UNGA/C-5: REGULAR BUDGET/PKO SCALES: E.U.

UNCLAS USUN NEW YORK 001071

C O R R E C T E D C O P Y (CH WORD IN SUB,GRAMMAR IN PARA 1,3,5)

SIPDIS

E.O. 12958: N/A
TAGS: AORC KUNR PREL UNGA
SUBJECT: UNGA/C-5: REGULAR BUDGET/PKO SCALES: E.U.
CONTINUES TO TARGET THE BRIC, G-77 ATTACKS THE CEILING,
U.S. PROPOSES TO ELIMINATE CATEGORY C

REF: UNUN 917


1. (U) SUMMARY: The Fifth Committee held informal meetings
on November 20th on the Scales of Assessment for the Regular
Budget and for Peace Keeping Operations. In the Regular -
Budget scales debate, the G-77 proposed increasing the cap on
assessments from 22 percent to 25 percent, while the European
Union's Low Per Capita Income (LPICA) proposal would increase
the assessments for those countries with more than one
percent of global GNI (namely the BRIC - Brazil, Russia,
India, and China),and distribute the resulting savings among
the developed countries with LPCIA (the majority of G-77
states). The G-77 referred to the LPCIA as a soft-target,
referring at one point to the E.U. proposal to redistribute
savings as bribery. They asserted that the "principal
distortion" of the 22 percent ceiling is the real matter to
be addressed. The G77 gave a stern caution to those
delegations that were lobbying G-77 members' efforts in New
York and in capitals. On the peace-keeping scales, the U.S.
proposed to eliminate Category C on the grounds that it
had no sound methodological basis and had outlived its
purpose. The G-77 did not directly answer questions from the
U.S. seeking a definition of what defines a "developing"
country. END SUMMARY.

REGULAR BUDGET SCALES OF ASSESSMENT
--------------


2. (U) G-77 ACCUSES DELEGATIONS OF IMPERIALISM AND BRIBERY:
Singapore, speaking on behalf of the G-77 and China, warned
delegations against their efforts to lobby G-77 members
towards changing regular budget scales assessment levels. It
expressed a "firm word of caution" against any bi-lateral
efforts in New York and capitals, calling such actions
attempts to "divide and conquer" and part of the "400 year
history of imperialism." Singapore also accused members -
without noting specific countries - of trying to bribe
nations, and insisted that all negotiations on scales must
take place in the 5th committee. Sweden, speaking on behalf
of the E.U., rejected the G-77 criticism, and noted that they
intend to keep the scales issue on the agenda and would
continue pursuing the matter as part of its relationship with
interlocutors.


3. (U) G-77 - NO STATUS QUO? NO PROBLEM: RAISE THE CEILING
TO 25 PERCENT: Singapore introduced the G-77 proposal, which
most notably calls for raising the ceiling from 22 percent to
25 percent. In defending its proposal, Singapore reminded
delegates that "we were ready a month" ago to sign an
agreement on the basis of the status quo. Singapore, in
pressing for the increase in the ceiling asserted that the
original 22 percent cap was brokered on the understanding
that the "largest contributor" would maintain its UN
payments, and it has failed to do so. It noted that the
"methodology has worked well for the last nine years, except
for the issue of the ceiling, because the largest contributor
will not pay its arrears."


4. (U) E.U. DEFENDS PROPOSAL TO INCREASE ASSESSMENTS FOR THE
BRIC AND PROVIDE REDUCTIONS FOR THE MAJORITY OF DEVELOPING
AND DEVELOPED COUNTRIES: The E.U. introduced its LPCIA
proposal, which calls for an income adjustment of 80 percent
for countries with Gross National Income (GNI) share less
than one percent of Global GNI, 60 percent for countries with
GNI share more than one percent of global GNI and 85 percent
for least developed countries. The proposal requires the
BRIC to make contributions more in-line with their capacity
to pay, while more than half of the acquired savings will be
used to reduce the assessments of most developing countries
and the rest easing the burden on developed nations. Russia
(which according to the E.U.'s calculations would see a 4.6
percent increase in its payment),asked how the E.U. had
chosen the one percent of global GNI as a threshold and
questioned "why not 1.5 percent, or two percent?" Singapore
called the one percent threshold "arbitrary" and said that
the LPCIA had become a "soft target" since the ceiling can
not be touched. The E.U. noted that it thinks developing
countries with sizeable economies have a greater capacity to
pay, but Russia insisted that references to the size of an
economy must be based on clear methodology. Singapore
requested that the Secretariat produce their own calculations
on the E.U. model and Singapore requested that it calculate
the E.U.'s plan including the G-77's 25 percent ceiling
proposal. Sweden made it clear that any plan incorporating a
ceiling increase can no longer be considered an E.U. plan.


5. (U) OTHER PROPOSALS: The cornerstone of the Mexican plan
is the establishment of a neutral zone of +/- 10 percent
around the LPCIA threshold in which countries neither get
discounts nor pay premiums. Mexico's plan argues in favor of
keeping the 22 percent cap. The CANZ proposal is similar to
that of the E.U., using 1 percent of GNI as a threshold for


reduction levels. Tajikistan's proposal urges greater use of
multi-year payment plans, and requests a limit to how much
countries just coming out of a multi-year payment plan can be
assessed. The Russian + CIS proposal centers on the greater
application of price-adjusted, rather than market, exchange
rates and requests the Committee on Contributions to stop
considering purchasing price parity (PPP) in its
deliberations.

SCALES OF ASSESSMENT: PEACEKEEPING
--------------


6. (U) U.S. PUSHES TO DROP CATEGORY C: Initially, Cuba echoed
the earlier comments of Singapore, cautioning delegations
against pressuring G-77 interlocutors on either of the scales
debates (See para. 2) and laid out its proposal, which
maintains and expands Category C (allowing a 7.5 percent
discount in assessments for "developing countries" that would
otherwise be placed in Category B based on calculations).
The U.S. presented its proposal, which includes an option to
"remove Level C and to re-letter subsequent levels" as well
as a status-quo option to "maintain the structure of levels
set out in resolution 55/235 of 30 January 2001." The U.S.
contended that Category C was intended to fill a limited
purpose for a brief period of time and that it has now
outlived its utility. Cuba claimed that the U.S. proposal to
eliminate Category C is an attack on those countries in the
category.


7. (U) U.S. - CUBA SPAR ON "DEVELOPING COUNTRY" DEFINITION:
The proposal presented by the G-77 decides that "Level C
shall be open for any Member State that is a developing
country and which becomes eligible for movement to Level B
from a lower level." The U.S. delegate questioned the
definition of a developing country, noting that not all
countries that might move through the lower categories would
typically fit the understanding of a "developing" nation.
Cuba did not define "developing", but instead insisted that
the matter was addressed fully when the scales were last
negotiated in 2000. Cuba claimed that Category C was created
specifically to help distinguish what is and what is not a
developing country. Cuba attempted to move away from the
definition issue by questioning the principled position taken
by the U.S., expressing that he was "struck" that "for some
things political agreements work and for others they don't."
RICE