheir “donor darling”clientstates.
Radical Solutions – and how to make them happen…
TheUNwassetupinthenameof“WethePeoples…”AtthefirstmeetingoftheUNGeneral AssemblyinLondoninJanuary1946, theBritishPrimeMinister,ClementAttlee, praisedthe authorsoftheCharter,sayinghowpleasedhewasthatitwassetupinthenameof “we the
peoples….” not “we the governments ” Buthewasdeluded:theUNis–andalwayshasbeen–a“we thegovernments” organisation:wethepeoplespaynotapennyfortherunningofitsoif: “He who pays the piper calls the tune…, ” wethepeoplescannotcomplainthatwedon’tgetmuchofasayin howtheorganisationisrun–orthedecisionsittakes.
Intherun-uptotheSummitoftheFuture,severalcalculatedthatthecurrentglobaltaxtakeis insufficienttomeetthebudgetrequiredtodelivertheSDGs,oranyoftheothergreatmissionsthat theUNhaspromisedtodeliver. Sowhatmightwethepeoplesdotoraisethefundsneeded? Might therebeawaythatwethepeoplescouldmonetiseorfundtheUNandthustakemoreofarolein payingtheUNpiperandcallingit’stune?
ThereismassivepopularsupportforaddressingtheClimateCrisis–butfewgovernmentsdareto inflictanypainonthepublicorthefossilfuelcompaniesthathavebeenmakingabilliondollarsa dayinprofitsincethe1990s.Thosecompaniesmaintainpowerfullobbiesthathavepersuadedour governmentstoretainsubsidiestofossilfuelproductiontothetuneof $5.23trilliondollarsayear. Agenuine“WethePeoplesUN”shouldclaimapartofthatcashmountainperhapsbymonetising theUNastheHeadquartersofamassiveGlobalCarbonTradingscheme,liketheonesetupbythe EuropeanCommission.LiketheEU,itcouldtradegovernment-to-governmentandbusiness-tobusinesscarboncredits–butitcouldgofurtherandsetupaPersonalCarbonBudget(PCB)Trading scheme PCBswouldtakethecurrentICCCcarbonemissionsbudgetrequiredtostaybelowthe1.5 degreethreshold,divideitbetweenthe8billioninhabitantsofplanetearthandtradeit accordingly. InhabitantsoftheIndustrialisedNorthwhowanttomaintaintheirhigh-carbon lifestyleswouldhavetopurchasecarboncreditsfromindividualsintheGlobalSouth–thus transferringhugeamountsofcashfromNorthtoSouth,andmassivelyincentivising arapid transitiontorenewablesourcesofenergy. ItwouldalsoraisebillionsinhandlingfeesbytheUN. Fanciful?–probably–butsometime,thehumanfamilyisgoingtohavetobitethebulletonclimate change.ThatistheRevolutionthattheyoungpeoplegoingthroughourschoolsanduniversities todaywillhavetodeliverintheirlifetimesiffuturegenerationsaretoliveinthesafe,sustainable worldwewantforthem.
Howmightwemakethathappen?Well,ina2008 Peace Child show–longbeforeGretaThunberg startedherFridaysfortheFuture–thechildrenoftheworldriseupina24/7schoolstrike.Their goalistorequiretheirgovernmentstoensurethat,whenparentsandfriendsaskthem: “What do you want to be when you grow up” –theycananswerconfidently: “Alive, if possible!” Inthatstory, theyhadnosuchconfidenceandthatuncertaintypersiststoday: thatiswhythereisamental healthcrisisinourschoolstoday. AUNthatworksis,totheyouthIspeakto,somethingworth strikingfor. S-GAntónioGuterrestoldapanelofyoungpeopleattheopeningtheSummitofthe Future, “Our generation messed up…” -adding: “Power is never given – it has to be taken…” ThePact fortheFuturewillneverdeliverthesecuritythis,andFuture,generationsneed:ithastobetaken fromtheGenerationthatmessedupbysomekindofstrikeaction.Onlyinthatwaywillthecurrent generationdeliverthefuturewhichGuterresdescribedinhislettertohisgreatgrand-daughter.
But – nowhere in that letter nor in any of the discussions leading up to the Summit of the Future – did he or anyone raise the most obvious solution to the UN’s Liquidity crisis: CREATE A UN THAT WORKS!!
• A UN that boldly addresses the growing conflict between the unipolar US-led G7 / NATO alliance and the Multipolar Anti-Western BRICS+ alliance led by Russia and China.
• A UN that finds a way to over-ride the vetos of Russia and the USA to end the carnage in Ukraine and Gaza;
• A UN that delivers the world free of nuclear weapons that it has worked for these last 80 years;
• A UN that solves the Climate Crisis and delivers on its oft-repeated promises of Education-for-all, Health-for-all, and Food & Shelter-for-all. For why should member governments, or anyone else, throw good money after bad at an organisation that fails to deliver the global services it was set up to provide? Sir Partha Dasgupta began his Biodiversity Review by noting that “The World lacks the institutional infrastructure to protect the global
commons….” The UN, as presently constituted, is clearly not that. The current liquidity crisis is the best possible incentive for the creation of the “institutional infrastructures” our world so obviously needs.
It is theeconomy,stupid–so,likeanystart-upinitiative,wemuststartwithaBusinessPlanforthis newUN.MauriceStrongandNitinDesaidevisedanexcellent B-O-A-C BusinessPlanformatfor theRioEarthSummittoframetheirAgenda21.Usingthatformat,aBusinessPlanthatdeliversa “lastingsolution”toourUNLiquidityCrisismightlooklikethis:
Basis for Action(The problem):wehaveaUNSystemthatcannotsavesucceedinggenerationsfrom thescourgeofwar–cannotdelivernucleardisarmament–orsolutionstotheClimate/Educationfor-all/Health-for-all/food&shelter-for-allpoly-crises;
Objective(The solution): createaglobalorganisationthatcandeliverthoseglobalservicesand leavefuturegenerationswithasafe,sustainable,peacefulplanetthatleavesnoonebehind;
Action(Actions to deliver that solution): globalengagementofWethePeoplesofeverynationand tribeonearthinadiscussionofwhatthatglobalorganisationwouldlooklike:acompetitionof ideasfromeveryone:governments,CitizenAssemblies,banks,businesses,schools,thinktanks, CommunityTownHalls,tribalgatheringsofindigenouselders,faithgroups-everyone.
Cost:BeAmbitious! Witha$100trilliondollarglobaleconomy,wecanaffordafewtrillionto ensurethatfuturegenerationshaveaplanetthatcansupporttheirneeds.Anditcanbefundedbya combinationofGNI-linkedgovernment’sassessedcontributions+income-generatingglobal activitiesmanagedbytheUNitselfandthesupportfromcitizenactivistsaroundtheworld.
ArmedwiththeUN’snewPactfortheFuture,theleastwecandoforFutureGenerationsisto committhatwewillNOTleavethemthehollowed-outhuskofadyingplanet.Collectively,wecan determinetobeGoodAncestorsandleavethemaplanetinabetterstatethanwefoundit.