Resumed 40th General Assembly agrees to economy measures for 1986.

Resumed 40th General Assembly agrees to economy measures for 1986

Facing what Secretary-General Javier Perez de Cuellar has called the "most serious financial crisis' in United Nations history, the fortieth General Assembly at a resumed session (28 April-9 May) agreed to economy measures proposed by the Secretary-General that would result in substantial savings for the Organization in 1986.

While the present crisis was one of "insufficient funds', Mr. Perez de Cuellar told the Assembly on 28 April, it was "above all a political crisis', arising "principally, though not exclusively, from disregard for obligations flowing from the Charter and from lack of agreement among Member States on the purposes for which the United Nations should be used, and on the support to be rendered by each Member State to ensure its effectiveness'.

It would, he added, "be a tragic repudiation of all the efforts and hopes invested these 40 years in the United Nations if . . . the Organization were allowed to founder for lack of funds'.

The 159-member plenary, in adopting resolution 40/472 on 9 May without a vote, decided that Secretary-General Javier Perez de Cuellar should proceed with proposals made in his report (A/40/1102) on the Organization's current financial crisis. These included cuts already instituted regarding travel, overtime, personnel and salary, and proposed reductions for the immediate future involving capital expenditures, publications, documents and meeting services.

The steps being taken--which were "absolutely essential to maintaining solvency of the Organization in 1986'--would inevitably affect implementation of programmes, services available to Member States, and employment conditions and welfare of Secretariat staff, the Secretary-General stated. However, if taken as a whole, they would result in a "reasonable apportionment among programmes and activities of the retrenchments which in the present emergency are not avoidable'.

The proposals emanated from a review of the 1986 portion of the 1986-1987 biennium budget made "in the light of the ominous situation' confronting the Organization, Mr. Perez de Cuellar said.

As of 1 January 1986, total arrears in assessed contributions amounted to $242.4 million; that figure could be expected to grow to as much as $275 million by the end of 1986, he said.

While financial difficulties related to both peace-keeping operations and the regular budget, the crisis had "built up over the years' as the result primarily of the withholding by 18 Member States of assessed contributions from the regular budget, Mr. Perez de Cuellar stated. Peace-keeping liabilities represented mostly debts to troop-contributing countries, who were reimbursed "far below the level' due to them, and who thus "bear the brunt of the deficit'.

At the beginning of 1986, the United States--the largest contributor --had indicated that it would pay from $90.5 to $102.5 million less than its assessed contributions for 1985 and 1986, he went on.

Even using all available reserves, a shortfall of $106 million--$76 million plus an additional projected $30 million because of the depreciation of the United States dollar--was expected. The cash shortfall could be even larger if assumptions regarding payments of assessed contributions were not realized or if the United States dollar should continue to depreciate, the Secretary-General said.

The Secretary-General on 30 April told the Assembly that the package of economy measures constituted "a fragile balance' and that he had sought to apportion the curtailments "as reasonably as possible' among programmes and activities. It would be "extremely difficult to achieve the requisite savings if the balance is upset', he said. All Member States should be guided by the "overriding importance of preserving and strengthening the capacity of the United Nations'.

The Assembly's Advisory Committee on Administrative and Budgetary Questions (ACABQ), in its report (A/40/1106), stated it fully shared the Secretary-General's views concerning the severity of the financial crisis, adding his estimates might be "optimistic'. The ACABQ stipulated that any savings realized should not revert to Member States, and that it did not favour borrowing or increasing the Working Capital Fund.

Intensive consultations: The Assembly approved the Secretary-General's plans after intensive consultations during the resumed session, on the basis of a statement by General Assembly President Jaime de Pinies (Spain) on 9 May in plenary.

Despite efforts to reconcile differences over the proposals, a "certain divergence of views' about the desirability of some of the economy measures had continued, Mr. de Pinies said in the statement. By and large, however, they had been acknowledged as being "unavoidable, though regrettable, in order to keep the Organization in a state of solvency'.

