UNITED NATIONS HAS TAKEN "STEP BACK FROM FINANCIAL BRINK" IN 1999, UNDER- SECRETARY-GENERAL CONNOR TELLS ASSEMBLY"S BUDGETARY COMMITTEE

Press Release
GA/AB/3360

UNITED NATIONS HAS TAKEN ‘STEP BACK FROM FINANCIAL BRINK’ IN 1999, UNDER- SECRETARY-GENERAL CONNOR TELLS ASSEMBLY’S BUDGETARY COMMITTEE

Current Year Projection Is More Cash, Better Assessments Collection, Lower Level Of Debt -– ‘A UN Better Prepared to Meet Responsibilities Member States Gave It’

In 1999, the United Nations took a step back from the financial brink, Under- Secretary-General for Management Joseph E. Connor told the General Assembly’s Fifth Committee (Administrative and Budgetary) this morning, meeting to hear his assessment of the financial situation of the United Nations. While 1999 had been a year of financial turnaround, 2000 would be a year of financial challenge. He cautioned that in 2000 the situation could deteriorate if the Organization’s operational grasp exceeded its financial reach.

While regular budget and tribunals assessments were as expected, there was an increase in peacekeeping assessments in 1999, he added. Even with that increase, the obligatory cost to Member States for all United Nations activities in 1999 was the lowest in six years. Actual assessment for 1999 came to just over $2 billion. Combined assessment levels projected for 2000 were some $1 billion higher than 1998 and 1999. The regular budget level in 1999 stayed about even with 1994, and was the lowest in several years. For 2000, peacekeeping assessments were forecast to rise to $1.938 billion. Spending on the regular budget and the international tribunals would be largely unchanged. The total for all budgets was projected to be some $1 billion higher than 1998 and 1999.

The Organization had more cash than last year, he explained, largely because of payments made by the United States to avoid losing its vote in the General Assembly. Total available cash at the end of 1999 jumped to some $1.093 billion, from $736 million in 1998. Amounts owed to the United Nations were also lower, at $1.758 billion, down from $2.031 billion a year earlier. And the level of the United Nations debt to its Member States –- some $800 million -- was also significantly lower than the previous three years.

The United States had paid an amount equal to its share of the 1999 regular budget plus some $150 million last year, he said. Its 1999 regular budget payments totalled some $452 million. Other Member States paid 103 per cent of what was owed for 1999, and as a result of both, there had been no need to borrow money from peacekeeping missions to meet the United Nations regular expenses. The United States had also paid 92 per cent of its share of the 1999 peacekeeping bills, while payments from other Member States totalled 123 per cent of their share.

Fifth Committee - 1a - Press Release GA/AB/3360 54th Meeting (AM) 23 March 2000

His projection at year end 2000 was more cash, a better collection of assessments and a lower level of debt, he said, and that meant a United Nations better prepared to meet the responsibilities Member States gave it. A degree of financial stability had returned for regular activities, but for peacekeeping operations, liquidity problems would mean less stability. For special missions funded by voluntary contributions, uncertainty was the watchword. In a word, the task was not easy.

During the extensive general debate that followed Mr. Connor’s presentation, many speakers expressed their positions on changes to the scale of assessments used to apportion the Organization’s peacekeeping and regular budget expenses among its Member States. The scale uses a formula based on the principle of States’ capacity to pay to determine the share of the Organization’s expenses for which each State will be responsible.

The representative of the United States said the United Nations was both indispensable and flawed. It must be fixed to save it, he continued. The greatest challenge facing Member States was the inequitable assessment of dues. A “potential major train wreck” was in the offing if the demand for peacekeeping operations and the means of funding them were not aligned. Peacekeeping expenditures were projected to double this year. The United States wanted to pay its fair share and, above all, wanted peacekeeping missions to be effective, and that required that they be fully funded in the field. However, current peacekeeping missions were fated not to succeed if the status quo continued.

Japan’s representative said that the present scale was not fair. His country paid some 22 per cent of the regular budget and the amount was being scrutinized increasingly in domestic debates. Further, the fact that Japan’s share of the assessed budget was 7 per cent larger than the total share of the permanent Security Council members, other than the United States, was untenable. Permanent Council members’ responsibilities should be reflected in the peacekeeping and regular budgets.

But China’s representative said that, at the United Nations, responsibility was not linked to amounts assessed. There was nothing in the United Nations Charter that said permanent members of the Council were liable beyond their capacity to pay. Requests to reform the scale seemed primarily aimed at lowering the ceiling, but the ceiling distorted the principle of capacity to pay in favour of the major contributor. The United States was assessed for 25 per cent of the budget, but its gross domestic product constituted about 27 per cent of the world’s total product.

The representative of the Republic of Korea said there could be no lasting solution to the Organization’s financial stability without payment of arrears of Member States. It would be difficult for Member States to address reform of the current scale of assessments until there were concrete results in terms of resolving arrears issues.

What was sacrosanct was not the ceiling, but the Charter, India’s representative said. Member States were being told that payments would continue to be withheld unless the ceiling for assessed contributions was lowered. No State had a right

Fifth Committee - 1b - Press Release GA/AB/3360 54th Meeting (AM) 23 March 2000

to take a unilateral decision on its assessment. While respecting the principle of capacity to pay, perhaps Member States should consider a scale in which a fair number of countries contributed at or near the ceiling. That would be more equitable and would reduce the Organization’s budgetary vulnerability.

Egypt’s representative stressed that the United Nations should not be held hostage by having its budget based on just one or a few States. At the same time, arrears must be paid to allow the Organization to carry out legislative mandates. According to the Charter, Member States must shoulder the expenses of the Organization in accord with the scales of assessment they determine. Constructive negotiations to settle differences on all aspects of the budgets were needed, but the Charter was a legal commitment to pay in full, on time and unconditionally.

Canada’s representative, speaking also on behalf of Australia and New Zealand, said negotiations on the scale of assessments should pay due regard to the principles of the equality of Member States; the binding nature of obligations assumed on ratification of the Charter; and the collective responsibility to bear the expenses of the United Nations as apportioned by the General Assembly according to the principle of capacity to pay. He also called for reviewing the Organization’s present mechanism to sanction those in arrears, via Article 19 of the Charter, and for interest on accumulated arrears and for penalties.

Statements were also made this morning by the representatives of Portugal (for the European Union and associated States), Nigeria (for the “Group of 77” developing countries and China), South Africa (for the Non-Aligned Movement), Russian Federation, Norway, Israel, Malaysia (speaking for the Association of South-East Asian Nations), Tunisia, Brazil, Morocco, Bangladesh, Pakistan, Czech Republic, Belarus and Cuba.

