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Viscount Waverley: My Lords, this is a serious matter. Something must be done, and sooner rather than later. The question is whether it should be by gradual reconstruction of finances and general reform or the "big bang" approach. I look forward to hearing how the Government will impact the decision-making process.
The noble Lord, Lord Judd, illustrated the gravity of the situation. I shall briefly re-emphasise the numbers. As of 30th April, unpaid assessments owed by member states totalled 2.8 billion dollars. Of that amount, 1.5 billion dollars was owed by the United States, 400 million dollars by the Russian Federation and 250 million dollars by the Ukraine. Additionally the organisation had no cash as at April 30 and had to borrow 50 million dollars from peacekeeping funds to carry the organisation through May: this with the peacekeeping fund already in hock to the tune of 1 billion dollars. Therefore, despite the fact that 53 member states have already paid their 1996 assessment in full, the United Nations continues down a perilous road of having to borrow to meet regular budget obligations.
We can all agree that having to do so in such a manner is poor financial management. President Clinton has said, as the noble Lord, Lord Judd, has pointed out, that he will pay all his government's arrears to the United Nations within five years. He has at the most four-and-a-half years at the helm, so the question is: when will the first instalment cheque be forthcoming? The United States, as we know, contribute to peacekeeping efforts and expects payment. Why not negotiate a period during which it continues to contribute but offsets this against its debts?
A question to the Minister: do arrears attract interest, and if so, at what rate? Clearly arrears must be paid, but what else is to be done? Either costs must be reduced or more cash made available. Where to find the cash? Is overmanning being addressed appropriately? What is the redundancy programme? Why are the United Nations even in New York? Who owns the buildings? What are the buildings worth either for rent or outright sale? Why not move the whole arrangement
To what extent should existing programmes be eliminated? I would urge that an internationally agreed list of properly costed priority programmes be drawn up. This inventory would identify overlap and double counting. No new long-term programmes entailing additional financial commitments should be entered into until existing ones have been fulfilled or suspended when new unforeseen priorities manifest themselves. Separate mechanisms must be found to fund immediate humanitarian developments such as the recent acceptance by the Ghanaian authorities of the refugees from Monrovia.
I favour placing charges on international air and sea passenger travel together with freight; easily identifiable, easily collectable, and I believe readily agreed to by international passengers. I remember well Beirut having such charges as an airport tax at the height of the troubles. Somehow one felt involved in the quest for peace and stability. Is there an argument for the United Nations to establish similar lottery arrangements to those we have here in the UK?
I feel that a major part of the problem lies in ignorance of the importance of the work of the United Nations. I am generally critical of governments in this regard holding their cards too close to their chest. We have this complication with Brussels. I have also never understood why, when our economy (as with others) is global, our legislature is so insular. For example, a disproportionate number of involved Members of either House take only the slightest serious interest in international affairs. This is in part illustrated by the speakers' list and attendance today. There should be more interaction between the members of legislatures. There is a clear role for parliamentarians, as with NGOs, to debate the issues with colleagues around the world. Mechanisms exist through such bodies as the IPU and CPA, but clear agendas must be set.
As with development issues, lack of involvement and education aggravate the ability to collect or budget monies. This hampers the ability of the Americans, for example, to legislate a budget that includes appropriate payments. Clearly, functions and mandates must also be carefully thought through. Should there, for example, be more emphasis on bolstering regional organisations like the OAU and indeed the Commonwealth?
To what extent is the Secretary General responsible for not taking decisive action at the start of his tenure? Did he not assure us that he would do so? Questions have been raised about his ability to deliver, but did he have the authority to carry out essential reforms? If so, why are we in this mess? Clearly this is not a good time to have his attention diverted from the essential job in hand by taking time in a lobbying effort to secure re-election when his term ends in December. What is the Government's attitude regarding his seeking another term?
Lord Desai: My Lords, the facts have been laid by my noble friend Lord Judd and the noble Viscount, Lord Waverley. I would like to ask why the problem has arisen. After all, 10 billion dollars is not a lot of money and even 2 million dollars' arrears on 10 billion dollars is not a lot of money. The problem is that the United Nations no longer engages the idealism of the world. It did once upon a time but now it has become the concern of specialist lobbies, of governments and not of the people. I am not denying that the United Nations does useful work. It does do useful work, but the way it was set up contains a basic flaw. That flaw is exactly paralleled in the European Commission (but I do not want to get into that): because it is not a representation of peoples of the world but of governments of the world, people think it is not their concern; it is the concern of governments.
