Resumed Fifty-fifth General Assembly

Fifth Committee

54^th Meeting (AM)

MEMBER STATES CRITICAL OF DELAY IN PROMISED PAYMENTS

FROM UNITED STATES, IN FIFTH COMMITTEE

Under-Secretary-General Provides Information on Human Resources Reforms

As the Fifth Committee (Administrative and Budgetary) continued its consideration of the financial situation of the United Nations this morning, many speakers expressed concern over the continued difficulties experienced by the Organization, agreeing that its financial crisis was the result of the non-payment of the arrears by the largest contributor –- the United States.  Other causes of concern included an expected increase in the peacekeeping budget and the level of debt the Organization owed for contributions of troops and equipment to Member States.

Speaking on behalf of the “Group of 77” developing countries and China, the representative of Iran said that while negotiations last December on the new scale of assessments had been difficult, the Group had made significant sacrifices to ensure the financial health of the Organization.  The Group regretted that the expected payment in return from the United States had still not been received.  It urged that country to heed its responsibility and demonstrate -- through concrete action –- its commitment to make the necessary payment on time, in full and without conditions.

Speaking on behalf of the Rio Group, the representative of Chile said he believed that the recent compromise on the scales of assessments meant an additional financial burden for the developing countries.  The urgency with which viable agreements had been reached in December had not been reciprocated by concrete actions by the United States, and the Rio Group noted with concern its failure to implement the agreements reached.

The representative of the United States said that his country recognized its duty to do everything it could, as fast as it could, to help alleviate the current difficulties.  It was moving quickly to pass the necessary legislation.  The political will for a prompt payment had been reflected in the unanimous Senate vote in favour of the payment of arrears, and the action had now passed to the House of Representatives.  The Secretary of State had signed the necessary waiver to eliminate the need for any further reduction in the regular budget ceiling, which had been previously specified as one of the requirements for further arrears payments.  The United States would continue to work its Congress to ensure that those payments were made as quickly as possible. 

Noting the United States’ confirmation that it would make a prompt payment of $582 million in arrears, the representative of the Republic of Korea said that once received that amount must be used to pay the debt owed to Member States, as the Under-Secretary-General for Management, Joseph E. Connor, had said it would be last week.  At the end of last year, that debt stood at $917 million and payment was long overdue.

The representative of New Zealand (also speaking on behalf of Australia and Canada) said that parallel to the problem of arrears was the issue of timely payment.  The delay in payments by some Member States injected an element of uncertainty into United Nations financial planning -- an already difficult exercise.  Member States should pay on time.  Failing that, there should be accelerated payments by Member States who paid late in the year, and full payments by year-end.

Also this morning, the Committee heard a statement by the Under-Secretary-General for Management, on behalf of the Secretary-General, regarding human resources management.

He said that a simple and efficient recruitment and placement process would provide the Organization with staff of the highest quality -- versatile, multi-skilled and able to meet urgent requirements.  The first element of the Secretary-General’s proposed reform was a new recruitment, placement and promotion system, where programme managers selected staff and were accountable for their decisions.  New central review bodies ensured compliance with the requirements in that process, and new monitoring and accountability mechanisms had been put in place.  The second element involved a transition to a system of managed mobility.

There were two other important issues, he continued, on which the Secretary-General was not yet ready to make final proposals.  The first related to contractual arrangements, on which he would welcome any guidance from Member States before consultations with staff on the subject resumed.  The second related to administration of justice in the Organization, on which consultations with staff were ongoing.  The Secretary-General assured the Committee that his proposals would be implemented in a fair and equitable manner, and in the best interest of the Organization and of its staff.

Also speaking in today’s debate were the representatives of Sweden (on behalf of the European Union and associated States), Pakistan, Japan, Norway, Singapore, Cuba, China and Argentina.

The Committee will continue its work at 3 p.m. tomorrow, 30 March, when it is expected to take action on several drafts.

Background

The Fifth Committee (Administrative and Budgetary) met this morning to hear a statement from the Under-Secretary-General for Management, Joseph E. Connor, on human resources, and to continue its consideration of the financial situation of the United Nations.