The Fifth Committee will meet again at 10 a.m. on Monday, 27 March, to discuss matters relating to the United Nations 2000-2001 programme budget, and the question of asbestos in the United Nations Headquarters buildings.

Fifth Committee - 3 - Press Release GA/AB/3360 54th Meeting (AM) 23 March 2000

Committee Work Programme

The Fifth Committee (Administrative and Budgetary) met this morning to consider the financial situation of the United Nations.

Statements

JOSEPH E. CONNOR, Under-Secretary-General for Management, said that in 1999 the United Nations had stepped back from the financial brink. At year end, cash balances were up; unpaid assessments were down; and debt to Member States for troops and equipment was also down. Assessments for 1999 came to just over $2 billion. Those for the regular budget and tribunals had been in line with projected levels, while increased peacekeeping assessments were due to higher levels than projected for most missions. Still, at $2.065 billion, the combined assessment level for 1999 was the lowest in six years. The regular budget level in 1999 stayed about even with 1994, and was the lowest in several years. Peacekeeping levels were down from the peak years of 1994 and 1995, while assessment levels for the tribunals had mounted annually since their inception.

The year 2000 showed that same pattern for the regular budget and the tribunals, he said. But as a result of new responsibilities mandated to the Organization, peacekeeping assessments were forecast to increase to $1.938 billion. Together, assessment levels projected for 2000 were some $1 billion higher than 1998 and 1999.

Turning then from service demands to resources, he said that the United Nations would be better able to begin to satisfy year 2000 demands because of its better situation relative to 1999 year end resources. The Organization now had more cash. Because issues, such as the possibility of the major contributor falling under Article 19 of the Charter, had been resolved, available cash balances at the end of 1999 for the regular budget, peacekeeping and the tribunals combined jumped to a high of $1.093 billion from $677 million in 1996, $669 million in 1997 and $736 million in 1998. Also, at the end of 1999, unpaid assessments for the regular budget, peacekeeping and the tribunals stood at $1.758 billion, down from $2,031 million a year earlier. And the level of debt to Member States for troops and contingent owned equipment totalled $800 million at the end of 1999, which was significantly lower than the previous three years.

The aggregate level of cash at the end of 1999 was $1.093 billion, compared to $736 million a year ago, he said. At year end 1999, regular budget cash was a positive $111 million, while peacekeeping and tribunal cash came to $982 million. These were the highest amounts in five years, and the biggest change in cash levels was in regular budget cash. There had been many years of negative regular budget cash -- with a negative $197 million in 1996 -- and the improvement now was largely due to higher payments by the United States. The United States had paid in 1999 an amount equal to its 1999 regular budget assessment of $302 million, plus an additional $150 million. As a result, its total regular budget payments to the United Nations came to $452 million in 1999.

The United Nations regular budget cash crisis had begun in 1995 when the United States paid only 48 per cent of its regular budget assessment, he recalled. The immediate cash crisis subsided in 1999 when the United States paid 149 per cent of its regular budget assessment. In effect, its payments in 1999 largely made up for the shortfall in 1995. Payments by other Member States of their current year's assessments and arrears totalled 103 per cent of 1999 assessments. As a result, no cross-borrowing of funds from peacekeeping cash had been needed to cover a year end deficit in regular budget cash, for the first time since 1995.

Turning to peacekeeping cash, he cautioned that the forecasts were based on “extremely unpredictable variables”, and therefore constant reforecasting was expected. In October, year end peacekeeping cash was forecast at about $749 million, while the actual amount was $957 million, exceeding the three most recent years.

Two variables caused the cash levels to rise, he said. Assessment levels had been higher than projected earlier, and Member States had paid more of the amounts assessed. Payments by Member States other than the United States of current year assessments and arrears totalled 123 per cent of amounts assessed in 1999. As for the United States, it had paid at a rate of 92 per cent of 1999 assessments. This was roughly the same percentage as the previous two years, but far in excess of the 40 per cent and 70 per cent it had paid in 1995 and 1996.

There was a third favourable variable impacting peacekeeping cash, he continued. In view of the $111 million cash balance for the regular budget at the end of 1999, and the pressure on peacekeeping cash for new and expanding missions, the Secretary-General had decided to transfer $58 million of regular budget cash to peacekeeping to complete funding of the Peacekeeping Reserve Fund. The Fund was a cash-flow mechanism to permit the Organization to rapidly respond to peacekeeping needs. The General Assembly set its level at $150 million. Of that, $92 million had been funded in prior years from regular budget cash ($25 million) and from three closed peacekeeping missions ($67 million), namely, Namibia (UNTAG), Iran-Iraq (UNIIMOG) and El Salvador (ONUSAL). The $58 million from regular budget cash completed authorized funding and would be reflected as additional cash resources available in 2000 for peacekeeping.

At the end of 1999, cash balances were higher; there was no need to cross- borrow; and excess regular budget cash was available to augment peacekeeping needs, he said. Unpaid assessment balances were lower at the end of 1999. Regular budget and peacekeeping amounts were down. Tribunal amounts were up. Overall, the picture was better.

There was improvement regarding the regular budget, he said. At the end of 1999, 126 Member States had paid their regular budget assessments for 1999 and all earlier years in full. This was nine more than last year and 51 more than in 1994. It was not too long ago that only 75 Member States had paid their regular budget contribution in full. The consistent payment in full of regular budget assessments was the prime measure of the Organization's financial stability.

The level of unpaid regular budget assessments was down $244 million as at 31 December 1999, which was a reduction of $173 million from the end of 1998, he said. Unpaid assessments due from the United States were down $148 million, while amounts due from all other Member States were down $25 million. The level of unpaid regular budget assessments at 31 December 1999 was highly concentrated in four Member States: the United States, Brazil, Yugoslavia and Argentina together owed 88 per cent of the total. The remaining 12 per cent was owed by 59 other Member States.

As to peacekeeping assessments, the amount unpaid at 31 December 1999 came to $1.482 billion, which was $112 million less than 1998. The United States outstanding payments increased by $19 million, Ukraine's position had not changed, nor had that of Belarus. The Russian Federation had reduced its unpaid balance by $46 million from the year before. Five years ago, the Russian Federation had unpaid peacekeeping assessments which aggregated over $500 million, but had paid that down each year. All other Member States had reduced their unpaid amounts by $85 million.

Unpaid assessments of the tribunals were over $32 million at year end 1999, and had increased since they were established. But the growth in unpaid amounts was roughly in proportion to the growth in the level of assessment.