Governments as a group, I have to say, have utterly failed to address the reform of the United Nations. The 50th anniversary has gone and in a sense those who want to defend the United Nations do not want to reform it. Those who do not like the United Nations or do not approve of it can only operate by not paying up and they feel they will get reform by causing a budgetary crisis. Here is an organisation on which a lot of the hope of avoiding total and utter massacre in many countries hangs and from which we expect not only emergency peacekeeping operations but also some positive initiatives on environment and development.
I believe that the financial crisis is a symptom of a much bigger problem. That problem is that the United Nations needs a very thorough overhaul. I would agree with my noble friend Lord Judd that it is pathetic that it only spent 10 billion dollars in that year. It should be able to spend much more money. As the noble Lord, Viscount Waverley, suggested, it should have some means of generating its own income. It should have proper borrowing powers, not short-term bank loans.
Where we have failed in this respect is that we have not thought through what is needed to improve the United Nations as an effective body. One problem is that the Secretary General is appointed on a Buggins' turn basis, continent by continent, and not on ability. Currently we face an impasse because it is assumed that the present Secretary General wants to run again and until he declares his hand no one else can declare his candidature. At a variety of levels appointments are made not on merit. I note from many examples that it is practically impossible to sack anyone in the United Nations. Each person has a nationally based government which will cry, "How dare you sack X!"
If the United Nations did not exist, it would have to be invented, but I hope not in its present form. The way it is set up encourages thoroughly irresponsible behaviour by some permanent members. Permanent members regard themselves as above the law. Article
I say all this because I believe that we should give serious thought to how we could restructure and reform the United Nations. We should rethink and expand its functions, improve its financing and start from a base which does not make it rely on member states which are reluctant to pay. We should make it an efficient body which is capable of functioning and which appoints people on merit.
Of the many schemes proposed, the one suggested by the noble Viscount, Lord Waverley, of a charge on air travel may be the least harmful. However, when we put forward proposals we must be sure that we do not exacerbate hatred of the United Nations. Quite a lot of people have proposed a tax on financial transactions. We should not be too hasty. While it may look like a lot of money at the other end of the rainbow, I do not think I would recommend such a tax because it could be easily evaded in the present climate.
While the United Nations has a liquidity crisis, one day the United States will have a rational budgetary strategy and moneys will be paid, Russia will pay, and so on. But that is not the problem. The financial problems of the United Nations are worth discussing not because of arrears but because of the way those arrears have been built up. It is not able to do what it should be doing and lack of money is very often the problem.
I feel that this is a distant dream but I would like the United Nations to be so reformed that it has a second chamber which directly represents the people of the world and not just the governments of the world. We can no longer believe, as we used to believe in 1945, that governments represent the best interests of their peoples. If one ever had that faith, one has long ago lost it. A whole new civil society has been created through the NGOs and many other bodies. International society is not only governments; it is many other elements as well. NGOs, global corporations and a variety of other agencies should have a role in the United Nations. We have failed to engage this other element of civil society in the United Nations.
Fifty years on, the United Nations is an unreformed organisation in which the people who want to reform it feel that the only way they can do it is by not paying the bills. That is a sad way to proceed. To try to reform a place by shutting it down is not the most efficient way.
Lord Redesdale: My Lords, I should like to start by thanking the noble Lord, Lord Judd, for initiating this debate. I have to admit that the title of the debate caused me some difficulty. It is not the normal question about UN reform or, indeed, the role of the UN. To some degree it is far more fundamental than that. As the noble Lords, Lord Judd and Lord Desai, and the noble Viscount, Lord Waverley, have already pointed out, the ability of the UN to operate, or even to carry on in its present form, is in doubt due to the chronic financial crisis that it faces. It is ironic that at a time when some of the major obstacles to the United Nations working as an effective international institution, such as the Cold War and the problems in South Africa, have been overcome, the ability of the United Nations to operate effectively is being crippled by its inability to finance itself.
