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111th Congress  }                                           {   S. Prt.
  2d Session    }          COMMITTEE PRINT                  {    111-42                                                                _______________________________________________________________________
 
                    MULTILATERALISM IN THE AMERICAS: 
                     LET'S START BY FIXING THE OAS 

                               __________

                                A REPORT

                                 TO THE

                     COMMITTEE ON FOREIGN RELATIONS

                          UNITED STATES SENATE

                     One Hundred Eleventh Congress

                             Second Session

                            JANUARY 26, 2010

                                     
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                 COMMITTEE ON FOREIGN RELATIONS        

             JOHN F. KERRY, Massachusetts, Chairman        
CHRISTOPHER J. DODD, Connecticut     RICHARD G. LUGAR, Indiana
RUSSELL D. FEINGOLD, Wisconsin       BOB CORKER, Tennessee
BARBARA BOXER, California            JOHNNY ISAKSON, Georgia
ROBERT MENENDEZ, New Jersey          JAMES E. RISCH, Idaho
BENJAMIN L. CARDIN, Maryland         JIM DeMINT, South Carolina
ROBERT P. CASEY, Jr., Pennsylvania   JOHN BARRASSO, Wyoming
JIM WEBB, Virginia                   ROGER F. WICKER, Mississippi
JEANNE SHAHEEN, New Hampshire        JAMES M. INHOFE, Oklahoma
EDWARD E. KAUFMAN, Delaware
KIRSTEN E. GILLIBRAND, New York
                  David McKean, Staff Director        
        Kenneth A. Myers, Jr., Republican Staff Director        

                              (ii)        

                            C O N T E N T S

                              ----------                              
                                                                   Page
Letter of Transmittal............................................     v

Introduction.....................................................     1

Background.......................................................     2

Observations.....................................................     4

    Unfunded Mandates and Finances in Dire Condition.............     4

    Selective Intervention in Defense of Democracy...............     6

Recommendations..................................................     9

    Improving the OAS's Financial Sustainability.................    10

    Making the OAS an Effective Defender of Regional Democracy...    12

Conclusion.......................................................    15

                               Appendixes

Appendix I.......................................................    17
Appendix II......................................................    19
Appendix III.....................................................    21
Appendix IV......................................................    23

                                 (iii)

                         LETTER OF TRANSMITTAL

                              ----------                              

                              United States Senate,
                            Committee on Foreign Relations,
                                  Washington, DC, January 26, 2010.
    Dear colleague: United States interests are served in 
strengthening multilateral institutions on behalf of effective 
democratic governance in the Western Hemisphere. As the primary 
institution of the inter-American system, the Organization of 
American States (OAS) is crucial to such an effort. Yet the 
organization faces serious financial and political challenges 
that demand the attention and leadership of its member-states.
    I directed my senior Senate Foreign Relations Committee 
(SFRC) staff member for Latin America, Carl Meacham, to examine 
these challenges in light of recent events. The OAS faces two 
primary challenges. First, in 2009, the OAS's abortive attempt 
to resolve the political crisis in Honduras exemplified its 
difficulty in addressing threats to democracy in their early 
stages, as previously observed in countries such as Venezuela 
and Nicaragua, where elected presidents have undermined 
democratic institutions. Second, following years of chronic 
budget difficulties, the OAS approved a 2010 budget that 
effectively depletes the organization's reserve funds, leading 
to an unsustainable financing shortfall. At the same time, the 
OAS is expected to address hundreds of new mandates generated 
at the Summits of the Americas and by the General Assembly.
    This report, by Mr. Meacham with significant contributions 
from Kezia McKeague, is particularly timely given the upcoming 
election of the OAS Secretary General. It provides 
recommendations for the United States Government, which remains 
the organization's top donor. Yet I hope it will help stimulate 
a broader debate on the critical situation confronting the OAS, 
for multilateral institutions are only as strong as the 
commitment of their member-states. The OAS requires a renewed 
effort to make it effective and financially solvent in the 
coming decade.

                                  (v)

                                     

    I also wish to commend the OAS and the OAS-affiliated non-
profit organization, the Pan American Development Foundation 
(PADF), for their important work in providing emergency 
humanitarian relief to the people of Haiti in the wake of the 
January 12 earthquake.
    I hope you find this report helpful as the U.S. Congress 
considers how to advance U.S. interests in hemispheric affairs. 
I look forward to continuing to work with you on these issues, 
and I welcome any comments you may have.
            Sincerely,
                                          Richard G. Lugar,
                                                    Ranking Member.

                    MULTILATERALISM IN THE AMERICAS:
                     LET'S START BY FIXING THE OAS

                              ----------                              

                              Introduction

          What is at stake with Honduras is nothing less than 
        the credibility of the OAS and its members in living up 
        to the call for the collective defense of democracy 
        enshrined in the Charter.--Arturo Valenzuela, Assistant 
        Secretary of State for Western Hemisphere Affairs\1\
---------------------------------------------------------------------------
    \1\ Remarks at Closed Meeting of the Permanent Council of the 
Organization of American States by Arturo Valenzuela, Assistant 
Secretary, Bureau of Western Hemisphere Affairs, Washington, DC, 
November 23, 2009.

