Sixty-first General Assembly

Fifth Committee

3^rd Meeting (AM)

CAPACITY TO PAY PRINCIPLE, CEILING ON CONTRIBUTIONS AMONG ISSUES RAISED

AS BUDGET COMMITTEE CONTINUES DEBATE ON 2007-2009 SCALE OF ASSESSMENTS

Also Takes Up Report of Joint Inspection Unit

For a second day, the Fifth Committee (Administrative and Budgetary) took up the 2007-2009 scale of assessments for dues of Member States, addressing, among other issues, the fairness in measuring the capacity of States to pay, whether or not the ceiling level on contributions established in 2000 was appropriate and the large assessment increases faced by some countries in the proposed scale.

The representative of the United States said that, given the reform in the methodology just six years ago, he hoped that the Committee could defy historical trends by discussing methodologies that truly reflected the changes in the world economy.  He suggested using the method of purchasing power parity to calculate gross national income in order to more accurately reflect the difference between major economic powers that had emerged and other States that were still in dire economic straits.

Stressing the large United States contribution to the United Nations over the years, he insisted that the United Nations should not be overly reliant on the financial support of one or two Member States.  Rather than serve as a reflection of the capacity to pay, the ceiling on assessments had always served to limit the financial reliance upon –- and even financial dominance by -– any one Member State.

The representative of Japan followed on that point, questioning the fairness of the current methodology, when Japan shouldered a larger financial burden than four of the five Permanent Members of the Security Council.  In spite of contributions to peacekeeping missions, the current system of burden-sharing was grossly lopsided and unfair, he said.

The representative of Venezuela, however, was critical of the ceiling on assessments, saying that it distorted the principle of capacity to pay.  The ceiling caused a loss of income and, for every $100 contributed by another Member State, $11 went to make up for that loss.  In effect, they were subsidizing the largest contributor.

The representative of the Russian Federation opposed any proposals that would distort the capacity to pay principle, in particular by introducing a floor for permanent members of the Security Council.  In general, he argued that the current method of assessments generally met the need for more accurate reflection of the capacity to pay and mitigation of fluctuations, and his delegation saw no workable alternative to the existing approach, a perspective also shared by some other delegations.

But the representative of Angola offered the perspective of one smaller State that saw flaws in the 2007-2009 scale of assessments, particularly noting the 700 per cent increase in its contribution.  Such a change did not reflect the reality of the country’s recovery from what she called the longest internal conflict in Africa.  Similarly, the representative of Guyana said that the members of the Rio Group, on whose behalf he was speaking, were significantly affected by scale-to-scale increases, and noted the importance of using reliable economic data that accurately reflected real country performance as the basis for assessment.  Although taking note of the discontinuities experienced by some States, the Republic of Korea’s representative said they could be explained by the relevant economic data.

As the Committee took up the 2005 report of the Joint Inspection Unit -- the only independent external oversight body of the United Nations mandated to conduct system-wide evaluations, inspections and investigations -- the representatives of South Africa, on behalf of the “Group of 77” developing countries and China, and Algeria expressed support for the continued existence of the Unit and its mandate.  They said that the Unit had demonstrated its commitment to the reform process and showed commendable progress in improving the quality, relevance and usefulness of its reports.

Presenting the report, the Chairperson of the Unit, M. Deborah Wynes, pointed out that the Unit had contributed to significant savings.  In fact, it had improved its ability to quantify the financial implications of its work, showing that its recommendations had resulted in savings equivalent to $17 million in 2005.  The merger proposed by the Unit of the Inter-Agency Procurement Services Office and United Nations Office for Project Services could save $800,000 annually.  Its recommendations could also result in non-quantifiable improvements, such as:  enhanced programme effectiveness; controls and compliance mechanisms; dissemination of best practices; better coordination and cooperation; and more accountability.

Also this morning, Mark Gilpin, Chief of the Contributions Section, introduced the Secretary-General’s report on the peacekeeping scale of assessments, which places each Member State in 1 of 10 levels, A through J, with permanent members of the Security Council in level A and least developed countries in level J.  The placement of other States depended on the level of their per capita gross national product/gross national income in relation to the average level for the membership as a whole, but the rates at several levels are set at discounts ranging from 7.5 per cent to 90 per cent of their rates of assessment for the regular budget.

Also participating in the debate were representatives of Ukraine, on behalf of the Organization of Democracy and Economic Development States -- GUAM (Azerbaijan, Georgia, Republic of Moldova, and Ukraine); Ghana; Gabon; Niger; Kenya; Kuwait; Ecuador; Belarus; Syria; Iran; Algeria; and Finland, on behalf of the European Union.  Also taking the floor were Bernardo Greiver, the Chairman of the Committee on Contributions, and Orobola Fasehun, Director of the World Intellectual Property Organization.

The Committee will take up the reports of Board of Auditors and the Office of Internal Oversight Services, as well as the review of Economic and Social Commission for Western Asia at 10 a.m. Wednesday, 11 October.

Background

The Fifth Committee (Administrative and Budgetary) met this morning to continue its consideration of the scale of assessments for the United Nations regular budget (for further details, see Press Release GA/AB/3753 of 9 October) and take up the peacekeeping scale of assessments, as well as an annual report of the Joint Inspection Unit (JIU).