The United Nations, on its 50th birthday, has an increasingly important role in a growing range of interdependent issues such as the globalisation of the economy, the environment, the fight against international crime and drug trafficking, the population explosion and reactions to conflicts and refugees. The United Nations is the only body that could conceivably tackle these issues on an international scale with any degree of moral authority. The worth of the United Nations is not in doubt as Britain's continued and active support shows clearly. The fact that, like any organisation, it has the inherent problems of overstaffing and wastage should not be a reason to question the need for the institution and certainly should not be the reason for any member state to refuse funding.
The failure of the UN has often been due to the failure of consensus of its member states. As the report of the Commission of Global Governance concludes, and I quote this realising that the noble Lord, Lord Judd, was a member of the commission:
The inability of the United Nations to finance itself is almost entirely due to the late or non-payment of assessed contributions by UN member states. It is absolutely critical that this problem is resolved. For example, as the noble Lord, Lord Judd, has already said,
At this point I must congratulate the Minister on the fact that one state that has an excellent record in this field is the British Government. It is a source of pride that our 1996 contributions were paid in full and on time. The biggest debtor at present is the United States, which is in arrears to the tune of 1.5 billion dollars or 55 per cent. of total arrears. The result of the refusal of the United States to pay its dues is that more than half of the UN's total expenses are being paid by European Union members, while Japan has become de facto the largest single contributor.
Since the organisation is not allowed to borrow from external sources, the peacekeeping budget has been continually raided in order to pay for day-to-day running expenses. This has meant that the United Nations has not been able to reimburse in a timely fashion countries that have provided troops and equipment for peacekeeping operations. Thus, the United Kingdom and France, for example, who have paid their share of the United Nations' expenses are still waiting to be reimbursed for the cost of sending troops to Bosnia and elsewhere. Such a situation, if not resolved, will inevitably lead to a reluctance on the part of member states to provide troops for future operations.
Funding crises could be prevented by penalising states who do not pay by withdrawing their voting rights under Article 19 of the UN Charter. The financial regulations could be amended so that Article 19 applies as soon as a state becomes two years in arrears in its contributions. I believe that that would be most effective as it is a source of national pride to represent one's country in the United Nations.
In addition to budgetary reasons, one of the motivations for the United States withholding its contributions appears to be to use non-payment as a lever to force reform of the United Nations. It complains that the bureaucracy of the United Nations is over staffed and complacent. While further efficiency drives are undoubtedly needed, it must not be ignored that much slimming down has already taken place. For example, 800 jobs in the UN Secretariat will be lost and recruitment will be frozen. In addition to shedding people, the United Nations will cut back in almost every sphere of its activities.
One area which is of particular concern, however, is fraud, as the noble Lord, Lord Desai, has pointed out. There have been public cases of very large amounts of money being stolen by UN officials. I hope that the Minister will look at any proposals to make more efficient the policing of the United Nations as these cases not only have a financial burden but undermine the UN in the eyes of the world.
A further area in need of reform concerns the relative contributions of member states. The United States claims that it pays a disproportionate amount towards the funding of the UN. Although as a permanent member of the Security Council it should arguably pay more, certainly the scale of assessments is badly in need of revision to take into account shifts in national
The problem with any proposed reform is that a consensus of all 185 members of the General Assembly is required. Considering the General Assembly's track record, it seems unlikely that the necessary consensus for reform would be easily reached.
On a more specific level, reform of the UN development programmes, such as UNICEF, UNEP and UNDP which rely partly or wholly on voluntary contributions, is also needed. At present their financing falls too heavily on a small group of states; for instance, only 10 states provide around 80 per cent. of the contributions to UNDP. A more equitable funding system is needed.
The system of voluntary contributions also leads to situations where programmes are approved without any guarantee of funding. Thus, in 1995 the UNDP was only able to carry out 75 per cent. of its approved country programmes. Funding must be ensured when programmes are approved.
