US embassy cable - 04ROME2391

UNCLAS  ROME 002391 
 
SIPDIS 
 
 
FROM THE U.S. MISSION TO THE UN AGENCIES IN ROME 
 
L/PIL FOR HAL BURMAN AND JEFF KOVAR 
IO/S FOR LISA JACOBSON AND IO/EDA FOR SHARON KOTOK 
 
E.O. 12958:  N/A 
TAGS: AORC, ABUD, UNIDROIT 
SUBJECT: MEETING OF UNIDROIT FINANCE COMMITTEE 
 
REF: a) STATE 130425 
 
1. Summary: the Finance Committee of the International 
Institute for the Unification of Private Law (UNIDROIT) 
met on June 15 to consider the organization's 2005 
budget.  U.S. did not block consensus on the proposed 
budget of 1.979 million euros, which represents a 4.2 
percent increase over 2004 (however, due to several 
factors, assessed contributions for almost all member 
states increased only 1.65 percent).  The organization is 
facing a long-term dilemma with several tasks that must 
be accomplished but few resources with which to work. 
The most important example is the hiring of a new Deputy 
Director General, which had to be delayed because of 
insufficient funding.  Member states will have to be 
prepared to provide the necessary resources if demands 
continue to be placed on the organization.  End summary. 
 
2. U.S. Mission rep attended the June 15 Finance 
Committee meeting.  Per ref guidance, U.S. made the 
following points: while we value the organization's work, 
our policy for international organizations remains zero 
nominal growth.  While we can abide a small increase as a 
one-time exception to ZNG policy in recognition of the 
organization's high priority work, we must continue to 
urge the organization to exercise maximum budget 
discipline.  While previously our ZNG call was echoed by 
other committee members, this time only the Brits 
expressed similar sentiments.  Others, including Italy, 
Germany and Spain, voiced their support for increased 
assessments.  Italy in particular (the host country and 
largest contributor) chided other members for not 
contributing more, while Spain stated their support for a 
larger increase.  The German rep said it was time to 
either "face facts" and fulfill the duties of the 
organization, or to "change the rules" and thereby reduce 
the requirements placed on UNIDROIT. 
 
3. While some of this change in sentiment may be due to 
the very small (1.65 percent) increase in contributions 
sought for most member states for 2005 (see para 4 
below), U.S. rep sensed a shift in attitudes from 
previous sessions.  We believe this can be attributed to 
the following: 
 
a. The organization is tiny, spending less than two 
million euros annually, so the amount of money we end up 
debating is relatively miniscule by comparison to other 
international organizations.  Department has made no 
secret of the fact that we believe UNIDROIT is a bargain 
 
SIPDIS 
 they do quality work for very little money. 
 
b. The current Deputy Director General has been eligible 
to retire for some years and has been working full-time 
hours for half-time pay since 2000.  While the 
organization and member states should have insisted that 
a new DDG and resources to pay him/her be found four 
years ago, that did not happen.  The DDG will definitely 
be leaving this year, yet the organization has only half 
the money (or less) needed to hire a new one.  Thus the 
decision to proceed was put off, and an interim solution 
found whereby the principal Research Officer will act as 
DDG until sufficient funding can be found. 
 
c. The depositary function of the Cape Town Convention 
has been strongly supported by the U.S. and other member 
states.  Yet thus far, the only way the organization can 
perform this function is to solicit voluntary 
contributions so an additional staff member can be hired 
(the U.S. contributed 110,000 dollars toward this 
effort), when in reality this is a function that should 
be a part of the regular budget.  The favored candidate, 
an American, turned down the offer because the salary was 
too small. 
 
d. A recognized step forward for the organization is the 
establishment of an electronic document library that can 
be accessed over the internet.  The organization is being 
forced to finance this project over a period of years 
because insufficient funds exist to buy the complete 
software program in one payment. 
 
4. Why only 1.65 percent?  At the March finance sub- 
committee meeting, the organization proposed a 12 percent 
increase in assessed contributions and was firmly 
rebuked, which surely made the Secretariat gun shy.  In 
addition, the government of Italy decided to clear their 
arrears and increase their contribution.  Finally, a re- 
evaluation of the units of account was done to bring the 
organization into line with a similar assessment done by 
the UN in 2003.  This resulted in increased contributions 
 
from several member states, allowing a more modest 
increase for others (the U.S. standing did not change). 
 
5. Comment: this tiny international organization with 
only a few permanent staff makes a valuable contribution 
to U.S. industry in its effort to harmonize commercial 
laws of differing countries and has been strongly 
supported by the Department's Office of the Legal Advisor 
(L).  Given the relatively small amount of funding 
necessary to enable UNIDROIT to carry out its designated 
functions, Mission believes it is worth considering as an 
exception to the mantra of zero nominal growth. 
 
CLEVERLEY 
 
 
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	2004ROME02391 - Classification: UNCLASSIFIED