UN CAPITAL MASTER PLAN: CLARIFICATION REQUESTED

1. ACTION REQUEST: Mission appreciates instructions from
Department on upcoming Capital Master Plan negotiations in
the Fifth Committee (reftel). Mission seeks clarification on
paragraph 5 of reftel regarding the U.S. position on the
letter of credit. Fifth Committee discussions begin on
Thursday, November 30 and USUN seeks further guidance and
talking points on this issue in time for these discussions.



2. In paragraph 5 of reftel, Department states that the U.S.
can support the letter of credit facility in order to
demonstrate full financial capability to contractors.
However, due to U.S. legislation prohibiting paying interest
on external borrowing by international organizations, USUN
understands that the U.S. cannot support drawing down on the
letter of credit for cash flow purposes, as the drawdown
would lead to interest charges on Member States. Mission
understands the U.S. legal issues surrounding interest
payments, but wonders about the utility of Member States
agreeing to a letter of credit facility if they do not agree
to drawdowns from the letter of credit. If the UN does not
have access to the funds secured by the letter of credit, as
and when the need arises, contractors will have no assurance
that they will be paid and may balk at entering into a
contract with the UN for this project. USUN seeks to
understand whether the U.S. can support the letter of credit
and drawdowns, with the understanding that the U.S. cannot
pay interest on any drawdowns. If the U.S. cannot agree to
drawdowns from the letter of credit, Mission would appreciate
clarification as to whether the U.S. is willing to consider
an alternative mechanism to ensure full financial capability
to contractors. Mission appreciates talking points from the
Department on this subject for use during Fifth Committee
discussions.

BOLTON