VZCZCXRO6900
PP RUEHIK
DE RUCNDT #1122/01 3492048
ZNR UUUUU ZZH
P 152048Z DEC 09
FM USMISSION USUN NEW YORK
TO RUEHC/SECSTATE WASHDC PRIORITY 7808
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHBJ/AMEMBASSY BEIJING PRIORITY 1283
RUEHMKA/AMEMBASSY MANAMA PRIORITY 0102
RUEHMO/AMEMBASSY MOSCOW PRIORITY 1409
RUEHBH/AMEMBASSY NASSAU PRIORITY 0002

UNCLAS SECTION 01 OF 03 USUN NEW YORK 001122 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: AORC KUNR PREL UNGA
SUBJECT: UNGA/C-5: SCALES DEBATE FOR REGULAR BUDGET AND PKO 
CHURN ON WITH NO CONSENSUS IN SIGHT 
 
REF: A. USUN 917 
     ¶B. USUN 1071 
 
USUN NEW Y 00001122  001.2 OF 003 
 
 
¶1. (U) SUMMARY: No consensus has been reached during recent 
informal meetings of the Fifth (Administrative and Budgetary) 
Committee of the UN General Assembly on both the regular 
budget and peacekeeping (PKO) scales of assessments. On the 
regular budget scales, the EU proposal failed to gain any 
traction, with the G-77 insisting that the proposal is 
nothing more than an attempt to break G-77 solidarity. 
Meanwhile, the G-77 continued to attack the 22-percent 
ceiling at every opportunity, to which the U.S. has responded 
by highlighting the underlying principles and historical 
basis for the ceiling on assessments. On the PKO scale, 
discussion continued to focus upon the lack of a definition 
for "developing country" given G-77 insistence of maintaining 
a clear distinction between developed and developing 
countries. While the U.S. and EU argued that any definition 
should be based upon objective criteria, the G-77 indicated 
that it considers the distinction between developed and 
developing countries to be a matter of choice and 
self-identification. END SUMMARY. 
 
SETTING THE SCENE 
----------------- 
 
¶2. (U) The Fifth Committee continued its consideration on the 
scales of assessments during informal meetings on 1, 4, and 8 
December. Due to both the contentious nature of deliberations 
on this sensitive issue and the importance of the scales to 
all Member States, these meetings have attracted significant 
interest within the Committee, with the conference room 
packed with delegates and staffers wishing to watch the 
unfolding political theater. 
 
REGULAR BUDGET SCALES: THE DEADLOCK CONTINUES 
--------------------------------------------- 
 
¶3. (U)  U.S. DEFENDS PRINCIPAL OF CEILING, EFFORTS TO PAY 
ARREARS, AND EU PROPOSAL: The U.S. expressed support, in 
principle, for the EU's proposal and highlighted the 
importance of its focus on the LPCIA. The U.S. said it will 
not consider raising the ceiling, reiterating the principle 
of ensuring that the UN is not overly reliant on any one 
member state. It reminded delegates that the UN has always 
had a ceiling and that the percent has steadily declined over 
time as more member states become members. The U.S. rebutted 
claims that it is still heavily in arrears, explaining that 
the U.S. has recently made substantial payments to the UN, 
and that the continuing arrears are largely the result of the 
different timings between the U.S. financial calendar and 
that of the UN. The G-77 dismissed the US explanation, 
commenting that it is not interested in the domestic factors 
that contribute to the late payments of members. The U.S. 
noted that the goal of all the proposals is to achieve the 
goal of a fairer and more equitable scales, but added that 
the task is "particularly difficult when we are experiencing 
a world financial crisis. The G-77 responded "stop invoking 
the crisis, they're the ones who created it." 
 
