FIFTH COMMITTEE ADDRESSES APPLICATION OF ARTICLE 19 OF CHARTER, TIMELY PAYMENT OF ASSESSED CONTRIBUTIONS, FUTURE SCALES OF ASSESSMENT

Fifty-seventh General Assembly

Fifth Committee

7^th Meeting (AM)

FIFTH COMMITTEE ADDRESSES APPLICATION OF ARTICLE 19 OF CHARTER, TIMELY PAYMENT

OF ASSESSED CONTRIBUTIONS, FUTURE SCALES OF ASSESSMENT

As it began its consideration of the report of the Committee on Contributions this morning, the Fifth Committee (Administrative and Budgetary) focused on the application of Article 19 of the Charter; measures to encourage timely payment of assessed contributions; methodology for the preparation of future scales of assessment; assessment of non-member States; and appeals by Members for a change of assessments.

The Committee’s general mandate includes advising the Assembly on application of Article 19 of the Charter, under which a Member of the United Nations in arrears in payment of its dues in an amount that equals or exceeds the contributions due for two preceding years, can lose its vote in the General Assembly.

Regarding the proposed measures to ensure timely, full and unconditional payment of dues by Member States, the representative of Denmark, speaking on behalf of the European Union and associated countries, said that a linkage between the application of Article 19 and multi-year payment plans would provide greater incentive for Member States to submit and respect such plans.  That measure must provide for payment each year of a State’s current year assessments and a part of its arrears.  Furthermore, the plans should, where possible, generally provide for the elimination of a States’ arrears within a period of up to six years.

Speaking on behalf of the “Group of 77” developing countries and China, the representative of Venezuela urged the Assembly to continue to examine ways in which requests for exemption from sanctions under Article 19 from developing countries experiencing genuine economic difficulties could be examined in a timely manner. With regard to multi-year payment plans, the Group endorsed the recommendation of the Committee on Contributions that such plans should be voluntary and should not be automatically linked to other measures.

In that connection, the representative of Botswana said that since several Member States had expressed their intention to enter into such plans, the time had come to formalize such arrangements and make them subject to monitoring. 

Also considered today was the question of arrears in contributions, amounting to some $16.2 million, owed by the former Socialist Federal Republic of Yugoslavia.  That country’s membership was automatically terminated upon the admission of the Federal Republic of Yugoslavia to membership in the United

Nations.  The alternatives facing the Assembly now are either to write off the amounts due or to seek payment by the five successor States (Bosnia and Herzegovina, Croatia, The former Yugoslav Republic of Macedonia, Slovenia and the Federal Republic of Yugoslavia).

Speaking on behalf of the five successor States, a representative of the Federal Republic of Yugoslavia insisted that all the contributions assessed to the former Socialist Federal Republic of Yugoslavia should be written off.  Having ceased to exist, the Socialist Federal Republic of Yugoslavia should have ceased to be a Member of the United Nations ipso facto.  Keeping a dissolved State on the list of the scale of assessments had been a misleading approach.

Also this morning, the representative of Argentina sought a reduction in his country's assessment in view of its unprecedented economic and fiscal crisis.  Syria’s representative said that the Committee should express greater enthusiasm in connection with Iraq’s request to be allowed to pay its arrears from the revenues realized from its oil-for-food programme, because it would be beneficial to the Organization.

As the Committee turned to the development of videoconferencing within the United Nations system and construction of additional conference facilities for the Economic Commission for Africa (ECA) in Addis Ababa, several speakers welcomed the fact that work in Addis Ababa was proceeding according to schedule.  They also stressed that the global nature of the Organization made videoconferencing particularly relevant.  The use of such information technology could lead to cost savings, enhance exchange of information with duty stations and make administrative processes more effective.

On yet another agenda item this morning, delegates expressed their appreciation to the Procurement Division for achieving tangible progress in procurement reform, which had been introduced to increase transparency, eliminate duplication, rationalize procedures and increase participation of developing countries and countries in transition.  Urging the Procurement Division to persist in its efforts, speakers said that it should take due account of the comments of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), particularly regarding payment delays, provisionary registration and use of brokers.

[According to the ACABQ report, temporary or provisional registration of vendors could introduce inequality in the way companies were treated.  Any vendor from any country should have an equal opportunity to register, and only fully registered vendors who had received legal and financial background scrutiny should be awarded contracts.  Regarding the use of brokers in air shipment of United Nations cargo, the Advisory Committee pointed out that the safety of personnel and freight should be a priority.]

Also speaking this morning were representatives of Costa Rica (on behalf of the Rio Group), Brazil (on behalf of MERCOSUR), Ghana, The former Yugoslav Republic of Macedonia, Republic of Korea, Switzerland, Nigeria, Libya, India, Ukraine, Russian Federation and South Africa.

