167. This is my first opportunity to report to Member States on the work of the Organization. Although I have served the United Nations for more than 30 years, never before has it been my responsibility to form a considered judgement about its overall functioning and efficacy. Having done so now I find that, all in all, I am prudently optimistic.

168. As documented in the preceding pages, the United Nations has taken considerable strides in recent years to adapt to the far-reaching changes in its external environment. No sector of its activities has remained unaffected. Indeed, within the framework of principles and missions enunciated by the Charter, entirely new programme areas and work modalities have been initiated and others redefined as the needs of the international community have evolved. Moreover, despite the numerous constraints under which they operate, and notwithstanding occasional exceptions, the inventiveness of the Organization's senior managers is commendable and the dedication of its staff a source of pride.

169. Much yet needs to be done, however. In chapter II of this report, I indicated some of the desirable and necessary steps ahead in the various substantive programme areas and support structures. Here I wish to draw attention to critical overarching issues that affect the future performance of the Organization.

170. The fiscal precariousness of the United Nations is unprecedented and debilitating. For too many years we have been forced to "borrow" from the peacekeeping account to cover regular budget shortfalls caused by non-payment of dues by some Members. That is to say, we have not reimbursed Member States for the cost of troops they provided and matériel they supplied in good faith and pursuant to Security Council resolutions. Now that source, too, is nearing depletion. I hope and trust that we shall soon be able to put this problem behind us, and that in the future all Member States will fulfil their legal obligations to the Organization -- and one another -- by paying their dues in full and on time.

171. Apart from the fiscal problems caused by arrears, as I noted in the opening section of this report long-term shifts at the national and international levels alike imply that fundamental change is in store for the workings of intergovernmental organizations. The resources available to such organizations, including the United Nations, are declining relative to the magnitude of the tasks they face and to the capacities of other actors, especially the private sector. What is more, the very concept of intergovernmentalism as we know it is being altered as a result of the redefinition of the role of government and the means of governance now under way throughout the world.

172. In this transformed context, the Organization's past pattern of incremental adaptations will not suffice. To succeed in the new century, the United Nations must unleash its own major resource: the complementarities and synergies that exist within it. In other words, the United Nations must undergo fundamental, not piecemeal, reform. Three related steps are imperative. Each requires the support of Member States.

173. The first is to create the appropriate Secretariat structures that will permit the Organization to act as one within and across its diverse areas of activities. Acting as one does not mean moving in lock step. Nor does it imply denying the specific attributes of any component part. It does require that the Organization be capable of deploying its constituent units strategically while avoiding overlap and duplication, let alone competition, among them. Many of my proposals for reform are designed to achieve this aim: the position of Deputy Secretary-General, the Senior Management Group, the Strategic Planning Unit, four sectoral Executive Committees, and the United Nations Development Group, to cite the most important of them.

174. The second essential step is to reconfigure the balance of functions between the Organization's legislative bodies and the Secretary-General. Largely for reasons relating to the cold war practice of bloc politics, a large number of the rigidities with which the Organization is afflicted are, in fact, mandated. Member States demand and deserve accountability, but the Secretariat also needs flexibility to get its job done in the most cost-effective manner. The current situation serves neither party well. Several of my reform proposals seek to redress this problem, including recommendations on streamlining the agenda and the deliberations of the General Assembly, instituting sunset provisions for new mandates, and most importantly moving towards a results-based system of budgeting.

175. Finally, even where the best of systems are in place, people matter. The United Nations staff is a precious resource, which in some measure has been squandered by rules and regulations that impede rather than serve the effective performance of its work. The Organization needs a functioning career development programme, meaningful criteria and evaluations of performance coupled with real incentive and disincentive systems, as well as a corporate culture that animates and unifies those who serve it. I look forward to joining Member States in devising personnel policies that will help bring these conditions about.

176. As we approach the new century, the international community has some way to go to realize the hopes and commitments of the Charter of the United Nations but, when we measure our progress against the state of the world a century ago, we can only be impressed by how far we have come. Indeed, one of the most significant differences between that fin de siècle and this is precisely the fact that international organizations now exist to remind, and enable, the world to do better. That is why it is our solemn and historic obligation to make the United Nations the most effective instrument possible for the achievement of peace and progress -- for our children, and for theirs.

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