PART III - CONSTITUTIONAL AND ADMINISTRATIVE MATTERS (continued)
PARTIE III - QUESTIONS CONSTITUTIONNELLES ET ADMINISTRATIVES (suite)
PARTE III - ASUNTOS CONSTITUCIONALES Y ADMINISTRATIVOS (continuación)

B. Administrative and Financial Matters (continued)
B. Questions administratives et financières (suite)
B. Asuntos administrativos y financieros (continuación)

25. Other Administrative and Financial Matters (continued)
25. Autres questions administratives et financières (suite)
25. Otros asuntos administrativos y financieros (continuación)

25.2. Replenishment and Level of the Working Capital Fund (continued)
25.2. Reconstitution et niveau du Fonds de roulement (suite)
25.2. Reposición y cuantía del Fondo de Operaciones (continuación)

Igor KIPMAN (Brazil): I am sorry to interrupt, but last Friday at the end of the Session when we voted on the Resolution as amended by the distinguished delagate of Italy, I requested the opportunity to speak in order to justify my vote. The Chairman at that stage was not able to allow me that opportunity because there was no time left for the interpretation. I beg your indulgence, Mr Chairman. I would like to justify my vote today.

My delegation abstained from voting on that Resolution last Friday and I would like to explain why we had to abstain.

My delegation is perfectly aware of the need for an increase in the level of the Working Capital Fund, and we fully recognize that its present level has proved to be insufficient in times of financial difficulties. However, ah increase in its level, together with the increase in our assessed contributions to the Regular Budget, due to adverse fluctuations of the exchange rate, will amount to a level which my country foresees difficulty in managing to absorb.

My delegation has repeatedly mentioned during this Conference the external debt crisis and the difficult economic situation that my country is dealing with. We have particularly referred to the roots of such a situation which is affecting not only our country but many developing nations. Since our views in relation to those problems are well known, Mr Chairman, I shall refrain from tiring you and the delegates attending this Commission with a repetition of old arguments.

In view of the above I regret not having been able to endorse the Draft Resolution as amended by the delegate of Italy.

25.5. Headquarters Accomodation
25.5. Locaux du siège
25.5. Locales de oficina en la Sede

Dean K. GROWTHER (Assistant Director-General, Administration and Finance Department): Delegates have before them document C 87/LIM/37 dealing with Headquarters Accomodation. It has been the Secretariat's duty and privilege to report on the question of Headquarters Accomodation to the Conference and other governing bodies of the Organization over the past years. It is therefore in order to inform the Conference that the LIM document before you has been prepared and distributed to bring everyone up to date on this item.

In introducing this document, I should like to stress that the overall picture of Headquarters Accomodation as reported in this document has taken a positive turn during this biennium. In the Secretariat's view, this development is linked with two events, as reported in document LIM/37: one related to the finalization of a rental contract for Building F; and the other the restructuring project of the Caracalla Complex which is about to be initiated.

The whole biennium has been characterized, as delegations know, by financial difficulties. I wish to record the constant strenuous and generous support received by the Organization from the host Government, and particularly from the Permanent Representative of Italy.

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Whilst I am at the disposal of the Conference to provide further information, I hope Conference will agree with and support the remarks I have made regarding Headquarters Accomodation. The document is before the group, and I or my colleague will be very happy to answer any further questions. Perhaps the delegate of Italy may have some response that he may wish to make.

CHAIRMAN: I thank the Assistant Director-General for his introductory remarks. Are there any questions on this information or any comments.

Elio PASCARELLI (Italy): I am able to add some information that might be useful, to you here and to the distinguished delegates of this Commission, concerning the unfortunate circumstances that have led to this item taking some time to get the ratification of Parliament. You may know from the document and from other statements made in the past that we signed, with the Director-General, the agreement in June last year. Everything was ready and we got the necessary agreement of the different departments after the vacation. Usually Parliament does not work - and this is not unique to Italy - in the months of August and September. When we returned to Parliament to start work, from the Council of Ministers to the Government, all of a sudden we had the financial law. The Bill was shifted to the House, and when it reached the House and was ready to be given to the Committees, we had the crisis - elections, new Parliament, new Government - and then again we had the summer holiday. When we resumed we were ready to start, and, before the Prime Minister took the floor at the World Food Day Ceremony on 16th October, the Council of Ministers again passed the Bill because all Bills lying before Parliament are considered as extinct as soon as Parliament is dissolved. We had to start the whole procedure from the beginning.

On 9th October this document was passed to the House and just as it was about to be given to the Committees to be processed, we had the referendum. Then we had, I cannot call it a crisis but we had certain difficulties that you may know of, and we have the same government as before.

What I can tell the Commission is that we shall give this simple ratification preferential treatment. Meanwhile, I have the assurance from the Treasury that the allotted amount which was Lit 25 billion - equivalent to almost $20 million - has been allocated to the years 1988, 1989 and 1990. The appropriation is there, and I must add for your information that if this money proves not sufficient because of the rate of inflation and the cost increase, the Italian government will provide extra funds to accomplish the works needed by the guest Organization here.

May I underline once again that Italy is proud of being one of the two countries that gives free hospitality to international organizations. All the rest rent their premises to the Organization. Just for the information for some people who have been in doubt, the rent for this complex would be around $8 million a year. We do not plan to change this system. Sometimes we are paid late, $1 per year by cheque; we are satisfied with it.

Concerning the premises that the Organization has meanwhile been forced to rent at via Cristoforo Colombo, Mr Crowther probably said something about this. I was late coming here, for which I apologise but there is a plenary going on for voting on the Council. This rent - and he may correct me if I am wrong - has for the last two years been completely covered by Italian contributions and so it costs the Organization nothing. Nevertheless, in the new budget you will find the sum. I will do my level best, as they say in India - I do not know whether it is pure English or Indian English! - to get some special contribution again because we realise that it is not the Organization's fault if the enlargement of the buildings has not yet started. Therefore, we will do our best to relieve the burden on the Organization for the remaining buildings outside this complex.

I have nothing more to add, and I am ready, as is Mr Crowther, to give any answer to requests for clarification.

CHAIRMAN: I thank Ambassador Pascarelli of Italy for his explanatory remarks and may I add that I trust he will use his influence to speed up the parliamentary procedure.

If there are no further questions to be addressed to Mr Crowther or to Ambassador Pascarelli, may I state that Item 25.5 is concluded?

I will ask the Secretariat in the meantime if we have the required quorum. Apparently we have the requested quorum for the discussion but not yet for a vote. Perhaps there will be no need to vote. If there are no objections, we will now start on Item 25.3.

25.3. Replenishment of the Special Reserve Account
25.3. Reconstitution du Compte de réserve spécial
25.3. Reposición de la Cuenta Especial de Reserva

Dean K. CROWTHER (Assistant Director-General, Administration and Finance Department): This Agenda Item involves the replenishment of the Special Reserve Account and it refers to document C 87/LIM/13.

Members of the Commission will recall that the Special Reserve Account was established by Conference Resolution 18/31 to protect the Programme of Work and Budget against unbudgeted additional costs to cover losses on exchange on staff costs resulting from movements in the lira/dollar rate as compared with the adopted budget rate. The level of this account is established at 5% of the total effective working budget for the biennium. For the 1986/1987 biennium it was US$ 21,850,000. Due to the additional staff costs arising from the weakening of the US dollar against the Italian lira, the account was entirely exhausted in July of this year. In fact, the forecast deficit on the account at 31 December 1987 is estimated to be approximately US$ 7,5 million, which would be charged against the account.

The Council discussed possible ways to replenish this Account and decided, on the advice of the Finance Committee, that the best solution was to propose the replenishment of the Special Reserve Account with a special assessment of up to one-half of its level and the balance from the application of receipts from arrears contributions, or from future savings. Following extensive discussion, during which several members agreed with the proposal while others agreed only to replenish through arrears or savings, or reserved their position, the majority of members supported the recommendation. We therefore submit, as recommended by the Council, the draft resolution contained in document C 87/LIM/13 to the Conference for adoption.

The Draft Resolution has on the back a blank space for the amount that would be included. If I could ask members to turn to page 2 of the Resolution, in the penultimate paragraph which has the figure "l.", they can insert in the blank space in that paragraph the amount of "$US 12 309 000". The very brief explanation of this is that the level of the Programme of Work and Budget voted on Friday was $US 492 360 000, and the Director-General has in his wisdom, as I had just explained, requested that the Council agree to two and a half percent, or one-half, of the normal amount of replenishment of the Special Reserve Account. Two and a half percent of that level of the Programme of Work and Budget is $US 12 309 000. This amount would be assessed against the call for contributions that would go out for payment early next year.