    The ongoing political challenges in Honduras continue to 
raise questions about the appropriate role of the Organization 
of American States (OAS) in U.S. foreign policy and in 
hemispheric affairs. As Assistant Secretary Valenzuela made 
clear in remarks to the Permanent Council of the OAS, the 
organization's credibility largely depends on how it responds 
to threats to democratic governance in the region. Despite the 
advances made since the end of the Cold War, including the 
Inter-American Democratic Charter, the Honduras case highlights 
the limitations of the OAS's capacity for preventing and 
responding to both coups d'etat and the gradual erosion of 
democratic institutions by elected leaders.
    Meanwhile, the OAS is facing a crisis much less understood 
by the media or the public: a financial shortfall coupled with 
a proliferation of mandates, which now total over 1,700.\2\ 
With an operating budget that has stagnated for more than a 
decade, the organization is overstretched. Yet its member-
states have failed to prioritize among competing programs, 
choosing instead to exhaust the organization's reserve funds.
---------------------------------------------------------------------------
    \2\ A compendium of mandates from the last 3 years is available at 
http://lugar.senate.gov.
---------------------------------------------------------------------------
    Many of these limitations are inherent to a multilateral 
institution of 35 sovereign states. ``The OAS is neither a 
self-contained nor self-executing entity,'' noted a former U.S. 
diplomat interviewed for this study. Instead, its various 
collective decision-making organs operate based on consensus in 
a diplomatic environment increasingly marked by ideological 
division. Moreover, the increased importance of sub regional 
bodies, such as the Rio Group and the newly established UNASUR, 
has sidelined the organization in the policy formulations of 
many of the region's most influential governments.\3\
---------------------------------------------------------------------------
    \3\ The Rio Group is an organization of Latin American and some 
Caribbean states that was created in 1986. It does not have a 
secretariat or permanent body, and instead consists of annual summits 
of heads of state. Spearheaded by Brazil, the Union of South American 
States (UNASUR) is a more recent initiative, whose founding treaty was 
signed in 2008 by all twelve South American nations. Both the Rio Group 
and UNASUR exclude the United States.
---------------------------------------------------------------------------
    Nevertheless, the OAS continues to play an essential role 
more than 60 years after its creation. It is the only regional 
institution that encompasses all the democracies in the Western 
Hemisphere, and it provides a multilateral forum for the United 
States to engage with Latin America and the Caribbean on issues 
of mutual concern. The organization's commonly acknowledged 
strengths include election monitoring, cooperation on counter-
narcotics and counter-terrorism, and the protection of human 
rights through its two autonomous bodies, the Inter-American 
Commission and Court on Human Rights.
    At the direction of Senator Lugar, this study examines the 
converging financial and political challenges now facing the 
OAS. Although it is beyond the scope of this report to consider 
the OAS's work in other core issue areas, the focus on 
financial stability and defense of democracy reflects the most 
pressing concerns for both the future of the organization and 
U.S. interests. In Washington, DC, staff met with the Secretary 
General of the OAS, Jose Miguel Insulza, and other senior OAS 
officials, the U.S. Mission to the OAS, current and former 
permanent representatives to the OAS, diplomats, and regional 
analysts (see Appendix I for complete list of meetings).
    The first section of this report provides background on the 
structure and activities of the organization, while the 
observations section analyzes the OAS's dire financial 
situation and the challenges that face the OAS in defending 
democracy in the region. The final section develops policy 
recommendations for the United States Government (USG).

                               Background

    The OAS evolved from a series of Inter-American conferences 
that began in the 1820s and led to the creation of its 
predecessor, the Pan American Union, in 1910. In 1948, the 
United States and 20 Latin American nations signed the Charter 
of the Organization of American States in Bogota, Colombia. The 
OAS has since expanded to include Canada and the Caribbean 
countries. According to the Charter, the essential purposes of 
the OAS are to strengthen the peace and security of the 
continent; promote and consolidate representative democracy; 
ensure the pacific settlement of disputes; and promote 
economic, social, and cultural development.
    The annual General Assembly is the supreme policy-making 
organ of the OAS. It is composed of the delegations of each 
member-state, with each state having the right to one vote. It 
adopts its own rules of procedure, determines the structures 
and functions of the other OAS bodies, deliberates on current 
issues, sets the member-state contribution quota, approves the 
program-budget, and sets the standards that govern the General 
Secretariat. While the General Assembly tends to operate by 
consensus, it is empowered to adopt most decisions with the 
affirmative vote of an absolute majority of member-states. A 
two-thirds vote is necessary for certain decisions, such as the 
adoption of the agenda and the approval of budgetary 
matters.\4\
---------------------------------------------------------------------------
    \4\ Meyer, Peter. Congressional Research Service Memo on Background 
on the Organization of American States. Requested by minority staff of 
the Senate Foreign Relations Committee. 31 August 2009.
---------------------------------------------------------------------------
    The Permanent Council meets regularly throughout the year 
at OAS headquarters in Washington, DC to conduct the day-to-day 
business of the organization. Like the General Assembly, the 
Permanent Council is composed of one representative of each 
member-state, with each state having one vote. A two-thirds 
vote is necessary for most Permanent Council decisions, though 
the Council tends to operate by consensus.\5\
---------------------------------------------------------------------------
    \5\ Ibid.
---------------------------------------------------------------------------
    While the General Assembly and Permanent Council set the 
policies of the OAS, the General Secretariat is the permanent 
body charged with implementing them. The General Secretariat is 
directed by the Secretary General and Assistant Secretary 
General, who are elected to five-year terms--with the 
possibility of one reelection-by the General Assembly. Under 
Chapter XVI of the OAS Charter, the Secretary General's formal 
powers include serving as legal representative of the 
organization, participating in all OAS meetings with a voice 
but without a vote, and establishing the offices and hiring the 
personnel necessary to implement the mandates given to the 
General Secretariat. Additionally, a 1988 amendment to the OAS 
Charter empowered the Secretary General to bring any matter 
that may threaten the peace and security of the hemisphere to 
the attention of the General Assembly or the Permanent 
Council.\6\ The current Secretary General, Jose Miguel Insulza 
of Chile, was elected in 2005.
---------------------------------------------------------------------------
    \6\ Article 110, Chapter XVI.
---------------------------------------------------------------------------
    While the OAS dealt primarily with border disputes and 
collective security issues in its first years, it has steadily 
expanded its activities into a variety of other areas. The 
organization has identified four ``pillars'': democracy, human 
rights, security, and development.\7\ On democracy promotion, 
in particular, the OAS has taken a much more active role since 
the end of the Cold War and the return to democratic governance 
in much of the hemisphere. In 1990, the organization created 
the Unit for the Promotion of Democracy, a specialized 
department for fostering democratic practices in the 
Americas.\8\ In 1991, the General Assembly adopted Resolution 
1080, which instructed the Secretary General to convoke the 
Permanent Council or the General Assembly in the event of an 
interruption of democratic governance among one of the OAS 
member-states. The following year, the Washington Protocol 
allowed the suspension of a member-state for the forceful 
overthrow of a democratically constituted government. The 
fourth and most important instrument, the Inter-American 
Democratic Charter, was adopted on September 11, 2001. 
Affirming the universal right to democratic governance, it 
provided a set of definitional criteria for representative 
democracy to be used as benchmarks in the collective defense of 
democracy in the Americas.
---------------------------------------------------------------------------
    \7\ Organization of American States website: ``What We Do.'' http:/
/www.oas.org/en/about/what--we--do.asp
    \8\ The Unit for the Promotion of Democracy has since been merged 
into the Secretariat for Political Affairs, which is composed of three 
departments: State Modernization and Governance; Electoral Cooperation 
and Observation; and Democratic Sustainability and Special Missions.
---------------------------------------------------------------------------
    The OAS budget consists of three separate funds. The 
Regular Fund supports the General Secretariat and is primarily 
financed through member-state quotas, which are calculated 
based on gross national income, with adjustments for debt 
burden and low per capita income. The Regular Fund is divided 
into two Subfunds: the Operations Subfund and the Reserve 
Subfund. Another large portion of the OAS budget comes from 
specific funds, voluntary contributions that are directed to 
specific projects or programs. The OAS has collected specific 
funds since 1997 in order to supplement shortages in the 
Regular Fund. The final portion of the OAS budget is the 
Special Multilateral Fund of the Inter-American Council for 
Integral Development (FEMCIDI or Voluntary Fund), through which 
countries can contribute to the financing of national and 
multilateral development programs. The 2010 program-budget 
appropriated $178 million, of which $90.1 million come from the 
Regular Fund and $88 million from voluntary funds and 
contributions to specific projects. As the top source of 
funding, the USG is responsible for 59.47 percent of the 
member-state quota, totaling $47 million in FY2009. The USG 
also contributes an average of $20 million annually to specific 
and voluntary funds.\9\
---------------------------------------------------------------------------
    \9\ According to OAS officials, the U.S. contribution to the 
overall OAS budget, including all specific funds, amounts to 
approximately 37.64 percent.
---------------------------------------------------------------------------

