signed to provide enough funds to pay the most urgent bills and to see these peace and security operations, as nearly as they can be foreseen, through 12 to 18 months beyond July 1, 1962. Fifth, the plan was adopted by the Acting Secretary General after consultation with key delegations, including our own, and agreed upon after careful consideration of all available alternatives. Sixth, the bond issue itself is based squarely on the principle of collective financial responsibility of the entire membership. It does not relieve any members of their obligations for outstanding debts to the United Nations. And it would bring the abnormal U.S. share of the cost of peacekeeping down to the fair-share basis on which we are assessed for the regular administrative expenses of the United Nations. We believe that these basic facts and ideas about the U.N. financing plan, including the bond issue, add up to the most hardheaded and workable program that could be devised under the circumstances to resolve the present financial crisis. In particular, it does what both the authorizing committees and the appropriations committees of the Congress have repeatedly urged on executive branch witnesses in recent years: it takes active steps to collect arrearages, and it reduces the U.S. share of the cost of peacekeeping operations. Mr. Chairman, the questions which have been asked in the course of your hearings so far indicate your close interest in the financial workings of the United Nations. Ambassador Klutznick will speak, from his intensive firsthand experience, on the history and current state of U.N. finances and on the specific steps now underway to get the U.N.'s financial affairs on a solid footing. Senator SPARKMAN. All right, Mr. Ambassador. FINANCIAL HISTORY OF THE UNITED NATIONS Mr. KLUTZNICK. Mr. Chairman, and members of the committee, Secretary Cleveland has indeed set a record in brevity with a statement. I don't have a statement and I hope I can be reasonably brief. His description of me and my activities requires some enlargement and some apology. My personal background is more business than law, and the title Ambassador was given me, and I accept it most graciously, by act of the President. My activities in the U.N. have concerned not alone the Fifth Committee but the Economic Committee in the last session, and I should like to address myself, therefore, if I may, to some of the pertinent points that I believe have been raised in these meetings to date. The first of these is a simple question: In view of the fact that the bond proposal will be dependent upon payments into the regular budget for its retirement, is it a fact that we should be so concerned about the future and the regular budget? There is always a tendency in considering financial matters to draw general conclusions from isolated facts. I must say from my experience with the regular budget of the United Nations, and the voluntary budgets that there is no basis in past history for concern as to the future and that is about the only basis on which one can judge. It is very important that we look at the history of the regular budget and how it's been met, and the sense of fiscal responsibility that has existed in the discussion of the normal obligations of this institution. This is not an easy institution with which to deal. We are wont quite frequently to look upon the U.N. as if it had powers that a government has. It doesn't have. It has the power to assess, it does have The obligation to collect but it can't levy against any state, and it cerfainly can't put the head of the state in jail if they don't pay. There is another difficulty that is not frequently understood about the UN, in fiscal matters. Those of us who work in the U.N. usually represent either a ministry of foreign affairs or the State Department, and we are involved in political discussions and diplomatic discussons, and when we vote for the regular budget we have to go home and fulk either to the Treasury or the Minister of Finance, who is not present at all at the time that the commitment is made. And it is our experience that sometimes there is quite a gap between The diplomacy that takes place in the U.N. and the Minister of Fipunce or the Exchequer back home who may feel the pressure of a local program much greater than the need to pay the financial obligations due to an international organization such as the U.N. In hight of this, I think the record of the regular budget from purely a business point of view is utterly amazing. I have before im a careful study of the years from 1956 through 1961. It is a very interesting thing that happened. ECPION OF REGULAR DUES FROM U.N. MEMBERS At the end of a calendar year for which assessment was made, the normal trend was that about something under 90 percent was paid in that your It was higher in 1956 when it was 89.62 and lower in 1000 when it rouched a low of 82.96 when a number of new states were introduced and their arrangements had not yet been made for payment. But it has bounced back to about 86 percent in 1961. Hur myespective of whether in the first year it was 83 or 89 perpont, in the second your in every instance it has reached approximately Da porvont, varying from D4.46 to 95.08, and invariably in the next Yeal to all intents and purposes, a hundred percent had been fully Pso that for Dad, by the end of 1968, 99.98 percent had been colA ད་ང། plai, by the end of 1939, 99.87 had been collected. The little wd and oud wore always picked up in the next year so that you had * Audiosd potvont volleorion FA DAN Phe end of 1960, pp 94 percent had been collected. FAS DANA by the end of 1961, 99.91 percent had been collected. And Would I pusdienable their by the end of this year that for 1960 * Xektvol poissor will have been paid Y MY niemont, the pattern plus the working capital fund play $700ched to tide over not this kind of lg payment, makes jung rusan kalde rent of collections in an organization