The unpaid amount at year end 1999 was about 20 per cent of the assessment level for 1999, he said. The aggregate level had decreased, and the arrearage was concentrated in a few Member States: four Member States owed 88 per cent of regular budget arrears and four owed 90 per cent of peacekeeping arrears.

Regarding debt to Member States, he said the United Nations began 1999 owing $872 million, mainly for contingent-owned equipment and troops. At the end of the year, debt to Member States stood at $800 million, which was $72 million less than the amount owed at the beginning of the year.

During the course of 1999, he continued, the United Nations incurred new obligations totalling $232 million. The Secretary-General intended to continue the policy of paying out to Member States amounts equivalent to new obligations incurred. A partial payment of $141 million had been made during the course of 1999; a further $91 million would be paid shortly. The Secretary-General also sought to pay down debt to Member States when arrears were received. Accordingly, $16 million had been paid in October 1999 as a result of an arrears contribution of that amount by the Russian Federation in September.

In terms of amounts owed to Member States at 31 December 1999, the list was headed by the United States, India, United Kingdom, Netherlands and Italy, but there were 67 others, he said. The future liquidation of troops and equipment obligations was almost entirely dependent on the collection of peacekeeping assessments now long in arrears. Four Member States accounted for 90 per cent of peacekeeping assessment in arrears.

As to 2000, cash collections for the regular budget had started off well, he said. The number of Member States paying on time and in full in 2000 had surpassed those which did so in 1999. As of February 2000, 64 Member States had made their full regular budget payments, 15 more than last year. For the regular budget, it was projected that there would be more months with a positive balance and a positive year end cash balance was projected, based on the assumption that the United States would in 2000 pay regular budget contributions equivalent to its year 2000 assessments. If that was the case, the regular budget cash projection for 2000 would show no basic difference from the previous year, “and that was very good news indeed”.

The main deficit cash position would be in October and November 2000, as the Organization awaited the current year's contribution from the United States, he explained. It was hoped that the United States could accelerate its year end regular budget payment so that there would be no need for any cross-borrowings from peacekeeping cash for any month during 2000.

Peacekeeping cash was different, he continued. It was not expected that there would be as high a year-end balance in 2000 as in 1999, for two reasons. Approximately $162 million of peacekeeping cash on hand had been earmarked to pay to Member States this year for obligations incurred last year. The first obligation was the final settlement ($91 million) of 1999 obligations for troops and equipment. Also earmarked in the cash account at year-end 1999 was cash ($71 million) made possible by the arrearage contribution from the United States and the Russian Federation in late 1999. That amount, too, would be paid to Member States in 2000.

Last year ended with debt to Member States aggregating $800 million, he said. Early in 2000, it had been anticipated that payments delayed from 1999 would be made to Member States, consisting of $91 million to complete payment for new troop and equipment obligations incurred in 1999 and $71 million in additional payments to Member States as the result of an arrearage contribution by the United States and the Russian Federation. It was anticipated that new obligations for troops and equipment, coming to $419 million, would be incurred in 2000.

The Secretary-General intended to pay in 2000 a minimum of some $365 million to liquidate a high portion of new obligations for troops and equipment, he continued. That payment amount fell short by $54 million of the total of new obligations to be undertaken in 2000. Unpaid debt to Member States for troops and equipment was expected to come to $692 million at year end. But remaining debt could not be liquidated until Member States paid their peacekeeping arrears. At the end of 1999, outstanding peacekeeping assessments aggregated $1.482 billion, with a major portion owed by four Member States. The ratio of unpaid peacekeeping assessments to amounts owed by the United Nations now stood at just over 2 to 1 -- $2 of unpaid assessments now in arrears was available when collected to liquidate $1 of debt to Member States.

To summarize, the projection at year end 2000 was better cash, better collection of assessments and better level of debt, he said. That added up to a United Nations better prepared to meet the responsibilities placed on the Organization by its Member States.

But, he said, there were challenges which could undo the overall better situation. New missions in Kosovo and East Timor were daunting, as was their financial underpinning. Much had been reported by the media recently on the precarious financial situation of several special missions.

Turning first to Kosovo, he said humanitarian affairs was funded largely by voluntary contributions. Civil administration was the responsibility of the United Nations, with funding by assessed and voluntary contributions. Economic reconstruction was the responsibility of the European Union; funding for its consolidated budget was provided by voluntary contributions and fees for services. Institution-building was the responsibility of the Organization for Security and Cooperation in Europe (OSCE), with funding provided by its own budget and voluntary contributions. The Special Representative of the Secretary-General was responsible for the entire mission, but each pillar remained financially independent.

In terms of UNMIK’s civil administration, he said that assessments had been issued in a timely fashion to fund the United Nations responsibility for civil administration, but they had not been paid in a timely fashion. The first assessment had been approved by the Assembly in July for $125 million, of that amount, 17 Member States were assessed 90 per cent of the budget and the remaining 171 States were assessed 10 per cent. Five months later, $115 million had been collected. A second assessment had been legislated in December for $290 million. The two assessments came to $415 million, but by the end of February 2000, only $190 million had been paid.

By contrast, Member States have been relatively prompt in paying pledges made for voluntary contributions, he went on. At the beginning of February, $30 million had been pledged, and 90 per cent of that received. In terms of economic reconstruction, the Union and its members had pledged almost 75 per cent of the required voluntary funds. By the end of March, 73 per cent of pledges would have been paid.

The recent inflows of cash, both from improved collections of taxes and user fees, together with payment of pledges, would fund the Kosovo consolidated budget through mid-June. Receipt of the further pledged contributions of the European Union of 35 million euros would extend that date to September 2000.

He then turned to the United Nations Transitional Administration in East Timor (UNTAET). The Assembly had approved an assessment of $200 million at the end of December 1999 and a proposed budget for the period 1 December 1999 to 30 June 2000, amounting to $386 million, was being reviewed by the Advisory Committee on Administrative and Budgetary Questions (ACABQ). Of the $200 million assessed, $69 million had been received as of 21 March, but only 38 Member States had paid in full or partially their assessment. That means that 65 per cent of the assessment had yet to be paid. Trust funds had been established to support the operation, he added.

Kosovo and East Timor represented major undertakings of the Organization, he said. Mixed financing, relying on a major component of voluntary contributions, increased the difficulty of predicting the timing and extent of cash inflows and drained the efforts of key personnel to manage the mission while at the same time keeping the ship afloat financially.

