Madeleine K. Albright

I am pleased to have the opportunity this afternoon to further outline the United States' views on issues related to the financial situation of the United Nations.

My government takes very seriously the reports provided by the Secretariat on the financial difficulties faced by the organization.

In our view, these difficulties are caused primarily by two related facts. First, the failure of the majority of members to pay their full assessments on a timely basis; and second, the lack of confidence that many members have in the management and structure of the organization.

In recent years, substantial progress has been made towards improved management. If this progress is sustained and structural reforms also occur, a solution to the financial crisis will be easier to achieve. That is why my government has placed a high priority on the reform initiatives now being considered within the Secretariat and by the High-Level Working Group on Strengthening the UN System.

The related responsibility of this financial working group is to develop a more equitable, predictable and reliable system for funding the UN.

It is fair to say that, during our deliberations, the amounts owed to the UN by the United States have been referred to with some frequency-obliquely by the most diplomatic amongst you; rather more directly by others. The truth, of course, is that the problem of member payments is widespread and will require a solution that extends far beyond the question of payments by the United States. Given the role of the U.S. in this organization, however, any such solution must include a substantial contribution from the United States.

This afternoon, I would like to discuss some steps that my government believes would help the UN become more solvent and productive.

First, we will be asking our Congress to approve this year a five-year plan for paying our arrears to the UN. Last October, President Clinton said we would meet our obligations to this institution, and the inclusion of this request in our budget, at this time of great fiscal restraint in the United States, is a demonstration of the priority we attach to meeting our obligations.

Second, we will be encouraging prompt action on far-reaching proposals for reform and greater budget discipline throughout the United Nations system.

And third, we will be proposing a ceiling on the regular budget assessment for any UN member of 20%, a reduction from the current maximum of 25%. As the Secretary-General and representatives from a number of countries have pointed out, such a reduction would allocate the burden for financing the UN more broadly, while eliminating over-reliance on contributions from any one member state.

The viability of this plan depends on the linkage that exists among its elements. You should understand that we expect our Congress to insist, at a minimum, on specific legislative conditions that would permit the actual payment of arrears to occur only as the UN reforms, keeps its budget down and cuts unnecessary staff. At the same time, we will be making it clear to Congress that the United States will have to pay its arrears and provide a credible assurance that we will meet our future obligations at the reduced rate if we are to obtain sufficient support from members to reduce the maximum rate to 20%. We will also stress the Administration's opposition to any effort to reduce the U.S. rate of payment to the UN's regular budget through unilateral action; what we are proposing is a negotiated change, endorsed by the members of the UN.

If agreed, this reform package would create for the UN a more predictable and stable system of financing. And for member states, it would assure a UN that is more focused on priorities of real importance to people around the world, more effective in terms of results, and more efficient in the management of scarce public resources.

Before closing, I would also like to address other specific issues related to the responsibilities of this working group.

First, my government supports a continued surcharge on peacekeeping for permanent members of the Security Council, provided the surcharge does not produce an overall peacekeeping assessment for any one member in excess of 25%

Second, my government would not oppose a reasonable floor on peacekeeping assessments for permanent members of the Security Council.

Third, my government supports a number of elements in the European Union's proposal to make the regular budget scale of assessments more transparent and fair. We believe, for example, that-

the requirement for a minimum rate of contribution by each member state should be reduced or eliminated.

In addition, my government supports the idea of incentive mechanisms to encourage the early payment of assessments, but we would strongly oppose any measures, beyond the sanction contained in Article 19 of the Charter, to penalize late payments.

Finally, my government would oppose any plan to finance the regular budget through the imposition by the UN of a tax on the citizens of member states.

The net effect of these recommendations and proposed changes would be to replace the current scale of assessments with an arrangement that better reflects current economic reality, and which is more likely to result in full payment by UN members.

The United States believes that the UN performs indispensable functions that warrant financial support. But we also believe that not every function and activity currently performed by the UN is indispensable.

The UN's financial crisis cannot be resolved without adequate finances, but neither can be resolved without financial discipline. We must set priorities, focus on core functions, improve efficiency and drop low priority tasks. The best way, and perhaps the only way, to ensure the fiscal soundness of the UN is by moving rapidly down the road towards structural and budgetary reform.

This high-level working group has now received a number of substantive proposals. It should get down to serious business. The key question should be identified and discussed. Hard bargaining will have to occur.

At the same time, as I have mentioned above, the Clinton Administration will be working with our Congress on a plan to pay U.U. arrears as the process of UN reform gathers steam.

Thank you very much.

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