¶4. (U) EU PROPOSAL FACES STRONG OPPOSITION FROM G-77: The EU 
continued to advocate the institution of multiple gradients 
in the low per capita income adjustment (LPCIA), which would 
increase the assessment rates for the four BRIC countries 
(Brazil, Russia, India, and the PRC), and to have wealthy 
countries voluntarily redistribute half of the resulting 
savings to countries whose per capita GNI are below the world 
average (see reftel B). Singapore, speaking for the G-77, 
indicated its strong opposition to the proposal, arguing that 
a multiple gradient is both arbitrary and discriminatory. It 
described the EU proposal as one intended to divide the G-77 
and, in reference to the voluntary mitigation, stated that 
members of the G-77 would not accept "bribes" from the 
developing world. Russia indicated that it sees the proposal 
as being self-serving and questioned why the EU was 
advocating voluntary mitigation when the G-77, which stands 
to gain the most from it, was opposing it. In response to the 
concerns raised, the EU argued that a system of multiple 
gradients better reflects the current economic situation and 
that the voluntary mitigation was intended only to provide 
greater assistance to the countries that are most vulnerable. 
 
¶5. (U) G-77 CONTINUES ITS ATTACK ON THE CEILING: The G-77 
argued that if the EU was trying to address what it perceived 
as distortions generated by the LPCIA, it ought to also 
address the ceiling, which the G-77 argues is the greatest 
source of distortion in the regular budget scale. The G-77 
 
USUN NEW Y 00001122  002.2 OF 003 
 
 
pointed out that, during the negotiations that established 
the current scale methodology in 2000, the ceiling was 
reduced from 25 percent to 22 percent as part of a package 
deal that included U.S. commitments to pay back its arrears. 
The G-77 noted that the U.S. has not fulfilled its part of 
the deal and that the ceiling ought therefore to be restored 
to 25 percent. Although the G-77 recognized the U.S. argument 
that the ceiling served to prevent financial over-reliance 
upon any individual Member State, it argued that a ceiling of 
25 percent was sufficient to address that concern. 
 
¶6. (U) RUSSIAN PROPOSAL ON EXCHANGE RATES RECEIVES LIMITED 
INTEREST: Russia continued to advocate its proposal to expand 
the application of price-adjusted rates of exchange (PARE) by 
the Committee on Contributions (see reftel B). It pointed out 
that PARE is already an element of the methodology used to 
counter the effects of excessive exchange rate fluctuation 
but that it was not being applied to all countries for whom 
changes in exchange rates could not be adequately explained 
by economic factors. The U.S. pointed out that the criteria 
being singled out by Russia was one of many factors used by 
the Committee on Contributions (COC) to determine for which 
countries use of PARE is appropriate and that the COC did not 
believe that the determination could be made on the basis on 
any one criteria alone. Russia also indicated that -- if its 
proposal was acceptable to the Committee -- it was prepared 
to shoulder an additional 0.313 percent of the UN budget and 
to distribute the resulting discount to non-OECD countries. 
The G-77 indicated that it was willing to consider the 
Russian proposal because, unlike the EU proposal, it did not 
seek to change the scale methodology. 
 
¶7. (U) G-77 CONTINUES TO CRITICIZE DIPLOMATIC MOVES OUTSIDE 
OF THE FIFTH COMMITTEE: Singapore continued to criticize 
members for engaging G77 members bilaterally in capitals, 
referring to the practice as a "strange activity", insisting 
that negotiations be limited to the Fifth Committee, and 
asking "Are they so afraid of what happens in this room?" The 
EU responded that it has explained its position on the scales 
of assessment in capitals as part of its effort to maintain 
transparency and that the EU "does not fear any dialogue." 
Singapore conceded that it is the "right of any country to 
speak to any country" but said that the discussion on scales 
should happen only in New York and in a multi-lateral context. 
 
 
¶8. (U) THE WAY FORWARD AND THE STATUS QUO: The G-77 reminded 
the Committee that, had the Committee "followed the 
collective wisdom of 130 countries", a resolution to the 
regular budget scale could have been reached much earlier 
(see reftel A). The EU, however, continued to state its 
commitment to changing the methodology for the regular budget 
scale, though other supporters of a multiple gradient 
approach, such as Japan, have indicated their willingness to 
be flexible in order to reach a compromise. 
 