So the message was mixed, not only for the special missions but for the United Nations as a whole, he said. For 2000, a degree of financial stability had returned after an absence of several years for regular budget activities. For activities funded from peacekeeping assessments, there was less stability, with periodic juggling of amounts owed to Member States to provide the Organization with a degree of financial liquidity. For special missions funded in large measure by voluntary contributions, uncertainty was the watchword. In a word, the task was not easy for anyone.

ANTONIO MONTEIRO (Portugal), speaking on behalf of the European Union, Bulgaria, Czech Republic, Hungary, Lithuania, Romania, Slovakia, Slovenia, Cyprus, Malta and Liechtenstein, thanked those States that had paid their assessment despite economic hardship. However, there was deep concern about the financial situation of the Organization. The good news should be put into perspective, and rejoicing was not appropriate given that the United Nations was presently on the verge of imminent financial collapse. At the end of 1999 the Organization was still owed more than $1.7 billion -– more than its annual regular budget.

The underlying trend was a cause for concern, and the Union called on all Member States, and particularly the United States, to meet their obligations in full, promptly and unconditionally. The recent upswing in peacekeeping increased the need to solve the financial problem and stressed the underlying need to put peacekeeping on a sound financial footing. The Union reiterated its concern over United Nations debt to troop contributors, which had reached almost $1 billion. Persistence of arrears had forced the Secretary-General to engage in imprudent and potentially disastrous financial practices. The present financial situations impacted on fundamental United Nations activities.

The Union had presented a package of reform in 1996, including payment of arrears, a revision of the scales of assessment, incentives and disincentives, and increased administrative efficiency, he said. It had also called for the tightening of sanctions for non-payment under Article 19 of the Charter. Capacity to pay must continue to be the cornerstone of the scales of assessment, but it must be based on updated and accurate gross domestic product (GDP) figures. The Union called for a shorter statistical base period with automatic annual recalculation, and the regular budget should incorporate a reduction of the low per capita income adjustment. The debt burden adjustment should be removed, as it distorted the principle of capacity to pay, and United Nations assessments were not the best place to address debt.

He recalled that the Union was collectively the largest contributor to the United Nations. A reform of the peacekeeping scale of assessment was long overdue, as the present structure distorted capacity to pay. The current group system must be reviewed to account for economic development of Member States. That should be reviewed in the May resumed session of the Fifth Committee. The Union’s Council of Ministers had reaffirmed those positions on 20 March.

ROBERT FOWLER (Canada), speaking also for Australia and New Zealand, said those countries had paid in full, on time and without conditions. Many delegations were concerned about the lack of adequate and predictable funding for the Organization, which was charged with addressing the extraordinarily complex issues of international peace and security, and the most urgent economic, social and humanitarian problems. The overriding problem was that some Member States did not pay their assessments in full, on time and without conditions. As a result, the Organization was owed a large amount, of which the United States owed the most: 54 per cent of all monies owed. That hampered the Organization’s ability to fulfil its role and meant that missions approved by the Security Council were sent into the field inadequately equipped for their tasks. It was unconscionable that arrears should continue to cast such a long shadow over the Organization.

More concrete action must be taken to encourage timely payment of contributions, including a review of the present application of Article 19 of the Charter, he said. Instead of coming into force when Member States fell two years behind in their contributions, the current interpretation allowed States to be, in effect, three years behind. Arrears should be defined as amounts unpaid 30 days after issue of each assessment letter, and they should be calculated, for the purposes of Article 19, more frequently. The Assembly should review the minimum amount payable before a vote lost under the provisions of Article 19 was reinstated. The amount payable should be reasonable, rather than the bare minimum. With the increased predictability of regular budget assessments, the lowering of the floor and the introduction of annual peacekeeping budgets, most States should be able to make adequate advance provision to meet their financial commitments.

Apart from Article 19, the United Nations had few sanctions to deal with delinquent members, he continued. Proposals made in the Committee on Contributions and the High-Level Working Group on the Financial Situation should be seriously considered, including proposals that Member States in arrears should not be eligible for elections in the major organs, and that there should be interest penalties on accumulated arrears.

When Member States had ratified the Charter, they had agreed to share the expenses of the Organization as apportioned by the Assembly, and to do so unconditionally. Member States had also agreed to pay their contributions in full within 30 days of receiving their assessments. Further, they had approved the scales of assessments and the various budgets. They were legally obliged to pay their contributions in full, on time and without conditions. There could be no argument against that.

Negotiations on the scale of assessments should pay due regard to the following three principles: the sovereign equality of Member States; the binding nature of obligations assumed by Member States on ratification of the Charter; and the collective responsibility of all Members to bear the expenses of the United Nations as apportioned by the Assembly according to the principle of capacity to pay. Canada, Australia and New Zealand wished to engage constructively in negotiations on a new scale with a view to its comprehensive reform, and the improvement of its transparency, stability and simplicity. The capacity to pay should be the guiding principle.

ARTHUR C.I. MBANEFO (Nigeria), speaking on behalf of the “Group of 77” developing countries and China, said deep concern over the financial situation of the United Nations had been expressed by the group’s foreign ministers at their meeting in September 1999 in New York. The current financial crisis should not be linked to the scale of assessments, as it was primarily caused by the failure of certain Member States to pay their assessments. The financial situation had severely impaired the Organization’s ability to function and prevented it from carrying out its major activities. In addition, developing country troop contributors continued to subsidize the Organization because of irregular and late payment to them of what they were owed. This was a result on non-payment of assessed contributions.

The United Nations had been on a starvation diet year after year, he said. However, this had not been accompanied by the kind of revenue discipline whereby Member States did not deliberately default on their share of contributions. Because of difficulties that had arisen from the lack of financial liquidity , the atmosphere of confidence and cooperation, on which the United Nations depended for its existence, had been clouded.

In the interests of multilateralism, that cloud must be removed quickly so the United Nations could enter the twenty-first century with some assurances of support from its Member States, he said. The financing issue was at the core of the struggle for the future of the Organization, and would significantly impact on its effectiveness. The great damage that could be caused to the United Nations and its ability to fulfil its mandates because of the withholding of so large a part of its budget must be borne in mind.

The Group of 77 and China were committed to constructively participate in collective efforts to resolve the persistent financial difficulties, he said. The Group continued to believe that the only viable solution was for Member States to pay their arrears and to honour faithfully and promptly their legal obligations in full, on time and without conditions.

DUMISANI S. KUMALO (South Africa) speaking on behalf of the Non-Aligned Movement, said the Movement had already expressed its concern over the deteriorating financial situation of the Organization and its belief that the primary cause was the failure of certain developed countries to pay their contributions. It was also concerned about cross-borrowing from peacekeeping, and the resulting delay in payment to troop- and equipment-contributing States. He urged all States to fulfil their legal obligations to end that practice. He also urged all in arrears to pay them.

