FIFTH COMMITTEE SPEAKERS INSIST CHANGES IN APPLICATION OF ARTICLE 19 WILL HAVE NO NEGATIVE IMPACT ON PROMPT PAYERS

Fifty-sixth General Assembly

Fifth Committee

10^th Meeting (AM)

FIFTH COMMITTEE SPEAKERS INSIST CHANGES IN APPLICATION OF ARTICLE 19

WILL HAVE NO NEGATIVE IMPACT ON PROMPT PAYERS

In calculating arrears under Article 19 of the Charter, an appropriate balance needed to be struck between what was good for the Organization and what was good for some Member States, the Fifth Committee (Administrative and Budgetary) was told this morning as it continued its consideration of the issues related to the scale of assessments.

[Under Article 19, a Member of the United Nations in arrears in the payment of its dues, in an amount that equals or exceeds the amount of contributions due for the two preceding years, can lose its vote in the General Assembly.  Speakers yesterday morning expressed concern that some developing States would suffer as a result of the proposed changes in calculating such arrears, which include a “net-to-net” comparison between the debt and the initial assessment, as well as biannual calculation of arrears.]

Responding to those concerns, the representative of Australia, speaking also on behalf of New Zealand and Canada, said that the interests of one group of Member States were repeatedly overlooked:  the States that paid their dues in full and on time.  That group included both developed and developing countries, which subsidized those who paid late and accumulated arrears.  Developing countries suffered just as much as developed ones when others –- whatever their economic development –- chose to pay late.  While individual measures might have a small financial impact, joint action by many Member States could have a significant effect.  Those Member States that paid their bills on time would not be affected by the proposed changes.

He added that the merits of changing to the net-to-net approach were self-evident:  the intention of the Charter was to compare two years of actual net assessments with actual net arrears, and the change would bring an anomalous practice in line with it.  The change to a biannual calculation of arrears was also clearly in the best interests of the Organization.

Speaking on behalf of the European Union and associated States, the representative of Belgium stressed the need to settle the matter during the current session in accordance with resolution 55/5.  The Union’s position was part of a proposal submitted in 1996, which included revision of the regular and peacekeeping budget calculation, and measures to encourage prompt payment of arrears.  In implementing Article 19, the Union followed the principles of fairness and respect for the broad majority of Member States that sought to pay their arrears; firmness for those who refused to honour their commitments; and

understanding for those countries that faced genuine financial difficulties.   Expressing support for the proposed changes and other measures to improve the timely payment of arrears, he added that Article 19 was the only instrument available to the General Assembly to achieve that triple goal, and must be used discreetly and without bias.

Several speakers, however, echoed yesterday’s opposition to the changes, including the representative of Cuba, who said that less than one year ago, the Committee on Contributions had approved changes to the scale of assessments, resulting in financial burdens for many developing countries.  Without even an assessment of the impact of changes to the scale, delegates were being told that the sacrifices already made were not enough.  Additional burdens were being requested once again from the developing countries, which would be pressured to lose their right to vote if payment patterns were not improved.  Ways to improve the pattern of payments should address all the causes of the difficult situation facing the Organization – and, in particular, difficulties in collecting the debt of the main contributor.

Also speaking this morning were the representatives of Croatia, Kenya, Japan, Belarus and Iraq.

The Committee will meet again at 10 a.m. tomorrow, 17 October, when it will continue its consideration of the financial situation of the United Nations.

Background

The Fifth Committee (Administrative and Budgetary) met this morning to continue general discussion of issues relating to the scale of assessments for the apportionment of the expenses of the United Nations, including application of sanctions under Article 19 of the Charter for non-payment of dues, and incentives to encourage timely payment of contributions.  For detailed information, see Press Release GA/AB/3459 of 15 October.

Statements

DAVID STUART (Australia), speaking also on behalf of New Zealand and Canada, said he appreciated individual Member States would have concerns about how particular measures would affect them.  Those concerns needed to be taken into account.  However, if the Organization held to the rule that no improvements could be made because of adverse effects on some Members, it was unlikely that the United Nations would ever change its practices for the better.  An appropriate balance needed to be struck between what was good for the Organization and what was good for some Member States.

Indeed, there was one group of Member States whose interests were overlooked repeatedly, he continued.  Those were the States that paid their dues in full and on time, which included both developed and developing countries.  Those Member States subsidized those who paid late and accumulated arrears.  Developing countries suffered just as much as developed ones when others -– whatever their economic development -– chose to pay late.

