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UNCLAS USUN NEW YORK 001163 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: AORC KUNR UNGA
SUBJECT: UN FINANCES: G77 RAISES LIFTING OF SPENDING CAP IN 
FIFTH COMMITTEE 
 
REF: USUN 1071 
 
¶1.  SUMMARY: The normally routine discussion on the UN 
financial situation turned heated on June 1st when the G77 
raised the issue of lifting the spending cap and linked it to 
late payments by some Member States.  Delegations stated that 
the cap had been imposed on the Organization by a few Member 
States and that those same Member States were not meeting 
their financial obligations to the UN.  The discussion ended 
for the day with a request to resume discussion at a later 
stage.  END SUMMARY. 
 
¶2.  As reported in reftel, UN Controller Warren Sach made his 
presentation on the UN financial situation on May 24th.  The 
standard practice has been for the Committee's discussion on 
this presentation to occur a week after the Controller's 
presentation, in a formal session, and not to hold informal 
discussions.  The routine discussion was instead overtaken by 
a discussion on the spending cap and the financial 
obligations of Member States. 
 
¶3.  South Africa, on behalf of the G77 and China, noted that 
it was more imperative than usual to reflect on the financial 
situation of the UN given the spending cap that was 
"regrettably imposed on the Organization."  The statement 
also reiterated the G77 position that the spending cap will 
be automatically lifted when the Secretary-General requests 
such an action and that there was no link between reform and 
the budget, something that was reinforced by G77 Ministers in 
Malaysia during their meeting the week before.  The South 
African statement also noted concern that it appeared that 
some were linking the withholding of payments to reform and 
it was the same Member States that were not meeting their 
financial obligations to the UN that have imposed the cap on 
the budget. 
 
¶4.  India made a statement that the spending cap was imposed 
by the U.S., Japan and, to some extent, the UK.  The 
statement also noted that others who have not paid their 
contributions do not have a right to determine how India's 
contribution, made in full and on time, can be used.  The 
Indian delegate then asked for informal consultations to be 
held on this agenda item. 
 
¶5.  Pakistan stated that financial obligations should not be 
used as a bargaining chip for reform.  The statement also 
indicated that the lack of payment by some Member States 
undermines the ability of the UN to implement mandates, 
especially those of concern to developing countries, and that 
the policy of withholding payments was incomprehensible. 
Reform goes hand in hand with financial obligations and it 
was contradictory to push for reform and not pay and this was 
actually the only area that needed reform. 
 
¶6.  Jamaica noted that the G77 opposed the cap during 
discussions on the budget in December, but had been under 
significant political pressure to agree to a budget by 
consensus.  The delegate then stated that the cap was 
blackmail.  A number of other G77 delegations, including 
Egypt (calling the budget resolution "consensus at 
gunpoint"), Malaysia, Bangladesh, China, and Nigeria 
supported the statement by South Africa and expressed concern 
over the spending cap and late payments. 
 
¶7.  In response to comments made by the G77, the EU (Austria) 
and USDel reminded the Committee that the budget resolution 
had been adopted by consensus.  They also questioned the need 
for informals on this agenda item (COMMENT: Informal meetings 
are usually convened for the purpose of negotiating a 
resolution.  The Fifth Committee has not held informals on 
this item for years. END COMMENT). 
 
¶8.  Sach, in response to questions posed, clarified that the 
spending cap was related to the budget (agenda item 124) and 
not the UN financial situation (agenda item 126, currently 
under discussion).  He also stated that the UN had enough 
spending authority to get through the end of June and perhaps 
early July. 
 
BOLTON