China’s Emerging Financial Influence at the UN Poses a Challenge to the U.S.
As China’s share of the UN budget grows, the U.S., which seeks to revitalize its international leadership role, needs to improve its stream of funding for the world body.
The United States continues to falter in fulfilling its financial obligations to the United Nations, undercutting renewed broad-based international support for U.S. leadership at the world body, and thus leaving the door open to others, notably China, to take a more assertive role opposed to U.S. national interests. Although the Biden Administration has sought over the past year to muster sufficient political will to pay off outstanding debts for accumulated UN regular and peacekeeping arrears and make full payments earlier in the financial year, the U.S. Congress has once again proved unwilling to provide the necessary funds. Washington’s attitude toward these financial obligations in recent years has been characterized by a distinct lack of concern to fulfill what is a treaty-based commitment. While President Biden’s push for returning to the UN’s financial good graces has been spurred by a desire for the U.S. to reclaim its traditional leadership role at the UN, it has also garnered attention and support because of China’s challenge. Beijing has not hesitated to trumpet how its responsible approach to meetings its financial commitments to the UN sets a contrasting example to U.S. behavior. Rather than rising to China’s bait, the U.S. should take the high road, and seek opportunities to demonstrate through on-time and fully paid financial support its investment in and commitment to the UN system.
Financing the UN Budget
Member State financing for UN agencies comes in the form of assessed and voluntary payments. Assessed payments represent the treaty obligations to which member states have committed in order to maintain UN operations. The Assessments are based on a country’s share of the global national income with a few further adjustments for debt and low incomes and bracketed by a 0.001 percent floor and 22% ceiling (currently only applicable to the U.S.). Shares of the Peacekeeping assessments are further modified with a formula having the five Security Council permanent members paying a premium that funds a sliding scale of discounts for the peacekeeping assessments of over 135 less developed countries.
The triennial assessment negotiations, most recently completed at the end of 2022, can be contentious. On repeated occasions, U.S. efforts to secure a 25% ceiling on its peacekeeping contributions, in line with a self-imposed statutory cap has been met with threats from the G77 group of developing countries to vote down the 22% ceiling on regular budget assessments, established in 2000 and only ever used by the U.S. The existing arrangement has mostly remained intact over the past several decades.
China’s Growing Assertiveness
As China’s economy has grown rapidly to become the world’s second largest, the country’s share of UN expenses has also risen rapidly. In the early 2000s China’s assessed share of the UN regular budget was around 2%. Since then, in line with China’s phenomenal economic growth it has skyrocketed to 15.25% in 2022 and is expected to continue increasing at a rapid pace over the next decade.
“Finance serves as the foundation and an important element underpinning UN governance. Maintaining the role of the UN needs all member states to shoulder responsibilities and fulfill obligations. China commends those Member States who have fully paid their contributions and assessments. We call upon all Member States to pay their assessed contributions in full, on time, and without conditions.”
Statement by Counselor Guo Zhiqi, Permanent Mission of China, at the Main Session of the Fifth Committee of the 76th General Assembly on Agenda Item 140: Improving the Financial Situation of the United Nations, 10/29/21
While initially reluctant to embrace the leadership role that this status conferred, China in recent years has made up for lost time with a new aggressive assertiveness about the UN’s activities and direction. Beijing has come to appreciate how harnessing the UN can further its own strategic interests and goals. On the organizational side this has most visibly manifested itself in continuing Chinese efforts to insert personnel into key positions throughout the UN system and to take a greater interest in certain budget items that impact Chinese national interests. But it has also shown up in Beijing’s evolving attitudes to UN financing where it has been more outspoken about UN budgets and expenses and quick to criticize the U.S. as a laggard in meeting its financial obligations.
Traditionally, as with a larger range of economic development issues, China has aligned itself to the G-77 group of developing countries on financial matters. In doing so, it manages to straddle a significant divide. While joining with developing nations to form a powerful bloc of countries on budget assessment scales and formulas, it has distinct and separate interests both as now the second largest payer of UN dues and one of five permanent members of the Security Council.
Absent the 22% ceiling, the U.S. regular budget share would have soared toward 30%; with it, the annual savings to the U.S. taxpayer has amounted to hundreds of millions of dollars. Since the peacekeeping budget assessment is built off of the regular budget, the U.S. share in that account has also been lower, around 28% over the past decade, leading also to substantial financial savings. Many countries have been critical of the ceiling, viewing it as an unfair benefit to the U.S. and their opposition has been further stoked by U.S. budget arrears and poor payment history.
