AMBASSADOR WALLACE MEETS WITH SECRETARIAT

UNCLAS USUN NEW YORK 001901

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: AORC KUNR UNGA
SUBJECT: AMBASSADOR WALLACE MEETS WITH SECRETARIAT
OFFICIALS ON UN CAPITAL MASTER PLAN, REFORM AND SCALE OF
ASSESSMENTS


1. SUMMARY: Ambassador Wallace met with
Deputy-Secretary-General Mark Malloch Brown,
Under-Secretary-General for Management Chris Burnham,
Assistant-Secretary-General and Controller Warren Sach and
Officer-in-Charge of the Capital Master Plan John Clarkson on
Monday, September 25th. The Secretariat officials asked
about the U.S. position on financing for the Capital Master
Plan (CMP),in light of upcoming discussions in the Fifth
Committee. In addition, Ambassador Wallace raised UN reform
and scale of assessment, noting that progress on reform and
an acceptable agreement on scale of assessment would impact
Congressional support for the CMP. END SUMMARY.


UN CAPITAL MASTER PLAN



2. Malloch Brown noted that the Secretary-General would be
seeking a decision on financing for the construction phase of
the CMP this fall (beginning in late October) and inquired as
to the U.S. position on the issue.


3. Ambassador Wallace noted that the U.S. strongly supports
the project and has made strong statements to that effect.
He also stated that the U.S. supports using direct
assessments to finance the project and also clarified that
the U.S. is not presently offering another loan. Ambassador
Wallace added that the U.S. understood that the project's
cost estimates have increased since last fall and that this
would cause some on Capitol Hill and within the USG to be
upset, especially since the last estimates were understood to
be stable and final. Ambassador Wallace underscored the
importance of adopting a firm CMP budget and for the
Secretariat to stick to that budget.

SIPDIS


4. Burnham said that, in response to calls from Capitol Hill
for more transparency, the UN was working to increase the
transparency with regard to contracts. (NOTE: CMP contract
information can now be found on the UN procurement service
website, www.un.org/depts/ptd/cmp.htm. END NOTE.) Sach
expected that Fifth Committee discussions on the letter of
credit might be difficult; Burnham thought that the Fifth
Committee may resist approving the letter of credit in order
to highlight the fact that it might be needed due to late
payments from the U.S. Sach said that the Secretariat would
aim to characterize the letter of credit as an administrative
device vs. borrowing authority, to hopefully make it easier
to get the Fifth Committee's approval. (COMMENT: USDel has
learned that Japan may not be able to make its first payment
until late 2007 at the earliest. USDel also understands that
many G77 Member States are questioning the need for the
letter of credit, believing that it is only needed to assure
U.S. companies of payment, while foreign firms may not need
such a guarantee. While this does not make a lot of sense,
it is likely to lead to a greater push to hire non-U.S. firms
to carry out the CMP. END COMMENT.)


5. Ambassador Wallace agreed with Sach that it would be
helpful to charactize the letter of credit as an
administrative device and also agreed with Sach that it would
be helpful for Fifth Committee discussions if the ACABQ was
also in agreement with the need for a letter of credit.
Ambassador Wallace stated that he hoped that everyone could
speak from the same page from now on with regard to the CMP,
given the exchange during this meeting.


UN REFORM AND UN SCALE OF ASSESSMENT



6. Ambassador Wallace also raised mandate review, management
reform and the scale of assessments, noting that all were
"combustible" issues on Capitol Hill and that progress on
reform and an acceptable agreement on scale of assessment
would be needed to ensure full Congressional support of the
CMP.


7. With regard to mandate review, Ambassador Wallace noted
that it would be important for further progress to be made
this year and that lack of progress might impact U.S.
contributions to the regular budget. On management reform,
Ambassador Wallace asked the Secretary-General to continue to
push forward on implementing agreed upon reforms and urged
him to do whatever else he could under his authority as Chief
Administrative Officer, without coming to the GA for
approval. He also asked the Secretariat to help keep reform
moving ahead, in parituclar in helping to assure that the
Independent Audit Advisory Committee (IAAC) includes
non-political experts that are not subject to geographic
distribution.


8. Burnham noted that they were down to two finalists (an



Australian and Canadian) to head the ethics office and that
consultations continued with the staff union with regard to
human resource proposals. Burnham stated that he too hoped
to finalize the IAAC this year and also agreed that it should
have top-quality candidates without respect to a requirement
for geographic distribution. He commented that the Russians
were a problem with regard to greater public access and
transparency.


9. On the scale of assessment, Sach stated that if there was
no decision by the end of the year, there would be no way for
the UN to assess Member States and therefore there would be
no cash. Ambassador Wallace asked Sach to make this point
clear to the Fifth Committee.
BOLTON