[Senate Hearing 105-682]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 105-682


 
THE SECRETARY'S CERTIFICATION OF A U.N. REFORM BUDGET OF $2.533 BILLION

=======================================================================

                                HEARING

                               BEFORE THE

                SUBCOMMITTEE ON INTERNATIONAL OPERATIONS

                                 OF THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                       ONE HUNDRED FIFTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 20, 1998

                               __________

       Printed for the use of the Committee on Foreign Relations


                               


 Available via the World Wide Web: http://www.access.gpo.gov/congress/senate


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                     COMMITTEE ON FOREIGN RELATIONS

                 JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana            JOSEPH R. BIDEN, Jr., Delaware
PAUL COVERDELL, Georgia              PAUL S. SARBANES, Maryland
CHUCK HAGEL, Nebraska                CHRISTOPHER J. DODD, Connecticut
GORDON H. SMITH, Oregon              JOHN F. KERRY, Massachusetts
CRAIG THOMAS, Wyoming                CHARLES S. ROBB, Virginia
ROD GRAMS, Minnesota                 RUSSELL D. FEINGOLD, Wisconsin
JOHN ASHCROFT, Missouri              DIANNE FEINSTEIN, California
BILL FRIST, Tennessee                PAUL D. WELLSTONE, Minnesota
SAM BROWNBACK, Kansas
                     James W. Nance, Staff Director
                 Edwin K. Hall, Minority Staff Director

                                 ------                                

                SUBCOMMITTEE ON INTERNATIONAL OPERATIONS

                     ROD GRAMS, Minnesota, Chairman
JESSE HELMS, North Carolina          DIANNE FEINSTEIN, California
SAM BROWNBACK, Kansas                CHRISTOPHER J. DODD, Connecticut
GORDON H. SMITH, Oregon              JOHN F. KERRY, Massachusetts

                                  (ii)



                            C O N T E N T S

                              ----------                              
                                                                   Page

Lyman, Ambassador Princeton N., Assistant Secretary of State for 
  International Organization Affairs.............................     1

                                 (iii)



THE SECRETARY'S CERTIFICATION OF A U.N. REFORM BUDGET OF $2.533 BILLION

                              ----------                              


                        WEDNESDAY, MAY 20, 1998

                               U.S. Senate,
           Subcommittee on International Operations
                     of the Committee on Foreign Relations,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 4:20 p.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Rod Grams, 
[chairman of the subcommittee,] presiding.
    Present: Senator Grams.
    Senator Grams. I will call this hearing to order.
    Assistant Secretary Lyman, I want to thank you very much 
for coming here today to help us with the Secretary of State's 
certification that the United Nations or has taken no action 
during the past 6 months that would cause it to exceed a budget 
of $2.533 billion for the 1998-1999 biennium.
    In the interest of time and given that this will be a very 
narrowly focused hearing, with your cooperation, I would 
suggest that we dispense with our opening statements and move 
right to the questions. Would that be OK?
    Mr. Lyman. That is fine, Senator, if I could submit mine 
for the record.
    Senator Grams. That would be great. We will put it into the 
record as if read.
    [The prepared statement of Mr. Lyman follows:]
          Prepared Statement of Ambassador Princeton N. Lyman
    Mr. Chairman, I welcome this opportunity to appear before the 
subcommittee to explain the certification made by the Acting Secretary 
of State on May 4 regarding the budget of the United Nations.
    The certification made by the Acting Secretary was that the United 
Nations had taken no action during the preceding six months to increase 
funding for any United Nations program without identifying an 
offsetting decrease during that six-month period elsewhere in the 
United Nations budget and cause the United Nations to exceed the 
expected reform budget for the biennium 1998-1999 of $2,533,000,000. 
This certification was made pursuant to the Departments of Commerce, 
Justice and State, the Judiciary and Related Agencies Appropriations 
Act, 1998, Public Law 105-119; and its effect was to permit the payment 
of $50 million in Fiscal Year 1998 funds from the Contributions to 
International Organizations account for part of the U.S. assessment to 
the regular budget of the United Nations.
    Mr. Chairman, let me emphasize that the Administration is firmly 
committed to reducing United Nations budgets and to ensuring that 
budget levels, once set, are strictly maintained. The degree of success 
we have already achieved in this respect is gratifying, and it 
demonstrated that, working together, the Congress and the 
Administration can indeed increase the efficiency and effectiveness of 
the United Nations. I can assure you that, in keeping with this general 
policy, the Acting Secretary's certification was made only after due 
and thorough deliberation within the Department of State and after 
close consultation with the United Nations Secretariat.
    There is one factor that entered into our deliberations on this 
certification that I would like to clarify briefly at the outset of 
this hearing, namely the UN practice of providing the Secretary General 
limited spending authority for unforeseen or emergency expenditures. 
This authority has been used to cover $2,189,000 in unforeseen expenses 
since the beginning of the year. And although this is not directly 
related to the statutory budgetary certification, I would also like to 
address the decision of the United Nations to shift to a net budgeting 
approach in the current biennium.
    As this subcommittee is aware, it is the usual practice of the UN 
General Assembly to provide the Secretary General limited spending 
authority to cover unforeseen and emergency expenditures. For the 1998-
1999 biennium this authority amounts to $11 million in the unforeseen 
and extraordinary expenditures fund, to cover peace and security 
matters and the International Court of Justice, and $19 million for the 
contingency fund to cover other matters. The existence of this 
authority does not in itself constitute an increase in the agreed 
biennium budget. As actually appropriated by the General Assembly, this 
remains at $2.532 billion for 1998-1999, unless and until the General 
Assembly takes an affirmative action to increase it. As of now, the 
Secretary General is required to remain within the $2.532 billion 
level. Should the extraordinary spending authority be utilized, offsets 
or other adjustments would need to be found elsewhere in the budget, 
unless the General Assembly appropriates additional funds. I would 
point out that in the 1996-1997 biennium we were able to ensure that 
unfunded costs were fully absorbed within the approved budget level, 
without the need for additional appropriations.
    In respect of this contingency-type spending authority, the current 
certification follows the pattern of past years. Prior Administration 
certifications, made pursuant to very similar statutes, were based on 
the General Assembly-approved budget level. The existence and use of 
authorized contingency and emergency spending authorities in these 
prior years were not deemed to constitute UN action to exceed the 
budget.
    Based on information provided by the United Nations, we have 
learned that the Secretary General has used $2,189,000 this year from 
the unforeseen and extraordinary expenditures fund, primarily for the 
Sierra Leone liaison office and the Special Representative for the 
Great Lakes Region. Under UN budget procedures, the Secretariat will 
report in December of this year whether this additional spending is 
being accommodated within the appropriated biennium budget. Unless and 
until the General Assembly acts to increase the appropriation, the 
$2,189,000 must fall within the approved budgetary level. As of this 
time, the UN has taken no action to increase funding for any UN program 
and exceed last December's approved budget.
    We have been assured by UN Under Secretary General for Management 
Connor, in an April 15 letter, that were the Secretariat's year-end 
performance report to be issued now, the $2,189,000 in additional costs 
would be readily absorbed in the budget given current expenditure 
patterns and exchange rate gains. ``There are no indications at 
present,'' Connor wrote, ``that such expenditures [the $2,189,000] will 
require additional appropriations or assessment.''
    Let me turn now to the issue of net budgeting. The 1998-1999 
biennium budget reflects the new net budgeting concept proposed by the 
Secretary General to provide greater transparency in the presentation 
of certain UN costs--for the UN Office in Vienna, the Joint Inspection 
Unit, and the International Civil Service Commission--that are jointly 
funded with other UN system entities. The Department of State endorsed 
the decision to adopt this approach, in that it provides a more 
accurate reflection of anticipated expenditures directly attributable 
to the activities of the UN proper. The provision for net budgeting is 
included in the UN document which outlines the Secretary General's 
budget request of $2.583 billion for the 1998-1999 biennium. The same 
document also indicates that possible exchange rate gains of $50 
million could be realized by the time the UN budget is approved in 
December 1997. The Congress used this information to establish $2.533 
billion as the ceiling level for the 1998-1999 budget, which now is 
reflected in the certification language.
    Mr. Chairman, we appreciate this opportunity to discuss with the 
subcommittee the Acting Secretary's May 4 certification. I am prepared 
to respond to any questions you may have.

