Want Bang for Your Buck? Support the UN

Photograph by Fabrice Coffrini/AFP via Getty Images

Last week, Facebook purchased mobile messaging company WhatsApp for $19 billion. One way to put that in perspective is to note that it’s a little more than what the World Bank doles out annually in market-rate loans. Another way to think about it, however, is that $19 billion is only a little more than one-tenth of Facebook’s market cap. So perhaps what the comparison best illustrates isn’t the enormity of the WhatsApp deal but the tiny financial scale of the World Bank.

And it isn’t just the bank—the International Monetary Fund and the United Nations are pretty small in terms of financial size as well. Yet we rely on them to limit the fallout from global economic crises, sustain development, and preserve global peace. There’s even some evidence these multilateral institutions do make a marginal difference in these roles, which suggests they are an immense bargain. And that’s something worth thinking about as Congress weighs a bill that would provide a small increase to the IMF’s resources.

Not only is the World Bank’s annual lending at best midsize compared to the recent Facebook investment, it’s smaller even than one of America’s better-known commercial banks. The multilateral body’s outstanding market-rate loans total $144 billion—that’s about $30 per person living in a country eligible to borrow, or about half of a percent of the gross domestic product of those countries (at market exchange rates). It’s also only about 16 percent (PDF) of the value of Bank of America’s outstanding loans and leases. Add in the credits of the World Bank’s soft lending arm, the International Development Association, and the total is about 30 percent of the value of Bank of America’s loan portfolio at the start of last year.

Or what about the International Monetary Fund—credited with a vital role in saving the euro through its operations covering Greece, Ireland, and Portugal? In 2013, the fund had commitments of $235 billion under operations currently in effect—that included both funds disbursed to IMF member countries and funds guaranteed if countries requested them under an active arrangement. That’s about 26 percent of the value of Bank of America’s outstanding loans and leases, or about 0.3 percent of global GDP. Or compare the fund’s operations with the Federal Reserve’s balance sheet of Treasuries and mortgage-backed securities that has ballooned since the financial crisis from $869 billion to $4 trillion.

Meanwhile, the United Nations—including the General Assembly, the International Court of Justice, international drug control, crime and terrorism prevention programs, UN Women, and the organization’s trade and development activities—runs on about $2.6 billion a year. The U.S. contributes around $566 million of that—less than it takes to run the radio and TV channels operated by the U.S. government including Voice of America (PDF), and about half the cost of constructing the U.S. Embassy in Iraq.

UN peacekeeping operations themselves do add around $8 billion a year on top of the base budget (of which the U.S. provides around $2.2 billion). Still that’s only about the same as the defense budget of Singapore or the Netherlands. Or compare the $8 billion global price of these operations with an estimate of the annual cost of air conditioning for U.S. military forces in Iraq and Afghanistan: $20 billion (it turns out it takes a lot of fuel to air-condition a tent). For less than one-half the cost of keeping those U.S. troops cool, the UN supports 15 peacekeeping operations from Mali to the Democratic Republic of the Congo to Lebanon and Pakistan, involving 83,000 soldiers in all. One big reason for the cost effectiveness of UN blue-helmets is that peacekeeping forces (overwhelmingly from developing countries) are supplied at bargain-basement prices: a little more than $12,000 a head annually. The U.S. spent about $800,000 per year (PDF)—60 times as much— per soldier in Iraq.

Given how small these international organizations are in terms of financial scale, you might have thought that their funding would be a relatively uncontroversial matter. Sadly, that’s far from the case, as illustrated by the resistance among some members of Congress to approving a modest IMF funding increase. The cost to the U.S. of this increase is just $315 million, but thanks to the contribution from other countries that are part of the deal, that will have a 10-fold leverage effect in terms of resources available to the IMF to respond to financial crises. Three hundred fifteen million dollars is a rounding error on the U.S. budget. It’s about the same as one day’s cost of last year’s partial shutdown of the government.

Or look at it another way: $315 million is about the same amount Bank of America paid to settle claims by investors who were misled about mortgage-backed securities sold by its Merrill Lynch unit in the lead-up to the global financial crisis. It’s about one-seventh of the amount U.S. Attorney Preet Bharara is seeking in fines from the bank for selling defective mortgage loans to Fannie Mae and Freddie Mac.

Surely, funding the IMF—an organization that was critical to limiting fallout from the last financial crisis—is worth a fraction of the cost of the financial crisis-related fines paid by just one Wall Street institution. But, apparently, that’s not yet obvious on Capitol Hill. Though they are treated like punching bags in the House and Senate, international organizations are an immensely good deal for the American taxpayer, and it’s time that a cost-conscious Congress woke up to that fact.

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