I cannot emphasize too greatly the importance of the Special Reserve Account to our being able to carry out effectively the Programme of Work and Budget. The main reason there is because we cannot determine in advance what might happen to the lire/dollar relationship. In prior biennia, when the dollar has strengthened it has created a surplus which has been distributed to the membership, and in the biennium that has just finished the dollar has, as everybody knows, weakened dramatically and so reduced the account.

Replenishment gives us some degree of assurance, and therefore protection against further weakening of the dollar during the year to come. No-one really knows what is likely to happen. It is forecasted that the possibility certainly exists that the dollar will continue to weaken for at least some part of 1988. We have no way of knowing - but in order to protect the Organization against such losses we, together with the wisdom of Council, are recommending favourable consideration of this amount by the Commission.

CHAIRMAN: I thank Mr Crowther for his statement, and open the floor for remarks, questions and discussions on item 25.3.

Elio PASCARELLI (Italy): I shall give you the reason why I hastened to request the floor on this item: As Mr Crowther said, behind this proposal is the wisdom of the Council, and I would say that

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behind the wisdom of the Council was the wisdom of the Finance Committee. We had a long debate on it, and what you see in "1.", the operative part of the Resolution, is the result of our discussions within the Finance Committee. As host country, we have a very deep concern for the prospects, and it would show tremendous lassitude if we did not take care of the Special Reserve Account.

I would like to be more optimistic than Mr Crowther and hope that after the drastic measures taken on the United States budget the dollar will not fall any further - I see some encouraging signs in the first reaction of the world market. I do fervently hope that the dollar will recover the level of 1300 - but only God knows, and we do not know if God is going to help us. I think that this twelve and a half million that we forecast is a must, and I would like some countries to explain to me how we can use the savings unless we cut the programme. It is a preposterous position to use savings to fill the Special Reserve Account, as the first to suffer would be the overall situation of the FAO. If I am not wrong, we exhausted the previous Special Reserve Account in the month of July, and for six months we went on spending, so that by the end of the year it was minus seven, or even eight, because the dollar has fallen further in the last month. I believe that every fifty lire that the dollar loses is the equivalent of over two million dollars in our overall budget.

Italy could not support with more vigour the adoption of this half measure, because we do not replenish as we should and we keep our fingers crossed that this money will never be used.

Y. HEIDSMA (Netherlands): At first sight this Resolution deals with a matter which is entirely different to that which we discussed last week, the Working Capital Fund. It relates to unforeseen and therefore unbudgeted cost increases which are mainly due to exchange rate fluctuations - which are not, of course, really anyone's fault. However, when one looks at the Resolution before us it seems clear to our delegation that the Special Reserve Account was really never intended to be filled through an assessment. It was intended to be filled through, as we understand it, three other means; one, from the cash surplus; two, from payment of arrears; three, if these two should fail, from the general fund. While we understand the difficult position in which FAO finds itself at present, and while we fully agree that one cannot really predict exchange rate fluctuations during the next biennium, nevertheless in a final analysis what this amounts to is that we are being asked for a special assessment, basically, because other member states did not meet their financial obligations - be it the largest contributor or any other member states in arrears. As we said, I believe, very clearly at the time when we discussed the Working Capital Fund, the Netherlands is not prepared in principle to pay such an amount, because other members do not fulfil their obligations.

I should like to explain that our position on both the Working Capital Fund and the Special Reserve Account bears no relationship to the confidence we have in the financial management of the Organiza­tion. On the contrary, we appreciate the way in which the Organization has so far confronted the issue of the financial crisis. We also want to make our contribution to the difficult process of finding widely acceptable and effective ways of resolving the crisis and if we cannot go along with either this proposal or the proposal on the Working Capital Fund it is because we consider this to be in the longer term interests of the Organization.

Let me assure you, Mr Chairman, that for the Netherlands the financial well-being of the Organization is in fact a minimal condition for a proper discharge of the tasks which member states have set in the Organization; but in order to achieve a healthy financial state the member states should focus on durable solutions, not on, as we see it, stop-gap measures such as the one now before us. The conclusion for my delegation cannot be but that we unfortunately will not be able to support this resolution, and will have to vote against it.

A. Daniel WEYGANDT (United States of America): Mr Chairman, the other day your Vice-Chairman ventured the opinion that those who speak in opposition tend to speak for longer than those in favour of a proposal. Therefore, I shall try to be as brief as I can, even though I have to say from the outset that my delegation continues the opposition to this proposal that we have already expressed in the Council. The reason for that is that we basically feel that this is not the time for an additional assessment to be levied on member states and that the replenishment of the Special Reserve Account should be achieved by savings in the programme.

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I can really conclude my statement on that note, as we have already explained our position elsewhere, and I gather that we are behind in our schedule - so I have tried to be as brief as possible.

André REGLI (Suisse): Ma delegation n'a pas de problèmes à accepter la proposition de reconstituer le compte de réserve spécial pour le prochain biennium. Il n'y a donc pas de problèmes quant à l'acceptation du projet de résolution qui nous est soumis. L'objectif principal de ce Compte consiste à équilibrer les pertes causées par des fluctuations des taux de change. Ce sont là des contraintes dont le Secrétariat n'est pas responsable. C'est pourquoi, nous avons, à notre avis, le devoir de l'aider à résoudre ce problème.

Dans ce contexte, nous aimerions rappeler la suggestion que nous avions faite antérieurement devant la Commission II et qui a été reprise par d'autres délégations, c'est-à-dire que le Secrétariat étudie sérieusement la possibilité de calculer une partie du montant du budget en lires, et en fonction de cela les contributions respectives des Etats Membres dans la valeur nationale du pays hôte. Ainsi, nous mettrions à l'abri des fluctuations monétaires, la grande partie du budget étant dépensée dans le pays hôte. C'est d'ailleurs une méthode qui va être adoptée par l'ONUDI à partir de l'année prochaine.

Ronald DEARE (United Kingdom): I think that it is perhaps a matter for some regret that we did not discuss Item 25.4, about the general financial situation of the Organization first, before we dis­cussed this item and the item we have already completed on the Working Capital Fund. I think that it would have been a more logical way of dealing with things. We will certainly have something more to say on the general financial position when we get to Item 25.4. I think that this point was underlined to a great extent by what our distinguished colleague from the Netherlands said in his intervention just now.

But coming to this resolution before us, my delegation believes that when forwarding it to Conference this Commission should recommend formally that the Finance Committee be instructed to take up again with all urgency the question of a dual currency budget for FAO. This point was touched upon by the Swiss delegation who spoke immediately before me. We were recently told - I think it was by Mr Shah - that the expenditure of this Organization is split roughly 40 percent in US Dollars, 40 percent in Italian lire and 20 percent in other currencies. The major exchange problem has arisen on the 40 percent of expenditure incurred in lire. That is my understanding, but I stand to be corrected if I am wrong. It has arisen because the dollar equivalent established for this expenditure as long ago as November 1985 has proved to be woefully inadequate. It seems to my delegation that FAO could at least eliminate this particular problem if the lira element of the budget were to be retained in that currency with assessments on member states being raised in lire for that element. Thus, each member state would receive an assessment in US dollars in respect of 60 percent of the approved expenditure level and in Italian lire for the balance of 40 percent. In this way, the Organization could hopefully avoid the gamble which is at present involved in converting this substantial element of expenditure to US dollars on an exchange rate ruling on one particular morning in November, a mor­ning some three years or so in advance of the date by which expenditure is required to be completed. Indeed, Mr Chairman, it is four years ahead in the case of TCP expenditure.

It seems to us that the introduction of a dual currency budget along these lines could remove one of the major problems of the Special Reserve Account and introduce a welcome degree of improved sta­bility to the programme and budget process.

In conclusion, I would urge that this Commission should make this recommendation to the Conference with a view to an examination by the Finance Committee and hopefully a decision on this matter by the next Conference.

Ms Anne-Lise PETERSEN (Denmark): The Danish delegation appreciates the Organization's need for sufficient funds to meet the current financial obligations. we also voted in favour of the increase in the Working Capital Fund because we accept the argument that the present level of the fund is not sufficient to support the General Fund at the current budget level.

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Concerning the replenishment of the Special Reserve Account, my delegation realizes that the currency situation has exhausted the fund. We have previously, as other delegations, mentioned that long-term solutions to the currency problems ought to be dealt with. However, concerning the proposed model for the replenishment, we have especially noted paragraph 3.55 in the report of the Sixty-first Session of the Finance Committee where the committee expresses concern at the prospect of additional assessments being levied on all member nations, as the payment of arrears for previous biennia would provide substantially for the replenishment of the account.