    Senator Grams. Again, thank you for coming. It is good to 
see you again.
    The certification to Congress regarding the U.N. budget 
states, and I quote here: The U.N. Under Secretary-General 
Joseph Connor has assured us in writing that there are no 
indications at present that such expenditures will require 
additional appropriations or assessments.
    First, Mr. Assistant Secretary, would you please provide a 
copy of Mr. Connor's letter to the committee for the record?
    Mr. Lyman. I would be happy to do so. I do not have it with 
me, but I would get it to you.
    Senator Grams. What independent verification does the 
United States have that the United Nations is not incurring 
costs in addition to this amount?
    Mr. Lyman. Well, Senator, there are two ways in which we do 
that. The most important of all of course is that the budget 
cannot be increased regardless of what happens unless the 
General Assembly votes an increase. The General Assembly has 
not met to vote any increase whatsoever.
    Second, on those items that have come up since the original 
budget was passed on which additional expenditures were drawn 
down--and that was done in the case of the Secretary-General 
drawing down on an emergency fund--we went to the U.N. and we 
asked for the letter in writing which you referred to, to 
assure us that at this point in time they had funds to cover 
that additional amount, but that we could not say with 
confidence at this time no action had been taken for which 
offsets had been identified.
    Senator Grams. Where did these funds come from? You said 
they have the funds to cover it.
    Mr. Lyman. Well, a combination of a lower than anticipated 
expenditure rate and exchange rate.
    Senator Grams. Did you get assurances that those funds 
would be there?
    Mr. Lyman. Well, the timing is off--the way they resolve 
all these different things is at the end of the year. So at 
this point in time we can only ask, where are you at this 
moment in time? And the letter said, at this point in time we 
have offsets to those increases. So, that is it for the 
purposes of making a certification for the last 6 months up 
till now. That was the basis.
    Senator Grams. Do you have access to all the financial data 
of the United Nations?
    Mr. Lyman. We have access to a great deal of it. But when 
we ask for it--as you know, no country could audit the U.N.--
but we ask for, and usually get, the data we ask for.
    Senator Grams. So, you have access to any information you 
think is important or pertinent?
    Mr. Lyman. My experience has been that we have.
    Senator Grams. Now, the certification indicated the United 
Nations recently, as you mentioned, has drawn on the peace and 
security unforeseen emergency fund. Will you explain what 
activities are being funded out of this particular fund, and in 
more detail how will these be offset?
    Mr. Lyman. There is a fund relating to peace and security 
on which the Secretary-General is authorized to draw. The two 
major items for which he used this fund were Sierre Leone, in 
response to the coup, and the counter-attempts, which were 
successful, to restore the elected government. Second, for the 
Great Lakes Region of Africa, in general, where there was a 
great deal of effort underway by the U.N. to ascertain what had 
happened in terms of human rights and possible mass graves, et 
cetera.
    There were a couple of other minor items--one for Guyana/
Venezuela, but that was minor. Most were for Sierre Leone and 
the Great Lakes Region.
    Senator Grams. And can you identify any of the offsets.
    Mr. Lyman. The only degree of detail we have is, as the 
letter from the Under Secretary-General says, exchange rate 
savings and a lower rate of expenditure for this much. They did 
not give us more detail. I would have to say I did not ask for 
more detail.
    Senator Grams. Can we get more detail from the U.N.?
    Mr. Lyman. We can ask. What exactly--do you want to know 
where they are expending under their expected?
    Senator Grams. Right. I know the U.N. Secretariat is saying 
there are going to be offsets through currency exchange rates, 
et cetera. But we would like to have more specificity than that 
today. Then we will be able to compare the U.N.'s proposed 
offsets to the actual offsets at the end of the budget period.
    Mr. Lyman. OK, I will seek that.
    Senator Grams. OK, thank you.
    Does the United States, or any other member state for that 
matter, have a veto on how this pot of money is spent--that is, 
again, the emergency fund? Do we have any voice on that?
    Mr. Lyman. Not really. When the budget is approved at the 
beginning of the year, this fund is there and the Secretary-
General has the right to draw on it without asking for 
membership approval of the specific items. But then he has to 
report on how he has used it, as he has done.
    In these particular cases, these happen to be areas that we 
were pressing the United Nations to act on. So, we have no 
problem with these particular expenditures.
    Senator Grams. Now, there is a $19 million, quote, slush 
fund. Would this be considered another slush fund, so to speak?
    Mr. Lyman. It is a contingency fund, which, again, exists 
in the U.N. and which, as you know, we have a difference of 
opinion with the other membership. They would have preferred in 
our legislation that when we use the cap figure of $2.533 
billion we would add to that the authority on the contingency 
fund. The Congress did not do that. So, in this biennium, as in 
the last biennium, we will take the same view toward any use of 
that contingency fund that we are taking toward this fund, 
which is that they will have to absorb any draw downs of that 
amount.
    Senator Grams. Going back just for a moment to the 
emergency fund again. When we talked about the new 
expenditures, you stated that the cost will be absorbed, in 
part, by exchange rate gains, et cetera. Have you, or has the 
United States, undertaken any projections to try to determine 
whether these forecasts are accurate?
    Mr. Lyman. We follow the exchange rates very closely. 
Clearly, gains in the dollar this year show that there would be 
savings to the U.N. Of course, we cannot predict where the 
dollar will go 6 months from now, so this could all reverse 
itself, which would create enormous problems for everybody. But 
there have been gains in the dollar against the currencies that 
the U.N. buys since December that correspond to what he has 
said.
    Senator Grams. Does the U.S. mission try to track these 
type of figures, just to keep abreast of the numbers and the 
spending in the budget?