¶9. (SBU) COMMENT: The EU has not been ready to back away from 
its proposal, which the G-77 has interpreted as 
self-serving. While the EU claims that voluntary mitigation 
is part and parcel of its proposal and therefore will 
ultimately benefit many G-77 countries, the argument has not 
gained ground with the G-77, which has 
no intention of creating internal dissent by turning against 
China, India, and Brazil. G-77 members continue to 
express willingness to embrace the status quo for the 
methodology along with lifting the ceiling to 25 percent. The 
G-77 has continued to attack the ceiling at every 
opportunity. It is not clear how much the EU will continue to 
press their proposal, which has absolutely no chance of 
gaining a consensus in the Committee. 
 
PKO SCALES DEBATE STALLS ON "DEVELOPING COUNTRY" DEFINITION DEBATE 
--------------------------------------------- --------------------- 
 
¶10. (U) SEARCHING FOR MEANING: THE "DEVELOPMENT" DEBATE: The 
G-77 proposal states that "henceforth, Level C shall be open 
for any Member State that is a developing country and which 
becomes eligible for movement to Level B." Following the U.S. 
rejection of level C as an arbitrary and outdated anomaly 
that should disappear, the U.S. and others engaged in an 
exchange on how exactly to determine what constitutes a 
"developing country." Upon questioning, the Secretariat 
officials present admitted that the language was open to 
interpretation but stated that it was not the responsibility 
of the Secretariat to decide which countries were developed 
and which were developing. Rather, such a decision was in the 
hands of the Member States. 
 
USUN NEW Y 00001122  003.2 OF 003 
 
 
 
¶11. (U) EU and U.S. ASK FOR A CLEAR DEFINITION OF DEVELOPING 
COUNTRY: In response to continued questions from the U.S. and 
EU, Cuba, speaking on behalf of the G-77, indicated that 
designation as a developing country was not a matter of 
economic data but rather that of choice and 
self-identification. In other words, a Member State 
transitioning into level B -- whose members do not receive 
discounts to their PKO assessments -- could choose to be 
considered a developing country and be placed into level C -- 
whose members receive a 7.5 percent discount. Cuba argued 
that level C was the result of difficult negotiations in 2000 
to have the PKO scale reflect a clear distinction between 
developed and developing countries and that opposition by the 
U.S. and the EU, was simply an example of permanent members 
of the Security Council being greedy and refusing to fulfill 
their special responsibilities in funding UN peacekeeping. On 
the other hand, the U.S. reasserted its understanding that 
the establishment of level C was a temporary transitional 
measure. Both the U.S. and the EU insisted that if a 
distinction were to be made between developed and developing 
countries, it would have to be on the basis of objective 
economic data. 
 
¶12. (SBU) COMMENT: The G-77 is unlikely to provide objective 
and quantifiable criteria for what defines a developing 
country. Its priority remains to ensure that none of the G-77 
members are grouped into Category B. In the context of the 
debate, the operational G-77 definition of "developing" can 
be summarized in the following way: a country that chooses to 
define itself as such AND one that has joined the G-77. This 
is significant because there are a number of members of the 
G-77 which do not fit the traditional conception of 
"developing countries". For example, Singapore -- which is 
the lead negotiator for the G-77 -- is considered an 
"advanced economy" by the IMF, a "high-income economy" by the 
World Bank, and a country with "very high human development" 
under the UNDP Human Development Index. By continually using 
the term "developing", the G-77 hopes to convince members 
that there is some unnamed quality, be it social, economic, 
or political, that all its membership shares. In reality, the 
only thing universally common about the G-77's definition of 
"developing" is that it refers to its own membership, all of 
whom seek to pay as little as possible. 
RICE