GA/AB/3389

CAPACITY TO PAY PRIMARY CRITERIA FOR DIVIDING UN EXPENSES, FIFTH COMMITTEE TOLD

As the Fifth Committee (Administrative and Budgetary) continued its consideration of the scale of assessments for the regular budget of the United Nations this morning, there was general agreement that the principle of the capacity to pay was the fundamental criterion in the apportionment of the expenses of the United Nations.

Several speakers in the general debate noted with concern that the lowering of the ceiling on assessments would bring them financial responsibilities over and above those that resulted from the current methodology. [At present, a ceiling on payment limits any one country�s obligations to 25 per cent of the regular budget.] Many speakers also insisted that any adjustments to the scale should not lead to an assessment for developing countries that was higher than their capacity to pay.

In particular, that point was stressed by the representative of the Philippines (speaking on behalf of the Association of South East Asian Nations), who stressed that changes to the ceiling should not result in increased assessments for developing countries. Appropriate adjustments should be made for those Member States whose prospective assessment rates would increase by 50 per cent or more, since such increases would be a considerable financial burden to those countries. The total effect of such an increase should be spread equally, on a year-by-year-basis, over one scale period.

The representative of Singapore said that the main dilemma the Fifth Committee faced this year was the request by the United States to reduce the ceiling rate from 25 to 22 per cent. In a nutshell, there was no compelling case, based on objective economic rationale, to support such a reduction. However, delegates were aware of a domestic legislature�s decision linking the payment of long-standing arrears with a reduction in the ceiling rate. [In November 1999, the United States Congress adopted legislation which linked the payment of a portion of United States arrears on action by the General Assembly to reduce the regular budget ceiling assessment for Member States to 22 per cent.]

She added that the solution that should emerge should be reasonable and acceptable to all Member States. The scale of assessment was a finely balanced political compromise reflecting both political and technical considerations. It was necessary to avoid upsetting the fragile equilibrium that the scale currently rested upon.

Fifth Committee - 1a - Press Release GA/AB/3389 8th Meeting (AM) 4 October 2000

As delegations weighed the 12 proposed scales of assessments before them, the representative of Ghana said that the prospect of one proposal being accepted by all Member States as the best option for adoption was indeed remote. However, all the proposals contained reasonable, positive elements, which merited consideration. Not only should all defaulting Member States pay their contributions in full, on time and without conditions, but additional sanctions should be considered against Member States in arrears

Most speakers also agreed that it was important to take a decision on the future scale of assessments by the end of this session of the Assembly. They stressed the need for a transparent and fair consideration of the question, saying that the resulting scale should be predictable and stable.

Also speaking in this morning�s debate were the representatives of Mexico, Mozambique, Czech Republic, Morocco, Egypt, Indonesia, Belarus, Venezuela, Cuba, Tunisia, Ukraine (also on behalf of Georgia, Uzbekistan, Azerbaijan, and the Republic of Moldova), Peru, United Arab Emirates, Syria, United Republic of Tanzania, Poland, Kyrgyzstan, Libya, Cambodia, and the former Yugoslav Republic of Macedonia.

The Committee will continue its work at 10 a.m. on Thursday, 5 October, when it is scheduled to continue its general debate on the peacekeeping scale of assessments.

Fifth Committee - 3 - Press Release GA/AB/3389 8th Meeting (AM) 4 October 2000

Committee Work Programme

As the Fifth Committee (Administrative and Budgetary) met this morning, it was expected to continue its consideration of the scale of assessments for the regular budget. [For background information, see Press Release GA/AB/3385 of 29 September 2000.]

Statements

ERNESTO HERRERA (Mexico) said that in light of the failure of some Member States to pay their contributions, the only way to solve the difficult financial situation facing the United Nations was by full payment of arrears on time and without condition. He was concerned about the trend of authorizing exemptions under Article 19 of the Charter. While he felt sympathy for Member States that applied for exemptions, that trend only weakened the machinery established in the Charter for ensuring compliance with the financial obligations of the Organization. It was time to discuss a different machinery to promote the payment of arrears.

He said that it was not sound practice for a universal organization to depend on a single Member State. Mexico considered that a reduction in the ceiling was the proper course of action. However, the financial consequence of a reduction should not fall upon a small group of countries. He agreed with a reduction in the ceiling as long as all Member States assumed the difference. Any decision taken should be carried out within the current methodology.

