*EPF506 10/06/00
Reforming UN Assessment Scales Key U.S. Goal for the 55th UNGA
(Holbrooke: U.S. should remain number one UN contributor) (1890)
By Judy Aita
Washington File United Nations Correspondent

United Nations -- After attending the opening days of talks on restructuring the scales used to assess UN members the costs of running the United Nations and its peacekeeping operations, U.S. diplomats said October 3 that they were gratified at the positive response from other countries.

The United States, the largest single contributor to the United Nations since the organization was founded, has set the restructuring of the scales of assessment as its main goal for the year. Backed by the so-called Helms-Biden legislation which links the payment of approximately $100 million in U.S. arrears to the reduction of U.S. dues and peacekeeping costs, U.S. diplomats have been lobbying the UN's other 188 members to make long needed changes that will more accurately reflect the current international economic situation and deal with the new international agenda set out by the Millennium Summit in September.

"The financial restructuring of both the regular budget and the peacekeeping budget is a very, very important issue for the United States, for the United Nations, for its member states, for the world community," U.S. Ambassador Richard Holbrooke said at an October 3 press conference after making two presentations to the UN General Assembly's Fifth Committee (Budget and Administration).

In his difficult position as the chief U.S. envoy to the United Nations, Holbrooke has been working on both the international and domestic fronts in an attempt to reach his goals by the December 2000 vote in the Fifth Committee. At his press conference this week, he talked about the importance of the United Nations to U.S. national security interests and the need for the world's superpower to honor its treaty responsibilities. In the committee meetings he focused on the effort to improve and strengthen the UN by a process of reform and restructuring that takes into account new economic realities while preserving the historic criteria of factoring in capacity to pay.

"The roots of this issue run deep, and they don't relate solely to the United States' failure to pay all of its dues on time," Holbrooke told the Fifth Committee October 2. "We need to stop the ossification of the UN's financial structures. We need to stop the...locking in stone of a system predicated on old criteria and on old realities and that flouts the fundamental principle of our sovereign equality as member states."

"As it moves into the 21st Century, the UN must leave behind the unhealthy practice of placing excessive reliance on a single contributor. The principle of avoiding over-dependence on any one member state was embedded in the UN's methodology from the outset, but has fallen victim to politics, inertia and inaction on all sides," Ambassador Holbrooke said.

The United States is currently assessed 25 percent of the regular UN budget and about 30 percent of peacekeeping costs. The U.S. Congress has directed the U.S. Mission to the UN to renegotiate the assessment initially to 22 percent of the regular budget. Congress has already authorized the Administration to pay only 25 percent of the peacekeeping costs, thus adding to the U.S. arrears in the past year. Congress authorized the initial payment of $100 million of the arrears and the remaining $826 million payment is in an escrow account to be turned over if the UN reform measure meets Congress' clearly set criteria and benchmarks.

The scale of assessment was created in 1946 based on a "capacity to pay" as measured by states shares of the world Gross National Product (GNP). The basic principle has been a ceiling which protects the membership from being dominated by one country or a small group of dominant financial contributors and a base which protects the lesser developed countries which cannot afford to pay. A discount system, called the gradient, provides an in-between scale to help developing countries graduate to higher dues as their ability to pay changes.

In the post-World War II period, when the U.S. accounted for roughly 50 percent of the world GNP and the UN had only 55 members, the scale ceiling was set at 39 percent. As the UN grew, the ceiling was gradually lowered to maintain political balance with the last reduction in 1973 setting the U.S. portion of the regular budget at 25 percent. In 1999, the U.S. assessment of the regular budget amounted to about $304 million. The floor rate is currently at .001 percent with 34 members assessed at that rate in 1999 and each paying about $10,000 for the budget.

Peacekeeping was originally funded on a voluntary basis until 1963 when the assembly decided that it was "a solemn responsibility" of all members to pay for peacekeeping operations so they were incorporated into the regular budget. By 1973 the regular budget could no longer sustain the peacekeeping responsibilities and a scale was set under which 30 members paid 98 percent of the bills with the five permanent members of the UN Security Council accepting extra responsibility. The rest of the members paid only 2 percent. The assembly was to discuss changes at a later date but never did, so the scale has remained the same for 27 years.

