Ban Ki-Moon's 3 Percent Solution Puts UN Managers on Notice Over Bloated Budgets

United Nations Secretary General Ban Ki-moon lambasted his top managers last week for their free-spending ways in the face of a worldwide economic downturn, and hinted at the possibility that the U.N.’s very existence could be in jeopardy if they didn’t get the message.

Ban told his top managers in a closed door session on March 7 that the world body is in an “emergency situation” when it comes to funding -- and they are not helping. According to notes from the session, obtained by Fox News, Ban chewed out the group for handing in submissions for their upcoming 2012-2013 budgets that overshoot previous planned budget ceilings and warned them that “things cannot be business as usual. The U.N., he said, “should not take it for granted that we are able to exist. We need to be creative and innovative.”

His chief of staff subsequently circulated Ban’s remarks to top staffers, along with a demand that they come up with some cost-cutting ideas by March 9 -- last Wednesday.

Click here to read Ban's remarks.

Ban issued his cost-cutting demand just days after the British Department for International Development (DFID) -- the rough equivalent of USAID -- announced in an extraordinary move that it would cease funding four minor U.N. agencies that it deemed inadequate “value for money."

Ban’s budget–cutting deadline was just two days before the horrific tsunami washed over northeastern Japan, staggering the economy of the U.N.’s second-largest donor, and undoubtedly adding further to a bleak economic picture for future U.N. giving. (Japan pays 12.5 percent of the regular U.N. budget, while the U.S. pays 22 percent.

But Ban’s definition of belt-tightening -- which he called “painful” -- might not be the same definition used by others. The secretary general is demanding a cutback of at least 3 percent in the $5.4 billion preliminary total he had already given the General Assembly as an “outline” for 2012-1013 (the full budget proposal won’t be presented until next September when the General Assembly reconvenes).

If Ban’s 3 percent ceiling were applied across the board next September, that would still mean an initial U.N. regular budget proposal for 2012-2013 of about $5.2 billion.

In reality, the proposed cutback is not really a cutback at all, but more like a scaling back in the rate of increase in U.N. spending. Even with the cuts, Ban’s outlined U.N. spending would still be much higher than it was at the same stage in the budget process for 2010-2011 -- when the U.N. proposed an initial budget “outline" of $4.6 billion.

Click here to read the initial outline.

In other words, Ban’s new outline proposal is about 13.4 percent higher than it was two years ago, even assuming his “painful” cutbacks.

Click here to read the 2012-2013 outline.

Moreover, in the 2012-2013 proposed outline that Ban has already presented, and now proposes to cut back, he also revealed that actual spending for 2010-2011 had climbed to $5.2 billion -- or about 13 percent higher than his original 2010-2011 starting point.

That’s just a smidgeon less than the still-to-be-revised estimate he wants his lieutenants to produce for 2012-2013, after the “painful” retrenchment.

(Not all the 2010-2011 costs have rolled out, however. The U.N. traditionally readjusts its total spending for the current biennium one last time, in November.)

The so-called regular U.N. budget, however, is only the tip of the iceberg when it comes to Ban’s spending. In 2010-2011, atop the $5.2 billion it spent on its “core,” the U.N. also laid out another $9.4 billion in “extra-budgetary” spending, meaning voluntary payments by donors beyond their assigned dues.

Assuming this number does not rise at all -- unlikely, given past history -- over the next two years U.N. member states are going to be expected by Ban to shell out in the neighborhood of $14.7 billion. The $9.4 billion figure used as a baseline in the 2010-2011 biennium was an impressive $781 million higher than the previous two years.

The U.S. share of U.N. extra-budgetary expenses is much harder to figure out, since “extra-budgetary” means voluntary.

But even that total does not include yet another onerous pile of U.N. bills for peacekeeping operations. Keeping track of this spending atop other U.N. expenses is always difficult, since the U.N. uses a different budgetary cycle for its blue helmets -- July through June -- and usually approves totals only six months or a year of expenses at a time.

There is no budget yet for 2012-2013 peacekeeping operations, and even the last half of 2011 has not yet been projected. But from July 1, 2010, to June 30, 2011, the U.N. agreed to shell out $8 billion to keep its blue helmets in the field.

Assuming that all remains the same, peacekeeping operations could cost the U.N. $16 billion for 2012-2013. The U.N. claims to be putting in place a reform process that could lower the cost significantly, but the proof remains in the future.

The U.S. share of peacekeeping is 27 percent of the total, or, in this case, it would be about $4.3 billion.

In sum, after “painful” cutbacks, and assumed zero increases in spending outside the regular U.N. budget and peacekeeping, the total U.N. tab for 2012-2013 could well be $30.6 billion.
And maybe a lot more.

No wonder Secretary General Ban is anxious.

George Russell is executive editor of Fox News