FIFTH COMMITTEE REACTS TO SOBERING MESSAGE ON THE

UNCLAS USUN NEW YORK 001172 SIPDIS SIPDIS PLEASE PASS TO DAVID LEIS - IO/MPR E.O. 12958: N/A TAGS: AORC UNGA SUBJECT: FIFTH COMMITTEE REACTS TO SOBERING MESSAGE ON THE 2008/2009 PROPOSED PROGRAM BUDGET REF: USUN NEW YORK 1135 ¶1. Ambassador Mark Wallace addressed the Fifth Committee (Administration and Budget) during informal consultations on the proposed program budget (PPB) for the biennium 2008-2009 on December 10. Ambassador Wallace stated that the budget, in reality, is well beyond the Secretary General's initial budget of $4.19 billion. With add-ons and additional proposals down the line, the final actual total budget of the 2008-2009 biennium will be in excess of $5.2 billion, representing an increase of 25 per cent or more from the 2006-2007 budget. Ambassador Wallace emphasized the piecemeal approach to the budget and the fact that many of the proposed increases were not before the Member States, an unsound budgeting practice. Ambassador Wallace used several graphs representing the potential unprecedented growth of the UN budget to visually demonstrate that the 2008/2009 budget is the largest regular budget in the history of the UN. He stressed that neither the SYG nor Member States had taken any steps to prioritize or to identify offsets. During his intervention, Ambassador Wallace raised several possible approaches to addressing this budget challenge (REF), including one proposal that would allow the UN to continue its activities but postpone final action on the budget until the spring of 2008, when the Committee has before it all of the proposed increases in the budget and can examine the budget, with all add-ons, holistically. Eight Member States intervened, reacting to the USDel statement (para 2). See para 3 for the text of Ambassador Wallace's statement. ¶2. Eight delegations intervened following the USDel presentation: Pakistan (on behalf of the Group of 77 and China),Portugal (on behalf of the European Union), Guatemala, Egypt, Australia (on behalf of CANZ),Japan, Bangladesh, and Nicaragua. A summary of each country's intervention is below: Pakistan: The initial reaction was appreciation for the U.S. perspective and the information and analysis provided but expressed a different perspective on the issue. The Pakistani delegate said that the U.S. presentation "looks at the problem from a single perspective." The Pakistani delegate emphasized that development spending has seen only a nominal 0.5 per cent growth, a point reiterated by other speakers from developing countries. Pakistan stated that developing countries are not sharing in the growth of the UN budget, citing instead other priorities - UN reform measures, investigation and audit (OIOS),special political missions - that are the more costly parts of the UN budget. Pakistan called upon Member States to look at the budget in the context of a "larger interest," and expressed the perspective that the "unique nature of the UN means more than a few million dollars." Pakistan also firmly opposed the idea of rolling over the budget negotiations into the spring, believing such action would " severely impact the budget process," and affirming, "we are here; we are engaged." Portugal: The EU shared the USDel's concerns of the SYG's piecemeal approach towards budgeting and advocated for fiscal discipline. However, Portugal acknowledged that it is the General Assembly that issues mandates, and called for the Committee to seek budgetary efficiency without impairing the SYG's means of fulfilling the GA's mandates. Portugal also expressed interest in seeing draft language to actualize the U.S.'s budget proposal. Guatemala: Guatemala cast the USDel proposal as a rollover of the UN budget and said that was "not an option." Guatemala pointed to the dramatic growth of the UN budget beginning in 2004, when reform of the UN began in earnest, asking rhetorically, "wasn't it the U.S. who called for those reforms?" Guatemala also highlighted special political missions as examples of costly mandates from the UN Security Council, further stating that resources are only given to mandates agreed upon by the General Assembly, and since the U.S. is an active participant in every organ of the UN, then it has just as much responsibility in these mandates and their fiscal impact. Egypt: The Egyptian delegation agreed that the growth in the budget is a big problem shared by all delegations. However, he wondered about the timing of the U.S. proposal and what might be gained from rolling over the budget, asking, "Why now, less than 10 days before the conclusion of the 62nd session of the General Assembly, and two months after the budget was introduced to the Committee - what will two months more give us that we couldn't accomplish in the last two months?" Egypt also found fallacy in the U.S.'s comparison of the UN's budget with that of other international organizations, calling it "mixing apples and oranges." Egypt also pointed out that "only one peacekeeping operation" makes up 50 per cent of the entire UN budget. Australia: Australia was very supportive of the need to recognize the concern identified by the U.S. and said that the presentation was "shocking." The Australian delegate said that the U.S. has pointed