VZCZCXYZ0001
PP RUEHWEB

DE RUCNDT #1172/01 3482056
ZNR UUUUU ZZH
P 142056Z DEC 07
FM USMISSION USUN NEW YORK
TO SECSTATE WASHDC PRIORITY 3339

UNCLAS USUN NEW YORK 001172 
 
SIPDIS 
 
SIPDIS 
 
PLEASE PASS TO DAVID LEIS - IO/MPR 
 
E.O. 12958: N/A 
TAGS: AORC UNGA
SUBJECT: FIFTH COMMITTEE REACTS TO SOBERING MESSAGE ON THE 
2008/2009 PROPOSED PROGRAM BUDGET 
 
REF: USUN NEW YORK 1135 
 
¶1. Ambassador Mark Wallace addressed the Fifth Committee 
(Administration and Budget) during informal consultations on 
the proposed program budget (PPB) for the biennium 2008-2009 
on December 10.  Ambassador Wallace stated that the budget, 
in reality, is well beyond the Secretary General's initial 
budget of $4.19 billion.  With add-ons and additional 
proposals down the line, the final actual total budget of the 
2008-2009 biennium will be in excess of $5.2 billion, 
representing an increase of 25 per cent or more from the 
2006-2007 budget.  Ambassador Wallace emphasized the 
piecemeal approach to the budget and the fact that many of 
the proposed increases were not before the Member States, an 
unsound budgeting practice.  Ambassador Wallace used several 
graphs representing the potential unprecedented growth of the 
UN budget to visually demonstrate that the 2008/2009 budget 
is the largest regular budget in the history of the UN.  He 
stressed that neither the SYG nor Member States had taken any 
steps to prioritize or to identify offsets.  During his 
intervention, Ambassador Wallace raised several possible 
approaches to addressing this budget challenge (REF), 
including one proposal that would allow the UN to continue 
its activities but postpone final action on the budget until 
the spring of 2008, when the Committee has before it all of 
the proposed increases in the budget and can examine the 
budget, with all add-ons, holistically.  Eight Member States 
intervened, reacting to the USDel statement (para 2).  See 
para 3 for the text of Ambassador Wallace's statement. 
 
¶2. Eight delegations intervened following the USDel 
presentation: Pakistan (on behalf of the Group of 77 and 
China), Portugal (on behalf of the European Union), 
Guatemala, Egypt, Australia (on behalf of CANZ), Japan, 
Bangladesh, and Nicaragua. A summary of each country's 
intervention is below: 
 
Pakistan: The initial reaction was appreciation for the U.S. 
perspective and the information and analysis provided but 
expressed a different perspective on the issue.  The 
Pakistani delegate said that the U.S. presentation "looks at 
the problem from a single perspective."  The Pakistani 
delegate emphasized that development spending has seen only a 
nominal 0.5 per cent growth, a point reiterated by other 
speakers from developing countries.  Pakistan stated that 
developing countries are not sharing in the growth of the UN 
budget, citing instead other priorities - UN reform measures, 
investigation and audit (OIOS), special political missions - 
that are the more costly parts of the UN budget.  Pakistan 
called upon Member States to look at the budget in the 
context of a "larger interest," and expressed the perspective 
that the "unique nature of the UN means more than a few 
million dollars."  Pakistan also firmly opposed the idea of 
rolling over the budget negotiations into the spring, 
believing such action would " 
severely impact the budget process," and affirming, "we are 
here; we are engaged." 
 
Portugal: The EU shared the USDel's concerns of the SYG's 
piecemeal approach towards budgeting and advocated for fiscal 
discipline.  However, Portugal acknowledged that it is the 
General Assembly that issues mandates, and called for the 
Committee to seek budgetary efficiency without impairing the 
SYG's means of fulfilling the GA's mandates.  Portugal also 
expressed interest in seeing draft language to actualize the 
U.S.'s budget proposal. 
 
Guatemala: Guatemala cast the USDel proposal as a rollover of 
the UN budget and said that was "not an option."  Guatemala 
pointed to the dramatic growth of the UN budget beginning in 
2004, when reform of the UN began in earnest, asking 
rhetorically, "wasn't it the U.S. who called for those 
reforms?"  Guatemala also highlighted special political 
missions as examples of costly mandates from the UN Security 
Council, further stating that resources are only given to 
mandates agreed upon by the General Assembly, and since the 
U.S. is an active participant in every organ of the UN, then 
it has just as much responsibility in these mandates and 
their fiscal impact. 
 
Egypt: The Egyptian delegation agreed that the growth in the 
budget is a big problem shared by all delegations.  However, 
he wondered about the timing of the U.S. proposal and what 
might be gained from rolling over the budget, asking, "Why 
now, less than 10 days before the conclusion of the 62nd 
session of the General Assembly, and two months after the 
budget was introduced to the Committee - what will two months 
more give us that we couldn't accomplish in the last two 
months?"  Egypt also found fallacy in the U.S.'s comparison 
of the UN's budget with that of other international 
organizations, calling it "mixing apples and oranges."  Egypt 
 
 
also pointed out that "only one peacekeeping operation" makes 
up 50 per cent of the entire UN budget. 
 