On the latter, the Committee had before it a report from the Secretary-General, which provides information on the financial situation of the Organization as of 31 December 2000 and projections for the year 2001 (document A/55/504/Add.1).

The Committee heard a detailed oral statement from Mr. Connor on the financial situation, which included the material in this report, last week. 

[For a summary of this detailed statement, see Press Release GA/AB/3432 of 22 March].

Statements

Making a statement on behalf of the Secretary-General, the Under-Secretary-General for Management, JOSEPH E. CONNOR said that the Secretary-General had followed the work of the Fifth Committee on human resources management, in particular on his proposals for human resources management reform to which he attached the highest importance.  The Secretary-General would have liked to convey his views to the Committee in person, but, unfortunately, he was away from Headquarters. 

At the heart of the reform was the need for a simple and efficient recruitment and placement process, which allowed the Organization to retain and obtain staff who were of the highest quality, versatile, multi-skilled and able to meet the urgent requirements of the Organization, he said.  To achieve that, the Secretary-General’s reform proposal contained two key elements.  The first was a new recruitment, placement and promotion system, where programme managers made the decision to select staff and were accountable for those decisions.  New central review bodies would ensure compliance with the requirements in new process.  He had also put in place monitoring and accountability mechanisms for the attainment of organizational mandates relating to geography and gender of staff, and for ensurance that regulations and rules were observed.  The second element was to initiate a transition to a system of managed mobility, which would facilitate assignment of staff by the Secretary-General to any of the activities or offices of the United Nations, and also provide staff with greater career development opportunities.

Without those elements, the Organization would not be in a position to move towards faster recruitment, particularly at duty stations in developing countries, towards more rapid response to the needs of peacekeeping operations, and towards the broadening of the experience of staff, he said.  There were two other important issues, on which the Secretary-General was not yet ready to make final proposals.  The first related to contractual arrangements, on which he would welcome any guidance Member States wish to provide before consultations with staff on the subject resumed.  The second related to administration of justice in the Organization, on which consultations with staff were ongoing.  The Secretary-General would return to the General Assembly on those matters.  The Secretary-General assured the Committee that his proposals would be implemented in a fair and equitable manner, and in the best interest of the Organization and of its staff.

The Committee then turned its attention to its agenda item on improving the financial situation of the United Nations.

BAGHER ASADI (Iran), speaking on behalf of the “Group of 77” developing countries and China, expressed his gratitude to Mr. Connor for his presentation on the financial situation last Thursday.  He reaffirmed the legal obligation of Member States to bear the expenses of the Organization in accordance with the Charter, and to pay their assessed contributions in full, on time and without conditions.  The Group recognized the need to sympathize with those nations that were temporarily unable to meet their financial obligations as a consequence of genuine economic difficulties.  While 1999 had raised the hope that the Organization might move forward from the bleak financial situation of previous years, 2000 was perhaps a step back towards financial crisis. 

While negotiations last December on the new scale of assessments had been difficult, the Group had made significant sacrifices to ensure the financial health of the Organization, he said.  The Group regretted that the Organization had not yet received the expected payment from its major contributor.  It urged the major contributor to heed its responsibility and demonstrate -- through concrete action –- its commitment to make the necessary payment on time, in full and without condition.  Assessments to the regular and peacekeeping budgets of developing countries had increased following the adoption of the new scales.  The outcome of the negotiations had been successful in no small measure because of the Group’s belief that the financial health of the Organization must be restored, even at the cost of Group members assuming disproportionately higher financial burdens. 

The Group expressed concern at the late and irregular reimbursement to developing countries of the costs of troops and equipment provided to peacekeeping operations, he said.  That practice could not continue indefinitely, as it placed undue stress on developing countries.  The significant arrears owed by the Organization to troop-contributing countries were increasing.  If peacekeeping was a core activity of the Organization, its membership should show its commitment to that activity by paying in a timely fashion.  Troop-contributing countries could be reimbursed only if all countries paid their arrears in full.  He reiterated the urgent need to address the problem of the ballooning debt owed by the United Nations to troop-contributing countries, often running into tens of millions of dollars.  He welcomed the intention of the Secretary-General to use the prospective payment by the major contributor to reimburse troop-contributing countries.