    Mr. Lyman. Yes, our resource management people do. They 
have ways of calculating what it means for the budget.
    Senator Grams. In that regard, if the U.N. can absorb these 
costs, these additional expenditures as the certification 
indicates, then why did the U.N. authorize funding over the 
$2.533 billion instead of transferring funds between accounts?
    Mr. Lyman. I am sorry?
    Senator Grams. Instead of dipping into the emergency fund, 
is there an opportunity, instead of expending these additional 
dollars, to have transferred funds from one account to another?
    Mr. Lyman. What the U.N. will have to do is, in effect, 
transfer funds later on. But because the budget is against line 
items in the budget, the Secretary-General, for the purposes 
that he uses funds, would not use funds already committed to 
other programs. So, he had to draw on this fund for unforeseen 
or added mandates or decisions on his part to try and help in 
these situations. He could not dip into a line item.
    But once we get to the reconciliation at the end of the 
year, then the U.N. can say, well, we have savings here, there, 
et cetera, and these are various line items, and then they can 
use it to offset things.
    Senator Grams. So, to be clear on the issue of the $19 
million fund and the $11 million fund, the Secretary-General 
has the sole authority, are you saying, to spend these funds?
    Mr. Lyman. I know that is on the $5 million; I am not 
sure--I could ask my staffers. I am sorry. My staff tells me 
that the use of the $19 million fund has to be approved by the 
General Assembly.
    Senator Grams. OK. But in regard to the $11 million the 
Secretary General has sole discretion on how those funds are 
spent?
    Mr. Lyman. He has discretion. Although he has to come back, 
obviously, and show how he spent it. Then the General Assembly 
has to approve either covering it or asking for more money, or 
something.
    Senator Grams. How can you be confident, Mr. Secretary, 
that this funding will be able to be offset for the performance 
review in December?
    Mr. Lyman. Senator, I will be very candid. I dare not 
predict the future, and not predict where our certification 
will come out 6 months from now or 9 months from now. We, in 
doing the certification, stick exactly to the past 6 months up 
to now. I would not want to make a projection. It could go 
either way. There could be some new emergency, some added 
expenses, or the dollar could take a plunge. Then, 6 months 
from now, it may be we would be in a very different position; 
the U.N. might not be in a way to say that.
    On the other hand, it may work out to our benefit, as it 
did in the last biennium. So, I am frankly very loathe to make 
a prediction of where we will be 6 months from now. I can only 
do it on the basis of where we are today.
    Senator Grams. So, you feel comfortable with the trends, 
and this certification, that we are going to be on target?
    Mr. Lyman. I think I am comfortable with where we are 
today. I am comfortable that we can make this certification 
today. It is such an uncertain world out there, if, God forbid, 
there is another emergency and he has to draw again on this 
fund and there are no offsets, then we are in a different ball 
game. I hope that does not happen.
    Senator Grams. But, to be clear again, you feel that if 
there are no such emergencies, if the rest of the year is, 
quote, normal, you feel very confident that we are going to 
meet the target, essentially?
    Mr. Lyman. There are additional items coming up, Mr. 
Chairman, that they will have to absorb, that we anticipate, 
not yet funded.
    Senator Grams. Non-emergency?
    Mr. Lyman. Well, they are ongoing operations that would 
have to be renewed, but they have not been renewed. We went 
through the exact same process in 1996-1997, and in the two 
same cases, that is, Haiti and Guatemala, the U.N. only 
approves them for so long and then reviews them and decides 
whether to continue them.
    We will face that decision again in the U.N. if they renew 
them, they will be expenses that also will have to be offset. 
We will argue you must offset them. The last time, in the last 
biennium, they did. We will argue that they have to do so 
again.
    Senator Grams. Should they have taken that into account in 
the budget?
    Mr. Lyman. We wanted them to, quite frankly. We wanted an 
item in the budget that would anticipate this. We were 
unsuccessful in the General Assembly in getting it in.
    Senator Grams. And, bottom line, are you aware of any 
further plans right now, any things that are going on at the 
U.N. or that the Secretary-General has talked about, for any 
authorizations, any additional dollars from the peace and 
security emergency fund? Do you see anything out there?
    Mr. Lyman. I am not aware of any. While I am a little 
hesitant to speak about this because it is so in the early, 
formative stage, there is another fund, funded voluntarily by 
some other governments, for conflict prevention for the 
Secretary-General. If that comes through and is set up, it 
would give him an off-budget source of emergency funds that 
some other governments want to give him. But I do not quite 
know the status of that, whether it is actually in place or 
not. But I do not know right now of any further draw downs.
    Senator Grams. In that regard, then, are there any other 
emergency-type funds out there? I think there is a fund for the 
International Court of Justice which has about $600,000 a year. 
To date, are there any other accounts, any other funds, such as 
this emergency fund, or any new funds being set up, that as we 
always like to say in Washington, are off-budget----
    Mr. Lyman. No, not that I know of. But my staff tells me 
that the ICJ is part of the $11 million.
    Senator Grams. That is part of it?
    Mr. Lyman. It is part of the $11 million. So, I do not know 
of any other such funds.
    Senator Grams. In another area, Secretary Lyman, let me ask 
you about some of the additional spending that the United 
Nations expects to incur during this biennium, which has not 
been approved as part of the budget process. Now, according to 
the State Department's May 14th notification to Congress 
following the approval of its biennium budget, the United 
Nations, ``has taken no action subsequently to increase funding 
for any U.N. program and exceed the approval level.''
    So, first off, the Secretary-General created a new office. 
That is the Office of the Iraq Program, which is headed by Mr. 
Benin Savan, I believe, to coordinate various United Nations 
activities inside Iraq.
    Mr. Lyman. Right.
    Senator Grams. And, second, I understand that there is new 