The Secretary-General’s report on the implementation of resolutions 55/235 and 55/236 (document A/61/139) provides, “for illustrative purposes”, information on changes in the Member States’ peacekeeping rates of assessment, based on average per capita gross national income during the period 1999-2004, and presents updated composition of levels of contribution for peacekeeping operations for 2007-2009.  The report notes, however, that, until the Assembly has adopted a new scale for the regular budget, it will not be possible to determine corresponding rates of assessment for peacekeeping for 2007-2009.

For the purposes of peacekeeping financing, each Member State is assigned to one of 10 levels of assessment (from A to J), using a number of criteria, including a comparison of the average per capita gross national income of each Member State for a given six-year period with the corresponding average for all Member States.  The report recalls that, by resolution 55/235, the Assembly reaffirmed general principles underlying peacekeeping financing and adopted a new system of adjustments of the regular budget scale that are used to establish the rates for peacekeeping.  In its resolution 55/236, the Assembly welcomed voluntary movements by a number of States to levels higher than would result from the application of the new system.

Also addressed are peacekeeping rates for Montenegro following the declaration of independence on 3 June 2006.

The Committee also had before it the annual report of the Joint Inspection Unit (document A/61/34) -- the only independent external oversight body of the United Nations mandated to conduct system-wide evaluations, inspections and investigations.  The Unit states that its programme of work in 2005 was more system-wide in nature, more relevant to the work of the United Nations and better reflected the interests of Member States.  Some 63 per cent of recommendations in the 11 reports and notes issued in 2005 were aimed at management improvement, and 30 per cent at enhancing coordination and dissemination of best practices.  In 2006, six of the Unit’s 11 new projects are system-wide or multi-agency in nature, with emphasis on management, accountability and efficiency.

To better determine the impact of its recommendations, the Unit has adopted a system which defines different categories of impact, the JIU reports.  A follow-up system is being revised to gather information not only on acceptance of recommendations, but also on the status of their implementation and the impact achieved.  Developed by the Unit in 2004, a benchmarking framework for the implementation of results-based management was endorsed by the Assembly in resolution 60/257 in May 2006.

A report entitled “A common payroll for United Nations system organizations” identifies potential savings of some $100 million over a 10-year period.  The Unit’s recommendation not to increase the budget and application fees under the Patent Cooperation Treaty, although such increases had been requested by the Secretariat of the World Intellectual Property Organization (WIPO), has resulted in lowering of application fees by some $17 million in 2005.  The Unit also revised its internal working procedures.

Under “other issues”, the report refers to the fact that, late in 2005, the Secretary-General, without informing or consulting the President of the Assembly, waived the immunity of an Inspector so that the Swiss authorities could conduct an investigation.  The Inspector concerned was cleared of any wrongdoing and the case was subsequently closed.  The Unit is concerned that the provisions of the regulations governing the status, basic rights and duties of elected officials, which were adopted by the General Assembly to guarantee the integrity of the process that protects appointed officials, were not respected in this case.

Statement

MARK WALLACE ( United States) said that major changes to the scale had occurred in intervals of some 20 to 30 years.  Given the reform in the methodology just six years ago, as well as the pressing challenges facing the Organization, his delegation hoped that the Committee could defy historical trends by exchanging views and discussing methodologies that truly reflected the changes in the world economy.  He wanted to take today’s opportunity to highlight areas of discussion that were directly relevant to a scale of assessment methodology that would truly reflect the Member States’ capacity to pay and more equitably distribute assessment shares.

The United States had been the single largest financial contributor to the United Nations since its inception and had consistently supported the Organization’s efforts in meeting new and emerging challenges, he continued.  From the 2001 to 2005 fiscal years, the United States had contributed over $20 billion to the United Nations system in both assessed and voluntary contributions, with an increase of nearly 30 per cent in total contributions between 2004 and 2005.  It remained committed to funding the constantly rising peacekeeping assessments, as well as its financial obligations to the regular budget and international tribunals.

It was not just the United States, however, that had borne a heavy financial burden in support of the Organization over the years, he said.  Others had faced the same challenge.  The current scale was, in many respects, reflective of the economic balance of power in the years following the Second World War, and yet the global economic landscape had changed considerably since then.  The time had come to seriously consider whether the current methodology was truly reflective of present-day economic reality and circumstance.  As it stood, it allowed for little distinction between developing countries, giving a flat discount to most, and yet the capacity to pay of developing countries varied enormously.  Countries that had emerged as major economic powers and that were actively competing with developed economies received the same discounts under the scale of assessments as those in dire economic straights.  One important indicator to calculate gross national income was purchasing power parity.  That method, utilized by a number of international organizations, had been only loosely considered by the Assembly and the Committee on Contributions.  The time had come to give more serious consideration to the story that purchasing power parity data had to tell and to make the methodology more reflective of that information.

Just as the United States considered it important that all Member States provide a financial contribution, even if only at the minimum level, it also firmly believed that the United Nations should not be overly reliant on the financial support of one or two member States, he said.  Rather than serve as a reflection of the capacity to pay, the ceiling had always served to limit the financial reliance upon -– and even financial dominance by -– any one Member State.  Since the first scale, the ceiling rate had decreased over time, largely in correlation to the increase in the number of Member States of the United Nations.

