Congress is coming under increasing pressure² to pay the arrears of the United States to the United Nations (U.N.) in the amount of $1.293 billion. Much confusion surrounds the debate on this issue; the U.N., the U.S. Department of State, and Congress disagree even on how much the United States actually "owes." The Department of State, for example, calculates the arrears to be just $712 million. Although the United States is paying over $500 million to the U.N. in 1999 alone, Congress is withholding some of the money the U.N. says it is owed in order to force the organization to reform. This is appropriate because instances of waste, fraud, and mismanagement at the U.N. are well documented.

Congress soon will debate legislation on paying the arrears, but it will be pressed to provide the funds unconditionally by failing to require the U.N. to reform. This would be a mistake. In the past, the U.N. implemented reforms and refrained from objectionable activities only when the United States threatened to withhold--or actually withheld--some of its assessed contributions. Yet supporters of the U.N. argue that (1) the United States is reneging on its obligations; (2) the U.N. is reforming (or already has reformed); and (3) nonpayment of U.S. arrears undermines the influence of the United States at the U.N. There is no justification for these charges. Consider:

• The United States is the single most generous benefactor of the U.N. It pays 25 percent of the U.N.'s regular budget--more than the combined assessments of 177 members; from 1995 through 1998, it paid $2.6 billion to the organization's three budgets,³ and an additional $1.4 billion to its affiliated agencies;⁴

• The U.N. has failed to implement many necessary reforms despite the ample evidence of its waste, mismanagement, and fraud;⁵ and

• Historically, the influence of the United States at the U.N. has not depended on payment of its arrears.

For the most part, the Senate Foreign Relations Committee ignored the false arguments when it drafted the Foreign Relations Authorization Act for Fiscal Years [F.Y.] 2000 and 2001 (S. 886). This bill, which was placed on the Senate's calendar on April 27, 1999, includes a bipartisan plan to pay $926 million in arrears in return for specific U.N. reforms that is similar to an agreement between Congress and the Administration in 1997. This legislation, S. 903, would have paid $926 million in arrears to the U.N. in return for such specific reforms as enacting sunset provisions for U.N. programs and capping assessment levels for member states.⁶

Unfortunately, S. 886 contains provisions that would allow the Clinton Administration to ignore two key reform requirements, and it fails to mention some of the reforms included in previous legislation. This is a mistake, because the reforms called for in S. 886 would represent only the first steps toward the goal of overhauling the U.N. American taxpayers would be better served if Congress continued to press for all the reforms it sought in 1997.

Congress should continue to use its "power of the purse" to persuade the U.N. to reform. It should pay no more than the U.S. Department of State calculates. It should remain steadfast in demanding that the U.N. reform itself in return for payment of U.S. arrears. Moreover, it should demand that the Clinton Administration work to bring U.N. assessment levels in line with the caps Congress enacted. Congress should change the current practice of paying U.N. assessments nine months late by making payments before they are due, a practice Congress followed until 1982. This would help to avoid confusion about what the United States actually owes. Finally, Congress should refrain from its practice of paying the minimum amount of arrears necessary to maintain the U.S. vote in the General Assembly.

UNDERSTANDING U.N. BUDGETS AND ARREARS

Much of the confusion in the debate over paying U.S. arrears to the U.N. is caused by the fact that the U.N., the U.S. Department of State, and Congress calculate the amount "owed" in different ways. Some Members of Congress have come to a contrary conclusion: that the U.N. actually owes money to the United States.⁷ An understanding of the ways in which the U.N. assesses the dues of each of its member states should help to clarify such misunderstandings.

