UN FINANCES: G77 RAISES LIFTING OF SPENDING CAP IN

UNCLAS USUN NEW YORK 001163 SIPDIS SIPDIS E.O. 12958: N/A TAGS: AORC KUNR UNGA SUBJECT: UN FINANCES: G77 RAISES LIFTING OF SPENDING CAP IN FIFTH COMMITTEE REF: USUN 1071 ¶1. SUMMARY: The normally routine discussion on the UN financial situation turned heated on June 1st when the G77 raised the issue of lifting the spending cap and linked it to late payments by some Member States. Delegations stated that the cap had been imposed on the Organization by a few Member States and that those same Member States were not meeting their financial obligations to the UN. The discussion ended for the day with a request to resume discussion at a later stage. END SUMMARY. ¶2. As reported in reftel, UN Controller Warren Sach made his presentation on the UN financial situation on May 24th. The standard practice has been for the Committee's discussion on this presentation to occur a week after the Controller's presentation, in a formal session, and not to hold informal discussions. The routine discussion was instead overtaken by a discussion on the spending cap and the financial obligations of Member States. ¶3. South Africa, on behalf of the G77 and China, noted that it was more imperative than usual to reflect on the financial situation of the UN given the spending cap that was "regrettably imposed on the Organization." The statement also reiterated the G77 position that the spending cap will be automatically lifted when the Secretary-General requests such an action and that there was no link between reform and the budget, something that was reinforced by G77 Ministers in Malaysia during their meeting the week before. The South African statement also noted concern that it appeared that some were linking the withholding of payments to reform and it was the same Member States that were not meeting their financial obligations to the UN that have imposed the cap on the budget. ¶4. India made a statement that the spending cap was imposed by the U.S., Japan and, to some extent, the UK. The statement also noted that others who have not paid their contributions do not have a right to determine how India's contribution, made in full and on time, can be used. The Indian delegate then asked for informal consultations to be held on this agenda item. ¶5. Pakistan stated that financial obligations should not be used as a bargaining chip for reform. The statement also indicated that the lack of payment by some Member States undermines the ability of the UN to implement mandates, especially those of concern to developing countries, and that the policy of withholding payments was incomprehensible. Reform goes hand in hand with financial obligations and it was contradictory to push for reform and not pay and this was actually the only area that needed reform. ¶6. Jamaica noted that the G77 opposed the cap during discussions on the budget in December, but had been under significant political pressure to agree to a budget by consensus. The delegate then stated that the cap was blackmail. A number of other G77 delegations, including Egypt (calling the budget resolution "consensus at gunpoint"),Malaysia, Bangladesh, China, and Nigeria supported the statement by South Africa and expressed concern over the spending cap and late payments. ¶7. In response to comments made by the G77, the EU (Austria) and USDel reminded the Committee that the budget resolution had been adopted by consensus. They also questioned the need for informals on this agenda item (COMMENT: Informal meetings are usually convened for the purpose of negotiating a resolution. The Fifth Committee has not held informals on this item for years. END COMMENT). ¶8. Sach, in response to questions posed, clarified that the spending cap was related to the budget (agenda item 124) and not the UN financial situation (agenda item 126, currently under discussion). He also stated that the UN had enough spending authority to get through the end of June and perhaps early July. BOLTON