He also addressed the issue of an 80 per cent gradient for all low per capita income countries, saying that the distribution of assessment rates still remained unbalanced, principally due to that measure.  Like the ceiling, the level of the gradient had been set arbitrarily by the Assembly.  However, as a tool to assist developing countries, it had not steadily decreased in correlation to the increase in the standard of living in those same countries.  Rather, the opposite had occurred.  The gradient, which had started at the level of 40 per cent in 1946, had steadily increased over time to an all-time high of 85 per cent in 1983.  In 1998, it had decreased slightly to its current level.  While that level of relief might well be warranted for many of its recipient countries, the nature of its flat application provided disproportionate relief to a handful of major economic developing countries that had a considerable share of world income.

Accordingly, he continued, the United States supported debate on the modification of the gradient to maintain -– and even increase in some cases -– the current level for most developing countries, while adjusting it downward for large developing countries.  That would add an additional balancing element to the methodology, shifting a small portion of the financial burden away from the long-time major contributors to those major developing countries that could afford a greater share of the assessments.

While the length of the base period had varied, the United States had always maintained that a shorter base period was preferable, he said.  His country’s reasoning for a shorter base period was simple:  it better reflected a country’s current capacity to pay.  He looked forward to a constructive discussion on that matter and would listen to alternative views.

In conclusion, he said that some of the concepts and principles that the United States would like to see reflected in the 2007-2009 methodology were long-standing.  Others, like the application of gross national income rates based on purchasing power parity were newer and would require elaboration.  He trusted that members of the Committee would engage in the discussions constructively and with an open mind to agree upon a scale that was balanced and equitable.  He also looked forward to discussing the proposals of others.  The Japanese proposal for example, merited serious consideration, as might other proposals during the session.

TAKAHIRO SHINYO ( Japan) asked whether the current methodology remained fair, when Japan shouldered a larger financial burden than four of the five permanent Security Council members.  He said the assertion that those members were meeting their burden through the financing of peacekeeping was tenuous, because the Security Council’s decisions had a direct impact on a large portion of the regular budget.  The current system of burden-sharing was grossly lopsided and unfair, he added.

He believed a longer base period went against the principle of capacity to pay because it redistributed points in the scale of assessments from countries with fast growing economies to those that were in decline.  He favoured a shorter base period that more accurately reflected the most recent financial status of Member States.  The current base period arrangement seriously undermined the financial commitment of Member States that had experienced economic difficulties.

He then welcomed the multi-year payment plans of Liberia, and the payments completed by Iraq and the Republic of Moldova, as well as the schedules of Georgia, the Niger and Tajikistan.  The multi-year payment plans encouraged and assisted Member States in reducing their unpaid assessed contributions and provided a way for them to demonstrate their commitments to meet their financial obligations, and he encouraged other Member States in arrears to consider submitting payment plans.  He endorsed the conclusions of the Committee on Contributions on States retaining their votes in the General Assembly under Article 19.  Regarding Sao Tome and Principe, he accepted that its failure to pay the full minimum amount was due to conditions beyond its control, but strongly urged it, in the future, to submit relevant information in accordance with accepted procedures.

GEORGE TALBOT ( Guyana), speaking on behalf of the Rio Group, said the capacity to pay concept was the fundamental principle underlying the assessment of the scale of Member contributions.  Inherent in that principle was the recognition of “sovereign equality of status, but difference of endowment”.  He said large scale-to-scale increases remained significant for the Rio Group, noting the importance of using reliable economic data that accurately reflected real country performance as the basis for that assessment.  He urged the Committee to continue to pay special attention to that issue.

The use of purchasing power parity did not reflect the capacity of States to pay, and thus did not contribute to having a reliable scale, he said.  The next scale should be based on a low per capita income adjustment, a debt-adjustment based on the debt stock approach and a maximum 0.01 per cent assessment rate for least developed countries.  The Group supported the Committee’s recommendations for special consideration for countries with extenuating circumstances affecting their ability to pay, and efforts to reduce distortions of the current methodology.  The Group also welcomed speedy agreement on the issue of unpaid assessments by the former Yugoslavia.

VIKTOR KRYZHANIVSKYI (Ukraine), speaking on behalf of the Organization for Democracy and Economic Development -- GUAM States (Azerbaijan, Georgia, Republic of Moldova and Ukraine), said the group supported the main principle of methodology on the scales of assessment, that United Nations expenses should be apportioned according to the capacity to pay.  The work of the Committee on Contributions should continue to play its crucial role in identifying methodology for scales of assessment, reviewing payment plans and providing recommendations on exemptions under Article 19.

He said the States he spoke for welcomed the holding of an informal briefing on the scale of assessment, adding that they were ready to take part in negotiations for the 2007-2009 period.  Regarding the individual principles of the methodology for that period, he said the basis of the scale should remain the States’ capacity to pay.  He welcomed the six-year statistical base period that would ensure the scale’s simplicity.  He stressed that the low per capita income adjustment remained important for adjusting the capacity of developing countries to pay, and supported an increase of its gradient to 85 per cent.

