VZCZCXYZ0023
OO RUEHWEB

DE RUCNDT #0256/01 0801924
ZNY CCCCC ZZH
O 201924Z MAR 08
FM USMISSION USUN NEW YORK
TO SECSTATE WASHDC IMMEDIATE 3954

C O N F I D E N T I A L USUN NEW YORK 000256 
 
SIPDIS 
 
SIPDIS 
 
PLEASE PASS TO D, P, M, AND IO FROM AMB. KHALILZAD 
 
E.O. 12958: DECL: 03/20/2018 
TAGS: KUNR ACABQ AMGT UNGA
SUBJECT: NEED FOR DECISION ON APPROACH TO UN BUDGET 
 
Classified By: Ambassador Zalmay Khalilzad for reasons 
1.4 (b) and (d). 
 
¶1.  (C) This is a guidance request - see para 8. 
 
¶2.  (C) Summary:  The Secretariat has presented UN Member 
States with additional budget items ("add-ons") to the 
2008-2009 biennium budget adopted in December 2007.  A small 
number of these add-ons are expected to be decided by the 
membership this month, with decisions on the bulk of the 
add-ons likely to be deferred to later this year.  Most of 
the add-ons are items we support or desire (including 
Security Council-mandated Special Political Missions, key 
reform initiatives, and exchange rate adjustments).  The 
total cost for the add-ons presented thus far is about $1.1 
billion (which would bring the biennium total to about $5.3 
billion -- more than a 25% increase over the last biennium). 
In addition to carefully scrubbing the budget add-ons, we 
have essentially three options for dealing with the proposed 
increases:  agree to those programs we support; limit the 
increase by postponing consideration of programs that are not 
essential; reject the increase and be prepared to deny 
funding it.  USUN requests urgent response to guidance 
request at para 8.  End Summary. 
 
--------------------------------------------- ------------ 
Background:  Dealing With A Potential 25% 
Increase in the UN Budget 
--------------------------------------------- ------------ 
 
¶3.  (C) USUN has previously flagged concerns about both the 
piecemeal approach by the Secretariat to the UN budget and 
the explosive growth of the 2008-2009 biennium budget.  In 
December USUN raised concerns that the initial budget before 
the Fifth Committee of approximately $4.2 billion did not 
include some $1.1 billion in additional budgetary add-ons 
that would be considered at a later stage in 2008-2009 
biennium period.  Most of the add-ons are programs that the 
U.S. supports.  These include Security Council-mandated 
Special Political Missions (including Iraq and Afghanistan, 
SPM,s total nearly 50% of the add-ons, and represent alone a 
16% budget increase) and key reform initiatives (the bulk of 
the remainder).  USUN raised concerns that unless member 
states reviewed the budget in its entirety and prioritized or 
identified offsets throughout the entire budget, the final UN 
budget would soar to more than $5.2 billion -- a 25% increase 
and the largest in history. 
 
¶4.  (C) Despite U.S. opposition, the initial budget of 
approximately $4.2 billion was adopted in December.  That 
budget includes mandates that have been superseded over time 
and which the membership has been unable to consolidate or 
eliminate through the Mandate Review process (a process which 
also could have helped identify possible budgetary offsets to 
help fund the add-ons).  The GA and the Secretariat continue 
to be incapable of prioritizing mandates in a meaningful way 
or identifying offsets for new budget initiatives adopted by 
the GA.  While many member states express surprise and dismay 
at the cost of the add-ons, they are unlikely to do much to 
oppose them (other than, perhaps, agreeing to postpone some). 
Moreover, several of the key major donors have benefited 
from the drop in the dollar-denominated UN budget and in real 
terms face at most only negligible increases in their 
assessed contributions even with the unprecedented rise in 
the proposed budget. 
 
---------- 
Options 
---------- 
 
¶5.  (C) Against this backdrop, the USG needs to decide how to 
deal with the proposed budget add-ons.  Whichever of the 
options (see below) we ultimately choose, we still will need 
carefully to scrub the proposed programs to ensure as limited 
budgetary impact as possible.  To do so, USUN requests that 
the Department deploy a team of qualified staff to reinforce 
USUN,s efforts to review each major program item being 
proposed in the budget to ensure they meet USG criteria for 
funding at the lowest reasonable level. 
 