Voluntary contributions, which are often pledged on a short-term basis, prevent long-term strategic planning which is essential for sustainable development. That is a problem particularly facing UNICEF which, as a result of the recent rise in emergencies, is facing a loss of funding for its core basic needs programmes for children throughout the world. The Fundamental Expenditure Review, for example, shows a cut in UNICEF's general resources funding from its present level of £8.5 million now to £3.7 million by 2004. Similar cuts for UNDP and UNFPA seem likely.
The financing of peacekeeping, which has arguably become the UN's most important service, is also in need of reform. Since the end of the Cold War there has been a dramatic rise in the number and thus the cost of operations, but a secure funding system has not been implemented. A substantial peacekeeping reserve fund is needed so that forces can be deployed in trouble spots at short notice. A levy on the international arms trade could provide the required funding. There are also plenty of imaginative funding suggestions for core UN programmes, such as a global UN lottery tax as the noble Viscount, Lord Waverley, pointed out, or a tax on currency transactions, which the noble Lord, Lord Desai, derided. However, these are in the long term. In the short term the current financial crisis will only be solved by member states fulfilling the obligations they have made in the past.
I should like to conclude by speaking about one particular area of the UN's operations; namely, its MINURSO activities in the Western Sahara. I must declare an interest as the chair of the all-party group on the Western Sahara. The withdrawal of the diplomatic presence and the abandonment of the referendum process has got to be seen as one of the major disasters that the UN has been involved in in the past few years. I find it unbelievable that, after all its actions in the
Baroness Chalker of Wallasey: My Lords, first, perhaps I may thank the noble Lord, Lord Judd, for this opportunity to debate what progress has been made in ensuring adequate financial resources for the United Nations in all its activities. Her Majesty's Government have long recognised the value to the international community of an efficient and effective UN. It remains the only international organisation with the legitimacy, mechanisms and material resources capable of promoting a stable, secure and prosperous world. As the noble Lord, Lord Desai, said, if it were not there, something very like it would have to be invented.
The UN represents the voice of the international community. It faces many challenges and they seem to be ever-growing. But no challenge is greater than its financial crisis, which has deepened steadily and largely unchecked over recent years. We firmly believe that, if the organisation is to continue its good work and meet the ever-increasing demands placed on it, its member states need to will the financial means to meet the responsibilities. That means placing the UN on a firm financial footing not only for the present but for the future and striving to have something which will really work.
The UN's perennial cash flow problems result principally, as the noble Lord, Lord Judd, and others have said, from the failure of certain member states to pay their assessed contributions promptly and in full in accordance with international treaty obligations. In 1995, we paid in full our £227 million in assessed contributions. This was further backed up by over £101 million in voluntary contributions. This year, as the noble Lord, Lord Redesdale, has said, we have already paid our 58 million US dollars assessed contribution to the regular budget. We have consistently encouraged others to follow our example of full and prompt payment. We shall continue to repeat these sentiments in all relevant fora, in bilateral exchanges and with all donors.
But we believe the long-term solution lies in the reform of the UN's finances. As one of the UN's major donors, we have made strenuous efforts promoting the need for thorough-going reform and developing constructive proposals. These and others are now being addressed in New York in the High Level Working Group on the UN financial situation. I know that the noble Viscount, Lord Waverley, is interested in that and I can advise him that the process has already begun and that a lot more is happening also, as he will hear later.
The UN's cashflow crisis reached a peak at the end of 1995 when member states' arrears to the UN reached an unprecedented 2.3 billion US dollars--some 500 million US dollars higher than a year earlier. The average percentage payment by all member states had dropped to less than 93 per cent. of the amount assessed. As has been said, the US rate of payment had dropped not to 93 per cent., but to 47 per cent. Throughout last year, the UN cross-borrowed continually and extensively from its peacekeeping operations to fund the regular budget. The level and the length of time amount borrowed was unprecedented: never before had the UN reached year-end without repaying the amounts borrowed from peacekeeping operations. As has been said, the consequent shortfall on peacekeeping budgets delayed reimbursement to those member states providing troops and equipment for peacekeeping operations. The situation therefore looked especially bleak as the celebrations of the UN's 50th anniversary drew to a close. To some of us, they were rather hollow.