HYUN CHO ( Republic of Korea) said that the Committee faced difficult circumstances, and he wished to point out the need for Member States to adhere to the principle of capacity to pay.  The long base period promoted greater stability and predictability and assisted States in securing funds to pay for their obligations, but the shorter base period offered a better reflection of capacity to pay.  The base period needed continuity and should not be constantly changed.  Also, he preferred the debt flow approach to the current debt stock approach, which was based on a theoretical assumption that debt could be repaid in eight years, and he hoped to find a solution for that issue.

He said the low per capita income adjustment should reflect the capacity to pay, and not distort it.  The discontinuities for some States were explainable by the relevant economic data, and he reminded delegations of the elimination of the earlier limits scheme.  He sought more explanation of the low levels of threshold in the area of market exchange rate valuation indices.  He also encouraged Member States to submit multi-year payment plans.

ANDREY V. KOVALENKO ( Russian Federation) said that, under the United Nations Charter, equitable apportionment of the Organization’s expenses was an exclusive prerogative of the General Assembly, which in a number of its resolutions had established the fundamental principle that Member States must pay their assessments on time, in full and without any conditions.  Full respect of that principle formed the foundation of the Organization’s stability and that, in its turn, was the basis for successful implementation of its global challenges.  It was also difficult to overestimate the importance of the capacity to pay principle.  In fact, it was that principle that allowed the international community to talk about the United Nations as a unique world organization, where each nation had a voice, regardless of its financial contribution to the budgets.  For that reason, his country attached great importance to the work on further improving the scale methodology and regarded as unacceptable any proposals that would distort and limit the capacity to pay principle, in particular by introducing a floor for permanent members of the Security Council.

The current scale methodology was a result of painstaking work that had been done by Member States throughout the entire history of the United Nations and there was no need for a substantial change in the near future, he continued.  He welcomed the progress made by the Committee on Contributions on such elements as income indicators, gradients and the use of market exchange rates and price adjusted rates of exchange, and supported the relevant recommendations of the Committee on Contributions.  The current method overall met the need for more accurate reflection of the capacity to pay and mitigation of fluctuations.  At present, his delegation saw no workable alternative to the existing approach.  Some stability and predictability in the scale were also needed to ensure timely payment by Member States.  The current three-year review period was the best possible.  He also took note of the information on the application of multi-year payment plans by Member States, taking account of the positive assessment of the use of such plans.  He hoped States in arrears would make every effort to reduce their debt.

GLORIA POKU ( Ghana) said that developing countries should not, as a result of any scale and adjustments, be assessed at a rate higher than their capacity to pay.  She accepted the Committee on Contribution’s recommendation of basing the scale of assessments on the most current, comprehensive, and comparable data available for gross national income, and the application of market exchange rates to the scale except when price adjusted rates of exchange or another appropriate conversion method was needed to correct for distortions and fluctuations.  She called for retention of the low per capita income and debt burden adjustments, as well as the minimum assessment rate of 0.001 per cent and the maximum assessment rate of 0.01 per cent for least developed countries.

She said the United Nations’ financial problems could only be resolved if all contributions, including arrears by defaulting Member States, were paid in full, on time and without conditions.  She supported the Article 19 waivers for the Central African Republic, Comoros, Georgia, Guinea-Bissau, Liberia, Niger, Somalia, Tajikistan and Sao Tome and Principe.  She said that the system of multi-year payment plans assisted Member States in reducing their unpaid assessed contributions, and commended the States that had submitted them.

JEAN CHRISTIAN OBAME (Gabon) associated himself with the position of the “Group of 77” developing countries and China, and said that the Organization was facing an increasing demand for clear action on international peace, development and promotion of human rights around the world.  The World Summit had recommended strengthening the United Nations and reaffirmed the imperative need to give the Organization a stable, sound and predictable financial basis.  Towards that end, Member States must ensure payment of their contributions in full and on time.  It was also necessary to take into account their capacity to pay -– a fundamental principle, which could guarantee transparency and equity.

Continuing, he also encouraged the Secretary-General to increase his efforts to improve the statistical basis, so the scale of assessments could be based on the most recent, reliable, comparable and easily assessable data.  The next scale, like the present one, should take into account the situation of developing countries, especially their debt burden.  He hoped the methodology would be further refined to achieve a more just apportionment of expenses.  Regarding application of Article 19 of the Charter, he welcomed the adoption of draft resolution during informal consultations yesterday, which would allow nine Member States to maintain their vote in the Assembly through the end of the session.

AÏCHA LOUCHE ( Niger) thanked the Committee on Contributions for considering its request for an exemption under Article 19.  She also thanked the regional groups and delegations that supported those recommendations.  She hoped the request for an exemption for Sao Tome and Principe would have the same outcome, and for all nine countries that had requested an exemption under Article 19, so they could be authorized to vote until the end of this General Assembly session.  Despite the difficulties facing her country, she said her Government was looking for means to pay the third part of its arrears, in accordance with its multi-year payment plan.