All Members had a contractual obligation under the Charter to pay their duly assessed contributions. He appealed for generous voluntary contributions to the Special Account to help the Organization overcome its current financial difficulties.

There was widespread recognition, he said, that as Chief Administrative Officer the Secretary-General was responsible for administering the Organization's ongoing work prudently, with due regard both for the Assembly's wishes and for available resources, Mr. de Pinies concluded.

It was also understood that no project or programme for which there was a legislative mandate would be eliminated if adequate financial resources were available. The Secretary-General was to review his proposals in light of the evolving financial situation and would report to the Assembly at its forty-first session.

In adopting resolution 40/472, the General Assembly noted that the forty-first Assembly, after its opening on 16 September, would consider the Secretary-General's proposal that the Assembly curtail its session by three weeks, so that it would end in late November, in light of the financial situation then prevailing. It was agreed that a special Assembly session on Namibia would be held in New York immediately after the opening of the forty-first session, in the period between 16-22 September, in order to reduce the costs involved in such a session.

After the Assembly acted, the Secretary-General said the Assembly had "taken an important step towards strengthening the Organization at a time when its viability was under threat'.

Economy measures

In reporting on the financial crisis, Mr. Perez de Cuellar said that as of 31 March 1986, total outstanding contributions of Member States for current and prior years stood at $742.8 million. By 30 April, that figure had dropped to $542 million.

Meanwhile, he said, all reserves had been pledged to meet deficits. The Working Capital Fund of $100 million had been depleted due to withholdings which, at the end of 1985, amounted to almost that much. The Special Account, consisting of voluntary contributions by some Member States to help the United Nations meet its financial difficulties, now amounting to $90 million, had been largely committed to cover late payments. The Soviet Union on 17 April announced a $10 million contribution to the Special Account, he said.

Cost-cutting measures initiated in January and March by the Secretary-General would save the Organization some $30 million. These related primarily to a freeze in recruitment; a six-month suspension of promotions; deferment of cost-of-living adjustment for staff in the General Service category; hiring of consultants; temporary assistance; overtime; travel; deferral of alteration and maintenance projects; and further limitation of documentation.

Savings of another $30 million could result from deferral of major construction projects in Addis Ababa and Bangkok; reduction in number of and services for meetings; and curtailment of acquisition of equipment and of publications. It was estimated that $1.1 million would be saved if the forty-first Assembly cut its 1986 session by three weeks.

Even if sufficient payments were received to cover this year's cash shortfall, Mr. Perez de Cuellar told the Assembly, there would be little if any cash on hand at the beginning of 1987. The cash shortfall problem would persist until payments of assessed contributions were made in full, he stressed.

Member States should seek constructive agreement on the necessary emergency actions and provide continuing support during the next difficult months, the Secretary-General urged.

Fifth Committee action: The Assembly's Fifth Committee (Administrative and Budgetary) met on 30 April and 1 May In its report (A/40/1111), it stated that if the hypotheses envisaged by the Secretary-General failed to materialize, the Organization's cash situation could remain "a cause for concern'. Approval of the Secretary-General's proposals would not mean a revision of appropriations already adopted in the 1986-1987 budget, it added.

Debate

The Netherlands, on behalf of the European Community, said the Organization's financial crisis was caused by "blatant disregard by certain Member States for their financial obligations under the Charter'. The Organization had been able to carry on largely because other Member States had borne the consequences of actions of those who had not complied with their financial obligations. The Twelve deplored the practice of "financing a la carte', which rendered those budgets vulnerable. The Twelve were committed to sound financial management and fiscal restraint and would continue to co-operate constructively with the Secretary-General and Member States to safeguard the Organization's future.

Yugoslavia, on behalf of the Group of 77 developing countries, said there had been increasingly frequent attempts to weaken and curtail the role of the United Nations system and to erode the principles of sovereign equality and democratic functioning on which the Organization was based. Some quarters were attacking the United Nations and some specialized agencies, which constituted a crisis of multilateralism. The United Nations was being weakened as a forum for deliberation and negotiation on important economic and political issues.