Disputed "Arrears" of $472 Million

According to the U.N., the United States is in arrears in the amount of $1.293 billion as of December 31, 1998. The U.S. Department of State, however, calculates the amount of U.S. arrears to be substantially less--about $712 million, a difference of $472 million.¹⁵

The difference in the arrears occurs because the United States does not regard the funds Congress withholds as arrears because Congress enacted, and the President approved, the restrictions. The arrears are created by U.S. law. Because international treaties and U.S. laws are equal in weight under the U.S. Constitution, the more recent of overlapping or conflicting treaties or laws would take precedence. Each authorization and appropriations bill, if it does not provide the funding sought by the U.N. General Assembly, overrides the U.S. treaty obligation to the U.N. On the other hand, the U.N. does regard the funds withheld as arrears and continues to charge them against the U.S. account. According to the U.S. Department of State, total withholdings based on U.S. law amount to $472 million¹⁶ --$307 million from peacekeeping assessments, about $162 million from regular budget assessments, and $3 million from the international tribunal budgets. (See Table 1.)

FAULTY PAYMENT JUSTIFICATIONS

Many of those who advocate paying the arrears argue against attaching reform requirements to the payments. But their justifications are faulty:

• Faulty Justification #1: The United States is a "deadbeat" for not paying its dues. Not true.
  The United States has been chastised routinely and incorrectly as a "deadbeat" that reneges on its obligations.²³ The United States is not required to pay the U.N. the dues it assesses, however. Because international treaties and U.S. laws are equal under the Constitution, the more recent takes precedence. Each authorization and appropriations bill, if it does not provide the funding sought by the U.N. General Assembly, overrides treaty obligations to the U.N. At its discretion, Congress can decide not to pay the U.N. any of its assessed contributions. In fact, a good portion of the U.S. arrears to the U.N. are the result of legislated withholdings, and payment of them would violate U.S. law.

Nonetheless, the United States remains the U.N.'s single largest contributor. Every year, the United States pays at least 25 percent of the U.N.'s regular, peacekeeping, and tribunal budgets--more than the combined assessments of 177 other members.²⁴ The next largest contributors to the regular budget are Japan (19.98 percent), Germany (9.81 percent), France (6.54 percent), Italy (5.43 percent), and the United Kingdom (5.09 percent).²⁵ According to the U.N.'s records, the United States paid $589 million to the U.N. regular, peacekeeping, and international tribunal budgets in 1998.²⁶

Moreover, in addition to its assessed contributions, the United States provides generous voluntary financial support to the U.N. for which it rarely receives credit. According to the United States Mission to the United Nations, the United States gave the U.N. system nearly $2 billion in 1998; more than half this amount was voluntary.²⁷

A 1996 study by the U.S. General Accounting Office estimates that the U.S. voluntary contributions to U.N. peacekeeping operations in Haiti, Yugoslavia, and Somalia exceeded $6.6 billion, for which the country was not reimbursed. That amount is over four times the amount the United States owes in arrears as calculated by the U.N.²⁸

The United States is not the only country accused of owing money to the U.N., in fact. According to U.N. accounts, many other member states owe the organization greater amounts than the United States does as a percentage of their assessments. For example, as of December 31, 1998, of the 185 member countries in the U.N.:

1. 161 (87 percent) owed the U.N. for its regular budget, peacekeeping missions, international tribunals, or all three. Of these, 159 countries were in net debt to the U.N.²⁹

2. 67 countries (over 33 percent) had outstanding contributions to the regular budget.

3. On average, over 130 countries had contributions outstanding to peacekeeping missions.³⁰

4. 43 countries owed the regular budget for years prior to 1998. For both the Yugoslavia and Rwanda tribunals, over 140 countries had contributions outstanding prior to 1998, and an average of 119 countries had contributions outstanding prior to 1998 for peacekeeping missions active in 1999 as of December 31, 1998.³¹

5. Secretary General Kofi Annan listed 40 countries³² in February 1999 that were in violation of Article 19 of the United Nations Charter and were liable to have their voting privileges in the General Assembly suspended.³³

Many countries habitually fail to pay their assessments on time or in full. This fact receives little public criticism; but the fact that the United States is not the worst debtor country in the U.N. receives far less notice. Assuming the outstanding contributions as of December 31, 1998, for all member states remained static in 1999, 75 countries would be liable for Article 19 sanctions as of January 1, 2000; and 70 of those countries would have a greater debt to the U.N.--in relation to their assessed contributions--than the United States did (see Appendix B.)

