246. Memorandum From the Representative to the United Nations (Stevenson) to Secretary of State Rusk1

SUBJECT

  • Financing UN Peace-keeping Operations

1. The first steps have now been taken in our current efforts to improve the financial condition of the UN. Ambassador Plimpton has made a strong statement to the Working Group and the Department has sent out a series of circular telegrams to the non-Communist capitals urging that Member States agree that the regular budget scale percentages be used for assessing the Middle East and Congo expenses for the last 6 months of 1963.2 It will now be necessary to wait for reactions to these approaches before we will be in a position to assess where we are and exactly what course we should take.

2. The purpose of this memorandum is to explore with you now the basic alternatives that lie before us and their relative advantages and disadvantages so that as we receive the replies from various capitals we will have an agreed basis for making our final choice.

3. Let me clear away immediately a number of points on which I think we are all agreed. Our objective is to obtain by June 30 a General Assembly resolution which finances the UNEF and ONUC operations for the last 6 months of 1963 on a reduced basis but not so far reduced as seriously to damage any political interests of the United States. We have decided and said to the Working Group that for this year we will oppose the use for this purpose of a compulsory special scale of assessments which would carry the United States beyond the present regular scale of 32.02% of the total cost (or the Congressional limitation of 33–1/3%). We have left open the possibility of other means of raising these funds, including some combination of compulsory assessments and voluntary contributions. We have so indicated to the Working Group, but have said that the United States is not prepared to make any commitment with regard to a voluntary contribution unless there is improvement in the UN financial situation and unless we are joined by [Page 543] a sizeable number of other countries for sizeable amounts. We are all agreed that the total contribution by the United States should not exceed 38%—needless to say, no indication of this figure has been given to the Working Group.

4. The problem that causes us concern is that under our present instructions we see no practical alternatives available to us at the end of the road which will enable us to attain our basic objective. There are only three means, as we see it, of obtaining the necessary funds. In our view two of these will almost certainly turn out to be impractical and the third may be barred by our present instructions.

5. The first means is to utilize the regular scale of assessment for the full cost of the operation. The second means is to use the regular scale of assessments to the maximum extent possible and to rely on voluntary contributions for the remainder. The third means is to utilize some form of the three-bite approach which involves utilizing the regular scale up to the maximum extent possible, then the regular scale with certain reductions for smaller states, and finally the larger states voluntarily contributing the shortfall caused by the reduction to the smaller states. An alternative three-bite approach would be to provide that the shortfall be funded out of the UN’s Miscellaneous Income which is running around $6 million per year.

6. We have been assuming that the total costs we are dealing with here will probably amount to $50 million for UNEF ($10 million) and ONUC ($40 million) during the last half of this year. This may be reduced and to the extent that it can be the problem will be eased.

The Regular Scale Alone

7. Our view has been and remains that it will not be possible to raise this much money on the regular scale of assessments. We may be wrong; the returns from the capitals will soon tell us. If we are right, we must fall back on either the second or the third alternative. If we are right that the first alternative is not practical, the reason will be that, as some 6 years’ experience has shown, the small states are not willing to be assessed for these large peace-keeping expenses under the regular scale of assessments. In other words, they will be insisting, as they have in the past, on adjustments making their part of the burden relatively smaller than under the regular scale, which necessarily means that the larger countries would pay a proportionately larger portion of the burden.

The Regular Scale Plus Voluntary Contributions

8. The regular scale would be applied to the maximum amount possible and voluntary contributions would be solicited for the balance. For [Page 544] example, $10 million would be assessed on the regular scale; assuming that the smaller states are willing to pay at the rate of, say, 50% of the regular scale as to the $40 million balance (this is optimistic), do not assess the $40 million balance at 50% of the regular scale but assess 50% of the balance, namely $20 million, under the regular scale, leaving a $20 million balloon for voluntary contributions. These are the difficulties:

(a)
This approach was tried in 1957 and discarded as unsatisfactory.
(b)
The small countries want percentage relief rather than dollar relief, since only the former openly recognizes the principle that they should pay a lesser share of large peacekeeping operations.
(c)
The larger countries are unwilling to make the large voluntary contributions involved.
(d)
The Communists, French and other non-volunteers are not assessed as to the $20 million balloon and get off completely Scot free as to that part of the cost.
(e)
If all the $20 million balloon is to be raised, the United States would have to put up, say, 80% of it, which would bring the U.S. total contribution to some 51% of the $50 million total, and it is extremely doubtful whether the balance could be obtained from others.
(f)
If the U.S. contribution is to be limited to 38% of the $50 million total, this would mean it could only contribute $9,400,000 of the $20 million balloon, and, assuming (optimistically) that others would contribute as much as 25% of the U.S.’s contribution, there would be an unassessed and irretrievable shortfall of some $8,250,000 which could never be recovered from anyone. The operations would have to be cut down accordingly.

Finally, we do not think this formula could obtain the necessary 2/3rd vote in the General Assembly.

9. The only advantage that has been put forward in support of this formula is that it does not in form provide a “reduction” to the small states which the larger states make up. It is true that it does not, but it is also true that in substance it does: the smaller states pay less of the total than the regular scale would provide for, and some of the larger pay more. Furthermore, the price of avoiding the form of “reductions” is to give the same percentage reduction to all other member states, including the large Communist countries and France, and therefore either to leave a very substantial unassessed and irretrievable shortfall or to make it necessary for the United States, if the operation is to be funded, to pay much more than 38% of the total cost.

10. It would appear to us that the disadvantages from the point of view of the United States would far outweigh the advantages. We therefore wonder whether the Congress is really concerned with form rather than substance and whether it would not be wiser to explain the situation to them fully and try to persuade them to our view rather than take [Page 545] a disadvantageous position because it is on the surface consistent with their views.