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Documents before the Committee were introduced by the Chairman of the Committee on Contributions, Ugo Sessi; the Chief of the Contributions Service and Secretary of the Committee on Contributions, Mark Gilpin; the Director of the Office of Programme Planning and Budget Division, Warren Sach; and the Chairman of the ACABQ, Conrad S.M. Mselle; the Assistant Secretary-General for Central Support Services, Toshiyuki Niwa; and the Director of Information Technology Services Division, Eduardo Blinder.

The Committee will continue its consideration of the items introduced today at 10 a.m. tomorrow, 15 October, when it is also scheduled to be briefed on the financial situation of the Organization by the Under-Secretary-General for Management. 

Background

This morning, the Fifth Committee (Administrative and Budgetary) was expected to take up several reports related to the scale of assessments and programme budget for 2002-2003.

Scale of Assessments

Under its agenda item on the scale of assessments, the Committee had before it this year’s report of the Committee on Contributions (document A/57/11) regarding its sixty-second session, which took place last June.  The document addresses such issues as the application of Article 19 of the Charter; measures to encourage timely payment of assessed contributions; methodology for the preparation of future scales of assessment; assessment of non-Member States; and appeals by Member States for a change of assessments.

As the scales of assessment for the regular and peacekeeping budgets were last reviewed during the Assembly’s fifty-fifth session, the Committee on Contributions, according to the report, “focused its attention on other technical issues related to the scale of assessments,” including progress in the implementation of the 1993 System of National Accounts and conversion rates, which are used for scale calculations.

Continuing its consideration of measures to encourage timely, full and unconditional payment of assessed contributions, the Committee on Contributions took up such incentives as multi-year payment plans, imposition of indexation of or interest on arrears, and the proposal to credit surplus balances only to Member States that are current with their financial obligations to the Organization.

In particular, after reviewing the Secretary-General’s report on multi-year payment plans (document A/57/65), the Committee agreed that this measure constitutes a useful tool for reducing Member States’ arrears.  The Committee recognized that such plans should remain voluntary and should not be automatically linked to other measures.  Each year, the plans should provide for payment of the Member State’s current assessments and a part of its arrears; where possible, they should generally provide for elimination of a Member State’s arrears within a period of up to six years.

Regarding indexation of arrears, the Committee on Contributions recalled its previous conclusion that, if the General Assembly decided to introduce interest charges on arrears, the rate should be fixed at a low level and should not have retroactive effect.  The Committee felt that this annual rate should not exceed

1 per cent.

Having considered several requests for a review of assessments, the Committee recommended to the General Assembly that the rate of assessment for Afghanistan in 2003 be reduced to 0.001 per cent, as an ad hoc measure.  The Committee will also review the situation of Afghanistan carefully when considering the scale of assessments for the period 2004-2006.  As a result of a severe economic crisis in Argentina, the Committee also recommended making an ad hoc adjustment for that country, fixing a rate of assessment for Argentina of

0.969 per cent in 2003.

Regarding the arrears of the former Yugoslavia, the Committee on Contributions concluded that some of the issue’s aspects went beyond its competence.  Since those arrears were undisputed, there were no technical grounds to write them off, pending resolution of the legal and political issues involved.  Should the Assembly decide to write off some or all of the arrears, it would need to decide on the procedure to be followed in that regard.  Also, should payment be sought, it would be necessary to determine the date of the former Yugoslavia’s final dissolution in order to set the amounts preceding and following it.  The Committee on Contributions suggests that the five successor States should be invited to negotiate on which of them are to pay the debts, and in what amounts.  The matter would also need to be pursued with the Federal Republic of Yugoslavia.

The Secretary-General’s report on application of Article 19 of the Charter of the United Nations (document A/57/60) presents, for illustrative purposes, application of current procedures for the application of Article 19 versus those proposed to encourage timely payment of Member States’ dues.

The document explains that, in its resolution 55/5 A, the Assembly requested a review of the implications of the calculation of arrears at the beginning of each calendar year and at the beginning of the financial peacekeeping period on

1 July.  It also decided, subject to the outcome of further negotiations and the recommendations of the Committee on Contributions, to compare arrears with the amount actually assessed and payable (“net to net”) for the preceding two full years.  Under current “gross to net” procedures for the application of Article 19, a comparison is made at the beginning of each year of outstanding assessed contributions for each State with its total “gross” assessments (that is, without adjustment for its share of estimated income from staff assessment) for the two previous years.  For most countries, gross assessments exceed the assessed amounts actually payable, which have become known as “net” assessments.

The Secretary-General points out that had a system of semi-annual calculations been in place in 2001, or had calculations been made on a “net-to-net” basis, the pattern of payments, and hence the number of countries falling under Article 19, might have been different.

The Secretary-General’s report on measures to encourage Member States in arrears to reduce and eventually pay their arrears (document A/57/76) focuses on the possibility of imposing indexation of or interest on arrears and possible retention or redistribution of budgetary surpluses applicable to Member States in arrears.