The Movement continued to endorse the principle that peacekeeping must be paid for in accordance with the existing special scale, which reflected the special responsibility of the five permanent members of the Security Council, he said. Capacity to pay must remain the fundamental criterion in apportioning the expenses of the United Nations, and any unilateral attempt to modify the scales of assessment by imposing conditions was unacceptable to the 114 members of the Movement. Any reduction in the ceiling would further distort the principle of capacity to pay, he added.

He reminded all Member States that the Organization, including its sources of funding, had been established on principles and ideals acceptable to them all.

RICHARD HOLBROOKE (United States) said he was encouraged by conversations he had recently held with other Member States concerning the United Nations. The latest report on finances was less bleak than the last, for which Under Secretary- General Connor was to be congratulated, but there was no reason to be complacent. He and the Russian Federation’s permanent representative had just announced publicly that they would work closely on efforts to reform the United Nations. He hoped this joint effort by former opponents in the cold war would encourage others to follow suit. The United States and the Russian Federation did not intend to seek the establishment of another task force or to put forward a plan, but rather to work to create a more stable financial structure.

The United States believed that the United Nations was indispensable, if flawed, he said. It must be fixed to save it. It was in the United States’ national interest to improve the institution it had helped create and had even named. A world without the United Nations –- or in which it was paralysed –- would be more costly to all and more dangerous. While some Member States acted outside the United Nations in pursuit of national interest, collective action was preferred by all. He said he was speaking primarily of peacekeeping -– the core reason for the Organization’s formation and the one on which it would continue to be judged. Collective effort was also needed to support United Nations agencies and programmes in performing their work -– work for which the United States contributed a great deal of money.

He said that when he spoke of flaws, he was not referring to cosmetic problems. Some of those flaws in the United Nations threatened the very future of the institution itself. Most urgently, a “potential major train wreck” was in the offing if Member States’ aspirations for peacekeeping and the means of funding them were not brought into closer alignment. He acknowledged strong feelings against the United States in the United Nations. It was accused of employing a double standard; of acting outside the Security Council; of falling behind in its obligations. While mindful of the criticisms, he believed the United States had made great strides since last October, with funding bills now passed into law that would give $3 billion to the system this year; $100 million had been paid against its arrears and the rest was available as the United Nations worked through its reforms.

Much had been done to reform the United Nations, he said. There had been cycle after cycle of reform programmes, but they always left critics unsatisfied. While each report and reform had merit, non had gone far enough, and all had been insufficiently acted upon. Secretary-General Annan’s call for sunset provisions, for example, had been shelved or rejected by Member States. Another blue-ribbon panel was not needed. Rather, action was required -– not necessarily large-scale action, but small changes that would prove significant over time.

The United States, he said, did not intend to dictate reforms or to put forward “made in the U.S.A.” proposals, but rather to make suggestions. He would focus now on the role of the Secretary-General, that of the Secretariat, on peacekeeping and operational proposals, and on the peacekeeping and general assessments. He proposed that the Member States empower the Secretary-General to control all agencies and programmes, to take programmatic decisions in keeping with the United Nations core values and to hold managers accountable for programmes. The institution must be accountable to its Members and sound management principles must be applied. Ill conceived or managed programmes could not be allowed to have a life of their own. The international civil service must be modernized.

The United States applauded the work of the Fifth Committee on the regular budget last year, he said. This budget must be flatter and more equitable, and good signs for consensus had developed. Peacekeeping was different, however, with expenditures projected to double this year and be even larger next year. Neither the management structure nor the system of financing missions would support that increase in demand. Demand was outpacing capacity, and therefore the United Nations was headed for a decisive moment which could even decide if it stayed in the peacekeeping business. The Department of Peacekeeping Operations needed staff, management streamlining and the ability to move resources into the field quickly.

African States had the most to gain from improvements, because most challenges would be in Africa, he said. But the greatest challenge facing Member States was not any domestic legislature or Member State arrears, which were regrettable, but the inequitable assessment of dues. The peacekeeping scale was set up in eight days to fund a single mission in 1973. It should not be locked in concrete. While 98 per cent of obligations currently fell on some 30 Member States, others only paid token amounts. Some had said privately to him that they were willing to pay more, but he envisaged the assessment of most States would not change under any assessment revision. However, others undeniably had the capacity and were not contributing.

The United States endorsed the principle of capacity to pay, he said. It simply called for an equitable spreading of the burden. It supported the European Union call for reform of the scales. The system must be revised because the status quo would only lead to crises. One way or another, there would be change in the next year. The fate of the latest round of peacekeeping missions would be determined over the next six months, so time was in short supply. The United States wanted to work closely with other Member States, to engage with them and to pay its fair share. Above all, it wanted to make peacekeeping mission effective, and that required that they be fully funded in the field.

SERGEY LAVROV (Russian Federation) expressed deep concern about the United Nations critical financial situation. Outstanding arrears had once again exceeded $3 billion, meaning that the Organization was chronically short of cash and had to borrow from peacekeeping operations to finance regular budget activities. The situation was alarming because the United Nations abilities in the areas of maintaining international peace and security were impeded. At the same time, the Organization's reform was under way, and reforming under pressure of a permanent financial crisis was a difficult task.

The abnormal situation was caused by a number of factors, he said. The financial difficulties of the United Nations were the result of a lack of political will on the part of some States to meet Charter obligations and support the Organization by real deeds. Strict observance of Charter obligations to pay assessed contributions to the United Nations was the main prerequisite of the financial stability and normal functioning of the Organization. Despite its economic difficulties, the Russian Federation had paid in full its current contributions to the United Nations regular budget and had for the last six years made payments to peacekeeping budgets exceeding its annual assessments, thus consistently paying off its outstanding arrears.

Another important reason for the Organization's grave financial situation was unjust distribution of expenditures among Members, especially for peacekeeping operations, he said. The need to change the methodology of regular budget and peacekeeping scales of assessment was long overdue. It was time to take steps in that direction, taking into account the many valid proposals submitted by different States.

The Russian Federation was ready to consider proposals on reducing the Organization's dependence on one contributor, he continued. It was open for cooperation on the issue of reforming the scale of assessments, which should be based on the principle of capacity to pay. At the same time, there should be no doubt that the principle of real capacity to pay was inseparable from Member States’ responsibilities to fulfil their financial obligations without any conditions. Also, any decisions on the reform of the scale must be based on consensus. Russia was interested in cooperating with the United States to enhance the effectiveness of the Organization, particularly regarding maintaining peace and security. There were differences of opinion on reform, including budgetary reform, but those could be overcome in the framework of the common objective of strengthening the Organization’s ability to respond to the challenges of the twenty-first century.