• Faulty Justification #2: The U.N. is reforming or has reformed already. Not true.
  In her February 24, 1999, testimony before the Senate Foreign Relations Committee, U.S. Secretary of State Madeleine K. Albright claimed the "U.N. system has achieved more reform in the last half decade than in the previous 45 years."³⁴ Ironically, this statement also highlights the U.N.'s long-standing resistance to reform. Secretary General Annan announced two reform programs in January 1997, one that included actions he could implement, and another actions that required General Assembly implementation.³⁵ As the following examples of U.N.-recommended reforms demonstrate, they are more show than substance:

1. U.N. supporters claim the organization has cut personnel levels, but their claims are deceptive. The U.N. cut nearly 1,000 positions³⁶ in 1997, largely through a reduction of positions left vacant to bring total employment to 8,500 employees. Unfortunately, this reduction was only temporary. Within a year, the U.N. had increased the number of employees to 8,900 and budgeted for 9,050.³⁷

2. The U.N. Secretariat was "reformed" by merging two departments into one and giving it a new title, renaming two other departments, and creating an entirely new Department for Disarmament Affairs.³⁸ The Secretariat had the same number of major departments and offices (11) as it had before the reform plan was released.

3. Even though the "reformed" Secretariat had the same number of departments, it required a 22 percent increase in high-level management bureaucrats. In 1996, the Secretary General was supported by 26 Under and Assistant Secretaries General and senior officers in the Executive Office of the Secretary General. In 1998, 33 senior officers, including a newly created Deputy Secretary General and three Coordinators supported the Secretary General. In addition, 31 "special/personal representatives or envoys of the Secretary General" not present in 1996 were assigned duty.³⁹

Resolving the U.N.'s most vexing problems--redundancy in programs and inappropriate mandates--requires action by the General Assembly, which is unlikely. The General Assembly lists reform as the 49th item on the preliminary agenda for the upcoming 54th session, and has yet to approve many of the Secretary General's mild reform suggestions proposed in 1997.⁴⁰

Meanwhile, the U.N. system continues to grow. For example, the U.N. requires more money to operate. The General Assembly approved a biennial budget of $2.545 billion in December 1998,⁴¹ which exceeded the budget cap of $2.533 billion sought by the United States (as well as the 1998-1999 $2.532 billion budget) by more than $12 million. The general assembly passed the budget even though the Secretary General had agreed in principle to the cap. Furthermore, the spending increase counters the trend of declining budgets over the previous three regular budget cycles.⁴² In addition, without counting regional development banks and peacekeeping missions, the U.N. system in 1996 included 60 subsidiary bodies or related organizations. By 1998, there were 69 such bodies, an increase of 15 percent.⁴³

• Faulty Justification #3: Nonpayment of U.S. arrears undermines the influence of the United States at the U.N. Not true.
  The United States could be stripped of its vote in the General Assembly because of the amount of its arrears. On November 2, 1998, Congress authorized payment of the minimum amount necessary to avoid suspension of its vote in the General Assembly--$197 million.⁴⁴ U.S. arrears will exceed the amount at which the General Assembly can strip the United States of its vote by at least $140 million in 1999.⁴⁵ Congress will feel compelled to act again.

Congress should realize, however, that even though the United States could well lose its vote in the General Assembly if it failed to pay the arrears, this "punishment" would not harm U.S. interests seriously. Unlike Security Council resolutions, actions taken by the General Assembly are not binding on all member states. Even if the General Assembly voted for resolutions that ran counter to U.S. policy, they would have little real impact.

