371. Memorandum From Gordon Chase of the National Security Council Staff to the President’s Special Assistant for National Security Affairs (Bundy)1

SUBJECT

  • UN Financing

In the event you are interested, here are some points on the UN’s financial problems. Essentially, there are two fairly important issues at the present time—(a) repayment of the bonds and (b) the Secretary General’s efforts to get $100 million from the UN membership.

1.

The Bonds—Under present procedures, the UN budget assessment for the repayment of the bonds runs at the rate of $8.6 million per year (of which $3.8 million is owed to the U.S.). The UN is now in the fourth year of a 25-year repayment schedule.

The crux of the present problem is that the Russians and some others have been refusing to pay their share of assessments for the bonds [Page 811]on the grounds that they are a peacekeeping expense and should be paid for by voluntary contributions. We disagree; among other things, if a system of voluntary contributions is instituted, we conceivably may have trouble getting the $3 million per year which is owed to us and which we get now by simply subtracting this amount from our annual UN budget assessment. Also, a voluntary system might give us trouble with Congress, which approved the original bond purchase on the understanding that repayment would be from the regular UN budget.

The bond problem will probably be resolved, one way or another, in Committee 5 within the next couple weeks. Present indications are that there may be an attempt to use the UN budget’s “miscellaneous income” to pay off the bonds. This is a flim-flam which would not pain us and which would provide a fig leaf for the Russians if they wanted to be forthcoming on the bonds. We don’t know yet, however, whether the Russians in fact want to be forthcoming. If they are not forthcoming, we still think we will be able to avoid the unattractive voluntary contribution system for bond repayment—e.g. at worst, we can probably continue with the present arrangement which means that we get our $3 million per year and that the Russians keep piling up a debt on bond assessments.

2.

Secretary General’s Efforts—The Secretary General has said that the UN needs roughly $100 million. About $80 million of voluntary contributions are needed to pay old bills ($5.3 million is owed to us) and to restore the UN Working Capital Fund, while $18 million of voluntary contributions and assessments are needed to pay UNEF expenses for 1965.

So far, U Thant has collected $28 million, which includes $4.5 from us for assessed UNEF expenses. The Secretary General still feels he needs about $70 million. His chances of getting this amount depend in large part on what the Russians do—i.e. if they come through with a large voluntary contribution, others may follow close behind. The Russian contribution, in turn, probably depends partly on how the bond repayment issue comes out in the GA; if the Russians are fairly satisfied, there are some indications that they are prepared to contribute as much as $15 million.

The U.S. position at this time on voluntary contributions is fairly relaxed. While we are not saying it publicly, we think that U Thant’s statistics have holes in them. Even if they are correct, the UN financial situation is not very desperate. It has been much worse in the past.

At this time, we are not thinking about giving any voluntary contributions to U Thant; we feel that we did our bit when we caved on Article 19 and that others should do their part. Only if voluntary contributions start coming in from everyone else (including the Russians) [Page 812]might we be willing to help. In this regard, one painless way of helping would be to simply waive reimbursement on the $5.3 million which is owed to us.

GC
  1. Source: Johnson Library, National Security File, Agency File, United Nations, Vol. 3. Confidential.