ANTHONY ANDANJE ( Kenya) said that financing the United Nations was a difficult issue, and raised thorny questions of burden-sharing and claims of greater “ownership” by Member States of highly unequal economic power.  Every Member State had the right to an equal interest in the protection of the Organization’s well-being.  He called for continuing to set assessments based on the “relative capacity to pay” and said that tolerance of failure to pay by Member States in genuine difficulty must be retained.

The current assessment system continued to offer an equitable method of raising its revenues, he continued.  It was true that there were problems in the areas of determining an accurate base period, the definition of capital consumption, and the adjustment instruments of the scale, and he acknowledged that there were obvious disparities at the bottom and top of the scale.  Also, a paucity of data made it impossible to arrive at accurate calculations of some States’ national incomes, and Members with weak statistical capacities needed technical assistance.  Nevertheless, any technical problems could be resolved, and did not call into question the assessment system itself.

NASER ABDULLAH H.M. AL-HAYEN ( Kuwait) supported the position of the Group of 77 and China and stressed the importance of the agenda item on the scale for his delegation.  The scale was the basis for ensuring the Organization’s ability to face the challenges of today’s world.  The vital role of the United Nations signified the need to provide it with adequate financing, which would allow it to continue implementing its mandates.

Commenting on various elements of the scale, he said that its preparation on the basis of purchasing power parity was not precise enough.  He supported the idea of multi-year payment plans, which allowed Member States to demonstrate their resolve to live up to their commitments to the Organization.  He also supported providing exemptions to the nine countries under Article 19 of the Charter, which would allow them to vote in the Assembly.  He was pleased that Iraq had paid its dues in full.

The political will to work for the priorities of the Organization was a prerequisite for the Committee’s work, he added.  The United Nations must continue to live up to its obligations.  Member States, in turn, must live up to their responsibilities and pay their assessments on time and in full.  He hoped other States would show the same level of commitment to the goals of the Organization and the reform.

FRANCISCO ARIAS CÁRDENAS (Venezuela) aligned himself with the position of the Group of 77 and China and the Rio Group and said that, even though it was difficult to reconcile some positions, it was necessary to make an effort to find a methodology in accordance with the spirit of the Charter and the corresponding provisions of the Assembly’s Rules of Procedure.  The elements of the scale should abide by the principle of capacity to pay.  The “spinal cord” of the methodology was the gross national income -– a universally accepted indicator of Member States’ incomes.  There were also elements seeking to correct the differences in the level of development of different economies.  For instance, the scale included such elements as the debt burden and the low per capita income adjustments, which clearly determined the capacity to pay of Member States, in particular developing countries.

On the other hand, he continued, one element in the methodology –- the ceiling -- had been a unilateral imposition of the Member State with the highest contribution in nominal terms and distorted the principle of capacity to pay.  The ceiling had been imposed in 2000 under the pretext that the Member State in question would honour the debt it had pending with the United Nations.  However, the situation had not improved since then.  Should that element be maintained in the next methodology, for each $100 in contributions, $11 would be for payment of the percentage of the contribution from which that Member States had been exempted.  That was, in effect, as if other Member States were subsidizing the contribution of that Member State.  That was not only contrary to the principle of the capacity to pay, but also against the purposes and principle of the Charter.

He added that Venezuela had brought itself up to date with the outstanding contributions to the regular and peacekeeping budgets, as well as the budgets of the International Tribunals, the Capital Master Plan and the funds and programmes of the United Nations.  As a developing country, at times it faced difficulties in keeping up with its payments.  However, Venezuela was committed to its obligations under the Charter.

Regarding a series of proposals set forth during the latest session of the Committee on Contributions, he said that his country was open to ideas that would improve the current methodology.  Improvement should be the objective, and the efforts should not be distracted by elements that moved the system away from the capacity to pay principle.  It was necessary to focus on realistic proposals, based on existing, reliable and comparable data.  He also agreed with the Committee on Contributions’ recommendations on the requests for exemption under Article 19, as well as the request by Sao Tome and Principe.

Ms. IZATA ( Angola) noted the 700 per cent increase in its scale of assessments and expressed deep concern with the approach taken in the preparation of the 2007-2009 scale.  She said Angola would honour its commitment under the principle of capacity to pay, but the substantial increase in its contribution did not help her country.  Angola had experienced the longest internal conflict in Africa, and the drastic changes in its United Nations assessment did not reflect the challenges of reconstruction, reintegration of its displaced population, refugees, and former combatants, as well as rehabilitation of the economy and eradication of poverty.

She favoured basing the scale of assessments on current, comprehensible, and comparable data available for gross national income, as well as market exchange rates, except when price adjusted rates of exchange or other appropriate conversion rates were needed to correct for distortions and fluctuations.  She supported maintaining the debt burden adjustment, the floor at 0.001 per cent, and the maximum assessment of 0.01 per cent for the least developed countries.  She added that the minimum assessment rate for permanent members of the Security Council was not in line with the capacity to pay, and her country would not support any proposal that placed a colossal burden on her country or any that was not reflective of the country’s true capacity to pay.  She supported Article 19 exemptions for countries whose inability to pay was beyond their control.  She concluded by thanking all delegations that showed sympathy for her country’s situation, and believed that the Committee would find a course of action favourable to all Members of the Organization.