The Security Council is the U.N.'s principal political body. Only the Security Council can approve U.N. military operations or apply economic sanctions. General Assembly countries are doubly bound by the decisions of the Security Council: They must abide by all Security Council resolutions, and nearly every important decision (including nominations for Secretary General and new members of the General Assembly) must originate in the Security Council. Article 19 voting sanctions would not affect U.S. voting power in the Security Council.

Some critics argue that maintaining U.S. arrears could spur opposition to the U.S. position on key votes in the General Assembly; but this assumes that those countries care more about snubbing the United States than about protecting their own interests. It is difficult to believe that U.N. member states would undermine their own interests by opposing a U.S. policy that they otherwise would support simply because the United States had failed to pay its arrears.

Moreover, controversial policies sponsored by the United States rarely receive unconditional support in the U.N. For example, only once in the past 10 years has the General Assembly voted with the United States on more than 50 percent of non-consensus resolutions. In fact, the United States received the most resistance to its policies during the Cold War, when its U.N. arrears were much lower than they are today. From 1988 to 1994, U.S. arrears were nearly static--ranging from $402 million to $518 million--yet the percentage of times members voted with the United States in the General Assembly increased more than 300 percent between 1988 (15.4 percent) and 1994 (48.5 percent). Even when U.S. arrears were at their peak in 1998, General Assembly member states voted with the United States almost three times as often (44.2 percent) as they did in 1988.⁴⁶ (See Chart 1.)

General Assembly voting patterns since the end of the Cold War show that a U.N. member state's opposition to U.S. proposals is likely to be rooted in the policy itself, not in the amount of U.S. arrears.

THE BIPARTISAN COMPROMISE

The Senate soon will consider the Foreign Relations Authorization Act for Fiscal Years 2000 and 2001--S. 886--which outlines a plan to pay $926 million in U.S. arrears to the U.N. in return for reforms at that organization. The reforms stipulated in this legislation represent the first step toward achieving the goal of overhauling the U.N., but they could be strengthened by including all the reforms sought by the Senate Foreign Relations Committee in 1997. That year, Senators Jesse Helms (R-NC) and Joseph Biden (D-DE) forged an agreement with Secretary of State Albright to pay the U.S. arrears once the Secretary of State certified that specific reforms had been implemented at the U.N.

The effort was a painful compromise for both sides. Senator Helms was forced to approve an excessively large payment to an organization that he regarded as ineffective, and the Clinton Administration was forced to accept reforms it deemed unnecessary and even punitive. The Senate approved the legislation, which would have released $926 million in payments to the U.N. in three installments, by a vote of 90 to 5 in June 1997 and by a voice vote a few months later.⁴⁷ The House approved the deal, but inserted a provision prohibiting U.S. funding of groups that lobby foreign countries to support abortion. Despite his expressing reluctant support of the deal, President Clinton subsequently vetoed the legislation because of the abortion language. The same legislation failed to be enacted again in 1998 due to the abortion provision, assuring that the issue of payment of arrears to the U.N. would be likely to be contentious again in the 106th Congress.

In 1999, the Clinton Administration demanded that Congress weaken several of the reform conditions to which it had agreed in 1997 and 1998. Specifically, the Administration demanded that Congress (1) increase the arrears payment to $1.02 billion (up from $926 million); (2) eliminate the requirement that the U.N. lower the U.S. regular budget assessment to 20 percent; (3) eliminate the requirement that a permanent U.S. representative be appointed to the key U.N. budget committee;⁴⁸ and (4) remove the requirement that the U.N. set up a special account for the remaining disputed arrears.

Wary of continuing to send funds to an organization that has a long history of waste, fraud, and mismanagement,⁴⁹ Senate negotiators on S. 886 ignored the rhetoric and largely held to the 1997 deal to assure that U.S. tax dollars would not be wasted. The Clinton Administration's demands to increase the arrears payment and remove the requirement to place a permanent U.S. representative on the U.N.'s budget committee were not incorporated. The bill would authorize payment of $926 million in arrears to the U.N. and other international organizations.⁵⁰ Before the money can be disbursed, however, the Secretary of State must certify that certain reforms have been implemented. (See Appendix A.)