As already stated on previous occasions, the Danish delegation is opposed to solutions where the non-fulfillment of obligations by some member states causes extra financial burdens for other members, having paid their contributions. During the last Council meeting, my delegation therefore expressed its reservations concerning the proposed model for the replenishment of the Special Reserve Account where 50 percent of the repenishment shall be provided by making a special assessment on member states. Not being against the replenishment of the Special Reserve Account as such - for instance, from receipts of arrears of contributions - our reservation concerning the proposed model still remains, and consequently my delegation cannot vote in favour of the resolution as presented.

Rainer PRESTIEN (Germany, Federal Republic of) (original language German): Since 1950 my country has been a member of FAO, and since 1973 it is also a member of the United Nations. Our positive approach to the United Nations and its specialized agencies is very well—known. We shall certainly continue our very fruitful cooperation with the United Nations and its specialized agencies. In this respect we have constantly stressed the fact that the Organization of the United Nations must receive the necessary means in order to be able to fulfil their very important tasks. In this respect we have to consider financial matters, and it seems to me that the colleagues in this room of the Secretariat and the delegations of the member states are far more competent than myself to do so. As to the suggested increase of the fund, we had expressed our views recently. In our delegation we have come to the condors lorn that as regards the replenishment of the Special Reserve Account, this should also apply, in fact, as to the working capital fund. We feel that the replenishment by special contributions is not defensible as long as there are a series of member states who have not yet in fact paid their arrears. When these arrears are paid they will amount to about one-quarter of the 2-year budget in 1986, US dollars 24.9 million. Thanks to the payment of these arrears, the replen­ ishment of the Special Reserve Account could automatically be accomplished without any special assessment.

In the draft resolution it is suggested to replenish the Special Reserve Account only up to 50' percent. But here again, I think that my previous comments apply also. Therefore, as regards the suggested draft resolution as set out in C 87/LIM 13, I am afraid we cannot agree with it.ere l should like to go along with the observations of the Netherlands and Denmark.

Jean-Luc GRAEVE: (France): Ma delegation souhaite marquer certaines réserves face à la proposition du Secrétariat d'une reconstitution du Compte de réserve spécial par des contributions exceptionnelles des Etats.

Ma délégation fait observer qu'en donnant son accord et en votant le budget proposé par le Directeur général, elle a accepté pleinement de financer un effet change responsable d'une hausse de plus de 40 millions de dollars du budget. Aussi nous parait-il prématuré d'envisager maintenant une contribution exceptionnelle au compte de réserve spécial, qui ne pourrait être justifiée que par une baisse durable du dollar par rapport au niveau actuel. Or l'existence éventuelle de cette baisse ne pourra être constatée que beaucoup plus tard, au cours du prochain biennium.

Par ailleurs ma délégation donne son appui aux remarques faites par plusieurs délégations, notamment celles de l'Allemagne, du Danemark, des Pays-Bas et du Royaume-Uni, concernant le transfert de charge sur les Etats qui s'acquittent promptement de leurs obligations financières à l'égard de la FAO.

Ma délégation souhaiterait finalement appuyer les propositions faites par le Royaume-Uni et je crois aussi par les Pays-Bas, visant à ce qui soit étudiée la possibilité que la partie du budget dépensée en lires soit comptabilisée et versée en lires par les Etats Membres.

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JOHN LYNCH (Canada): Most of what I was going to say has already been said. We can support those delegations who have intervened to indicate their reluctance to support this particular proposal, not because of the principle involved - the principle of having both Working Capital Fund and Special Reserve Accounts which are adequate to meet the Organization's needs - is one which my country supports. However, it is more the circumstances or context surrounding this particular proposal. First of all, as some delegations have already noted, the FAO - that includes the Secretariat and the membership - has considerable work to do on an urgent basis with respect to the use of alternative currencies, either a package basket of currencies or a split currency. We believe that that work should have been followed up even more quickly than it has, and we would give priority to it in the future.

Secondly, we are concerned by the combined effect which the increase in the Working Capital Fund, the increase in the Special Reserve Account, and the increase in the Budget itself will have upon many countries, including our own. Thirdly, we would like to indicate that with respect to all of these measures, there seems to be an unwillingness to deal with the budget and the related financial measures in an integrated fashion. We do not yet know whether we at this Conference are going to be able to deal with the question of possible adjustments in programmes. It appears strange that we have got everything ready - to use a farming analogy - for the planting of a spring crop except to know how big an area of ground we are going to actually seed. We have spent a great deal of time here polishing up the equipment, oiling the machinery, but when we actually sit down to it, we do not know whether we are going to be seeding an acre or more than that.

We believe that it is very important for this Conference to look actually at that missing element of our work here, which is exactly what programme adjustments we are going to adopt in this Organization to deal with the financial crisis which is fast approaching us. I would point out in this context that the next financial year begins approximately one month and one week from now. I believe that if we can take measures with respect to the Working Capital Fund, the special Reserve Account, the withholding of the cash surplus and the other items being declared, that it would be possible for this Conference to look at programme adjustments which will be encumbent upon this Organization beginning January 1, 1988. I would encourage us later on in our Agenda to attempt to take a look at those necessary items of our Agenda.

Ms Josephine KAMSVAG (New Zealand): The delegation of New Zealand would like to associate itself with the comments made on the Special Reserve Account by the distinguished delegate of the Netherlands, and has drawn the same conclusion. My delegation will therefore not be supporting the draft resolution before us.

Antonio C. DE ALMEIDA RIBEIRO (Portugal): Mr Chairman, my delegation's position remains basically the same as the one we have pointed out for the replenishment of the Working Capital Fund. We do understand the reasons the Organization has to ask us now for the replenishment of the Special Reserve Account, and we strongly support the efforts that the Director-General is doing to cut expenditures in those cases in which it is possible to do it, but unfortunately we deeply regret not to be in a position to support extra contributions to the Regular Budget, and therefore at this stage our position is again for an abstention in this matter.

Mounir KHORAYCH: (Liban): (Langue originale arabe): Je voudrais poser une question au sujet du premier paragraphe du projet de résolution. Je citerai le texte arabe mais je pense qu'il est tout à fait conforme au texte dans les autres langues. Le texte stipule:

"la Conférence, notant que le Compte de réserve spécial a été complètement épuisé au cours de l'exercice 1986-87 à cause des pertes sur les dépenses de personnel due à la baisse du dollar par rapport au taux de 1760 lires pour un dollar utilisé pour le calcul du budget.."

Il me semble que l'inverse est vrai, car le taux de change du dollar a baissé par rapport au taux de la lire italienne. C'est ce que j'ai compris d'après le texte qui nous est soumis, si je me trompe corrigez-moi.

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En ce qui concerne le projet de résolution dans son ensemble, nous l'appuyons, étant donné la situation financière difficile que connaît l'Organisation et que nous connaissons tous, pour permettre à l'Organisation d'assumer ses obligations jusqu' à ce que la situation s'améliore. Ceci est tout à fait conforme à notre position à l'égard de l'augmentation du Fonds de roulement que nous avons approuvé la semaine dernière.

CHAIRMAN: I would ask Mr Crowther to give certain remarks related to the question, and maybe to other remarks which have been presented in the statements and interventions of the delegations.

Dean J. CROWTHER (Assistant Director-General, Administration and Finance Department): Perhaps I could answer the last question first since it is fresh in everyone's mind. The wording in the resolution concerning the exchange rate fluctuation in the English text and therefore I gather in the Arabic text makes reference to the Lira/Dollar exchange rate. I think the important matter here is the fact that it is the exchange rate that has fluctuated. Whether or not you take the dollar as compared to the lira or the lira compared to the dollar, in either event the dollar has weakened and the percentage either way works out to a decrease on the dollar side, and the most important aspect in the wording I think is the fact that we refer to the exchange rate and these two currencies that have been involved. In that sense I think the wording is accurate Mr Chairman, but we certainly do take the point of the representative from Lebanon.

Mr Chairman, I would like to make reference to a few points that have been raised during the debate this morning, and I do appreciate the concern and interest that have been shown by the delegate. I think that there may be some distinctions drawn that are perhaps not as clear as they should be.

