When U.N. Secretary-General Ban Ki-moon and Russian President Vladimir Putin met in Sochi, Russia, they were supposed to discuss the civil war in Syria. But the Russian leader -- joined by his top diplomat, Sergei Lavrov, and defense secretary, Sergei Shoigu -- suddenly changed the subject to more mundane matters. A series of U.N. reforms aimed at streamlining billions of dollars of spending on U.N. peacekeeping was posing a threat to Russia's commercial interests. Putin and his national security team politely but firmly pressed the U.N. leader to back off, according to several senior U.N.-based sources briefed on the meeting.
The high-level intervention on U.N. spending marked only the latest example of Russia flexing its diplomatic muscle to protect its commercial position at the United Nations. For much of the past decade, Russia has been engaged in a systematic effort to stymie attempts to root out corruption in U.N. spending. The Russians have pushed out U.N. reformers. They've defanged watchdogs. And they've blocked internal budget reforms aimed at saving costs.
Russia's zeal for turning back reform has been felt most powerfully in the U.N.'s leasing of aircraft -- a $1 billion a year market -- that provide transport for the world's second-largest expeditionary force. An examination of U.N. procurement practices in the air-transport sector -- drawing on dozens of interviews with U.N.-based officials and diplomats, as well as a review of internal U.N. communications and audits -- suggests that Russia has enjoyed unfair advantages, including contracts that all but demand that the United Nations lease Russia's Soviet-era aircraft.
The dispute provides a textbook example of the difficulties of implementing basic financial reforms at the United Nations when major powers have conflicting commercial interests in the outcome. As such, the secretary general and key countries have been unwilling to openly confront Russia because its cooperation is required on a wide range of critical issues at the United Nations.
Since the end of the Cold War, Russian entrepreneurs have turned the Soviet-era air fleet into a thriving business, supplying the U.N. and other international agencies with low-cost surplus aircraft, including Antonov transport planes and Mi-8 and Mi-26 helicopters. The low-cost aircraft -- which Russian factories continue to produce -- have largely dissuaded Western air operators from competing for U.N. contracts, which must go to the lowest bidder. Russian companies now account for about 75 percent of all contracts for commercial helicopters, the most lucrative segment of U.N. peacekeeping's multibillion-dollar marketplace.
But the near Russian monopoly is facing challenges from neighbors such as Ukraine, which produces similar helicopters. The United States and European powers like Germany, France, Italy, and Spain are also looking for new business opportunities as the NATO mission in Afghanistan winds down. Those countries have privately raised concern with the U.N. about the integrity of its procurement process. They claim that the U.N.'s purchasing system is rigged to favor Russian aircraft; its bidding specifications -- for instance, requirements of seating capacity for more than 20 passengers -- are tailored to exclude most competitors. "Procurement is done in a way which directly specifies a Russian helicopter," said one senior European diplomat. "We have asked for more transparency; we want to change to a new [bidding] system as soon as possible."
Requests for helicopters and transport planes originate from the U.N.'s 15 peacekeeping missions and are routed through headquarters' air-transport section before being sent on to the U.N. procurement department, which invites companies to bid. Western diplomats have expressed concern that many of the key players -- including a Ukrainian procurement chief and a Russian aviation specialist -- come from countries with a major stake in the aircraft market.