FIFTH COMMITTEE RECOMMENDS $21.7 MILLION FOR MISSION IN HAITI

Press Release
GA/AB/3029

FIFTH COMMITTEE RECOMMENDS $21.7 MILLION FOR MISSION IN HAITI

The General Assembly would authorize and assess $21.7 million gross ($21.4 million net) for the United Nations Mission in Haiti (UNMIH) for the period 1 to 30 November, if it adopts a draft decision approved this morning by the Fifth Committee (Administrative and Budgetary). The Committee also began considering how to improve the Organization's financial situation.

By the text's terms, the Assembly would assess an additional $42.4 million gross ($41.7 million net) for the period 1 August to 31 October. That would be in addition to the $21.2 million gross ($20.8 million net) it had previously assessed. The assessments for the periods 1 August to 30 November would be ad hoc arrangements.

The main thread running through the discussions on financing UNMIH and on the United Nations financial situation was that unilateral actions by Member States to reduce their dues to peace-keeping operations were unacceptable, null and void.

Citing international law, the representative of New Zealand argued that treaty obligations the United States assumed on joining the Organization were legally binding. They could not be nullified by the decision of a single Member State or its national legislature. Quoting Article 27 of the Vienna Convention on the Law of Treaties, she said a party might not invoke the provisions of its internal laws as justification for its failure to perform a treaty. If the United States chose not to meet its treaty obligations, its growing arrears must eventually be treated according to Article 19 of the United Nations Charter.

[According to that Article, a Member State would lose its voting rights in the General Assembly if its arrears equalled or exceeded its contributions for the preceding two full years.]

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She was responding to an 18 October statement by the United States. China, expressing support for the view expressed by the representative of New Zealand, said that it reflected that of all Member States, except the United States. China had taken part in the consensus on UNMIH on the understanding

that the United States' unilateral statement was null, void and totally unacceptable. As a major contributor of troops and equipment, India expressed hope that such action would not harm its participation in UNMIH.

On the financial situation, the Philippines, speaking for the "Group of 77" developing countries and China, said the dramatic rise in outstanding contributions was largely due to lack of payment of assessments by the major contributor. That was disturbing particularly when 54 developing countries had made great efforts to pay up their dues, as of 18 October.

The European Union, speaking through the representative of Spain, stated that its member States had, as of 30 September, paid more than 47.8 per cent of all contributions to the regular and peace-keeping budgets. Regarding the reduced payments expected from the major contributor, he said that total economic benefits to New York City generated by the United Nations were $3.2 billion in spending and more than 30,000 jobs, besides the economic benefits that United Nations activities represented to the United States.

The draft decision on financing UNMIH was introduced by Mexico. Portugal sought a correction in a report which had stated that it owed dues to the Organization.

Introducing the Secretary-General's report on the financial situation of the Organization, the Under-Secretary-General for Administration and Management, Joseph E. Connor, said that uncollected assessments remained at unprecedented levels. The amount owed to troop-contributing countries would reach some $1 billion by the end of the year.

The Committee will meet again at 3. p.m. today to continue its section- by-section review of the proposed 1996-1997 budget.

Committee Work Programme

The Fifth Committee (Administrative and Budgetary) met this morning to take action on the financing of the United Nations Mission in Haiti (UNMIH) and begin considering how to improve the Organization's financial situation.

Financing UNMIH

The Committee had before it a draft decision on the financing of UNMIH (document A/C.5/50/L.3) by which it would have the Assembly assess, as an ad hoc arrangement, an additional $42.4 million gross ($41.7 million net) for the period 1 August to 31 October. It would also have the Assembly authorize and assess, as an ad hoc arrangement, $21.7 million gross ($21.4 million net) for the period 1 to 30 November.

Improving Organization's financial situation

A note by the Secretary-General transmits a 1993 report entitled financing an effective United Nations (document A/48/460 and Corr.1) prepared by the Independent Advisory Group on United Nations Financing, sponsored by the Ford Foundation, under the co-chairmanship of Shijuro Ogata and Paul Volcker. Mr. Ogata served for more than 30 years in the Bank of Japan and was Deputy Governor of the Japan Development Bank from 1986 to 1991. Mr. Volcker was Chairman of the Board of Governors of the United States Federal Reserve Bank from 1979 to 1987.

Referring to the Organization's financial crisis, the report says that Member States could repair the situation. The total United Nations budget of some $5.2 billion in 1992 pales in comparison to the national defence costs and private sector transactions. That figure includes the regular and peace-keeping budgets and voluntary contributions to some United Nations specialized agencies. The sum of the regular and peace-keeping budgets for 1992 was less than the cost of two Stealth bombers or the combined cost of New York City's fire and police departments for one year. As for the "blue helmets", on average, the world's nations invest only $1.40 on peace-keeping for every $1,000 they devote to their own armed forces.

