Every three years, the 193 Member States of the United Nations collectively decide on a formula – known as the “scales of assessment” – that determines how much each country contributes to the UN regular budget and to peacekeeping operations. Right now, Member States are negotiating the formula that will determine how much each country should pay the UN in the years 2019-2021. The negotiations will conclude by late December.
The process, driven by Member States of the UN, is a complex, but important one, so we’re taking a moment to answer nine common questions.
How is the formula determined?
It’s complicated, as processes can get when they involved nearly 200 participants at the negotiating table (see chart below).
Breaking it down, each country’s contribution to the UN regular budget is based on a formula that, in theory, represents a country’s “capacity to pay.”
The formula starts by using a country’s share of global gross national income (GNI). Then, adjustments are applied, taking account of where a country is relative to average global income per head and indebtedness. A minimum floor is applied and a ceiling for Least Developed countries and the largest contributor (i.e. the U.S.).
Quartz concisely summed it up, explaining: “In brief, the UN considers gross national income, population, and debt burden in determining the percentage of the total budget and each Member State must pay to fund general UN operations. That budget is known as the ‘regular budget.’”
It’s important to note that each country’s dues to the UN peacekeeping budget are determined through the formula for the regular budget, plus additional adjustments. Most countries receive additional discounts dependent on their levels of income – discounts that are made up for by the Permanent Members of the Security Council who pay a premium reflecting their privileged position of having de-facto control over creating the mandates of peacekeeping missions.
Shouldn’t countries just pay whatever they want? Wouldn’t it be easier and more effective if it was all voluntary?
It is inaccurate to say that voluntarily funded organizations are more effective than those that are not.
Voluntarily funded organizations usually tend to have humanitarian, program-oriented missions that are more mechanical in terms of delivering products, and therefore have more quantifiable results (tons of food delivered, numbers of children vaccinated, etc.). The programs funded through assessed budgets, such as those at the UN, tend to be more political in nature and therefore harder to quantify.
This is one reason why the U.S. government itself has an assessed funding scheme via the taxes we all pay. Any large organization or governmental entity needs stability and predictability in its budget. Relying on donors and taxpayers to choose their amount would undoubtedly lead to underfunding of key priorities.
Many studies – even one by the U.S. Congress about UN funding – have documented this in their analysis. In addition, the treaty adopted by the United States to become a member of the UN requires that our regular budget dues to the organization be paid in full. A voluntary funding scheme would be a violation of the letter and spirit of that treaty obligation.
Can the formula be changed? How?
The short answer is: Yes, but it isn’t easy.
The scale formula is in theory re-negotiated every three years, but because it’s a classic zero-sum game – if one country pays less, another country must pay more – countries are loath to open up the negotiations. Decisions in the General Assembly on important matters require a two-thirds majority although decisions on the budget are, by tradition, made via consensus.
As a result, very few changes have been made historically. To illustrate the difficulty, take India as an example. It is one of the world’s fastest growing large economies, but now pays a quarter of the share it paid in 1950. That being said, for the last several decades, India has been the largest cumulative contributor of troops and police to UN peacekeeping operations. It has risked more of its citizens’ lives than any other country, so it objects when other countries push for it to pay more.
Should the formula be changed?
We as an organization do not have a position on revisions to the scales as it’s a Member State decision. Even so, the last time the methodology of the scale of assessments changed was in 2000, and one can argue that it is due for revisions. There are certainly a range of options available to ensure every country pays an equitable share of the burden. For example, potential changes could be adopted which establish minimum assessments for permanent and non-permanent members of the Security Council or ones that eliminate existing discounts for wealthier nations like Kuwait, Qatar, Singapore, and United Arab Emirates. There are a host of other options but there is no perfect solution.
To reach an agreement, countries must be willing to make concessions. Historically, that has proven to be exceedingly difficult. The United States is a prime example. It is true that the United States (among others) pays more than it should for peacekeeping, based on its share of the global economy. In that case, it is also true that it pays less for the Regular Budget (see chart below).
