Peace Child Solution to UN Reform

Peace Child Solution to UN Reform: Solve the UN’s Liquidity Crisis:

it’s the economy, stupid….

by David R. Woollcombe, Founder and President Peace Child International

The United Nations’ Liquidity Crisis in Brief

In January of this year, UN Secretary-General, António Guterres, wrote a letter to all UN Member State representatives that must have been uncomfortable for him to write. He had to tell them that: “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….” The core problem, he explained, is that: “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.”

At the Summit of the Future in September, and UNGA Week, there was no sign or press statement following up on that dire prediction and, to 23 rd September 2024, 139 Member states have paid their assessed contributions in full, leaving 54 which haven’t, of which the USA and China are the biggest: they owe $3 billion and $2 billion respectively to the UN’s Core Budget, and its Peacekeeping operations.

Ironically, this Liquidity Crisis comes at a time when the UN System is actually spending more than ever before: $74 billion in 2022 – up from $40 billion a decade ago. The trouble is that over 80% of that budget is in “earmarked funds” – funds which member states and others designate for spending through certain agencies, often on specific projects within those agencies. The “assessed contributions” are what keeps the lights on and pay for core salaries – and that is where the UN is seriously cash-stressed. It has meant that the Secretariat has had to impose a Hiring Freeze, and severely curtail official travel, the procurement of goods, services and consultants. Energy saving measures have been implemented as the picture [above] shows.

Construction and maintenance projects have been slowed or cancelled and, in his January 2024 letter, the S-G said that “Every Secretariat entity will be asked to plan and execute its programme of work within a reduced spending ceiling….”

Though these actual figures are bad, the reputational damage for the UN is exacerbated by the evidence that staff and visitors to the UN see every day: empty offices, positions unfilled, escalators turned off to save power and meetings cancelled or transferred online to save funds. This gives rise to inevitable rumours that: “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….”

But very few Member States actually want the UN to disappear. Neither do the general public: in a study published in September 2024, Pew Research found that, in 35 Countries, “58% have a favorable view of the organization, only 31% a negative view.” Despite the emergence of other entities like the G20, the Shanghai Cooperation Organisation and BRICS+, most agree that the UN is the only game in town and must be preserved. But, as the S-G says at the end of his letter: “We simply must find a lasting solution for these recurring liquidity problems.”

Let us review what he, and many others, have suggested those “lasting solutions” might be:

Solutions proposed to date

The Secretary-General’s solution is to “urge all Member States to meet their financial obligations in full…” The two words that he, as a diplomat, is far too polite to include are: “ – or else!” Currently, the answer to “or else?” lies in Clause 19 of the UN Charter which states: “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…”

Several studies suggest that this penalty is much too timid: in the real world, customers are expected to settle invoices within 30 days or face penalties and, ultimately, court proceedings. The UN should impose indicative penalties on Member States who fall 3 or 6 months in arrears, things like: exclusion from the members Dining Room, chairmanship of committees and, for the worst offenders, a loss of the right to vote in the GA and Security Council. Such things would embarrass the representatives of non-paying member states and focus their minds on getting their capitals to pay their dues.

However, such a move might require a change in the UN Charter which few Member States want to contemplate. So international researchers and think tanks propose other, more practical, suggestions: 1. Regulate earmarking / strengthen assessed contributions: Most commentators feel this is an essential first step. The Intl. Peace Institute’s Global Observatory reveals that: “88% of UNDP’s income in 2022 was earmarked. For UNICEF, that number was 87%, and the World Food Program, 97 %.” They comment: “Funding practices that force UN structures and processes to follow the money provided by a limited number of member states are inherently flawed.” It also requires UN Agencies to become “non-stop fund-raisers” – and this competitive chase after voluntary contributions results in a “more atomized UN family, with more overlap and duplication, competing for turf.” It also leads some UN Agencies to depart from their stated mandate to deliver any and all projects for which funding is available. The solution proposed by The Secretary-General’s own “Funding Compact” is that Donors should increase their core resources to at least 30% and double their contributions to pooled resources into interagency funds. But that idea has considerable push-back from both donor and recipient countries who like the cosy system of financial patronage that the current system gives them. At the very least, the S-G could require earmarked funds pay a higher percentage of their total to overheads.