The report recalls the Committee on Contributions’ recommendation that it might be prudent to fix the deadline for payment of contributions from the date of the issuance of assessments rather than from the date of their receipt.  That would involve a revision of financial regulation 5.4 to specify that assessments should become due and payable 35 days from the date of issuance, rather than

30 days from their receipt.  A similar suggestion is made in the report on multi-year payment plans.  The Assembly would also need to decide whether to define timely payment in terms of the due period specified in financial regulation 5.4 or from 1 January of the year following the date on which assessments became due and payable.

Regarding incentive payments to countries that pay their contributions promptly, some members of the Committee were opposed to rewarding Member States for meeting their obligations under the Charter.  The Committee was informed that interest income under the regular budget, the usual source of such incentive payments, was fairly limited -— $3.6 million in 1998-1999 and $5.3 million in 2000-2001.  In addition, the experience of other organizations was not generally encouraging in that respect.

On indexation of debt, the report states that should the Assembly decide to include indexation charges in the assessments of Member States, it should make it clear that the revised amount is the new assessed contribution and, thus, subject to Article 19.  Such a decision would involve an amendment to financial  regulation 5.2, which defines assessments and how they are to be adjusted.  Indexation of arrears would pose more complex technical issues than imposition of interest.  One of the possibilities is fixing the interest rate at 3 per cent, with the Contributions Committee reviewing it periodically.

Yet another proposal involves allocation of budgetary surpluses to Member States with no outstanding payments.  The document suggests that the Assembly may also wish to decide that the balance of the budgetary surpluses should be transferred to the United Nations Special Account in order to strengthen the Organization’s reserves.

2002-2003 Budget

The first document under this agenda item is the first report of the Secretary-General on construction of additional office facilities at the Economic Commission for Africa (ECA) in Addis Ababa (document A/57/322), which contains progress information and an update on actions taken with regard to the views and recommendations of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) in its last year’s report on the matter (document A/56/711).  For example, the Advisory Committee’s recommendation that ECA consider the possibility of leasing any unoccupied office space during the initial period to suitable outside entities is being pursued and seems achievable, considering the current trend of office use in Addis Ababa.

According to the Secretary-General’s report on videoconferencing at the United Nations (document A/57/339), videoconferencing capabilities are a part of the Organization’s overall information and communication strategy, which seeks to increase efficiency of decision-making, facilitate the sharing of the Organization’s institutional knowledge and provide higher-quality services to governing bodies and Member States.  The report provides a comprehensive review of videoconferencing at the United Nations since 1998, and presents an overview of new and emerging videoconferencing requirements.

According to the document, the use of videoconferencing has grown substantially over the years, and the requirement for additional capacity and resources will continue to increase.  The infrastructure, equipment and staffing will need to be upgraded and reinforced in order to keep up to date with current industry standards and have sufficient capacity to keep pace with ever-increasing demands.

Also before the Committee was the Secretary-General’s report on procurement reform (document A/57/187), which details the principal focus of the Secretariat’s efforts in response to resolution 55/247 and other relevant resolutions.  The Procurement Division continues to develop initiatives to increase transparency, fairness and responsiveness in the procurement process.  This would encourage greater participation by vendors from developing countries and countries with economies in transition, and increase the efficiency and cost-effectiveness of the Secretariat’s procurement activities through sharing of information, increased field support, improved technical information, capacity-building and the use of the Internet.

Initiatives undertaken include procurement courses attended by more than

70 staff members of the Procurement Division, development of a procurement model on CD-ROM, and a procurement training programme for the United Nations system as a whole.  Concerning the increase in procurement opportunities for vendors from developing countries and countries with economies in transition, the report states that 6 out of 12 procurement seminars held in different cities in 2001 were located in such countries.  Furthermore, a gratis vendor advertising facility and contact information for United Nations vendors for developing countries and countries with economies in transition had been posted on the Procurement Division’s Web site.

The Department of Peacekeeping Operations has also been strengthening the procurement capacity of field missions.  This includes providing assistance and technical advice to missions on procurement and supply of goods and services, submitting annual procurement plans for all field missions, and developing and implementing training programmes for procurement staff at field missions.

In a related report (document A/57/453), the ACABQ points out that the statistical data presented in the report of the Secretary-General on the level of procurement from developing countries demonstrates no significant change in favour of vendors from those countries.  Moreover, in some cases it shows a real decline. The total increase in procurement from developing countries is limited to host countries of United Nations peacekeeping operations and their neighbours.  However, the Advisory Committee notes the efforts of the Secretariat to disseminate information relating to procurement through its Web site, letters to permanent missions and business seminars and briefings.

On simplification of vendor registration, the Advisory Committee was informed that, while a provisionally registered vendor may participate in the bidding process, the registration process must be completed before a contract is awarded.  The ACABQ expresses its concern that provisional registration might introduce inequality in the way the companies are treated.  Any vendor from any country should have an equal opportunity to register, and only fully registered vendors who have received legal and financial background scrutiny should be awarded contracts.  It is also important to rectify the chronic problem of delays in payments to vendors, as frequently it takes two or three months beyond the standard 30 days to pay them.