¶6. (C) In addition to scrutinizing the proposed add-ons to 
the budget as described above, we see essentially three 
realistic options -- each with advantages and disadvantages 
-- that we could pursue: 
 
a) Pay it All:  Assuming we are satisfied through the 
Department,s review process that the add-ons are necessary, 
we could support the proposed budget increases for those 
programs - even if they result in the largest budgetary 
increase in UN history.  We could argue that the bulk of the 
add-ons are for continuing SPM,s that the U.S. approved in 
the Security Council and which deal with essential peace and 
security efforts around the globe.  These include core USG 
priorities like Iraq and Afghanistan.  We could also fund the 
reform initiatives that are ready for adoption, including 
Information Technology improvements and possibly DPA 
expansion. 
 
b) Oppose any Further Increases:  In order to defend the 
principle of budgetary discipline, we could oppose the 
proposed increase by pointing to the exponential growth of 
the budget and the flawed UN budgetary process that prevents 
a comprehensive look at the entire budget in order to 
identify offsets to help fund the proposed increases.  (This 
approach could also reaffirm our zero-nominal growth policy.) 
By insisting on fiscal discipline and a more coherent budget 
process, we would also help focus the membership on the need 
to tackle organizational inefficiencies, including obsolete 
or redundant mandates.  (This position could also lead to 
eventual decisions to withhold funds in the event the rest of 
the membership adopts the budget anyway.)  While attractive 
politically, there is little likelihood the wider membership 
would support this approach -- particularly at a time where 
other major donors have seen their own currencies appreciate 
vis-a-vis the dollar-denominated UN budget and could easily 
absorb the increases being proposed.  Moreover, we would be 
refusing to fund programs that we need or want, which are the 
bulk of the add-ons being considered.  This posture could 
also limit leverage we would otherwise have in shaping the 
content or size of the budget increase that would be adopted 
by the wider membership, perhaps ending with a 25% increase 
anyway. 
 
c)  Defer the Non-Essential (but desirable):  We could fund 
only essential items (e.g., SPMs, exchange rate losses) and 
defer consideration of all non-essential items having 
budgetary impact into the next biennium budget and deal with 
these as part of a comprehensive budget review. This approach 
would create the conditions for the wider membership to 
prioritize during the next budget cycle among the 
non-essential add-ons while identifying potential offsets 
from the broader assessed budget where most of the fat 
exists.   Deferring consideration of some add-ons until the 
next biennium budget discussion in late 2009 would 
synchronize discussion in the same year on both the next 
biennium budget and the renegotiation of the scale of 
assessments -- an important lever for budgetary discipline 
among donors whose assessed contribution percentage will 
increases.  The net result of this approach would be a budget 
increase this year of a minimum of 16% for items that must be 
funded. 
 
----------------- 
Other Options 
----------------- 
 
¶7.  (C) There are other variants to the options described 
above that the Department might consider and which may come 
up in discussions on how to proceed.  However, we believe 
these approaches are either unlikely to garner support or 
could allow the wider membership to set priorities we would 
not share by cutting programs we want in order to fund those 
they prefer.  Such options include: 
 
a) Limit budget growth by setting a ceiling for the dollar 
amount we could accept.  This would require opposing or 
deferring some of the add-ons -- perhaps even programs we 
deem essential depending on the amount of the ceiling.  This 
approach could also require trade-offs among the add-on 
items. Since the majority of the costs associated with the 
$1.1 billion in add-ons are for programs the USG generally 
favors or which must be funded -- e.g., SC-mandated SPMs or 
reform initiatives -- this would require us to choose between 
a policy of fiscal restraint or action now on many reform 
items -- and perhaps even critical SPMs. 
 
b) Fund all essential items but identify offsets from the 
$4.2 billion budget adopted last December for remaining 
discretionary programs.  While this seems a rational option, 
it is not likely to succeed since the majority of the GA is 
not prepared to engage in such political tradeoffs involving 
the very mandates that the membership has been unwilling to 
seriously review and which they just approved a few months 
ago.  Like option b above, we would need to be prepared to 
refuse to fund the budget in the likely event the broader 
membership rejects this approach. 
 
---------------------- 
Guidance Request 
---------------------- 
 
¶8.  (C) USUN seeks the dispatch by the Department of a team 
of experts to help UN scrub the add-on budget proposals being 
examined in New York.  We need to do this before these items 
are considered so that our own assessment of the proposal can 
be factored into the negotiations.  USUN also seeks 
Department,s guidance on which of the above options, or 
combination of options we should pursue.  Key donors are 
eager to know how the U.S. intends to proceed on the budget. 
The PGA has scheduled a meeting in early April to discuss 
reform efforts, including the budget process.  This meeting 
provides an important opportunity for the USG to identify 
preferred options, assert leadership on this important issue, 
and attain support for our preferred approach.  Delays in 
identifying the approach the U.S. will take will contribute 
to the inertia that typically results in the membership 
adopting a budget close to the total the Secretariat has 
identified. 
KHALILZAD