2. Mergers and “Delivering as ONE”: A FUNDS Report by Stephen Browne and Thomas Weissman recommends the setting up of an Independent Funding Commission to identify overlap and recommend rationalizations and mergers. They point out the current semifarcical situation:

• •

3 x UN Agencies are responsible for Food & Agriculture: FAO, WFP and IFAD; 6 x UN-related Agencies collect Data on Trade: UNCTAD, ITC & the UN Dept. of Economic and Social Affairs + the bodies connected to the UN: the WTO, World Bank and IMF; • 29 x Agencies have programs on Water; • 4 x Agencies have programs on Maternal health: UN Women, UNFPA, UNICEF & WHO; This results in meetings at which NGO leaders like myself watch aghast as hours of debate are wasted on discussions as to which agency has responsibility for what. “Stop it!” we want to cry – and sometimes Agency leaders do, and talk piously about cost-effectiveness and “delivering as one.” The liquidity crisis should incentivise cost saving measures and, indeed, already has: some New York and Geneva-based UN agencies are scheduled to move to the expanded UN Campus in Nairobi, as rents there are much lower than those in Manhattan.

3. The EU Method: Several interesting ideas for new Funding Mechanisms were raised in a 2020 Publication by Augusto Lopez Claros, Maja Groff and Arthur Dahl. They explored several methodologies starting with that used by the European Union. The EU system requires each member state to pay a fixed percentage of their Gross National Income (GNI) + VAT tax receipts which are deducted automatically at source. Member States are not allowed to withhold contributions even if they disagree with policy. Also, the Budget is set for 7- year cycles, which gives the EU Commission levels of financial autonomy of which the UN can only dream. BUT – the EU is only 27 countries with long, shared histories, cultures and tax systems. Direct comparisons with UN funding mechanisms are thus probably fanciful.

4. A Tobin Tax: Another possibility explored by Claros, Groff and Dahl – and many others before them – is the financial transactions tax proposed by James Tobin. It builds on the 1936 proposal of John Maynard Keynes for a general financial transaction tax and the original rationale for both was to dampen the reckless speculation or “casino capitalism” of financial markets. Tobin himself did not give much thought to what to do with the tax on transactions raised annually. But the tax’s supporters quickly did the math, and realised that a 0.05% tax on the world’s $1.3 trillion dollar daily transactions would yield +/- $600 billion a year – more than enough to fulfil all the UN’s mandates for peace-keeping, education-, health-, shelter-, water- and nutrition-for-all. And that, perhaps, is its major drawback: quite apart from the fact that all Member Governments would likely to refuse to allow the UN to be independently funded, looking at the financial inefficiencies inherent in the current UN system, would the UN have the absorbative capacity to spend the colossal sums of money a Tobin-tax type of instrument would collect? Probably not…

5. The Schwartzberg Proposal: The most promising proposal we have seen to date is also the simplest: proposed by Joseph Schwartzberg in his 2013 study, Transforming the United Nations System: Designs for a Workable World, the UN would assess Member State contributions at a fixed percent of their peoples’ average Gross National Incomes (GNIs). The World Bank reports that total world GNI in 2023 was a little over US$100 trillion: 0.01% of this would be $100 billion, a little over the $74 billion that the UN spent last year. The main advantage of the Schwartzberg approach is its simplicity and transparency: every country would be assessed on the people’s average per capita income, so countries like Liechtenstein, Monaco and Qatar would contribute a whole lot more per capita than – say – China, Sierra Leone or Nigeria. But everyone would see it to be fair – and it would eliminate the complexity which baffles this author, and many of the diplomats I have spoken to. It would also eliminate the need for “Earmarked Funds” – which would allow the UN to pursue its core mandates, not the pet projects of wealthy individual Member States and their “donor darling” client states.

Radical Solutions – and how to make them happen…

The UN was set up in the name of “We the Peoples…” At the first meeting of the UN General Assembly in London in January 1946, the British Prime Minister, Clement Attlee, praised the authors of the Charter, saying how pleased he was that it was set up in the name of “we the

peoples….” not “we the governments.” But he was deluded: the UN is – and always has been – a “we the governments” organisation: we the peoples pay not a penny for the running of it so if: “He who pays the piper calls the tune…,” we the peoples cannot complain that we don’t get much of a say in how the organisation is run – or the decisions it takes.