spending associated with the U.N. Conference in Rome this 
summer, regarding the creation of the International Criminal 
Court. I also understand that there have been unforeseen costs 
associated with the U.N. operations in Sierre Leone.
    Now, how much will each of these new programs cost?
    Mr. Lyman. The Iraq program is paid for out of the proceeds 
of the Iraq oil.
    Senator Grams. Is there a dollar amount?
    Mr. Lyman. I can get that for you.
    Mr. Lyman. But under the agreement on the oil for food 
program, under Iraq, the expenses for the U.N. in managing that 
program, as well as other U.N. expenses related to Iraq, like 
UNSCOM, come out of the Iraqi oil proceeds.
    On the Conference in Rome, it is general practice--and I 
will have to get some more information on this--generally, a 
country which sponsors a conference pays any additional cost to 
the U.N. for holding it there. I will verify that, but I think 
that is the general rule. I would guess it is the rule in this 
case. Yes, that is right.
    So, Italy will pay the incremental costs of holding it in 
Rome.
    Senator Grams. OK, there will be no additional assessments?
    Mr. Lyman. There would be no additional assessments.
    Senator Grams. And also on the unforeseen costs associated 
with U.N. operations in Sierre Leone?
    Mr. Lyman. The one we now see in Sierre Leone is related--
the one that might develop is a U.N. military observer program, 
which would come out of peacekeeping, not out of the regular 
budget. Other programs would be out of voluntary funds, like 
UNDP, et cetera.
    Senator Grams. So, what you are saying is that why all 
these programs, the new programs and additional spending, you 
do not believe there have to be program spending cuts 
identified to pay for this new anticipated spending because you 
say they are offset in other areas of the budget or with 
contributions?
    Mr. Lyman. Well, what I am saying is that should there be 
any additional unfunded program expenditures, whether in Sierre 
Leone or anyplace else, we would take the position that offsets 
will have to be found, just as we asked the U.N. to certify to 
us in writing that they have identified offsets for this $2.189 
million. So, we have taken that position.
    Now, it is not a popular position in the United Nations, I 
have to tell you. Other governments do not like it. But we held 
this position successfully throughout 1996 and 1997, and we 
will hold it to the best of our ability throughout 1998 and 
1999.
    I think all the members know that if they exceed the 
budget, they lose a substantial part of our contribution, 
because we will not be able to certify.
    Senator Grams. Under the budget rules and normal 
procedures, isn't it the position of Coordinator, funded 
through the regular budget rather than----
    Mr. Lyman. The Iraq?
    Senator Grams. Right, shouldn't the position of the Iraq 
Coordinator under the budget rules be on the regular budget 
rather than--I think you said it would come out of the oil 
sales?
    Mr. Lyman. We have taken--I confess I will have to look at 
the budget rules on this, but we have taken a fairly strong 
position with Iraq that they pay for this. I mean, that has 
been a position of the United States; that the international 
community is not going to pay to feed their people because they 
will not feed them themselves. Nor should we pay additionally 
for the inspection of the weapons of mass destruction. They 
were the aggressor. They caused this. Their oil proceeds should 
be used for this purpose.
    So, as a policy point of view, we would want to include as 
much of this under the Iraq oil proceeds as possible. I will 
check the rules to see if this violates any rules. But our 
policy has to put, frankly, the burden of this on Iraq.
    Senator Grams. According to the United Nations, the 1998-
1999 regular budget contains a resource reduction of $124 
million. Where are these cuts being made? And also, which 
programs were cut, or maybe activities eliminated, or any 
administrative costs reduced to arrive at this figure?
    Mr. Lyman. A large part of that, quite frankly, Senator, 
comes from the reduction of staff and the elimination of 
positions and running programs with fewer staff and increased 
efficiency through use of information technology, et cetera. 
The Secretary-General does not have the authority to eliminate 
a program if the General Assembly does not agree. As you know, 
and you supported this very strongly, he has proposed to be 
able--that the General Assembly would introduce sunset 
provisions on new programs. That has not yet been approved by 
the General Assembly, so that is not in place.
    So what he can do is either consolidate offices, as he has 
done, operate with fewer staff, et cetera, and try and do the 
full panoply of mandates that he has been given within fewer 
resources.
    Senator Grams. You brought up the reduction in staff, so 
let me ask you this. Last year, the State Department certified 
that there were 8,500 regular budget posts that were filled. On 
February 24th Mr. Connor testified before this committee that 
there were now 8,900 posts filled. How is the U.N. paying for 
these additional personnel, and which programs were cut, which 
were reduced, and especially to account for some of the savings 
of the $124 million in resource reduction?
    Mr. Lyman. Well, as you know, up until January 1, 1998, the 
authorized level of posts was around 10,000.
    Senator Grams. Authorized?
    Mr. Lyman. Authorized, right. But they only filled, as you 
point out, up until quite recently, around 8,500 of them. It 
was one of the ways they lived within the cap in 1996-1997, 
because they simply did not fill a lot of posts.
    For the 1998-1999 budget, the authorization of posts is 
now--I have got the figure here somewhere--but it is 9,000-
something. They have authorization to go up to that level. They 
have an authorized number now of 9,058. So, it is down from the 
10,012, but they are authorized and within the budget for 1998-
1999 to go up to that level. That does not mean they will go up 
to that level, because there is always a vacancy rate. So the 
U.N. had the authority to go from 8,500 to 8,900 because it is 
within now the new ceiling.
    My guess is, to be perfectly frank, if they run into a 
crunch toward the end of this biennium, they will end up doing 
what they did last time, which is not to fill vacancies as they 
come open in order to save money. They are not the only 
institution that does that.
    Senator Grams. We ask this question because we have been 
told there has been an actual reduction in bodies--not in 
