Nations' unpaid bills force bankrupt UN to cut budget

Programmes and jobs to go in drive on red tape, reports David Usborne in New York

As it pleads bankruptcy in the face of non-payment of contributions by its member states, the United Nations yesterday signalled a shake-up in its in-house management with a substantially reduced draft budget for 1996 and 1997.

Details of the new budget were unveiled in New York yesterday by Joseph Connor, a former chief executive of the accounting company Price Waterhouse, who was hired last year by the Secretary-General, Boutros Boutros-Ghali, to try to peel away the worst of the UN's bureaucratic inefficiencies.

If approved by the General Assembly, Mr Connor's budget would be the first spending cut in more than two decades. He foresees a reduction of 4.2 per cent in 1996-97, achieved through eliminating some UN programmes no longer considered worthwhile and the net loss of more than 100 jobs.

On an official visit to Australia, meanwhile, Mr Boutros-Ghali told an audience in Canberra that the UN was once again facing an imminent cash crunch. "I am bankrupt. The UN is bankrupt. This is one of my greatest frustrations," he said. "I have no way to put pressure on member states."

Notable among the laggards is the United States, which accounts for a quarter of the regular UN budget and nearly a third of funding for peace- keeping operations. As of 15 April, the US was in arrears for $527m, UN officials said. A British official insisted that as a matter of policy the United Kingdom pays its UN dues "on time and in full".

Mr Connor's efforts to streamline the UN are being undertaken with US political opinion very much in mind. There is an atmosphere of deep antipathy to the UN in the Republican-dominated Congress and the Clinton administration has declared its intention to provide from next year only a quarter of the peace-keeping budget.

Mr Connor's biggest challenge may be changing an employment culture at the UN which has made it impossible to fire anyone, or even to reward good performance.

"We have to discriminate between the best and least best of the staff members," he said yesterday. While a total of 201 jobs would be axed under his budget, 14 new posts would be created to bolster internal overviews of how programmes and spending are implemented.

Stressing that member states have the right as clients to expect value for money from the United Nations, Mr Connor, who was with Price Waterhouse for 36 years, remarked: "I've been working for clients all my life. I know the business of delivering to clients what they want. Around here that has been a somewhat strange concept."