Recently, President George W. Bush announced his intention to loan the United Nations $1.2 billion to refurbish the UN headquarters in New York City. The loan is contained in the President’s 2005 Foreign Operations budget which totals $31.5 billion. Although UN officials lobbied for an interest-free loan, the U.S. proposes to charge 5.5 percent interest on the 30-year loan which would have to be approved by the U.S. Congress and the UN General Assembly.
Basic Facts:
· The cost to rebuild the UN headquarters in New York is currently projected at $1.2 billion. The United States has offered to loan the United Nations 100 percent of the cost.
· There are 191 member states in the United Nations. No other country is contributing to the loan amount. Plans for the rebuilding to be financed through special assessments to member nations were not seriously considered by the UN.
· The United Nations wanted U.S. taxpayers to provide the loan to them interest-free. A May, 2003 General Accounting Office (GAO) report estimated that an interest-free loan would cost the United States at least $700 million – assuming it was paid back.
· Interest and principal on the loan would be repaid by member nations over 30 years based on their percentage of annual dues assessments. The United States already contributes 22 percent of UN dues ($636 million for 2002-2003) – more than any other nation. This does not include peacekeeping contributions or contributions to other UN agencies and programs.
· The United States will also have to pay a “default subsidy,” in the amount of approximately $40 million in case the UN is unable to repay the loan.
Repaying the Loan:
· The State Department has indicated that the loan will be repaid by member nations through their regular assessments. But U.S. policy requires that its annual dues may not be used to repay loans.[i] Therefore, the United States would have to be assessed a special amount to help repay the loan. Presumably, because the UN will not want to divert portions of its annual budget to repay the loan, other nations will also be assessed additional amounts over and above their annual dues.
· However, there is no plan that has been made public to collect additional assessments from other member nations to help repay the loan.
· In fact Japan – the second largest contributor to the United Nations – is demanding that its annual assessment be reduced.
· From 2004-2006, Japan will contribute 19.5 percent annually ($564 million) of the UN regular budget.[ii] A panel reporting to Prime Minister Junichiro Koizumi has recommended that Japan reduce its percentage to 15 percent annually.
· Repayment of the loan and additional assessments are complicated by the fact that not all member states pay their dues on time – or at all.
· In 2002, 86 member states failed to pay their dues in full and 39 member states made no payment at all.
Number of UN Member States Who Pay
# of Member States Paid in Full [iii]:
2000 – 141
2001 – 135
2002 – 117
· Once construction begins on the current building, the United Nations will have to build a new building to move its staff to a new location. To finance this move, the UN will issue bonds to finance the construction, but only do so if Congress issues a federal tax exemption on the bonds. The GAO estimates this exemption will cost the U.S. government $108 million (in present value 2003 dollars) over the life of the loan.
· GAO cites Construction Industry Institute research which shows that cost estimates can vary from 30 to 50 percent. A 30 percent cost overrun would add another $360 million to the project, while a 50 percent overrun would add another $600 million to the taxpayers’ burden.
· The GAO wrote in its report that “many decisions that can affect the project scope, schedule, and cost have yet to be made” by the UN.
United States: “One of the Least Generous” Countries in the World
In a speech at Notre Dame University in May 2000, Kofi Annan called the United States “one of the least generous” countries in the world. But the U.S. record of helping the UN proves otherwise.
· An American citizen, John D. Rockefeller, Jr. gave the United Nations $8.5 million in 1946 to purchase the land on which the UN headquarters now sits.
· The United States government provided a $65 million interest-free loan (more than $400 million in 2003 dollars) to build the General Assembly, Secretariat building, a conference building and a basement support area when construction began in 1948.
· At that time, President Harry Truman said the loan “demonstrates our faith in the future of the United Nations” and our desire to “strengthen the United Nations.”[iv] Fifty-five years later, after a record of war, famine, human rights abuses and terrorism, is President Bush still trying to demonstrate “faith” in the United Nations?
· The UN’s Dag Hammarskjöld Library was built with a $6.7 million gift from the Ford Foundation.[v]
· Subsequent buildings and additions to existing structures totaling $57 million where financed from the UN regular budget, 25 percent of which was provided by U.S. taxpayers during that time (over $14 million).[vi]
· Among numerous other contributions, the United States provides:[vii]
o 51.4 percent of the World Food Program budget;
o 25.8 percent of the International Atomic Energy Agency budget;
o 25 percent of the UN High Commissioner for Refugees budget;
o 25 percent of the International Civil Aviation Organization budget;
o 22 percent of the World Health Organization budget;
o 17.1 percent of the UN Children’s Fund;
o 14.1 percent of the UN Development Program.
· Overall, the United States is the largest financial contributor to the United Nations and has been since the creation of the UN in 1945.
· Last year alone, the United States contributed over $3 billion total to the UN.
Based on the evidence, it is wrong for Kofi Annan to call the United States “one of the least generous” countries in the world.
[i] U.S. General Accounting Office: Report to the Honorable Michael Enzi, U.S. Senate; GAO-03-566; May 2003; page 16.
[ii] Permanent Mission of Japan to the United Nations; http://www.un.int/japan/statements/foreignpolicyqa040126.html
[iii] United Nations Press Release GA/AB/3565; http://www.un.org/News/Press/docs/2003/gaab3565.doc.htm
[iv] Truman Library; Statement by the President; August 11, 1948.
[v] U.S. General Accounting Office: Report to the Committee on Foreign Relations, U.S. Senate; GAO-01-788; June 2001; page 18
[vi] ibid
[vii] U.S. Department of State; http://www.state.gov/r/pa/ei/rls/24236.htm
