As the Trump administration slashes funding and exits multiple international bodies over criticism that the U.N. has failed to promote U.S. interests, the United Nations is warning it could face a cash crisis by July. 

In a Jan. 28 letter from U.N. Secretary-General António Guterres to ambassadors, he cited record unpaid dues and rigid budget rules that have left the organization exposed.

Guterres said the U.N. is trapped in a "Kafkaesque cycle" in which rigid budget rules force it to return "unspent" funds even when those contributions were never paid. He said outstanding dues reached a record $1.568 billion at the end of 2025 and that collections covered only 76.7% of assessed contributions, leaving the organization dangerously exposed.

Unless collections "drastically improve," the secretary-general warned, the U.N. will not be able to fully implement its 2026 budget and could face a liquidity crisis by mid-year.

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A senior diplomatic source told Fox News Digital that the secretary-general himself bears significant responsibility for the deepening crisis, arguing that warning signs had been visible long before the current shortfall.

According to the source, major contributors had been pressing for efficiency and reform for years, yet meaningful action was delayed. When reforms were eventually introduced, the source said, they were applied broadly rather than through targeted cuts in areas where real savings were possible, harming even U.N. bodies considered central to the organization’s mission. "He is going to go down as the worst secretary-general in the history of the U.N.," the source said.

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The warning from Guterres comes as the United States, the world body’s largest contributor, has cut voluntary funding to multiple U.N. programs and declined to make some required payments, deepening the cash crunch described in the secretary-general’s letter.

Broader U.S. foreign assistance cuts under the Trump administration’s foreign policy realignment. In January 2026, the United States formally withdrew from the World Health Organization and began exiting dozens of international bodies, including multiple U.N. entities, citing misalignment with American priorities.

The funding squeeze has already forced the United Nations to tighten spending across several agencies. Separate Reuters reporting shows that U.N. bodies, including the World Food Programme and refugee agencies, are preparing layoffs and program reductions as overall contributions fall to the lowest level in a decade.

Hugh Dugan, former National Security Council special assistant to the president and senior director for international organization affairs, told Fox News Digital that the current turmoil reflects long-standing structural weaknesses rather than a sudden collapse.

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"We’ve heard this before," Dugan told Fox News Digital, referring to repeated warnings from U.N. leadership over cash shortfalls.

Dugan said the organization has struggled for decades with inconsistent revenue and outdated financial practices, arguing that alarmist messaging is unlikely to restore donor confidence without visible internal reforms.

He said Guterres, who has roughly 11 months remaining in office, appears focused on ensuring the institution does not close on his watch.

"The doors will remain open, maybe just, but that’s his legacy," Dugan said.

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Asked about President Trump’s newly announced peace board, Dugan said it should not be viewed as a competitor to the United Nations or a replacement for its charter-based system.

"I don’t see it as a replacement of the principles of the U.N.," he said, describing the initiative as operational rather than ideological.

Dugan compared it to past convening efforts such as the Clinton Global Initiative, saying it focuses on dealmaking and coordination rather than supplanting the international order.

Despite mounting criticism of its performance and finances, Dugan said the U.N. continues to hold one enduring advantage.

Referring to the annual U.N. General Assembly debate, Dugan said, "When the U.N. calls a meeting today, it’s routine to have more than 100 heads of state in the room," he said. "The power to convene is no small accomplishment."

Last week, Secretary of War Pete Hegseth released the 2026 National Defense Strategy (NDS), a Pentagon blueprint that elevates Israel as a "model ally" and translates President Donald Trump’s national security doctrine into concrete military policy.

"Israel has long demonstrated that it is both willing and able to defend itself with critical but limited support from the United States. Israel is a model ally, and we have an opportunity now to further empower it to defend itself and promote our shared interests, building on President Trump’s historic efforts to secure peace in the Middle East," the NDS states.