RODRIGO RIOFRÍO ( Ecuador) said that, in the last five years, his country had been forced to make drastic adjustments, as a result of the “dollarization process” established in 2001.  Ecuador had had to make major efforts to meet its obligations to the United Nations, in some cases to the detriment of its development and other projects.  Capacity to pay must be the fundamental principle for establishing Member States’ share of the Organization’s expenses.  It was also necessary to make efforts to avoid abrupt increases from one scale to another.

The six-year base would make it possible to obtain sound and reliable data and see the real evolution of a country’s economy, he continued.  Assessments should be calculated on the basis of data that reflected the real behaviour of the economy.  To obtain accurate statistical data, national questionnaires should be channelled through the Permanent Missions to the United Nations, which then could follow up with the capitals to obtain results.  It was important to review each element of the scale, particularly those that allowed for distortions, including the ceiling.  Also, adjustments for low income and debt should be made when preparing the new scale.

YURI YAROSHEVICH ( Belarus) supported the recommendation of the Committee on Contributions that the scale should be based on the most current, comprehensive and comparable data available for the gross national income.  The existing scale methodology had served Member States and met the interest of the general membership.  The low per capita income adjustment and the debt burden adjustment were the integral factors of the scale methodology.  In combination with the gross national income, they allowed Member States to adhere to the fundamental principle of the capacity to pay, as they took into account a country’s economic and social strength and its per capita income, which reflected the actual paying capacity.  In order to ensure fair treatment of countries that were especially vulnerable to unforeseen economic challenges and critical market fluctuations, Belarus proposed to use a six-year base period for the calculation of the average gross national income data.  It was the only tried methodology to avoid sudden and painful changes in the scale for developing countries and countries with economies in transition.

Attempts to promote a minimum assessment rate for the permanent members of the Security Council, as well as the use of purchasing power parity, were contrary to the principle of capacity to pay and did not meet the criteria that the data used should be reliable, fair and comparable.  The proposal for annual recalculation of the scale was impractical, less stable and more expensive.

YASSAR DIAB ( Syria) said that the assessment scale should be based on the capacity to pay.  He noted that the industrial countries must shoulder their responsibilities with regard to the financing of the United Nations given their prosperous, strong, and sustainable economies.  He said that many countries’ economies were still weak and vulnerable, and that needed to be taken into consideration in the scale of assessments.  He favoured basing the scale on current, comprehensible, and comparable data available for gross national income, as well as market exchange rates, expect when price adjusted rates of exchange or other appropriate conversion rates were needed to correct for distortions and fluctuations.

He positively viewed the Article 19 exemptions proposed by the Committee on Contributions for nine countries.  He stressed the need for all countries, especially major contributors, to pay on time, in full and without conditions.  Multi-year payment plans had made a positive contribution to reducing unpaid assessed contributions, he added, but stressed the need for those plans to be voluntary and not linked to any other measure.  With regard to the arrears of the former Yugoslavia, he took note of the statement by Slovenia and the need to resolve the issue in an appropriate manner.

JAFAD SAFAEI ( Iran) said that his delegation associated itself with the position of the Group of 77 and China.  He wholeheartedly supported the efforts to reach a scale that would reflect the capacity to pay of all Members of the Organization.  He did not intend to repeat many points made in the debate, but wanted to focus on one issue:  how to deal with paragraph 2 of resolution 55/5 C and the question of the review of the General Assembly decision on the ceiling.  As pointed out by several speakers, including the representative of South Africa on behalf of the Group of 77, the financial well-being of the Organization had not materialized six years after the concession on the ceiling was made.  The review of that decision according to paragraph 2 of resolution 55/5C should be included among all the options considered by the Committee when considering the scale for 2007-2009.

In his concluding remarks, BERNARDO GREIVER, Chairman of the Committee on Contributions, expressed appreciation for the support to the Committee and said that all the comments were very important to that body.  The Committee awaited the Assembly’s resolution and instructions to continue its work.  The present scale was only operative through December this year, and the Committee was ready to assist the budget Committee in its enormous responsibility to prepare the next scale for 2007-2009.

Peacekeeping Scale of Assessments

MARK GILPIN, Chief of Contributions Section, introduced the Secretary-General’s report on the implementation of Assembly resolutions 55/235 and 55/236, saying that the new system of adjustments established by resolution 55/235 had set criteria for placing Member States in 1 of 10 levels -– A through J, with permanent members of the Security Council placed in level A and least developed countries in level J.  The placement of other States depended on the level of their per capita gross national product/gross national income in relation to the average level for the membership as a whole.  The rates of assessment for countries in levels C through J were set at discounts ranging from 7.5 per cent to 90 per cent of their rates of assessment for the regular budget.  Countries in level B were assessed at the same rate as for the regular budget and the countries in level A paid the balance of amounts assessed for peacekeeping operations –- pro rata to their regular budget rates of assessment.  In updating the composition of levels for 2007-2009, the Secretary-General had used the data for 1999-2004 that had been reviewed by the Committee on Contributions.

