Russia and China bridle at paying UN more

By Mark Turner 
March 24, 2006
The Financial Times
Original Source: http://news.ft.com/cms/s/bf43398a-bb65-11da-8f51-0000779e2340.html

The US has sparked protests from Russia and China by proposing a fundamental change to the way contributions to the United Nations are calculated that would make them pay more.
The US, the organisation’s biggest contributor, wants to shift from a formula broadly based on gross national income (GNI) to one that takes account of purchasing power parity (PPP) – a tool used by economists to compare living standards in different countries more accurately.
In testimony prepared for a congressional hearing, before that hearing was delayed, John Bolton, the US ambassador to the UN, argued that the GNI-based calculations could be “greatly skewed by distortions introduced into the marketplace by currencies which are non-convertible”. By using PPP indicators “as an important economic tool in its discussions of scale of assessments”, Mr Bolton says, the UN would be “be better equipped and have more balanced data”.
But the move is a clear challenge to China and Russia, and to developing countries, whose relative wealth is considerably higher when measured by PPP.
“PPP would radically shift the balance,” said one UN diplomat. “Developing countries would pay a lot more.”
China would be particularly affected: its share of world GNI is about 4 per cent, a UN economist said, but when measured by PPP it rises to 12 per cent.
Currently China contributes only 2.1 per cent of the UN’s budget, while Russia accounts for 1.1 per cent. By contrast, the US pays 22 per cent, and France and the UK each pay about 6 per cent.
Wang Guangya, China’s ambassador to the UN, told the FT that Beijing was “definitely opposed” to a PPP-based formula. He said there was no consensus on how it should be measured.
Andrey Denisov, the Russian ambassador, similarly hit out against the proposal, saying that Moscow was ready to consider increasing its contribution but that this had to be done “in a voluntary way”, through a “more fair, less induced” mechanism.
The US proposal is being made as European countries seek to increase or remove a cap that limits to 22 per cent the percentage of the UN’s core budget paid by any one member state. Without that cap, the US contribution would rise to more than 30 per cent under the current formula, a diplomat said. Meanwhile Japan is pushing what its diplomats describe as a more “modest proposal”, which does not use PPP. It wants permanent members of the Security Council to pay at least 3 or 5 per cent of the core budget.
The US and Japanese proposals will be considered among others by an expert committee in June, ahead of a final decision by the end of the year.