REPORT OF 56TH UNIDROIT FINANCE COMMITTEE

UNCLAS ROME 005491

SIPDIS

L/PIL FOR HAL BURMAN AND JEFF KOVARS; IO/EDA FOR WINNICK
IO/S FOR LISA JACOBSON

FROM FODAG

E.O. 12958: N/A
TAGS: AORC ABUD UNIDROIT
SUBJECT: REPORT OF 56TH UNIDROIT FINANCE COMMITTEE

REF: A) ROME 4415, B) SECSTATE 190770, C) ROME 4389, D)

SECSTATE 196873, E) ROME 04940


1. SUMMARY. THE 56TH SESSION OF THE INTERNATIONAL
INSTITUTE FOR THE UNIFICATION OF INTERNATIONAL PRIVATE
LAW (UNIDROIT) FINANCE COMMITTEE APPROVED A 2003 ORDINARY
UNCLASSIFIED

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BUDGET LEVEL OF EURO 1,802,550.00, A NOMINAL INCREASE OF
19,673 EUROS OVER THE 2002 LEVEL. USDEL DID NOT BLOCK
CONSENSUS BUT STATED THAT THE U.S. POSITION CONTINUED TO
BE ZERO NOMINAL GROWTH. THE BUDGET PROPOSAL WILL BE SENT
TO THE DECEMBER 6, 2002 GENERAL ASSEMBLY FOR FINAL
APPROVAL. END SUMMARY.


2. THE 56TH SESSION OF THE UNIDROIT FINANCE COMMITTEE
MET ON OCTOBER 22, 2002. AS REPORTED IN REFTEL E, THE
55TH SESSION OF THE COMMITTEE HAD BEEN UNABLE TO APPROVE
A BUDGET DUE TO MEMBER CONCERNS (JAPAN, ITALY, FRANCE,
SWITZERLAND) ABOUT A LAST-MINUTE INCREASE IN THE BUDGET
PROPOSAL (TO ALLOW UNIDROIT TO CARRY OUT ITS FUNCTIONS AS
DEPOSITARY FOR THE RECENTLY CONCLUDED CAPETOWN CONVENTION
ON INTERNATIONAL INTERESTS IN MOBILE EQUIPMENT) AND THE
ANNOUNCEMENT OF THE GOVERNMENT OF ITALY THAT IT WAS
REDUCING ITS CONTRIBUTION.


3. AS A RESULT, THE SECRETARIAT WAS OBLIGED TO WITHDRAW
THE PROPOSAL AND REDRAFT THE BUDGET TO TAKE INTO ACCOUNT
THE LOWER ITALIAN CONTRIBUTION. AT EURO 1,802,550.00
(FOR ORDINARY EXPENDITURES) THE RE-DRAFTED BUDGET
PRESENTED TO THE 56TH SESSION CAME IN SLIGHTLY BELOW THE
ORIGINAL PROPOSED BUDGET LEVEL (REFTEL A) AND REPRESENTED
A NOMINAL INCREASE OF ONLY 19,673 EUROS. (NONETHELESS,
THE U.S. CONTRIBUTION REMAINS THE SAME (EURO 110,000) AS
IN THE ORIGINAL BUDGET LEVEL.) WHILE FUNDING FOR
SCHOLARSHIPS FOR DEVELOPING COUNTRY RESEARCHERS AND FOR
CONSULTANTS WAS REDUCED, THE RE-DRAFTED BUDGET DOES NOT
PROVIDE THE MEANS FOR UNIDROIT TO CARRY OUT THE FUNCTIONS
OF DEPOSITARY FOR THE CAPETOWN CONVENTION. IN PRESENTING
UNCLASSIFIED

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THE RE-DRAFTED BUDGET UNIDROIT SECRETARY GENERAL HERBERT
KRONKE CALLED THE PROPOSAL ONE "BORN OUT OF DESPAIR"
WHICH COULD BE TOLERATED FOR ONE YEAR, BUT WHICH, AFTER
THAT, WOULD BE "UNSUSTAINABLE."


4. THE FINANCE COMMITTEE APPROVED THE OVERALL BUDGET
LEVEL. USDEL STATED THAT, WHILE THE U.S. WOULD NOT BLOCK
CONSENSUS, THE U.S. POSITION WAS AND REMAINED ZERO
NOMINAL GROWTH.


5. IN DISCUSSION OF THE RE-DRAFTED BUDGET, MEXICO,
FRANCE, GERMANY, SPAIN, SWITZERLAND AND AUSTRIA EXPRESSED
DIFFICULTIES WITH THE SECRETARIAT'S PROPOSAL TO REDUCE
"LEGAL ASSISTANCE TO DEVELOPING COUNTRIES" (PRIMARILY
SCHOLARSHIPS FOR RESEARCH). USDEL STATED THAT THIS WAS
AN APPROPRIATE LINE ITEM FROM WHICH TO SEEK SAVINGS, AND
ENCOURAGED COUNTRIES TO CONSIDER VOLUNTARY CONTRIBUTIONS
FOR SUCH SCHOLARSHIPS INSTEAD. AS A RESULT OF THESE
CONCERNS THE SECRETARIAT WILL JUGGLE SOME OF THE INTERNAL
LINE ITEMS WITH A VIEW TO PROVIDING MORE FUNDING FOR
SCHOLARSHIPS WHILE STAYING WITHIN THE APPROVED BUDGET
ENVELOPE. THE REVISED PROPOSAL WILL BE SUBMITTED TO THE
DECEMBER 6 GENERAL ASSEMBLY.


6. CONCERNING THE DEPOSITARY FUNCTIONS, JAPAN AND
AUSTRIA ALSO EXPRESSED SUPPORT FOR UNIDROIT CARRYING OUT
THESE FUNCTIONS, BUT STATED THAT THE PROPOSAL HAD COME IN
TOO LATE FOR CONSIDERATIONS IN CAPITALS. THESE COUNTRIES
SAID THAT THE NEED TO SUPPORT THE DEPOSITARY FUNCTION
WOULD BE GIVEN MORE SYMPATHETIC CONSIDERATION IN NEXT
YEAR'S BUDGET PROPOSAL.
UNCLASSIFIED

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7. THE FINANCE COMMITTEE ACCEPTED THE FINAL
MODIFICATIONS TO THE BUDGET AND THE APPROVAL OF THE
ACCOUNTS FOR THE 2001 FINANCIAL YEAR (ALSO OUTSTANDING
FROM THE 55TH SESSION.) HALL

UNCLASSIFIED

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2002ROME05491 - Classification: UNCLASSIFIED