The current financial crisis should be dealt with primarily politically, in a comprehensive and integrated manner. The Group of 77--two thirds of the entire United Nations membership --were ready to explore all possibilities within Charter provisions to enhance the Organization's effectiveness. They would continue to oppose unilateral actions to force changes in the decision-making processes that would lead to abandonment of the democratic principle of the sovereign equality of all States. They would try to bring about serious, durable and negotiated solutions to the financial and other problems confronting the Organization, and would consult with the other Member States to preserve and strengthen the ability of the United Nations to function more effectively.

The USSR said the Organization's difficulties were political in origin. The United States had taken a number of measures clearly aimed at applying a policy of coercion towards the United Nations, for example its withdrawal from UNESCO, steps to limit privileges and immunities of United Nations Missions, and a demand to reduce staff of the Soviet, Ukrainian and Byelorussian Missions to the United Nations. United States actions had caused the Organization's current financial difficulties, which jeopardized its ability to carry out its functions under the Charter.

Despite cost-cutting measures, there were still untapped resources within the Secretariat that could be used to meet much of the current deficit. The Secretary-General should make further efforts in that direction. The Soviet Union would consider measures to eliminate dead weight from United Nations programmes; in doing so, no damage should be done to United Nations programmes in major areas. Measures already taken should not be used to cover up the consequences of the arbitrary actions of the United States. The United States should bear full financial and political responsibility for the steps it had taken unilaterally. That included the continued application of United Nations financial rules, which provided for repayment of all savings to the Organization's States Members.

The United States said the current cash shortfall had been building up over a long period of time. Shortfalls in payments of assessed contributions had begun in 1956 and had reached serious proportions as early as 1960. As of 31 March 1986, some 80 countries--a majority of United Nations Members--had all or a portion of their 1985 assessments still unpaid. The Organization had managed to continue operations because of its reserves, and because the United States, which was assessed 25 per cent of the Organization's expenses, had contributed virtually its full assessment each year.

Because of two recently enacted laws, the United States was unable to pay its full assessment this year. The Kassebaum Amendment limits United States payments to the United Nations and specialized agencies to 20 per cent of their budgets unless weighted voting is introduced. The Gramm-Rudman-Hollings Deficit Reduction Act was not specifically directed at the United Nations or international organizations, but its effects were being felt by them. "The fact that arrears of other Member States have totally depleted the Organization's reserves suggests that the United States shortfall becomes the straw that breaks the back of the camel.' The financial crisis was not the responsibility of any one Member State, but the result of "years of withholdings and late payments by a majority of countries'.

The United States supported the Secretary-General's proposals as a package, but opposed commercial borrowing or further increasing the Working Capital Fund. Estimates of the shortfall might be somewhat optimistic, so the Secretary-General should monitor the short-term financial situation carefully. The United States had always been the largest financial supporter of the United Nations and fully intended to continue its support for the Organization.

India said the non-aligned countries were concerned at the increasingly frequent attempts to weaken and curtail the role of the United Nations system and to erode the principles of sovereign equality and democratic functioning on which it was based. It regretted that financial and political pressures were being exerted on the United Nations even as the Group of 14 intergovernmental experts on the Organization's functioning was engaged in its task. Economies had become unavoidable. Given the necessary will and determination, the United Nations could overcome the present difficulties threatening its very existence.

Uganda, on behalf of the African Group, said deliberate attempts were being made to weaken the United Nations and erode its democratic character, with a view to re-establishing a world order based on power-determinism. The critical economic situation facing Africa was largely responsible for failure by African countries to meet their financial obligations to the United Nations, but those countries pledged to comply with their obligations. Unilateral withholding of assessed contributions was aimed at achieving particular objectives, including annulment of basis principles and democratic procedures of the United Nations.

At its resumed session, the Assembly also:

Appointed William H. Draper III as new Administrator of the United Nations Development Programme (UNDP) to succeed Bradford Morse;

Observed a minute of silence in memory of Argentine economist Raul Prebisch, who died on 28 April (see page 118).

Photo: Secretary-General Perez de Cuellar (left) and President de Pinies at podium during resumed session.