authorized posts but in bodies. When we have 8,500 last year 
and now this year 8,900, there are more bodies than there were 
last year. So, I know we are always kind of going between 
authorization and actual count. But this would show--according 
to Mr. Connor's own testimony and account--that there are more 
people working than there were last year.
    Mr. Lyman. Yes, there is no question that there are more 
now than there was in the period you mention. We go back and 
forth, quite frankly, over this question of authorized and 
people on board. The key, frankly, in our view, is the overall 
budget and the programs that are being carried out.
    You set a ceiling, as we do in the U.S. Government, of--we 
call them FTE's--and agencies are to run within those. They go 
up and down within that scale all the time. We have pushed for 
reductions, but, frankly, the U.N. felt that when they went all 
the way down to around 8,500, they needed more people to carry 
out programs, and they went back up to 8,900. One can argue 
about that, and whether they needed them. But the key for us is 
are they staying within the overall budget guidelines and the 
overall personnel ceilings.
    We cannot demand more than that, although we can urge them 
to cut personnel as much as possible.
    Senator Grams. Well, we are going to continue to push for 
that, and also push for a reduction in the number of authorized 
positions, as well. Because sometime they are going to come 
into a balance in what we are asking.
    In the past budget biennium, jointly financed activities 
were included in the regular budget. Under this budget, a new 
accounting procedure was used, called net budgeting. As a 
result the funding for jointly financed activities was removed 
from the regular budget and 317 posts were moved off the U.N. 
books to other organizations.
    Now, this change deletes $47 million from the U.N. regular 
budget. Now, if you compare the regular budget from 1996-1997 
to the regular budget for 1998-1999, are there any activities 
that are not included in the 1998-1999 budget yet still exist? 
So, in other words, have there been posts taken off budget 
which still exist but are not counted into the regular 1998-
1999 budget when you compare the two budgets together?
    Mr. Lyman. Going to net budgeting did not change posts. 
What it did do was to say that whereas previously the U.N. 
budgeted the total amount it would cost them for certain 
services, and then on the other side of the ledger would show 
an income from other agencies to pay for those, so you netted 
it out only at the end of the 2 years. In this budget they have 
netted it out at the outset, and demonstrated that the actual 
expenditure for the U.N. will be $47 million lower because they 
get this reimbursement.
    It is not an uncommon budgeting practice. We do it in parts 
of the U.S. Government. Corporations do it. It does not change 
it very much. You could add it on and then have the income at 
the end of the 2 years. You would net out the same way. But in 
their original budget outline that was used, I think, here in 
the Congress, and certainly in our calculations, on getting to 
$2.533 billion, they said they were going to use that.
    Senator Grams. So, if there is off-budget movement, or 
subcontracting so to speak, of some of these posts, they are 
going to be figured in and reconciled at the end of the 2-year 
budget?
    Mr. Lyman. Well, the expenditures are. I mean, these are 
reimbursements from other entities, like the Joint Inspection 
Unit or other agencies which have other budgets in the United 
Nations, and they reimburse for services.
    Senator Grams. These jointly financed activities, such as 
the Joint Inspection Unit, the International Civil Services 
Commission, the U.N. Services in Vienna, where is the funding 
for these activities coming from currently, in the 1998-1999 
budget?
    Mr. Lyman. The funding is provided under the auspices of 
the U.N. regular budget. Other agencies reimburse the U.N. for 
their share of the costs.
    Senator Grams. Now, I do not know if this is budget 
gimmickry or what, but would it be accurate to say that at 
least part of the $124 million in so-called savings so far in 
that column of savings has been achieved by these accounting 
methods?
    Mr. Lyman. No, I think this is separate.
    Senator Grams. This is separate?
    Mr. Lyman. $46 million was clearly identified separately in 
the budget documents as related strictly to the net budgeting 
approach.
    Senator Grams. In order to compare this budget and the 
previous budget, would you have to add the cost, then, of the 
jointly financed activities to the 1998-1999 budget to make 
this clear, to ensure that a no-growth budget was achieved, 
that we are going to add up these costs?
    Mr. Lyman. The no-growth issue is a tough one, Senator, to 
be honest. Because the question is, where do you make the 
comparison? We did not have a legislative requirement on no 
growth, though that was obviously our policy and it was in the 
legislation that was proposed, that you worked on so hard for, 
for paying our arrears.
    The question is, where do you compare it? The U.N. says, 
look, compare it to where we started, in 1996-1997. In that 
case, even if you account for the change in net budgeting, the 
1998-1999 is lower. If, however, you say, well, we want to 
compare where you ended up at the end of 1997, to where you are 
starting in 1998-1999, then it is not a no-growth budget, or, 
rather, a reduction. It depends on your point of view of where 
you think the comparisons ought to be made.
    The U.N. says, look, compare us 2 years from now; maybe we 
will have made just as many reductions in the 1998-1999 as we 
made in 1996-1997. But do not hold us to a comparison of the 
end of December. Other people argue that, no, you should hold 
them to the end of December, because you are operating under 
the same inflation and exchange rate assumptions.
    Frankly, I will be very candid, if the law had required us 
to certify that this was a no-growth budget, we would have had 
to deal with those issues and sort them out and come to you 
with a definitive point of view--frankly, we have differences 
as to how you would interpret no-growth. We did not have to 
make that certification. Frankly, I am glad I did not have to 
make it this time. So, I only can be candid enough to say it 
depends on where you make the comparisons.
    Senator Grams. I will move on to another area, the tax 
equalization fund. Has the United States agreed to take over 
the payment of any of the costs associated with the tax 
equalization fund, any costs that were attributed to the 