NUNO TOMAS (Mozambique) said that, at the Millennium Summit, world leaders reaffirmed their faith in the United Nations and its Charter as indispensable foundations for a more peaceful, prosperous and just world. The leaders also resolved to ensure that the Organization was provided, on a timely and predictable basis, with resources it needed to carry out its mandates. The review of the scale of assessment constituted the first step towards ensuring an adequate provision of funds to the United Nations.

Reaching consensus on a methodology for the scale had never been an easy task for the United Nations family, he said. Fierce political debate had done more harm than good. However, one central element of the methodology enjoyed the consensus of the entire membership, namely, the principle of capacity to pay. He supported that principle as the fundamental objective and valid criterion in the apportionment of United Nations expenses. Member States had a legal obligation to bear the expenses of the Untied Nations as apportioned by the Assembly. Mozambique supported the strict application of Article 19 of the Charter. It also understood the difficult situation of some countries with arrears, and encouraged the Assembly to exempt them from the penalties provided by Article 19.

While Mozambique was flexible on the issue of reviewing the scale of assessments, such a review should not result in increased financial burden on developing countries already facing serious difficulties in paying their assessed contributions, he said. On the situation of least developed countries, he proposed that the floor should remain at 0.001 per cent and that the maximum assessment rate should not exceed 0.01 per cent. The issue of the ceiling should be addressed carefully, taking into account the fact that it was a deviation from the principle of capacity to pay. With the ceiling, there was the risk of having the majority of the membership subsidizing any Member State benefiting from the ceiling. The scale of assessment should ensure that each Member State paid a fair share of the apportioned expenses of the Organization.

VLADIMIR GALUSKA (Czech Republic) associated himself with the position of the European Union and noted that the Committee on Contributions had thoroughly analysed the 12 proposals for the new methodology for the upcoming period. However, due to time constraints, that Committee had not been able to propose an additional comprehensive option.

As declared in Article 2 of the Charter, the Organization was based on the principle of sovereign equality of all its Members, he continued. In order to ensure to all of them the rights and benefits resulting from membership, all Member States should fulfil, in good faith, the obligations they assumed in accordance with the Charter. The main legal obligation of a Member State was the payment of its assessed contributions to the regular budget on time and in full.

An equitable scale of assessments for the apportionment of the expenses of the Organization was the cornerstone of its financial health and its preparedness to adequately perform and fulfil adopted programmes, he continued. Therefore, his delegation supported the basic principles of the reform of the methodology, including real capacity to pay derived as closely as possible from the current economic situation, as well as simple, equitable and transparent methods for definitions of the scale, without excessive distortions. It was important to finish the discussions on the new scale by December 2000.

ELHASSANE ZAHID (Morocco) said that the issue under consideration was vital to the United Nations, because it related both to the financing of activities mandated by Member States and to the financial responsibilities of States. He supported the timely payment of all contributions, taking into account the economic and financial situation of countries, particularly developing and the least developed ones. There was indeed a general consensus on the starting point for determining the assessment of each Member State, which was the gross national product (GNP) averaged out over several years -� the statistical base period. However, there had never been a clear consensus on the length of the base period itself, and other points also presented difficulty to both the Committee on Contributions and to Member States. The fact that the General Assembly asked for 12 scales to be prepared testified to that. Just the annex to the report of the Committee on Contributions was more than 100 pages long.

Everyone must make an effort to agree on the scale by the end of the year, he continued. As for Morocco and other developing countries, they felt that it was necessary to take into account the real capacity to pay of each Member State. The developing countries had huge development needs and other constraints, including debt, the problem of currency, and dependence on certain commodities. All those needs and constraints had an effect on their capacity to pay.

Each State should contribute in an equitable way to the Organization, he said. As for the floor, the countries which had the greatest difficulties must enjoy special status. The floor should not be changed for those countries. The problem of the ceiling was also important. For many sessions now, the question of the ceiling had been more political than technical. Morocco believed that the ceiling should be the subject of a frank discussion among Member States in informal consultations, taking into account the position of the United States and other countries and groups concerned. Any change should not affect developing countries.

FELIPE MABILANGAN (Philippines), speaking on behalf of the Association of South-East Asian Nations (ASEAN), supported the statement by Nigeria on behalf of the �Group of 77� developing countries and China, and reiterated the legal obligation of Member States to pay their assessed contributions in full and on time. In spite of economic difficulties, the countries of ASEAN strived to pay their assessments in full, and that was a clear manifestation of their commitment to the United Nations.