                              Observations

Unfunded Mandates and Finances in Dire Condition
    The OAS continues to face persistent budget difficulties. 
Until a modest increase in 2006, the regular fund had been 
straight-lined for over 10 years with no adjustment for 
inflation. Increases in non-discretionary costs have made it 
more difficult to carry out programs and made the OAS more 
reliant on voluntary contributions. Yet the organization's 
financial situation is even more dire today, according to 
information provided by OAS officials. For the past two years, 
the General Secretariat has increased expenditures by relying 
on the organization's Reserve Subfund without the expectation 
of member-states increasing their quotas. With the Reserve 
Subfund now depleted, the projected financing shortfall for 
2011 is $9.6 million, leading to what one OAS official called 
``a cliffhanger.''
    At the same time, the OAS has been given an increasing 
number of mandates as the organization approved new documents 
like the Inter-American Democratic Charter and the Summits of 
the Americas Declarations and Plans of Action. For instance, 
the first four Summits alone produced almost 650 mandates 
addressing nearly every issue facing the nations of the 
hemisphere, while other mandates have originated from General 
Assembly resolutions. The U.S.-chaired Board of External 
Auditors, which is charged with examining the accounts of the 
General Secretariat, has identified approximately 1,700 
existing mandates. Although some mandates do not require 
funding, many others have not been properly funded or 
fulfilled. Some analysts have suggested that the OAS's 
financial situation is partially a consequence of this 
broadened agenda, which led to a proliferation of committees, 
directorates, and consultants that are largely unaccountable 
and only tangentially related to the organization's core 
mission.
    As a result of financial difficulties in the region and a 
reluctance to adjust the country quotas, the OAS is unlikely to 
receive adequate financial support to either resolve its budget 
shortfall or to implement ever increasing mandates. According 
to some analysts, the organization's recurring budgetary crisis 
is ``a demoralizing institutional weakness . . . [that] 
constrains the OAS's ability to establish priorities and plan 
ahead, to recruit and retain top level staff, conduct high 
quality programs, and initiate urgently needed activities.'' 
\10\ Moreover, the OAS has deferred maintenance on its property 
and other tangible assets to the point that engineers have 
identified serious deficiencies in need of urgent repairs. 
These deficiencies endanger the health and safety of employees 
as well as the preservation of properties of historical 
significance.
---------------------------------------------------------------------------
    \10\  Inter-American Dialogue, Responding to the Hemisphere's 
Political Challenges: Report of the Inter-American Dialogue Task Force 
on the Organization of American States, June 2006.
---------------------------------------------------------------------------
    In 2009, the Board of External Auditors advocated ``the 
need for member-states to seriously challenge and reduce the 
number of mandates to a mutually agreed core of important work 
commensurate with the organization's founding principles and 
purposes.'' The task of prioritization, however, is complicated 
by the political nature of the OAS and the divergent interests 
of its member-states. Security challenges, for example, mean 
``crime in the street for Mexico and climate change for the 
Caribbean,'' as one permanent representative put it. Moreover, 
for some member-states the OAS is primarily a political 
organization that should focus on democracy and human rights, 
while others, including the Caribbean countries, many of which 
are not members of the Inter-American Development Bank (IDB), 
insist that development must remain an integral part of the OAS 
agenda. As a follow-up to their meeting with staff regarding 
this study, the Caribbean diplomatic delegations to the OAS 
sent a letter to Senator Lugar emphasizing the significance of 
OAS development programs to their interest in the OAS (letter 
attached in Appendix II).
    If the OAS is to maintain the support of all member-states, 
it should examine its agenda ``topic by topic, program by 
program, mandate by mandate'' to determine which contribute to 
the viability of the organization as a whole, a permanent 
representative told staff. As Secretary General Insulza 
acknowledged in his inaugural speech, the OAS requires a 
``targeted agenda'' and a greater linkage between mandates and 
the budget in order to become more effective. A positive step 
in this direction is the creation of a working group to 
determine member-states' priorities for the 2011 budget.\11\ 
Moreover, according to OAS senior officials, the General 
Secretariat plans to move towards a results-based budget over 
the next two years that will emphasize outputs and outcomes. In 
December 2009, the Permanent Council adopted a resolution 
establishing a formal linkage between the annual formulation 
and adoption of resolutions by the General Assembly and the 
budget and funding process of the OAS. The result should be a 
clear definition of the expected outcomes for each resolution 
adopted at the annual session of the General Assembly, an 
assessment of the cost of implementing the resolution, its 
formal incorporation into the budget process, and an 
identification of the funding source.
---------------------------------------------------------------------------
    \11\ The chair of the working group, Canadian Deputy Chief of 
Mission Pierre Giroux, has developed a mechanism for assigning points 
to the 35 different groupings that he has made of the voluminous number 
of OAS mandates. Delegations submitted their rankings in January 2010. 
The working group will deliberate over the member-states' submissions 
during the month of February and will present its report to the 
Permanent Council's Committee on Administrative and Budgetary Affairs 
(CAAP) during the first week of March. The report will serve as an 
input to draft the budget.
---------------------------------------------------------------------------
    Despite these positive steps, the OAS will face a battle 
over budget cuts in 2010. With the Reserve Subfund exhausted, 
one permanent representative predicted ``a train wreck,'' while 
another interviewee described ``bloodletting'' from an already 
lean budget. Clearly, the OAS can no longer postpone difficult 
decisions on the unsustainable gap between funding and 
mandates.
Selective Intervention in Defense of Democracy
