163. Airgram From the Mission to the United Nations to the Department of State1
SUBJECT
- Report of the Committee on Contributions
Summary—The UN Committee on Contributions met at United Nations Headquarters from 20 to 30 April 1971. Inasmuch as the scale for three years was established last year, this session was a relatively light one. Efforts were made by da Mota (Brazil) and Meyer Picon (Mexico) to discuss a revision of principles concerning the scale of assessments; however, these efforts were successfully resisted by a majority of the Members, principally from the developed countries. Instead, the Committee asked the Secretariat to provide improved data on the impact of price changes on the calculation of national income and on the ability of countries to secure foreign exchange.
Four copies of the Report are attached.2 End of Summary
In general, this session of the Committee was not very controversial. The actual substantive work was completed in four days, after which the Secretariat and a Drafting Group took the first three days of the following week to prepare the Draft Report, which was then approved by the Committee on Thursday, except for a decision on the date and place of the next session. That final decision was taken at a one-hour meeting on the morning of Friday, April 30.
Da Mota and Meyer Picon made a strong effort to have the Committee discuss at this session changes in the criteria or principles governing the establishment of the scale. They were particularly interested in changes which would benefit the countries with a low per capita income. Their efforts were resisted by Zakharov (USSR), Viaud (France), Rhodes (UK), Naito (Japan) and Zodda (Italy). Conscious of Zakharov’s position that any change in the criteria or principles would mean that he and the Soviet Union would oppose the US ceiling instead of supporting it, Finger also urged that no action be taken at this session to consider changing these criteria or principles. Da Mota and Meyer Pi-con then went along.
The issue of the implications of changes in price levels and exchange rates for the determination of relative capacities to pay was a delicate one. (Paragraph 20 of the Report.) The Soviet bloc countries have in general followed a policy of price stability; consequently Zakharov and Raczkowski (Poland) have consistently opposed any change from the calculation of national income in current prices. Other Members, however, felt that it is unfair to use national income statistics which contain a substantial measure of inflation as a basis for calculating the scale, thus providing a benefit for countries whose national income is stated at relatively stable prices. Finger felt this was a sensitive issue, bearing in mind the need of Soviet support for the US ceiling; however, he did join with the majority in pressing for [Page 302] better data so as to neutralize the impact of differences in changes of price levels.
This thrust was aided by a note from the Netherlands, which had argued that the increase in its assessment had been too high because the degree of inflation in the Netherlands had not been taken into account sufficiently. In fact, this was not so. The Committee did make allowances for inflation as it considered the scale of assessments last year, and the assessment of the Netherlands is not out of proportion to that of other European countries in similar circumstances. Nevertheless, it is hoped that the improved data to be provided by the Secretariat for next year’s session will enable the Committee to neutralize the impact of differences in changes of price levels in a more systematic way. Zakharov reluctantly went along with this consensus.
The Committee also requested improved data on debt burdens, so that it may take into account “in a more systematic way” the factor of the ability of Members to secure foreign currency. (Paragraph 21.) The Committee considered requests by Pakistan and Rumania for relief in their level of assessments because of the natural disasters which had stricken their countries. (Paragraphs 10–15.) While sympathizing with their plight and considering that the impact of such disasters on national income should be reflected on the next scale—1974–76—the Committee felt that it was not able to recommend any revision in the scale adopted by the General Assembly, in response to the two appeals submitted to it. This decision will have the incidental benefit of reducing the US assessment very slightly, from 31.52 to 31.50, in 1972. The reduction will be de facto in 1972 but, based on past practice, will be officially recognized in the next scale. More important than this slight reduction is the retention of the practice. If countries like the Federal Republic of Germany should be admitted, the practice of giving the United States one-third of the benefit would result in a reduction of several percentage points in the US assessment.
The most controversial point involved the acceptance by the Secretary General of currency other than US dollars. (Paragraph 24.) The Secretary General submitted a report outlining the sums that had been accepted in such currencies. He then referred to a paragraph in the Report of the Fifth Committee, reading as follows:
“In the context of the factor regarding the ability of Member States to secure foreign currency, and taking into account resolution 2291 (XXII), the Committee recommends that the needs of the Organization in currencies other than the US dollar should be met by giving priority for payments in non-US currencies to the countries whose currencies they may be.”
A problem had arisen in the case of Indian and Pakistani rupees, although the sums involved were not large. The Secretary General interpreted this paragraph of the Fifth Committee’s Report to mean that [Page 303] a Member State should be entitled to pay up to its total contribution in its own currency if the needs of the Organization in that currency as established by the Secretary General so allowed. This position was supported by da Mota, Meyer Picon, Fakhreddine (Sudan) and Idzumbuir (Congo K). The Members from developed countries, and especially Finger, argued strongly that, while a Member State should be entitled to pay in its own currency a substantial portion of the amount required by the United Nations in that currency, payment of contributions in currency other than dollars was a special privilege which should be available to other Member States as well.
Finger considered it important to fight on this issue because of the provision in US legislation requiring that the US pay 2.5 million dollars of its annual assessment in certain foreign currencies that the US holds. He attempted to delete all reference to the issue from the Report on the grounds that the discussion was merely a private consultation with the UN Controller and the Committee had not been asked by the General Assembly to express its views on the paragraph. This position received firm support from Viaud, Zakharov and Gibson. Finally, however, a compromise was worked out under which no suggestion was made that the General Assembly should pronounce itself on this issue but the difference in views would be mentioned in the Report.
The Committee decided that its next session should be held from 23 May to 9 June 1972 in Geneva. Several members were involved in other UN meetings which would have made it impossible for them to meet in New York at that time and it proved to be virtually impossible to find another date convenient to all Members. Ironically, Zodda argued strongly for New York next Spring. (He has a daughter living in Westchester and likes to visit her once a year.) The Secretariat estimated that the additional cost of meeting in Geneva rather than New York would be a maximum of $8800 for a two-weeks session and $9800 for three weeks.
This sum would be reduced if some Members did not request reimbursement because they had official business in Geneva anyway. Viaud indicated that he would plan not to request reimbursement since he will have to be in Geneva for a meeting of the Governing Council of the United Nations Development Program. Furthermore, the Report stated clearly in its final paragraph that this decision to meet outside New York was of an exceptional nature, resulting from the schedules and commitments of Members.