VZCZCXYZ0028
PP RUEHWEB

DE RUCNDTA #2166 3211506
ZNR UUUUU ZZH ZUI RUEWCSE3655 3211419
P 171506Z NOV 06
FM USMISSION USUN NEW YORK
TO RUEHC/SECSTATE WASHDC 0000
INFO ECOWAS COLLECTIVE
MAGHREB COLLECTIVE
RUEHZO/OAU COLLECTIVE
SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHBJ/AMEMBASSY BEIJING
RUEHBY/AMEMBASSY CANBERRA
RUEHCV/AMEMBASSY CARACAS
RUEHKA/AMEMBASSY DHAKA
RUEHGE/AMEMBASSY GEORGETOWN
RUEHHE/AMEMBASSY HELSINKI
RUEHKL/AMEMBASSY KUALA LUMPUR
RUEHKU/AMEMBASSY KUWAIT
RUEHLS/AMEMBASSY LUSAKA
RUEHMO/AMEMBASSY MOSCOW
RUEHNE/AMEMBASSY NEW DELHI
RUEHOT/AMEMBASSY OTTAWA
RUEHSA/AMEMBASSY PRETORIA
RUEHGP/AMEMBASSY SINGAPORE
RUEHKO/AMEMBASSY TOKYO
RUEHVN/AMEMBASSY VIENTIANE
RUEHWL/AMEMBASSY WELLINGTON
RUEHUB/USINT HAVANA

UNCLAS USUN NEW YORK 002166 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: AORC UNGA KUNR
SUBJECT: UN FINANCES: IMPROVING THE FINANCIAL SITUATION OF 
THE UNITED NATIONS 
 
REF: A. USUN 2127 
     ¶B. A/61/556 
 
¶1.  SUMMARY: ON NOVEMBER 9 AND 15TH , THE FIFTH COMMITTEE 
(ADMINISTRATIVE AND BUDGETARY) RESUMED CONSIDERATION AND 
DISCUSSION ON IMPROVING THE FINANCIAL SITUATION OF THE UNITED 
NATIONS.  CONTROLLER WARREN SACH HAD PREVIOUSLY (REFTEL) 
EMPHASIZED THE FOLLOWING THREE POINTS IN HIS STATEMENT 
PERTAINING TO REGULAR BUDGET, PEACEKEEPING AND SCALE OF 
ASSESSMENTS: 1) THE UN WILL HAVE TO BORROW 200 MILLION 
DOLLARS FROM ITS RESERVE ACCOUNT IF OUTSTANDING ASSESSMENTS 
ARE NOT PAID; 2) THERE WILL BE NO REIMBURSEMENT FOR TROOP 
CONTRIBUTING COUNTRIES IN THE FOURTH QUARTER, AND; 3) THE UN 
WILL FACE A FINANCIAL CRISIS IF A SCALE IS NOT ADOPTED BY THE 
END OF THE YEAR.  DURING THE DEBATE 16 FORMAL STATEMENTS WERE 
DELIVERED, MANY FOCUSING ON THE OUTSTANDING DUES OWED BY THE 
U.S., THE GROWING PROJECTED DEBT OF THE UN (AND HOW THAT WILL 
AFFECT THE ABILITY OF MEMBER STATES TO PROVIDE TROOPS AND/OR 
EQUIPMENT TO PEACEKEEPING MISSIONS), THE FINANCIAL POSITION 
OF TRIBUNALS AND THE CAPITAL MASTER PLAN, AND THE BURDEN OF 
UN ASSESSMENTS ON THE DEVELOPING WORLD.  END SUMMARY. 
 
---------------------------------------- 
STATEMENTS ON THE UN FINANCIAL SITUATION 
---------------------------------------- 
 
¶2.  DURING FORMAL STATEMENTS ON THE FINANCIAL SITUATION OF 
THE UN, SEVERAL MEMBER STATES FOCUSED ON PAYMENT OF 
ASSESSMENTS, THE GROWING PROJECTED DEBT OF THE ORGANIZATION, 
AND THE BURDEN OF UN ASSESSMENTS ON THE DEVELOPING WORLD. 
SOUTH AFRICA (ON BEHALF OF THE GROUP OF 77 AND CHINA) STATED 
THAT THE UN MIGHT FACE A FINANCIAL CRISIS UNLESS THE 
ORGANIZATION'S LARGEST CONTRIBUTOR, THE U.S., WHICH ACCOUNTS 
FOR 80 PERCENT OF THE OUTSTANDING DUES TO THE REGULAR BUDGET, 
PAID ITS DUES IN FULL TO ALL ACCOUNTS.  IF NOT, THE 
ORGANIZATION WOULD HAVE TO BORROW OVER 200 MILLION FROM THE 
RESERVE ACCOUNT BY THE END OF DECEMBER.  THE G77 NOTED THAT 
THE ORGANIZATION WOULD BE UNABLE TO "MAINTAIN THE MOMENTUM OF 
THE WORLD SUMMIT" UNLESS MEMBER STATES ACTED ON THEIR CHARTER 
OBLIGATIONS. 
 