    As related in the background section, the OAS has 
strengthened its legal norms and procedures for the defense of 
democracy in the post-Cold War era. In practice, however, the 
OAS has not demonstrated consistency in its treatment of 
threats to democracy in the region. The OAS tends to act 
decisively in response to the illegal seizure of power through 
unconstitutional means, such as the clear-cut situation of a 
military coup. A distinct threat arises when democracy is 
eroded gradually through the abuse of constitutional powers by 
those who hold them; in these instances, the OAS has proven 
reluctant to act.
    On paper, the Inter-American Democratic Charter 
differentiates between unconstitutional interruption and 
alteration.\12\ Although these situations are not clearly 
defined, they are usually interpreted to denote traditional 
military coups (interruption) and the undermining of democratic 
institutions by elected officials (alteration). In the case of 
the latter threat, any member-state may request a meeting of 
the Permanent Council to assess the situation collectively and, 
if necessary, send a diplomatic mission ``to foster the 
restoration of democracy'' (Article 20 of the Democratic 
Charter). In the case of an unconstitutional interruption and 
the failure of diplomatic initiatives, a special session of the 
General Assembly may suspend the member-state from the OAS 
(Article 21 of the Democratic Charter). The impetus for these 
provisions stemmed from the OAS's experience in Peru, where 
President Alberto Fujimori's erosion of democratic 
institutions, culminating in electoral manipulation in his run 
for a third term in 2000, provided grounds for developing a 
capacity to address not only coup but also non-coup 
scenarios.\13\
---------------------------------------------------------------------------
    \12\ Perina, Ruben. ``The Role of the Organization of American 
States.'' Protecting Democracy: International Responses. Eds. Morton H. 
Halperin and Mirna Galic. Lanham, MD: Lexington Books, 2005. 127-171.
    \13\ Piccone, Theodore J. ``International Mechanisms for Protecting 
Democracy.'' Protecting Democracy: International Responses. Eds. Morton 
H. Halperin and Mirna Galic. Lanham, MD: Lexington Books, 2005. 101-6.
---------------------------------------------------------------------------
    The Democratic Charter also strengthened the preventive 
capacities of the organization by allowing the government of a 
member-state to request assistance of the Secretary General or 
Permanent Council when it ``considers that its democratic 
institutional process or its legitimate exercise of power is at 
risk'' (Article 17 of the Democratic Charter). In addition, 
``the Secretary General or the Permanent Council may, with the 
consent of the government concerned, arrange for visits or 
other actions to analyze the situation,'' and ``adopt decisions 
for the preservation and strengthening of the democratic 
system'' (Article 18 of the Democratic Charter). Up to and 
including the Peruvian political crisis in 2000, the OAS had 
been criticized for a ``firefighter approach,'' focusing on 
extinguishing full-blown crises when they ignited rather than 
preventing them before they flared up.\14\
---------------------------------------------------------------------------
    \14\ Cooper, Andrew F. and Thomas Legler. Intervention Without 
Intervening: The OAS Defense and Promotion of Democracy in the 
Americas? New York: Palgrave Macmillan, 2006.
---------------------------------------------------------------------------
    Since the implementation of the Democratic Charter in 2001, 
a special session of the General Assembly has convened only 
twice, in response to military overthrows in Venezuela in 2002 
and Honduras in 2009. These crises revealed the shortcomings of 
the OAS's defense of democracy. In both cases, the OAS reacted 
forcefully to the democratic interruption, yet it had 
demonstrably failed to respond to the erosion of democratic 
institutions by elected presidents that preceded the coups.
    In Venezuela, multiple signs of democratic weakening and 
political tension preceded the ouster of President Hugo Chavez 
on April 11, 2002. Yet the OAS did not take any preventive 
measures that might have encouraged the Venezuelan Government 
to foment dialogue rather than confrontation with its many 
powerful internal critics. Instead, domestic political turmoil 
continued to build, and following the violent breakup of a 
massive march on the presidential palace the military sided 
with a diverse coalition of political, civil society, and 
business leaders to seek the removal of President Chavez from 
power. The formula chosen to replace President Chavez clearly 
violated the Venezuelan constitution. Invoking the Democratic 
Charter, the Permanent Council condemned the coup, dispatched 
Secretary General Cesar Gaviria to Caracas to investigate the 
situation and begin diplomatic efforts, and convoked a special 
session of the General Assembly.\15\ By the time the General 
Assembly met, President Hugo Chavez had already been restored 
to power. In the wake of the crisis, the OAS was unable to 
obtain consent from the Venezuelan Government to maintain its 
presence on the ground until the political situation once again 
deteriorated in the last quarter of 2002.
---------------------------------------------------------------------------
    \15\ Former Colombian President Cesar Gaviria served as Secretary 
General of the OAS from 1994 to 2004.
---------------------------------------------------------------------------
    As Secretary General Insulza wrote in a report to the 
Permanent Council in 2007, the Democratic Charter proved 
``ineffective in Venezuela in April 2002, when the OAS was 
unable to prevent the coup against the constitutional 
President, or to produce any resolution on the rupture of 
democracy before the country returned to normal.'' \16\ The 
Venezuelan case illustrated the difficulties in sustaining 
preventive or follow-up diplomacy because of the Democratic 
Charter's requirement of ``by invitation only.'' It also 
underscored the OAS's reliance on executive sovereignty; no 
branch of government other than the executive has invoked the 
Democratic Charter to prevent a breakdown of democracy. In many 
cases, however, the executive branch itself threatens 
democratic institutions.
---------------------------------------------------------------------------
    \16\ The Inter-American Democratic Charter. Report of the Secretary 
General pursuant to resolutions AG/RES. 2154 and AG/RES. 2251. 
Presented to the Permanent Council. 4 April 2007.
---------------------------------------------------------------------------
    In Honduras, a coup ousted President Manuel Zelaya on June 