Although S. 886 is similar to U.N. reform efforts in 1997 and 1998, several provisions in those bills have been dropped, including (1) withholding $50 million from the regular budget payment until the Secretary of State certifies the U.N. eliminated 1,000 positions; (2) capping contributions to the U.N. and over 40 other international organizations at $900 million annually; and (3) granting the Security Council the authority to review the two U.N. peacekeeping missions funded through the U.N. regular budget.

S. 886 also would alter the Administration's authority to waive certain requirements. In the 1997 legislative compromise, for example, the Clinton Administration was allowed to make the FY 1999 payment even if the U.N. had failed to implement one of the following conditions: create a contested arrears account for the disputed amounts; grant the Security Council oversight of the two peacekeeping operations funded through the regular budget; or reform procurement procedures. S. 886 would allow the waiver to apply only to certification that the U.N. had established a "contested arrears" account if "there is substantial progress in meeting this condition."

The provision that would allow the Administration to apply a waiver to the third-year payment certifications changed under S. 886 from applying to all but two requirements (establishing an inspector general and capping the regular budget assessment at 20 percent) to only the requirement regarding capping assessments at 20 percent of the biennial budget for any one member state.

The reforms in S. 886 represent only the first steps that should be taken to promote reform at the U.N. Congress should not hobble those steps by striking reforms that were included in previous efforts to reform the U.N. or by inserting wiggle room in the form of waivers that would undermine the existing reforms.

WHAT CONGRESS SHOULD DO

When the Clinton Administration first sought to weaken U.N. reform conditions, Senator Helms reportedly expected the "administration to stick with the [1997] U.N. reform agreement."⁵¹ Senator Helms sent the right message and largely followed up in the Senate Foreign Relations Committee with S. 886. Congress should strengthen these efforts to reform the U.N. by:

• Reducing the amount of arrears to be paid from $926 million to $712 million as calculated by the U.S. Department of State.
  Despite the State Department's calculation, S. 886 would authorize payment of $926 million. Congress should not pay more than the amount officially recognized by the U.S. State Department.⁵²
  
  
• Remaining steadfast in demanding reforms in return for payment of the arrears.
  Congress is right to insist that the U.N. reform itself before it agrees to pay the arrears. Congress has a duty is to ensure that U.S. taxpayer dollars are not squandered. To this end, Congress should not backtrack on previously agreed-on reforms, including reducing payments to the regular budget payment by $50 million pending certification that the U.N. eliminated 1,000 positions (in relation to the 1996-1997 levels); capping contributions to international organizations at $900 million annually; and granting the Security Council the authority to review the two peacekeeping missions funded through the regular budget.⁵³

In addition, Congress should not consider allowing the President to waive requirements in the legislation under certain circumstances. The "contested arrears" account is a key reform. Placing the amount of contested arrears--some $472 million, according to the U.S. Department of State as of December 31, 1998--in a special account would allow the United States to continue arguing its case without having those "arrears" applied against it for Article 19 consideration until the issue was resolved. Likewise, requiring the U.N. and designated special agencies to cap a member state's contributions at 20 percent of the biennial budget is important. Although S. 886 would not require the U.N. to cap assessments at 22 percent (see Appendix A), allowing the President to waive the required 20 percent cap would cost Americans millions of tax dollars; just 2 percent of the 1998-1999 biennial regular budget represents about $50 million.