¶3.  SOUTH AFRICA RECALLED THAT THE RATIONALE FOR REDUCING THE 
CEILING FOR THE MAIN CONTRIBUTOR TO 22 PERCENT HAD BEEN TO 
FACILITATE PAYMENT OF ARREARS TO IMPROVE THE UN'S FINANCIAL 
SITUATION.  THERE WERE INDICATIONS THAT THE RATIONALE HAD NOT 
BEEN MET AND THAT THE MAIN CONTRIBUTOR HAD NOT HONORED ITS 
UNDERTAKINGS, SHE SAID.  THE SOUTH AFRICAN DELEGATE CONCLUDED 
BY EXTENDING HER SYMPATHETIC UNDERSTANDING TO MEMBER STATES 
UNABLE TO MEET FINANCIAL OBLIGATIONS DUE TO SOCIAL AND 
ECONOMIC CONDITIONS BEYOND THEIR CONTROL.  CUBA ALSO CALLED 
ON THE U.S. BY NAME TO COMPLY WITH THE UN CHARTER TO PAY ITS 
ARREARS ON-TIME AND IN FULL.  THE CUBAN DELEGATE LINKED THEIR 
DIFFICULTIES TO PAY TO THE EMBARGO AND RESERVED HIS RIGHT TO 
COMMENT ON THIS TOPIC UNDER OTHER AGENDA ITEMS (PRESUMABLY 
SCALES).  SUPPORTING THE STATEMENT BY THE G77 AND CHINA WERE 
GUYANA (ON BEHALF OF THE RIO GROUP), LAOS (ON BEHALF OF 
ASEAN), KUWAIT, BANGLADESH, MALAYSIA, VENEZUELA, INDIA, 
ZAMBIA, IRAN AND SINGAPORE. 
 
¶4.  FINLAND (ON BEHALF OF THE EUROPEAN UNION) NOTED THE 
"VICIOUS CYCLE" OF PLANNING MANDATES AND THE INABILITY TO 
ADEQUATELY EXECUTE THEM BECAUSE OF SEVERE CASH-FLOW 
DIFFICULTIES.  NOTING THE 2.5 BILLION DOLLARS IN OUTSTANDING 
PAYMENTS FOR PEACEKEEPING OPERATIONS, FOR EXAMPLE, THE EU 
REITERATED ITS SUPPORT FOR CONSOLIDATION OF PEACEKEEPING 
ACCOUNTS TO IMPROVE THE LIQUIDITY OF INDIVIDUAL MISSIONS, 
FACILITATE THE PROMPT REIMBURSEMENT OF TROOP CONTRIBUTING 
COUNTRIES AND TO MAKE ASSESSMENT FEWER AND MORE PREDICTABLE. 
 
 
FINLAND CONCLUDED BY ASKING ALL MEMBER STATES TO "TAKE THEIR 
OBLIGATIONS TO THE SECRETARIAT AS SERIOUSLY AS THEY EXPECT 
THE SECRETARIAT TO TAKE THEIRS."  THE EU NOTED THAT 70 MEMBER 
STATES WITH OUTSTANDING DUES OWED A TOTAL OF 661 MILLION, 
WITH OVER 95 PERCENT OWED BY FOUR COUNTRIES.  THE TOTAL 
AMOUNT OUTSTANDING FOR PEACEKEEPING AT THE END OF OCTOBER HAD 
BEEN OVER 2.5 BILLION, WHICH HAD A NEGATIVE IMPACT ON THE 
EFFECTIVENESS OF SUCH OPERATIONS.  THE ORGANIZATION'S DEBT TO 
CONTRIBUTORS OF TROOPS AND EQUIPMENT WERE EXPECTED TO 
INCREASE TO MORE THAN 1 BILLION DOLLARS, DUE TO THE SAME 
DELAY IN THE RECEIPT OF ASSESSED CONTRIBUTIONS. 
 
¶5.  NEW ZEALAND (ON BEHALF OF CANZ) WAS CONCERNED ABOUT THE 
MIXED FINANCIAL INDICATORS, THE UNCERTAIN POSITIONS OF THE 
REGULAR AND PEACEKEEPING BUDGETS, AND THE HIGH DEGREE OF 
RELIANCE ON A SMALL GROUP OF COUNTRIES TO MEET THEIR 
OBLIGATIONS OVER THE COMING WEEKS TO ENSURE THAT THE CASH 
FLOW OUTCOME FOR 2006 WAS MANAGEABLE.  NEW ZEALAND NOTED 
THERE WERE SOME ENCOURAGING SIGNS IN THE PAST YEAR, INCLUDING 
A REDUCTION IN UNPAID ASSESSED CONTRIBUTIONS AND THE INCREASE 
IN CASH AVAILABLE FOR THE CAPITAL MASTER PLAN.  HOWEVER, THE 
NUMBER OF MEMBER STATES PAYING REGULAR BUDGET ASSESSMENTS IN 
FULL BY OCTOBER 31 HAD DROPPED FROM 130 A YEAR AGO TO 122 IN 
¶2006.  THE AMOUNT CONTRIBUTED BY SOME STATES DID NOT LESSEN 
THEIR OBLIGATION TO PAY ASSESSMENTS ON TIME, AS THE DELAY 
INJECTED SIGNIFICANT UNCERTAINTY AND RISK INTO THE UN'S 
FINANCIAL PLANNING.  CANZ BELIEVED THE RETENTION OF FUNDS IN 
CLOSED MISSION ACCOUNTS PENALIZED MEMBER STATES THAT PAID 
ASSESSMENTS ON TIME, WHICH HELPED MANAGE THE CONSEQUENCES OF 
THOSE THAT DID NOT.  CANZ LOOKED FORWARD TO CONSIDERING 
REFORM OF PEACEKEEPING FINANCES NEXT YEAR, AND REMAINED 
HOPEFUL THAT THE UN COULD FIND A MORE SOUND FINANCIAL 
FOOTING. 
 