WANG YINGFAN (China) said the United Nations years of financial crisis had been mainly due to delays by the primary contributor of its assessed contributions. Member States must display genuine political will and pay their arrears on time, in full and without conditions. In that way, the financial crisis would be resolved easily. There was now a request to reform the scale, which seemed primarily aimed at lowering the ceiling. Currently, the major contributor was assessed 25 per of the budget, while its GDP constituted about 27 per cent of the world’s total product, with its economy growing for nine years in a row. Thus, the current ceiling was already favourable to that State. A further lowering of the ceiling would deviate even further from the principle of capacity to pay. It was unacceptable to use the notion of lowering the ceiling as a precondition for payment of arrears to exert pressure on the United Nations.

Some countries were putting forward the idea that permanent members of the Security Council should not enjoy low per capita income adjustment, he said. But there was no provision in the United Nations Charter as to the exception or any special status of the permanent members of the Council when it came to implementing the principle of capacity to pay. In the Organization, responsibility was not reflected in the amount of money paid. Any attempt to base the status of a country in the affairs of the United Nations on how much money it paid ran counter to the sprit of the Charter.

China was not against adjusting some elements of the scale to make it more reasonable and more in conformity with the principle of capacity to pay, he said. But no adjustment should involve discriminatory measures against the developing countries, thereby exacerbating their burdens.

OLE PETER KOLBY (Norway) said the world needed a strong United Nations, and the United Nations in turn needed the full support of all its Members. Growing crisis management, conflict prevention, long-term development demands and demands to secure human rights for all were being made on it. Norway gave top priority to strengthening the United Nations, and believed that the responsibility for providing it with the money and resources it needed was shared by all.

Norway was a major contributor, he said, providing almost $100 per capita for membership, peacekeeping and development, with voluntary contributions 20 times its assessed contributions. Member States could not, in the long run, expect the Organization to do more with less. Budget growth must be allowed when necessary to fund priority activities and meet new challenges. The list of Member States that had paid their assessed contributions included small developing States; those fulfilling their obligations despite economic hardship were to be commended.

The financial situation gave reason for a little more optimism, but Member States were still owed some $800 million for troops and equipment, he said. It was only the goodwill and patience of troop-contributing countries that had kept the Organization afloat over the last three years. Norway fully supported the European Union’s proposed comprehensive package for reforming the financial system. The package comprised payment of arrears, revision of the regular budget and peacekeeping scales of assessment, incentives to pay and disincentives for late-payers, and measures to increase administrative efficiency.

YEHUDA LANCRY (Israel) said the agenda of the United Nations grew ever longer, with an impressive wave of activity in the areas of sustainable development, social development, the status of women and of improving the quality of life in developing and least developed countries. Those essential projects and countless others must operate with increasing resources and efficiency if they were to meet the growing demands of the global community.

Israel therefore supported comprehensive reform in the financing of the United Nations system, including in the scale of assessments for the regular and peacekeeping budgets, he continued. The objective of such reform should be to ease the burden that now fell upon the major contributor, the United States, which had significantly contributed to the United Nations from its inception to the present. Israel was ready to support and partake in reform that shifted the weight to a large number of States, at a minimum cost to developing countries and those with economies in transition, and with no change for least developed countries. Only those adjustments could ensure that the Organization would be ready and able to rise to the challenges of the next century.

HASMY AGAM (Malaysia), speaking on behalf of the Association of South East Asian Nations (ASEAN), said he noted that the financial situation continued to be grim and the United Nations was still strapped for cash. He was increasingly concerned that this was adversely affecting the Secretariat’s ability to fulfil mandates. Urgent and concrete action was needed to save the United Nations from being permanently crippled.

The failure of the major contributor to pay in full and on time was the main cause of this crisis, he said. The scales of assessment had not caused it. Only early settlement of arrears and timely future payments by all would eliminate the persistent problems. The ASEAN always took its obligations seriously. Conditions on dues were not acceptable, and were inconsistent with the Charter that all had subscribed to.

Noting that the Under Secretary-General had stated that cross-borrowing had ceased, he was concerned that the previous practice meant delays in reimbursing troop- and equipment-contributing countries, particularly impacting on those from the developing world. That problem must be addressed. Member States had made substantial progress in reform, and ASEAN States were committed to carrying it forward. But a starving Organization could not serve Member States better, however it was reformed. Ways must be found to resolve the financial situation, and the ASEAN States was committed to that. Statements every year in the Assembly were not enough. The time had come to act.

SUH DAE-WON (Republic of Korea) said that despite some improvements, the Organization’s financial outlook remained depressing, with aggregate arrears of more than $1.7 billion. His delegation welcomed that cross-borrowing from peacekeeping accounts had ceased, but figures indicated that a return to the practice might become necessary again. Cross-borrowing was financially imprudent and adversely affected troop- and equipment-contributing countries.

If the current situation of arrears remained unchecked, confidence in the Organization would be eroded, even as it assumed broader functions, he said. The crisis hampered the Secretary-General’s reform efforts and deprived the United Nations of flexibility to fund new peacekeeping missions in a timely manner. There was a pressing need to restore the Organization’s financial stability and viability. There would be no lasting solution without prompt payment of arrears of Member States. Before any concrete results were witnessed in terms of resolving arrears issues, it would be difficult for Member States to address comprehensive reform of the current scale of assessments.

YUKIO SATOH (Japan) said the financial difficulties the United Nations now faced were largely due to some States’ arrears. Japan was concerned that 41 member States –- roughly 22 per cent of the entire membership -– had arrears above the amount specified in Article 19 of the Charter. It was a solemn obligation of all Member States to make efforts to eliminate their arrears.

It was also important to make the scale of assessments fair and equitable, to allow governments to gain support from their people, he said. The present situation was far from equitable and fair. Japan’s contributions had recently been exposed to increasingly severe scrutiny in public and political debates in Japan. Why was Japan’s assessment more than 20 per cent while its gross national product (GNP) was only 17 per cent? he asked. Further, the fact that Japan’s share of the assessed budget was 7 per cent larger than the total share of the four permanent members other than the United States was untenable. Their responsibilities should be reflected in the peacekeeping and regular budgets. Therefore, it was imperative that the scale become more equitable, and to that end, the present methodology should be revised.

Japan supported proposals to revise the scale for the peacekeeping budget to better reflect the real capacity to pay, he said. The principles of equity and fairness were respected by all Member States, and he was convinced that a solution could be found that was acceptable to all. Japan was prepared to play an active and constructive role in forthcoming discussions on reforming the scale.