PIERRE SCHORI (Sweden), speaking on behalf of the European Union and associated States, welcomed the positive news in Mr. Connor’s presentation on finances.  In 2000, 141 Member States had paid -- some despite considerable economic hardship -- all their regular budget assessment in full for 2000 and all preceding years.  However, that positive feature accounted for only one rather small portion of the overall financial situation of the United Nations.  While 1999 had been a good year, and inspired optimism, the main indicators showed the 2000 presented a less bright picture.  The Union remained deeply concerned about the finances of the Organization. 

At the end of 2000, arrears in contributions for the regular budget, peacekeeping and Tribunals were in excess of $2.2 billion –- an increase of

$500 million from the preceding year.  In that context, he called on all Member States to meet their Charter obligations in full.  Increasing demands were being put on the Organization, as evidenced by the recent upswing in peacekeeping activities.  The European Union renewed its appeal for a full, prompt and unconditional payment of all assessed contributions. 

In particular, he stressed the importance of payment by the largest contributor of its arrears and assessed contributions to the United Nations.  As part of its wide-ranging discussions last autumn, the Assembly had agreed, on the one hand, to grant relief to Member States whose economic circumstances genuinely required it and, on the other hand –- at an increased level –- to provide relief to the largest economy in the world in order to resolve its long and persistent record of accumulating arrears.  The decision finally taken in December on the scale of assessments was motivated by the will of all Member States to ensure the financial stability of the Organizations for years to come.  It was also based on the premises that the largest contributor would, henceforth, pay the full amount of all its assessed contributions, settle its arrears to the Organization by 2003, and pay $582 million of its arrears immediately.

The first quarter of this year had passed, and he was deeply concerned that those arrears had not yet been paid to the United Nations.  He took note of the assurances given by the representative of that Member State that its governmental bodies had been “moving quickly to ensure that the full amount of arrears …are promptly paid”.  In that context, the Union reiterated its concern about the Organization’s debt to all troop and equipment contributors, many of which were developing countries.  For the first time in several years, the Secretary-General had not been able to fully pay out to Member States new obligations incurred during the current year.  He welcomed the Under-Secretary-General’s statement that all the $582 million expected from the largest contributor would be used to compensate troop- and equipment-contributing countries.

In his presentation, Mr. Connor had made it very clear that the present financial situation had a negative impact on areas that were fundamental to the activities of the United Nations, he continued.  In that connection, he recalled the decision by the Assembly last October to apply Article 19 of the Charter -– the sole mechanism to ensure payment of assessed contributions -– in a fairer and more consistent manner. 

In conclusion, he reiterated the Union’s strong commitment to the Organization.  As, collectively, its largest contributor, the Union’s assessment rate surpassed its share of world gross national product (GNP) by almost 25 per cent.  The Union member States and the European Commission together provided close to half of all official development assistance (ODA) worldwide.  The Union thus assumed an important financial responsibility, which it had duly honoured.

J. GABRIEL VALDÉS (Chile), speaking on behalf of the Rio Group, said that the Group shared other members’ concern at the financial situation of the Organization.  In his view, the financial crisis experienced by the United Nations was the result of the non-payment of the arrears by the largest contributor.  Despite numerous efforts by Member States, the financial situation had worsened in 2000 when compared with the previous year.

Four months ago, Member States, had accepted a compromise formula to enable the Organization to overcome its chronic financial crisis, he continued.  For the members of the Rio Group, that compromise had meant an additional financial burden, which was further compounded by their status as developing countries.  The urgency with which viable agreements had been reached on the scales of assessments for both the regular budget and peacekeeping operations had not been reciprocated by concrete actions by the major contributor.  The Rio Group noted with concern the failure to implement the agreements reached.  The Organization relied on its Members to honour their commitments, and their failure to do so cast a shadow over its future. 