Further according to the report, total procurement for 2001 amounted to $854.4 million, of which $222 million (26 per cent) related to air transportation services.  While air transportation of personnel is still conducted only by certified air operators, brokers are allowed to participate in the air shipment of United Nations cargo, and the services of brokers might be more efficient and less expensive.  For instance, out of $105.3 million spent to move United Nations cargo by air in 2000-2001, brokers provided services worth $8.3 million, or approximately 8 per cent.  The ACABQ cautions that, despite the potential economic advantages of using brokers, safety considerations are of paramount importance, as is full compliance with established safety standards and regulations.

Also before the Fifth Committee was a letter to the Secretary-General (document A/57/281-S/2002/895), in which the Permanent Representative of Iraq reiterates his request that consideration be given to the possibility of Iraq’s $12.39 million of arrears being paid from the revenues realized from Iraqi oil exported under the memorandum of understanding and the “oil-for-food” programme. Iraq has not paid its contributions to the regular budget of the United Nations because of circumstances beyond its control resulting from comprehensive sanctions.

Introduction of Documents

The report of the Committee on Contributions was introduced by the Chairman of that body, UGO SESSI (Italy), who said, that by the terms of resolution 55/5 C, the elements and criteria used in the preparation of the scale of assessments for 2001-2003 would remain fixed until 2006 and, thus, this year, the Committee had focused on technical issues, which would be important in its consideration of the next scale of assessments.  He went on to describe the contents of the main chapters of the report, including those on the system of national accounts, conversion rates, multi-year payment plan, indexation and interest on arrears, budgetary surpluses and appeals by Member States for a change of assessments.

On assessment of new Member States, he said that the Committee had considered the prospective rates of assessment of Timor-Leste and Switzerland.  It concluded that Timor-Leste’s rate of assessment should be set at the floor level of 0.001 per cent, and Switzerland’s at 1.274 per cent.

He also informed the delegates that at the conclusion of the Contributions Committee’s last session, 19 Member States fell under the provisions of

Article 19, although four had been granted exemptions until 30 June 2002.  Those were Burundi, Comoros, Georgia and the Republic of Moldova.  Seven Member States  -– Afghanistan, Chad, Kyrgyzstan, Mauritania, Seychelles, Uzbekistan and Vanuatu  -- had subsequently paid the amounts necessary to restore their vote in the Assembly.  In its resolution 57/4 of 27 September this year, the Assembly had also decided that Comoros, Georgia, Guinea-Bissau, Republic of Moldova, São Tome and Principe, Somalia and Tajikistan would be permitted to vote until 30 June 2003, and that Burundi should be permitted to vote until the next substantive session of the Committee on Contributions in June 2003.  Accordingly, four Member States came under Article 19 and had no vote in the Assembly:  Central African Republic, Iraq, Liberia and the Niger.

The reports on the application of Article 19 of the Charter, multi-year plans, and measures to encourage timely payment of dues were introduced by the Chief of the Contributions Service and Secretary of the Committee on Contributions, MARK GILPIN.

Statements

ADRIANA PULIDO SANTANA (Venezuela), speaking on behalf of the “Group of 77” developing countries and China, said that the Committee on Contributions report had provided many valuable insights.  However, the Group regretted that the Committee had not provided enough guidance for the Fifth Committee on the arrears of the former Yugoslavia.  The Group of 77 and China supported the recommendations of the Committee on Contributions on Afghanistan and Argentina.  The recommendations had been adopted in the Committee by consensus and based on technical merit, and not agreeing on them would pose a serious threat to the credibility of the Committee’s future recommendations, which, based on such precedent, would then be freely contended according to the interest of the affected parties.

On the application of Article 19, the Group accepted the need to consider the request for exemption from the application of that article, in particular for developing countries experiencing genuine economic difficulties.  Accordingly, the General Assembly should continue to examine ways in which the requests of those Member States for exemption could be examined in a timely manner.  With regard to multi-year payment plans, the Group endorsed the recommendation of the Committee that such plans should be voluntary and should not be automatically linked to other measures.

In the case of the arrears of the former Yugoslavia, the Group looked forward to the additional information, as well as the views of other delegations, on the way to approach that issue.  The Group would also like to emphasize that discussions on the item should be conducted in a comprehensive and transparent manner.

THURE CHRISTIANSEN (Denmark), speaking on behalf of the European Union, said he agreed with the Secretary-General that a linkage between the application of Article 19 of the Charter and implementation of multi-year payment plans would provide greater incentive for Member States to submit and adhere to a payment plan.  The European Union also supported the recommendation that the plans must provide for payment each year of the Member State’s current year assessments and a part of its arrears.  Furthermore, the plans should, where possible, generally provide for the elimination of a State’s arrears within a period of up to six years.

Multi-year payment plans could be kept voluntary and not automatically linked to other measures, if that constituted the best way to reduce unpaid assessed contributions.  However, the Secretary-General should be invited to report annually to the General Assembly on whether multi-year payment plans actually led to reductions in Member States’ unpaid assessed contributions.

