VZCZCXYZ0025
PP RUEHWEB

DE RUCNDT #1847 2631816
ZNR UUUUU ZZH
P 201816Z SEP 06
FM USMISSION USUN NEW YORK
TO SECSTATE WASHDC PRIORITY 0253

UNCLAS USUN NEW YORK 001847 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: AORC KUNR UNGA
SUBJECT: UN SCALE OF ASSESSMENT: AMBASSADORIAL LEVEL 
MEETING WITH THE EUROPEAN UNION PRESIDENCY 
 
 
¶1.  Summary. On September 15, Ambassador Wallace met with 
Ambassador Tom Gronberg (Austria) who will negotiate the 
scale of assessment this fall on behalf of the European 
Union. Wallace and Gronberg engaged in a state of play 
discussion on US and EU positions (both of which remain under 
discussion), as well as the Russia/China problem, 
possibilities for moving forward with a common approach, and 
timing of Fifth Committee consideration of the scale.  End 
summary. 
 
¶2.  Ambassador Gronberg indicated that the New York-based EU 
delegations would be meeting later in the day to try to reach 
a preliminary group position on the scale methodology for 
2007-2009.  Should the group succeed in doing so, a decision 
would still need to be taken in capitals, with September 25 
set as a tentative deadline for agreement.  Gronberg 
indicated that while there were divergent positions in the 
EU, particularly among the older and larger contributors and 
the newer and smaller ones (whose rates will likely increase 
under any formulation), he believed the group was close to 
consensus. (Comment:  Upon Gronberg's comment and out of his 
view, the Finnish Fifth Committee expert attending with him 
shook her head and indicated that this was very unlikely. End 
comment.) 
 
¶3.  A common denominator for all EU countries was their 
support for a 6-year base period.  He reminded Ambassador 
Wallace that the EU collectively is paying 10 per cent more 
than their collective shares of world gross national income 
(GNI) and all countries are concerned that they are faced 
with further increases in the 2007-2009 scale.  Wallace 
expressed empathy for the EU position on the base period, 
while reminding Gronberg that there has been a trend to 
decrease the length of the base period and the United States 
has concerns about reversing the current trend.  The goal, he 
pointed out, should be to increase the rates of "other" 
Member States.  A 3 year base period would assist in this 
regard because it would more adequately reflect the capacity 
to pay of large developing countries whose economies have 
grown considerably in recent years.  In short, the United 
States would have difficulty supporting a 6 year base period. 
 Both agreed that a good option could be to explore a sliding 
gradient. 
 
¶4.  Ambassador Wallace informed Gronberg that the United 
States is actively working on its proposal and also hopes to 
have a position agreed by September 25.  He reminded Gronberg 
that the United States remains concerned about past actions 
by the EU with respect to the ceiling rate; indicated that 
for many reasons (not least domestic congressional pressure) 
the US would not be in a position to agree to any increase in 
rate; and inquired of Gronberg on the EU's latest position on 
the ceiling.  Gronberg conveyed that there was no firm EU 
position on the ceiling, and that some EU countries view the 
ceiling as linked to US payment of arrears.  Ambassador 
Wallace underscored that keeping the ceiling at its current 
level was a U.S. redline. 
 
¶5. Ambassador Wallace raised the issue of purchasing power 
parity, highlighting its beneficial effects for the EU 
countries' rates, as well as its utility in bringing major 
developing country economies more in line with their capacity 
to pay.  Gronberg believed that the EU may take a positive 
view on moving in the direction of PPP and that a discussion 
now on PPP was useful to at least lay the groundwork for 
future scale discussions in coming years.  Ambassador Wallace 
agreed and emphasized that with the rapidly changing world 
economy it was important to have methodologies like PPP 
discussed. 
 
¶6.  With respect to the Chinese and Russian rates, Gronberg 
said he had met with both delegations earlier in the summer 
and understood that the Japanese proposal for a P5 floor 
"would not fly".  However, he did think that both countries 
would consider voluntarily increasing their rates and that it 
would be important for others to help them to commit to this. 
 
¶7.  Lastly, timing of the Fifth Committee deliberation was 
discussed.  The scale agenda item is expected to be 
introduced on October 9th so the Committee can take an early 
decision on Article 19 exemptions and hear from the Chair of 
the Committee on Contributions.  The EU will have a statement 
prepared for the 9th, but may not be in a position to engage 
substantively on elements of the methodology at that time. 
In concluding the meeting, Ambassador Wallace reiterated the 
USG desire to work closely with the EU as the issue proceeds 
this fall. 
 
BOLTON