Australia: Australia was very supportive of the need to 
recognize the concern identified by the U.S. and said that 
the presentation was "shocking."  The Australian delegate 
said that the U.S. has pointed out a significant problem in 
that "10 days before we pass a budget, we don't even know how 
much that budget really is."  Australia stated that as the 
CEO of the UN, the SYG ought to take a role in identifying 
offsets to the budget expenditures. 
 
Japan: Japan expressed concern about the increase in the 
budget, particularly in the context of the scale of 
assessments and whether Member States could sustain such a 
budget with their contributions. Japan stated its readiness 
to consider the PPB now, and would seek every opportunity to 
reallocate resources and to seek full and thorough 
justification for every request for resources.  Japan called 
for vigilance to maintaining established procedure, stating 
its opposition to the SYG's piecemeal approach to budgeting. 
 
Bangladesh: In addition to echoing the position of the G-77 
and China, Bangladesh wished to study the evolution of 
mandates in an effort to identify the source of budget growth. 
 
Nicaragua: The Nicaraguan delegate said that the UN's role in 
the world has been enhanced, as the General Assembly has 
taken the decision to strengthen multilateralism and 
intervene in an increasing number of places in the world. 
Therefore, the budget naturally increases as a result. 
Nicaragua agreed that the budget is piecemeal, and that a 
lack of vision on the part of the UN leadership in this 
regard has led to a fragmentation of the budget.  Nicaragua 
saw an imbalance in the three pillars of the UN reflected in 
this budget proposal, echoing the Pakistani delegate's 
statement that much more in the way of resources are needed 
for development so that developing countries can comply with 
the Monterey Consensus.  Nicaragua also blamed a great part 
of the budget increase on the UN Security Council. 
 
¶3.  Text of Ambassador Wallace's intervention (the graphs 
referred below have been posted to the U.S. Mission to the 
UN's website): 
 
I thank the coordinator, Alejandro Lepori, the Chairman of 
the Fifth Committee, my friend Hamidon Ali, and the Secretary 
of the Committee Movses Abelian for their hard work to date. 
I also thank and truly appreciate all of the hard work by my 
many colleagues here in the Fifth Committee to date.  Of 
course, we have long days and nights ahead with the work 
before us. 
 
I have come to the Fifth Committee informal discussions today 
on the 2008/2009 biennium budget to offer what the United 
States believes is vitally important context to the 2008/2009 
budget.  We believe that the U.N. budget in the context that 
I will offer today presents us with a crisis that questions 
the viability of the way the U.N. does business, and the role 
of member states and the role of the U.N. Secretariat in the 
preparation and approval of the budget. 
 
The SYG has proposed an "initial" budget of $4.19 billion for 
the biennium 2008/2009.  As we all know, this $4.19 billion 
proposal represents only a part of the actual budget.  In 
addition the SYG simultaneously but separately identified 
various "add ons" to the base budget that would bring the 
actual 2008/2009 budget up to approximately $4.8 billion. 
The 2006/2007 approved budget was $3.799 billion though it 
ultimately totaled $4.17 billion.  The 2008/2009 projected 
budget of $4.8 billion represents a 15% increase over the 
2006/2007 budget. 
 
The proposed regular budget with just the "add ons" already 
identified by the Secretary General makes this budget the 
largest regular budget in the history of the U.N.  This 
budget also represents the largest increase in the history of 
the U.N. on a dollar basis.  Moreover, even this $4.8 billion 
figure is not what any of us expect as the final budget 
because it does not take into account additional proposals 
that have more recently been identified or which we can 
expect during the course of the biennium. 
 
We expect that the final actual total budget of the 2008/2009 
biennium to be in excess of approximately $5.2 billion. 
Accordingly, such a final budget is likely to represent an 
increase of 25% or more from the 2006/2007 budget.  And lets 
remember what such an increase actually funds.  As my 
colleagues from the G77 and China rightly point out in 
paragraph 30 of the Draft Resolution before us: 
"approximately 75 percent of the budget resources are related 
 
 
to salaries and common staff cost...."  The budget increase 
does not go directly to humanitarian or development aid but 
rather to increasing the size of the UN Secretariat 
bureaucracy. 
 
We all agree that the piecemeal, ad hoc approach of the 
current budget is inconsistent with sound budgeting 
practices.  See paragraph 9, and 35 of the Draft Resolution 
on the 2008/2009 biennium budget.  Moreover, we are concerned 
that no substantial cuts or offsets have been proposed by the 
SYG or member states to this largest of all U.N. budget 
increases. 
 
A graphic portrayal of the U.N. budget, particularly when 
made with international comparables and norms serves to 
emphasize the striking growth in the UN regular budget.  We 
have compiled various graphic analyses that underscore the 
magnitude of the problem before us. 
 
