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

2668. Subject: Cash Crisis in the UN.

Summary: UN faced with serious financial crisis to extent that likely unable meet end of Sept payroll unless it receives contribution payments presently not foreseen. While UN attempting obtain accelerated contributions from other member states, these not likely provide needed cash. Consequently, UN requested US make accelerated payment on $26 million balance owed for 1971 assessment, which already appropriated by Congress. I urge Dept expedite $13 million payment now scheduled for about Oct 1 so that this amount available to UN by Sept 29. While this will not resolve financial problem, it will avoid placing onus on us if UN can’t meet its obligations, and place it on those in arrears where rightly belongs. End summary.

1.
UN now faced with extremely serious crisis since cash not available to meet current obligations. USUN advised mid-day Sept 14 to Sept 15 payroll (about $2.5 million bimonthly) could not be fully met unless contributions to regular budget forthcoming from delinquent member states. However, this crisis averted when Controller (Turner) in violation existing rules, withheld $2 million payment to UN pension fund, which was due Sept 10.
2.
According to Ziehl (Deputy UN Controller), UN will not be able meet next payroll (Sept 30), necessary pension fund payment, and other obligations (many of which already being deferred) without sizeable payments of contributions prior that date. Expected contributions of others during remainder this month small, but Controller pressing for maximum payments. Anticipating new financial crisis, Turner informed USUN recently that, in absence of cash, UN might be forced introduce arbitrary restriction on program and other expenditures in order to preserve cash to meet commitments already made. However, did not believe SYG would consider doing this without GA approval. Turner described UN as “technically bankrupt,” and has so informed SYG.
3.
Since UN working capital fund depleted, as Dept aware, only recourse of UN to meet obligations pending receipt of contributions is to (a) borrow from trust funds with interest (Controller has drawn these down to maximum except for non-drawal on UNDP); (b) cut back expenditures (however, SYG cannot transfer funds between budget [Page 308]sections without approval of ACABQ; or (c) obtain accelerated contributions from delinquent member states. Although US made $26 million payment in Jul against 1971 assessment, similar amount remains to be paid. As Dept aware, UN Financial Rule 5.4 states that assessments on member states “due and payable in full within thirty days” of receipt of SYG’s communication informing them of assessments for budget most recently approved by GA (1971 SYG communication sent Jan 12, and full payment due at latest end Feb). UN recognizes delay in US payments due in part to FY/CY difference, but because of present situation has requested US pay balance of assessment more rapidly than now scheduled (i.e., one-half early Oct, and remaining one-half early Dec) in order avert expected new crisis end Sept.
4.
If next UN payroll can’t be met, since US has not fulfilled its 1971 obligation under Rule 5.4 and owes more than any other member states on 1971 assessment, will almost certainly receive major share blame along with other delinquents and can anticipate broad negative press coverage, outcry from Secretariat members (especially Americans) if not paid salaries, possible accelerated “job action” by staff, and general unhealthy UN atmosphere 26th GA, when major items of interest to US (e.g., ChiRep, disaster relief, narcotics, ECOSOC reform, etc.) being considered.
5.
Consequently, I strongly urge Dept expedite payment one-half balance owed by US (approximately $13 million) on 1971 assessment so that (a) we can inform UN within seven days of intention US Govt to pay in time for UN meet Sept 30 payroll, and (b) check be transmitted by Dept to reach UN prior to Sept 29. Furthermore, I urge Dept expedite payment balance US assessment so no onus can be placed on US in any situation where UN unable meet its financial obligations.
6.
Obviously, accelerated US payments cannot correct cause of UN financial crisis, but it can remove stigma from US and place blame where it rightly belongs on members in arrears (especially USSR and France). Indications are that Hambro unable to effectively deal with deficit problem, and SYG expects to return it to 26th GA. Turner has recommended to SYG that he inform GA that, in absence solution by end of year, he or next SYG would have to take steps to cut back on programs so that actual ongoing expenditures of UN be trimmed to availability of cash flow rather than based on approved budget section levels. He expects SYG to make such statement to Fifth Comite early in GA. Such a stringency measure applied in US Govt, and might have salutory effect in UN, and certainly we should support it. However, our support will be much more meaningful and effective if our own assessments are fully paid up.
7.
I would appreciate Dept’s views soonest re what austerity measures we might urge UN to take once US assessment is paid in full.
Bush
  1. Source: National Archives, RG 59, Central Files 1970–73, UN 10. Confidential; Immediate.