28, 2009, following months of escalating tension between the 
executive branch and the rest of the Honduran Government. In 
March 2009, President Zelaya announced that he would conduct a 
referendum in June regarding the convocation of a 
constitutional assembly, provoking fears that he aimed to 
remove limits on presidential election and perpetuate himself 
in power. Nearly all Honduran political institutions reacted 
negatively to the proposed referendum, and the Honduran 
judiciary declared the proposal to be unconstitutional in late 
May 2009. Nonetheless, President Zelaya proceeded with the 
referendum, even after losing an appeal on June 16, 2009. As 
the political situation deteriorated, the OAS's response was 
limited. Secretary General Insulza sent a special envoy to 
Honduras on June 17, Raul Alconada, and the Permanent Council 
issued a resolution on June 26 calling on all actors to ``avoid 
a disruption of the constitutional order'' and directing a 
Special Commission to visit Honduras. Public statements made by 
the Secretary General's envoy aggravated the situation as he 
appeared to endorse the ballot. The Commission, which was 
formed on June 27 and was scheduled to arrive on June 29, was 
canceled after the June 28 ouster.
    Following President Zelaya's removal from office and the 
country, the Permanent Council adopted a resolution that 
condemned the ``coup d'etat''; demanded the immediate, safe, 
and unconditional return of President Zelaya to the presidency; 
declared that no government arising from the coup will be 
recognized; condemned all acts of violence; and called a 
special session of the OAS General Assembly. On July 1, the OAS 
General Assembly adopted a resolution that threatened to 
suspend Honduras from the organization if the de facto 
authorities of the country failed to allow President Zelaya to 
return to power within three days. On July 4, Secretary General 
Insulza briefed the OAS General Assembly on his consultations 
in Honduras, and the General Assembly unanimously voted to 
suspend Honduras in accordance with its previous resolution and 
Article 21 of the Democratic Charter. After the suspension, and 
in light of the OAS's inability to engage both sides, Costa 
Rican President Oscar Arias, with the support of the U.S. State 
Department, took the lead in negotiating an agreement between 
President Zelaya and de facto President Roberto Micheletti. Due 
to the breakdown of the subsequent accord, the OAS did not 
monitor the Honduran presidential election on November 29, 
though it continued to call for adherence to the accord.\17\
---------------------------------------------------------------------------
    \17\ The so-called Tegucigalpa-San Jose Accord called for the 
formation of a national unity and reconciliation government, a 
congressional vote on President Zelaya's restitution to the presidency, 
and the creation of a verification commission to ensure the accord's 
implementation, among other provisions. Although a verification 
commission was created according to schedule, the government of 
national unity could not be formed due to President Zelaya's insistence 
that he should head it and then his refusal to present candidates to 
complement the list presented by de facto President Micheletti. The 
Honduran Congress, moreover, delayed for several weeks before finally 
announcing that it would consider Zelaya's reinstatement on December 2, 
three days after the presidential election on November 28. As a result, 
Zelaya declared the pact dead and urged his supporters to boycott the 
election.
---------------------------------------------------------------------------
    The swift and principled response to the coup highlighted 
unity among OAS member-states on the defense of democracy. As 
Assistant Secretary of State Valenzuela responded in his 
Questions for the Record submitted by Senator Lugar, ``the 
unanimous condemnation of the disruption of the constitutional 
order in Honduras reaffirms the collective defense of democracy 
as a core principle and responsibility for all the nations of 
the Western Hemisphere.'' Yet some analysts criticized the 
organization's punitive stance towards the de facto government 
for hardening positions on all sides and failing to foster 
dialogue between the relevant parties. ``Speed trumped 
deliberation,'' one senior OAS official told staff. 
Furthermore, the association of the Secretary General with 
President Zelaya's abortive attempt to return to Honduras on 
July 5 damaged the image of the OAS as an honest broker. 
Regarding the 72-hour ultimatum for the restoration of 
President Zelaya, one permanent representative to the OAS 
argued to staff that ``it was absurd to set those kinds of 
conditions 24 hours after the coup'' and ``the lesson is that 
the OAS should not rush to judgment.'' While other permanent 
representatives maintained that the OAS did everything it could 
with the tools provided by the Democratic Charter, they 
lamented that the OAS was left to only a supporting, rather 
than leading, role in attempting to resolve the crisis.
    As in Venezuela, the Honduran crisis also highlighted the 
limitations of the OAS's capacity to prevent institutional 
ruptures. While political polarization and fragile institutions 
were among the long-term conditions that contributed to the 
crisis, even its immediate causes were evident well before the 
OAS became involved. Admittedly, as one OAS permanent 
representative described to staff, the OAS does not always 
receive proper credit for its ``underground work, for 
preventative diplomacy is silent and very hard to sell.'' 
Nevertheless, the OAS has demonstrated decisive responses to 
traditional coups but relative passivity towards the gradual 
erosion of democracy, despite the relationship between these 
two threats, as illustrated by recent crises. In both Venezuela 
and Honduras, executive defiance of other government 
institutions provoked the breakdown of democratic rule.
    A number of comparable situations exist in the region, 
including the persecution of the media in Venezuela and recent 
electoral fraud in Nicaragua. Because military coups have been 
relatively rare since the democratic wave of the 1980s and 90s, 
the greatest danger to democracy lies with elected officials 
who abuse their constitutional powers. Although the Democratic 
Charter provided a variety of tools for the OAS to address this 
threat, including authority for the Secretary General to engage 
a government directly, in practice, neither the Secretary 
General nor member-state governments have been willing to take 
any serious steps toward developing an effective early warning 
mechanism that does not depend on the invitation of a member-
state.

