296. Telegram From the Department of State to the Mission to the United Nations 1

2875. Ref: USUN 3956.2 Subj: Soviet Position on Payment Arrears.

Re methods for handling arrears problem following is for your guidance in talks with Sovs and Secretariat.

Dept concurs in general with line you propose take on arrears problem in event Fedorenko makes another approach. Our understanding is that you do not propose to take initiative for any meeting on this subject but are preparing contingency position. In next talk, if Sovs renew request for proposals on settling arrears you would adopt position [Page 637]described this telegram. Also, our understanding that in any discussions with Sovs (or informal exchanges with Working Group) on financing arrangements, you would adhere to line in comment B of reftel and guard against any weakening of essential and inherent link between problem of future and satisfactory settlement of arrears.

Following are points we suggest you emphasize in event next discussion with Sovs turns to arrears problem:

1.
We are flexible on accounting devices for settling arrears, and will not make issue of modalities. We believe several possibilities can be designed which would allow Sovs to settle their debts without appearing to abandon their position. (FYI. We suggest that you do not get into question of how particular solution relates to Sov “principles”. We will try to be accommodating but feel that question of whether settlement is detrimental to their principles is matter basically for them and not for us. End FYI.)
2.
Particular devices are matter Sovs will want to work out with Secretariat. We are willing to go along with any reasonable scheme that does not violate Financial Regulations and is consistent with Charter. We would not want to leave impression (para 3 of reftel) that we would be satisfied with minimal payment just to avoid Article 19 hassle at this time. This may well be outcome but we are concerned with satisfactory settlement arrears and not simply resolution Article 19 issue. We recognize that Sovs may be concerned about possibility that after they have worked out apparently viable scheme with Secretariat we might pull out rug from under them by rejecting it as unsatisfactory. If this becomes apparent in conversations with Fedorenko you are authorized to outline in very general terms methods we might regard as satisfying requirements, using as illustrations the consolidated account and ex gratia devices described below. You should avoid, of course, being drawn into any negotiations with Soviets on modalities to pay off arrearages. We would like this aspect kept between USSR and UN. End FYI.
3.
FYI. We want to avoid any suggestion of US–USSR deal in which we appear to abandon principle of financial integrity UN and wink at violation of financial rules to avoid showdown. For this reason Dept believes you should not at this time seek informal exchanges with Sovs, even at working level, on methods of arrears payment. End FYI.
4.
Sovs may be concerned by prospect that after they pay they will suffer prestige loss and that US public and press will picture result as backdown from showdown. We cannot of course control what others and press will say but believe that world will applaud satisfactory outcome and that Sovs will not suffer from policy of support for UN. If satisfactory arrangement can be worked out we would in public statements indicate our gratification at settlement and would not seek to exploit it to their detriment.

[Page 638]

In meantime, as suggested USUN 3847,3 you are authorized carry on consultations with Narasimhan and Turner,4 on assumption Sovs may be open some means paying debts and will seek Secretariat advice. (We would want to avoid putting this in context that would lend credibility to Sov complaint we are compromising confidential nature of US–UK-USSR discussions on future financing.) You can say we are flexible on modalities Secretariat might work out with those in arrears, including Sovs, in such fashion as not to compromise Financial Regulations.

You should emphasize to Secretariat we believe they in position to discuss proposals for alleviation immediate financial crisis in light GA Res 1877 (S–IV)5 which “Appeals to Member States … to pay their arrears, disregarding other factors …” and request SYG to work out with Members “arrangements as to the most appropriate modalities within the letter and spirit of the Charter.” Key elements of Res are payment “without prejudice to their respective positions” and “possibility of payment by installments.”

Following are three illustrative devices that have been suggested and that might meet problem. You can tell Secretariat we believe any of these offer possibilities satisfactory financial settlement and might be politically acceptable. All of them assume that Sovs pay Working Capital Fund assessments and will not object to UN crediting their regular budget payments to cover arrears for items for which payment withheld in 1963.

1.
Consolidated account. All arrears as of June 30, 1964 would be consolidated in a single account. Payments would then be made by those in arrears not to separate accounts but to consolidated one. Barton (Canada) has already surfaced this idea in his paper6 and Secretariat already familiar with it. Idea would be that UN would start International Cooperation Year with clean slate, with arrears paid and new agreements in hand on authorizing and financing future peacekeeping operations. We believe this might have atmospheric possibilities in view of Gromyko-ICY letter July 15, 19637 pointing out UN successes and calling for solution of important international questions during the year. Consolidated account formula might also have particular appeal to French. FYI. While consolidation might raise some legal and perhaps accounting problems, we believe such solution would readily obtain GA endorsement. End FYI.
2.
Ex gratia payment, covering total arrears, in single contribution or in installments. Sovs would not pay on peacekeeping accounts but make ex gratia contribution to UN to mitigate UN’s financial crisis and avoid situation which could prejudice prospects for international understanding. Sovs might couple this payment with reservation of their legal position. Sovs would not attach such conditions to ex gratia contribution that comptroller unable credit contributions to peacekeeping arrears. In subsequent years Sovs would make further voluntary contributions in requisite sums and with similar reservations.
3.
Voluntary Payments for Peacekeeping (UNOC & UNEF) Arrears. Sovs would make “voluntary” payment to settle all or part of their peacekeeping arrears, probably after UNOC withdraws, at the same time reserving their legal position. Soviets might arrange pay in installments if they wish.

Apart from tie to International Cooperation Year, Dept does not believe that, at this stage of discussion with Sovs, linkage of arrears problem with other issues, either in UN context or outside, is likely be fruitful approach. We have already made logical tie with future of peacekeeping and in that connection emphasized our common interest in strengthening UN peacekeeping capacity.

Department aware that in broader context in which this was in President’s January 8 reply to Khrushchev, strengthening of peacekeeping encompasses wide range of common objectives in putting limitations on nuclear weapons, reducing risks of war, and moving toward effective disarmament. We will continue to study possibilities of linkage to some of these broader questions but believe that to bring any of them in now would be premature.

Rusk
  1. Source: Johnson Library, National Security File, Country File, United Nations, Article 19, Vol 1. Confidential; Limdis. Drafted by Pelcovits and Jackson on May 6; cleared in CIA, L, EUR, SOV, UNP, and IO; and approved by Cleveland. Repeated to London, Moscow, and Geneva for Gardner.
  2. Dated May 1; it set out proposals for future discussions with the Soviets on Article 19 issues. (Ibid.)
  3. Dated April 23. (National Archives and Records Administration, RG 59, Central Files 1964–66, UN 10–4)
  4. Bruce R. Turner, Under Secretary, Office of the Controller, UN Secretariat.
  5. For text, see United Nations Yearbook, 1963, pp. 575–576.
  6. Not found.
  7. Printed in Izvestia July 18, 1963.