He said that the principle of capacity to pay should remain the fundamental criterion for the apportionment of the expenses among Member States. He also supported the recommendation of the Committee on Contributions to continue to use GNP as a basis for determining a State�s income for calculating assessments. Market exchange rates should be used for determining conversion rates, except where excessive fluctuations caused distortions in the income of some Member States. The base period should reflect a country�s capacity to pay in a realistic manner. A six-year base period was reasonable and should provide a basis for consensus.

The allowances given to developing countries with external debt and low per capita income should remain in any methodology to be used in determining Member States� assessments, he said. He also supported maintaining the floor rate at 0.001 per cent and a ceiling for least developed countries at 0.01 per cent. Any change in the ceiling should not result in an increase in the assessments of developing countries. Annual recalculation of the scale of assessments would lead to instability in assessments and should not be pursued any further. Appropriate adjustments should be made for those Member States whose prospective assessment rates would increase by 50 per cent or more, since that would be a considerable financial burden for them. The total effect of that increase should be applied equally on a year-by-year-basis over one scale period. In conclusion, he stressed the need to hold all discussions in an open and transparent manner and to take a decision on the scale before the end of this regular session.

AHMED DARWISH (Egypt) said that Article 17 of the Charter stipulated that Member States should bear the expenses of the United Nations as apportioned by the General Assembly. That meant that there was a legal obligation to pay contributions in full, on time and without conditions. Egypt reaffirmed the importance that arrears be paid according to a specific timetable. He would like to see a fairer, more equitable scale that would accurately reflect the situation of developing countries. The gap between the developed and underdeveloped was growing, and developing counties were being negatively affected.

He said that Egypt supported the statement made by the Group of 77 and China. It was necessary to revise coefficient up. On the ceiling, his delegation had adopted a decision to set it at 25 per cent. However, Egypt felt that the Organization should not depend on one or a few Member States to finance it. Any reduction in the ceiling should be supported by the major contributors so that developing countries would not even feel the change. Egypt also believed that troops contributors and contributors of materiel to peacekeeping operations must be reimbursed speedily. All Member States must discharge their obligations on time. The case of Member States that had requested waivers must be studied carefully. The Organization was in a sensitive situation. There was urgent need not to engage in confrontation, but rather to engage in targeted negotiations so that differences could be reviewed and the United Nations provided with the resources it required. That would render the Organization effective and performance-oriented.

MAKMUR WIDODO (Indonesia) said that the Millennium Summit had sent clear messages on the need to continuously refurbish the performance of the United Nations in advancing the well-being, prosperity and peace of all peoples. While it was important that the Organization pursue these various reforms in a comprehensive, fair and equitable manner, it was also true that such efforts would come to naught if they were not accompanied by sufficient resources to the meet the Organization�s mandated priorities. The problem was fundamentally one of a �crisis of payments�. No progress would be made unless all Member States abided by their legal obligations to pay their share in full and on time.

The capacity to pay was the fundamental criterion for the apportionment of such expenses, he said. Any change in the scale should not increase the burden of developing countries beyond their means. A one-point increase in scale for the developing countries was significant and would potentially reduce resources earmarked for urgent domestic requirements. He stressed the continuing relevance and importance of the low per capita adjustments to provide relief to developing countries. It must be subject to comprehensive discussion, with a view to increasing both the threshold and gradient from their current level, so as to make the scale of assessment fairer and more equitable.

The difficult financial situation facing the Organization was not linked to the methodology of the scale, he said. Revision of the scale would not significantly impact on it. Financial difficulties could only be resolved if Member States, in particular the major contributor, took concrete actions towards settling their arrears and faithfully honouring their Charter obligations. Transparency was the most important aspect in the decision-making process.

SERGEI LING (Belarus) said that, since its introduction, the methodology of the scale of assessments had attracted particular attention from Member States of the United Nations. However, numerous changes in the methodology of the scale over the years had not made it any simpler. Some proposals, frequently made for political reasons, had led the scale away from the main principle of the capacity to pay. The 12 proposed scales testified to the differences in approaches to the formulation of the scale.

The unfairness of the scale to some countries made it impossible for them to pay on time and in full, he continued. Belarus had experienced such a situation, but it was fully aware of the importance of payment of contributions by Member States. Despite its difficult financial situation, his country was doing its best to pay its contributions in full, having already paid its assessed contributions for the year 2000.