The Committee’s consideration of the procedures for the application of Article 19 and measures to encourage timely payment would benefit if their overall impact on the Organization as a whole were considered.  While individual measures might have a small financial impact, joint action by many Member States could have a significant impact.  It was correct to observe that if the relatively few Member States that would fall under Article 19 under the net-to-net approach paid the minimum amount necessary to recover their vote, the Organization’s cash balance would increase by only $9 million.  But if more Members paid in full and on time, it would significantly improve the functioning and flexibility of the United Nations.  The main purpose of the measure was not to minimally increase the cash balance, but to encourage payment.

The merits of changing to the net-to-net approach were self-evident:  the intention of the Charter was to compare two years of actual net assessments with actual net arrears, he said.  The change would bring an anomalous practice into line with the Charter’s intention.  He noted that the Committee on Contributions’ report found no technical reason to delay the change:  it was essentially a political decision, under which the States that paid on time would no longer subsidize that chose to accumulate arrears.  In that connection, he described the current payment situation, which was “complex and did not fall into simple North-South lines”, adding that the change to the net-to-net approach would increase the amount of money coming into the Organization, particularly from those major contributors, including developing ones, whose practice it had been to accumulate arrears close to two years’ worth of assessments.  Those Member States that paid their bills on time would not be affected.

The question that needed to be considered next was when the decision should be implemented, he said.  He believed an implementation date of 1 January 2002 -– which provided over 12 months’ notice –- would give governments sufficient time to adjust their payment practices and patterns.  The Committee should take a decision in favour of biannual calculation of arrears, for such a change was clearly in the best interests of the Organization.  Again, those Member States that paid their bills on time would not be affected.  That change was also essentially a political decision.  Revision of financial regulation 5.4 could be easily achieved if the political will was there.

Regarding measures to encourage timely, full and unconditional payment of assessments, he supported the introduction of indexation of arrears, although charging interest was the less technically complicated measures.  Having read with interest the report’s discussion of multi-year payment plans, he would welcome a report from the Secretariat on how such plans might be negotiated, handled and approved.  The S-curve incentive scheme, as used by other United Nations agencies, also merited serious consideration.

STEPHANE DE LOECKER (Belgium), speaking on behalf of the European Union and associated States, said that resolution 55/5 stated that the General Assembly must, during the major part of its fifty-sixth session, deal with measures to encourage the prompt payment of contributions to the Organization.  The Union was convinced that Member States must settle the issue during the current session.  The Committee had been faced with the same difficulties and issues year after year.  The Union’s position was part of four sets of measures submitted in 1996, including the revision of the regular and peacekeeping budget calculation and measures to encourage the prompt payment of arrears.  Regarding the implementation of Article 19, the Union followed three principles, including fairness and respect for the broad majority of Member States that sought to pay their arrears, firmness for those that refused to honour their commitments, and understanding for those countries facing genuine financial difficulties.

Article 19 was the only instrument available to the General Assembly to achieve that triple goal and must be used discreetly and impartially, he continued.  The Union would continue with three measures including “net-to-net” calculations, biennial calculations and other measures to improve the timely payment of arrears.  In that regard, the Union would be guided by two considerations.  The complete and timely payment of contributions showed the responsibility and determination of Member States to strengthen the international community.  It also showed a determination to allow the Organization to achieve its mandates.  Strengthening Article 19 should not penalize States that were resolved to pay their arrears, but faced genuine financial difficulties in doing so.  The Union would be open to any proposal that allowed the timely payment of arrears.  The Union emphasized that the application of Article 19 was related to chronic difficulties in the financial situation of the Organization.  He reminded the Committee that although Under-Secretary-General Joseph Connor had provided the Committee with some good news, the problems facing the Organization would continue.

JASMINKA DINIC (Croatia) said she was aware that some countries made great efforts to meet their financial obligations to the Organization in full and on time.  The principle of capacity to pay was the basic principle of the scale methodology, and had guided the preparation of the scale of assessments for 2001-2003.  There was, however, room for improvement, particularly in the present environment of global recession.  She encouraged the Committee on Contributions to continue its consideration of the matter, including the socio-economic impact of hosting refugees on developing countries and countries with economies in transition in the context of futures scales, as well as when reviewing requests for exemption under Article 19.

Croatia supported the implementation of Article 19 since that was the only “sanction” for those Member States not meeting their basic obligations, she continued.  Croatia accepted, however, the existence of specific cases where the situation in a particular country was beyond the control of the government and financial obligations could not be met in time.  The procedure for applying Article 19 should include encouragement for fuller and timely payment of assessed contributions.  As a measure to encourage the timely, full and unconditional payment of assessed contributions, or of reducing existing arrears, the establishment of multi-year payment plans would be useful.  Those plans could be applicable for all Member States that had difficulties in paying their arrears, not necessarily those that fell under the provisions of Article 19.