• Demanding that the Administration work to bring U.N. assessments in line with the caps Congress enacted into law, as well as placing a permanent U.S. representative on the U.N.'s key budget committee.
  The Senate should take advantage of the opportunity offered by the nomination of Richard C. Holbrooke as Ambassador to the United Nations to press the Clinton Administration on these issues. During the confirmation hearings, the Senate should confront the Administration over its failure to follow through on President Clinton's goals of lowering the peacekeeping budget assessment to bring it in line with U.S. caps. Senators also should press the Administration to place a permanent representative on the U.N.'s Advisory Committee on Administrative and Budgetary Questions (ACABQ), which constructs the U.N. budget proposal. The United States could work to cut U.N. expenditures from within this committee. The Senate should demand a regular detailed update on the status of U.N. reforms, a summary of U.S. payments to U.N. budgets and affiliated organizations and programs, and an annual statement of U.S. arrears. It also should reiterate its opposition to paying arrears under any conditions that are less strict than those proposed in 1997.

• Changing the current practice of paying annual assessments nine months late by making payments before they come due.
  Confusion about the arrears is exacerbated by the different fiscal years observed by the U.N. and the United States. The U.N. fiscal year follows the calendar, while the U.S. fiscal year runs from October 1 to September 30.⁵⁴ Before fiscal year 1982, the United States habitually authorized and appropriated its U.N. assessments in the October before the year for which they were assessed. To realize a one-time budget benefit during the high deficit years of the 1980s, however, the United States essentially skipped one year's worth of payments and began paying assessments to the U.N. and other international organizations during the year in which they were due. As a result, for the first nine months of each year, the U.S. debt to the U.N. is artificially high, increased by the full U.S. assessments for that year--which are more than $500 million in 1999.

Although this discrepancy does not affect the relationship of the United States with the U.N., it does fuel criticism of the United States. Congress should defuse this faulty rhetoric by returning to the normal authorization and appropriation process for the FY 1999 budget assessments and for the FY 2000 budget.

• Refraining from the recent practice of paying the minimum amount of arrears necessary to maintain the U.S. vote in the General Assembly.
  Article 19 of the United Nations Charter grants the General Assembly the power to strip a member of its vote if its "arrears in the payment of its financial contributions to the Organization...equals or exceeds the amount of the contributions due from it for the proceeding two full years." The United States is very close to being held liable for such sanction, primarily because of the 25 percent cap on U.S. peacekeeping contributions, which has pushed the total amount of contested arrears above the Article 19 threshold in the United Nations Charter.⁵⁵ The U.N. has threatened to sanction the U.S. vote in the General Assembly because it has exceeded this amount. (See Appendix B for a listing of other countries potentially facing Article 19 sanction.) To avoid such a sanction in 1998, Congress authorized payment of the minimum amount necessary, about $197 million. The United States is likely to face Article 19 censure in 1999 as well.

Congress should not make a similar payment this year, however. If Congress adopted a strategy of making additional payments annually just to maintain a vote in the General Assembly, it would weaken its moral argument on having the U.N. reform before arrears were paid. Moreover, these stopgap payments are only a temporary solution. Even if the United States were to pay the U.N. all the arrears it recognizes, it still could face Article 19 sanctions in the future if this problem were not resolved because the arrears that would be accumulating consist mostly or entirely of amounts not recognized by the United States, which would make sanctions likely in the long run.⁵⁶ Unrecognized arrears and the need for U.N. reform are important issues, and neither would be aided by making minimal payments in order to maintain a vote in the General Assembly.⁵⁷

This issue is more about the U.N.'s resistance to reform than it is about resistance by the United States to pay arrears. If Congress wishes the U.N. to reform and to forge a lasting solution to the arrears problem, it must be willing to consider sacrificing the U.S. vote in the General Assembly. This loss would be of little consequence because the primary way the United States exerts influence in the U.N. is through the Security Council, and its vote there would not be affected by an Article 19 sanction. It would be regrettable if the United States were to lose its vote, of course, but it is the U.N.'s decision to make. Sending the message that the United States was willing to sacrifice its vote in the General Assembly would demonstrate that, for both Congress and the American public, the stance of the United States on U.N. reform is non-negotiable.