The Group shared the optimism shown by Mr. Connor at the conclusion of his presentation last week, with regard to the immediate future of the United Nations, he said.  However, the fact that the largest contributor continued to pursue the same policy, the expected increase in the peacekeeping budget, and the outstanding debt owed for contributions of troops and equipment cast dark shadows over the future.

DON MACKAY (New Zealand), also speaking on behalf of Canada and Australia, said that he fully supported the Secretary-General’s proposals for human resources reform, and encouraged the Organization to endorse that package, which would allow the Organization to obtain and retain staff of the highest calibre.  He supported a strong, effective United Nations -- the “indispensable organization” as the Secretary-General rightly called it.  If the Organization was to fulfil Member States’ expectations, it must have a healthy and stable financial situation.  While he was pleased to see the progress made in 1999, the “step back from the brink” was tempered by news of the United Nations financial situation for 2000.  In that year, the United Nations lost ground in financial terms.  Cash reserves were down, unpaid assessments exceeded the levels of the previous four years and debt owed to Member States for peacekeeping had also exceeded previous years. 

The year 2000 was not, however, without its encouraging aspects, he continued.  The number of Member States which had fully paid their assessments by the end of the year had risen from 126 in 1999 to 141 in 2000.  The downside of the good news, however, was that the level of unpaid contributions by Member States remained enormously high.  The arrearage was concentrated among a few Member States, most of them major contributors.  The level of arrears had perpetuated unacceptable delays in payment to peacekeeping troop contributors, undermining the core function of the Organization.  That was an affront to those States, many of them from the developing world, who paid their dues to the United Nations as assessed, on time and without conditions.  Legally incurred dues to the United Nations were a binding obligation upon Member States.

The great bulk of arrears were attributable to a single Member State, he added.  He welcomed efforts that the United States had made to pay down its substantial arrears and he hoped that the remaining arrears issues, including contested arrears, would be resolved to the satisfaction of all parties concerned.  The States for which he spoke supported an equitable, transparent scale of assessments based on capacity to pay.  The United States rate reductions were unpalatable to many delegations, as they contravened those principles.  Nevertheless, a consensus had emerged around new scales of assessments, with the best interests of the Organization at heart.  It was of some disappointment that despite the resolutions on the scales three months ago, the Organization continued to await the payment of the next tranche of United States arrears.  He hoped that the United States would soon honour the commitments made last fall.

Parallel to the arrears problems was the issue of timely payment, he said.  The number of Member States paying their regular budget assessment in full by the end of February had decreased from 64 in 2000 to 54 this year.  The delay in payments by some Member States injected an element of uncertainty into United Nations financial planning, an already difficult exercise.  Member States should pay on time.  Failing that, there should be accelerated payments by Member States who paid late in the year, and full payments by year-end.  Article 19 of the Charter remained the sole sanction against those Member States which did not pay their legally binding dues.  He supported implementation of the General Assembly’s decision to calculate arrears on the basis of what was actually assessed and payable for the preceding full two years.   He remained optimistic about the ongoing development of the United Nations and envisioned an organization based on a much sounder financial footing.  Such an organization would be in a stronger position to address challenges such as poverty, humanitarian crises and HIV/AIDS. 

MASOOD KHALID (Pakistan) said that while the financial overview presented by Mr. Connor appeared encouraging in certain respects, much optimism generated by projected indicators remained in the realm of unfulfilled commitments.  Total unpaid assessments had crossed the $2 billion mark, with a whopping $917 million was owed to troop-contributing countries.  Regrettably, the commitments by major contributors to release payments had remained unfulfilled.  He had been pleased to note that towards the end of 2000 the Organization had been able to avoid the practice of cross-borrowing.  Projections for the later half of 2001 once again portrayed the negative drift towards cross-borrowing on a short-term basis.   There was a need to check that trend -- even for short-term purposes.  That would only be possible if major contributors continued to make regular payments in accordance with their obligations and without delay.  The United Nations capacity to dispense with its primary responsibility for peacekeeping should not be impacted by such financial problems, as peace remained the most cherished objective of the international community. 

