continuation of which in 1949 had not been authorized and for which the Secretary-General accordingly had not included estimates in his 1949 budget proposal. However, as noted by the Advisory Committee, the reduced estimates also reflected certain administrative reforms during 1948. Further, the Secretariat's estimates had been prepared more realistically and were justified more adequately than in 1948. The United States position generally was to support most of the Secretary-General's estimates as modified by his acceptance of substantially all of the Advisory Committee's recommendations for reduction. In a few cases, particularly the estimates for advisory socialwelfare activities, the United States supported increases; in other cases, such as the estimate for expatriation allowances for members of the staff of the Secretariat, the United States pressed for decreases. The result of reductions and additions made by the Fifth Committee during the first reading of the budget was provisional approval of a budget of about $32,480,000. The difference between this figure and the amount of $43,487,128, which was finally adopted, is largely accounted for by authorizations for the continuation or initiation of activities not included in the original estimates, such as the Conciliation Commission in Palestine ($3,000,000), the Special Committee on the Balkans ($1,347,300), the Korean Commission ($334,000), the Kashmir Commission ($326,089), the Indonesian Good Offices Committee ($215,114), adoption of Spanish as a third working language in the General Assembly ($300,000), and the holding of the Second Part of the Third Session in April ($336,000). SCALE OF MEMBER ASSESSMENTS The scale of assessments for member contributions to the budget for 1949 remains substantially the same as the scale of assessments for 1948. As in 1948, the United States share in 1949 is 39.89 percent of the aggregate assessment of Members. The admission of Burma made it possible to adjust the shares of two Members who clearly had been overassessed in 1948, but the percentage contributions of other Members are not affected. This year, for the first time, a country which is not a Member of the United Nations but which has accepted the Statute of the International Court of Justice-Switzerland-is assessed a share of the expenses of the Court. Although the scale of assessments has not been changed fundamentally for 1949, the General Assembly adopted a resolution which anticipates an eventual ceiling of 33.33 percent of the total assessments as the maximum which any one Member will be assessed in normal times. United States delegations have sought acceptance of this principle at each regular session of the Assembly since 1946. The resolution which was finally adopted is the result of extended negotiations in a working group of the Fifth Committee and reflects directly the efforts that have been made each year since the United States Delegation at the Second Part of the First Session in 1946 first propounded the concept of a percentage ceiling for the scale of contributions. The resolution of the General Assembly accepts "the principle of a ceiling to be fixed on the percentage rate of contributions of the Member State bearing the highest assessment" and recognizes in the preamble "that in normal times no one Member State should contribute more than one-third of the ordinary expenses of the United Nations for any one year." This resolution represents acceptance in principle of the position consistently maintained by the United States that, although relative capacities to pay must be regarded as a major factor in determining the scale of member contributions for a universal organization such as the United Nations, the concept of sovereign equality and its corollary of equal responsibilities must also be considered. In light of the opposition expressed by other Members in previous years, this resolution may be regarded as a significant accomplishment by the United States in the administrative and budgetary field. Full implementation of the ceiling principle is not expected for several years. Because of the obvious dollar shortage experienced by almost all of the other Members (assessments are paid in dollars), the United States Delegation made it clear that it expected application of a ceiling when consistent with the financial ability of the Members to meet dollar assessments. CONSTRUCTION OF PERMANENT HEADQUARTERS Pursuant to a resolution adopted by the General Assembly in 1947 in response to an offer made by the United States, the Secretary-General negotiated an agreement with the United States Government for an interest-free loan of $65,000,000 to be used for construction of the permanent headquarters of the United Nations in the city of New York. The offer to negotiate such an agreement was made with the specific reservation that it would be subject to approval by the Congress." 7 The background of the problem of financing the headquarters construction is set forth in The United States and the United Nations: Report by the President to the Congress for the year 1947, Department of State publication 3024, pp. 8386. The agreement provides that the Government of the United States will lend to the United Nations sums not to exceed in the aggregate $65,000,000, which shall be expended only for the construction and furnishing of the permanent headquarters in the United Nations Headquarters District in the city of New York. The United Nations will repay the loan, without interest, in 32 annual payments beginning July 1, 1951. The United Nations agrees that, while any part of the indebtedness is outstanding, it will not create any mortgage, lien, or other encumbrance against the real property in the Headquarters District. On April 7, 1948, the President transmitted the headquarters loan agreement to the Congress and urged its approval. Before the close of the regular session, the Senate passed Senate Joint Resolution 212 authorizing the President, after the Congress shall have appropriated the necessary funds, to bring the loan agreement into effect on the part of the United States. The House of Representatives completed action on this legislation during the special session of the Congress, and the legislation became law (Public Law 903, 80th Congress) upon signature by the President on August 11. The legislation approved the agreement as signed, adding provisions designed to assure that construction will proceed as