It was essential that the continued integrity of the norms set out in Article 19 was ensured, he said.  In paragraph 2 of resolution 55/5/B, it was stated that the elements and criteria of the scale of assessments were fixed until 2006 and applied without prejudice to Rule 160 of the rules of procedure of the General Assembly.  That meant that, on the one hand, appeals by Member States for a change of assessment under Rule 160 must be considered, but, on the other hand, such considerations must not lead to annual renegotiations of the scale of assessments.  There was an urgent need for the Contributions Committee to submit proposals to the General Assembly at its fifty-eighth session on how to set out clear and objective criteria for the application of Rule 160 with regard to appeals for a change of assessments.  In the meantime, no further appeals by Member States for a change of assessments should be considered prior to adoption by the General Assembly of such criteria for the application of Rule 160.

With regard to requests from Argentina and Afghanistan, the changes of assessments proposed by the Committee on Contributions could be endorsed, with a request that the Secretary-General ensure that such a decision would not have adverse effects on the financing by Member States of the appropriations for 2003. Another option would be to refer the matter to the fifty-eighth session, pending further considerations by the Committee.

MARIA ELENA CHASSOUL (Costa Rica), speaking on behalf of the Rio Group, expressed appreciation for the work of the Committee on Contributions as the body mandated with the task of advising the Assembly on contributions, scale of assessments and exemptions under Article 19 of the Charter.  The Committee's recommendations were highly authoritative from a technical point of view.  They were essential elements, guiding the work of the Fifth Committee.

Having analysed this year’s Contributions Committee report, the Rio Group supported the recommendations regarding requests by Afghanistan and Argentina to review their assessments, he said.  While reaffirming the importance of timely, full and unconditional payment of assessed contributions, and conscious of the economic problem that developing countries faced, the Rio Group agreed with the Committee’s recommendation that multi-year payment plans were voluntary and that they could not be automatically linked to other measures.  Regarding the arrears of the former Yugoslavia, the Rio Group agreed that the issue raised a series of legal and political questions.  In her opinion, the Assembly required further advice from relevant departments on the matter.  It was of the greatest importance to consider proposals on that issue by successor States.

DEJAN SAHOVIC (Federal Republic of Yugoslavia), speaking on behalf of the successor States of the former Socialist Federal Republic of Yugoslavia (Bosnia and Herzegovina, Croatia, the former Yugoslav Republic of Macedonia, Slovenia and the Federal Republic of Yugoslavia), said that having ceased to exist, the Socialist Federal Republic of Yugoslavia should have ceased to be a Member of the United Nations ipso facto.  Yet, it continued to be assessed for contributions.  Its dissolution had been a continuing process, and the exact dates when each successor became independent were all different.  That situation should have been appropriately reflected in the decisions of the United Nations.  Since then, all five successor States had been admitted to the United Nations and had been paying their assessed contributions. 

The dissolution of the former Socialist Federal Republic of Yugoslavia had been unique and without precedent, he continued.  Keeping a dissolved State on the list of the scale of assessments had been a misleading approach, which should bear no legal consequences for other Member States.  It should also have no negative financial consequences for the successor States.  Therefore, he reiterated the joint position of all five successor States that all the contributions assessed to the former Socialist Federal Republic of Yugoslavia should be written off.  The successor States strongly believed that the issue should be treated as a politically sensitive one.  A political decision was needed to write off those alleged arrears, and the successor States would be grateful if they received Member States’ understanding and support.

LUIZ TUPY CALDAS DE MOURA (Brazil), speaking on behalf of the Southern Common Market (MERCOSUR) and associated countries, said he supported the request of Afghanistan and Argentina for a change in assessments.  In the case of Argentina, the capacity to pay had been seriously disrupted by exceptional circumstances within that country.  Paragraph 79 of the report described the current economic crisis in Argentina, but it did not give the whole picture of the gravity of the situation.  The drop in the gross domestic product (GDP) in 2002 would be in the order of 16 per cent, and unemployment and poverty rates would be higher than predicted.  It was also important to note that the Argentine contribution had gone up sharply over the past few years, and that the change in the methodology of financing peacekeeping operations had meant that Argentina’s contributions to peacekeeping had also increased.

GUILLERMO KENDALL (Argentina) said that in the 1990s his country had been the fifteenth biggest contributor to the United Nations budget.  That was a result of a period of growth in the national economy, and the country had often been pointed to as a model of development.  However, today Argentina was going through its worst and most prolonged crisis, which had affected its international status, as well as its internal economy.  In economic terms, there had been more than four years of persistent recession.  That recession had now become a depression.  As a consequence, the public debt had gone up to $140 billion, which was impossible to service.  In 2001, 42 per cent of its international reserves had been wiped out and unemployment had climbed to 18 per cent.