Turning to the recommendations of the Committee on Contributions, he said that the main criterion should remain the principle of the capacity to pay. The GNP should remain the basis of calculating a country�s income. The base period should reflect the real economic changes of countries. Belarus supported the six- year base period, but was also prepared to consider a three-year one. Debt-burden adjustment should be retained in the new scale, and the principle of repayments should be considered. He had no objections to the floor and believed that the low per capita income adjustment should be retained. He also did not mind using a sliding gradient. However, his country could not accept proposals concerning debt indexation and introducing restrictions on access to the United Nations procurement system for debtor countries, without consideration of the conditions leading to that debt.

In conclusion, he said that Belarus had paid in full its regular budget assessment and had practically paid off its debt for the peacekeeping operations. By the end of this year, the United Nations would receive an additional amount exceeding $2 million from Belarus.

CLAUDIA PETROSINI (Venezuela) associated herself with the position of the Group of 77 and China, and expressed regret that the Committee on Contributions had been unable to come up with clear recommendations on the next scale of assessments. She also asked that the Contributions Committee recalculate her country�s conversion rate, for it should reflect more accurately Venezuela�s capacity to pay and its real economic situation.

If developed countries decreased their contributions, their share would be absorbed by developing countries, she continued. That would cause some distortions. The contributions of Latin American countries should not be expected to grow by more than 13 per cent, but, in some cases, it had grown by more than 40 per cent. Why should the contribution required of Venezuela grow by 35 per cent, while its real growth was less than 2 per cent? she asked. She supported proposal C for the future scale, which was the only one that really reflected the difference in income between developed and developing countries. Twenty per cent of the countries of the world controlled 80 per cent of the income, and that should be taken into account.

The lowering of the ceiling would lead to distortions, she continued, and the ceiling of 25 per cent should be kept. A reduction of the ceiling to 22 per cent would mean a discount for one Member State and an increase to other countries, which was unacceptable. The country which enjoyed the benefit of the ceiling should also pay its debt to the United Nations. Consultations on the issue should be fair and transparent. All Member States had the right to have all information available on matters important for them.

RAFAEL DAUSA CESPEDES (Cuba) said that it was his hope that delegations realized that they had to work transparently in negotiations and that the interests of the Organization must be paramount for all. On the methodological elements being considered, Cuba reaffirmed the validity of the principle of capacity to pay as the essential criteria for establishing the scale. The methodology must also include the criteria set forth in 46/221B relating to exchange rates and low income adjustments made on the basis of per capita income, and must use outstanding debt for debt adjustments. Account must be taken of other factors that influenced the economic situation of countries.

The basic statistical period should be six years, he said. Eliminating the maximum limit was the most serious distortion of principle of capacity to pay. The proposal to increase the threshold deserved careful attention. The United States claimed that it wanted to decrease its contributions from 25 to 22 per cent in the initial phase. The Committee should not be deceived. It would then seek to move it from 22 to 20 per cent. What would happen if legal bodies of the other Member States were to follow a similar policy? Chaos would prevail and the international organization would disappear. How could the richest country in the world ask to decrease its contribution and distribute 30 percentage points amongst a group of countries, including developing countries? Cuba believed that the ceiling should be eliminated. It would be a paradox for the United Nations to support financial considerations tailored to political objectives. The unilateral policy was designed to impede the functioning of the United Nations. The Fifth Committee must identify the true interests and needs of the United Nations and how it could be given the necessary human and financial resources to discharge its mandates. That could only be done if countries met their financial obligations under the Charter in full and on time.

On requests for exemption under Article 19, any consideration of a request should be based upon full recognition of the serious economic situation of developing countries. Cuba supported the requests of the Comoros, Tajikistan, and Sao Tome and Principe. The role of the Assembly as defined by the Charter, as well as the role of the Committee on Contributions, should be reaffirmed. Cuba was committed to meeting its financial obligations to the United Nations, despite serious difficulties caused by the economic blockade imposed on it for more than 40 years. It would continue to meet its legal obligations.

SAID BEN MUSTAPHA (Tunisia) said that it had been one month since the Millenium Summit. At the Summit, world leaders had recognized the need to adapt the Organization, so that it could face the profound changes the world had undergone in recent years. That task was far from being achieved. Among the commitments made at the Summit was that of guaranteeing the United Nations the necessary human and financial resources needed for its efficient functioning in coming years. That was the ultimate responsibility of the Fifth Committee. Deliberations on the scale must aim at that objective.

