UN organizations and funding cuts. A month and a half in, where are we? A recap

Good morning readers.

I am sharing below an informative article by Ian Richards. It makes for depressing reading but at least the International Labour Organization got off lightly. That says to me the value of skills and employment training is still being recognized.

It’s a month and a half since the US stopped almost all voluntary funding to UN organisations through stop-work orders, heavily impacting the operations of IOM (6,000 jobs lost), UNHCR (5,000 jobs lost), UNICEF and to a lesser extent OHCHR, OCHA and ILO. The US also withdrew from WHO and stopped funding UNRWA.

Meanwhile the UN Secretariat continues to suffer a liquidity crisis as funds are late arriving. A spending ceiling has been set in the low 80 percent of the agreed budget. A global hiring freeze has been imposed and many temporary appointments may not be renewed. Operational delivery has been reduced.

The US isn’t alone. Several European countries have announced a retreat from development spending. In some cases this is to reprioritize spending on defence. The Netherlands has cut funding for UN organizations by 50 percent. The UK will reduce spending from 0.5 percent to 0.3 percent of GDP, bearing in mind that a share of this is already earmarked for migrant accommodation in the UK itself. France and Switzerland have also reduced their aid spending. However, the impact of European cuts will be more gradual as the instrument of stop-work orders is not being used.

It hasn’t been easy for organizations to calculate the impact of funding cuts because, while waivers to stop-work orders were also issued, staffing cuts at USAID meant they were not always implemented. Further, negotiations may still need to take place on what costs had already been incurred at the time of the stop-work orders and could legitimately be claimed. However, the time it takes for this to happen may be too late to save certain jobs.

The US is part way through a 180-day review of development aid spending. In that time USAID has been reduced to a skeleton staff to be absorbed into the State Department, although a court order reversed some of these changes and reinstated certain staff. Early indications are that future spending will be focused on trade, commerce, energy and humanitarian.

Looking ahead, all eyes will be on negotiations for the UN regular budget for 2026, that will get underway in October. Pressure for cuts will come from many directions and Secretary-General Antonio Guterres will need to spend the next few months explaining the value of the UN system to a skeptical world population that currently takes the benefits of international organizations for granted.

At the same time, staff and contractors, who have given years of service in difficult and dangerous locations, are paying a heavy price. Many organizations are not providing indemnities and it isn’t clear that there are systems to ensure fairness in downsizing. Valuable experience will be lost

Amid the sobering news, one bright spot. The ILO’s regular budget was approved earlier this month. There was no growth, so in real terms a small cut but it could have been worse.