Argentina did not yet have the machinery for accessing international capital markets, he said, and the dimensions of the crisis left no hope for short-term recovery.  Thus, it was difficult to meet international commitments and the regular budget assessment of the United Nations.  The Argentine situation was unique and unprecedented for a country in peacetime.  The Committee on Contributions had, by consensus, reached the conclusion that there should be a reduction in the percentage of its payments, and that the capacity to pay had been affected by exceptional circumstances.  Argentina supported those conclusions.

HAROLD ADLAI AGYEMAN (Ghana) said that he supported recommendations for a change of assessment for Afghanistan and Argentina, and the recommendations for rates of assessment for the newly admitted States of Switzerland and Timor-Leste. He would be grateful, however, for further clarification from the Secretariat as to how the decisions taken on the rates for Afghanistan and Argentina for 2003 would be interfaced by the rates of assessment to be adopted for Switzerland and Timor-Leste for that year.

With regard to the arrears of the former Yugoslavia, he continued, the focus of action of the General Assembly should be the arrears that were outstanding before the former Yugoslavia ceased to exist.  In that respect, his delegation recommended that the Secretariat calculate the amount outstanding in the name of the former Yugoslavia before 25 June 1991, the date on which the first successor State, Slovenia, advised the Secretary-General that it had ceased to exist as part of the former Yugoslavia.  Other outstanding amounts should be calculated in a similar manner for the former Yugoslav Republic of Macedonia, Croatia, Bosnia and Herzegovina and the Federal Republic of Yugoslavia.

The amount of arrears in the name of the former Yugoslavia from 27 April 1992, the final date on which the last successor State established its separate identity, to 1 November 2001 should be written off as it related to the obligations of a State that had ceased to exist.

COLLEN VIXEN KELAPILE (Botswana) associated himself with the position of the Group of 77 and China on the issue of timely payment of assessed dues by Member States.  The expenses of the United Nations were a collective responsibility of Member States and should be borne by all, as apportioned by the General Assembly in accordance with the principle of capacity to pay.  Currently, Article 19 was the only instrument for ensuring timely payment, and its application should be exceptional in nature.

He went on to support the recommendations of the Committee on Contributions concerning the applications for exemption by the Comoros, Georgia, Guinea-Bissau, Republic of Moldova, São Tome and Principe, Somalia and Tajikistan.  He also agreed that Burundi deserved exemption even though it had not submitted its application on time.  He was also sympathetic to the circumstances faced by Afghanistan and Argentina, and agreed with the the Contributions Committee's recommendations for those countries. 

As for the proposed measures to encourage full, timely and unconditional payment of assessed contributions, in particular multi-year payment plans, he said that they could be a useful tool.  He took note of the information provided by the Secretary-General on the subject and would discuss further details during informal consultations.  Given that several Member States had expressed their intention to enter into such plans, the time had come to formalize arrangements and make them subject to monitoring.

Some of the measures previously discussed raised a variety of complex issues, and priority should be given to examining those measures, which could lead to concrete results.  Regarding the possibility of changing from “gross to net” to “net to net” calculations, he restated his country’s understanding that the current procedure was consistent with the relevant decisions of the General Assembly.  Some of the proposals before the Committee might not be desirable, for they would accelerate the application of Article 19 for most Member States.  The analysis contained in the Secretary-General’s report on the matter clearly illustrated that the use of the “net to net” methodology would negatively affect many States, in particular developing ones. 

KANG JEONG-SIK (Republic of Korea) commented on the adjustment of dues for Argentina.  As a country having experienced a serious financial crisis recently, his country had great sympathy for Argentina’s dire economic situation.  He hoped that Argentina would be able to overcome the adversity soon.  Certainly, developments there had seriously impacted its capacity to pay, and Argentina deserved special consideration in that regard. 

The reduction in the country’s capacity to pay should not automatically lead to a revision of its scale of assessments, however, he said.  Only extraordinary circumstances should lead to changes.  He expressed concern that such a revision could constitute a dangerous precedent and lead to multiple requests for a revision.  There should be clear rules in that respect.

DIMCE NIKOLOV (The Former Yugoslav Republic of Macedonia) associated himself with the statement by the representative of the Federal Republic of Yugoslavia and said that there was no doubt that the question of the dues of the former Yugoslavia should be resolved as proposed by the successor States.  The issue had important legal and political implications.  The dissolution of the Socialist Federal Republic of Yugoslavia had been unique, and no identical precedent existed.  Thus, its situation should not be applicable to other States.

HUSSEIN SABBAGH (Syria) associated himself with the position of the Group of 77 and China, saying that he fully supported the recommendations of the Committee on Contributions and agreed with the statement by the representative of Venezuela on the application of Article 19 of the Charter.  The agreement of the successor States to the former Yugoslavia should facilitate quick adoption of a resolution on the subject.  As for the request by Iraq to be allowed to pay its arrears from the revenues realized under the oil-for-food programme, he believed the Fifth Committee should deal with the subject more enthusiastically.  That should alleviate the financial crisis of the Organization. 