Insiders note that while China continues to align itself with the G77, which has resisted U.S. efforts to place a ceiling on peacekeeping assessments and has made regular, half-hearted efforts to challenge the 22% regular budget ceiling, the country has begun to chart a more nuanced position. The biggest and most obvious reason is that under current economic growth trends China will soon reach 22% and start to benefit from the ceiling. That could in turn push its share of the peacekeeping above 25% so Beijing may also reconsider its stance, in line with the G77 in opposition to a new ceiling.
The United Nations Peace and Development Trust Fund: A Wolf Warrior in Sheep’s Clothing?
In addition to touting its payment record on assessed UN dues, China has lifted a lesson from the U.S. playbook in realizing the strategic and practical value of voluntary funding in key areas. In 2016, China partnered with then-UN Secretary-General Ban Ki-Moon to establish the United Nations Peace and Development Trust Fund (UNPDF), agreeing to fund it with $200 million in supplemental voluntary contributions over ten years. Divided evenly between a Peace and Security Sub-Fund, for financing UN projects and activities related to the maintenance of international peace and security, and a 2030 Agenda for Sustainable Development Sub-Fund, the UNPDF was seen by many as a strong statement of Chinese support for the UN. Along with the UN Secretary-General’s Chief of Staff, the Fund’s Steering Committee is composed of China’s Ambassador to the UN, representatives from the Chinese Ministries for Foreign Affairs and Finance, and the Chinese national Under-Secretary-General for Economic and Social Affairs. Its projects have centered on peacekeeping, preventive diplomacy, counter-terrorism, poverty reduction, refugees and migration, and implementation of the 2030 Agenda for Sustainable Development. According to the Chinese MFA, it has “enriched UN agencies’ toolkit to support member states and contributed to the implementation of major initiatives of the UN.” In 2020, Chinese President Xi Jinping in his annual General Assembly speech announced a further five-year extension of the fund until 2030.
There have been doubts about the goals and long-term viability of the Fund’s projects. Questioning the Fund’s transparency and accountability, some observers view the UNPDF as a blatant way for Beijing to buy influence at the highest levels of the UN. Several former U.S. and UN officials admitted they had not paid close attention to the Fund but said readily available information on its operations and goals was hard to come by. Others felt it was part of a larger structure of Chinese specialized and bespoke funding aligned with UN programs, designed to guide and direct them in ways helpful to China’s long-term strategic aims.
Conclusion
Is China’s stance on meeting its financial obligations and criticizing countries, notably the United States, part of a larger and longer-term strategic direction or is it just a demonstration of good intentions and behavior toward the UN? Is it a trenchant example of what many now term ‘Competitive Multilateralism?’ In many ways it doesn’t really matter. China’s words and deeds in UN financing throw past U.S. behavior into a stark contrast under any circumstances and further highlight Washington’s ongoing intransigence. Other countries recognize this difference, but want to see words backed up with action.
The U.S. clearly understands the challenge, but the response is uneven and uncertain. The Biden Administration has made a push to meet U.S. financial obligations to the UN and sought legislation to lift the self-imposed 25% cap on peacekeeping assessments. As Assistant Secretary of State Michele Sison told a House Foreign Affairs Committee hearing on February 14, 2022, “Our influence at the U.N. is greatest when we pay our bills in full and on time… [O]ur failure to live up to our financial obligations is something that those who would like to poke at us are going to jump right on.” This rhetoric has been backed up by budget requests that include a substantial down payment on past arrears, matched by stepped efforts to move appropriated funds to the UN on an expedited basis.
However, despite apparent broad-based Congressional acceptance, along with outspoken support from influential members, on the importance of U.S. multilateral leadership, the response from Capitol Hill has not matched the Administration’s requests. The original House and Senate Foreign Operations bills for FY 2022 both contained funding to start paying off peacekeeping and other arrears. But, a last-minute compromise on the omnibus appropriation measure for the remainder of the fiscal year saw those funds stripped out and no financial allocation to exceed the 25% peacekeeping cap. Undeterred, the Biden Administration in its FY 2023 budget request again requests funds to “to fully fund U.S. contributions and to pay United Nations peacekeeping dues on time and in full.” For the moment, however, U.S. arrears to peacekeeping top $1 billion and, absent additional Congressional appropriations, it will continue to grow still further given the adherence to the 25% cap.