The document is now influencing parallel debates over the future of U.S. security assistance to Israel and whether the next Memorandum of Understanding (MOU) should continue delivering traditional U.S. military aid to Israel amid dissenting voices that portray the alliance as a burden rather than a strategic asset.

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According to the strategy, Israel proved its ability and willingness to defend itself following the Oct. 7 attacks, demonstrating that it is not a passive partner but an operational force that supports U.S. interests in the region. The strategy emphasizes empowering capable allies rather than constraining them, building on President Trump’s earlier push for regional integration through the Abraham Accords.

Jonathan Ruhe, director of foreign policy at the Jewish Institute for National Security of America, said the strategy reflects a broader American shift toward partnerships that strengthen both U.S. security and domestic industry.

"U.S. defense assistance to Israel in the MOU is spent in dollars here in America to support our industry," Ruhe told Fox News Digital. "And like in the national security strategy, it then enables Israel to go and do more to protect U.S. interests."

He said a future agreement would likely extend beyond funding alone. "A new MOU would also likely be broader and include things that are more 50-50 partnership, like joint research and development, co-production, intelligence sharing and things like that to reflect the changing partnership going forward," Ruhe said.

The strategy also highlights the importance of revitalizing the American defense industrial base, noting that allies purchasing U.S. systems help strengthen domestic production while enabling partners to shoulder greater responsibility for regional security.

Avner Golov, vice president of the Israeli think tank Mind Israel, said the document makes clear that Israel is viewed not merely as a recipient of aid: "Israel is in the fight. We are protecting ourselves by ourselves. We just need the tools to do that. And by doing so, we enhance not only America’s standing in the Middle East, but also worldwide and contribute to the American economy."

That framing comes as Israel and the United States prepare for negotiations over the next 10-year MOU, which governs U.S. military assistance to Israel. The current agreement, signed in 2016, provides $3.3 billion annually in foreign military financing, along with $500 million a year for missile defense cooperation.

The debate follows tensions during the Biden administration, when the White House paused the delivery of certain U.S. weapons to Israel in May 2024, including a shipment of 2,000-pound bombs. At the time, Netanyahu warned that Israel "will stand alone" if Washington halted weapons deliveries, reflecting concern that limits or delays in U.S. military support could undermine Israel’s readiness and deterrence. 

Experts have noted that U.S. leaders have not always approved every Israeli weapons request and that roughly 70% of Israel’s military imports come from the United States, underscoring the strategic calculus behind Prime Minister Netanyahu's recent push for greater independent production.

Golov criticized that approach, arguing it risks prioritizing optics over readiness. "I believe that is a short-term vision," Golov said. "In the long term, Israel must first be prepared for the next round of escalation. If we are not ready, we will face another war. If we are prepared, perhaps we can deter it."

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"Israel must remain the strongest army in the region, and that is also a fundamental American interest," Golov said.

Ruhe said the debate reflects lessons learned from nearly two years of war. "You’ve got this sort of topsy-turvy world now where the Israelis are saying we don’t want to take any more U.S. money, and the Americans are saying, no, you’re going to take our money," he said.

According to Ruhe, the conflict exposed vulnerabilities created by heavy dependence on U.S. supply chains and political delays.

"The war of the last two years showed that Israel can’t afford to be as dependent on the U.S. or continue to maintain the same defense partnership that it has because that creates a dependence," he said. "Israel becomes vulnerable to U.S. shortages in weapons output or politically motivated embargoes and holdups that can impact Israel’s readiness."

At the same time, Ruhe noted that Israel remains reliant on the United States for major platforms.

"Even Israel will say we’re utterly dependent on the U.S. for those big-ticket platforms," he said, pointing to aircraft such as the F-15 and F-35 that Israel has already committed to purchasing.

For that reason, Ruhe argued that maintaining stable funding under the next MOU may be the most practical path forward.

"It’s actually much easier for Congress just to go ahead and approve that money," he said, explaining that predictable funding reduces annual political battles on Capitol Hill.

