Reaction Paper:

Financing
POLI 562D: KATHARINA COLEMAN
JUNGROAN LIN
POLI 562D REACTION PAPER: FINANCING Jungroan Lin
Prof. Katharina Coleman 2017-10-26

Introduction

When attempting to illuminate the reasons for organizational success and failure, many preach

the catchphrase: follow the money; the domain of peacekeeping does not exempt itself from

this mantra. Issues of financing are at the core of why many peacekeeping policy options are

simply not possible. This literature review presents a reaction to a set of publications focusing on

the financing of peacekeeping or rather why existing models of financing consistently fall

short. In exploring this theme of failed financing, this paper attempts to capture three of the most

significant arguments repeated across the literature which possibly explain the failures: economic

inefficiency, political unfeasibility, and accountability gaps.

Financing, the issues, and why it is so hard to get right

Katharina Coleman suggests that good United Nations [U.N.] peacekeeping financing should

incentivize timely state contributions of highly effective peacekeeping units willing to make full

use of their capabilities. (2014, 1) Simultaneously, she argues that the existing system falls short

of this goal and there is no shortage of literature reaffirming this statement from both the

academic world and from official publications by international organizations. Consistently

brought up are the weaknesses in financial incentives for troop contributing countries [TCC] and

police contributing countries [PCC]. In addition to outdated valuations, the generic per-unit basis

of valuation for troops and the generic market value and estimated useful life for equipment

systems of costing incentivize contributors to give the poorest quality product whenever

possible, since there is no incentive for contributing specialized troops or equipment which may

have been better suited for the task (Coleman, 2014).

POLI 562D REACTION PAPER: FINANCING Jungroan Lin
Prof. Katharina Coleman 2017-10-26
Peacekeeping financing has also failed due to virtually ignoring readiness as an important issue.

There simply exists no financial inventive for states to invest in readiness, since they are only

reimbursed for participation cost (Ibid., 10). The United Nations assumption that the

contributing state has already purchased the item for national use, and in doing so has effectively

bought a certain number of usage months (Ibid., 17) completely ignores the fact that the

opportunity cost of diverting the troops or equipment, which are a scarce resource nationally, and

must be first and foremost sufficient for civil emergencies and disaster readiness (Fetterly, 2006,

397). The reality is that states usually need to get additional equipment to their existing

inventory in order to meet the peacekeeping need (Coleman, 2014, 17).

Peacekeeping costs were historically covered by the U.N regular budget, split up between

members as an annual cost (Khanna et al., 1998, 179). While this established amount was, and

continues to be legally binding, functionally it is subject to protest when members withhold

payments (Ibid., 180). Since, alternative sources of funding have become increasingly important,

especially as the North Atlantic Treaty Organization [NATO] and regional actors such as the

African Union [AU] have emerged with increasing scope, each bringing to the field their own set

of financial structures and subsequent needs.

Beyond the difficulty of allocating financial resources picking the best winners and losers in

each financial package - critiques of peacekeeping financing include the lack of Pareto-

efficiency, the political divisiveness of financing debates, and even the mere inability to hold

those who should pay accountable. The heterogenous makeup of the United Nations, as well as

the political cleavages with competing interests, further complicate this issue by creating the

possibility for an even greater set of perverse economic incentives, political cohorts, and

opportunities to shirk responsibility altogether.

POLI 562D REACTION PAPER: FINANCING Jungroan Lin
Prof. Katharina Coleman 2017-10-26

Economic Inefficiency

While all of the literature discussed in the paper agrees that work needs to be done on

peacekeeping financing, the ways in which they reach the conclusion of brokenness are quite

different. Khanna, Sandler and Shimizus (1998) work on financial burden-sharing from 1976-