Meeting our obligation "is not simply a matter of a bill that comes due," said Holbrooke. "This is a national security interest of the United States. "Peacekeeping is highly leveraged. Every dollar we spend, the rest of the world spends three....and it is the most critical part of the budget because it is conflict prevention. When conflict prevention fails you end up paying a much larger bill in refugee relief, food assistance and so on."

The entire U.S. contribution to the United Nations -- which includes assessments, food aid, humanitarian assistance, and other voluntary contributions to U.N. agencies -- make the United States "by far the largest contributor, with Japan a clear, undisputed second," Holbrooke said. "I think the United States has been generous."

"However, I strongly believe we should pay our full obligation as we have agreed on it: on time and in full. I don't like the fact that the United States is in arrears; most Americans don't like it and we're doing everything we can to rectify it," he said.

"Should the United States be the number one contributor to the United Nations? Yes, without question," Ambassador Holbrooke said. "That is our obligation, it is our commitment. The United States cannot presume to be the world's leading power...You can't be that on one hand and on the other hand shirk our responsibility for leadership. Being number one is not bragging rights, its obligations and responsibilities."

"And Americans who should be proud of the role of leadership they have in the world should also be proud to assume the responsibilities of leadership, which are in the national interest of the United States and its people but also in the interest of the United Nations and its community," Holbrooke said.

U.S. Ambassador Donald Hays, who oversees management reform at the UN for the United States, said that the U.S. delegation "is preparing a proposal which will allow for graduating members from their current highly subsidized base to a more justifiable economic base for payments in the peacekeeping scale."

"We believe that it is through graduation that members will be able to move up over a period of years to a more substantial payment in order to fix the finances of peacekeeping," he said.

Hays said that from the discussions he has had with individual delegations and speeches in the committee, the "unanimous opinion was that it was time to review the scale and that member states undertook that the next formation of the scale would be more equitable, more fair, more transparent, and more flexible."

Nevertheless, he said, all members are concerned that peacekeeping is a core function, but equally concerned that it is an open-ended requirement which fluctuates greatly. For example a year and a half ago peacekeeping was about $500 million, this year it will be about $300 million.

Both Holbrooke and Hays said that they are gratified by the degree of acceptance their arguments have received from other delegations. Over the past year "the reform of both budget scales has taken on a new life," Hays said.

"The financial systems are agreed to by all the members inside the Fifth Committee, a committee which is composed of all U.N. members," Hays explained. "You have rich and poor, small and large, North and South represented around the table so every negotiation whether on terms and conditions of employment of UN secretariat personnel, peacekeeping budgets, scales of assessment, how much of the regular budget goes to each program...are all hotly debated issues."

"The importance of both budgets and how they operate is central to whether the United Nations can, in fact, move forward into the modern era with a new agenda which was spelled out in the Millennium Summit that deal with a wide range of global effects of our modern day world -- disease, poverty, connection to the internet, refugees, dealing with AIDS, dealing with sectarian and regional conflicts," Hays said. All of these issues have to be dealt with on a much more pragmatic, more global basis and it will take a much modern approach to handling the finances of this system is we're going to undertake these in an effective way."

"What is new is there is a refreshing willingness by a majority of the members to undertake very open, flexible and pragmatic of view of both scales," Hays said.

But both Holbrooke and Hays say that they still face immense difficulties over the next few months: How the five permanent members of the Security Council (China, France, Great Britain, Russia and the United States) will apportion their share of the burden; there are at least three models from different countries on how the scale might be handled, as well as the political and economic considerations of all 189 UN member states.

"The obstacles are first, the immense difficulty of moving an organization which operates by consensus, when the word...is a euphemism for unanimity, and second, the fact that many countries view the American position as being a little bit extreme and are unhappy with it," Hays said.

"Third, some countries are concerned they might have to pay more unfairly and some countries are afraid they have to pay more even though they should and they don't want to," said Hays. "Fourth, and most importantly, the costs of peacekeeping are going up very rapidly."

Holbrooke also stressed that the upcoming U.S. presidential election on November 7 and the subsequent change in Administrations will not affect the U.S. negotiating position or his commitment to follow the Helms-Biden bill, which is U.S. law, and getting an agreement that is good for all sides.

"This Administration will be working on this issue up to noon on January 20. It will be going all out. We do not believe that the election should have any effect on the commitment of the executive branch to fulfill our legislative obligations in this regard," said Holbrooke.

(The Washington File is a product of the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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