In fact, the U.S. is the only developed country that has a ceiling on its payments – 22% for the Regular Budget. This ceiling has meant that U.S. has paid less for the last 18 years than it should if the regular formula was applied.
Every three years when the negotiations come up, the U.S. calls for an (understandable) reduction in peacekeeping but then objects when other countries (understandably) say that they should not receive special treatment on the regular budget. As a result of being unwilling to give up this “perk,” no progress is made, and the status quo continues.
How much does the United States currently owe?
According to the agreed formula, the United States owes 22% of the UN regular budget and 28% of the peacekeeping budget. (To put this into context, the U.S. dues to the UN – both regular and peacekeeping – are just 0.2% of the overall annual federal budget. In fact, a tall Frappuccino costs twice as much per American as the UN regular budget dues.)
As the world’s most prosperous nation, the United States is the largest contributor to the UN. The share the U.S. pays has fallen over time – see below – reflecting changes in the global economy. Relative to the size of its economy, the U.S. now pays less than many other developed countries. The reality is that many other countries – like Japan, Germany, England, France, Italy, and Russia – pay more than their fair share, as the chart above on the world’s 10 biggest economies makes clear.
Even though it is billed at around 28%, the U.S. has not been willing to pay more than 25% of the peacekeeping budget the past two years – a position President Donald Trump publicly stated during his address to the UN General Assembly on September 25, 2018.
Because of the gap between what it is billed and what it pays, since Fiscal Year 2017, the U.S. has accrued nearly $526 million in peacekeeping arrears – a number that will increase to nearly $750 million in Fiscal Year 2019 (come January 1) if Congress does not act.
What do we expect next?
President Trump telling the UN General Assembly that the U.S. will not pay more than 25% of the peacekeeping budget will not in itself translate into a change in the methodology. An agreement must be negotiated by all member states, not mandated by one. In addition, at the end of the day, Congress decides how much money is allocated, and current law dictates only 25% in payment for the UN peacekeeping budget. There has been little political will to go above this, let alone pay down our 2017 and 2018 arrears.
Besides the technical aspects of how to achieve this, the challenge for the U.S. negotiating team, led by outgoing U.S. Ambassador to the UN Nikki Haley, will be to persuade other countries to pay more, which they are reluctant to do, especially if the U.S. is unwilling to offer any concessions.
Developing countries who make up a majority of the UN membership – and provide the great majority of peacekeeping troops – will resist attempts to reduce the adjustments they currently benefit from. Similarly developed countries will be reluctant to pay more, arguing that relative to the size of their economy, they already pay more than the U.S.
While there is still time for a breakthrough and viable options to pursue, the most likely outcome from this dynamic is deadlock and a continuation of the existing methodology for the scales of assessment. In absence of a change to the scale methodology, the U.S. will continue to be billed close to 28%. But with President Trump pledging to pay no more than 25%, this will mean growing U.S. debt to UN peacekeeping.
Has the U.S. ever been behind on its dues before?
Yes. Beginning in the 1980s, the U.S. Congress started withholding part of its contribution to the UN. This reflected U.S. domestic policy debates regarding UN reform and the fairness of its assessed share.
By 1993, President Bill Clinton had signed congressional legislation that required the U.S. contribution to the UN regular budget to be capped at 22% and peacekeeping at 25%. This was significantly below the rate at which the U.S. was being billed.
In 1999, the detrimental impact on UN operations from the U.S. not paying its full dues, along with international criticism and the looming possibility of a loss of U.S. voting rights in the General Assembly, led to Congressional action.
As leading members of the Senate Foreign Relations Committee, Senators Jesse Helms (R-NC) and Joe Biden (D-DE) constructed a package that called for partial payment of U.S. arrears with subsequent payments predicated on lowering the U.S. assessed rate and hitting UN reform targets.