out a significant problem in that "10 days before we pass a budget, we don't even know how much that budget really is." Australia stated that as the CEO of the UN, the SYG ought to take a role in identifying offsets to the budget expenditures. Japan: Japan expressed concern about the increase in the budget, particularly in the context of the scale of assessments and whether Member States could sustain such a budget with their contributions. Japan stated its readiness to consider the PPB now, and would seek every opportunity to reallocate resources and to seek full and thorough justification for every request for resources. Japan called for vigilance to maintaining established procedure, stating its opposition to the SYG's piecemeal approach to budgeting. Bangladesh: In addition to echoing the position of the G-77 and China, Bangladesh wished to study the evolution of mandates in an effort to identify the source of budget growth. Nicaragua: The Nicaraguan delegate said that the UN's role in the world has been enhanced, as the General Assembly has taken the decision to strengthen multilateralism and intervene in an increasing number of places in the world. Therefore, the budget naturally increases as a result. Nicaragua agreed that the budget is piecemeal, and that a lack of vision on the part of the UN leadership in this regard has led to a fragmentation of the budget. Nicaragua saw an imbalance in the three pillars of the UN reflected in this budget proposal, echoing the Pakistani delegate's statement that much more in the way of resources are needed for development so that developing countries can comply with the Monterey Consensus. Nicaragua also blamed a great part of the budget increase on the UN Security Council. ¶3. Text of Ambassador Wallace's intervention (the graphs referred below have been posted to the U.S. Mission to the UN's website): I thank the coordinator, Alejandro Lepori, the Chairman of the Fifth Committee, my friend Hamidon Ali, and the Secretary of the Committee Movses Abelian for their hard work to date. I also thank and truly appreciate all of the hard work by my many colleagues here in the Fifth Committee to date. Of course, we have long days and nights ahead with the work before us. I have come to the Fifth Committee informal discussions today on the 2008/2009 biennium budget to offer what the United States believes is vitally important context to the 2008/2009 budget. We believe that the U.N. budget in the context that I will offer today presents us with a crisis that questions the viability of the way the U.N. does business, and the role of member states and the role of the U.N. Secretariat in the preparation and approval of the budget. The SYG has proposed an "initial" budget of $4.19 billion for the biennium 2008/2009. As we all know, this $4.19 billion proposal represents only a part of the actual budget. In addition the SYG simultaneously but separately identified various "add ons" to the base budget that would bring the actual 2008/2009 budget up to approximately $4.8 billion. The 2006/2007 approved budget was $3.799 billion though it ultimately totaled $4.17 billion. The 2008/2009 projected budget of $4.8 billion represents a 15% increase over the 2006/2007 budget. The proposed regular budget with just the "add ons" already identified by the Secretary General makes this budget the largest regular budget in the history of the U.N. This budget also represents the largest increase in the history of the U.N. on a dollar basis. Moreover, even this $4.8 billion figure is not what any of us expect as the final budget because it does not take into account additional proposals that have more recently been identified or which we can expect during the course of the biennium. We expect that the final actual total budget of the 2008/2009 biennium to be in excess of approximately $5.2 billion. Accordingly, such a final budget is likely to represent an increase of 25% or more from the 2006/2007 budget. And lets remember what such an increase actually funds. As my colleagues from the G77 and China rightly point out in paragraph 30 of the Draft Resolution before us: "approximately 75 percent of the budget resources are related to salaries and common staff cost...." The budget increase does not go directly to humanitarian or development aid but rather to increasing the size of the UN Secretariat bureaucracy. We all agree that the piecemeal, ad hoc approach of the current budget is inconsistent with sound budgeting practices. See paragraph 9, and 35 of the Draft Resolution on the 2008/2009 biennium budget. Moreover, we are concerned that no substantial cuts or offsets have been proposed by the SYG or member states to this largest of all U.N. budget increases. A graphic portrayal of the U.N. budget, particularly when made with international comparables and norms serves to emphasize the striking growth in the UN regular budget. We have compiled various graphic analyses that underscore the magnitude of the problem before us. Chart 1 shows the Growth in the UN Regular Budget from the 1998/1999 biennium budget of $1.772 billion to the current expected final budget of in excess of $5.2 billion in terms of percentage increases - a 193% increase. Chart 2 shows a Comparison of Budget Levels from