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

4361. Subj: Indebtedness of “China.”

1.
Summary: Efforts solve UN deficit likely be seriously complicated by indebtedness left by ROC when expelled from UN and unlikelihood PRC will agree to assume these obligations. Malik (USSR) told Hambro (Norway), who in turn passed to Bush, that presence PRC required for any further discussions UN deficit which would have to be held under UN rather than Hambro auspices. Deficit problem expected to be returned to GA in near future where question PRC/ROC financial obligations be aired. USUN seeks Dept. guidance soonest. End summary.
2.
As Dept. aware, when ROC expelled by GA it left $30.2 million assessed contributions outstanding computed as of Oct. 31, OQOQM broken down this was $6.3 million on 1971 regular budget, $11.9 million prior year’s regular budget, $5.3 million UNEF and $6.7 million ONUC.
3.
With PRC assuming seat of “China,” the question of obligations of PRC and prior actions of ROC in UN is complex matter with political, legal and financial ramifications. Assuming that change in representation of China was simply matter of one govt. succeeding [Page 318]another, one cld assert that PRC as successor govt. wld be responsible for obligations of ROC. Legal precedent is that in most circumstances successor govt. succeeds to rights and obligations of its predecessor. However, in present circumstances PRC claims it is a successor state and not successor govt. Consequently, if it is assumed that present situation is one of state succession rather than govt. successor then legal picture becomes more cloudy. Nevertheless one cld argue that PRC wld be responsible for obligations of ROC.
4.
Since Oct. 1949 PRC has asserted that it was wrongly deprived of its right of representation and participation in UN. In this situation, to attempt to hold PRC responsible for obligations incurred during period which it contends it was wrongly treated and legally denied rights cld be interpreted as “taxation without representation.”
5.
Question is further complicated by Article 19 UN Charter since if ROC obligations are transferred to PRC, latter could be subject to sanction provisions unless payment made prior to 27th GA. Since PRC represented this GA we can assume it wld meet fully assessments under 1972 regular budget. However, if PRC not held to ROC obligation $18.2 million indebtedness under regular budget would be added to already untenable UN deficit situation.
6.
Question of financial obligations of PRC is one which we probably will be confronted this GA. Most likely forum will be when problem of UN deficit discussed following assumed failure of Hambro efforts. We expect Hambro to report failure to SYG early next week and expect SYG subsequently will report this to GA. Probably in turn 5th Comite will be given this problem at least initially. Lively debate cld ensue and in this eventuality USUN must be prepared.
7.

Options open to US include: First, pressing PRC to assume ROC indebtedness but PRC doing so appears most unlikely and cld result in (a) creating an unresolvable legal problem and impediment to our relations with PRC; (b) inflaming public opinion in US against PRC and UN unnecessarily; (c) our losing in this attempt and (d) thus further eroding provisions Article 19 of Charter.

Second, our accepting PRC refusal to assume obligations and adding $18.2 million indebtedness of ROC to present UN indebtedness of nearly $190 million. This wld make solution of UN deficit problem more difficult than at present and it wld increase our expected contribution even if solution cld be found calling for shared assumption by all member states and US were to participate.

Third, try to defer question of ROC indebtedness and PRC obligation and call for an in depth study of total UN financial problem. This not overly appealing because it wld be once again delaying in membership facing up to single most serious problem now confronting organization. It wld have advantage, however, of giving US more time [Page 319]to negotiate behind scenes, including possibility of SYG obtaining one time substantial voluntary contribution from PRC.

Fourth, attempt to deal with overall UN deficit and to highlight PRC/ROC problem. However, this wld be all but impossible because ROC and/or PRC wld have to be included as major defaulters. Assuming PRC wld not assume ROC obligations, we wld then be in difficult position of having part of onus being put on ROC which only recently we characterized as responsible member of UN which fulfilled its Charter obligations. Other defaulters certain to capitalize on this with net effect likely to be at minimum pointing out inconsistency in US policy, and at maximum US be accused of hypocrisy and subject to further vilification.

8.
Malik called Hambro yesterday in response to previous Hambro note to Perm Reps US, USSR, UK and France for follow-up meeting November 19 to discuss Hambro proposal. Hambro in turn called Bush to report substance of Malik call which is as follows: (a) no decision can be taken on deficit problem without PRC; (b) consideration deficit problem will require decision on how to treat indebtedness of ROC; (c) rather than private meetings under Hambro auspices, future meeting should be held under UN auspices with PRC present and simultaneous translation in both Russian and Chinese provided.
9.
Malik will not attend meeting. However, Hambro still wishes other PermReps meet with him afternoon November 19 in order be able to report to SYG.
10.
Request Department’s guidance soonest.
Bush
  1. Source: National Archives, RG 59, Central Files 1970–73, UN 10. Secret. Repeated to Moscow, Taipei, and Tokyo.