Chart 1 shows the Growth in the UN Regular Budget from the 
1998/1999 biennium budget of $1.772 billion to the current 
expected final budget of in excess of $5.2 billion in terms 
of percentage increases - a 193% increase. 
 
Chart 2 shows a Comparison of Budget Levels from Initial 
Appropriation to Final Appropriation.  The Chart demonstrates 
that we are truly considering this U.N. budget in a piecemeal 
fashion and we do not have a substantial portion of the 
likely budgetary increase currently before us - an unsound 
budgeting practice. 
 
Chart 3 shows a Comparison of the Growth in the U.N. Budget 
with the Budget Growth of the Top Ten Member State Donors. 
Please understand that I could not easily include all 192 
member states on this Chart, but the sole inclusion of these 
ten states on this Chart is not intended nor should it be 
taken to diminish in any way the important and valuable 
contributions to the U.N. by the 182 member states not 
reflected on this Chart.  Nonetheless, Chart 3 dramatically 
demonstrates the budget growth before us as an outlier well 
beyond any reasonable comparison with member state government 
growth.  The delta between the norms of member state 
government budgeting and the U.N. budget is extraordinary. 
Based upon these figures over the course of the last five 
years or so, the U.N. budget has grown at an average rate of 
some 17% while the U.S. budget has grown at a rate of some 7% 
and the other top donors have grown at lesser rates. 
 
Chart 4 shows a Comparison of the Growth in the U.N. Budget 
with the Growth in the Budget of Other International 
Organizations.  Chart 4 further demonstrates the budget 
growth before us as an outlier well beyond any reasonable 
comparison with other International Organizations and the 
delta is extraordinary here as well. 
 
And this dramatically growing budget does not include 
peacekeeping or funding for the tribunals.  The peacekeeping 
budget is likely to rise from some $5 billion to some $7 
billion or approximately a 40% increase in 2008.  The $625 
million cost of the various U.N tribunals represents an 
increase of some 15% in the 2008/2009 biennium.  Nor does the 
budget include the more than %15 billion in contributions and 
expenditures for operational activities of other parts of the 
U.N. System, mainly the U.N. Funds and Programs and 
specialized agencies. 
 
Given: 
 - The historic massive increase in the U.N. regular budget 
as proposed and the absence of any parallel offsets or cuts; 
 - Budgetary constraints within all of our own member state 
budgets, and; 
 - The lack of any reasonable comparative growth in similar 
international budgets; 
the United States must strongly advocate against such a large 
wholesale increase in the UN budget without even an effort to 
find substantive offsets or to set priorities among the 
programs and activities. 
 
What can we do?  In both the method by which we consider the 
budget and in the substance of the increase itself, the 
answers are simple but the challenges are great. 
 
First, we all agree that piecemeal consideration of the U.N. 
budget is inappropriate, misleading and reflects unsound 
budget practices.  In principle, the solution is that we 
should only consider this budget when it is actually and 
completely before us.  We must be fully and truly informed on 
the whole budget before we can take an informed decision on 
the budget as my G77 and Chinese colleagues rightly point out 
in Paragraph 12 of the Draft Resolution text.  Unfortunately, 
the majority of the increases in the budget will only be 
 
 
ready for review in the spring resumed session.  A solution 
might be to take action now to allow the U.N. to continue its 
activities but postpone final action until we could consider 
the full 2008/2009 in the spring resumed session with no 
strings attached - meaning no caps nor tied to any specific 
agreement short of a good faith consideration of the 
hopefully complete 2008/2009 budget. 
 
Second, we all agree on the enormous size of the increase and 
the absence of any prioritization or offsets.  In principle, 
the solution is to prioritize programmatic expenditures and 
to identify meaningful offsets - actions that any responsible 
government or international organization would take.  There 
are only two parties that could take steps to prioritize and 
to identify offsets - member states and the SYG.  To date, we 
as member states have been unable to truly prioritize in a 
consensus fashion and we have been unable to identify offsets 
- the failure of mandate review to date is a clear example. 
Also to date we as member states have been unwilling to grant 
the SYG the authority to recommend priorities or to identify 
meaningful offsets.  Accordingly, the great challenge before 
us is for member states to find the political will to truly 
prioritize and to identify meaningful offsets or to ask the 
SYG to make such recommendations on priorities and offsets. 
 
For years the United States has advocated zero nominal growth 
in U.N. budgeting.  We have done so for purposes of fiscal 
restraint and to ensure that the U.N. was disciplined in its 
program management.  In principle we will continue to 
advocate zero nominal growth.  Today we have a greater 
challenge.  With the largest budget increase in history -- 
and outside the norms of international comparables -- the 
credibility of the U.N. is at stake.  It is up to all of us 
to take real action.  We must not fail this institution. 
 
As our great President Ronald Reagan once said, "spending 
will not be curbed by wishful thinking." 
 
I thank you all for your commitment to the challenge before 
us. 
 
End Text. 
 
Khalilzad