MEETING OF UNIDROIT FINANCE COMMITTEE

UNCLAS ROME 002391

SIPDIS


FROM THE U.S. MISSION TO THE UN AGENCIES IN ROME

L/PIL FOR HAL BURMAN AND JEFF KOVAR
IO/S FOR LISA JACOBSON AND IO/EDA FOR SHARON KOTOK

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

REF: a) STATE 130425


1. Summary: the Finance Committee of the International
Institute for the Unification of Private Law (UNIDROIT)
met on June 15 to consider the organization's 2005
budget. U.S. did not block consensus on the proposed
budget of 1.979 million euros, which represents a 4.2
percent increase over 2004 (however, due to several
factors, assessed contributions for almost all member
states increased only 1.65 percent). The organization is
facing a long-term dilemma with several tasks that must
be accomplished but few resources with which to work.
The most important example is the hiring of a new Deputy
Director General, which had to be delayed because of
insufficient funding. Member states will have to be
prepared to provide the necessary resources if demands
continue to be placed on the organization. End summary.


2. U.S. Mission rep attended the June 15 Finance
Committee meeting. Per ref guidance, U.S. made the
following points: while we value the organization's work,
our policy for international organizations remains zero
nominal growth. While we can abide a small increase as a
one-time exception to ZNG policy in recognition of the
organization's high priority work, we must continue to
urge the organization to exercise maximum budget
discipline. While previously our ZNG call was echoed by
other committee members, this time only the Brits
expressed similar sentiments. Others, including Italy,
Germany and Spain, voiced their support for increased
assessments. Italy in particular (the host country and
largest contributor) chided other members for not
contributing more, while Spain stated their support for a
larger increase. The German rep said it was time to
either "face facts" and fulfill the duties of the
organization, or to "change the rules" and thereby reduce
the requirements placed on UNIDROIT.


3. While some of this change in sentiment may be due to
the very small (1.65 percent) increase in contributions
sought for most member states for 2005 (see para 4
below),U.S. rep sensed a shift in attitudes from
previous sessions. We believe this can be attributed to
the following:

a. The organization is tiny, spending less than two
million euros annually, so the amount of money we end up
debating is relatively miniscule by comparison to other
international organizations. Department has made no
secret of the fact that we believe UNIDROIT is a bargain

SIPDIS
they do quality work for very little money.

b. The current Deputy Director General has been eligible
to retire for some years and has been working full-time
hours for half-time pay since 2000. While the
organization and member states should have insisted that
a new DDG and resources to pay him/her be found four
years ago, that did not happen. The DDG will definitely
be leaving this year, yet the organization has only half
the money (or less) needed to hire a new one. Thus the
decision to proceed was put off, and an interim solution
found whereby the principal Research Officer will act as
DDG until sufficient funding can be found.

c. The depositary function of the Cape Town Convention
has been strongly supported by the U.S. and other member
states. Yet thus far, the only way the organization can
perform this function is to solicit voluntary
contributions so an additional staff member can be hired
(the U.S. contributed 110,000 dollars toward this
effort),when in reality this is a function that should
be a part of the regular budget. The favored candidate,
an American, turned down the offer because the salary was
too small.

d. A recognized step forward for the organization is the
establishment of an electronic document library that can
be accessed over the internet. The organization is being
forced to finance this project over a period of years
because insufficient funds exist to buy the complete
software program in one payment.


4. Why only 1.65 percent? At the March finance sub-
committee meeting, the organization proposed a 12 percent
increase in assessed contributions and was firmly
rebuked, which surely made the Secretariat gun shy. In
addition, the government of Italy decided to clear their
arrears and increase their contribution. Finally, a re-
evaluation of the units of account was done to bring the
organization into line with a similar assessment done by
the UN in 2003. This resulted in increased contributions

from several member states, allowing a more modest
increase for others (the U.S. standing did not change).


5. Comment: this tiny international organization with
only a few permanent staff makes a valuable contribution
to U.S. industry in its effort to harmonize commercial
laws of differing countries and has been strongly
supported by the Department's Office of the Legal Advisor
(L). Given the relatively small amount of funding
necessary to enable UNIDROIT to carry out its designated
functions, Mission believes it is worth considering as an
exception to the mantra of zero nominal growth.

CLEVERLEY


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2004ROME02391 - Classification: UNCLASSIFIED