POLITICS: U.N. Head Seeks Help on Resolving Cash Crisis

By Thalif Deen Reprint | | Print |

Thalif Deen

UNITED NATIONS, Nov 25 1997 (IPS) - U.N. Secretary-General Kofi Annan, whose organisation is near-bankruptcy, is seeking “urgent advice” from the 185-member General Assembly on how to resolve a new financial crisis facing the world body.

Annan has summoned the high-level Working Group on Finances – a subsidiary body of the U.N. General Assembly – to lay out options for speeding up the cash flow. The Group, which is expected to meet later this week, is due to come up with several proposals to save the organisation from completely running out of funds.

As of November 15, the United Nations was owed more than 2.2 billion dollars in outstanding dues. The biggest single defaulter is the United States which owes more than 1.5 billion dollars in arrears.

“The only reason the United Nations is surviving is that our creditors have not demanded payment,” U.N. spokesman Fred Eckhard told reporters.

The new cash crisis has been prompted by a decision of the U.S. Congress earlier this month to withhold payments Washington had promised to deliver before the end of the year. The vote on U.N. funding got caught up in domestic politics.

“We are perhaps facing the most serious cash crisis in our history,” Annan told a gathering at Princeton University in the state of New Jersey on Monday.

Annan said he has been borrowing money from the U.N. peacekeeping budget to fund the day-to-day operations of the world body. “But with the reduced level of U.N. peacekeeping, even this source of funds is being depleted. Something, somewhere, has to give,” he added.

As of last month, the majority of the 185 member states have not paid their dues in full. At least seven countries – Bosnia- Hercegovina, Central African Republic, Gambia, Iraq, Sao Tome and Principe, Somalia and Yugoslavia – have lost their voting rights in the General Assembly for nonpayment of dues.

Under Article 19 of the U.N. charter, a member state can lose its voting rights if its arrears equals or exceeds the amount of the contributions due from it for the preceding two full years.

Annan said member states already have several options, including a series of proposals to provide incentives and disincentives, to ensure prompt payment of dues.

“Some think discentives would have more bite,” he said. “There could be stricter implementation of the charter provision under which member states lose their voting rights in the General Assembly if they fall two years behind in their payments.

“We could also consider charging interest on debts. Recruitment of nationals from debtor countries could be suspended. So could procurement in those countries.”

The Secretary-General also said that some members want the United Nations to borrow money from the World Bank or from commercial lenders to tide over the cash crisis. “Such measures are all controversial. A few raise legal questions, are possibly inconsistent with the charter and might even be counter- productive.”

Although the United Nations has been dipping into the peacekeeping budget, it also owes more than 900 million dollars to various countries for peacekeeping expenses, mostly for payment to soldiers and for equipment leased to the world body.

Eckhard told reporters this issue was really at the crux of the U.N.financial situation for 1998…We’ve used those funds to borrow from, to keep the doors open here.”

The United Nations would be “looking at whether peacekeeping continues to shrink and at what rate in 1998, so that we know how much cash will be available to borrow,” he said. “And we will be keeping a nervous eye on the troop contributors that we owe money to, because we are technically in bankruptcy.”

Should anything change in the mood of those member states who are owed moeny, the General Assembly, for example, could vote that we no longer have the authority to borrow from peacekeeping, Eckhard said “That would really trigger an immediate cash crisis.”