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Golov said Israel’s long-term objective should not be reducing ties with Washington, but deepening them. "I don’t want to reduce dependency," he said. "I want to increase contribution to America."

He described the emerging vision as a fundamental shift in how the alliance is structured. "We are moving from a 20th-century aid model to a 21st-century strategic merger," Golov said. "Israel is the only partner that delivers a 400% return on investment without asking for a single American soldier."

Golov said the proposed framework is built around three pillars: an industrial defense ecosystem, a joint technology ecosystem and a regional ecosystem connecting Israeli innovation, Gulf infrastructure and American power.

He emphasized that maintaining U.S. security assistance during the transition period is critical.

"We need a final ten-year ‘bridge’ with the current security aid MOU," Golov said. "A sudden cut would be a dangerous signal of American retreat to our enemies and may hinder IDF preparedness."

"I don’t know who the next president of the United States will be," he added. "This is where our enemies can read it in a very dangerous way."

President Donald Trump dramatically reversed course Tuesday on a U.K. plan to transfer sovereignty of the Chagos Islands to Mauritius while warning it could jeopardize U.S. access to the Diego Garcia military base.

Trump’s reversal highlights what a defense expert called a "new Trump Doctrine" before linking the president's opposition to the Chagos deal with his Greenland push and citing fears Mauritius could later back out.

Writing on his Truth Social platform Tuesday, Trump called the U.K.’s Chagos decision "an act of great stupidity."

"Shockingly, our ‘brilliant’ NATO Ally, the United Kingdom, is currently planning to give away the Island of Diego Garcia, the site of a vital U.S. Military Base, to Mauritius, and to do so FOR NO REASON WHATSOEVER," Trump wrote. "There is no doubt that China and Russia have noticed this act of total weakness."

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"Trump has done a 180, partly because of the U.K.’s support for Denmark’s sovereign claims over Greenland and partly because of a new strategy outlined by the White House," John Hemmings, director of the National Security Center at the Henry Jackson Society, told Fox News Digital.

"These moves are linked and part of a ‘new Trump Doctrine’" outlined in November’s National Security Strategy," he explained.

"Diego Garcia is a potential threat to Beijing’s strategy to control vital shipping lanes between the oil-rich Middle East and China’s industrial heartland," he added, describing how "nearly 23.7 million barrels of oil transit the Indian Ocean every day, with the base being vital in any U.S.-China conflict over Taiwan."

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In a separate post, Trump explicitly linked the Chagos dispute to his Greenland push.

"The U.K. giving away extremely important land is an act of GREAT STUPIDITY, and is another in a very long line of national security reasons why Greenland has to be acquired," Trump wrote.

The Chagos Islands were separated from Mauritius during Britain’s decolonization process, a move the International Court of Justice ruled unlawful in 2019. 

The U.K. later agreed to transfer sovereignty while leasing Diego Garcia back for at least 99 years at a cost of at least $160 million annually.

Diego Garcia is a hub for long-range bombers, logistics and power projection across the Middle East, the Indo-Pacific and Africa. Around 2,500 personnel, mostly American, are stationed there.

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"If Mauritius were to offer the islands to China after taking de jure control, it would put immense pressure on the U.S. in the eyes of international public opinion," Hemmings explained.

"After all, once Mauritius has de jure sovereignty, it can renegotiate the lease terms or even renege on the treaty at any time it wants.

"It might also provide access to the exclusive economic zone, with all of its rich fishing grounds, to Chinese fishing fleets, adding another layer of risk to U.S. Air Force operations around the island," Hemmings said.

"At this moment, the U.S. base at Diego Garcia is thought to be secure, with Mauritius promising the U.K. (and by proxy, the U.S.) a 99-year lease, which will not, it is supposed, interfere with the operations of the air base at all. But the devil is in the details."

Fox News Digital has reached out to the White House for comment.