The issue at hand was not easy, he said. However, all delegations should begin negotiations on the question with the interests of the United Nations as their ultimate goal. The exercise must lead to a consensus decision which recognized the interests of all. Those must be carefully observed. All speakers had reaffirmed that capacity to pay was the cardinal principle on which the scale must be based. That principle, however, was not interpreted in the same way. Efforts must be focused on the search for an equation that was, among other things, fair. In that respect, he shared the view that capacity to pay for each Member State must incorporate currency changes.

The Organization should not depend on a single contributor, he said. As regards the ceiling, delegates must bear in mind the political nature of that question. They must also not lose sight of the principle of capacity to pay. Any answer to that question must not result in increasing the burden on developing countries. The base period must be kept at six years, debt adjustment must be based on debt stock, and the low income per capita adjustment must also be kept as a fundamental element of the scale methodology. He had doubts about annual recalculation of the scale. However, Tunisia repeated its willingness to consider all constructive proposals.

VOLODYMYR YEL�CHENKO (Ukraine) speaking also on behalf of Georgia, Uzbekistan, Azerbaijan and the Republic of Moldova, said that the Millennium Summit had reaffirmed the need to place the Organization on a stable financial footing. Today, the importance of the elaboration of an objectively balanced regular budget scale was also based on the need to reform and institutionalize the scale of assessments for peacekeeping, which had remained unchanged since 1973. He believed that the 12 scale proposals constituted a good basis for discussion, but they could not substitute for deliberations on the separate elements of the scale methodology. He expressed regret at the failure of the Committee on Contributions, for the first time ever, to come up with a set of statistical data on estimates of GNP, due to the absence of consensus on the application of exchange rates.

He supported the use of market exchange rates for the recalculation of national data into the United States dollars, he said, especially when relevant information was available from the International Monetary Fund (IMF). Although he realized that in cases where market rates could cause serious distortions, price adjusted rates of exchange should be applied, he wanted to stress that this should be an exceptional measure limited to very specific cases. He advocated the establishment of a three-year base period, as this would provide a more adequate and up-to-date estimation of GNP. He was also prepared to consider various options for the parameters of the gradient, on the understanding that the resulting points would be reallocated to States above the threshold. The debt- burden adjustment should be preserved, and the least developed countries should continue to benefit from a floor rate of 0.001 per cent and a ceiling of 0.01.

He said that he could not support proposals favouring reintroduction of the scheme of limits, as this would entail distortions in the rates of assessment of a number of countries. Temporary permissions to vote in the General Assembly should be granted to Burundi, Georgia, Kyrgyzstan and the Republic of Moldova. At the same time, he was disappointed by the lack of consistency in the Committee's approach to consideration of requests for exemption from the application of provisions of Article 19 of the Charter submitted by other States, in particular Tajikistan.

TAN YEE WOAN (Singapore) associated herself with the position of ASEAN and the Group of 77 and China, and said that there were no easy answers to the question of what constituted a fair assessment rate. Over time, the principle of capacity to pay had assumed a chameleon-like quality. Everybody agreed that it was a fundamental element on which to arrive at a fair and equitable scale, but as delegates delved further, it became clear that each country, for perfectly valid reasons, had a different perception of what constituted that principle.

Five years ago, a working group was convened to address that question, she continued, but it was not able to come up with an objective measure of capacity to pay. One explanation for that could be that the definition of the principle had been left deliberately vague. Otherwise, it would be impossible to marry technical considerations with political realities. It was unfair for any Member State to be subjected to increases of 50 per cent or more in its assessed contribution from one scale period to the next, as a result of the methodology adopted by the General Assembly. The scales should be predictable and stable, and not subject to wild swings. In that regard, her delegation supported some form of mitigation for countries that experienced such sudden and large increases. The scale of assessment was a finely balanced compromise reflecting both political and technical considerations, she said. It was necessary, as far as possible, to avoid upsetting the fragile equilibrium that the scale currently rested upon. The main dilemma this year was the request by the United States to reduce the ceiling rate from 25 to 22 per cent. In a nutshell, there was no compelling case based on an objective economic rationale to support a reduction in the ceiling. However, delegates were aware of a domestic legislative decision linking the long-standing problem of arrears with a reduction in the ceiling rate. Singapore believed that, on principle, all arrears should be paid in full, on time and without conditions. Any solution that emerged should be reasonable and acceptable to all Member States. Most importantly, it should not disadvantage developing countries.