First off I think it is important to make reference to the work that has been done by the Finance Committee and by the Council. I have the impression from several delegates that as a matter of urgency we should go back and study a basket of currencies of various types, a split assessment and perhaps some other measures. I am sure that most of the delegates will recall such measures being discussed in the June Council following a report by the Finance Committee, and that this matter has again been taken up with the Finance Committee even as late as September. Mr Chairman, the Finance Committee has studied I think at least four different options for correcting this problem and it made certain suggestions to the Council, but the final results of the Council have been included both in the Council's report and are reflected ultimately in this resolution before you. I would not want to leave the impression that these matters have not been studied. Quite frankly they have been studied very thoroughly. There are arguments for and against each of the alternatives that have been suggested, for example on the split payment in lire and dollars. While again this would solve the situation in certain cases it would be the reverse when the dollar was strong, but to the Organization this creates an enormous cost. We literally have to run two accounting systems. For all those assessments paid in dollars we have to run all of the set of books in dollars. For those assessments that are received in lire we have to run them in lire, because if you are not to convert from one to the other you literally have to have a complete set of records. As you know our financial regulations call for us to retain our official records in dollars. That does require us, when we receive contributions in lire, to literally make a conversion as of the exchange rate at that day and record them in our official records in dollars. If we were not to do this it would require a change, not just in the financial regulations but in our method of record keeping, at fairly substantial cost. I am not at all sure that that substantial cost would be offset by the savings that may be incurred. Mr Chairman, if we look back on the number of biennia when we have had a particular problem of assessment in Special Reserve Account I think we would find, other than the original establishment, that this is the first time the Organization has presented a proposal through the Finance Committee and the Council to the Conference to replenish through assessment. In prior years there has been sufficient fluctuation which has created improvements in the lire/dollar exchange rate to allow the topping off in most instances of the Special Reserve Account by way of a surplus, and the surplus therefore has been distributed. At that time, of course, there were no recommendations coming forward that we should make a change. I think it is important, Mr Chairman, that the fact that the dollar has weakened so dramatically during the past two years has created this situation, and while certainly none of us expect the dollar to continue to weaken at that rate during the next biennium, we still think that there is a need for some degree of protection.

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The proposals made to say that the Organization should absorb the amount of the replenishment of the Special Reserve Account is in effect a request to the Organization to reduce its budget by that amount. Since the Programme of Work and Budget has been carried out, has been voted upon at the existing level, literally we have no authority to reduce that budget. Mr Chairman, our hands are tied; we have very little option at this point, and we therefore must come to this position of requesting some replenishment. We thought that a request for one half would be an appropriate one, and certainly the Finance Committee wholeheartedly supported that and ultimately the Council supported that. It is certainly right for debate; it is certainly right for a complete and full understanding, but unless we have some degree of protection in the Special Reserve Account I do not see any way that the Organization can carry out its Programme of Work and Budget and at the same time not be protected against exchange rate fluctuations, particularly on staff costs. Every effort will be made, and I can give the assurance certainly of the Director-General, that everything will be done to alleviate and to minimize exchange rate fluctuations. Every management effort will be taken to gain the highest amount of interest on deposits that are received to avoid any other possible offset on exchange rate fluctuations, but there is no way that we can guarantee there will not be fluctuations in excess of those that we are able to accommodate.

Mr Chairman, there has been reference made to the concern that the good payers have against those who do not pay, and there again it depends a little on who is not paying at the time of course, because there is a difference in the mix of those who are not paying in the last biennium versus prior biennium. Nonetheless I think it is fair to say that with the exception of the unusual situation that the United States finds itself in, most other countries find that they are able to pay, if not in the current biennium then in the subsequent biennium. We normally run a rate of arrears of between 8 and 10 percent other than that of the United States. We do expect that all countries will pay their portion eventually. That means certainly that we will not receive the entire one half replenishment during the next biennium and we must come to the realization that that is the case. That really means that we have to protect ourselves from currency fluctuations by some other means by the amount that is not received. Again every effort will be made to minimize those fluctuations so that we do not have to take other measures.

The sum and substance, Mr Chairman, is that the replenishment of the Special Reserve Account as a minimum to the one half level is absolutely essential for the Organization to use to carry out its Programme of Work and Budget. We take that very seriously and will make every effort to make the most efficient use of all monies received and to avoid any further fluctuation to the degree that we have any control over them. Most of the fluctuation itself we cannot control.

I think, Mr Chairman, that addresses the issues that I have raised. Perhaps there are some that Mr Shah has picked up that I have not, and with your permission perhaps we can have him address those. Thank you, Mr Chairman.

Ms Janet Lesley TOMI (Australia): I originally just wanted to strongly associate the delegation of Australia with the very lucid explanations that have been given by a number of delegations. I refer to the reasons provided by the Netherlands, France, United Kingdom, United States and Canada because all of the issues they canvassed explained the difficulty the Australia delegation had with this proposal, and we will be voting against this draft resolution.

Beyond that I would like to take up one point made now by Mr Crowther that the Secretariat's hands are now tied because the budget has been approved. This indeed is a point that I think a number of delegations made in Commission II, that it would have been far more we think desirable that we could have looked at this range of various proposals to deal with the financial difficulties facing the Organization if they could have been taken first, and then we would have had the opportunity to look at the Programme of Work and Budget in toto.

Unfortunately, this has not been the case, and therefore we feel the discussion now going on with regard to this particular Item is in some sense very meaningless.

I have also a question to ask that may derive from my ignorance, I understand from what was said by an earlier delegation - I think the Netherlands - that there is provision to replenish the SRA from the drawing-down of general funds. I note from document C 87/LIM/41 that as at 31 December 1987

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there is going to be an unobligated balance of some $25 million. I am wondering whether this money in some way cannot be drawn down to replenish the Special Reserve Account rather than looking to additional levies.

My only other point is that although Asutralia is a member both of the Finance Committee and the Council we here are attracted to the proposal of the delegate of the United Kingdom that the Finance Committee be asked to study the feasability of split currency assessments. I appreciate from what Mr Crowther has said that apparently this has already been done, but it may have been done in the absence of full knowledge of the ration of actual currency disbursements.

Patrick Oliver RYAN (Ireland): We are not very happy with the proposal that the Special Reserve Account be partially replenished on this occasion by special assessment. Equally on the other hand we cannot accept that it be replenished from programme cuts. Therefore we support this resolution. We were also going to support the suggestion from the delegation of Switzerland and the United Kingdom that the Finance Committee examine as a matter of urgency the payment of assessment in special currencies, but following the explanation by Mr Crowther of the difficulties, we suggest that States continue to protect the Organization against currency fluctuations, by not missing payments.

Ansoumane SAGNO (Guinee): Après examen du Document C 87/LIM/13j'éprouve vraiment quelques inquiétudes quant au point 1, du projet de résolution. Mon pays ne siège pas au Comité financier et au Conseil. Ces organes méritent tout notre respect, comme l'avait dit lors d'une de nos séances, le distingué Représentant de l'Italie, parce que tous les membres qui siègent ont été élus démocratiquement. Cependant la crise financière que traverse la FAO découle du fait que certains Etats Membres n'arrivent pas à s'acquitter de leurs obligations. Il est clairement dit dans le Document C 87/LIM/11 au para­graphe 4 que 22 Etats ont effectués des versements partiels et 45 n'ont fait aucun versement en 1987.

Ce qui signifie que 68 Etats sont en situation irrégulière, soit 43% de l'ensemble des Etats Membres. En plus, le projet de résolution qui nous est soumis notifie des inquiétudes concernant le versement des contributions du plus gros bailleur de fonds, autant cette année que durant le prochain biennium de l'exercice.

Dans ces conditions, est-ce possible de demander à ces Etats Membres de faire une contribution extraor­dinaire? Et ce, étant donné que l'ordinaire n'est pas réglé? Ou alors cette demande s'adresse-t-elle seulement aux Pays Membres capables de s'en acquitter? Si tel est le cas, le projet de résolution devrait en tenir compte pour éviter à cette demande un caractère obligatoire.

Je pense qu'un appel volontaire pour reconstituer le compte de réserve spécial dont l'importance n'est pas à démontrer serait favorablement accueilli auprès des Etats Membres.

Nous devons user de toute l'action nécessaire pour porter le Compte de réserve spécial à son niveau statutaire à condition que cela n'entraîne pas des obligations financières supplémentaires pour les Etats Membres qui auront des difficultés pour s'en acquitter. Pour cela nous devons compter sur les services du Secrétariat qui grâce à ses initiatives très habiles a toujours réussi à nous tirer de l'impasse.

Masahiko YASUMURO (Japan): Concerning the replenishment of the Special Reserve Account for 1988-89 my delegation considers that the Special Reserve Account is an important system for securing the full implementation of the programme of work in cases where it may be affected by dollar fluctuations. We believe that long-term financial measures of this kind should be studied and considered as soon as possible. We believe that the replenishment of the SRA is clearly needed at this stage, so my country has no difficulty in supporting the draft resolution.

Pedro SEBASTIAO (Angola): Nous serons très brefs. Mon pays appuie le projet de la résolution qui nous est soumise. C'est tout.

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Milan KARIC (Yougoslavie): En ce qui concerne la proposition de la reconstitution du compte de réserve spécial, je voudrais rappeler l'intervention précédente de ma délégation sur l'augmentation du Fonds de roulement. C'est pour ces mêmes raisons que ma délégation, dans les grandes lignes, ne peut pas accepter cette résolution parce qu'il s'agit de nouveau d'une augmentation 'financière supplémentaire' des pays membres.