Joint Inspection Unit

M. DEBORAH WYNES, Chairperson of the Joint Inspection Unit, said the reform of the Unit began to bear fruit.  The screening process for the programme of work was more thorough, and her prepared report provided a comprehensive overview on the status of implementation of reforms.  She pointed out that the Unit had improved its ability to quantify the financial implications of its work, showing that its recommendations had resulted in savings equivalent to $17 million in 2005.  The merger proposed by the Unit of the Inter-Agency Procurement Services Office and the United Nations Office for Project Services could save $800,000 annually.  The Unit could prove it had contributed to significant savings.  She also noted that the recommendations could result in non-quantifiable improvements, such as:  enhanced programme effectiveness; controls and compliance mechanisms; dissemination of best practices; better coordination and cooperation; and more accountability.

The internal work procedures of the Unit had been continuously improved, she said.  She expected a study of the World Meteorological Organization’s Working Capital Fund to be completed in time for its Congress in the spring.  During 2005, 14 management risk assessments were completed for 14 organizations within the United Nations system, several more were to be completed this year, and all were to be covered in the course of 2009.  The terms of reference of one post had been changed to recruit an investigator to assist participating organizations that lack in-house investigative capacity.  The Unit planned to convert two General Service posts to Professional posts at the P-3 level in the next biennial budget proposal in order to remedy an imbalance between its number of inspectors and researchers, which would increase the productivity and timeliness of its reports.  She also outlined recent personnel changes within the Unit.

OROBOLA FASEHUN, of the World Intellectual Property Organization (WIPO), drew attention to a note of his organization regarding the Joint Inspection Unit’s paragraph 3 (document A/61/34) on his organization, and presented the facts regarding the paragraph, to be reflected in the record and circulated in the Committee.

The statement said that the Unit’s comment that it had recommended against an increase in Patent Cooperation Treaty application fees, which made the total fees received by the organization $17 million lower, was not accurate.

The decision regarding the level of Patent Cooperation Treaty fees in the 2004-2005 biennium was based on analysis undertaken before the Unit submitted its report to WIPO on 14 February 2005, it continued.  It was, therefore, inaccurate to say that the organization’s decision was based on a JIU recommendation.  The 2006-2007 decision was based on the same analytical process.  Further, the $17 million figure did not coincide with any official information from the Office of the Patent Cooperation Treaty, and it was difficult to determine what the actual income would have been if the fees had been raised.  Finally, it noted that the financial implications of savings in 2007-2008 on its programme and budget could not be assumed.  It was up to the organization’s member States to decide when and how the outcome of the desk-to-desk review could be reflected in the programme and budget.

KATJA PEHRMAN ( Finland), speaking on behalf of the European Union and associated States, said she appreciated the progress of the reform of the Joint Inspection Unit, but requested assurance that concrete data on the status of recommendations applying to more than one agency would be forthcoming.  She encouraged the Unit to develop constructive working relationships with the Office of Internal Oversight Services (OIOS) and the Board of Auditors.  She looked forward to learning of how the JIU will expedite the earlier formal adoption and submission of its programme of work.  She supported the proposal on improving the selection of JIU inspectors, and called for the process to be shorter, simple, transparent, and reliable, with a consultative role by the President of the General Assembly and thorough evaluation of the candidates.

Speaking on behalf of the Group of 77 and China, KAREN LOCK ( South Africa) expressed appreciation for the Unit’s work and said that the Group had actively participated in the deliberations aimed at strengthening the Unit, which had led to the adoption of Assembly resolution 59/267 in 2004.  In turn, the Unit had shown its commitment to the reform process by acting expeditiously on the provisions of that text, for example, by submitting an advance version of its work programme for 2006 to the Fifth Committee at the first part of the sixtieth session.

Turning to the Unit’s annual report for 2005, she said that the Group strongly supported the commendable progress in improving the quality, relevance and usefulness of the Unit’s reports.  The potential savings identified by the Unit and reported to the Assembly and governing bodies illustrated, among other things, the relevance of the reports.  As part of ongoing efforts to avoid duplication, the Group would like to encourage the Unit, the Board of Auditors and the OIOS to continue with efforts to ensure greater collaboration and coordination.  The Group also commended the Unit for promoting such interaction, as well as dialogue with oversight bodies at other organizations of the United Nations system.

Regarding the implementation of the Unit’s recommendations, she said that the Group had endorsed the Unit’s approach to not only seek to ensure the follow-up to the recommendations, but more importantly to measure the impact thereof on the participating organizations.  The Group would consequently appreciate an elaboration of the methodology that had been used to determine the acceptance and implementation levels of system-wide reports, as mentioned in the Unit’s report. She supported the eight categories of impact adopted by the Unit.

The Group would like to receive further information on the difficulties the Unit faced due to its very limited research capacity, as stated in paragraphs 37 to 40 of its report, she continued.  She welcomed the attention brought by the Unit to the training of its Secretariat and the use of videoconferencing as a means of facilitating interaction of participating agencies.  Finally, the Group noted with concern the issue highlighted by the Unit in relation to the lifting of the immunity of an Inspector and asked for further information in that regard.