1996 and Shimizu and Sandlers (2002) paper discussing the same topic (and to some extent as a

follow-up to the former) from 1994 to 2000 approach the issue of financing from an economic

lens, specifically drawing our attention to the free rider phenomenon that because a

contributing nation finds the equilibrium of their own marginal cost and marginal benefit, they

will fail to include the marginal benefit for all other nations, leading to many nations who benefit

and thus should be contributing, but do not. These authors conceptualize peacekeeping as a

public good due to its nonexcludable and nonrival nature ones nations gains from world

peace do not detract from another nations available gains and at the same time, world stability

and security benefits everyone (Khanna et al, 1998, 181). Additionally, they hypothesize that

wealthier nations contribute a disproportionately large financial burden enhance the free riding

phenomenon, and will only continue to grow in disproportionality as rapid deployment is in

greater demand, leading the more U.N. leverage of NATO.

By looking at the correlation of GDP with peacekeeping assessments, as well as actual payments,

they conclude that pre-1990, there was no evidence of disproportionate burden sharing (Ibid.),

however, 1990 onward the presence of no-UN-led missions is leading to an enhanced

disproportionate burden-sharing by NATO allies. (Shimizu and Sandler, 2002, 140) The

confirmation of this hypothesis is not particularly surprising, especially once having defined

peacekeeping as a public good, which is almost never pursued in a pareto-efficient manner

POLI 562D REACTION PAPER: FINANCING Jungroan Lin
Prof. Katharina Coleman 2017-10-26
(Fetterly, 2006, 398). However, they still leave open the question of whether or not this is

normatively an issue. Why should financially wealthier countries not pay more in terms of

money, especially when considering that their opportunity costs for contributing troops or police

are much greater on balance? Additionally, wealthier nations have communicated their

preference to take on a money-contributing role, rather than a troop or police contributing one,

exemplified by the 2013 State of the Union address stating that U.S. troops will continue

coming home at a steady pace as Afghan security forces move into the lead [and] our mission

will change from combat to support. (Belasco, 2004, 2)

Political unfeasibility

To some extent, we can look to the political factors as to why a more balanced set of contributing

nations may be preferred, beyond the reason of Pareto-optimality. One of the key inhibitors of

financial reform in the United Nations is the political debate between cleavages, especially seen

between developing nations and developed nations, who have vastly different incentives when it

comes to adjusting financial measures such as per unit funding for troops (Coleman, 2017, 109).

Nations pre-existing financial commitments to peacekeeping could be drastically altered should

financing reforms occur; thus, political debate is inevitable.

Coleman identifies three key factors of success to financing reform: the intrinsic quality of a

proposal, the extent to which it inflames pre-existing divisions, and the ability of a proposal to

motivate specific coalitions of states to exert political pressure (2017, 105). Additionally, she

brings forward three proposals for financing reform, none of which are able to satisfy all three

success factors, highlighting the difficulty of finding a reform that is grounded in merit, does not

inspire fiery debate, yet still has a group of nations to champion the initiative. Especially when
POLI 562D REACTION PAPER: FINANCING Jungroan Lin
Prof. Katharina Coleman 2017-10-26
considering the former two criteria, it becomes evident that reform that garners enough interest

for championing nations would not inspire heavy political debate, given the divergence of

interests between developing and developed countries from a financial perspective.

Accountable for assessments?

In addition to the political and economic analyses of why peacekeeping financing is so difficult,

a classic public administration problem of implementation plagues the U.N. budgeting process.

Even once annual assessments of contributions have been made, high levels of arrears and late

payments of Member States are present (AU Peace Fund, 2016, 4). When designing financing

reform in the realm of peacekeeping, policymakers are faced with the classic challenge of the

level of compliance of members states in making timely and full contribution. (Amani Africa,

2017, 9) This issue is not isolated to the United Nations, but also a key factor in the financing

problem in the African Union.

In terms of current accountability measures in the United nations, members only lose voting

ability after payments have been in arrears for two full years of assessments (Shimizu and

Sandler, 2002, 127). This in itself introduces economic incentives to not pay up, especially when

considering the effects of inflation. Frankly, political pressures have been nonexistent due to the

virtually universal incentive to shirk payments. When looking at the African Union in particular,

this accountability gap may be underpinned by a simple financial inability to pay; while some

countries have prospered economically, many are still in developing stages of nation building

and do not necessarily have the capital, nor the economic stability to consistently contribute.