                            Recommendations

    Staff developed the following recommendations for the USG 
to ensure that the United States plays a constructive role in 
addressing the issues reviewed. If hemispheric democracy 
remains a long-term strategic benefit, then the USG should 
continue to advance its interest in improving the democracy 
promotion capacities and financial stability of the 
organization.
    U.S. ideas and support are critical to this endeavor. The 
State Department's Bureau of Western Hemisphere Affairs should 
consult closely with the U.S. Mission to the OAS on policy 
formulation towards the hemisphere. The USG should also 
consider high-level consultations with regional governments to 
obtain their views on improving OAS performance, establishing 
priorities for the organization, and expanding application of 
the Inter-American Democratic Charter. Without a conscious 
effort to formulate a systematic policy, the OAS could remain 
an afterthought for policymakers. Quiet diplomacy, however, 
should allow the USG to build coalitions on individual issues 
with like-minded governments.
    Staff also cautions against two commonly-proposed reforms. 
First, the USG should not recommend abandoning the practice of 
consensus, despite its limitations, for the United States would 
wield less influence if the Permanent Council and General 
Assembly conducted a vote on every issue. Second, the 
Democratic Charter should not be reopened for negotiation. 
While subject to improvement, it provides important mechanisms 
to assess and directly respond to threats to democracy. 
Furthermore, the hemispheric unity on democracy that produced 
the document would be more difficult to attain today. Reforms 
to the Democratic Charter should be explored in the area of 
implementation only.