EZIO VALFRE (Peru) said that one objective that remained, and which should not be delayed, was determining with the greatest precision elements for the scale methodology. That would allow real capacity to pay to be fairly reflected in the scale. His delegation felt that the Statistics Division should use updated statistical data that was as precise as possible.

The final result of the application of any of the 12 proposals must be in proportion with the real level achieved by the economies of Member States, he said. In the case of Latin America, a majority of the projections based on the proposals would appear to evade any idea of proportionality. Peru regretted that the Committee on Contributions was unable to suggest a revision to the situation. Proposal C was most in line with the reality of the region and therefore deserved support.

ABDULLAH NASSER RASHIED LOTAH (United Arab Emirates) said that the proposals made on behalf of the Group of 77 presented useful elements to enrich dialogue between the Group and others in the effort to achieve a fair, just and equitable scale by consensus. His country was one of the first to pay its full obligations to both the regular and the peacekeeping budgets on time. It was concerned about the recurrent crisis faced by the Organization, in addition to the cross-borrowing that had been resorted to in order to cover expenses in the regular budget. They had led to a delay in reimbursement to troop-contributing countries and negatively impacted peacekeeping operations. He disagreed that the current scale was the reason for the financial crisis which the United Nations currently suffered. The cash crisis had nothing to do with the methodology of the scale. Securing a sound financial basis would not happen until all countries paid their obligations in full, on time and without conditions.

The United Arab Emirates reaffirmed the importance of transparency and capacity to pay, he said. The scale must take into account socio-economic conditions of countries, in particular the least developed and those that faced natural disasters or economic instability. Political will should be displayed in paying contributions. Special measures for financing peacekeeping operations should remain unchanged, and should continue to take into account the special responsibility of the permanent members of the Security Council.

LESLIE K. CHRISTIAN (Ghana) associated himself with the position of the Group of 77 and China on the scale of assessments. He said that the prospect of one proposal being accepted by all Member States as the best option for adoption was indeed remote. However, all the proposals contained reasonable, positive elements which merited consideration.

The principle of the capacity to pay was the fundamental criterion in the apportionment of the expenses of the United Nations, he continued. Developing countries should not be assessed at a rate higher than their capacity to pay as a result of any adjustments in the scale. The base period should reflect changes in the economic development of Member States and ensure stability in the scale. Ghana supported a base period of six years, because it offered a good compromise between those who preferred a shorter period of three years and those who favoured a longer period of nine years. His delegation also believed that market exchange rates should be used for the scale, except where that would cause serious fluctuations or distortions in the income of some Member States, and that the debt-burden adjustment should be retained. A review of the current ceiling rate of 25 per cent may be necessary, but it should not be arbitrary, such that it distorted the relation between a Member State's capacity to pay and the rate of assessment applicable to it.

The principle of low per capita income adjustment continued to be relevant. What was in dispute was the gradient to be used for that adjustment, he said. He found it difficult to accept the view that a much lower percentage level was more appropriate, and would insist on the retention of the gradient at 80 per cent to ensure that the scale of assessment was fair and equitable. The problem of discontinuity experienced by countries moving up through the low per capita income threshold between scale periods had to be addressed. The United Nations critical financial situation was not due to the methodology of the scale of assessments. The financial problems could only be resolved by the payment of all contributions, including arrears by defaulting Member States, in full, on time and without conditions. Additional sanctions should be considered against Member States in arrears. The Committee on Contributions should submit a report on the possibility of indexation or interest on arrears and multi-year payment plans.

ABDOU AL-MOULA NAKKARI (Syria) said that despite the fact that the request for 12 methodologies had come from Member States themselves, they would probably complicate matters in the discussion. He supported the position of the Non-Aligned Movement and the Group of 77 and China, and went on to note Syria�s high assessment rate in successive scales. Under the two latest scales, the contribution of Syria had jumped from 0.04 to 0.08 per cent, and the latest figure would remain the same even under the best expected scale of the 12 proposals. Proposal C was a better approach as far as capacity to pay was concerned. When inquiring about the reasons for the assessment growth, his country was used to receiving the same answer that the increase for Syria was a result of the elimination of the scheme of limits.

There was a serious attempt to reduce the ceiling, he continued. That could result in a move away from the principle of capacity to pay and serve to disregard the situation of developing countries. He also noted the reduction in contributions of many States that were better off than his country, and he found it illogical that the rates of some developed countries would be reduced at the expense of developing countries like Syria. Despite the increase in Syria�s assessment, his country always tried to pay new contributions in full, particularly during the past three years.

