The Organisation of American States is in a deep financial crisis
IT IS LITTLE KNOWN outside of the Organisation of American States (OAS) and even among its member Governments that it has been in a financial crisis for several years.
The Organisation has survived over the last three years particularly because the two countries that make the large contributions to its regular and special funds have continued to pay.
But, even with the regular payments of 70 per cent of the annual regular budget of the institution by the United States of America and Canada, it has been in financial difficulties. There are two reasons for this: first, five countries have persistently been in arrears of payment of their full quotas; and second, the institution has been given mandates without money to execute them.
This year crunch time has arrived. It was not a task that could be shirked. Therefore, as the Permanent Council convened for its first meeting for 2106 on January 21, as Chairman I delivered the following call to arms to the 33 other Ambassadors representing all the independent countries of the Americas and the Caribbean except Cuba.
“You will recall that at the formal handing over of the Chairmanship of this Council on January 15, I had indicated in my remarks my deep concern about the financial health of the Organisation and my profound anxiety about its capacity to continue to operate, and to serve the interests of the people of our member states.
I had said then that, as Chairman of the Permanent Council, I would be delinquent in my responsibility to the Organisation if I did not urge this Council to give this matter the serious and immediate attention it requires and deserves.
The Organisation’s financial situation is dire. Addressing it cannot be delayed. The very existence of the Organisation is now at risk – and that is not an exaggeration. We start this year with a deficit of almost $19.7 Million. Additionally, the Organisation has no reserve funds. The reserve fund was fully utilised to keep the Organisation functioning, and then only barely. To carry out its operations, the Organisation has been borrowing from Special Funds to finance its regular work.
This is obviously not sustainable for two reasons: First, donors to the Special Funds provide these monies for specific purposes within their national laws and regulations. When the funds are not utilised in the way they were intended, a violation occurs which could lead to their termination. Second, the resources used to address the shortfall have come from the Department of Human Development, Education and Employment. This not only limits the capacity of the Organisation to perform in these vital areas, it also affects the programmes of great value to the majority of member states and their peoples.
For some time now, the Organisation has not been adequately staffed, and programmes and projects have suffered as a result. Staff morale is extremely low, because everyone is aware of the dreadful financial circumstances and are worried about their future. This has led to an outflow of capable people that the Organisation desperately needs.
As the body responsible for overseeing the good governance and the effectiveness of the Institution, we – the Permanent Council – have a special and vital responsibility. Action can no longer be delayed. We have a Budget for 2016 that is unrealistic in absolute terms. It is clear that a new, realistic Budget is required. And, it has to be a Budget supported with actual resources. Therefore, the overall financial future of the Organisation has to be addressed urgently, and solutions have to be found.
There is also the matter of arrears of contributions. This too has to be considered. I want to emphasise that considering the matter of arrears is not directed at any member state and has no political motive. If we fail to act to address these problems now, we may well be presiding over the demise of the Organisation which I know not one of us wants to do.
Therefore, we will hear a presentation from the Secretary for Administration and Finance, Ambassador Jay Anania, after which I encourage a full discussion between us. It is my fervent hope that together we might agree on proposals for going forward”.
A very spirited but serious discussion followed this address and a very sobering presentation by Jay Ananias in which he confirmed that the total balance due to the Organisation by a few defaulting states at the end of last year is US$19.7. He also revealed that the Budget, recently approved for 2016, was unrealistic to carry out the mandates given to the Organisation and to meet its responsibilities to staff. While a Budget of US$84 Million had been approved, a realistic number would be closer to US$115 Million.
Of great concern to the smaller member states of the Organisation, particularly those from the Caribbean, is there is a shortfall of US$3.2 Million in the existing 2016 Budget and it is proposed that it be filled by cutting expenditure in the Department of Human Development, Education and Employment. This is the Department that provides, among other things of benefit to Caribbean countries, scholarships and fellowships for nationals to pursue higher education and training. There was therefore a justified argument from Caribbean delegations against cuts that focussed exclusively or in large measure on this Department.
The OAS has many other values to the Caribbean that space does not permit me to elaborate in this commentary. Suffice to say that the crippling or demise of the Organisation would not be in the Caribbean’s interest. For that matter, to one extent or another, it is not in the interest of any member state to deprive itself of the many opportunities the organisation provides, including for diplomacy to address conflicts and open doors to dialogue.
All the country representatives at the meeting reaffirmed their commitment to the Organisation and expressed a desire to tackle its problems realistically. That was the easy part. As Chair, I appointed three Committees to deal with the issues of a realistic Budget, the arrears owed to the Organisation, and its management and financial future.
That is the hard part, and it now lies squarely before member states.