Amilcar Spencer LOPES (Cap-Vert): Je serai très bref, la délégation cap-verdienne appuie le projet de résolution pour la reconstitution du Compte de réserve spécial pour 1988-89, tel qu'il est annoncé dans le document C 87/LIM/13, et ce, pour les mêmes raisons qu'elle avait appuyé une augmentation du Fonds de roulement.

Ernst ZIMMERL (Austria) (original language German): We have difficulty in giving our agreement to the new contribution when many countries are in arrears. I think we should take up the proposal of the delegate of Switzerland in order to consider the special currency assessment. In that case, replenishment may become absolutely unnecessary.

If I may say a few words regarding the comments about the financial regulations, they can be modified we think. There is also the fact that two budgets make things even more expensive. A calculation in two different currencies costs more, but in view of the fact that one is asking for additional contributions from Member States we should consider whether these additional costs should be borne or not.

In this respect, I would like to make a suggestion. In trade between countries or states, an importer who orders a product at a given price in a given country can have a system of insurance against exchange rate fluctuations. This might also be possible for FAO contributions - or something along those lines.

Mourad BENCHEIKH (Algérie): Je vous remercie d'autant plus volontiers que vendredi soir, lorsque l'Algérie voulait expliquer son vote concernant le Fonds de roulement, le Secrétairat avait fait état, ou le Président qui présidait, de l'impossibilité qu'avaient les interprètes de rester au-delà de 18 heures. Chose qui m'avait beaucoup frappée dans la mesure où des interprètes assumaient la Commission I et la Commission II. Toujours est-il que mon intervention ici voudrait constituer plutôt une réponse immédiate au problème du compte de réserve spécial et faire une réflexion à haute voix sur la démarche qui nous est proposée ici et qui consiste en quelque sorte à demander aux Etats Membres des contributions supplémentaires.

La délégation algérienne avait démontré qu'elle était tout à fait opposée à l'augmentation du Fonds de roulement et ceci pour plusieurs raisons:

- La première est la plus évidente; c'est que l'Algérie traverse à l'heure actuelle un certain nombre de difficultés économiques qui la conduisent à une politique d'austérité très stricte.

- La seconde c'est que l'Algérie en votant favorablement pour le budget, a consenti un sacrifice supplémentaire et a voulu, ce faisant, montrer son attachement à la coopération multilatérale.

- La troisième raison, qui me paraît non moins importante, c'est qu'en définitive, la démarche qui nous est proposée tend à occulter le véritable problème des arriérés. L'Algérie est en effet persuadée que si tous les pays faisaient face à leurs arriérés (et faisaient face régulièrement à leurs arriérés), et si tous les pays prenaient l'engagement de régler leurs contributions dans les délais, le problème auquel nous sommes confrontés à l'heure actuelle n'aurait pas lieu d ' être.

En conclusion de cette réflexion générale, je voudrais dire que cette augmentation de contributions comme augmentation du Fonds de roulement de réserve spéciale, ainsi que d'autres mesures, pose le problème qui est le suivant: qui est de demander aux bons payeurs de continuer à payer pour les mauvais payeurs et cette démarche est inacceptable pour mon pays.

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Or je ne sais pas dans quelle mesure une question aussi importante que cette augmentation des contributions ne ferait pas l'objet en plénière d'un vote au deux tiers. C'est une façon je crois, qui serait tout à fait en harmonie avec le Règlement général, avec la coutume de l'Assemblée générale des Nations Unies. C'est une décision qui serait très importante et très grave et l'Algérie souhaite qu'on la traite avec toute l'attention qui lui est due.

Je conclus en disant qu'il faut bien comprendre que ceux qui ne payent pas et ceux qui ont décidé de ne pas payer ne paieront pas davantage ces contributions supplémentaires. Ceux qui ont l'habitude de payer pourraient être fortement incités à s'engager aussi sur la voie des arriérés surtout si on les obligeaient à répondre d'une façon ou d'une autre, aux résolutions qui risqueraient d'etre adoptées.

Antoine SAINTRAINT (Belgique): Je vous remercie de me donner la parole. Ma délégation souhaite justifier son vote d'abstension à propos de la reconstitution du Fonds de roulement. Nous avons expliqué que notre délégation estimait que les bons payeurs ne pouvaient se substituer aux débiteurs défaillants. En ce qui concerne la reconstitution du fonds du compte de réserve nous émettrons le mime vote que celui que nous avons émis à propos du Fonds de roulement pour la raison que j'ai déjà eu l'occasion d'exprimer. En fait et en pratique un minimum de 40% des dépenses de la FAO se font, au Siège, en lires italiennes. La Belgique est un membre fidèle et actif de la Communauté économique européenne et elle estime qu'il serait souhaitable que dans un très proche avenir on puisse étudier la possibilité d'un budget qui puisse être partiellement libellé en lires italiennes ou en monnaie européenne, par exemple, l'ECU, de façon à ce que soient couvertes dans de bonnes conditions les dépenses faites au Siège. Il est clair pour les pays européens, payeurs en monnaie européenne soulageraient la FAO qui ne réglerait qu'en partie les fluctuations des taux de change actuels du dollar. C'est une idée qu'en tant que Membre fidèle de la Communauté économique européenne nous défendons et nous souhaitons que dans un très proche avenir on puisse en arriver à cette formule qui est déjà retenue dans d'autres Organisations internationales (peut-être pas parmi les plus importantes), mais dans certaines Organisations à Genève, la formule est déjà retenue à l'heure actuelle. Nous souhaiterions que le problème soit très rapidement étudié par le Comité des finances de façon à ce que les pays de la CEE puissent apporter leurs contributions dans une monnaie pour laquelle les soubressauts des taux de change n'interviennent que de façon beaucoup plus réduite. Il est clair que le problème serait en grande partie réglé si les pays européens pouvaient apporter leurs contributions en lires italiennes ou en ECUS européens. C'est la raison pour laquelle, sur la reconstitution du compte de réserve spécial, nous émettrions un vote d'abstension qui ne doit pas être interprété comme une position de principe opposée à la reconstitution du Compte de réserve puisque nous savons qu'il y a un problème qui se pose. Nous voudrions également souligner l'importance qu'il y a d'apporter une solution à la question de l'entièreté du budget par rapport au dollar américain.

Elio PASCARELLI (Italy): After the various interventions here, I have some remarks and some questions. First of all I want to assure the distinguished delegate of Belgium that the idea of using a basket of currencies - for instance, ECU - was examined in two sittings of the Finance Committee. The objection then was that with ECU we do not have the dollar in the basket. What our distinguished friend Saintraint has just said, that we should use ECU for half of it and dollars for the rest of it, seems really attractive. We plan to pursue this idea urgently in the Finance Committee.

As Mr Crowther said, the lira/dollar has also been discussed there. I am sorry to hear again that the Secretariat is against it, but we would like the Secretariat to work a little more, and since they have Finsys/Persys, and plenty of new devices to make calculations very rapidly, I think that they ought also to help their own Organization to find a way out of its difficulties.

On the substance of the matter, I am sorry to hear even some members of the Finance Committee, who have decided to find a compromise solution of the 50 percent replenishment, now changing their minds. I do not know whether they are our to wreck the Organization or to keep it safe and sound. If I saw my roof falling on my head I would not look at what the others were doing, I would hold it up. That is

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my view. I am sorry to repeat once again the slogan of a Prime Minister of Italy 90 years ago, Sidney Sonnino, who used to say “Quod Aliis licet tibi non”. In other words, we do not follow the example of the worst but we try to follow the example of the best. May I remind you that if just one-third of the last cash surplus had been put aside we would be able to cover this special Reserve Account because many of the countries present in this hall hastened to get back their part of the cash surplus in the fact years and now in the lean years they refuse the Organization the means that it needs to protect its programme. Fat years and lean years: this Organization has lived on fat years for many biennia

casn surplus. Mr Crowther can say

mai. they uuc less than a couple of million dollars that the Organization received from us in the fat years and distributed as cash surplus. I can speak loudly because my country was the first to encourage the other member countries for the sake of the Organization not to claim back now the cash surplus of 1984/85 since it is equitable to leave in the hands of the Organization what the Organization gave back in the fat years.

Now we have had a terrible biennium which exhausted completely in one-and-a-half years all the protection that the Organization had. By the month of July we had nothing more in the Special Reserve Account. Italy went beyond that. We did not defer the claim, but abandoned that in the hands of the Organization. It would be very easy to say:"For replenishing $625 000, we left in your hands $1 600; use that money!" No, Sir, we are going to pay that because we believe we have to sustain, to support, this Organization to overcome its difficulties. We pray to God that the difficulties will not be so severe as they proved in the last biennium, but it would be unfair not to give the funds to the Organization that is obliged to fulfil and execute the approved programme.