The scrutiny of and demands on many parts of the UN have grown more acute as it strives to respond effectively to the crisis in Ukraine. The U.S. wants it to be a key tool for U.S. aspirations to lead a determined and comprehensive international response. Yet, a willingness to ensure available and adequate financial resources for the world body will be a key measure of the potential extent of that leadership. China’s prompt and full payments to the UN send a contrasting signal to the growing rather than shrinking U.S. debt and poor payment history. To succeed, Washington should step up with a credible payment plan and follow through, underscoring the value it places in the UN’s work and the essential role it plays in global affairs.
China’s Emerging Financial Influence at the UN Poses a Challenge to the U.S.
By Andrew Hyde
In International & Regional Organizations
The United States continues to falter in fulfilling its financial obligations to the United Nations, undercutting renewed broad-based international support for U.S. leadership at the world body, and thus leaving the door open to others, notably China, to take a more assertive role opposed to U.S. national interests. Although the Biden Administration has sought over the past year to muster sufficient political will to pay off outstanding debts for accumulated UN regular and peacekeeping arrears and make full payments earlier in the financial year, the U.S. Congress has once again proved unwilling to provide the necessary funds. Washington’s attitude toward these financial obligations in recent years has been characterized by a distinct lack of concern to fulfill what is a treaty-based commitment. While President Biden’s push for returning to the UN’s financial good graces has been spurred by a desire for the U.S. to reclaim its traditional leadership role at the UN, it has also garnered attention and support because of China’s challenge. Beijing has not hesitated to trumpet how its responsible approach to meetings its financial commitments to the UN sets a contrasting example to U.S. behavior. Rather than rising to China’s bait, the U.S. should take the high road, and seek opportunities to demonstrate through on-time and fully paid financial support its investment in and commitment to the UN system.
Financing the UN Budget
Member State financing for UN agencies comes in the form of assessed and voluntary payments. Assessed payments represent the treaty obligations to which member states have committed in order to maintain UN operations. The Assessments are based on a country’s share of the global national income with a few further adjustments for debt and low incomes and bracketed by a 0.001 percent floor and 22% ceiling (currently only applicable to the U.S.). Shares of the Peacekeeping assessments are further modified with a formula having the five Security Council permanent members paying a premium that funds a sliding scale of discounts for the peacekeeping assessments of over 135 less developed countries.
The triennial assessment negotiations, most recently completed at the end of 2022, can be contentious. On repeated occasions, U.S. efforts to secure a 25% ceiling on its peacekeeping contributions, in line with a self-imposed statutory cap has been met with threats from the G77 group of developing countries to vote down the 22% ceiling on regular budget assessments, established in 2000 and only ever used by the U.S. The existing arrangement has mostly remained intact over the past several decades.
China’s Growing Assertiveness
As China’s economy has grown rapidly to become the world’s second largest, the country’s share of UN expenses has also risen rapidly. In the early 2000s China’s assessed share of the UN regular budget was around 2%. Since then, in line with China’s phenomenal economic growth it has skyrocketed to 15.25% in 2022 and is expected to continue increasing at a rapid pace over the next decade.
While initially reluctant to embrace the leadership role that this status conferred, China in recent years has made up for lost time with a new aggressive assertiveness about the UN’s activities and direction. Beijing has come to appreciate how harnessing the UN can further its own strategic interests and goals. On the organizational side this has most visibly manifested itself in continuing Chinese efforts to insert personnel into key positions throughout the UN system and to take a greater interest in certain budget items that impact Chinese national interests. But it has also shown up in Beijing’s evolving attitudes to UN financing where it has been more outspoken about UN budgets and expenses and quick to criticize the U.S. as a laggard in meeting its financial obligations.
Traditionally, as with a larger range of economic development issues, China has aligned itself to the G-77 group of developing countries on financial matters. In doing so, it manages to straddle a significant divide. While joining with developing nations to form a powerful bloc of countries on budget assessment scales and formulas, it has distinct and separate interests both as now the second largest payer of UN dues and one of five permanent members of the Security Council.
Absent the 22% ceiling, the U.S. regular budget share would have soared toward 30%; with it, the annual savings to the U.S. taxpayer has amounted to hundreds of millions of dollars. Since the peacekeeping budget assessment is built off of the regular budget, the U.S. share in that account has also been lower, around 28% over the past decade, leading also to substantial financial savings. Many countries have been critical of the ceiling, viewing it as an unfair benefit to the U.S. and their opposition has been further stoked by U.S. budget arrears and poor payment history.
Insiders note that while China continues to align itself with the G77, which has resisted U.S. efforts to place a ceiling on peacekeeping assessments and has made regular, half-hearted efforts to challenge the 22% regular budget ceiling, the country has begun to chart a more nuanced position. The biggest and most obvious reason is that under current economic growth trends China will soon reach 22% and start to benefit from the ceiling. That could in turn push its share of the peacekeeping above 25% so Beijing may also reconsider its stance, in line with the G77 in opposition to a new ceiling.