of this 1104 exemmed ny expersona, an indi 1 am sure Senator *****, #ˆpevk ga eziye's eve en zie mar before, A of collection » Nader app'sado list if no a to My or past Now, to give some indication of what happens in a live organization, the first day of these hearings reference was made to the status of the collections at the end of 1961. I have taken the trouble, sirs, to secure the very latest information in that regard, and in the month or more that has passed, there has already been paid toward the 1961 budget an additional $1,682,000. I will supply a copy of this for the record. COUNTRIES ALREADY PAID ON BUDGET FOR 1961 Senator AIKEN. Can you tell us now what countries paid that? Mr. KLUTZNICK. I will be delighted. The payments made were by the following countries in the following amounts toward the 1960 budget: Albania, $11,000; Austria, $30,000; Byelorussian S.S.R., $236,766; Chile, $160,056; Greece, $21,419; Nepal, $21,157; Panama, $23,367; Philippines, $133,013.50; Rumania, $20,000; Ukrainian S.S.R., $909,202.22; Cyprus, $24,811; Senegal, $37,217. That was toward the 1961 budget or a total Senator SPARKMAN. How much was that Cyprus figure? Mr. KLUTZNICK. $24,811. Senator SPARKMAN. That is the full payment? Mr. KLUTZNICK. That is right. Senator SPARKMAN. I just happened to be looking at the figure. Mr. KLUTZNICK. That is right. Now, the 1960 budget Senator AIKEN. That is very encouraging, but how much of that was paid on the assessments for UNEF or the Congo operation? Mr. KLUTZNICK. I am talking on the regular budget only at the moment, Senator. Senator AIKEN. Do you have the list of how much has been paid for the other budgets, too? Mr. KLUTZNICK. I don't have the latest on that; I don't have it on hand. Senator AIKEN. You must have. Mr. KLUTZNICK. I don't have it with me. Senator AIKEN. You should have. You shouldn't come with one set of figures and leave the other figures at home. Senator SPARKMAN. He is dealing now with the regular budget. Mr. KLUTZNICK. I am dealing with the regular budget. Senator AIKEN. Aren't you going to tell us? Mr. KLUTZNICK. I am going to tell you everything I know and some things I don't despite the wonderful introduction I received. The 1960 budget: Cyprus, $2,287; Senegal, $3,431; Byelorussian S.S.R., $8; Hungary, $100,000; Nicaragua, $6,147.75; Paraguay, $5,500; and toward the 1959 budget, Paraguay, $15,451. A copy of this will be made available for the record. Now the total for 1960, $1,628,008.72. Senator SPARKMAN. Was that the amount paid? Senator SPARKMAN. What is the balance? BALANCE STILL OWED FOR 1961 Mr. KLUTZNICK. Well, the balance toward the 1961 budget is $8,099,878.41, due from various states. Senator SPARKMAN. 3 million of which is owed by one country. Mr. KLUTZNICK. Yes. Approximately. And for 1960 toward the 1960 budget, $117,373.75, leaving a balance of $3,167,876.05, a good part of which is also owed by one country. In 1959 Senator SPARKMAN. That is a little in excess of 212 million. Mr. KLUTZNICK. That is correct. As between the 11 million plus one country owes substantially half of that. And toward 1959, the payment of $15,000 left a balance of $37,885 unpaid. Now, in our judgment, may I say, in my judgment, this represents quite a good record of payment on the regular budget. I must say that, and quite quickly, that in my capacity as the representative on the Economic and Social Council, I also serve on the governing council of the Special Fund and Technical Assistance Committee, and we handle the New York end of the Congo stabilization fund or economic fund as well as the Committee of 8 that was recently established, and if I found anything in my experience with those funds, voluntarily contributed, it is that they are most conservatively administered. Most of you undoubtedly know Paul Hoffman who is the Managing Director of the Special Fund and in my judgment is doing one of the inspirational jobs of the U.N. today. He will not permit any permanent contracts to be entered into without resources in hand. Some people charge that would be arbitrary since it would be a voluntary fund. Senator AIKEN. You have the total that was due as of January 1, and the total amount that was due January 1 for all the years up to January 1, 1962, then. Have you totaled it? Mr. KLUTZNICK. Well, it is slightly over $11 million. Mr. KLUTZNICK. Yes; the figure will be supplied. Senator AIKEN. That is a very good record, and it was to be expected. Mr. KLUTZNICK. I agree, sir, that this is a good sound record for this type of organization and I know of no way in terms of addressing oneself to the assurance of repayment in the future than to attempt to evaluate either an organization's character or willingness to pay in the past. Banks do that, and I assume those who buy bonds should do it. get is intry. wardt good pr (The document referred to is as follows:) Record of payments to regular budget as of Feb. 9, 1962 1959. 1960.. 1961 U.N. regular budget: Summary of contributions due and received Mr. KLUTZNICK. Now, with that record the question properly arises where is the trouble in the fiscal picture in the U.N. And the answer is quite simple, and it ought to be isolated, and Senator Aiken and Senator Morse isolated it very well in their report. I wish I could read that report here, it would probably dispose of the whole problem. But historically the whole business of peacekeeping operations, if it had been covered by chapter 7 of the Charter-and if the relationships of the great powers had remained the same immediately after the Charter became operative as it was at the time that the Charter was accepted-if that chapter had been applied and had been completely operative, then it is doubtful in terms of peace and security actions that we would be sitting here today worrying about this fiscal problem. But the general view of the Charter and the general view of the nations gathered there and gathered in the U.N. was that the incidence |