While establishing a goal such as the 25% marker of peace related activities by 2020 set by the

African Union Assembly may in theory ameliorate some of the political and economic problems
POLI 562D REACTION PAPER: FINANCING Jungroan Lin
Prof. Katharina Coleman 2017-10-26
brought up earlier in this paper, the actual implementation of it may be extremely difficult. The

reports claim that this estimate would be the realistic one in the current circumstances, it fails

to address the accountability gap.

An Impossible Trinity?

A noticeable trend across peacekeeping financing is a sort of emergent impossible trinity.

Beyond the stated case of Colemans proposals for peacekeeping financing reform, other

impossible trinities are evident. When looking at financing through the three contributing factors

to failed financing in this paper economic reasoning, political debate, and accountability gaps

it is often a feasible task to address two of them, but trying to loop in a third becomes incredibly

difficult. A policy that is economically efficient and politically saleable may be virtually

implement at the ground level. Similarly, many proposals strive towards more economically

sound reasoning while having a clear implementation plan, such as the separation of special

mission funding from regular budgeting, but then spark incredibly heated political debate

between developed states and developing states.

Concluding Thoughts

A shared theme across this set of literature in peacekeeping financing is undoubtedly the extreme

difficulty of creating robust frameworks that actually achieve the goals of good financing. The

wicked problem of financing in this case is accentuated by difficulties of efficiently allocating

the public good of peacekeeping, political contention between parties with drastically different

incentives, and by implementation barriers particularly characterized by accountability gaps.

Even the framing of this problem has proven to be an incredibly difficult task with and has
POLI 562D REACTION PAPER: FINANCING Jungroan Lin
Prof. Katharina Coleman 2017-10-26
attracted a diverse set of approaches, all of which have offered comparatively better solutions to

the status quo in theory, but without any absolute guarantees. While partial solutions are aplenty,

finding a comprehensive and holistic solution to a single problem so far has been difficult

through any frame. Often, it appears as though the available solutions present an impossible

trinity, where all factors can be satisfied except one. Although, with the United Nations, perhaps

two-thirds is just enough.

POLI 562D REACTION PAPER: FINANCING Jungroan Lin
Prof. Katharina Coleman 2017-10-26
References

Amani Africa, Financing peace and security in Africa: Breakthrough in increased African
ownership? Amani Africa Report No. 2 July 2017.
AU Peace Fund, Securing Predictable and Sustainable Financing for Peace in Africa, August
2016, available at www.peaceau.org/uploads/auhr-progress-report-final-020916-
withannexes. pdf.
Belasco, Amy, The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations
Since 9/11 CRS report 7-5700 8 December 2014, Summary pp.2-3.
Coleman, Katharina P., The Political Economy of UN Peacekeeping: Incentivizing Effective
Participation, Providing for Peacekeeping -7 (2014), New York: International Peace
Institute, pp. 1-23.
Coleman Katharina P., Extending UN Peacekeeping Financing Beyond UN Peacekeeping
Operations? The Prospects and Challenges of Reform Global Governance 23 (2017), pp.
101120.
Fetterly, Ross, A Review of Peacekeeping Financing Methods, Defence and Peace Economics,
17:5(2006), pp. 395-411, http://dx.doi.org/10.1080/10242690600888189.
Khanna, Jyoti, Todd Sandler and Hirofumi Shimizu, Sharing the Financial Burden for U.N. and
NATO Peacekeeping, 1976-1996 Journal of Conflict Resolution 42:2 (1998), pp. 176-
195.
Shimizu, Hirofumi and Todd Sandler. (2002). Peacekeeping and Burden-Sharing, 1994-2000.
Journal of Peace Research. 39(6), 651-668.
UN, Report of the Secretary-General on options for authorization and support for African Union
peace support operations, S/2017/454, 26 May 2017.