              improving the oas's financial sustainability

Resolve the Financial Shortfall
    Member-states confront the following options to address the 
$9.6 million shortfall in the 2011 budget: increase the 
assessed contributions by 12 percent, increase the 
contributions by a smaller percentage and cut lower priority 
activities and personnel, or, if assessed contributions are not 
increased, cut expenditures by a larger amount. The majority of 
member-states have stated that they will be unable to increase 
their assessed contributions by the 12 percent that would be 
required to meet the shortfall. Budget cuts therefore appear 
inevitable, at least in the short-term. Based on conversations 
with a wide group, staff concluded that several areas should be 
evaluated for possible cost-cutting measures.
    Most importantly, the OAS needs to streamline services and 
merge programs wherever possible in order to achieve savings. 
For example, the Inter-American Children's Institute, located 
in Montevideo, Uruguay, creates the need for an administrative 
infrastructure and office space that could be accommodated at 
headquarters at a much lower cost. The Institute's current 
budget of approximately $1.2 million could therefore be reduced 
substantially.
    Similarly, a considerable portion of the budget is 
allocated to field offices. A review should be made of the 
costs that could be reduced if the offices were abolished in 
those large countries that have not expressed an interest in 
keeping them. This would be a potential reduction of over $2.1 
million of the overall $7.6 million allocated to the offices, 
even while maintaining the 21 offices in the Caribbean and 
Central American countries that have specifically requested 
preserving these offices for the provision of much-needed 
services.
    Regarding the subsidies for non-profit organizations 
affiliated with the OAS, similar dependencies should receive 
equal treatment. For example, the Pan American Development 
Foundation (PADF) receives a subsidy of $131,000 but pays rent 
($457,456) for the space it uses at the OAS building located on 
F Street in Washington, DC. The Trust for the Americas, 
however, receives $199,800 but does not pay rent. Both 
organizations should pay rent and receive the same subsidy 
currently provided to the PADF.
    Regarding operations at headquarters, the Department of 
Special Legal Programs is located in the already bloated 
Secretariat for Legal Affairs and is tasked with responsibility 
for consumer protection and follow-up to the Inter-American 
Convention on the Elimination of All Forms of Discrimination 
against Persons with Disabilities. According to several 
missions to the OAS, the Department has not produced 
significant accomplishments in either area and could be 
eliminated in order to save $511,500. Moreover, the Secretariat 
for Multidimensional Security has three distinct departments 
responsible for programming as well as an office of the 
Executive Secretary, which does not conduct any programs and 
could be reduced to the Executive Secretary's salary, allowing 
for savings of $517,100.
    Finally, a review of the OAS personnel roster reveals that 
there are 53 non-career positions of trust financed by the 
Regular Fund. Any reduction of personnel due to the financial 
shortfall should focus on this category, particularly from the 
ranks of advisers, rather than line authority positions, such 
as Department directors.
Support a Comprehensive Review of Mandates
    The recommendations detailed above represent examples of 
viable reductions to address the deficit forecast for 2011. An 
informed decision on budget cuts, however, must rely on a 
comprehensive evaluation of all the mandates given to the 
organization. This assessment is currently being undertaken by 
member-state delegations, and the results should guide the 
General Secretariat in its drafting of the 2011 budget to be 
approved at the 2010 General Assembly.
    Staff recommends that the USG strongly support this 
priority-setting process, assessing which mandates should 
continue to receive funding as well as establishing its own 
criteria to allocate the specific funds it provides to the OAS. 
As the Chair of the Working Group on the Review of OAS Programs 
wrote to the Permanent Council, OAS member-states must 
prioritize among ``competing goals, competing objectives, 
competing outputs'' in the face of limited resources.\18\ This 
process will not eliminate the need for a political negotiation 
on allocations, but it should assist the organization in making 
informed choices. The ultimate objective should be to focus the 
OAS on its core mandates and strengths.
---------------------------------------------------------------------------
    \18\ Priority Setting Process. Presented by the Chair of the 
Working Group on the Review of OAS Programs. Permanent Council of the 
Organization of American States. CAAP/GT/RVPP-3/09 rev. 1 add. 1. 16 
October 2009.
---------------------------------------------------------------------------
    In addition, the review of mandates should contribute to 
decisions on the OAS's long-term financial stability. Member-
states will need to choose between reducing the number of 
mandates or increasing funding in order to place the 
organization on sound financial footing as well as enhance its 
credibility, which has been damaged by the large number of 
mandates that remain unfulfilled. The USG should not propose 
any funding increases until the OAS successfully defines 
priorities and makes better use of results-based budgeting to 
link strategic objectives with expected results and indicators. 
In the medium-term, the USG could also assess the viability of 
capping its quota contribution at 49 percent of the Regular 
Fund in order to encourage other countries to take a greater 
financial responsibility and thus become more vested in the 
future of the organization.
Promote Responsible Use and Replenishment of Reserve Subfund
    Regarding future budget decisions, the USG should advocate 
adherence to Article 72(b) of the General Standards to Govern 
the Operations of the General Secretariat, which regulates the 
use of the Reserve Subfund (see Appendix III). According to 
these standards, ``the amount of this Subfund shall be 30 
percent of the total of the annual quotas of the Member 
States'' and it ``may be used only on a temporary basis'' to 
cover liquidity shortages, ``pending full receipt of the 
anticipated income,'' or financing shortages (italics added). 
In the latter case, Article 72(b) requires the restoration of 
funds by way of an equivalent appropriation in the following 
year's program-budget. In recent years, however, the General 
Secretariat and the member-states have failed to abide by this 
payback provision, instead continually relying on the Reserve 
Subfund to resolve financing shortages while postponing 
difficult prioritizing decisions.
    Without a Reserve Subfund, the OAS will be unprepared for 
any period of illiquidity in the Regular Fund, which it has 
faced in the past when quota payments have not been received as 
scheduled. The USG should press for replenishment of the 
Reserve Subfund as well as for its responsible future use.
Promote a Fundraising Strategy for Maintenance of OAS Buildings
    According to reports commissioned by the General 
Secretariat in the past two years, six specific and urgent 
problems in the Main Building and the General Secretariat 
Building represent an imminent threat to health and safety and 
require immediate repair. The latest report concludes that 
immediate repairs will cost approximately $6 million, while the 
overall cost of renovating the 100-year-old headquarters 
building and other properties is an estimated $40 million. As a 
result, the OAS Committee on Administrative and Budgetary 
Reform authorized $1,034,000 from existing resources in 
September 2009 to undertake urgent structural repairs in OAS 
buildings. The 2010 program-budget also instructed ``the 
General Secretariat to prepare a fundraising strategy for 
facility of building issues including urgent repairs and 
preservation of historic buildings.'' The USG should assist the 
General Secretariat in implementing a fundraising campaign for 
this purpose.\19\
---------------------------------------------------------------------------
    \19\ Program-Budget of the Regular Fund of the Organization for 
2010, Quota Assessments and Contributions to FEMCIDI for 2010. AG/RES. 
1 (XXXVIII-E/09). 30 September 2009.
---------------------------------------------------------------------------

                 making the oas an effective defender 
                         of regional democracy