The “Helms-Biden” accord provided the framework for then U.S. Ambassador to the UN Richard Holbrooke to negotiate a reduction in U.S. contributions to the regular budget from 25% to 22%. In the exchange, the U.S. committed to clear $926 million of the $1.3 billion of arrears it had built-up over the preceding decade.
Ambassador Holbrooke’s success in reducing the U.S. share to 22% of the regular budget had the knock-on effect of bringing down the peacekeeping share to 25.9% by 2008-9 – achieving for a time the Helms-Biden requirement to cap the U.S. peacekeeping assessment at 25%. This has subsequently risen over the last 10 years to 28%, on the back of the relative strength of the dollar following the 2008 financial crisis and the greater economic downturn in Europe and Japan, which for example, suffered after the devastating 2011 tsunami.
Since the enactment of Helms-Biden, the U.S. has had a decidedly mixed record with regards to fully paying the assessed peacekeeping rate. During the latter half of the Bush Administration, re-institution of the 25% cap and other underpayments led to significant U.S. arrears. Following the change in administration in 2009, the U.S. paid $721 million in peacekeeping back payments, and during the first several years of the Obama Administration, the U.S. returned to paying its peacekeeping dues at the full assessed rate.
This changed in Fiscal Year 2013: In that year’s omnibus appropriations bill, Congress capped U.S. peacekeeping contributions at 27% (the rate in effect for Calendar Year 2012), even though the U.S. rate had grown to more than 28%. While Congress maintained the 27% ceiling through the end of Fiscal Year 2016, the U.S. did not fall behind in its payments because it was able to use credits from previous overpayments to UN peacekeeping operations to make up the difference. In Fiscal Years 2017 and 2018, however — following Donald Trump’s ascension to the Presidency — Congress took a harder line, once again reinstating the 25% cap.
What does it mean when the U.S. doesn’t fully pay its bill to the UN?
The UN cannot simply reduce its spending to offset the U.S. not paying its bill. The UN is legally required to share efficiency savings with all Member States, including all those that have paid their share in full.
U.S. arrears ultimately mean that UN peacekeeping missions come under financial strain. This is already being felt through delayed re-imbursements to UN troop contributing countries, like Ethiopia. And it could soon mean that UN is not able to rent the planes it needs to transport peacekeepers or carry out vital security work needed to keep peacekeepers safe.
When the U.S. fails to pay its peacekeeping and regular budget dues, it jeopardizes UN programs that are in the U.S. national interest. It also negatively impacts America’s ability to advance its agenda at the UN.
As such, the U.S. should use the next month to pursue a negotiated scales settlement. By pursuing robust negotiations with a range of Member States, as opposed to a take-it or leave-it approach, the U.S. is more likely to see an agreement which reduces its overall costs and ends mounting arrears. Then, it will be incumbent upon Congress to lift the arbitrary cap on peacekeeping, which would allow the U.S. to fully pay its dues.
The benefits of that approach have been proven over the decades and polling consistently shows that 7 in 10 Americans want the United States to pay its share.
Are there really benefits to funding the UN?
It’s clear where we stand: YES! We have created many resources to answer this question, but, in short, Americans get a fantastic return on our investment.
Overall, the U.S. spends seven times more on Valentine’s Day than it does on its dues to the UN and UN Peacekeeping. By paying its dues on time and in full, other countries are encouraged to do the same – picking up 78% of the tab of UN regular dues.
That’s just looking at the economics. When it comes to work on the ground, the U.S. gets even more from participating at the UN. Out of over 100,000 peacekeepers, the U.S. provides less than 100 people. And when emergencies strike, from natural disasters to famines to conflicts that force millions to flee their homes, it’s UN agencies that are on the front lines of the response, literally helping shelter, feed, and heal humans in need.
Our government always needs to work to use taxpayer money as efficiently as possible, including at the UN, but willy-nilly slashing the U.S. budget for the UN will cost our country in the long-run. It will undermine the UN’s work to keep us safe, and it won’t make a dent in reducing the U.S. federal budget.