regular budget during the previous biennium? In other words, in 
effect, are these expenses being moved off budget?
    Mr. Lyman. Some expenses in this budget were in fact moved 
to the tax equalization fund. People who--I think there are 
five people--who work full-time on this. The decision was to 
charge them to that particular program and the source of funds 
for it, because that is what they work on exclusively and they 
do not serve the general membership. We did accede to that in 
the budget.
    Senator Grams. Has the U.S. agreed to take over the 
additional payment?
    Mr. Lyman. Well, it comes out of what we contribute for the 
tax equalization fund, yes.
    Senator Grams. At last month's official peacekeeping 
briefing Deputy Assistant Secretary Hull informed the committee 
that the U.N. mission in Bosnia will be undertaking court 
monitoring as part of its, quote, peacekeeping mandate. In 
addition, the U.N. peacekeeping mission in Western Sahara is 
little more than an election monitoring program in the guise of 
a peacekeeping mission. What role does the U.S. play in 
determining the mandates of a peacekeeping mission? It sounds 
like a mission creep, as we always like to say.
    Mr. Lyman. You put your finger on a very, very important 
issue that we are debating now with the U.N. and with the other 
members in the U.N. It was decided by the Peace Implementation 
Committee--those group of countries that monitor the Dayton 
Accords--that the effectiveness of police programs in Bosnia 
would always be limited unless there was an improvement in the 
judiciary system. Because you can arrest people, but if there 
is not a proper system for prosecuting them, et cetera, it 
would not work.
    As part of that, the Peace Implementation Committee charged 
the U.N. with doing the court monitoring piece. Other entities 
outside the U.N. are going to take on other aspects of judicial 
reform.
    We have taken the position that that is fine, but it should 
not be charged to peacekeeping, because this is not 
peacekeeping, per se. The other members of the Security 
Council, quite frankly, disagreed with us very strongly. They 
say, look, the Peace Implementation Committee made this 
decision and charge. Where else are you going to get this 
funding? Et cetera.
    We have suggested that it ought to be done by voluntary 
funding. We have been prepared to contribute to it. We do not 
have agreement at this point. We are in a minority. Others 
think it is closely enough associated with the purposes of the 
peacekeeping to do it that way. So, we are still arguing over 
this. I think it is a very important issue, and we have raised 
this with the U.N. on many occasions: To define that which is 
peacekeeping and charged to peacekeeping clearly, so that other 
activities, which may be very important for the country but are 
not peacekeeping do not get charged to that budget.
    Now, the dilemma we get in, to be perfectly frank, Senator, 
is they say, well, yes, but you have put this cap on the 
regular budget, we cannot find it there, and we do not like 
voluntary funding in our countries because it is easier for us 
to do assessed, so where do you suggest we get it from? And of 
course we have come back in this case and said, either out of 
voluntary programs, like UNDP, or our own voluntary 
contributions.
    It comes up in other cases. In Western Sahara and CAR it 
came up, the Central African Republic. We have taken a very 
strong position: That the peacekeeping mandate and funding for 
the Central African Republic should not include whatever the 
U.N. wants to do to help in developing election laws and 
monitoring observers and all of that. We are taking that 
position with the U.N. No decision has been made on doing that 
in the CAR and how it will be done.
    But I take your point. I think we are in agreement here on 
it. But I have to tell you that we have some tough fights in 
the U.N. on this issue.
    Senator Grams. So, in other words, the United States has 
taken a stand or is working against this type of funding?
    Mr. Lyman. We are working against using peacekeeping funds 
for what we consider are not peacekeeping activities. They may 
be good activities, they may be important to the overall 
situation in the country, but if they are not military or 
police, they should not be part of a peacekeeping budget.
    Senator Grams. Is your concern also that they are moving 
these funds off budget and putting them into peacekeeping 
activities so they can escalate or increase spending, but do it 
under the guise of peacekeeping?
    Mr. Lyman. I think it is more that new situations come up, 
like the CAR, and they do not know where to find the funding. I 
think it is more that.
    Senator Grams. On tribunal funding, the United States ad 
hoc war crimes tribunals are also, quote, off budget for 
purposes of calculating the biennium budget of the United 
Nations.
    Mr. Lyman. They are.
    Senator Grams. And although these tribunals are funded from 
both regular and peacekeeping assessments for member states, 
the United Nations budget does not reflect the more than $120 
million assessed for these operations in the U.N.'s 1998 
budget. Why are these tribunals treated separately from the 
regular budget of the United Nations for the purpose of budget 
presentation?
    Mr. Lyman. I confess I was not here when those decisions 
were made, but I gather there was quite an argument over how 
they would be funded, whether they would be funded under the 
peacekeeping formula or the regular formula, et cetera. The 
decision that was made was to split it and to put it outside 
the budget. My guess is that they simply did not have room 
within the regular budget when they made the decisions on these 
tribunals, and did it that way.
    Senator Grams. Under present rules, is the United Nations 
allowed or permitted to borrow from these funds for any regular 
budget activities? Can they draw these back in?
    Mr. Lyman. No. The only place that the U.N. can and does 
borrow for its regular budget is out of the peacekeeping 
budget--not out of the tribunal peacekeeping, but out of the 
other peacekeeping budget.
    Senator Grams. Is it against the rules? Is there a valve 
there that prohibits them from doing this? Or, right now, is 
there simply a practice of not borrowing?
    Mr. Lyman. I have to check if there is a rule. I know it is 
a practice not to do anything else. But I will get for you 
whether there is any flat rule against it.
    Senator Grams. OK. Then I would like to also ask if you can 
find out if the United States has any access to documentation 
that would be able to help trace the use of the moneys for the 
