The United Nations is confronting one of the most severe financial challenges in its history. With contributions delayed or withheld, particularly by major powers, the organization risks being unable to cover even its core operating costs. According to Dr. Ronny Patz, an expert on UN financing, the situation reflects both immediate cash-flow difficulties and deeper structural risks.
Liquidity vs. financial crisis
Dr. Ronny Patz stresses the importance of distinguishing between two related but distinct problems. “It’s really important to separate the liquidity crisis from the financial crisis,” he explains. “They have similar origins, but they have different implications.”
At the heart of the liquidity crisis is the United States’ failure to pay its assessed contributions on time. Historically, Washington would pay late, but reliably enough for the UN to plan around. “This year we are in a particular situation because it looks like the US is not going to pay the majority of its assessed contributions,” Dr. Patz says. “Even the risk of it brings the UN to a situation where they may not have enough cash to pay for everything.”
The financial crisis, however, could prove even more damaging. Under UN rules, if the organization underspends due to unpaid contributions, it must return those funds to Member States, even if the money was never actually available. “We end up in a runaway financial crisis,” Dr. Patz warns, “because every year the UN would get less and less cash than budgeted.”
A double squeeze
The strain goes beyond the UN’s regular budget. Voluntary contributions, which support agencies such as IOM and UNHCR, have also declined sharply. “The US has cut, and countries like Germany, the UK, the Netherlands, Sweden have all looked at their multilateral aid more restrictively in the last one or two years,” Dr. Patz notes. “Those countries cannot jump in.”
Meanwhile, China (now the UN’s second-largest contributor) has also begun paying its assessments later in the year, worsening cash management. Together, the US and China represent 42% of assessed contributions.
Possible solutions
Asked whether the UN could repeat the 1960s experiment of issuing bonds, Dr. Patz outlines four possible approaches:
The first is shadow budgets – “This is what UNESCO did after the US stopped paying in 2011,” he says. “Behind the official budget, there was an expenditure plan based on what they could actually do with the money they had.” Secondly, there is the option of voluntary funding mechanisms – Member States opposed to downsizing could pool resources to cover core staff costs. Dr. Patz points to the OSCE, which has operated without a formal budget since 2021 but continues functioning thanks to stopgap funding arrangements.
The third solution could be UN bonds – but while bonds could rally public support, Dr. Patz is skeptical. “At some point they have to be paid back with the UN budget,” he cautions. “It’s solving a problem now that comes back to haunt us in five, ten, or 20 years.”
Finally there are rule changes – a more pragmatic fix that would require Member States to agree that money unspent due to non-payment should not be refunded. But political divisions have blocked this so far.Dr. Patz concludes that the likeliest outcome is a mix of shadow budgeting and voluntary contributions. “The bonds will only come if the situation gets so bad that the whole organization couldn’t run for a year or two,” he suggests.
Debates over budget cycles and relocation
Some critics argue that the move to a one-year budget cycle exacerbated the crisis. Dr. Patz disagrees. “Even with a two-year cycle, most of the costs are staff. You can’t move staff costs to the next year. At the size of the non-payment right now, this would have been the same problem in a biennial cycle.”
Likewise, proposals to relocate staff to cheaper duty stations, as part of the UN80 initiative, will not resolve the crisis. “From what I can read, they are making savings in the zero-point or one percent ranges,” Dr. Patz says. “But we are talking about a 15 to 30 percent cut. Those relocations are not the solution to the problem.”
The role of bureaucracy
Dr. Patz also addresses the crisis within broader research on international bureaucracies. “Some UN administrations are really entrepreneurial, developing new policy ideas and pushing them into the world,” he explains. “Others are very submissive, only doing what they are told by Member States. Those that are more entrepreneurial are the bigger shapers of global policies.”He highlights another underappreciated reality: fundraising. “UN agencies are big fundraising machineries because they cannot rely on permanent resources to the degree many people think they have,” he notes. “This changes the way staff work, because they are always in a kind of fundraising mode.”
A call for bold proposals
Ultimately, Dr. Patz sees a dangerous stalemate: “Member States are waiting for UN officials to make proposals, and the leadership is waiting for Member States to take the initiative. Each of them is waiting for the other side to move forward.”
Breaking the impasse, he argues, requires leadership from within. “I think it is the responsibility of the UN staff, the leadership, the management, to make bold proposals, even if they fail. Only this will get the ball rolling towards actually solving the crisis.”