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As they do every three
years, member states of the United Nations
are busy renegotiating the assessment
scale upon which membership dues are calculated.
In October, a new round of negotiations
began in earnest. And while this ongoing
debate in New York may be somewhat obscure
and trivial to those who aren’t
lawyers, accountants, and negotiators
representing member states on the UN’s
Committee on Contributions, its wider
ramifications for American foreign policy
are profound. This time around the United
States is pushing for a paradigmatic change
in how these dues are calculated.
During the opening session
of the General Assembly’s Budgetary
Committee meeting on dues calculations,
the United States stated its preference
for abandoning the current assessment
scales, which are based on a country’s
gross national income, for a relatively
obscure measurement for comparing economies
called Purchasing Power Parity (PPP).
(Readers of The Economist might recognize
this term from the magazine’s periodic
“Big Mac Index” that uses
PPP to compare economies based on the
price of a McDonald’s hamburger
in countries across the world.) Simply
put, PPP is the amount of a nation’s
currency needed to buy a “basket
of goods” domestically in comparison
to the amount needed to buy the same “basket”
in a different country, resulting in a
system that is intended to measure comparative
standards of living.
While
using this formula to calculate UN dues
might seem benign in principle, it amounts
to a seismic shift that could have potentially
debilitating effects on the stream of
money needed to sustain UN operations
worldwide. And with the UN’s largest
financial contributor placing renewed
emphasis on using the United Nations to
work through international dilemmas in
North Korea, Lebanon, Darfur, Iraq, Iran,
Haiti, and elsewhere, disrupting the steady
flow of financial support to the United
Nations could have haunting consequences
for global peace and security.
There are three broad
categories in which member states’
contributions to the United Nations and
its affiliated international organizations
fall. Humanitarian relief and development
agencies of the United Nations, like the
World Food Program, UNICEF, and the United
Nations High Commission on Refugees, are
funded exclusively through voluntary contributions;
member states are not obliged to contribute
and do so at a rate each state decides
on its own. The regular UN budget, which
finances normal UN operations of the Secretariat,
the General Assembly, the Security Council,
the Economic and Social Council, and the
International Court of Justice, is funded
through assessed dues that each member
state is treaty-bound to pay. Similarly,
UN peacekeeping operations are financed
by assessments to member states, but are
counted separately from the regular UN
budget.
Under the current formula
for assessing the UN’s regular budget,
a member state’s capacity to pay
is determined by the country’s population
size and gross national income. Less developed
countries generally pay the lowest allowed
rate, or 0.001%. The top 15 contributors
pay roughly 84% of the budget, with the
United States paying a maximum rate of
22%.
This 22% “ceiling”
is actually some 8 points lower than what
the United States would pay based on a
strict application of the “capacity
to pay” scale. For much of the 1990’s,
Congress sought to lower US payments to
the United Nations and withheld dues as
a negotiating tactic to achieve that goal.
Finally, in 1999, Congress passed legislation
that would release a portion of US arrears
to the United Nations in exchange for
lowering the assessment ceiling of the
regular UN budget to 22% (from 25%). In
the future, should regular UN scales of
assessment be calculated by using PPP,
American dues would drop by only 0.5%,
but rapidly developing countries like
India and China would see their dues increase
dramatically, perhaps by as much as 10%.
Such a rapid increase could be politically
and practically unfeasible as these member
states would surely fight vigorously to
maintain current levels and, even if defeated,
may not be able to make major adjustments
to their national budgets so suddenly.
Bringing up PPP in negotiations
between member states may be nothing more
than a negotiating tactic as it would
make little difference for American assessment
levels. But other countries, notably Japan—which,
at 19 percent, is the UN’s second
largest contributor to the regular budget—may
back this proposal. Or, following the
United States’ lead in the 1990s,
the Japanese may threaten to lower its
contribution level until certain reforms—namely
Security Council reform that would give
them a permanent seat—are enacted.
Either way, when one member state doesn’t
pay its assessed rate in full, the shortfall
must somehow be made up by other member
states. (Indeed, Japan’s dues are
as high as they are in large part because
of the three percent drop in American
dues in 2000.)
From an American perspective,
one consequence of this shifting of burden
toward rapidly developing countries may
be a decline of American influence within
the Secretariat. For example, assessment
rates are linked to hiring quotas, which
means that more Americans are eligible
to work at the United Nations. As many
top jobs become filled at the start of
the new Secretary General’s term,
a decline of American contributions—and
a commensurate increase among other key
member states—may result in fewer
Americans hired for top jobs at the UN
and a weakening of America’s voice
within the Secretariat.
But more to the point,
PPP is an unreliable way to calculate
dues, mainly because it is open to wide
interpretation. (Even the Economists’
Big Mac index comes with a disclaimer.)
The central problem with using PPP to
measure dues is that the amount of money
needed to purchase a “basket of
goods” is a statistic that can be
politically determined by each member
state. The government in Indonesia, for
example, could interpret “basket
of goods” to mean something quite
different than the government of Sweden,
or any other national government. Making
matters worse, PPP data are simply not
available for many member states. And
even where it is available, it is often
based on extrapolations from survey data,
which in turn is sometimes decades old.
Finally, one further complication is that
PPP calculations are pegged to the US
dollar; the power of a member state’s
local currency would therefore heavily
determine how much each country can pay.
Disparate interpretations
of how to measure PPP could lead to fierce
debates between member states, which would
needlessly undermine the ultimate goal
of dues negotiations: correctly apportioning
the costs of UN operations. On the other
hand, using Gross National Income to determine
the payment scale means that dues are
pegged to something that is determined
apolitically. It is a statistical measurement
established externally from national governments,
and therefore ensures that the United
Nations will not get bogged down in needless
microeconomic debates between member states.
With the United States
stretched beyond capacity by operations
in Iraq and Afghanistan, the United Nations
has assumed a primary burden sharing role
in areas of strategic interest to the
United States, such as Haiti and Lebanon.
It is also been the preferred forum for
taking on the nuclear ambitions of North
Korea and Iran and settling countless
international disputes. Ensuring that
the flow of money to the United Nations
is not disrupted by unwieldy dues calculations
should be a priority of American foreign
policy.
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