UNITED NATIONS: EU and U.S. Clash over U.N. Contracts

By Thalif Deen Reprint | | Print |

Thalif Deen

UNITED NATIONS, Apr 9 1996 (IPS) - The United States and the European Union (EU) Tuesday clashed over a proposal to bar deadbeat member states from winning lucrative business contracts from the United Nations.

If a member state does not pay its dues, argued the EU, it has no moral right to profit from the United Nations.

But the United States, the largest single defaulter, said that any attempts to penalise members would be in violation of the U.N. charter which guarantees the equality of all states before the world body.

“The award of contracts should be based on objective commercial criteria,” U.S. delegate William Grant told the Administrative and Budgetary Committee Tuesday. “Imposing a penalty on member states would go beyond the Charter.”

The United States owes the United Nations more than 1.5 billion dollars. At the same time, U.S. companies have won at least 33 percent of all peacekeeping contracts and 20 percent of other U.N. contracts for the supply of goods and services to the world body.

Under a provision proposed by the 15-member EU last week, Secretary-General Boutros Boutros-Ghali was urged to give preference to vendors from countries that had paid their dues.

The thrust of the provision was to prevent U.S. companies from profiting from the multi-billion-dollar business the United Nations currently generates. But following strong protest by Washington, the penalty clause was dropped from the U.N. procurement system which is being revamped.

The New York-based U.N. Association of USA (UNA-USA) says that in 1994, the entire U.N. system spent about 3.8 billion dollars buying food rations, vaccines, relief supplies, office equipment and military vehicles for U.N. operations worldwide. The U.S. share was valued at 737 million dollars: 20 percent of the U.N. market and a 43-percent increase over 1993.

In 1994 alone, the U.S. supplied goods and services worth more than three times the value of the next largest supplier. The country with the second largest share of 1994 U.N. procurement contracts was Italy with 230 million dollars, or 6.1 percent of the total.

Speaking on behalf the EU, Renata Archini of Italy said she regretted that no agreement had been reached on the matter.

“But the European Union will continue to pursue the principle whenever the question of procurement is brought up,” she said.

In January, the EU accused Washington of making money from the United Nations even while falling behind in its financial obligations to the cash-strapped world body.

Ambassador Paolo Fulci of Italy said U.S. payments to the world body were more than offset by the earnings from goods and services supplied to U.N. agencies by U.S. companies.

“With American arrears mounting, Italian legislators are asking why they should pay their dues to the United Nations on time, while the leader and its biggest procurements beneficiary was not doing so,” he told reporters.

Urging a system of incentives and penalties to resolve its financial crisis, the EU wants the United Nations to bar suppliers from countries in arrears to the world body. The EU also wants to limit the recruitment of nationals from countries not paying their dues in full and on time.

In a fact-sheet released last October, the U.N. Department of Public Information said the U.S. share of the United Nations’ regular budget is about 315 million dollars per year — the equivalent of about 1.30 dollars per U.S. national.

For every dollar the U.S. contributes to the New York-based U.N. Development Programme (UNDP), U.S. companies get back about four dollars in UNDP procurement contracts, according to the U.N. fact sheet.

New York City Mayor Rudolph Giuliani said last year that the United Nations, its agencies and diplomatic corps contribute 3.2 billion dollars a year to the economy of the city alone. This, in turn, has generated 30,600 jobs, yielding about 1.2 billion in annual earnings, the mayor said.