Every UN secretary-general has flagged the financial situation, but Antonio Guterres has issued the direst warning yet, calling it a 'race to bankruptcy' and of imminent financial collapse, points out Ambassador T P Sreenivasan.
Key Points
- The United States has historically used delayed payments and funding cuts to push reforms.
- Member States withholding payments have worsened the crisis.
- Today, only 68 of the 193 members have paid their assessed contributions in full.
Every secretary-general of the United Nations has spoken about the difficult financial situation of the UN.
Many of them have lamented that the total annual budget of the UN is lower than that of the New York fire brigade which has to fight fires only in one city, while the UN is expected to fight fires across the world.
But such laments were often greeted with a shrug as everyone knew that it was a bloated bureaucracy with huge salaries.
Diplomats posted to the national missions to the UN are constantly battling for posts in the UN because they are better paid with very few responsibilities.
But current UN Secretary-General Antonio Guterres issued the direst warning yet when he said that the United Nations is in a 'race to bankruptcy' and facing 'imminent financial collapse'.
Budget On Downward Spiral
The warning did not create panic around the world since the UN had ceased to be effective quite a few years ago and a search is on for an alternative.
The US had begun to impose financial discipline on the UN, using Cinderella's stepmother's tactics of reforming her daughter by denying sustenance.
It delayed payment of its assessed contribution deliberately to reduce expenditure and later forced the General Assembly to reduce its annual assessed contribution from 25% percent to 22% in December 2000 through a landmark deal with the UN to resolve a massive arrears crisis.
It even withdrew from specialised agencies like UNESCO and UNIDO. The US contribution to the peacekeeping budget was also slashed to force the UN to scale down peacekeeping operations.
President Donald Trump had questioned the relevance of the UN during his first term itself.
As of February 2026, the US has initiated a historic retreat from more than thirty major UN bodies and affiliates, including the Climate Change Convention, WHO, the Human Rights Council and the UN Relief and Works Agency for Palestine Refugees.
The economy measures forced on the UN by member States by holding assessed contributions has led to the financial crisis of today.
The system of a mix of assessed contributions calculated on the basis of capacity to pay and voluntary contributions for specific activities, which had sustained the UN over the years is in total disarray and the budget of the UN has been on a downward spiral from year to year.
Today, only 68 of the 193 members have paid their assessed contributions in full. Only 55 countries have paid within the deadline of February 8, to make the official 2026 'Honour Roll'.
India has a record of paying its assessed contributions in full and on time.
In fact, the UN is in arrears of paying the dues on payment of amounts due to our personnel participating in peacekeeping operations over the years.
In a sense, the salaries due to our soldiers are being used meet UN expenses.
The excessive appointments of UN staff have been a point of criticism right from the beginning. Once, when then UN secretary-heneral Boutros Boutros Ghali was asked as to how many people worked in the UN Headquarters, he apparently replied, 'about 50%'.
The reason for such employment is mainly because of a 'desirable range' or quota for each member State to ensure that the secretariat represents the global population and membership fairly.
Consequently, it is difficult to recruit the professional staff purely on merit and many are employed in order to maintain geographical balance.
This results in a situation where many in the secretariat are not able to contribute and the burden falls on the others from countries which are 'over represented'.
Outdated Peacekeeping Operations Add to UN's Financial Strain
Bringing changes in the UN for reducing expenditure is extremely difficult because of various sensitivities.
For instance, the Trusteeship Council, once an important body during the decolonisation era is still functioning though it deals only with a few non self-governing territories, which do not desire independence from their administering powers.
This means an anachronism maintained at considerable expenditure.
Similarly, the UN is forced to keep some peacekeeping operations going because the agreement of all the concerned countries is required to close down such operations.
A case in point is the continued existence of the United Nation Military Observer Group in India and Pakistan (UNMOGIP) originally deployed to oversee the ceasefire line in Jammu and Kashmir.
The Shimla Agreement between India and Pakistan replaced the ceasefire line with the Line of Control, but Pakistan has insisted on its continuation.
Today, UNMOGIP remains an active mission with its headquarters alternating between Srinagar and Islamabad.
India is obliged to provide facilities for it in New Delhi, though we do not accept its advice on the Line of Control.
UNMOGIP and similar peacekeeping operations, which have outlived their utility languish in several areas, consuming the scarce resources of the UN.
The Financial Crisis
The present financial crisis of the UN is accentuated by the fact that, after the failure of the UN to deal effectively with COVID-19 on account of the Chinese veto in the Security Council, the Russia-Ukraine war launched by a permanent member of the Security Council and the conflict in Gaza, which enjoys the support of another permanent member.
The world has lost its faith in the United Nations. In fact, the current moves by the US to establish a Board of Peace in Gaza with President Trump as its permanent chairman have become an effort to replace the UN as the guardian of international peace and security.
The support extended to the Board of Peace by some major powers does not augur well for the United Nations.
The secretary-general's warning that the UN is in a 'race to bankruptcy' and facing 'imminent financial collapse' is more than a financial crisis.
It strikes at the very roots of an organisation, which is the only universal body, which has been a hope for humanity for more than eighty years.
Building an alternative body for peace in the highly volatile world of today is a serious challenge.
Unlike the League of Nations, the UN has a number of specialised agencies, the loss of which will affect the Global South and its disappearance will be a disaster for the developing world.
Fundamental reform of the UN is still the hope for mankind, however complex the task may be.
The current financial crisis points towards reshaping the UN as a lean and thin organisation.
It should be possible to learn from the experience of eighty years to reduce expenses drastically by reducing the bureaucracy and using the permanent missions to the UN to take on some organisational responsibilities.
Projects and programmes, which have outlived their utility should be drastically cut.
If this can be done on a war footing, the financial crisis may well become an opportunity for reform.
Ambassador T P Sreenivasan -- Deputy Permanent Representative of India to the UN in New York from 1992 to 1995 -- is a long-time contributor to Rediff.
You can read his earlier columns here.
Feature Presentation: Aslam Hunani/Rediff
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