The Organization’s financial woes notwithstanding, resolution of certain long-standing issues had generated a renewed optimism, he said.  Pakistan’s commitment to United Nations peace efforts remained unswerving.  In the wake of the successful review of the scale of assessments last fall, contributing States looked forward to an early schedule for reimbursement.  He was dismayed at the slow progress towards payment of arrears by the largest contributor.  Its payment would facilitate reimbursement to contributing countries.  The successful implementation of many important projects was subject to the United Nations’ financial strength.  Given its size and mandate, the Organization’s capacity to deliver demanded that its engine remain well stoked.  It was incumbent on Member States to recognize their obligations to pay and it was equally an obligation for United Nations management to organize its programmes in a cost-effective manner. The financial health of the Organization depended not only on commitments, but also on actual payment of dues by all Member States.  There was an urgent need to substitute deeds for words.

LEE HO-JIN (Republic of Korea) said today he had listened with pleasure to the statement by Under-Secretary-General Connor on human resources management.  The additional commitment of the Secretariat to ensure faster recruitment and faster mobility was welcome. 

Turning to the financial situation of the Organization, he said that by setting new scales of assessments for the regular budget and peacekeeping last December, Member States had made great strides in placing the United Nations finances on a sound and solid footing.  That might not have been possible if many Member States, including the Republic of Korea, had not accepted a sharp increase in their contributions for the sake of achieving a common goal.  His delegation urged all Member States to fully honour their commitments under the new arrangements.

Noting some positive indications in the latest financial report, he said that overall, however, the financial situation of the Organization remained precarious.  United Nations activities were constantly hampered by a recurring pattern of cash flow deficit.  The total outstanding contributions to the regular, peacekeeping and Tribunals’ budgets had amounted to over $2.2 billion by the end of last year.  The Republic of Korea was particularly concerned that these arrears were concentrated among a few major contributors.  United Nations financial stability and liquidity would significantly improve if only those few major contributors faithfully abided by their commitments.

He noted the United States’ confirmation that it would make a prompt payment of $582 million in arrears.  Once paid, that amount must be used to pay the debt owed to Member States, as indicated by Mr. Connor.  As of the end of last year, that debt stood at $917 million and payment was long overdue.

This year, the Organization was likely to see a remarkable expansion of its peacekeeping operations, he said.  A sharp increase in assessments brought Member States to the same old question -- whether the United Nations provided value for money.  Further reform measures should be taken to ensure that it did, particularly in the areas of human resources and procurement.  In addition, oversight should be further strengthened to ensure efficient use of resources and enhance managerial accountability.

He said that his country had consistently met its financial obligations by paying its assessments in full and on time.  By the same token, he urged Member States in arrears to pay their share of contributions in full, on time and without conditions.

KIYOTAKA AKASAKA (Japan) said that his delegation attached great importance to ensuring that the United Nations operated on a sound and stable financial basis, and assessed contributions must be paid towards that end.  For its part, Japan had been faithfully fulfilling its obligations to pay its assessed contributions in full and on time, despite a difficult economic and budgetary situation, and would continue to do so in the future.  It must be borne in mind, however, that it was not an obligation to be shouldered by only a few.  It was a collective responsibility of all Member States.

The number of countries paying their assessed contributions in full by the end of the year had been growing every year, he continued.  It had risen to 141 by the end of 2000.  In addition, the amount of arrears on the regular budget was down to $222 million.  His delegation was pleased that the number of States in arrears, to the extent that the terms of Article 19 of the Charter applied, had fallen to 38 in January.  Those developments were clearly the results of serious efforts by many Member States to discharge their financial obligations towards the Organization.  He expected those efforts to continue this year. 

Japan was also gratified that cross-borrowing had been unnecessary at the end of 2000, he said.  He expected that reimbursement to troop-contributing countries would continue.  He commended the efforts of the Secretariat to continue appropriate cash flow management and asked how reserve funds, including the Peacekeeping Reserve Fund, were being used.

