US embassy cable - 04ROME3992

UNCLAS ROME 003992 
 
SIPDIS 
 
 
FROM THE U.S. MISSION TO THE UN AGENCIES IN ROME 
 
L/PIL FOR HAL BURMAN AND JEFF KOVAR 
IO/S FOR CHRIS VAN FOSSAN AND IO/EDA FOR SHARON KOTOK 
 
E.0. 12958: N/A 
TAGS: AORC, ABUD, UNIDROIT 
SUBJECT: MEETING OF UNIDROIT FINANCE COMMITTEE 
 
REF: a) STATE 214239  b) ROME 2391 
 
1. Summary: the Finance Committee of the International 
Institute for the Unification of Private Law (UNIDROIT) 
met on October 8 to consider the organization's 2005 
budget.  A draft resolution on arrears was considered but 
eventually dropped after lengthy discussion.  U.S. did 
not block consensus on the proposed budget of 1.979 
million euros, which represents a 4.2 percent increase 
over 2004 (assessed contributions for almost all member 
states, including the U.S., increased only 1.65 percent 
due to a re-valuation of units of account).  As most 
issues had been resolved in the June committee meeting, 
very little budget discussion took place.  End summary. 
 
2. U.S. Mission rep attended the October 8 Finance 
Committee meeting.  Per ref a) 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.  The U.S. made one of only two interventions 
on the budget, since most differences had been aired and 
issues resolved during the June committee meeting.  The 
Canadian delegate made the other budget intervention, 
echoing the U.S. statement on ZNG and adding a call for 
private funding of certain projects. 
 
3. A draft resolution on arrears was discussed at some 
length but eventually dropped, primarily because of a 
controversial provision that several nations, including 
the U.S., did not support.  That provision stated that if 
a member nation accumulated five or more years of 
arrears, its contribution would no longer be included as 
part of the organization's annual budget calculations. 
The U.S. (along with the UK, Canada, Japan and Mexico) 
opposed the provision on several grounds, but primarily 
because simply eliminating arrears from budget 
calculations is not an acceptable means of combating non- 
payment of dues and would send the wrong message to those 
non-payers. 
 
4. To clarify questions raised in ref a) para 3, nations 
who have accumulated two or more years of arrears already 
lose their right to vote in the General Assembly.  The 
possibility of stricter sanctions was considered, but the 
Secretariat advised against a more harsh type of 
 
SIPDIS 
suspension or outright expulsion.  The Secretariat argued 
that it is better to keep as many nations as possible as 
members and to continue to approach the arrears issue on 
a case-by-case basis.  The committee agreed that a "tool 
box" approach, or a combination of carrots and sticks, 
would be best and the resolution was sent back to the 
Secretariat for additional work.  The issue will not be 
 
SIPDIS 
formally presented before the General Assembly next 
month. 
 
5. The SYG appealed once again for a more realistic view 
by member nations of the resources necessary to keep the 
organization running and accomplish its goals.  Since 
1998 the Deputy SYG, who retired on September 30, has 
worked full-time hours for half-time pay.  In addition, 
all of the SYG's pension costs have been and are being 
paid by the German university from whom he is on extended 
leave.  Add the depositary function of the Cape Town 
Convention, a mandatory task for which there have been 
only voluntary contributions thus far, the SYG argued, 
and it is easy to see that the current level of activity 
cannot be sustained by the current level of resources. 
 
6. Comment: Mission wholeheartedly agrees with the SYG's 
sentiments expressed in para 5.  The organization spends 
less than two million euros annually and the Department, 
particularly the Legal Advisor's office, has made no 
secret of the fact that UNIDROIT's work is not only 
 
SIPDIS 
important for U.S. industry, but is a bargain.  The 
Deputy SYG's retirement and interim replacement, the 
Capetown Convention depositary function, and the need for 
an electronic document library are all chronicled in ref 
b) and present additional examples the organization's 
inability to carry out its core functions at its present 
level of funding.  Given the above, Mission reiterates 
its previous statement that the organization is worth 
considering as an exception to the mantra of zero nominal 
growth. 
 
HALL 
 
 
NNNN 
 2004ROME03992 - Classification: UNCLASSIFIED