JULIUS ANDEREGG (Switzerland) said that his delegation was grateful for the warm welcome extended to the two new Member States.  He thanked the Chairman of the Committee on Contributions for the swift handling of the issue.  Switzerland stood ready to fulfil its financial obligations immediately upon adoption by the General Assembly of the corresponding parameters.

Introductions

WARREN SACH, Director of Programme Planning and Budget Division, Department of Management, introduced the report of the Secretary-General on construction of additional office facilities at the Economic Commission for Africa in Addis Ababa (document A/57/322).

EDUARDO BLINDER, Director of Information Technology Services Division, Department of Management, introduced the report of the Secretary-General on videoconferencing at the United Nations (document A/57/339).

CONRAD S.M. MSELLE, Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), said the Committee had recommended that the General Assembly take note of document A/57/322 on the construction of office facilities at Addis Ababa.  The Advisory Committee would submit comments, if any, on A/57/339 in the report it would prepare after it had examined the report of the Secretary-General on information and communication technology strategy.

Statements

Mr. SABBAGH (Syria) drew the Committee’s attention to errors in document A/57/339.  In the table in annex 3 showing the headquarters, towns and countries for peacekeeping missions, there were certain mistakes.  For example, in Arabic the use of El Faour was not correct.  Furthermore, the Golan Heights were in Syria, so rather than saying the Golan Heights, the State should be mentioned instead -– the Syrian Arab Golan.  With regard to Jerusalem, the State mentioned was Israel, when Jerusalem was, in fact, a Palestinian-occupied territory.

Mr. CHRISTIANSEN (Denmark), speaking on behalf of the European Union and associated States, said the Union attached great importance to the work of the Economic Commission for Africa (ECA), and the construction of new facilities would be a welcome addition to help meet growing needs in connection with the expanding United Nations humanitarian and development activities in the region.  He noted that the preparatory work, including finalizing agreements with the host country, design, bidding and identification of consultants and contractors, was well under way, and that the project was being implemented according to schedule. 

He also took note of the report on the use of videoconferencing.  The global nature of the Organization made it particularly suitable to take advantage of videoconferencing to achieve cost savings, enhance exchange of information between Headquarters and duty stations, and make decision-making and administrative processes more effective.  The European Union strongly supported the increased use of such technology and took note of the fact that videoconferencing would be a component of the new United Nations information technology strategy.  Although additional infrastructure improvements to further expand the use of videoconferencing at Headquarters were projected in the context of the capital master plan, the Union believed that the regular use of that technology in meetings of intergovernmental bodies could be increased at once.  That could lead to significant cost-reductions, particularly in terms of travel of staff to meetings.  He also suggested that videoconferencing be introduced in the Fifth Committee at the present session.

NONYE UDO (Nigeria) said that she was glad the work had already commenced on the construction of additional facilities in Addis Ababa, and sought clarification regarding the presentation of inflationary increases, currency fluctuations and contingencies in the cost estimates.

ABDUSSALAM ELMAALUL (Libya) hoped progress would continue on construction in Addis Ababa and thanked the representative of Syria for his corrections to the report on videoconferencing.

Responding to comments, Mr. SACH, Director of Programme Planning and Budget Division, said that presentation of the costs of construction in Addis Ababa included separate lines on contingencies and currency fluctuations and inflation.  Such a presentation followed the format traditionally assumed at the United Nations.  A corrigendum would be issued to document A/57/339.

The Committee’s Chairman, MURARI RAJ SHARMA (Nepal), proposed that the Committee should request the Secretariat to prepare two draft decisions, whereby the Assembly would take note of the Secretary-General’s reports on videoconferencing and construction of additional ECA office facilities in Addis Ababa.

ABDOU AL-MOULA NAKKARI (Syria) said that his delegation had no problems with regard to activities in Addis Ababa and expressed its satisfaction that construction was taking place according to schedule.  However, a corrigendum would be needed to the videoconferencing report.  Also, before taking note of the reports, he would like to know what the Secretariat understood by “take note”.  He believed that all decisions involving additional resources should be made with proper authorization by the Assembly.

Mr. BLINDER, Director of the Information Technology Services Division, said that the Secretariat would submit figures and projections on the use of videoconferences based on the need to address conflicts among requests.  On the one hand, there was an issue of capacity in terms of infrastructure.  Frequently, however, there was also the need to support various conferences simultaneously.  Those provisions would be proposed within the context of the budget.

Mr. NAKKARI (Syria) said that taking note of the report did not mean that the Committee authorized the Secretariat to increase the resources adopted for the programme budget.  Of course, the Secretary-General could ask for additional resources, when such a need arose.

The Committee then decided to request the Secretariat to prepare two draft decisions, whereby the Assembly would take note of the Secretary-General’s reports before the Committee.

Introductions

TOSHIYUKI NIWA, Assistant Secretary-General for Central Support Services, introduced the report of the Secretary-General on all aspects of procurement reform at Headquarters and in the field (document A/57/187).

Mr. MSELLE, ACABQ Chairman, introduced the Committee’s related report (document A/57/453, paras 2-9).

