SCALE OF ASSESSMENTS: MEMBER STATES PROPOSE MODELS

UNCLAS USUN NEW YORK 000983

SIPDIS

E.O. 12958: N/A
TAGS: AORC UNGA KUNR
SUBJECT: SCALE OF ASSESSMENTS: MEMBER STATES PROPOSE MODELS
FOR THE CONSIDERATION OF THE COMMITTEE ON CONTRIBUTIONS

REF: A. PHAM-SPRATT EMAIL 10/06/2008 1:31PM

B. PHAM-SPRATT EMAIL 10/22/2008 6:36PM


1. SUMMARY: On October 6, 2008, agenda item 122: "scale of
assessments for the apportionment of the expenses of the
United Nations" was formally introduced in the Fifth
Committee. Member States had before them reports regarding
the unpaid assessments from the Former Yugoslavia, the
Secretary-General's (SYG) report on multi-year payment plans
A/63/68, and the report of the Committee on Contributions
(CoC) A/63/11. CoC Chairman Mr. Bernardo Griever introduced
the CoC report. Statements were made by France on behalf of
the EU, Antigua and Barbuda on behalf of the G77 ad China,
Angola on behalf of the African Group, Japan, the Russian
Federation, Iran, Mexico, Kuwait, Venezuela, and USDel. We
have provided those statements to the Department (Ref A). A
subsequent cable will be sent to the Department containing
more details on the formal statements.


2. Beginning October 6, Member States began informal
consultations on the CoC report A/63/11 and discussed
elements of scale methodology. Discussions centered mainly
on the ceiling (para. 3),Purchasing Power Parity (PPP)
(para. 4),debt-burden adjustment (para. 5),and low per
capita income adjustment (LPCIA) (para. 6). The CoC Chairman
and an expert from the UN Statistics Division were available
to answer questions from Member States. On Tuesday, October
21, Member States proposed language that requests the CoC to
provide information regarding a variety of scale models
(paras. 8 to 11). END SUMMARY.

INTRODUCTORY DISCUSSIONS


3. CEILING: G77 countries, namely Guatemala, Brazil,
Nicaragua, Cuba, and Venezuela, were the only delegations
that verbally criticized the 22 percent ceiling on Member
States' assessments during informal discussions, citing this
element as the "largest distorting factor" on the scale of
assessments. Notably, the G77 supported the status quo
methodology during the last review of scale methodology in

2006.


4. PPP: G77 countries also spoke out against the usefulness
of PPP in the UN context. Much of their arguments were drawn
from paragraph 32 of A/63/11. The G77 was concerned with PPP
as comparable reliable data. Sweden, speaking on behalf of
the EU, was the only delegation to mention PPP in a positive
light, stating that the EU would like the CoC to further
consider the potential application of PPP.


5. DEBT-BURDEN: The EU mentioned the possibility of
employing only public debt and not total debt when
calculating the debt-burden adjustment. The G77, however,
favors the application of total debt, which makes a
government's debt appear larger, therefore giving Member
States a larger discount when assessments are adjusted for
debt-burden.


6. LPCIA: The EU indicated concerns with the current way
LPCIA is determined in the current methodology. The EU's
suggested changes to LPCIA would mean that there would be an
increase in some G77 members' assessments. Comment: LPCIA
and debt burden are the two most important aspects of G77
discounts on their assessments. The EU proposals relating to
LPCIA are along the same lines as the proposal put forward by
USG in 2006. End Comment.

LANGUAGE PROPOSALS


7. During informal discussions on Tuesday, October 21, the
EU, CANZ, Mexico, and Palau/Nauru introduced language (Ref B)
that will instruct the CoC, which is set to meet in June
2009, to consider specific models to calculate Member States'
assessments.


8. MEXICO: Mexico's proposal included automatic annual
recalculation and implementing a "neutral zone" of 10 percent
below and above the LPCIA 80 percent threshold. Mexico
believes that annual recalculation will ensure that the scale
accounts for the most up-to-date data on nations' gross
national income. Mexico indicated that the proposed "neutral
zone" is intended to give countries set to graduate from the
LPCIA threshold relief from paying large scale-to-scale
increases.


9. PALAU/NAURU: Palau and Nauru proposed only one paragraph,
asking the CoC to analyze the "burden imposed on countries
with the smallest populations by the minimum assessment rate
of 0.001 percent." Palau, in introducing the paragraph,
argued that these smaller nations with a gross national
income of less than 0.0001 percent floor are forced to pay
above their "capacity to pay," creating a large financial
burden.




10. EUROPEAN UNION: The EU proposed 10 scale models,
including one that would maintain the status quo and one that
would remove the 22 percent ceiling. The other models
directly affect the debt-budget adjustment and the LPCIA.
The EU argues that models addressing every element of the
scale should be included and presented to the CoC for
consideration.


11. CANZ: Canada, Australia, and New Zealand presented two
paragraphs including four scale models for the CoC to
analyze. Similar to a majority of the EU's proposals, CANZ's
models affect the debt-burden approach and the LPCIA. One
model features the stepped gradient approach proposed by
USDel during the 2006 scale negotiations. Unlike the EU's
proposal, all of CANZ's models include the 22 percent ceiling.


12. There is a potential that discussions in the Fifth
Committee may stray from technical matters relating to the
submission of models to the CoC to political debates
regarding the substance of the various scale methodologies.
Khalilzad