AHMED ABOUL GHEIT (Egypt) said the financial crisis was still alarming. The many years of drought made it urgent that solutions to the causes of the problem be found. Egypt stressed the importance to avoid basing the budget on just one or a few States, so the United Nations would not be held hostage. Article 17 of the United Nations Charter provided that Member States must shoulder the expenses of the Organization in accordance with the scales of assessment they determined. That was a legal commitment on all Member States –- to pay in full, on time and unconditionally -– and the obligations were determined in accordance with capacity to pay.

Egypt believed it was very important that arrears were paid, he said, to allow the Organization to shoulder its responsibility to carry out legislative mandates. That, in turn, served Member States. It was necessary to seek the best means to collect the amounts due under all the budgets. The debt of some States had passed $3 billion. The fact that arrears were not being paid off meant that troop- and equipment-contributing countries, including Egypt, had not been paid for their international peace and security contributions. Those amounts owed were now over $1 billion.

There were many indices of danger in evidence, and Member States were now faced with a state of urgency. The situation demanded constructive and intense consultations and negotiations to settle differences over all aspects of the budgets and scales. That must be done in a manner that would ensure payment of arrears and guarantee the cash the United Nations needed to be effective.

SAID BEN MUSTAPHA (Tunisia) said it was only with a sound financial situation and adequate resources that the United Nations would be able to meet Member States’ expectations and fulfil the responsibilities assigned to it, particularly in terms of maintaining international peace and security. The higher number and nature of the responsibilities conferred on the United Nations should be supported by firm political commitment by all Member States to give the Organization the means to act.

He said he was pleased that the Organization had over recent years successfully embarked on a wide-ranging reform process, using management methods that took cost-effectiveness into account. For over five years, remarkable budgetary discipline had been exercised. While much remained to be done, it must be borne in mind that this was a long-term endeavour, and meant changing a system that had been in place for over half a century.

His delegation remained open to considering proposals on reforming the scale of assessments, he said. Consensus was the golden rule where shared interests were at issue. Such reform should enshrine the principle of capacity to pay; an ongoing examination of the impact on States of any change in the scale; and the need for a political decision to change the ceiling contribution rate. While open and constructive debate on that matter should take place, it was necessary in the meanwhile to deal with the financial situation that impeded the United Nations ability to meet its challenges.

KAMALESH SHARMA (India) said in real terms, the last six budgets had gone from marginal, to zero, to negative growth. The final appropriation of 1994-1995 had been higher than the initial appropriation for the current one, even while the largest economies had undergone sustained growth. He wondered why the United Nations was criticized in a way that other organizations to which the major contributor belonged were not, including the OSCE, Organisation for Economic Cooperation and Development (OECD), North Atlantic Treaty Organization (NATO) and the European Commission. He doubted whether any of those entities had to go through the financial turmoil that the United Nations faced, or had to do as much with as little.

There were now 1,349 fewer posts than five years ago, he noted. While critics would say that that showed there had been excess, those same critics still pressed for the Department of Peacekeeping Operations to be allowed to use gratis personnel because its resources were so stretched. In other words, they agreed that the Department was short-handed, but could not say so because then the regular budget would have to grow to fund the needed posts. And the same could be true of other departments with a lower profile.

For years, it had been said that the United Nations financial situation would improve only if it cut costs, he said. But in an organization where so much of costs went to staff salary, the only choice was to lop off staff, which had been done, or reduce salaries. He hoped the latter would not occur, as the Noblemaire principle [upon which salaries were established] was already a fiction. No one would let the United Nations go under, but an Organization staffed with complacent or financially pressed civil servants was an equal problem.

Now Member States were being told that the withholding of payments would continue unless the ceiling for assessed contributions was lowered, he said. It must be clear that what was sacrosanct was not the ceiling, but the Charter. Negotiating a lower scale, or a lower ceiling, was a right open to all, but a unilateral decision was not. While the rich always tried to reduce the taxes they paid, a man who refused to pay taxes because he thought they were too high would find himself enjoying his government’s adverse attention.

The capacity to pay should continue to be the basis on which the scale should be drawn up, but “the capacity to pay a lot” meant “the capacity to play havoc”, he said. Perhaps the time had come to see if, while respecting the principle of capacity to pay, there should also be efforts to make the upper reaches of the scale more democratic. One of the reasons that organizations such as the OSCE did not have the financial problems of the United Nations was that its scale was flatter, so if one or two members withheld payments, it did not cause immense disturbance. If the Committee on Contributions was to consider parameters for the scale, it should be asked to look at a ceiling much lower than the present one. Reducing it from 25 per cent to 22 per cent would only mean that instead of one country, there were two preponderant contributors and that would hardly improve matters. Instead, a scale should be considered in which a fair number of countries contributed at or near the ceiling. That would be more equitable and would reduce the Organization’s budgetary vulnerability.

Turning to peacekeeping, he said India was owed significant sums for troops and equipment. There must be a deadline for when the United Nations would make the payments in full. If the pattern continued, legislative and parliamentary support for peacekeeping operations would decline in democracies, and the United Nations might have to turn only to countries free of democratic process or parliamentary processing -- a questionable ethos to induct into peacekeeping operations.

GELSON FONSECA, Jr. (Brazil) said that despite payments towards arrears last year, the Organization was still not in good shape. Brazil had made an arrears payment last year. It had experienced difficulty in meeting its obligations as a result of the need to address the consequence of the global financial crisis. Last December, the Assembly approved a budget for the United Nations that amounted to a decrease in resources for its work. He could forecast that the zero nominal growth budget would soon become a less-than-zero nominal growth. Therefore, the process of administrative reform that had started must be carried through and ways must be found to improve efficiency.

Brazil remained open to suggestions from the Secretariat on how Member States could address and improve the financial situation, he said. Results-based budgeting in peacekeeping may be a useful tool. Success of the very difficult and complex peacekeeping operations was essential not just to the prestige of the Organization, but also to a stable international order. Therefore, stable management was needed in that area.

Brazil firmly believed that the crisis was not caused by the methodology of the scale, he said. It could definitely be improved, without disadvantaging developing countries, but the real reason for the crisis was well-known. The scale must be fair, predictable and clearly based on capacity to pay without distortions that could add to the burden of developing countries. The ceiling constituted a subsidy to a Member State by others, including developing States. Any refinement should aim at correcting rather than increasing distortion. There was no reason to reduce the ceiling -– rather the contrary. The peacekeeping scale should also be institutionalized and kept within its present format and criteria.