Japan had long insisted that a fairer and more equitable scale of assessment was prerequisite for the stabilization of United Nations finances in the long run, and a reform had been initiated in that regard last year after difficult negotiations, he said.  This year, the Organization would face an increasing level of peacekeeping budgets, as well as the task of accommodating some new proposals to strengthen the United Nations for the next programme budget. Member States should make their budgetary contributions in full and as early as possible.

OLE PETER KOLBY (Norway) said that the good news was that regular budget arrears had been cut almost in half over a three-year period.  The bad news was that, as of the end of the year, unpaid assessments for the regular budget, peacekeeping and the Tribunals had increased by about $500 million over the last year, exceeding the levels of the last four years.  Cash insufficiency had resulted in a period of cross-borrowing for the International Tribunals for former Yugoslavia and Rwanda for the first time in 2000.  The amount due for peacekeeping operations was rapidly increasing.  For the first time in several years, the Secretary-General had been unable to fully pay new obligations incurred during the current year.  Membership in the United Nations meant an obligation to pay assessed contributions in full, on time and without conditions.  Breaching that principle was a treaty violation.  He urged the largest contributors to pay their arrears and assessed contributions.

Assuring the financial solvency of the Organization must be a primary goal, he said.  The resolutions adopted last December regarding the scale of assessments gave reason to hope that the United Nations’ financial situation would improve somewhat.  The United Nations’ financial situation should be strengthened and its efficiency improved.  Important steps had been taken to make the United Nations more streamlined, effective and efficient.  While he welcomed reforms, it was equally important that the United Nations be given sufficient resources to carry out its mandates under the programme budget and peacekeeping resolutions on a sound and predictable financial basis.  It should not be necessary to resort to administratively demanding trust funds and other budgetary arrangements to fund priority activities of the United Nations.  He reiterated the call to allow for real budget growth, when necessary, to fund core activities and meet new challenges.

DONALD S. HAYS (United States) said that, while the United States was not in the habit of discussing its legislative process, in the spirit of partnership it was fitting to provide critical information that would bear upon the financial well-being of the United Nations.  The United Nations largest contributor recognized its duty to do everything it could, as fast as it could, to help alleviate the current difficulties.  Last December, the membership had entered into an explicit compact -– reform of the scales of assessment in return for the United States payment of a sizeable portion of its arrears.  The membership rose above individual self-interest to reform both scales of assessment.  The negotiations had resulted in a compromise, one that all felt was fair and reflected an even-handed balance of competing interests –- both political and financial -– around the table. 

The result of the compact, however, was short of the steps required by United States legislation to enable the United States to pay the $582 million in arrears, he continued.  It was, therefore, necessary for the United States Government to take steps to amend existing laws to free up funds.  He assured delegations and the Secretariat that the United States was moving quickly to pass necessary legislation and that that action had the full support of the Government.  Just 16 days after the compromise had been reached in the Fifth Committee, the Senate Foreign Relations Committee had held hearings and had publicly endorsed the agreements reached.  The political will for a prompt payment had been reflected in the unanimous 99 to zero Senate vote in favour of the payment of arrears.  The action had now passed to the House of Representatives.  Any further delay in payment was not a reflection of political opposition, but rather a function of a legislative process that was at least as complicated and lengthy as the Fifth Committee process. 

He said that the United States Secretary of State had indicated several times that the release of those funds and the lifting of the legislative cap on United States peacekeeping contributions were among his top legislative priorities this year.  The Secretary of State had also signed the necessary waiver to eliminate the need for any further reduction in the regular budget ceiling, which had been previously specified as one of the requirements for further arrears payments.  The United States was committed to keeping Member States informed on the timing of arrears payments and would continue to work with the its Congress to ensure that those payments were made as quickly as possible. 

GERARD WEI HONG HO (Singapore) thanked the Secretariat for improving the format of the financial report, and supported the statement by the representative of Iran on behalf of the Group of 77 and China.  He said that the United Nations resembled a man shot in the stomach, who was bleeding profusely. Having received a heart transplant and blood transfusions, the man continued to bleed.  That was the situation the United Nations was facing today.  It was clear that the financial situation of the United Nations had not changed a bit.  It was still facing difficulties, and one Member State was responsible for almost half the arrears.