The Advisory Group states that the consensus procedure for approving the regular budget should be continued and all States must pay up their dues on time. The Organization should require its Members to pay in four quarterly instalments, instead of a single lump sum at the beginning of the year. The United Nations should be authorized to charge interest on late payments under the new quarterly schedule and the sums deposited in the working capital fund. That fund's level should be raised from $100 million to $200 million, paid for by a one-time, $100-million assessment. The Organization should speed up the replenishment of its reserves by depositing into the fund the budgetary surpluses that were owed to Member States with arrears.

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When a reliable means to pay its bills is established, the regular budget should stop borrowing from the peace-keeping accounts and the United Nations should not be authorized to borrow outside.

On peace-keeping, the report recommends that the United Nations should create a $400-million revolving reserve fund for peace-keeping, financed through three annual assessments. The United Nations might consider unifying its peace-keeping budgets and finance them by a single annual assessment. The Secretary-General should be permitted to obligate up to 20 per cent of the estimated cost of a peace-keeping mission once it is approved by the Security Council. All Member States with above average per capita incomes, except the permanent Council members, should be assessed at the same rate as what they paid for the regular budget.

On other matters, the report recommends that the administrative spending of all United Nations programmes funded solely by voluntary contributions should be assessed. Voluntarily-funded agencies should seek a larger portion of their funding from multi-year, negotiated pledges.

The Secretary-General's comments on the Group's suggestions are contained in his November 1993 report on financing an effective United Nations (document A/48/565 and Corr.1). On the recommendation that Member States should be required to pay their dues in four quarterly instalments, the Secretary-General says that that would be feasible only if it is adopted along with other changes to ensure that the Organization had enough cash throughout the year. If adopted in isolation, it would not improve the cash flow. It may lead to the collection of less money at the beginning of the year as States that have been paying their dues on time might decide to pay in instalments. There was also no guarantee that late payers will pay their quarterly dues in time.

The report states that the Secretary-General had previously suggested that he should be allowed to charge interest at commercial rates on late payments and deposit the sums in the working capital fund. He had suggested that interest should be calculated quarterly on all dues and outstanding contributions. The Universal Postal Union (UPU) and the International Telecommunication Union (ITU) charge interest on late payments and have higher collection rates than the United Nations.

The Secretary-General agrees with the thrust of the Advisory Group's recommendation that the working capital fund's level be raised from $100 million to $200 million and the difference funded by a $100-million, one-time assessment. The Fund's level should, however, be raised to one- quarter of the regular budget's net annual level. On that basis, its level for 1994, for instance, would be about $300 million.

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He disagrees with the recommendation that the Organization should not be authorized to borrow. The Food and Agriculture Organization (FAO), the International Labour Organisation (ILO), United Nations Educational, Scientific and Cultural Organization (UNESCO) and the World Meteorological Organization (WMO) have borrowed on occasion, he adds. The authority to borrow commercially should be exercised only when no funds were available under any assessed activity. Any interest charged on the United Nations could be matched by interest charged on Member States whose failure to pay their dues on time had necessitated the loans.

The Secretary-General agrees that the United Nations should establish a much larger peace-keeping reserve fund, set at $400 million and financed by three annual assessments. [The Assembly had set up that fund of $150 million to enable the Organization to respond rapidly to peace-keeping needs.] He favours the Advisory Group's call for a unified peace-keeping budget, funded by a single annual assessment. Currently, with 16 peace-keeping missions with six-month mandates, 32 budget reviews are undertaken in any 12-month period.

The Secretary-General concurs with the thrust of the recommendation that he should be allowed to obligate up to 20 per cent of the initial cost of a peace-keeping mission once it is approved by the Security Council. He should be allowed to obligate up to a third, with the sum assessed.

A note verbale from Denmark to the Secretary-General (document A/50/484) transmits the Nordic Foreign Ministers' statement at their 25 September meeting in New York on the financial situation. In the letter, Denmark, Finland, Iceland, Norway and Sweden express deep concern about that condition. The present crisis threatens the Organization's ability to prevent and contain conflicts, promote development and alleviate suffering. The letter deplores the fact that the United Nations is practically bankrupt due to Member States' failure to pay up their dues without conditions.