The Three-Bite Approach

11. This involves assessing an initial amount, as large as possible, on the regular scale and assessing the balance on the regular scale except that the percentages of the smaller countries are lowered. The balance is provided by voluntary contributions. Thus, of a $50 million total cost, $10 million might be assessed on the regular scale and the 18.47% aggregate regular scale percentages of the smaller states reduced, as to the $40 million balance, by 50% to 9.24%. This would produce a shortfall of $3,692,000, which would be met by voluntary contributions by the U.S. and other friendly developed states. Assuming that the U.S. put up 80% of the shortfall, its total contribution, assessed and voluntary, would be 35.5% of the $50 million total.

12. This is obviously much cheaper for the United States than the second alternative, and, indeed, seems to us the only means by which we can obtain the desired results within the 38% limitation.

13. It is, of course, similar to the approach used last year, which involved a “reduction” to Albania, Cuba, etc., and resulted in Congressional criticism. However, in that case the entire shortfall was taken up by the United States; we believe it possible, as regards the last 6 months of 1963, to get a sizeable number of other States to join in voluntary contributions to take care of a shortfall of this size.

14. The three-bite approach has made some headway in the Working Group. It is being carefully considered by some of our important friends, including the Australians and the Canadians. We think it might be possible to negotiate some such solution before the end of June within the 38% limitation. My feeling is therefore that we should concentrate our attention on the construction of a formula along the lines of the three-bite approach which would present the least difficulties to Congressional opinion. We have suggested several devices for this purpose.

15. The first would be to provide that voluntary contributions can be made in goods or services acceptable to the Secretary General. The United States could provide such goods and services and the President could waive reimbursement therefor under the Participation Act, in case it were decided that it would be inadvisable to ask for a Congressional appropriation of more than 32.02%. (This point is discussed in the last paragraph of our telegram 3130.)3

16. The second would be to ensure that other states make substantial voluntary contributions, which would differentiate the formula [Page 546] from that criticized by Congress last summer-where the United States made up for all of the reductions. This could be done by prior agreement between the developed states or by the United States making its contribution on a matching basis.

17. A third possibility would be to provide that no reduction would be afforded to any state which has refused as a matter of principle to pay its peace-keeping assessments. Such a provision, if it could be put through, might well eliminate Congressional criticism, as no reduction would go to any Communist countries. However, it would cause serious difficulties as regards the Arab States, who have refused to contribute to UNEF.

18. It would, of course, be possible to arrange that the three-bite approach be presented to the world without the use of the word “reductions” appearing in any texts. There are many ways this could be done, and they should be fully explored, but the fact of the matter is that no formula has any chance of acceptance by the General Assembly which does not in fact provide relief to the smaller states and add correspondingly to the burdens of the larger states.

19. As things stand, our instructions, although they envisage the possibility of the United States going up to 38% and contemplate our entering into consultations with the Working Group, preclude the “reductions” which alone, we think, would make it possible for us to negotiate the financing of these peace-keeping operations on a U.S. 38% basis.

The Alternative Three-Bite Approach

20. The alternative three-bite approach is the same as the above, except that the shortfall resulting from lower assessments for underdeveloped countries would be financed from the miscellaneous income of the UN for 1964, which should amount to more than $6,000,000.

This approach would appear to have the advantages of avoiding voluntary contributions and of assuring the full collection of the shortfall. It is true that by reducing the miscellaneous income of the UN it would add to the dollar amount assessed against the United States as well as all other members in 1964. This method of dealing with a subject matter distasteful to the United States would be similar to that used for many years in dealing with the tax reimbursement of US nationals employed by the UN and in paying the awards made in 1953–54 by the Administrative Tribunal to the US nationals dismissed from the Secretariat. In both cases miscellaneous income of the UN has been used for these purposes without objection by the United States.

It appears possible on the basis of hasty calculations that this method could be used in connection with UNEF and Congo financing resolutions at the May Special Session of the General Assembly (and [Page 547] repeated at the Regular Session in the fall if these operations are to be continued into next year). The present level of miscellaneous income would appear to be sufficient for this purpose but it could perhaps be supplemented by having the UN issue a special series of UN stamps commemorating its peace-keeping operations.

21. Finally, let me share my concern that we are permitting ourselves to get bogged down in technicalities so that neither the Administration nor the Congress is able to take a clear view of our national interests in relation to the UN. We will, after all, have an annual financial problem in connection with the UN. We do need in the long pull to carry Congress with us in our broad view of those national interests. This broad view should, it seems clear to me, include the idea that the US should not allow the opposition of the Communist states or the inferior sense of responsibilities of others to stand in the way of our using the UN for such peace-keeping operations as we determine are in our national interest. This undoubtedly will mean, as it has in the past, that we will be called upon to pay more than one-third of the cost of these operations. It would, in my opinion, be a shame if through lack of real leadership with the Congress we allow ourselves to get permanently boxed in so that our true national interests cannot be served.

  1. Source: Kennedy Library, National Security Files, Subjects Series, United Nations (General), 1/63–4/63, Box 311. Confidential. An attached paper on “regular” and “aggregate” percentages contributed to the United Nations by certain states is not printed. Ambassador Stevenson forwarded a copy of this memorandum and one on the future of NATO under cover of a memorandum to the President on March 9. (Ibid.) An attached and undated note by Bundy reads: “Mr. President: the UN financing part of this is damn complex and can wait. The NATO part is an interesting anti-Acheson statement. McG. B.
  2. See Document 243.
  3. See footnote 2, Document 243.