Our efforts to find a long-term solution to the UN's financial problems began over a year ago when we tabled specific proposals for reform of the UN scales of assessment on a transparent and balanced basis; that is, more in line with the principle of capacity to pay. Most recently, in January this year, the UK put forward a comprehensive package of proposals (as an EU initiative) to put the organisation back on a secure financial footing. These comprise measures to tighten penalties on non-payers; accelerate repayment of arrears; reform the scales of assessment; and tighten controls on UN expenditure. We firmly believe that the European proposals are the best solution offered and we are lobbying member states for support for them.
While the financial position of the UN remains extremely grave, the first four months of 1996 have seen a generally improved pattern of payments of assessed contributions, which reflects the considerable efforts made by a number of member states to respond to previous appeals concerning the financial situation of the UN. By the end of April, we and 55 other member states had paid our 1995 and 1996 regular budget contributions in full--an improvement on the same time last year, when only 39 member states had done so in total.
The recent long-awaited approval by the US Congress of US appropriations to the UN for 1995, which will provide increased funding for the UN both for the regular budget and for peacekeeping, is also welcome. But the US has still to pay its 1.3 billion US dollars arrears accrued in the years prior to 1995 and still has to address appropriations for 1996. We continue to emphasise in every contact with the US Administration and Congress, including at ministerial level, that the US has a legal obligation under the UN Charter to pay its assessed contributions promptly and in full. We have also made clear that the UN's other major donors will not make up any US shortfall.
According to the latest UN cashflow forecasts, it is likely that borrowing from peacekeeping operations to fund the regular budget can be delayed until August this year. We view the practice of cross-borrowing of funds
Perhaps I may reply briefly to a number of points which noble Lords have raised. I turn first to the perennial subject of UNESCO. The noble Lord, Lord Judd, asked me about it particularly. The noble Lord knows why we left the organisation in 1985. Our departure was prompted by the excessive politicisation of UNESCO and by its extravagance and organisational inefficiency. I have many times publicly acknowledged that good progress has been made since then, but there is still scope for further reform. Finance is a very important consideration in the question of whether we should rejoin. We have to keep a tight rein on public expenditure. We believe that UNESCO could cut its spending without harming its work. We believe that it has more to do. A decision to return to UNESCO would require an annual assessed contribution of about £11 million. I believe that that money could be better spent elsewhere on the developing countries rather than on UNESCO until it brings its house totally into order. It should certainly reduce its outgoings in Paris, which is not exactly directly helping the developing countries.
The noble Lord, Lord Judd, referred to the UN's preventive diplomacy capabilities. That is an area in which we, like many other organisations, are active. I could not agree more with the noble Lord when he says that the UN should be involved in effective action to prevent crises before they erupt. The preventive deployment in Macedonia is a clear example of what can be achieved. The noble Lord knows that, under an initiative with the French, we have given the UN a senior political adviser to assist the team mediating in the recent Inter-Tajik peace talks. That is another preventive measure to stop the worsening of the crisis in Tajikistan. We have given the UN a representative list of those whom we would make available for further preventive diplomacy initiatives. We are waiting for the UN to make use of that list. Those are the ways in which we prevent far greater expenditure. I well remember that when Jan Eliasson was an under secretary for the DHA he provided figures relating to various crises to which we had had to respond. They indicated that the cost of responding after those crises had occurred was about 10 times the cost of preventing them in the first place.
We believe that the effort which needs to be made on finance is not beyond the ability of member states. We have tried to play our part by getting the UN's own organisation to reform its procedures. I should like to put on a local hat as an honorary colonel of the Royal Logistic Corps. Britain has some of the finest logisticians. We have tried to help the UN by deploying logisticians in key positions. If the work is done properly--as it is by the British Army--it will save the UN money. But I am afraid that the UN still has a great deal to learn, even if the process has begun. All of these actions can prevent unnecessary expenditure and give the UN a much better name. How much our troops teach in these various ways is a great tribute to them.
The noble Viscount, Lord Waverley, spoke about international levies. I ask the noble Viscount to think again about what he said. The introduction of an international levy in the way that it has been mooted would increase the burden on member states who already pay their assessed contributions to the UN promptly and in full. There is no guarantee that the performance of others would improve. Of course, only sovereign governments may levy such taxes. I believe that a good deal of thought has to be given to it if the idea is to be pursued.
