The UN is bankrupt and has to close its headquarters in Geneva – because the US is not paying either. Pirates hijack merchant ship off the coast of Somalia

The Palais des Nations in Geneva is the second most important headquarters of the United Nations. There will be a premiere there around the turn of the year: the building has to close.

In recent weeks, the Geneva office has had to take cost-saving measures to save energy and operating costs. Among other things, the use of escalators was restricted, the heating was turned down and the opening hours of the buildings were shortened. For example, the library building is now closed on Fridays.

On December 20, 2023, the palace was completely closed. Because it is often quiet there around the Christmas holidays, the closed space has hardly been noticed until now.

However, the approximately 1,600 UN employees were expected to return to their offices in early January. This isn’t happening now – employees are relegated to the home office. Conferences, of which around 8,000 take place annually, must currently also take place online.

Why does the UN have so little money that it has to take such drastic measures for the first time? The reasons:

inflation

The United Nations office in Geneva is like all of us: the sharp increase in electricity prices in Switzerland is causing them problems. Due to supply bottlenecks, first caused by the corona pandemic and then by the war in Ukraine, energy prices for Swiss households rose by 27 percent in 2023.

Furthermore, inflation was not taken into account in the financial planning of the 2023 United Nations budget. The regular budget for 2023 was approved by the General Assembly in December 2022.

The electricity bill doubles every year

The Palais des Nations, with its 34 meeting rooms and 59 elevators, consumes a considerable amount of electricity. According to Swissinfo, the Geneva office needs a total of 13.2 million kWh from January to October 2023, for which the UNOG (United Nations Office in Geneva) had to pay 7.2 million francs. For comparison: in 2022, 14.4 million kWh cost only CHF 3.9 million.

Since 2021, the palace’s electricity bill has doubled annually. UNOG administrative director Kira Kruglikova tells Swissinfo of a total price increase of 344 percent net between 2021 and 2023.

“Although I am concerned that the current liquidity crisis will actually impact our business operations, I am confident that the measures we have taken can mitigate these negative effects,” says general manager of the office Tatiana Valovaya. However, a further reduction in energy consumption will also be necessary in 2024.

The contributing countries do not pay

Another reason why the UN is short of cash is the debts of its member states. Some Member States have paid their contributions late or not at all in 2023 – or, like the US, only partially.

“Due to the late payments from Member States, the liquidity crisis affects the entire UN Secretariat,” Kruglikova explained to Swissinfo.

According to the UN, only 142 of the 193 member states have fully paid their contributions for the 2023 regular budget, leaving 51 countries missing. The US hasn’t paid its dues in full either, and this is where it especially hurts: The United States pays the highest total contribution – if it does.

According to the US Mission in Geneva, they have set aside a total of $707 million for the UN for 2023, of which “$200 million was disbursed in accordance with the short-term funding resolutions of Congress.” Because US contributions to the UN must be approved by Congress each year, it is not yet known what amount the US will ultimately contribute to the 2023 UN budget.

In a UN video released early this year, spokesman Farhan Haq explains what happens if a country fails to meet its contribution: If a country fails to pay the mandatory amount it owes to the UN over the past two years, it loses its vote in the General Assembly. Member States would try to avoid this and ensure that their debts did not become so high that they would lose their voting rights.

At the same time, the largest contributors are trying to put pressure on the UN by delaying payments to emphasize their political objectives.

Incidentally: Switzerland paid its contribution of just over $33 million (about CHF 28 million) on time in early 2023.

What’s next?

It is nothing new that the United Nations is strapped for cash. And this despite the fact that they are not even particularly expensive, as Farhan Haq explains in the video: “The General Secretariat and all peacekeeping missions cost only 1 dollar and 25 cents per capita of the world’s population. That’s less than a pack of chips.”

Antonio Guterres, Secretary General of the United Nations, commented on the precarious situation in October 2023. He expressed concern about liquidity constraints and called on Member States to make payments on time and in full.

The headquarters in Geneva are expected to reopen from mid-January

In the coming months, the United Nations may have to limit or even end some of its programs. Payments to employees and partner organizations may also be delayed. According to the director of information services at the Geneva office, Alessandra Vellucci, there are currently no plans to lay off staff.

The Palais des Nations in Geneva should function somewhat normally again from mid-January – depending on what the UN’s financial situation looks like.