UN SCALE OF ASSESSMENT: AMBASSADOR WOLFF MEETS

UNCLAS USUN NEW YORK 000452

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: AORC KUNR UNGA
SUBJECT: UN SCALE OF ASSESSMENT: AMBASSADOR WOLFF MEETS
WITH FINNS ON PPP APPROACH



1. Ambassador Wolff met with Finnish Permanent Representative
Kirsti Lintonen, Ambassador Tom Gronberg, and Fifth Committee
delegate Katja Pehrman on March 8 concerning the upcoming
consideration of the scale of assessment in the General
Assembly. Ambassador Gronberg, who will represent the EU in
next fall's Fifth Committee negotiations on the scale, took
the opportunity of his visit to New York to meet with
Ambassador Wolff to discuss the upcoming U.S. proposal on
purchasing power parity (PPP) and reactions by others to this
approach.


2. Though the EU is seeking a range of data from the
Committee on Contributions (CoC),Gronberg indicated that it
was not yet clear how the EU would proceed on the scale
methodology, and the group position will be developed later
in the year. He also said that maintaining an EU position on
the scale would be a significant challenge for the group in
the 61st GA. Major EU contributors would certainly benefit
from incorporating the PPP approach, and some have indicated
their preference for exploring PPP. However, PPP would
increase the rates of the newest EU members, with Poland,
Hungary and the Czech Republic bearing the greatest increases.


3. By way of general introduction to the U.S. position,
Ambassador Wolff indicated that we have a tremendous amount
at stake in scale negotiation. Fundamentally, it is unhealthy
to place the financial stability of the Organization on just
a few major contributors. The UN needs to shift to a more
equitable burden-sharing system, whereby those countries that
have the majority of votes also have an investment in their
decisions through greater assessment.


4. Turning to the U.S. proposal on PPP, Ambassador Wolff
commented that though this approach has not previously been
used in the UN, economists believe that PPP is one of the
more accurate economic indicators. As such, the U.S. is
extremely serious in its pursuit of using PPP to measure
capacity to pay. It would represent a major shift and
balancing of financial burden from the current major
contributors to large developing economies such as China and
India. In response to Gronberg's comments that it would be
difficult not to provide any low per capita income adjustment
in the scale methodology, Ambassador Wolff noted that the
question is whether PPP accounts for this adjustment already.
He further assured Gronberg that it is not the U.S.
intention to squeeze money from the poorest countries, but
rather to make sure that allocations are more equitable and
realistic.


5. Interestingly, Gronberg commented that some countries are
looking at tabling proposals based on PPP, though when asked
he would not indicate which countries he was referring to.
It was his feeling that the concept of PPP might need time to
be digested by Member States, particularly since it is such a
clear departure from past practice and the concept hasn't
been too well developed in economic terms. In concluding the
meeting, Ambassador Wolff stressed the importance of
maintaining regular contact between the EU, U.S., Japan and
other major contributors in advance of next fall's
negotiation so that we may all be aware of developing
positions and strive to support each other's key concerns.

BOLTON