The financial situation of the United Nations had nothing to do with the scale of assessments, he said. The financial crisis was a result of non-payment of contributions by States, particularly by the largest contributor. Unless those arrears were paid, the unstable financial situation of the Organization would remain the same or deteriorate further. The capacity to pay must be the major criterion in the rates of assessment. It was also necessary to respect equity in payment. The Syrian economy since the last scale had not achieved a quantum leap that would justify the recent leap in assessment. The economic realities of developing countries and their indebtedness should be taken into consideration, as well as the special circumstances of countries suffering from occupation, including Syria. Israeli occupation of an important part of Syrian territory continued. The Syrian Golan was a source of agricultural wealth, and was an important part of the Syrian economy. That had not been taken into consideration, and that meant a lack of fairness in the calculation of the scale.

DAUDI N. MWAKAWAGO (United Republic of Tanzania) said that capacity to pay had long been the basic principle of the scale. Over the years, the Assembly had taken into account a number of elements for determining capacity to pay. The low per capita income allowance formula and the debt-relief factor were essential elements in the determination of capacity to pay. He fully supported the application of those elements on the basis of agreed-upon criteria. He supported the retention of the present floor at 0.001 per cent for least developed countries, and a maximum assessment for developing countries of not more than 0.01 per cent. The United Republic of Tanzania favoured a six-year statistical base period with no annual recalculation.

He said that his country had endeavoured to pay its contributions, notwithstanding occasional temporary difficulties. The peacekeeping scale of assessments had been the subject of extensive discussion at the Committee�s last resumed session. Without an agreed-upon methodology for both scales, it would be difficult for the United Nations to develop a mechanism to ensure that Member States paid their assessed contributions on equitable, fair and simple criteria based on each Member State's capacity to pay. The timing of the review of both scales meant delegations were going to engage in almost parallel negotiations on two important items. Priority must be given to reaching an agreement first on the regular budget scale. Arrangements for review of the two scales should facilitate full, transparent, and adequate participation of all Member States in the exercise.

JANUSZ STANCZYK (Poland) said that a comprehensive review of how to apportion United Nations expenses more fairly and equitably was a healthy and democratic process calling for collective wisdom and consensus-building. On the statistical base period, while he saw the benefits of a shorter base period, in particular with regard to obtaining verifiable and reliable statistical data, he did not favour shortening the base period because of its likely effect on stability and continuity. The low income per capita adjustment had been part of the scale methodology from the beginning. Overall, its current level, consisting of a world average of per capita income and an 80 per cent gradient, was acceptable. The issue at stake was how to mitigate against large variations when a country moved up through the threshold between scale periods.

On the debt-relief formula, despite some methodological imperfections that formula had passed the test of time and proved its usefulness for determining real capacity to pay, he said. For a number of countries, Poland included, the debt- relief formula still played a role in assuring the fairness and equity of assessment. Debt servicing was, and would continue to be, a heavy burden on Poland�s capacity to pay. Concerning the role of the Committee on Contributions, he said that the Assembly would be best served if it was provided not only with a technical analysis, but also more with technical advice, conclusions and recommendations. He encouraged that Committee to use its advisory function more fully.

ELMIRA IBRAIMOVA (Kyrgyzstan) said that her country stood for a transparent, equitable, fair methodology, reflecting the actual capacity of the Member States to pay. The idea of a four-year base period for the calculation of the scale of assessments, accompanied by a reduction in the length of the scale period from three to two years, was new and noteworthy. The current methodology took into account years that were far too remote in the calculations. It was not adequate and led to distortions, because countries� situation could change in five years. More frequently, updated financial statistics on countries� economies should be used.

Her delegation supported the proposal to keep current conversion rates, she continued, but such calculations should be performed carefully to avoid distortions. The use of the debt-burden adjustment was valid, but the criteria which applied to it should be clarified. The debt-burden adjustment should be based on total debt stock. The per capita income adjustment was also a very important element.

Continuing, she noted with concern that the lowering of the ceiling would bring Kyrgyzstan additional financial responsibilities in comparison to calculations based on the current methodology. That was a clear distortion, for the GNP per capita in Kyrgyzstan was $380 in 1998, which was 12 times smaller than the world�s threshold. Despite its economic difficulties, her country had fully paid off its arrears to the regular budget and had taken decisive steps to gradually eliminate its debt for peacekeeping operations. Kyrgyzstan had now paid the minimum required under Article 19 of the Charter. She reiterated the need for strict fulfilment of the financial obligations of States to the United Nations and added that, at the same time, fair assessment rates were a prerequisite to the financial prosperity of the Organization.