I would like the Secretariat to explain to my friends here how much of the cash surplus accumulated because of the fluctuations, because the reason for the depletion of the Special Reserve Account is not the non-payment of arrears; it is the fluctuation of the dollar mainly. You can say what were the percentages that caused this depletion and what is the percentage of the cash surplus that accumulated because of the fluctuation of the dollar.

Ronald DEARE (United Kingdom): Like my distinguished colleague from Italy, I must say that I was somewhat surprised at the apparent lack of flexibility in the response of Mr Crowther to the point that had been raised about a dual currency budget. I am well aware, of course, of the work that has been carried out in the Finance Committee and in the Council, but I for one do not accept that that should be the end of the matter. I think this is an on-going problem that needs, on-going study. As was noted by the distinguished Ambassador from Belgium, this split currency budget has been adopted by other agencies in the UN system and has just been adopted by UNIDO at its recent General Conference in Bangkok.

Again, I share the surprise of the distinguished Ambassador of Italy that with all the sophisticated and expensive computer equipment in which the Organization has invested for, amongst other purposes, financial accounting, it is not possible to contemplate the introduction of a dual currency budget.

I can understand the difficulties, but it seems to me that the suggestion that has been made that this matter should be given further study is one that everyone in this room, I would have thought, would support.

Whilst I have the floor, could I say that I too would be interested to hear the answer to the question put by the distinguished representative of Australia about unobligated balances. My delegation fully accepts the need for the Organization to have a Special Reserve Account, but we do not necessarily at this stage accept that it needs to be replenished by a special assessment on members. We are not convinced that there are not other ways in which this might be achieved. As I say, the distinguished delegate of Australia has asked a question and I would be very interested to hear the answer to that.

V. J. SHAH (Director, Office of Programme, Budget and Evaluation): One of the questions raised in this very lively debate was about the surpluses in earlier biennia which can be attributed to favourable movements of exchange rates.

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In 1984/85 the excess of income over expenditure was $34.7 million, and the balance of the Special Reserve Account in excess of the 5 percent required for the subsequent biennium was $9.8 million.

In 1982/83, when the excessive over expenditure was US$ 46.2 million, the excess balance of the Special Reserve Account was US$ 13.7 million. In 1980/81, the excess of income over expenditure was only US$ 6 million, and the balance of the Special Reserve Account in excess of the five percent was US$ 1.1 million. That is as far back as we go.

One question which has been repeatedly raised in the debate is: why a special assessment? The distinguished delegate of the Netherlands in fact started off by saying that a Special assessment was not even intended by resolution 13/81 referring to the Special Reserve Fund. Allow me to try and explain.

There are several ways in which that resolution foresees the replenishment of the Special Reserve Account for the subsequent biennium. The first course is that any balance of funds remaining in the Special Reserve Account would be carried forward; we are in a situation where the funds were used up in July. The second method is that any portion of the cash surplus would be witheld and credited to the Special Reserve Account; we are not going to have a cash surplus. The third is the use of sums received in payment of arrears.

This is certainly a possibility which is envisaged, and is part of the proposal before you. To rely entirely on arrears involves two major dangers: firstly, that we do not know what part of the arrears - and especially the arrears of the largest contributor - will be paid in the next biennium: we just do not know; secondly, there is the danger that even if they were going to be paid, or there was a good chance that they would be paid, unless these arrears during the next biennium are paid right at the beginning of the biennium, we start the biennium very open, very vulnerable to risks.

The possibility of any other means of replenishing the Special Reserve Account is provided in the operative paragraph, paragraph 6 of resolution 13/81, which foresees the possibility, and permits the Director-General to submit proposals to the Conference through the Finance Committee and the Council concerning ways and means of bringing the Special Reserve Account up to the level of five percent. That is the operative paragraph. The Director-General of course considered the possibility of replenishing the Special Reserve Account up to its entire level by special assessment, and it is precisely because of his recognition that the burden on Member Nations would be heavy, together with the other burdens involving other proposals before the Conference, that he decided on submitting a proposal which would involve a special assessment for half the amount of the replenishment necessary. It is entirely in recognition of this. The response of many delegations has been to say that if we had had arrears paid we would not have a problem, because we could then use them to replenish the Special Reserve Account: but here I think in all sobriety that it is a question of distinguishing between individual obligations and communal obligations.

It is certainly an individual obligation of every Member Nation to honour its dues; but when the pay­ment of these dues is delayed, does it help the Organization to say "Well, it's not my problem, Jim - you go to Harry, or you go to John and ask him to solve it for you"?

We then come to the question of the communal obligation. Is it the will of the Conference that this Organization should begin the next biennium with an approved programme of work and budget, true, but one which would be exposed to the adverse affects of currency exchange rates? We are not saying that we will spend this money - of course not. If the exchange movements are stabilized, or move in favour of the United States dollar, not only would we not use this money, but the Special Reserve Account would get credits from favourable movements of exchange rates.

This is the balance of the arguments which I would ask the Commission to consider.

May I now turn to the question of alternative solutions? - and I hope my colleague Mr Crowther will not only join me in this, but that we are going to speak with one voice on this because we work very closely together. The Finance Committee has indeed already been instructed by the Council to return to the examination of a system of split assessment in dual currencies, as well as other measures which might be examined. Even if the Finance Committee were to proceed with this with all due speed - and Mr Crowther has assured you that there is the fullest possible intention on the part of the Secretariat to give it every support in its examination - what is possible, in time? In time

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we would get a solution, or several solutions, submitted by the Finance Committee, coming through the Council, coming to you, to the Conference in two years time. Fine - in two years time, the Commission may then be in a position to take any decisions about whether it intends to maintain the Special Reserve Account, with what characteristics, at what level, or find other solutions. But we are addressing the needs of this next biennium beginning in January 1988 and I hope that all those who have suggested that alternative solutions be studied will recognize that, even if other solutions are found - and I am sure that study will lead to other solutions - we need to have some solutions. for application now in the coming biennium.

To dispel any doubt about the attitude of the Secretariat in this matter: we know that the International Atomic Energy Agency was the first to apply the system of dual assessment. UNIDO, as the distinguished delegate of the United Kingdom has pointed out, has only now, at its General Conference, decided to use that. When I last saw the proposals of Unesco for their General Conference - which has just about concluded now - they were proposing to establish a Special Reserve Account. I am sorry that our contributions to this Conference have not permitted us to find out what the outcome was, but that was the proposal going to the Unesco General Conference. In all of the intersecretariat discussions in which my colleague Mr Heim participates in the Consultative Committee on Administrative Questions - finance and budget questions - all of the organizations are agreed that this is something which they are jointly pursuing. So there is no doubt that the matter is under examination and is being pursued by all organizations who do not apply a system yet.

The distinguished delegate of Australia enquired whether the Special Reserve Account should not be replenished from the unobligated funds at the end of this biennium. The figure the delegates mentioned was US$ 25 million, which is the figure mentioned in the document which you will be considering under the next agenda item. However, this figure refers to the cash balance in the general fund, and not to the unobligated funds. I have no doubt that Mr Crowther and Mr Heim will certainly wish to respond in greater detail on this.

Dean K. CROWTHER (Assistant Director-General, Administration and Finance Department): Further to the question raised by the distinguished delegate of Australia: reference was made to the unobligated balances shown in the statement of US$ 25 million, which is composed of two specific figures, one, the bills that will be owed at the end of the year to unpaid obligations - contracts, purchase orders, other obligations which have been entered into - of roughly US$ 17 million, to which an additional amount of US$ 7 million for obligations for similar kinds of things on the TCP Programme - that is, not just to carry forward appropriations, but actual obligations that have been entered into for equipment, personnel, and other items - must be added. The two together comprise USS 25 million. These are unpaid bills - it would be nice to offset other things against unpaid bills, but I do not think our vendors would be too happy about that!

The idea that we can use other funds for replenishing the Special Reserve Account is certainly one that occupies a great deal of attention - finding every way we can to improve the collection of arrears, finding every way we can of savings where possible, is certainly the objective of the Organization; but I am afraid the figure in obligation balances would not be possible.

One last comment on the United Kingdom statement: I certainly did not intend to infer that we would be inflexible. In my earlier comments I did want to explain the discussions that were held in both the Finance Committee and later in the Council on the various proposals which had been prepared. From the Secretariat's point of view, certainly we are perfectly willing and hopefully inflexible, in that sense - we are perfectly willing to accept whatever judgements are made by the governing body. We are at your disposal, and will certainly continue to be so. We do however intend to offer the benefit of the information that has been gained from the studies that have been made and the discussions held by the Finance Committee and Council - but I do not want to imply that the Secretariat would be inflexible on this kind of matter.