planned and that advances will be called for only as needed. The legislation also authorizes and directs the Reconstruction Finance Corporation to make advances not to exceed in the aggregate $25,000,000 pending appropriation of the full amount of $65,000,000. The General Assembly approved by acclamation the report of the Secretary-General on the agreement and the construction plans; expressed appreciation of the cooperation extended by the Government of the United States, the State of New York, and the city of New York; and applauded a statement of gratitude to the United States made by Assembly President Herbert Evatt. Special messages by Mr. Evatt to the President, to the Governor of New York, and to the Mayor of the city of New York supplemented the General Assembly action. The headquarters site was acquired in March 1947 by the United Nations as a gift from John D. Rockefeller, Jr. It is located in New York between 42d Street and 48th Street and between the East River and First Avenue. The plans envisage three major structural units: a meeting hall for the General Assembly, a conference area housing the chambers for meetings of the Councils and other conference and committee rooms, and an office building for the Secretariat. Supplementing construction on the site itself, the city of New York is moving ahead with a program of developing and improving the approaches to the site at an estimated cost to the city of $20,000,000. Since September the necessary excavation work has proceeded ahead of schedule. Excavation for the entire project is estimated to be approximately 80 percent complete as of the beginning of this year. A contract for the construction of the Secretariat building and for the construction of all of the foundation work has been let. It is anticipated that the Secretariat building will be completed during the latter part of 1950 and that the entire project will be finished by the summer of 1951. STAFF ASSESSMENT PLAN One of the most significant decisions made by the General Assembly was the decision to institute, as of January 1, 1949, a staff assessment scheme for the Secretariat. Staff assessments are a form of internal income tax levied by the organization on the compensation received by staff members from the United Nations. One of the earliest conclusions with respect to personnel matters reached by the General Assembly was that equality of treatment for the staff could not be achieved so long as staff members were subject. to diverse systems of national income taxation. While some persons would be immune from taxes, others receiving the same salaries for similar jobs would pay taxes at varying rates. To eliminate this inequity, Members were requested to exempt from national taxation incomes received from the United Nations. At the same time, it has always been recognized that the granting of immunity from national income taxation would create a group of tax-privileged international public servants unless the United Nations itself acted to prevent such an undesirable result. The Secretary-General was instructed to study the problem and submit to the General Assembly proposals for a scheme of internal staff assessments. To facilitate consideration of the Secretary-General's proposals, the Fifth Committee called upon a group of tax legislation experts, one from each of the following countries: France, the Netherlands, the United Kingdom, the United States, and Uruguay. On the basis of the tax experts' unanimous report, which was received and revised in minor detail by the Fifth Committee, the General Assembly adopted the staff assessment scheme by a vote of 35 to 1, with 2 abstentions. The rates of assessment are higher than the United States income tax rates for 1947 and lower than the Canadian rates. (United States and Canadian nationals are presently the only members of the Secretariat who are subject to national taxation on their United Nations incomes.) The scheme incorporates the progressive features of all modern income-tax systems. It takes into account differences in family and dependency status, and the rates are progressively higher for persons in the higher salary brackets. United Nations salaries have been fixed on a "net" basis in the past. The salary scales for comparable employment in the area of the headquarters were taken as a guide and then reduced so that the "takehome" pay of United Nations personnel would be comparable to outside income after (United States) taxes. It is necessary therefore to adjust the United Nations salaries upward to assure that staff members will continue to have roughly the same net salaries after assessment deductions. The importance of these actions should not be underestimated because of the appearance of an immediately neutralized result. The significant aspects are these: (a) the staff assessment system assures that the granting by national governments of tax exemption for United Nations salaries to assure equal treatment for members of the Secretariat will not create a tax-privileged group of international public servants; (b) as conditions of employment outside the Secretariat change, the staff assessment system will provide a flexible means of achieving suitable adjustments; and (c) appropriate recognition now exists, as on the national level, for differences in marital and dependency status among employees. Pending action by Member governments to relieve their nationals who are in the Secretariat from liability for what would otherwise be a form of double taxation, the Secretary-General is authorized to reimburse employees for taxes paid on their 1949 salaries. APPOINTMENTS TO FILL VACANCIES IN Appointments to fill vacancies on subsidiary bodies which are composed of experts serving in their individual capacities are normally accomplished with a minimum of negotiation and debate. This year the continuation in office of one expert whose terms of office on the Contributions Committee and the Administrative and Budgetary Committee do not expire until December 31, 1950, and December 31, 1949, respectively, became a matter of heated discussion involving a significant principle. Dr. Jan Papanek, a Czechoslovak national, had become persona non grata with the Czechoslovak Government following the establishment of a Communist regime in the spring of 1948. The Czechoslovak Delegation requested the General Assembly to terminate his office in both committees. The basic issue involved was whether an individual |