In the run-up to the Summit of the Future, several calculated that the current global tax take is insufficient to meet the budget required to deliver the SDGs, or any of the other great missions that the UN has promised to deliver. So what might we the peoples do to raise the funds needed? Might there be a way that we the peoples could monetise or fund the UN and thus take more of a role in paying the UN piper and calling it’s tune?

There is massive popular support for addressing the Climate Crisis – but few governments dare to inflict any pain on the public or the fossil fuel companies that have been making a billion dollars a day in profit since the 1990s. Those companies maintain powerful lobbies that have persuaded our governments to retain subsidies to fossil fuel production to the tune of $5.23 trillion dollars a year.

A genuine “We the Peoples UN” should claim a part of that cash mountain perhaps by monetising the UN as the Headquarters of a massive Global Carbon Trading scheme, like the one set up by the European Commission. Like the EU, it could trade government-to-government and business-tobusiness carbon credits – but it could go further and set up a Personal Carbon Budget(PCB) Trading scheme. PCBs would take the current ICCC carbon emissions budget required to stay below the 1.5 degree threshold, divide it between the 8 billion inhabitants of planet earth and trade it accordingly. Inhabitants of the Industrialised North who want to maintain their high-carbon lifestyles would have to purchase carbon credits from individuals in the Global South – thus transferring huge amounts of cash from North to South, and massively incentivising a rapid transition to renewable sources of energy. It would also raise billions in handling fees by the UN. Fanciful? – probably – but some time, the human family is going to have to bite the bullet on climate change. That is the Revolution that the young people going through our schools and universities today will have to deliver in their lifetimes if future generations are to live in the safe, sustainable world we want for them.

How might we make that happen? Well, in a 2008 Peace Child show – long before Greta Thunberg started her Fridays for the Future – the children of the world rise up in a 24 / 7 school strike. Their goal is to require their governments to ensure that, when parents and friends ask them: “What do you want to be when you grow up” – they can answer confidently: “Alive, if possible!” In that story, they had no such confidence and that uncertainty persists today: that is why there is a mental health crisis in our schools today. A UN that works is, to the youth I speak to, something worth striking for. S-G António Guterres told a panel of young people at the opening the Summit of the Future, “Our generation messed up…” - adding: “Power is never given – it has to be taken…” The Pact for the Future will never deliver the security this, and Future, generations need: it has to be taken from the Generation that messed up by some kind of strike action. Only in that way will the current generation deliver the future which Guterres described in his letter to his great grand-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 the economy, stupid – so, like any start-up initiative, we must start with a Business Plan for this new UN. Maurice Strong and Nitin Desai devised an excellent B-O-A-C Business Plan format for the Rio Earth Summit to frame their Agenda 21. Using that format, a Business Plan that delivers a “lasting solution” to our UN Liquidity Crisis might look like this:

Basis for Action(The problem): we have a UN System that cannot save succeeding generations from the scourge of war – cannot deliver nuclear disarmament – or solutions to the Climate / Educationfor-all / Health-for-all / food & shelter-for-all poly-crises;

Objective(The solution): create a global organisation that can deliver those global services and leave future generations with a safe, sustainable, peaceful planet that leaves no one behind;

Action(Actions to deliver that solution): global engagement of We the Peoples of every nation and tribe on earth in a discussion of what that global organisation would look like: a competition of ideas from everyone: governments, Citizen Assemblies, banks, businesses, schools, think tanks, Community Town Halls, tribal gatherings of indigenous elders, faith groups - everyone.

Cost: Be Ambitious! With a $100 trillion dollar global economy, we can afford a few trillion to

ensure that future generations have a planet that can support their needs. And it can be funded by a combination of GNI-linked government’s assessed contributions + income-generating global activities managed by the UN itself and the support from citizen activists around the world.

Armed with the UN’s new Pact for the Future, the least we can do for Future Generations is to commit that we will NOT leave them the hollowed-out husk of a dying planet. Collectively, we can determine to be Good Ancestors and leave them a planet in a better state than we found it.