Those are the two points I wish to touch on at this stage. I believe that the others have been answered, but we can perhaps continue with the discussion and if there is anything further we will happily respond to it.

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Ms Janet Lesley TOMI (Australia): I would like to thank Mr Shah for his explanation. I was confused by the fact that this document clearly states that the balance is unobligated: I of course understand the difference between unobligated monies and outstanding obligations, and I do wonder why, if this money is obligated, it should be listed in the document as unobligated.

Dean K. CROWTHER (Assistant Director—General, Administration and Finance Department): I am sorry, Mr Chairman, while I have the document, I am not sure of the precise figure. I had thought that the amount I had referred to earlier was the obligated figure. Perhaps the way to overcome this would be for us, following the meeting, just to discuss this specifically, and unless there is further interest we would be happy to. Mr Shah has the answer.

V. J. SHAH (Director, Office of Programme Budget and Evaluation): I believe, if we have the right reference to the statement of the distinguished delegate of Australia, she was referring to an unobligated balance of 25 million dollars. That is in the table at the top of page 2 of Document LIM/42. That unobligated balance of $ US 25 million is the $ US 25 million of savings, programme adjustments leading to savings. That is what we have reduced from the approved Programme of Work and Budget in order to achieve the savings.

Khaldoun SUBAIHI (Jordan) (original language Arabic): Jordan feels that the subject we are discussing at present is a very technical one and falls within the framework of the treatment of a financial situation of the Organization. Therefore, it is perfectly normal for the Organization to turn to the Member States so as to be able in future, for reasons which are beyond the responsibility of the Organization, to meet the needs of the Organization.

An effort, I think, is necessary so as to be able to live up to the expectations of the Organization. My delegation supports the draft resolution.

A. Daniel WEYGANDT (United States of America): Thank you for giving me the floor a second time, Mr Chairman. I hope I am not preempting other speakers who have not yet taken the floor. I simply wanted to intervene at this point to support what was expressed by our colleague the distinguished representative of Algeria with respect to the treatment that we should give this issue when we come to Plenary. I would note that previous speakers have pointed out that the financial regulations would not normally provide for replenishement of the Special Reserve Account by a special assessment. I realize that it is within the scope of our regulations, but it is not a normal procedure, if I may express that opinion. I would also note that in Article XVIII Section 5 of the Constitution we talk about decisions on the level of the budget being taken by a two-thirds majority. I think that the only reason it would be phrased that way, the level of the budget as opposed to the budget as a whole, is because we are talking about the level of assessments that will result from any decisions that we take. It seems to me that our colleague from Algeria has made a very important point here. When we are talking about approving measures that will require an increase in assessments, I think as general matter we should refer this to a two-thirds majority. I have no illusions about the outcome of any vote on this question, but I do think it is an important question of principle that any decisions bearing on increased assessments should have a clear support behind them. That is just my point at this stage.

J. HEIDSMA (Netherlands): I just want to react to one or two things that Mr Shah said in his explanation. First, of course he is entirely right that in the resolution from 1981 there is included in the text the possibility of taking any measure, including a special assessment. What I wanted to say, though, is what contrary to what was stated in the case of the Working Capital Fund where it is explicitly mentioned that there is a possibility of a reassessment, in the case of the Special Reserve Account the word "assessment" does not as such appear in the resolution.

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Secondly, I believe Mr Shah said that we all have two types of obligations, one an individual one and secondly a communal one. I am not entirely sure what he meant by that, but as far as my delegation is concerned we certainly believe that we do fulfil our communal obligations. Certainly, by opposing this resolution we do not think that we do not fulfil this communal obligation.

The third point I wanted to make is, as a matter of information, that of course two organizations have now adopted the dual currency system. There are a few organizations in Geneva, if I am not mistaken - that have a third system, so to speak, by assessing the Member States in the local currency, which is yet another method. I am not proposing it; I am just giving it as a form of information.

Finally, on the two-thirds majority issue, I am inclined, without being an expert on these matters at all, to agree with the United States delegate. But I think it would be helpful if we got some sort of legal opinion on this as well.

CHAIRMAN: Of course it is hard to sum up this discussion, and it is not my intention to do so except by stating that there were different views, and in the four groups of views I have registered some voices for the draft resolution, some other voices for the resolution with certain reservations, some other countries clearly against the draft resolution and some delegations have announced that they would abstain. In that situation, we will ask Mr Crowther to have the floor now with certain suggestions, providing that we have almost the required quorum at this point.

Dean K. CROWTHER (Assistant Director-General, Administration and Finance Department): We have asked for the Legal Counsel to come to the hall to address this issue of a two-thirds majority. Since there is not a clear consensus, I would expect the important thing would be to put the matter therefore to a vote, depending on the chair's wishes. I think the Secretariat probably should make a quick count just to see what the numbers are. When the Legal Counsel arrives he can make a judgement as to which rule should be in effect. It seems to me that should be in order.

J. LYNCH (Canada): This is just about a procedural matter which I think I have voiced before. First of all, I would like to take this opportunity to thank you and your colleagues on the way you have been chairing our sessions. However, as I think you are aware and most of us here are, we have been losing a lot of time in this Commission and also in other Commissions. In this Commisssion it has not necessarily been because of differences of view about procedural items. It is mainly because we do not have enough people to field a quorum. If I could suggest this, given the limited time available to us, we are going to have to look very seriously at whether or not we are going to be able to finish our work. In general my delegation believes that the Organization of this particular Conference into three Commissions is perhaps a mistaken idea. There appear not to be enough delegations who have sufficient people to man three different Commissions at the same time. Therefore, I would make the suggestion on a specific basis that there not be overlapping meetings of Commissions because it appears that we are unable to meet the minimum number required. In future, I would suggest - and we will hopefully make this suggestion - that with respect to some of the items being discussed in this Commission it would make more sense and also help us in achieving a quorum if these items could be dealt with in Commission II or whatever Commission dealt with the Programme of Work and Budget. This particular suggestion is made because, one, we seem to be awaiting events, and one of the events we are awaiting is sufficient numbers, and it appears to be appropriate to raise it that it appears from previous things that we have lost at least two or three hours waiting for sufficient people to be available for a quorum. This is a feeling I have from talking to some delegates that other people sensed that we are not quite working properly. This is not in any way intended to be a criticism of your Chairmanship because I think both you and your colleague have been very, very fair and firm in your Chairmanship. It is just a question that the bodies will not come .

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CHAIRMAN: I thank the distinguished delegate of Canada for his kind words' addressed to the Chair. Of course, we do our best and I share your view that we waste too much of our time waiting until a quorum will be ensured, etc. We have to realize that we are beyond the schedule so it is my intention to do whatever is possible to conclude this item, which is a very important one. Again, I will ask the Secretariat to count the present delegations to see whether we have reached the quorum or not. We have now exactly 69 delegations.

J. HEIDSMA (Netherland): I am thinking aloud together with the Chair about how we can solve this issue. I do not know if it is procedurally possible, but why do we not just continue with the next item, and as soon as we have a quorum we interrupt the discussion on that item, take the vote and continue with the item? I am not sure if it is possible, but it would be helpful in view of the time we have left.

CHAIRMAN: Theoretically it is possible, but we are so close to reaching the quorum that I am afraid that if we postpone the vote, for instance to the afternoon session, we may have a situation much worse, that is fewer delegations present than we have now. Maybe we shall again ask the Secretariat to try to find whether in the other Commissions there are some other delegations available. To make certain of the reply to your suggestion, I will ask Legal Counsel.

LEGAL COUNSEL: I understand that the question which has been asked is, in view of the fact that the Constitution provides that a two-thirds majority vote is required to determine the level of the budget, whether a two-thirds majority vote is also required in order to adopt the resolution that you have before you. The Constitution and the General Rules of the Organization do not lay down any specific rule on the rather exceptional measure that you are in the process of considering. However, it is quite clear that certain specific items do require a two-thirds majority, and these are listed in the General Rules in a footnote on page 32 of the English version of the Basic Texts. There is no specific requirement applying to the Special Reserve Account and in the absence of, shall we say, an exceptional provision - because a two-thirds majority is an exception to the normal rule, which is a simple majority - I do not believe that a two-thirds majority is required in this parti cular case.