ALBINA C. CHEBOMUI (Kenya) concurred with the position of the “Group

of 77” developing countries and China and stressed the fundamental legal requirements of Member States to bear the expenses of the Organization as apportioned by the General Assembly, and to pay their assessments in full, on time and without conditions, as stipulated in the Charter.

With respect to measures to encourage timely, full and unconditional payment, she did not support any changes in the methodology for the purposes of Article 19, which would most likely affect many developing countries.  Those countries were still grappling with the need to adjust their budgets to the burden of additional points transferred to them last December upon adoption of the new scale of assessments.  It was also important to bear in mind the challenges of globalization and the volatility of their economies.  Article 19 as a sanction for non-payment was appropriate and efficient in its application.  However, Kenya supported the need to consider with empathy requests for exemptions from its application by countries temporarily experiencing genuine economic problems.

Kenya was strongly committed to the ideals, values and aspirations of the Organization, she continued, which had proven over the decades its effectiveness and flexibility in dealing with complex and wide-ranging international issues despite scarce financial resources.  In that context, she recalled last week’s very encouraging statement by Under-Secretary-General for Management Joseph E. Connor, which indicated that Member States were making a genuine effort to meet their financial obligations to the Organization.

ARATA FUJII (Japan) said that Japan had attached great importance to securing the finances of the Organization, especially during its serious financial crisis, through the full payment of contributions.  He was not convinced, however, that changes in methodology for calculating arrears could substantially contribute to that purpose.  It was not the appropriate time to introduce the new system for implementation of Article 19 during the session.  The Committee on Contributions should continue its study of the subject.

ORLANDO REQUEIJO GUAL (Cuba) said that less than one year ago, the Committee had approved changes to the scale of assessments, resulting in financial burdens for many developing countries.  From that date, without even an assessment of the impact of changes to the scale, delegates were being told that the sacrifices already made were not enough and that more was required.  Additional burdens were being requested once again for the developing world, whose countries would be pressured to lose their right to vote if payment patterns were not improved.  Ways to promote improvement in the pattern of payments should address all the causes of the difficult situation facing the Organization – and, in particular, difficulties encountered in collecting the debt of the main contributor.

It was paradoxical that disproportionate emphasis was being placed on recovering some $9 million if the “net-to-net” approach were adopted, without having presented a proposal to tackle the overwhelming debt of the major contributor to the Organization, he continued.  Cuba was concerned at the fact that far from improving the financial situation, the proposals could worsen matters, and undermining the democratic nature of the Organization, if a greater number of countries were deprived of their right to vote.  It was not relevant to support proposals to strengthen Article 19.  He was opposed to any attempt to link the consideration of requests for exemption to the adoption of proposals to strengthen Article 19.  An environment of that nature should be avoided. 

OLEG N. LAPTENOK (Belarus) said that all Member States should pay their contributions in full and on time and bear the expenses of the Organization, as apportioned by the General Assembly in accordance with the Charter.  Belarus was among the first 10 States that had paid its regular budget assessments at the beginning of the year, and all Member States should follow that rule.  His country had also paid its peacekeeping dues in full.  Since his Government had taken a decision to expand its participation in non-military peacekeeping components, it attached special attention to that area.  Just this year, Belarus had contributed more than $1.5 million and would continue its efforts in that direction.  Regarding the application of Article 19 of the Charter, he said that it was necessary to take into account the factors that stemmed from conditions beyond certain States’ control.

AHMED K. AHMED (Iraq) said that, as a result of sanctions, which had been imposed on his country in August 1990, it could not afford to buy food and medications, let alone pay its contributions to the Organization.  Because of the lack of financial resources, its arrears had exceeded the limit under Article 19.  For several years, the country had submitted applications for exemptions under Article 19, but one Member State in the Committee on Contributions had opposed its requests for political reasons.

Iraq’s last application was submitted in October 1998 and was discussed by the Committee on Contributions in February 1999, he said.  Subsequently, his country had addressed the Secretary-General and the Security Council, requesting that its contributions to the international organizations should be paid from the revenues from the sales of oil under the “oil-for-food” programme.  His country had been informed that in informal consultations in the Security Council, only one country – -the United States -– had opposed its request.

In April 2000, yet another letter had been addressed to the President of the Security Council requesting that Iraqi contributions should be taken from the

2.2 per cent account, specifically set aside for administrative purposes.  Following consultations in that regard, Iraq had been told that the United States had again been the country that objected to the proposal.  In view of the importance that Iraq attached to the matter, he wanted to confirm his country’s request today to be allowed to pay its arrears and contributions from that account.

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