233. Memorandum Prepared in the Department of State1


A Special Session of the United Nations General Assembly will convene in May or June to consider the problem of financing UN peace and security operations beyond June 30, 1963. In the meantime, starting at the end of January, a twenty-one member working group including the United States will begin meeting to produce a financing proposal to be put before the Assembly. The purpose of this memorandum is to review briefly UN financial developments over the past year and to indicate the present thinking of the Administration as to how the United States should seek to influence the working group’s proposal and the Assembly’s action on this matter.
When U Thant was elected in the fall of 1961 to serve out the unexpired term of Dag Hammarskjold, he turned at once to an interim solution of the financial crisis of the United Nations, caused by non-payments of assessments for peace-keeping operations in the Middle East and the Congo. Such non-payments now amount to about $100 million. After consultation by the Secretary-General with the World Bank and the U.S. and other delegations it was proposed that the General Assembly: [Page 515]
assess all members for the cost of the peace-keeping missions in the Middle East and Congo for the first six months of 1962.
request an advisory opinion from the International Court of Justice as to whether the assessments for the Middle East and the Congo operations were legally binding on members.
authorize a $200 million issue of UN Bonds, repayable out of regular budget assessments, to provide stopgap funds until more durable arrangements could be made.
These things were done. The six-month assessment was passed by the Sixteenth General Assembly—using as a basis the regular administrative budget scale, modified by substantial reductions for the poorer countries and supplemented by voluntary contributions from the U.S. and, as to the Middle East, the UK. The World Court rendered a favorable advisory opinion, and the 17th General Assembly accepted the opinion by a vote of 76 to 17 with 8 abstentions. As of January 9, 1963 about $148 million of bonds have been sold or pledged, including presumed U.S. matching of pledges already made by others.
Meanwhile additional steps are being taken to put UN finances on a better basis. The Secretary-General has secured the services of Mr. Eugene Black as financial adviser to the United Nations; an energetic campaign to collect arrearages, based on the World Court opinion, is getting underway; and the UN Working Capital Fund has been increased by the General Assembly from $25 to $40 million.
Thus bankruptcy has been at least temporarily averted; the peace-keeping missions in the Middle East and Congo have been maintained; the legality of the assessments for these operations has been affirmed; delinquent members are now confronted with Article 19 of the Charter, which provides that any member with arrearages totalling more than the last two years’ assessments loses the right to vote; and the twenty-one member working group has been established to grapple with the problem of financing further peace-keeping costs.
The regular UN scale of assessments was developed for meeting administrative expenses: the present U.S. percentage is 32.02%. The majority of UN members have taken the position that this regular scale should not be applied to the costs of substantial peace-and-security operations like those in the Middle East and the Congo. They contend that the regular scale was intended to apply only to the ordinary budget, that its application to peace and security operations of this magnitude is inconsistent with the primary peace-keeping responsibility of the five permanent members of the Security Council under the UN Charter (particularly in operations where all troops are furnished by smaller nations) and with relative capacities to pay. Besides, they believe, it would impose too heavy a financial burden on the smaller members, particularly the developing nations.
In financing any international operation there are two main alternatives: to levy an assessment on all countries, or to depend on voluntary contributions from some countries. During the past few years, peace and security operations have in practice been financed by a combination of these methods. The Administration and the Congress have already determined that they do not wish to continue this past practice.
If the remaining peace and security expenses in the Middle East and the Congo were to be financed only by voluntary contributions, our judgement is that the United States would probably have to pay considerably more than half of the total amounts required. If these costs are to be met by assessment, the experience of the past five years has shown that it is not politically feasible to get a two-thirds vote of the General Assembly for meeting them according to the regular administrative scale. Consequently a special scale for these peace and security operations (or different special scales for each of them) would have to be developed, which would put a relatively smaller load on the smaller and poorer countries and a relatively larger load on the financially stronger countries.
Since we cannot predict the nature of any future peacekeeping operation, it would not be desirable to establish ahead of time a peace and security scale for unknown contingencies. Some operations might be of sufficient interest to the United Nations as to justify a somewhat higher share, others might be regarded by the United Nations as not justified unless they could be financed on the regular budget scale. The United Nations should, therefore, oppose any general decision to establish a peace and security assessment scale for all purposes, but should participate in developing special scales for meeting the necessary costs of the Middle East and Congo operations for the coming year or so.
After months of consultations with experts in and out of the government, therefore, we are inclined to work for a program which:
—encourages, whenever special circumstances make it possible, the financing of peace-keeping operations primarily by the nations most directly concerned (for example, the cost of the West New Guinea operation is being split between The Netherlands and Indonesia);
—continues, as at present, to finance minor peacekeeping operations through the Regular Budget at the regular scale (as is now done for armistice supervision teams in Kashmir, Korea, and the Middle East);
—adopts no “peace-and-security scale” for more than a year or so in advance, and makes no advance financial decisions about future costs of unknown peacekeeping operations;
—maintains for the Middle East and the Congo the principle of collective financial responsibility of all UN members (this means a general assessment against all states rather than a resort to voluntary contributions);
—assigns to small and developing states smaller shares of the costs of such operations than they pay under the regular scale (this means a “special” scale in which the major powers are assessed more than in the regular scale); and
—gives a greater voice—in view of their greater contributions—to the larger contributors as to the establishment of any special peace-and-security scales in the future (which means a new mechanism such as the peace-and-security financing committee described below).
Specifically, the United States would be prepared to work with the other members of the United Nations in meeting Middle East and Congo costs after July 1, 1963, through a program that would combine these two elements:
Special scales of assessment for the Middle East and Congo operations which provide somewhat larger percentages for the U.S., other major powers, and those which can afford it; and provide smaller percentages for the developing countries. (Such increased assessments on the U.S., above the present 33–1/3% Congressional limitation, should be considered in light of (i) the cost to the U.S., in dollars and in American lives, if the U.S. were required to conduct, directly, similar operations in its own interest; and (ii) the capacity to pay and special responsibilities of the stronger UN members).
The establishment of a new peace-and-security financing committee of the GA, in which larger contributors would have relatively stronger representation than in the GA. This Committee would be established by a new rule of procedure of the GA, which would give it the sole authority to recommend to the GA special scales of assessments for peacekeeping operations, and provide that no such special scale can be established by the GA without the committee’s concurrence.
  1. Source: Kennedy Library, National Security Files, Subjects Series, United Nations (General), 1/63–4/63, Box 311. Official Use Only. Transmitted from the State Department Executive Secretary to McGeorge Bundy under a January 21 covering memorandum. According to the covering memorandum, Secretary Rusk had approved the memorandum on UN financing and asked for the opinions of Bundy and the President prior to consultations with Congressional leaders. A handwritten note by Bundy on the covering memorandum reads: “P[resident] approves.”