Statements

BHARTRUHARI MAHTAB (India) congratulated the Procurement Division for improving its Web site, which had greatly increased transparency.  He looked forward to the Procurement Division sharing its experiences with other United Nations entities, including funds and programmes.  He noted that concerted efforts had been made by the Division to enlist more vendors from developing countries through the organization of seminars and briefings.  However, the litmus test was whether there had been any significant changes in the level of procurement from developing countries.  In that connection, he shared the concern expressed in paragraph 4 of the ACABQ’s report (document A/57/453), which stated that, in some cases, the level of procurement from developing countries showed a real decline and that the total increase in procurement from developing countries was limited to host countries of United Nations peacekeeping operations or their neighbours.

He also touched upon the subject of outsourcing practices, and noted from the annex to the Report of the Secretary-General on Outsourcing Practices (A/57/185) that a number of services had been outsourced, particularly in the field of local area network, wide area network and maintenance of computer hardware, since technical skills were not readily available in the Organization. Scrutiny of the annex revealed that those items had not been outsourced in United Nations Office in Geneva, the United Nations Office in Vienna and other Funds and Programmes.  His delegation wondered whether those services could have been outsourced for United Nations offices in Geneva and Vienna, as well.

OLEKSII V. IVASHCHENKO (Ukraine) expressed his appreciation to the leadership and staff of the Procurement Division for providing feedback on the procurement reform.  It would be of benefit if such a pattern of reporting were used by other departments of the Secretariat.  Of particular importance was increased participation in procurement from developing countries and countries with economies in transition, including through training, briefings and seminars.  In that connection, there was a need to speed up procurement training within the Organization.

He also emphasized the importance of cooperation with the Department of Peacekeeping Operations in all areas of procurement in the field, as that area was particularly prone to mismanagement.

VLADIMIR A. IOSSIFOV (Russian Federation) noted with satisfaction that in recent years tangible progress had been achieved in the field of procurement.  In particular, the Procurement Division Web site was exemplary.  The Division’s electronic page was constantly updated and supplemented by information important to both vendors and Member State delegations.  More new companies were now included in the database of companies providing services and goods to the United Nations.  Of great importance was the need to attract more vendors from developing countries and countries in transition.

He stressed that success in the procurement reform had been achieved largely through constructive dialogue between Member States and Secretariat officials.  He attached great importance to the participation of Russian companies in United Nations procurement, and said that Russia was ready to participate actively in efforts to create equal conditions for all in that field.

His delegation shared the view of the ACABQ regarding the chronic problem of payment delays to vendors.  It was important to find a solution.  A thorough registration process should ensure not only expansion of the base of vendors, but also the quality assessment of applicants.  Temporary or provisional registration could be counterproductive, as it could introduce inequality in the way the companies were treated.  Any vendor from any country should have an equal opportunity to register, and only fully registered vendors who had received legal and financial background scrutiny should be awarded contracts.  The Russian delegation supported the position of the ACABQ on the work of brokers in air transportation.  There, the safety of personnel and freight should be a priority.

ABDELMALEK BOUHEDDOU (Algeria) recalled that the procurement reform had been introduced to increase transparency, eliminate duplication, rationalize procedures and register vendors more representative of the developing countries.  The staff of the Procurement Division should be commended for making the reform a tangible reality.  The report of the Secretary-General confirmed that the results of the reform in the sensitive area of procurement were positive.  He was glad that developing countries and countries in transition represented up to 42 per cent of vendors.

That was not an accident, he continued, but a result of the actions to encourage their participation.  Those actions included dissemination of information among Member States of documentation on procurement to inform the vendors.  New elements on the Web site of the Procurement Division were also important.  They should allow local vendors to increase their contacts with the United Nations and encourage them to register.  Also notable was a more dynamic approach to the organization of regional seminars.  Procurement reform should serve as an example for other departments on how to improve performance and

achieve important results.  Urging the Procurement Division to persist in its efforts, he said that it should take due account of the comments of the ACABQ, particularly regarding provisionary registration, payment delays and use of brokers.

KAREN LOCK (South Africa) said her delegation was encouraged by steps taken over the past few years to increase procurement activities by developing countries and countries with economies in transition.  She hoped that the United Nations could reach a situation where procurement was distributed more equitably.  In that regard, her delegation shared the concerns of the ACABQ that the increase in procurement was shared only by host countries of peacekeeping operations and their neighbours.  While there were some reforms being undertaken, the full extent of those reforms was not clear, and her delegation would like to see a breakdown of procurement statistics for funds and programmes for 2001-2002.

Her delegation believed, she continued, that procurement imbalances could only be improved if the Secretariat and United Nations funds and programmes continued their efforts to improve procurement opportunities.  Information should be disseminated through the Procurement Division’s Web site, letters to permanent missions, and procurement seminars for developing countries and countries with economies in transition.  The percentage of total procurement from such countries had declined, and she wished to invite procurement agencies to take measures to improve access to procurement activities for vendors.

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