Last autumn, Member States had bent over backwards to reach an agreement on the scales of assessment, trying to accommodate one particular Member State.  As a result of a promise to pay, the contribution of that State to the regular budget was reduced to 22 per cent, while many other States undertook a heavier financial burden.  More than three months had passed.  While other States had carried out their part of the bargain, the arrears of that one Member State had not been paid, and so the debt to troop-contributing countries also remained unpaid.

That perverse practice must come to an end, he continued.  The financial future of the United Nations depended on the payment of the promised amounts by the United States.  The situation was exacerbated by the fact that the United States did not recognize a portion of its debt.  As a responsible Member of the Organization, it must pay the so-called contested arrears.  The United Nations must stitch its wounds.  Reconciliation would take place only if the United States paid all its dues, without setting conditions and making demands.  It must pay in full, on time and without conditions.

EVA SILOT BRAVO (Cuba) supported the statement made on behalf of the Group of 77 and China, and agreed with the statement by the representative of Singapore. 

She questioned the relationship established last December, following hard and sometimes frustrating negotiations, between the financial situation and the level of assessments.  Last year, it had seemed that resolving the financial situation of the Organization depended on a reformed scales of assessments.  The majority of Member States had agreed to the reform, based on the need to improve the financial situation of the United Nations.  Three months had gone by, however, and while it might be too early to talk about the real impact of the decision, the direct and unambiguous connection between the scale and the financial well-being of the Organization appeared to be revealed as fallacy. 

Many other factors contributed to the financial situation of the United Nations, she continued, and little had changed since December.  Prospects for the future were not encouraging.  Countries had agreed to take into account the promises of the main contributor to demonstrate its commitment to the Organization.  Unfortunately, that Member State had not complied with any of its promises.  The Organization could not depend on unilateral decisions.  The major contributor was not demonstrating a commitment to the United Nations.  She felt that even though there had been some payments, which was encouraging, they would not make a major improvement in the financial situation of the United Nations. 

All countries, and in particular those with the largest financial obligations, must carry out their promises in time, in full, and without conditions.  She also wondered what would happen next year, when the transitional period finished and many States would be obliged to undertake larger financial responsibilities.

SUN MINQIN (China) expressed serious concern over the United Nations financial situation.  It was well known that the arrears owed by the major contributor were the leading cause of its problems.  Certain Member States -- certain developing countries -- tried their best to fulfil their financial obligations.  In December 2000, the Member States had reached a political decision on the new scale of assessments.  China had hoped that it would have been urgently implemented.  Three months had since elapsed, and the promised United States payment had not been made.  She hoped that the country with the largest arrears would act like other Member States of the United Nations and take concrete action to pay its assessed contributions in full and on time.  It should pay all its arrears in accordance with the requirements of the General Assembly.  Concrete action was needed, not mere promises.

She said that a strong and stable financial footing was a basic condition for the United Nations to fulfil its Charter obligations.  She appealed to all Member States to earnestly fulfil their financial obligations, so that the United

Nations could, in turn, fulfil its obligations more effectively and better serve mankind.

GUILLERMO KENDALL (Argentina) endorsed the statement made by the Rio Group.  Argentina had submitted a programme for the payment of its assessments.  By the end of July, Argentina would pay some $11 million for peacekeeping operations and $1.2 million for the Tribunals.

Responding to a question on use of reserve funds, Under-Secretary-General CONNOR said that the peacekeeping's resources comprised three components:  cash for inactive mission accounts, cash for active mission and cash in the reserve fund.  At the time of his last statement, the reserve fund for peacekeeping had been fully funded at about $150 million.  Since then, income had increased it to a total of some $179 million.  The reserve fund was used to start up or expand ongoing missions. Currently, cash advances from the fund equaled some $50 million.  That amount was reversed to the fund when assessments were received from Member States, thereby ensuring that adequate financing existed in the fund for new and advancing start-up needs.

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