tribunals. In other words, have they been used in the past? Is 
there any means that we have of monitoring or auditing these 
funds to see how they have been spent in the past?
    Mr. Lyman. Monitoring. But I say again that formally you 
cannot audit. But I can try and get an answer to that.
    We have also had some OIOS studies of these, as well, that 
I would be happy to share the information we have from those.
    Senator Grams. Just to see where the dollars have been 
going--or the moneys have been spent.
    Mr. Lyman. I fully agree.
    Senator Grams. Also, the United Nations increasingly has 
been establishing trust funds outside of the regular budget to 
fund many of the activities. Does the Under Secretary-General 
control these funds?
    Mr. Lyman. They are usually set up for a specific purpose, 
and each one has terms of reference. Since they are usually 
voluntarily funded, they are set up for the purposes for which 
they are funded, let us say elections in country X or whatever.
    They are managed by the United Nations, under those terms. 
They are not intended to be used for anything else.
    Senator Grams. So, in other words, the rules do not permit 
to borrow from these funds to fund any other type of activity?
    Mr. Lyman. I don't believe the U.N.'s financial rules are 
explicit on this point, but, as a matter of practice, I am not 
aware of the U.N. borrowing from trust funds.
    Senator Grams. Do you have access, again, to any financial 
information?
    Mr. Lyman. We can get information on those. There are quite 
a few of them, and they are all set up for a specific purpose. 
We have urged them to set up--in order to do voluntary versus 
assessed funding--other countries have set up various ones. I 
will try and get you information on them.
    Senator Grams. Of course, you know we have the Social 
Security and we have the Highway Trust Fund, and we manage to 
borrow from those.
    Mr. Lyman. I recognize the problem. If I am wrong, I will 
tell you. But the information I have is they do not. But I will 
verify that.
    Senator Grams. On the peacekeeping support account, the 
U.N. currently permits member states to dedicate personnel, 
including military personnel, to work for the U.N. as 
volunteers. Now, there is a proposal at the U.N. whereby people 
who are working on a voluntary basis could now be paid by the 
United Nations. What is the administration's position on this 
proposal? And what effect will this have on the budget if it is 
enacted, to eliminate volunteers and to begin paying 
volunteers?
    Mr. Lyman. Yes, this is a very, very important issue, and I 
am glad you raised it, Senator. It is something we are in deep 
discussion in the U.N. on. I will be very candid--I know I am 
on the record, let me be very candid--there is a resentment 
among some members that countries which can afford to do so 
second people to the United Nations, and therefore get, in 
their view, undue influence over the U.N. because they can 
afford to second people.
    So the General Assembly passed a resolution that says the 
U.N. should phase out these seconded personnel, and if they are 
necessary to the United Nations, they should be put on the 
budget and hired just like all the other personnel, so that you 
do not get an undue influence.
    We have taken the position--wait a minute, we said--
especially in peacekeeping, where most of these people are--the 
purpose of this was to provide the U.N. a specialized expertise 
in order to overcome problems they have had in organizing and 
employing peace keepers. To put all this in the regular budget 
does two things. One, it demands a much higher budget; and, 
second, you may not get the same kind of people and you lose 
some of the expertise.
    We are battling this right now. We have raised many 
questions about a proposal that is circulating right now--and 
we and other countries--about replacing all these people--or 
most of them, not all of them--with pair personnel. We have 
pointed out that there is no budget to do that.
    So, it being debated in the Fifth Committee, and we have 
engaged heavily with other countries and the U.N. on this. I 
will keep you informed how this plays out.
    I think it is important for a number of reasons. It is 
important for the kind of skills the U.N. needs. Second, I 
think the U.N. must distinguish--and the Secretary-General has 
this authority under this resolution, between temporary needed 
skills of a specialized nature and long-term, permanent staff 
requirements. We think that there is a fair amount of what is 
in DPKO from seconded personnel that should not necessarily be 
permanent, long-term staff.
    They were there to build a certain capacity and do not 
necessarily have to be there forever. That is what we are 
arguing right now in the U.N. we and other countries, by the 
way, share this view. But that is the background to this 
debate.
    Senator Grams. But to put you on record again, the U.S. is 
in opposition?
    Mr. Lyman. Yes. Some may make sense. Some on a long-term 
basis and adequately filled, but not all of them by any means.
    Senator Grams. It just seems that we have stressed 
volunteerism, and I know as many countries around the world 
stress volunteering for such activities, and then there are 
some that would oppose a volunteer position to help save money 
and provide the expertise you are talking about. How many 
positions are we talking about, by the way?
    Mr. Lyman. Well, the total staffing in DPKO is about 400 or 
a little less than that. I will have to get you the exact 
figures.
    Do we know how many?
    I think 106 are what they call gratis military personnel.
    Senator Grams. But that would add a lot to the budget.
    Mr. Lyman. Oh, yes.
    Senator Grams. If they wanted it, they would have to have 
offsets somewhere else.
    Mr. Lyman. Exactly. That is one of the arguments.
    Senator Grams. But like you are arguing, too, the U.N. 
might not have the expertise.
    Mr. Lyman. Well, I argue on both grounds: One, you would 
have to have offsets in the budget, but I am also worried about 
the expertise that is needed. Because when we second people up 
there--and we have seconded--some of those 106 are Americans--
we get some highly specialized, capable logistics experts, et 
cetera. That kind of expertise you do not necessarily hire off 
the street.
    Senator Grams. In another area, there was $10 million left 
over from last year from the regular budget that was not 
credited back to the member states.
    Mr. Lyman. I thought it was. The surplus was credited 
back--$61 million. That is why our assessment for this calendar 