The United Nations Peace and Development Trust Fund: A Wolf Warrior in Sheep’s Clothing?
In addition to touting its payment record on assessed UN dues, China has lifted a lesson from the U.S. playbook in realizing the strategic and practical value of voluntary funding in key areas. In 2016, China partnered with then-UN Secretary-General Ban Ki-Moon to establish the United Nations Peace and Development Trust Fund (UNPDF), agreeing to fund it with $200 million in supplemental voluntary contributions over ten years. Divided evenly between a Peace and Security Sub-Fund, for financing UN projects and activities related to the maintenance of international peace and security, and a 2030 Agenda for Sustainable Development Sub-Fund, the UNPDF was seen by many as a strong statement of Chinese support for the UN. Along with the UN Secretary-General’s Chief of Staff, the Fund’s Steering Committee is composed of China’s Ambassador to the UN, representatives from the Chinese Ministries for Foreign Affairs and Finance, and the Chinese national Under-Secretary-General for Economic and Social Affairs. Its projects have centered on peacekeeping, preventive diplomacy, counter-terrorism, poverty reduction, refugees and migration, and implementation of the 2030 Agenda for Sustainable Development. According to the Chinese MFA, it has “enriched UN agencies’ toolkit to support member states and contributed to the implementation of major initiatives of the UN.” In 2020, Chinese President Xi Jinping in his annual General Assembly speech announced a further five-year extension of the fund until 2030.
There have been doubts about the goals and long-term viability of the Fund’s projects. Questioning the Fund’s transparency and accountability, some observers view the UNPDF as a blatant way for Beijing to buy influence at the highest levels of the UN. Several former U.S. and UN officials admitted they had not paid close attention to the Fund but said readily available information on its operations and goals was hard to come by. Others felt it was part of a larger structure of Chinese specialized and bespoke funding aligned with UN programs, designed to guide and direct them in ways helpful to China’s long-term strategic aims.
Conclusion
Is China’s stance on meeting its financial obligations and criticizing countries, notably the United States, part of a larger and longer-term strategic direction or is it just a demonstration of good intentions and behavior toward the UN? Is it a trenchant example of what many now term ‘Competitive Multilateralism?’ In many ways it doesn’t really matter. China’s words and deeds in UN financing throw past U.S. behavior into a stark contrast under any circumstances and further highlight Washington’s ongoing intransigence. Other countries recognize this difference, but want to see words backed up with action.
The U.S. clearly understands the challenge, but the response is uneven and uncertain. The Biden Administration has made a push to meet U.S. financial obligations to the UN and sought legislation to lift the self-imposed 25% cap on peacekeeping assessments. As Assistant Secretary of State Michele Sison told a House Foreign Affairs Committee hearing on February 14, 2022, “Our influence at the U.N. is greatest when we pay our bills in full and on time… [O]ur failure to live up to our financial obligations is something that those who would like to poke at us are going to jump right on.” This rhetoric has been backed up by budget requests that include a substantial down payment on past arrears, matched by stepped efforts to move appropriated funds to the UN on an expedited basis.
However, despite apparent broad-based Congressional acceptance, along with outspoken support from influential members, on the importance of U.S. multilateral leadership, the response from Capitol Hill has not matched the Administration’s requests. The original House and Senate Foreign Operations bills for FY 2022 both contained funding to start paying off peacekeeping and other arrears. But, a last-minute compromise on the omnibus appropriation measure for the remainder of the fiscal year saw those funds stripped out and no financial allocation to exceed the 25% peacekeeping cap. Undeterred, the Biden Administration in its FY 2023 budget request again requests funds to “to fully fund U.S. contributions and to pay United Nations peacekeeping dues on time and in full.” For the moment, however, U.S. arrears to peacekeeping top $1 billion and, absent additional Congressional appropriations, it will continue to grow still further given the adherence to the 25% cap.
The scrutiny of and demands on many parts of the UN have grown more acute as it strives to respond effectively to the crisis in Ukraine. The U.S. wants it to be a key tool for U.S. aspirations to lead a determined and comprehensive international response. Yet, a willingness to ensure available and adequate financial resources for the world body will be a key measure of the potential extent of that leadership. China’s prompt and full payments to the UN send a contrasting signal to the growing rather than shrinking U.S. debt and poor payment history. To succeed, Washington should step up with a credible payment plan and follow through, underscoring the value it places in the UN’s work and the essential role it plays in global affairs.
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