A. WEYGANDT (United States of America): I would like to thank Mr. Roche for his response to my question. In fact my question was not exactly as he put it however. My point was simply to say that the intent that I see in Article XVIII Section 5, requiring a two-thirds majority clearly talks about the level of the budget, and the only rationale that I could come up with for such a phraseology, would be that in terms of dealing with the levels of the budget you are dealing with the level of assessment. Here we are dealing with a measure that requires additional assessment and I was wondering whether there are any provisions elsewhere in the text. I am familiar with the provisions that he has listed for us on page 32 of the English text, but if there are any other provisions dealing with matters of assessment requiring a particular majority I have, over the weekend, tried to find such a reference and I am unable to find anything, and it seems to me that in general legal practice you take the nearest equivalent precedent as the basis for your decision.

The other question I think is simply a matter of principle, and that is that if we have one clear precedent requiring two-thirds majority when you are establishing assessments, does it not make sense to continue to require that, even if the assessment in question is a relatively small one? I would simply also, recalling the statement made by my distingushed colleague from Algeria who was noting that elsewhere in the UN system on important questions there is a provision for two-thirds majority, so it seems to me that there is a certain amount of ambiguity about this situation, and I think it really should be something that perhaps deserves additional thought if you would allow me Mr Chairman.

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CHAIRMAN: I have just been informed by my colleaguess that we are trying to increase the number of the delegations and asking some people to come in from Commission II, so maybe we can have few minutes more of patience.

Elio PASCARELLI (Italy): Since we have some time to waste I would like to bring my contribution. I have been trying to recall everything I learned at the university on international law, company laws and the statutory prescription of majorities. I am rather inclined to agree with my American colleague that eventually we might need a two-thirds majority, but this is a Commission and we have a Plenary that has to approve our report. We can postpone, if need be, the vote to that Plenary, and there I can assure you that no Commission will be meeting when the Plenary discusses this point.

This is my personal idea to help you spend the time.

A. Daniel WEYGANDT (United States of America): Indeed it has been pointed out to me, both over the microphone and without the benefit of the microphone, that I was not sufficiently clear on where I was asking for the two-thirds majority. I had thought that in my first intervention on this subject I made it relatively clear that I was talking about the Plenary. I am not talking about the Commission. We cannot get half the people here so there is no sense in looking for a two-thirds majority an any event. I am really only talking about the Plenary, and I certainly thank my Italian colleague for making that addition to my proposal.

Leopoldo ARIZA HIDALGO (Cuba): También en la misma línea del colega de Italia, quisiéramos aprovechar estos minutos para explicar un criterio: la Dirección Legal no ha dado una clara respuesta sobre si se necesitan los dos tercios o la mayoría, aquí, en la Comisión. Yo creo que debería precisarse esa situación antes de seguir adelante, porque la delegación que inpugna esta situación tampoco ha explicado si eso es producto de que están los textos básicos, sino que él considera que es así, pero aquí no estamos en consideraciones individuales, sino con textos que dicen sobre esta situación gráficamente, o no dicen nada.

LEGAL COUNSEL: I assumed that it was generally accepted that the question of a two-thirds majority did not arise in terms of the discussion in this Commission. The reply I gave was in fact a reply to the point as explained just now by the delegate of the United States. My reply was directed to what would happen in the Plenary.

Ronald DEARE (United Kingdom): I thought I would take this opportunity to speak in support of what was said earlier by our distinguished colleague from the United States on my right. Far be it from me to take issue with our distinguished Legal Cousel since I am not a lawyer, but I always under­stood that if there is no specific provision for a particular circumstance, one would go to the nearest possible relationship or precedent. It is quite clear that our distinguished forebears who drew up these Basic Texts certainly envisaged the need for a two-thirds majority in the case of the budget assessment by virtue of the specific wording of the provision to which the delegate of the United States referred, and I would argue that since there is no specific provision which says that a supplementary assessment for the Special Reserve Account - or the Working Capital Fund for that matter - is subject only to a simple majority, the precedent of the two-thirds majority required for the level of the budget is very relevant to this question. Therefore I would support very much the arguments advanced by my distinguished friend on the right.

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Michel MOMBOULI (Congo): J'arrive un peu tard de la Commission II pour venir compléter le collège des Membres de cette Commission afin d'atteindre ·le quorum.

Entre-temps, j'ai pu profiter des interventions de certains de nos collègues pour essay-er de compren­dre de quoi il s'agissait.

Si j'ai bien compris, nous sommes en train de poser la question de savoir si nous allons procéder maintenant au vote pour la reconstitution du compte de réserve spécial, et si en la matière il existe des dispositions dans les textes de base de l'Organisation.

Je formule la question suivante:

Est-ce que le Conseiller juridique pourrait nous dire clairement s'il existe des dispositions dans les textes de base qui concernent la reconstitution du compte de réserve spécial, selon lesquelles il serait nécessaire de procéder à un vote?

Si la réponse est affirmative, nous pensons que dans ce cas-là le vote pourrait avoir lieu en plé-nière et pas en Commission.

Si par contre il n'y avait aucune disposition concernant un vote pour la reconstitution du Fonds de réserve, on pourrait peut-être dans ce dernier cas se contenter d'un simple consensus.

Nous demandons donc au Conseiller juridique de clarifier la situation. Est-ce que pour reconstituer le compte de réserve il est nécessaire de procéder à un vote? Si c'est oui, nous sommes obligés de nous soumettre à cette disposition. S'il n'y a pas de dispositions, dans ce cas, à moins que certaines délégations n'exigent un vote, il faudrait peut-être accepter le consensus.

J'aimerais donc avoir l'avis du Conseiller juridique pour savoir ce qu'il y a lieu de faire.

CONSEILLER JURIDIQUE: Je crois que la réponse que j'ai donnée au distingué délégué des Etats-Unis est très claire. Il n'y a aucune disposition, dans les Textes fondamentaux, prévoyant un vote excep­tionnel nécessitant une majorité des deux tiers dans un cas pareil.

Le délégué du Royaume-Uni a soulevé la question de faire une comparaison entre un vote sur le niveau du budget et la résolution qui est devant vous. Il a estimé qu'étant donné qu'il n'y avait rien de précis dans les textes, il fallait suivre la procédure qui était prévue dans un cas qu'il estime similaire.

En dernière analyse, surtout quand il s'agit d'une question qui n'est pas spécifiquement réglementée, il appartiendra à la Conférence en séance plénière de décider la majorité requise.

Toutefois, j'aimerais préciser qu'un vote à la majorité des deux tiers est une exception et n'est prévu que dans certains cas qui sont spécifiés dans les textes.

En l'absence d'un texte régissant précisément la question qui est devant vous, s'il y a une diver­gence d'opinions entre les Etats Membres ici représentés, il faudra que la Conférence prenne une décision sur la question de savoir si, dans ce cas, un vote à la majorité des deux tiers est néces­saire.

Michel MOMBOULI (Congo): Je voudrais tout d'abord remercier M. Roche de ce complément d'information qui était très utile. Après l'avoir entendu, nous ne pouvons pas demander. davantage. Puisque nous sommes ici en Commission III et non pas en séance plénière, d'après les explications que M. Roche nous a données,c'est la séance plénière qui devra choisir quel est le mode de sanction à donner à cette opération que nous voulons effectuer. Tout ce que nous pouvons faire,.c'est conduire le problème à la séance plénière qui décidera s'il faut procéder par un vote aux deux tiers, ou par un vote à la majo­rité, ou par simple consensus. Pour le moment, nous ne pouvons pas faire plus. Nous laissons la question ouverte. La Commission présentera le problème à la séance plénière qui devra se prononcer sur la procédure qu'elle jugera la meilleure. Lorsque le choix aura été fait, nous nous contenterons de suivre en fonction de ce choix.

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Leopoldo ARIZA HIDALGO (Cuba): Nosotros estaríamos de acuerdo en todas sus partes con la propuesta del Congo; sin embargo, de la respuesta del Sr. Roche se puede inferir claramente que no hay nada legislado. Lo que no está jurídicamente legislado no creo que pueda inventarse, y no podemos convertir esto tampoco en una asamblea legislativa nueva para los textos básicos.

Las ideas, las interpretaciones, pueden ser libres, y muy variadas; por lo tanto creo que hay que atenerse a lo que ha explicado el Sr. Roche y a lo que ha ratificado ahora el distinguido represen­tante del Congo: no estamos en un Plenario; estamos en una Comisión y por lo tanto no está legislado que aquí tengan que exigirse dos tercios.

CHAIRMAN: We have finally achieved a quorum so now we can vote on this draft resolution. I remind delegations that this draft resolution is contained in document C 87/LIM/ 13. The precise amount was given by Mr. Crowthe:r, and is US$ 12 309 000. We will vote by show of hands.

Vote by show of hands
Vote à main levée
Votación a mano alzada

The draft resolution was adopted by 36 votes to 17 with 23 abstentions
Le projet de résolution est adopté par 36 voix contre 17 et 23 abstentions
Por 36 votos contra 17 y 23 abstenciones queda aprovado el proyecto de resolución