ALI KHALIFA EL-MAGHTUF (Libya) said that the item under consideration required particular attention because of its complexity and its technical nature. He supported the position of the Group of 77 and China, and expressed regret that the Committee on Contributions had been unable to come up with a single set of recommendations to guide the work of the Fifth Committee. The United Nations needed human and financial resources to implement its mandated activities.

The General Assembly had set the ceiling at 25 per cent and set a floor for contributions, he continued. It had also affirmed the principle of capacity to pay, which had been agreed to by all countries. That concept had a human face, but, unfortunately, it was not applied in a fair way. Anomalies had become common in its application. In 1986, interesting statistics had been published, according to which the methodology of the scale led to certain distortions. According to those figures, for example, the United States paid 25 per cent of the United Nations regular budget; the USSR contributed 10.5 per cent; Japan -� 10.42 per cent; and the Netherlands -� 1.78 per cent. However, when all the contributions, including voluntary contributions, were calculated, Norway came out as the largest per capita contributor, followed by such countries as Sweden, Qatar, Libya and Belgium. The United States followed, contributing $4 per capita. Richer countries which could pay more actually paid much less than developing countries, when their contributions were compared with their per capita GNP. A handful of countries controlled world trade. A handful of the billionaires in the North had income exceeding the income of whole countries in the South. Those facts needed to be taken into consideration, when calculating the scale of assessments.

The United States had imposed sanctions against Libya, he said. It had enacted laws exceeding its national jurisdiction and applied them to other regions and countries. That was contrary to international law. Such unilateral measures had to be challenged, for they were counter to the United Nations Charter, as well as to the principles of equity and justice. There was great concern over the impact of sanctions on civilian populations. All unilateral sanctions should be lifted. Sanctions against Libya had resulted in financial damage of over $30 million.

OUCH BORITH (Cambodia) said that just two weeks ago, heads of State and government proclaimed the Millenium Declaration, which placed peace and anti- poverty efforts at centre of United Nations priorities. The issue of the scale of assessment was inherently linked to the scale used for peacekeeping operations. Although the subjects could be discussed separately, it was only when they were discussed within the context of overall reform that full benefits would be obtained. Deliberations on the scale would be meaningless unless the primary cause of the deteriorating financial situation of the United Nations was resolved. The Organization must be provided with resources commensurate with its mandates. Member States had a legal obligation to bear those expenses. The principle of capacity to pay was the fundamental criterion in the apportionment of expenses. The low per capita income adjustment should remain an integral part of the scale methodology in order to provide relief to countries such as his own. The floor rate of 0.001 per cent and the ceiling for least developed countries at 0.01 per cent should also be maintained.

The role of peacekeeping operations had evolved significantly, he said. Cambodia was in full agreement with other Member States on the need to establish a method for determining the peacekeeping assessments that realistically reflected the current economic situation of Member States. In 1973, Cambodia had been placed in Group C. Cambodia�s situation had changed greatly since then. As a result of three decades of civil war, unrest and economic crisis, Cambodia was now categorized as one of the least developed countries. He noted that Cambodia�s GNP was lower than those of a number of countries placed in Group D. He proposed to the Fifth Committee and the Committee on Contributions that it consider the reallocation of Cambodia from Group C to Group D.

NASTE CALOVSKI (The former Yugoslav Republic of Macedonia) said that his country had a paramount interest in seeing the United Nations function as a relevant, efficient and democratic organization. To respond to new demands, the United Nations must have the adequate mechanisms and the resources to finance them. There were numerous technical issues which should be undertaken by experts. Delegates should focus on building the political will to reach consensus.

The discussion so far had not addressed the functioning of the present arrangement of the principal organs and their numerous sub-organs, he said. Another arrangement for the functioning of the principle organs was necessary; one that would be not only less costly, more democratic and relevant, but also more suitable from the point of view of small delegations. A new arrangement could be agreed upon which would reaffirm the central position of the Assembly as the chief deliberative, policy-making and representative organ of the United Nations. If that were done, the Committee could substantially reduce the budget and use the resulting savings for development programmes and for financing peacekeeping missions.

The representative of Libya then corrected some statistical data concerning the United States contribution from his earlier presentation.

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