year will be $297 million instead of 3-something.
    Senator Grams. Well, some of the information I have is that 
$10 million was being used to fund U.N. programs in 1998, $7 
million for IMIS and $3 million for UNCTAD, whatever that is--
there are so many acronyms.
    Mr. Lyman. UNCTAD, yes.
    Senator Grams. There were dollars used to fund those two 
programs, a balanced refurbishing of the interpreters booth, et 
cetera.
    Mr. Lyman. I will have to get you more details, but there 
was--right toward the end of the year, there was a question----
    Senator Grams. So, is this outside of the 64?
    Mr. Lyman.[continuing.] of whether funds available could be 
used for some of these programs in 1998-1999. I think the 
decision was made that some funds could be made available for 
programs that would be carried out in 1998-1999, but it was not 
the total surplus. Because U.N. members got $64 million in 
surplus back.
    There is a real problem with the IMIS. The question is, how 
do you fund a revamping of their information system in the 
U.N.? And there is not enough money in the regular budget to do 
it, and they are wrestling with this problem, quite frankly. 
Again, we are taking the position that you have got to find it 
within the $2.533 billion.
    Senator Grams. Who authorizes that, then? Is it up to the 
Secretary-General to do it, or does it take a vote?
    Mr. Lyman. No, it would have to be approved in the Fifth 
Committee.
    Senator Grams. In the Fifth Committee?
    Mr. Lyman. Yes.
    Senator Grams. So, this was approved, then, out of the 
committee?
    Mr. Lyman. The amounts that were approved at the end of the 
year were approved at the Fifth Committee.
    Senator Grams. And just a final question, and I know we 
have gone maybe a little longer than expected, but I just had 
one question I wanted to ask about a standing army that we have 
heard about.
    Mr. Lyman. Oh, yes.
    Senator Grams. U.N. Assistant Secretary-General aKoy has 
called the proposal for establishing a permanent headquarters 
for a United Nations, quote, standing army system. Now, it is 
an interim measure toward the establishment of U.N. standing 
army.
    Now, he should know, because he is the Deputy Chief of the 
U.N. Peacekeeping Operations Department. So, Mr. Assistant 
Secretary, when the Deputy Chief of the U.N. Peacekeeping 
Operations Department calls this an interim step to a standing 
army, I take him at his word.
    Is the Clinton administration supporting this proposal?
    Mr. Lyman. We certainly do not support a step toward a 
standing army. On the contrary, you will recall when we did 
what we call PDD-25, to look at our whole policy on 
peacekeeping, after the Bosnia experience and the rest, and we 
came up with a whole series of things about how to improve both 
our own reaction to peacekeeping proposals and the U.N. Among 
the recommendations made was that one of the problems the U.N. 
experienced in setting up a peacekeeping operation, once it was 
approved by the United Nations, by the Security Council, was 
its ability to set up rapidly in a volatile situation. It took 
so long, that was part of its problem.
    Because we are opposed to a standing army, because we 
opposed it, it was recommended and it has been in all the 
reports and it was in the GAO report which was kind of a report 
card on us, on following up with PDD-25, to establish the 
capability in the U.N. for what is called a rapid deployment 
headquarters. That is, it would be a headquarters element that 
could go out and do the preliminary setup until the regular 
peacekeeping forces arrive.
    It is actually a very valuable instrument. It includes some 
permanent staff and some who are on call, for a total of 24 
people. It is not a standing army. The U.N. has no authority to 
call on troops unless the Security Council approves the 
peacekeeping. They have no authority and no funds to do so 
otherwise. So, there is no way it can create a standing army, 
but a rapid deployment headquarters is. So, everybody who 
looked at the capability of the U.N. to set up a peacekeeping 
operation thought this was a good thing to do.
    We contributed to it. We contributed out of a voluntary 
peacekeeping account--it is not our IO account--toward this. It 
is set up and it is, I think, a good thing. If the DPKO thinks 
it is a step toward a standing army, they are in trouble, 
because we would veto any standing army in this Security 
Council. We have always been opposed to it.
    Senator Grams. Well, when you mention a rapid deployment 
headquarters, it has to basically set up, then, a structure of 
command. Once that is in place----
    Mr. Lyman. It sets up for a peacekeeping operation that is 
approved.
    Senator Grams. Right.
    Mr. Lyman. Yes.
    Senator Grams. But it would set up a structure.
    Mr. Lyman. Yes.
    Senator Grams. A line of command. There are many of us who 
fear the word ``incrementalism.'' That if you set a structure 
in place, it is only a matter of time that we are going to be 
moving closer and closer, from a rapid deployment to a national 
guard-type commitment, to a standing army. So, that is why we 
are very concerned and want to nip this in the bud, and to make 
our feelings very strongly opposed to it.
    Mr. Lyman. I take your point, Senator. We are absolutely 
opposed. It would be a mistake for the U.N. to even move in 
that direction.
    The only way the headquarters operates is if the United 
Nations, let us say, sets up a peacekeeping operation in 
country X, and says, OK, we authorize 3,000 peace keepers. Then 
and only then can this deployable headquarters go out there and 
set up the structure for when these 3,000 people arrive. But 
until the Security Council authorizes a peacekeeping operation, 
they are sitting there. They do not have the authority or 
resources to call on anybody.
    So, it is to improve their ability, once we approve it, but 
it is not a standing army, and we will not ever in the Security 
Council permit a standing army.
    Senator Grams. All right. Well, thank you. Do you mind if I 
check with the staff to see if we have covered everything?
    Mr. Lyman. You are happy to. I mean, I am happy for you to 
do so. But I am not sure I will ever satisfy you. They always 
have hard questions for us.
    Senator Grams. Well, thank you very much, Mr. Secretary. I 
appreciate your time in coming up today.
    Mr. Lyman. Thank you, Senator. I appreciate your interest.
    Senator Grams. All right. We will talk to you later this 
year. Thank you very much.
    The hearing is concluded.
    [Whereupon, at 5:10 p.m., the hearing was adjourned, 
subject to the call of the Chair.]