Also before the Committee was a 27 September note verbale from the Permanent Mission of Ukraine to the Secretary-General (document A/50/502), transmitting a letter from that country's president. In that letter, President Leonid Kuchma states that his country owes $237.5 million to the United Nations. Those arrears piled up due to the outdated system for apportioning the Organization's expenses. Despite some positive changes, Ukraine was charged at three times its capacity. The President requests a solution that would include an appropriate assessment for Ukraine by having it placed in the group of "economically less developed Member States" in the scheme for apportioning peace-keeping operation costs.

Also before the Committee was a 20 October letter from Spain's Permanent Representative addressed to the Secretary-General (document A/C.5/50/4) transmitting the declaration by the Presidency on behalf of the European Union on the financial situation. Unilateral decisions adopted by any Member State

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contradicting its financial obligations regarding the Organization were unacceptable. All Member States should pay up their dues on time and without conditions.

The Secretary-General's report describes the United Nations financial situation (document A/50/666 and Corr.1 and Add.1) as uncertain. Unless Member States pay their fees, the Organization's continued viability would be threatened. The Organization has no capital base and effectively no reserves. It depends on Member States' prompt payment of their dues to assure cash inflows, something that is not happening.

While significant dues were received, most had been anticipated and the projected need to borrow about $240 million for the regular budget by year-end was unchanged, it continues. Total outstanding dues to the regular budget and peace-keeping exceeded $3.33 billion as of 30 September 1995. Unpaid fees to the regular budget were $810.1 million, of which $385.6 million was due for 1994 and prior years and $424.5 million relates to 1995. The total of sums owed is equivalent to 71.4 per cent of the regular budget dues for 1995.

Regarding cash flow, it is projected that disbursements in 1995, at $1.23 billion, will exceed receipts by an unprecedented $213 million. At the end of 1995, the estimated usable cash at the Organization's disposal is projected at $486 million. That consists of $725 million for peace-keeping and a $239-million deficit for the regular budget. Meanwhile, the Organization will owe troop contributors some $1 billion by the end of 1995.

Action on financing of UNMIH

MARTA PENA (Mexico) introduced the draft decision on the Mission's financing, reviewing some of its provisions. The draft decisions should be adopted without a vote. The Secretariat should finalize the expected performance report on the Mission so that the Committee would also have the view of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) as soon as possible.

The Committee approved the draft without a vote.

DENISE ALMAO (New Zealand) said she would like to respond to the statement by the representative of the United States on 18 October, that, contrary to its legal obligations, his Government did not intend to pay more than 25 per cent of the assessments for UNMIH and any other peace-keeping operations. She said that treaty obligations could neither be abrogated by the statement of a national representative to the Fifth Committee nor set aside by the unilateral announcement to any subsidiary body or organ of the General Assembly. The treaty obligations which the United States assumed on joining the Organization were legally binding under international law. They continued to exist and could not be nullified by the decision of a single

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Member State or its national legislature. The Vienna Convention on the Law of Treaties had clearly stated the relevant rules of customary international law. Article 26 of that Convention stated that every treaty in force was binding upon the parties to it and must be performed by them in good faith. Article 27 also stated that a party might not invoke the provisions of internal laws as justification for its failure to perform a treaty.

She added that it was clear if the United States chose not to meet its treaty obligations in full, its arrears would continue to grow. There should be no misunderstanding of the fact that eventually its unpaid contributions must be treated in accordance with the provisions of Article 19 of the Charter. New Zealand deeply regretted the view expressed by the United States. It was not in the interest of that country or the Organization for any Member State to impugn treaty obligations on any matter. Reforms to achieve a more equitable scale of assessments could only be done through negotiations among all Member States.

WANG XIAOCHU (China) said he fully shared what had been said by New Zealand as it reflected the views of all Members, except the United States. The Chinese delegation had participated in the consensus on the understanding that the unilateral statement of the United States was null and void. No State could impose its will on the membership of the United Nations. Reform of the scale of assessments was the subject of a decision by the General Assembly, after consultations. Any unilateral action was legally null and void and totally unacceptable.

VIJAY GOKHALE (India) supported the view of New Zealand and China. As a major contributor of troops and equipment it hoped no unilateral action would be allowed to harm its participation in UNMIH.

Statements on Financial Situation

JOSEPH E. CONNOR, Under-Secretary-General for Administration and Management, introducing the Secretary-General's report on the Organization's financial situation, said the report showed that the uncollected assessments remained at unprecedented levels. That situation had forced the Secretary- General to borrow from peace-keeping funds to meet regular budget obligations. Even with the payments received in recent weeks, it was still expected that by the end of the year it would be necessary to borrow $240 million to meet regular budget requirements.