CONCLUSION

Critics that chastise Congress for failing to pay all U.S. arrears to the United Nations are wrong. The Clinton Administration bears equal responsibility for the growing arrears. Congress, and especially the Senate Foreign Relations Committee, has taken the lead in demanding that the U.N. become less wasteful and more accountable for its decisions. Congress has used the "power of the purse" in the past to demand that the U.N. implement long-awaited reforms first. Historically, the only way for the United States to force the U.N. to consider serious reforms has been to threaten its source of funds. Congress should ignore the faulty justifications for paying the arrears without requiring reform and demonstrate that it will not waste the tax dollars of hard-working Americans on this wasteful and poorly managed organization.

Brett D. Schaefer is Jay Kingham Fellow in International Regulatory Affairs at The Heritage Foundation.

APPENDIX:
HOW S. 886 WOULD RELEASE PAYMENT OF U.S. ARREARS TO THE U.N.

For the first U.S. payment, the U.S. Secretary of State would be required to certify that neither the U.N. nor its affiliated and specialized agencies had taken action to:

1. Require the United States to violate its Constitution or laws;

2. Establish sovereignty over the United States or require the United States to cede its sovereignty;

3. Claim authority to impose taxes or fees on U.S. nationals or approve any formal effort to develop, advocate, or promote any proposal to impose a tax or fee on any U.S. national in order to raise revenue for the U.N. or any such agency;

4. Develop, create, or establish any special agreement under Article 43 of the United Nations Charter to make available to the U.N., on its call, the armed forces of any member state;

5. Charge any interest or penalties against the United States in relation to its arrears;

6. Exercise authority or control over any U.S. national park, wildlife preserve, monument, or real property; or implement plans, regulations, programs, or agreements that exercise control or authority over the private real property of U.S. citizens located inside the United States without the approval of the property owner; and

7. Amend its financial regulations to prohibit external borrowing.

For the second payment, the Secretary of State would be required to certify first that all the conditions necessary to release the first payment remained in force; then that the U.N. had agreed to:

1. Place all U.S. arrears to the U.N. incurred before the enactment of the bill in excess of the amount authorized in the bill in a "contested arrearages account" that would not be applicable to Article 19 sanctions;

2. Cap any one member state's contribution to the peacekeeping budget at 25 percent of the total budget; and

3. Limit any one member state's assessed contributions to U.N. regular budget to 22 percent.

For the third payment, the Secretary of State would be required to certify first that all the conditions necessary to release the first and second payments remained in force, then that the U.N. had agreed to:

1. Reduce further the cap on assessed contributions to the regular budget and any designated affiliated and specialized agency of the U.N. to a maximum of 20 percent;

2. Establish independent inspectors general for designated agencies to conduct and supervise objective audits, inspections, and investigations relating to the programs and operations of the U.N. The inspectors general would be nominated by the director of each agency, confirmed by the member states, and granted sufficient authority to fulfill their responsibilities;

3. Revise the budgetary process by requiring consensus in the General Assembly to approve any biennial budget increase and increase accounting of expenditures;

4. Adopt "sunset provisions" (automatic termination of authority and funding) for designated specialized agencies and require all U.N. programs to undergo periodic review, evaluation, and affirmation as a prerequisite for continued funding;

5. Designate for the United States or the five largest contributors to the U.N. a permanent seat on the ACABQ;

6. Allow the U.S. General Accounting Office access to U.N. financial data;

7. Establish basic personnel standards, including merit-based hiring, a code of conduct, periodic evaluations, reviews of employee expenditures, and periodic assessments of staff numbers and payroll;

8. Restrict the 2000-2001 budgets of designated agencies to zero growth over the 1998-1999 budgets;

9. Instruct each specialized agency to maintain budgets within the level approved by the member states at the beginning of the biennium, identify expenditures by category, and require advance approval of the member states for any supplemental funding; and

10. Limit the assessed contribution of any one member state to any designated agency to 22 percent.

APPENDIX 3