U.N. may face financial crisis

The United Nations could be forced to delay staff salaries or cut back some operations if a dispute over reform keeps member states from adopting a 2006-2007 budget by Dec. 31.

Warren Sach, the top U.N. budget official, rejected the notion of a complete U.N. shutdown but said it was possible that salaries might not be paid in full or on time and the U.N. might have to borrow from peacekeeping missions or freeze purchases to close a potential shortfall.

"There is no clear, easy way to work around a situation where more money has to go out than comes in," Sach told reporters in a briefing Tuesday, adding later: "This place doesn't run on air, it runs on money."

The threat of a budget crisis arose last week when U.S. Ambassador John Bolton said the U.N. should consider adopting an interim budget, possibly for three months, while diplomats hammer out a contentious reform package.

The United States pays 22 percent of the U.N.'s regular budget, which must be adopted by consensus. While Bolton has been careful not to tie the reforms directly to the budget, he argues that by deciding the budget now, many reforms that it wants would essentially be frozen.

"Reform requires creativity, imagination and forward-thinking, business as usual got us to the situation we're in now, business as usual isn't going to get us out of it," Bolton said Wednesday, adding that the United States was prepared to be flexible.

U.N. Secretary-General Kofi Annan presented a US$3.6 billion budget for 2006-2007 last month, the AP reports.

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