Given the high level of unpaid peace-keeping assessments, most payments to troop-contributing countries had been suspended since June, he continued. Based on some payments in September and October, the Secretariat had initiated payment of some $250 million of part of what was owed to troop contributors. Nevertheless, some $800 million was still owed to those Member States as of today; the amount would increase to about $1 billion by the end of 1995. The

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situation remained critical. There was no room for complacency. Emergency measures would have only a modest positive effect. If receipts during the rest of the year did not meet current projections, such measures might be inadequate to deal with the problem in the short term as well. The reports before the Committee contained no new proposals for solving the financial difficulties. Only Member States through their actions could do so.

ARTURO LACLAUSTRA (Spain), also speaking for the European Union, said the Secretary-General's report clearly stated the stark situation of the Organization's finances. The Union, whose member States paid their contributions promptly, fully and without conditions, had as of 30 September, paid more than 47.8 per cent of the total contributions collected for the regular and peace-keeping budgets. Thus the basic financial problems afflicting the United Nations -- having obligations far exceeding the cash resources to pay debts -- had been posed in all its acuteness. The Union shared the Secretary-General's opinion that the problems of the Organization would not be solved until Member States paid their assessments in full.

He said the Union had reaffirmed its position on the eve of the special commemorative meeting of the General Assembly in a declaration made on 20 October by the Presidency on behalf of the European Union. It had then stated that the lack of political will did not discharge Member States of the financial obligations which they had undertaken on subscribing to the Charter, and which were international obligations legally binding each State.

He expressed concern about the fact that the projected increase in contributions owed was due in large part to reduced payments expected from the major contributor. The estimated total economic benefits to New York City generated by the United Nations was $3.2 billion in spending, 30,600 jobs and $1.2 billion in earnings, besides the economic benefits that United Nations activities represented to the United States.

Unilateral decisions adopted by any Member State that contradicted the fulfilment of its financial obligations were unacceptable, he continued. The attitude of those Member States in arrears penalized those that paid their contributions in full and were financing the debts incurred by the debtor States. Those in good standing were penalized twice, since the Organization had had to withhold reimbursements which were legally due to troop- contributing States. Such delays placed unfair burdens on the troop contributors. The cash conservation measures introduced by the Secretary- General and their implementation should be regulated. There was an urgent need to find a solution to the current financial crisis. The work of the high-level working group on the financial situation of the United Nations was a useful basis for that task. Various proposals had been presented by the European Union for revising the scale of assessments and the implementation of incentives and disincentives in order to achieve concrete results in cooperation with all Member States.

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MARY JO B. ARAGON (Philippines), speaking for the "Group of 77" developing countries and China, said the Group shared the concerns expressed by the Secretary-General and other delegations on the seriousness of the Organization's financial situation. The fundamental cause of the financial difficulties was the failure of Member States, in particular the larger contributors, to fulfil their Charter obligations in full and on time. Indeed, the dramatic increase in outstanding contributions was due in large part to unpaid assessments from the major contributor. That was a disturbing trend particularly when 54 developing countries exerted great efforts to meet fully their contributions to the regular budget as of 18 October.

The Group believed that ensuring a viable financial base for the Organization would depend on the political will and Member States' commitment to provide it with the necessary resources in full and in a timely manner to enable it to implement effectively mandated activities, she said. There was need for sympathetic understanding of those Member States who were temporarily unable to meet their financial obligations because of genuine economic difficulties. In all other cases, the Group found no basis for those who were able to but, for other reasons, unilaterally withheld payment of their contributions.

The Group did not share the perception that the current cash-flow problem was linked to the existing systems of assessments, she continued. It continued to believe that it was both simplistic and misleading to believe that a revision of the scales was a panacea for the Organization's financial ills. Such a revision would neither change the aggregate amount of revenues nor guarantee better cash flows or prompt payment. The Group of 77 and China were prepared to undertake a review of all aspects of the Organization's financial situation. Any resolution on the financial difficulties should be arrived at through a process of the broadest possible agreement within an equitable democratic and consensual framework. Efforts to prepare the Organization for the next century would not be successful as long as it continued to operate under a virtually permanent state of financial stress.

Speaking only on behalf of the Philippines, she said her Government had paid all its dues to the Organization, including to peace-keeping accounts.

REGINA EMERSON (Portugal), referring to the report on the financial situation, said it had stated that Portugal owed outstanding contributions to the Organization. However, the reverse was the case, Portugal had some $12,000 in credit. She requested that a corrigendum be issued to state that her country had owed no outstanding contributions to either the regular or the peace-keeping budgets.

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