Initial Appropriation to Final Appropriation. The Chart demonstrates that we are truly considering this U.N. budget in a piecemeal fashion and we do not have a substantial portion of the likely budgetary increase currently before us - an unsound budgeting practice. Chart 3 shows a Comparison of the Growth in the U.N. Budget with the Budget Growth of the Top Ten Member State Donors. Please understand that I could not easily include all 192 member states on this Chart, but the sole inclusion of these ten states on this Chart is not intended nor should it be taken to diminish in any way the important and valuable contributions to the U.N. by the 182 member states not reflected on this Chart. Nonetheless, Chart 3 dramatically demonstrates the budget growth before us as an outlier well beyond any reasonable comparison with member state government growth. The delta between the norms of member state government budgeting and the U.N. budget is extraordinary. Based upon these figures over the course of the last five years or so, the U.N. budget has grown at an average rate of some 17% while the U.S. budget has grown at a rate of some 7% and the other top donors have grown at lesser rates. Chart 4 shows a Comparison of the Growth in the U.N. Budget with the Growth in the Budget of Other International Organizations. Chart 4 further demonstrates the budget growth before us as an outlier well beyond any reasonable comparison with other International Organizations and the delta is extraordinary here as well. And this dramatically growing budget does not include peacekeeping or funding for the tribunals. The peacekeeping budget is likely to rise from some $5 billion to some $7 billion or approximately a 40% increase in 2008. The $625 million cost of the various U.N tribunals represents an increase of some 15% in the 2008/2009 biennium. Nor does the budget include the more than %15 billion in contributions and expenditures for operational activities of other parts of the U.N. System, mainly the U.N. Funds and Programs and specialized agencies. Given: - The historic massive increase in the U.N. regular budget as proposed and the absence of any parallel offsets or cuts; - Budgetary constraints within all of our own member state budgets, and; - The lack of any reasonable comparative growth in similar international budgets; the United States must strongly advocate against such a large wholesale increase in the UN budget without even an effort to find substantive offsets or to set priorities among the programs and activities. What can we do? In both the method by which we consider the budget and in the substance of the increase itself, the answers are simple but the challenges are great. First, we all agree that piecemeal consideration of the U.N. budget is inappropriate, misleading and reflects unsound budget practices. In principle, the solution is that we should only consider this budget when it is actually and completely before us. We must be fully and truly informed on the whole budget before we can take an informed decision on the budget as my G77 and Chinese colleagues rightly point out in Paragraph 12 of the Draft Resolution text. Unfortunately, the majority of the increases in the budget will only be ready for review in the spring resumed session. A solution might be to take action now to allow the U.N. to continue its activities but postpone final action until we could consider the full 2008/2009 in the spring resumed session with no strings attached - meaning no caps nor tied to any specific agreement short of a good faith consideration of the hopefully complete 2008/2009 budget. Second, we all agree on the enormous size of the increase and the absence of any prioritization or offsets. In principle, the solution is to prioritize programmatic expenditures and to identify meaningful offsets - actions that any responsible government or international organization would take. There are only two parties that could take steps to prioritize and to identify offsets - member states and the SYG. To date, we as member states have been unable to truly prioritize in a consensus fashion and we have been unable to identify offsets - the failure of mandate review to date is a clear example. Also to date we as member states have been unwilling to grant the SYG the authority to recommend priorities or to identify meaningful offsets. Accordingly, the great challenge before us is for member states to find the political will to truly prioritize and to identify meaningful offsets or to ask the SYG to make such recommendations on priorities and offsets. For years the United States has advocated zero nominal growth in U.N. budgeting. We have done so for purposes of fiscal restraint and to ensure that the U.N. was disciplined in its program management. In principle we will continue to advocate zero nominal growth. Today we have a greater challenge. With the largest budget increase in history -- and outside the norms of international comparables -- the credibility of the U.N. is at stake. It is up to all of us to take real action. We must not fail this institution. As our great President Ronald Reagan once said, "spending will not be curbed by wishful thinking." I thank you all for your commitment to the challenge before us. End Text. Khalilzad