The noble Viscount also asked about moving the United Nations. This is a plausible idea. I can think of many good places to which it could be moved. However, although it sounds plausible I do not believe that it is the answer. The solution is to make the UN more effective and efficient. I have thought long and hard about it, but I believe that the only lasting solution for the United Nations is a recognition by member states of their ownership and responsibility. Put another way, if one is a member of a club one must pay one's dues. All noble Lords who have spoken in this debate have agreed with that. Article 19 of the UN Charter, referred to by the noble Lords, Lord Judd and Lord Redesdale, is concerned expressly with the size of arrears owing to the UN. It should be applied where member states are in arrears. They lose their right already to vote if the size of their arrears amounts to a total of two years' assessments. The noble Lord, Lord Redesdale, may be interested to know that we are already working with our European partners to tighten the application of that article which so far has not been implemented in detail.
The noble Lord, Lord Desai, asked about the use of others to strengthen the whole UN process. That is a good idea. It is something that the British Government have been practising at all the international conferences that have taken place in the past few years. In particular, we welcome the fact that non-governmental organisations have been with all our delegations to UN summits. I have had the personal pleasure of working with them in Rio, Cairo, Copenhagen and Beijing. That is a productive initiative, in particular because frequently they come up with sensible suggestions which can help to prevent unnecessary extra wheel inventions which sometimes come from the bureaucracy who are less practical than non-governmental organisations.
I have said many times in this House that the UN can be only as effective as the member states are prepared to make it. That means that they must ensure that it has the necessary resources to carry out its essential task. It is enormously important that the major donors set an example by good payment. The smaller less well-off member states can hardly be expected to pay up when the relatively more prosperous do not. The assessed contributions to the UN, the agencies and the peacekeeping are legal obligations. However important they are, the longer term reform of the UN's financial systems on the basis of the proposals backed by the European Union is critical. That is something upon which we intend to continue leading, as we have been, so that the UN will have a sound financial base when it goes into the millennium.
The noble Lord, Lord Desai, was right when he said that people have lost confidence in the UN; they have lost a relationship with the UN. Everyone wants value for money from their aid resources. Quality has to be our watchword. We want the UN to be distinguished by a sound, quality programme. That is why the UN is silly if, at the secretariat or any other level, it objects to and seeks to fight the suggestions for reform.
While I agree with the noble Lord that the membership as a whole has failed in the past to put right so many of the matters we have mentioned tonight, things have changed. The G7 Halifax Summit grasped the nettle of reform. The G7 is now formulating a comprehensive UN reform agenda for the heads of government meeting in Lyon next month.
I hope that that planned renewal of the UN will secure widespread endorsement from the whole membership. It is critically important that we pursue many of the arguments put forward here, especially the financial and quality arguments such as recruitment on merit, which the noble Lords, Lord Judd and Lord Desai, mentioned.
As regards a further term for the Secretary General, that is a matter for him. So far he has not indicated his intention. As the House will be aware, the UK does not reveal its voting intentions in these elections.
I have now to put right something which the noble Lord, Lord Redesdale, said. The UN has already made some savings, but those made are the tip of the iceberg. Much more needs to be done. That is why we need the work being done by Under-Secretary General Connor to be carried through, in particular the attack on fraud. The noble Lord, Lord Redesdale, then went on to talk about voluntary contributions to the agencies. He got that totally wrong. I shall spell it out to him in a letter, but suffice to say tonight that not only have we maintained our core contributions to those agencies such as UNICEF, UNDP and UNFPA, in the case of UNICEF our 1995-96 contribution of over £27 million was a record high, exceeding the previous year's £25 million. Despite the financial climate being so difficult, reform efforts are being made by agency heads--by Gusth Speth at UNDP; by Carol Bellamy at UNICEF; and Nafis Sadik. That is why they will receive our support. They are carrying out the reforms and they deserve the support that we can give them.
The process of change has started. The Lyon Summit in June will be important for the UN. The modifications are going well. Not only will the UK continue to be a major player and contributor in money terms, but also in new ideas and economies. We must get this right if the UN is to stand up to the principles upon which it was founded more than 50 years ago.
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