UN SCALE OF ASSESSMENT: AMBASSADORIAL LEVEL

UNCLAS USUN NEW YORK 001847

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: AORC KUNR UNGA
SUBJECT: UN SCALE OF ASSESSMENT: AMBASSADORIAL LEVEL
MEETING WITH THE EUROPEAN UNION PRESIDENCY



1. Summary. On September 15, Ambassador Wallace met with
Ambassador Tom Gronberg (Austria) who will negotiate the
scale of assessment this fall on behalf of the European
Union. Wallace and Gronberg engaged in a state of play
discussion on US and EU positions (both of which remain under
discussion),as well as the Russia/China problem,
possibilities for moving forward with a common approach, and
timing of Fifth Committee consideration of the scale. End
summary.


2. Ambassador Gronberg indicated that the New York-based EU
delegations would be meeting later in the day to try to reach
a preliminary group position on the scale methodology for
2007-2009. Should the group succeed in doing so, a decision
would still need to be taken in capitals, with September 25
set as a tentative deadline for agreement. Gronberg
indicated that while there were divergent positions in the
EU, particularly among the older and larger contributors and
the newer and smaller ones (whose rates will likely increase
under any formulation),he believed the group was close to
consensus. (Comment: Upon Gronberg's comment and out of his
view, the Finnish Fifth Committee expert attending with him
shook her head and indicated that this was very unlikely. End
comment.)


3. A common denominator for all EU countries was their
support for a 6-year base period. He reminded Ambassador
Wallace that the EU collectively is paying 10 per cent more
than their collective shares of world gross national income
(GNI) and all countries are concerned that they are faced
with further increases in the 2007-2009 scale. Wallace
expressed empathy for the EU position on the base period,
while reminding Gronberg that there has been a trend to
decrease the length of the base period and the United States
has concerns about reversing the current trend. The goal, he
pointed out, should be to increase the rates of "other"
Member States. A 3 year base period would assist in this
regard because it would more adequately reflect the capacity
to pay of large developing countries whose economies have
grown considerably in recent years. In short, the United
States would have difficulty supporting a 6 year base period.
Both agreed that a good option could be to explore a sliding
gradient.


4. Ambassador Wallace informed Gronberg that the United
States is actively working on its proposal and also hopes to
have a position agreed by September 25. He reminded Gronberg
that the United States remains concerned about past actions
by the EU with respect to the ceiling rate; indicated that
for many reasons (not least domestic congressional pressure)
the US would not be in a position to agree to any increase in
rate; and inquired of Gronberg on the EU's latest position on
the ceiling. Gronberg conveyed that there was no firm EU
position on the ceiling, and that some EU countries view the
ceiling as linked to US payment of arrears. Ambassador
Wallace underscored that keeping the ceiling at its current
level was a U.S. redline.


5. Ambassador Wallace raised the issue of purchasing power
parity, highlighting its beneficial effects for the EU
countries' rates, as well as its utility in bringing major
developing country economies more in line with their capacity
to pay. Gronberg believed that the EU may take a positive
view on moving in the direction of PPP and that a discussion
now on PPP was useful to at least lay the groundwork for
future scale discussions in coming years. Ambassador Wallace
agreed and emphasized that with the rapidly changing world
economy it was important to have methodologies like PPP
discussed.


6. With respect to the Chinese and Russian rates, Gronberg
said he had met with both delegations earlier in the summer
and understood that the Japanese proposal for a P5 floor
"would not fly". However, he did think that both countries
would consider voluntarily increasing their rates and that it
would be important for others to help them to commit to this.


7. Lastly, timing of the Fifth Committee deliberation was
discussed. The scale agenda item is expected to be
introduced on October 9th so the Committee can take an early
decision on Article 19 exemptions and hear from the Chair of
the Committee on Contributions. The EU will have a statement
prepared for the 9th, but may not be in a position to engage
substantively on elements of the methodology at that time.
In concluding the meeting, Ambassador Wallace reiterated the
USG desire to work closely with the EU as the issue proceeds
this fall.

BOLTON