University of Macerata 2014-2015 Prof. Avv. Roberto Baratta, PhD International Organisations Law 9

Financing IIs Financing IIs is an issue of utmost practical relevance – IIs may deliver results as long as they have the necessary funds to carry out policy decisions adopted by their organs. Capacity to make payments matters: it is an important tool to exercise political influence. It is a delicate topic to highlight the relationship between II and its MS Costs of running an II are: a) administrative costs; b) operational costs. MS usually have an obligation to pay some form of fee or contribution. In addition, there may be voluntary contributions. As to the EU, it is assumed that it is the institution itself which can boast its own resources

Organization’s budget IIs constituent treaty provides in principle for a procedure It is usually prepared by the institution’s administrative organs and, after consultations with other bodies, is submitted for decision to the plenary organ. In the UN: i) the various departments of the Secretariat propose a sectorial budget concerning their own activities; ii) the Secretary-General makes a comprehensive draft; iii) that draft is submitted to one of the standing committee of the General Assembly; iv) the GA adopts (if necessary, after revision) it by a two-third majority

Expenditure The ordinary expenditure of IIs is mostly related to their existence: the lease or rent of buildings, the salaries of staff, the organizations of conferences, costs of maintenance, libraries etc. Operational expenses sometimes occur: for instance, the UN sends peace-keepers all over the world, and special rapporteurs, fact-finding missions, and election monitors the ICAO helps its MS to improve airport safety the financial institutions lend money to MS in need

Issues concerning expenses The main legal issue arising with expenses is about the legality of a given type of expense in respect with the scope of the activities of the org. In the UN, the GA decides (by a two-third majority) which states shall pay how much, by making use of the so-called ‘scale of assessment principle’. It is based on the capacity to pay, largely depending on national income, national per capita income and the general level of development Article 19 sets out a sanction: if the amounts of arrears equals or exceeds the amount of contributions due from a MS for the preceding two years, than the MS shall have no vote in the GA

Issues concerning expenses 2 Suspensions of voting rights occurs atomatically. An issue arose when the GA decided to organize peace-keeping operations in the Middle East (UNEF, 1956) and Congo (ONUC, 1960). Two permanent members of the SC refused to pay their contributions, arguing that the those operations were not ordained by the SC. So, these states argued, they were illegal and nobody was expected to pay illegal actions

Issues concerning expenses 3 ICJ Opinion 1962: Do missions authorized by the SC fall within the meaning of ‘expenses of the Org.’ under Article 17 UN Treaty? ICJ held that the GA was entitled to deal with the maintenance of international peace and security, and that legitimate expenses may arise in that regard, though the UN treaty is silent on peace-keeping operations. It focused on the fact that if an expenditure is made for pursuing a purpose of the UN, than it is an expense of the org. ICJ bolstered its conclusion by pointing out that when the issue of sending troops to Middle East and Congo had been discussed in the GA, no objections were raised. Objections must be raised when the organ is acting. So acquiescence is to be presumed.

EU system of own resources As envisaged by the constituent instruments, a system of own resources has been devised and adopted through several decisions. Basically, three resources are provided for: i) Custom duties; ii) agricultural levies; iii) MS would pay part of their Value Added Tax (VAT) collections to the EU Attractiveness of the idea that IO may have their own resources. This definition is however something of misnomer, since they are actually collected by MS authorities, and more fundamentally are revenues which come from the MS national budgets