¶6.  THE RUSSIAN FEDERATION SAID THE INFORMATION PRESENTED BY 
THE CONTROLLER SHOWED THAT ALL BUDGETS OF THE UN HAD BEEN 
ENCOUNTERING CASH DEFICITS, PROVING THE UN'S FINANCIAL 
SITUATION HAD NOT BECOME MORE STABLE IN THE PAST YEAR. 
ALTHOUGH THE NUMBER OF MEMBER STATES THAT HAD PAID THEIR 
ASSESSMENTS IN FULL HAD GROWN A LITTLE, THE RUSSIAN 
FEDERATION NOTED WITH CONCERN THAT THE OVERALL AMOUNT OF 
FINANCIAL ASSESSMENTS OWED TO THE UN RELATED TO A SMALL GROUP 
OF MEMBER STATES.  THE FAILURE OF THOSE COUNTRIES TO MEET 
THEIR FINANCIAL OBLIGATIONS TOOK PLACE AGAINST THE BACKGROUND 
OF INCREASED EXPENDITURES IN AREAS SUCH AS PEACEKEEPING, 
WHICH COULD HAVE A NEGATIVE IMPACT ON INTERNATIONAL PEACE AND 
SECURITY.  STABLE FINANCING FORMED THE BASIS OF THE 
ORGANIZATION'S SUCCESS IN ALL SPHERES OF ITS ACTIVITIES, 
INCLUDING REFORM EFFORTS, HE SAID.  DELAYS IN PAYMENTS COULD 
LEAD TO A SIGNIFICANT INCREASE OF THE UN'S INDEBTEDNESS TO 
TROOP AND EQUIPMENT CONTRIBUTING COUNTRIES.  NON-PAYMENT ALSO 
LED TO DELAYS IN REIMBURSEMENTS TO MEMBER STATES FROM CLOSED 
PEACEKEEPING OPERATIONS.  THE INFORMATION PRESENTED BY THE 
SECRETARIAT WOULD BE USEFUL TO MEMBER STATES FOR THE 
 
SIPDIS 
CONSIDERATION OF SUCH IMPORTANT ISSUES AS THE SCALE OF 
ASSESSMENTS FOR 2008-2009 AND FINANCING OF THE CAPITAL MASTER 
PLAN. 
 
¶7.  OFFERING ANOTHER PERSPECTIVE ON THE PAYMENT OF DUES, 
JAPAN STRESSED THAT IT WAS ESSENTIAL TO RELATIONS BETWEEN THE 
ORGANIZATION AND MEMBER STATES THAT THE UN DEMONSTRATE PROPER 
BUDGETARY DISCIPLINE AND INTEGRITY.  TO MAINTAIN AND 
STRENGTHEN CONFIDENCE IN THE UN AT HOME, JAPAN SAID THE UN 
MUST PRODUCE TANGIBLE RESULTS IN THE AREAS OF MANAGEMENT 
REFORM AND MANDATE REVIEW.  REGARDING PEACEKEEPING, THE JAPAN 
DELEGATE NOTED THAT THEIR BUDGETARY SYSTEM REQUIRES SEPARATE 
ASSESSMENTS AND A DETAILED EXPLANATION BASED ON THE MANDATE 
OF EACH MISSION.  CHANGES IN THE PEACEKEEPING BUDGETARY 
 
 
SYSTEM THAT WOULD NOT CONTRIBUTE TO STRENGTHENING THE 
FINANCIAL BASE SHOULD NOT BE PURSUED, HE SAID.  JAPAN 
BELIEVED THAT DEMONSTRATION OF BUDGETARY DISCIPLINE AND 
INTEGRITY WAS NECESSARY FOR POSITIVE RELATIONS BETWEEN THE 
GOVERNMENTS OF MEMBER STATES AND THEIR TAXPAYERS, AND FOR THE 
CONTINUOUS PAYMENT OF ASSESSED CONTRIBUTIONS.  TANGIBLE 
RESULTS IN THE AREAS OF MANAGEMENT REFORM AND MANDATE REVIEW 
WOULD MAKE THE ORGANIZATION MORE EFFICIENT, EFFECTIVE AND 
TRANSPARENT, STRENGTHENING CONFIDENCE IN THE UN AT HOME, HE 
SAID. 
 
 
BOLTON