ELHASSANE ZAHID (Morocco) said he was pleased to note improvements in the financial situation last year, although that situation remained precarious. The picture that had been painted was disturbing, despite the improvements. While no cross-borrowing from peacekeeping had occurred last year, that practice continued because of the financial situation, and that delayed payment to troop contributors and the undertaking of activities that were vital. There was still consensus on the collective responsibility for financing the United Nations, and on capacity to pay as the primary determinant of assessments. There was also general agreement that the Organization needed a sound financial base.

Consensus solutions to the current problems must be found, he continued. Capacity to pay must remain the main criterion for assessments, but the scales must be corrected and attenuated to account for factors that affected the economies of certain countries and thus their capacity to pay. The methodology, including the ceiling, must be reconsidered. But any change must be acceptable to all, and must not increase the burden of developing countries. The United Nations was more necessary than ever and must be resourced to meet its challenges, as Member States had collectively pledged to do in agreeing to its Charter.

RIAZ HAMIDULLAH (Bangladesh) said that in the five months since Mr. Connor had last addressed the Committee, the Organization was apparently in a slightly better situation, though still not where it should be. Consideration of the financial situation of the Organization brought in the issues of payment of contributions by Member States in full, on time and without conditions in line with Charter obligations and strict financial discipline. Money owed by Member States had soared to nearly $2.5 billion. Payment to Member States contributing troops and equipment to the peacekeeping operations was long overdue, and to meet the widening deficit in the regular budget, the Organization had to resort to cross-borrowing from peacekeeping funds. Member States knew that, yet had pushed the Organization to this precarious state.

Agreeing to an acceptable scale was a most difficult exercise, he said. Member States had different levels of income and different economic structures. While the realities of the global economy could not be ignored, nor could the difficulties faced by a large number of Member States. Any new assessment must weigh those factors while remaining committed to the Charter principles. The issue must be approached in a pragmatic manner, with a broader understanding of each other’s difficulties.

SHAMSHAD AHMAD (Pakistan) said the overwhelming membership viewed financial solvency as important to enable the United Nations to carry out its mandated programs. It was essential that all Member States meet their financial obligations in a timely manner. Political mandates must be coupled with effective funding based on realistic rather than short-term considerations. The deteriorating financial situation had led to undesirable financial practices, such as cross-borrowing by the Secretariat from peacekeeping funds. Cross-borrowing, in turn, had resulted in delays to Member States providing troops and equipment, thus resulting in particular difficulties for developing countries, including his own. That practice could not be allowed to continue indefinitely.

Unfortunately, the financial situation had not improved, despite major reforms undertaken, he said. A cash-starved organization could not be effective or efficient. There was absolutely no link between the critical financial situation and the methodology for the scale of assessments. Any future revision of the scale should not be predicated on the Organization’s reform. In the larger interest, financial uncertainty could not continue indefinitely. Innovative and realistic approaches should be applied to break the deadlock. Central to any consideration of the scale should be the principle of capacity to pay. For its part, the Secretariat should continue to explore ways to use its limited resources optimally.

VLADIMIR GALUSKA (Czech Republic) said the United Nations system reflected the best common interest of the people from around the world. He supported a strong, transparent and caring United Nations, and one that promoted cooperation. The Czech Republic had always fulfilled its obligations to the Organization on time, in full and without conditions. Even though the country still faced some transitional challenges, it was devoted to the notion of multilateral development cooperation and had increased its financial support to the United Nations development activities over the past year by almost 30 per cent.

In view of the continuing frailty of the Organization’s financial situation, at the end of last year, the Czech Republic had advanced partial payment of its assessed contributions for 2000, and paid the remaining part at the end of January, he continued. The United Nations remained the only global organization tackling the common problems of the nations of the world. Its authority should be strengthened. The remaining reform proposals should be speedily approved and implemented. At the same time, even the best blueprints did not count for much if there was no money for implementation. The Czech Republic was prepared to discuss ways to finance the Organization’s needs and accomplish its agenda in the new millennium.

ULADZIMIR VANTSEVICH (Belarus) said one of Mr. Connor’s graphs indicated that the situation regarding his country’s payments to peacekeeping operations in 1998-1999 had not changed. But in fact, the situation had changed dramatically for the

better. In December 1999, the Fifth Committee had adopted a resolution changing the order of payments for the arrears owed by his Government. In January 2000, Belarus fully paid its arrears for peacekeeping operations which began after 1 January 1996. It had also made partial payment with respect to both the ad hoc international criminal tribunals, and had begun making payments for peacekeeping operations set up prior to 1996. It was well known that Belarus’ arrears for peacekeeping operations had arisen for reasons that were independent of the Republic itself. In the future, it would continue to pay its assessments and arrears without conditions.

As for the regular budget, he welcomed the fact that this year the number of countries that had paid their contributions had risen. Belarus had been paid its 2000 contributions on 8 January. It understood the importance of the work being carried out by the United Nations to reform the scale methodology and his delegation was ready to participate constructively in that effort.

DULCE BUERGO RODRIGUEZ (Cuba) said she heard again with regret that the financial situation remained precarious, despite discrete progress. Of course, she was pleased to hear about the progress. Cuba was concerned at the weakening of the Secretariat’s capacity to carry out mandates as a result of the financial situation. The unilateral conditions imposed by the major contributor regrettably meant that the situation would arise again. That imposition of conditions was again evident in the United States’ statement to the Fifth Committee this morning. It was unacceptable to hear growing political conditions on payment when Member States should rather be hearing about efforts to pay. The true cause of the problems was non-payment of contributions by Member States, and in particular the United States.

There was no link between the methodology of the scale and the financial crisis, she said. Insisting on declaring such a link would not facilitate deliberations to address problems, and could even make solutions more difficult to find. The importance of the United Nations to Cuba was demonstrated by its serious efforts to pay its arrears and its full payment of this year’s dues, despite economic problems imposed by the United States. Without political will, no solution would be found. If Member States did not fulfil their obligations under the Charter, a way out of the financial situation would not be found. She appealed to all Member States to pay contributions in full, on time and without conditions, and thereby make it possible for the United Nations to fulfil the role Member States had assigned to it.

Once again, she noted, when the financial situation of the United Nations was discussed in the Fifth Committee, its members received the information on the day of that discussion. She suggested that it may help the quality of debate if information was provided far enough in advance to allow representatives to study it prior to consideration. The discussion and consideration should not be mechanical, with positions merely repeated every time, and without allowing for the opportunity of an interactive dialogue. She hoped the Committee would continue its consideration of the financial situation during the next week and would be able to take a decision on the matter.

* *** *