On the Unit’s work programme for 2006, she said that the Committee had already acted on it in resolution 60/258. She commended the Unit for the initiative of providing its assessment on the status of implementation of resolution 59/267, as contained in annex III of its report.  The Group reiterated that reform was a process.  It appreciated the numerous improvements over the last two years and supported the continued existence of the Unit and its mandate.

ANDREW S. HILLMAN ( United States) said this year’s Joint Inspection Unit annual report represented an improvement over similar previous summaries, as it included an interesting analysis of participating organizations’ acceptance and implementation of previous Unit recommendations.  Referring to the table presented in paragraph 30, he expressed hope that future tables would include information in each category on identified cost savings, actual savings, number of accepted recommendations and the implementation status of each recommendation.

He said the United States would welcome clarity about whether the Unit routinely transmitted its reports to the organization under review, requesting that such an entity report back within a defined time frame on whether it would accept Unit recommendations and plans for implementation.  Noting concern that the Unit was unable to determine the exact level of acceptance of its recommendations when multi-agency reports were involved, he urged the body to take a more active role in developing a method to provide that information.  The goal of all Unit reviews should be to improve United Nations management and achieve better coordination.  He urged the Unit to present its programme of work to the General Assembly at the earliest possible date each year and submit it separately from the annual report.  The United States had other concerns it hoped to raise during the upcoming informal consultations.

ABDELATIF DEBABECHE ( Algeria) said that the position of the Group of 77 was extremely relevant and he fully associated with it.  His delegation attached particular importance to the work of the Joint Inspection Unit and was pleased at the speed with which resolution 59/267 was being implemented.  In the resolution, the General Assembly had asked the Unit to proceed with its reform and the proposals for that had already been submitted.  His delegation particularly appreciated the clarity of annex III to the Unit’s report, as well as the Unit’s serious approach to the process of internal reform and improvement of its working methods.

He also welcomed the information on the Unit’s greater cooperation with the Board of Auditors and OIOS, as well as the simplicity and clarity of the work programme for 2006, which clearly presented the Unit’s objectives within the United Nations system, he said.  The Unit had also taken action on a number of recommendations contained in document A/60/883 containing the conclusions of a consultative body, PricewaterhouseCoopers.  Within the framework of a formal discussion of that document, it was necessary to use the majority of its formulated remarks on an objective basis.  For example, in the remarks saying that the investigation was not thoroughly carried out, there was no proper knowledge of the United Nations system and the terms of resolution 60/257 were misinterpreted.  A number of improvements might be envisaged in the appointment of inspectors, but having the Unit was helpful and its existence should not be called into question.

Responding to comments from the floor, Ms. WYNES offered assurance that concrete data on the status of recommendations applying to more than one agency was to be provided in the next year’s annual report, and that cooperation would continue with OIOS and the Board of Auditors.  Additionally, the submission of the programme of work was to be expedited by moving planning up to November instead of late January, enabling implementation on 1 January, and submission in March of a formal document instead of a conference room paper.  She then detailed the Joint Inspection Unit’s means of calculating the impact of its recommendations, as well as the transmission of the progress of follow-up on its recommendations, and further clarified the need to promote some research assistants to research officers.

She then offered a detailed clarification of the Secretary-General’s lifting of immunity in the fall of 2005 of a Unit inspector and his wife, at the request of Swiss authorities.  The inspector was subsequently cleared of all charges.  Particularly, she detailed the history of deliberations between the General Assembly, the Secretary-General, and the Joint Inspection Unit on privileges and immunities, and that the agreed-to process had not been respected by the Secretary-General.  The Unit had asked for clarification from the Secretary-General, but none had been received.

After a March 2006 meeting with senior officials, she said the Unit was informed that the Convention on Privileges and Immunities took precedence over an earlier bulletin from the Secretary-General and, for confidentiality reasons, no one had been informed about the case, including the General Assembly.  The Unit felt it was important for the Secretariat to respect the will of the General Assembly, particularly to safeguard those who had been appointed or elected by the General Assembly.  The Unit also called for the issuance of a letter by the Secretary-General copied to all informed of the case if there was a positive outcome so that all were aware of the process.

Responding to the note from the World Intellectual Property Organization, the Unit pointed out “that this appears unprecedented”, and the Secretary-General of WIPO could have contacted the Unit for a proper explanation if it believed there was an error in the report, or contacted the WIPO General Assembly, which had received the annual report in advance.  She then provided further background, and clarified how the Unit’s recommendations on Patent Cooperation Treaty fees had been implemented prior to the completion of its final report, so they were not included within the text, and believed that the Unit’s findings had, in fact, contributed to actual savings of $17 million.  She added that there was an expectation of greater savings if the desk-to-desk review was properly completed.  She added that the Unit’s report on its website had identified deficiencies in management of the organization, which senior officials in the World Intellectual Property Organization had not accepted.

Ms. LOCK (South Africa) said that she wanted to register concern over the information regarding the procedure followed in lifting the immunity of the Inspector and requested that the information just shared with the Committee be circulated.  She would also appreciate the presence of Secretariat representatives during informal consultations to respond to questions on that issue.  The implications were wider than the situation of a specific individual.  The incident could have a broader impact on privileges and immunities enjoyed by United Nations personnel.  The issue had to be looked at in that context.

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