Encourage the Secretary General to Make Full Use of the Powers of the 
        Office
    As described in the observations section, the Democratic 
Charter has given the Secretary General new and broader 
diplomatic responsibilities, allowing him to act with greater 
autonomy in the defense and promotion of democracy. Although he 
remains accountable to member-states, the Secretary General may 
convoke OAS meetings on critical topics, use his ``bully 
pulpit'' and access to the region's leaders, and offer his good 
offices to resolve crises. According to Assistant Secretary of 
State Valenzuela, ``as the elected leader and spokesman for the 
OAS, he [the Secretary General] does have certain autonomy and 
ability to shape the agenda.'' \20\
---------------------------------------------------------------------------
    \20\ Questions for the Record Submitted to Assistant Secretary--
Designate Arturo Valenzuela by Senator Richard Lugar (#19), Senate 
Foreign Relations Committee, July 8, 2009
---------------------------------------------------------------------------
    The USG should continue to encourage the Secretary General 
to make full use of both his formal and informal powers to 
exercise consistent leadership in protecting democracy in the 
region. ``If an able diplomat, the Secretary General can play 
an effective `soft power' role even without the permission of 
the country in question,'' one think tank analyst commented to 
staff. One permanent representative interviewed for this study 
called for greater communication and shared leadership between 
the General Secretariat and the Permanent Council, although he 
recognized that the Secretary General should not be absolutely 
bound by the commands of the Permanent Council representatives. 
Indeed, the General Assembly elects the Secretary General with 
the clear expectation of leadership based on experience and 
access to member-state governments. Full use of the Secretary-
General's powers could ameliorate crisis situations as well as 
call attention to cases of democratic erosion in the region.
Support A Strengthened Role for the Inter-American Commission on Human 
        Rights
    The Inter-American Commission on Human Rights (IACHR) is an 
autonomous organ of the OAS and one of the two bodies charged 
with the promotion and protection of human rights in the 
hemisphere. Composed of seven members who are elected by the 
OAS General Assembly, the IACHR receives, analyzes, and 
investigates alleged human rights abuses. It also publishes 
reports on the human rights situations in individual countries 
and submits cases to the Inter-American Court on Human Rights. 
According to the Rules of Procedure of the IACHR, the 
Commission may create rapporteurships to assist in the 
promotion and protection of human rights in relation to certain 
thematic issues. The rapporteurships may be assigned to members 
of the Commission, or to outside individuals, in which case 
they are designated special rapporteurs. The rapporteurs report 
their findings to the Commission on at least an annual 
basis.\21\
---------------------------------------------------------------------------
    \21\ There are currently six thematic rapporteurships and one 
special rapporteurship: the Rapporteurship on the Rights of Women; the 
Rapporteurship on the Rights of Migrant Workers and Their Families; the 
Rapporteurship on the Rights of the Child; the Unit for Human Rights 
Defenders; the Rapporteurship on the Rights of Indigenous Peoples; the 
Rapporteurship on the Rights of Persons Deprived of Liberty; the 
Rapporteurship on the Rights of Afro-Descendants and Against Racial 
Discrimination; and the Special Rapporteurship for Freedom of 
Expression.
---------------------------------------------------------------------------
    The USG should assess the viability of individually 
presenting the reports prepared by the rapporteurs to the OAS 
Permanent Council and General Assembly. The IACHR already 
provides annual reports to both bodies, noting which countries' 
human rights situations deserve special attention, follow-up, 
and monitoring. By permitting the timely submission of 
individual reports to the political bodies, the OAS would 
strengthen the role of the rapporteurs in protecting essential 
elements of representative democracy. All too often the 
findings of the IACHR and the agenda of the Permanent Council 
diverge to the detriment of both democracy and the respect of 
human rights in the hemisphere.
    The USG should also encourage the IACHR to develop cross-
country comparisons that could be used to create a 
comprehensive index on democratic indicators in each country of 
the hemisphere. Similar to the UN Human Development Index, such 
an index could serve as a warning mechanism with respect to 
democratic erosion by elected leaders. Although several member-
states have indicated the need for periodic evaluation of the 
quality of democracy in the region, many other member-states 
would likely oppose a monitoring mechanism conducted by the 
General Secretariat as counter to the principle of 
nonintervention. An expansion of existing monitoring mechanisms 
by the well-respected IACHR would be a more effective 
alternative.
Maintain and Strengthen the Role of the OAS as the Principal Agency of 
        Electoral Observation in the Americas
    The OAS is widely regarded as the leading election 
observation organization in the hemisphere. Since 1962 and 
particularly following the creation of the Unit for Democracy 
Promotion in 1990 (followed by the Secretariat for Political 
Affairs in 2006), the OAS has successfully observed 
presidential, legislative, and special elections throughout the 
region. As representatives of a multilateral institution, OAS 
observers are often able to establish closer relationships with 
and gain greater access to political and electoral institutions 
than other observer groups. In addition, the OAS has the 
institutional capacity to organize larger electoral missions 
and maintain observers on the ground longer than other 
organizations.\22\ Nevertheless, this cornerstone of the 
organization's democracy-promoting operations is funded 
precariously by voluntary contributions instead of a permanent 
fund.
---------------------------------------------------------------------------
    \22\ United States Permanent Mission to the Organization of 
American States, http://www.usoas.usmission.gov/democracy.html
---------------------------------------------------------------------------
    The USG should explore the viability of supporting 
electoral observations with a standing fund adequate to finance 
the full range of activities required for electoral monitoring. 
Such a fund would permit the advance planning required for 
election observers to start their work in early phases of the 
electoral process, such as registration and campaigning, which 
often prove vital for deterring or exposing fraud.\23\ In 
addition, the USG should encourage the OAS's Department for 
State Modernization and Good Governance to formulate a results-
based and comprehensive work-plan to strengthen the role of the 
OAS on decentralization, transparency, and institution-
building, among other governance issues. This effort could 
provide a means to help strengthen the capacity of the OAS to 
be proactive, rather than reactive, in defense of democracy.
---------------------------------------------------------------------------
    \23\ Inter-American Dialogue, Responding to the Hemisphere's 
Political Challenges: Report of the Inter-American Dialogue Task Force 
on the Organization of American States, June 2006.
---------------------------------------------------------------------------
Promote Consultation With All Branches of Government and With Civil 
        Society
    The Democratic Charter allows ``the government concerned'' 
to invoke the Democratic Charter to prevent a breakdown of 
democracy. In practice, however, no branch of government other 
than the executive has turned to the OAS to denounce the 
disruption or erosion of democracy. If the executive branch 
itself is threatening democratic institutions, then the 
Permanent Council only takes action after the rupture has 
occurred. As Secretary General Insulza wrote in a report to the 
Permanent Council, the effectiveness of the Democratic Charter 
is ``seriously limited when only the executive can use it to 
defend a democracy.'' \24\
---------------------------------------------------------------------------
    \24\ The Inter-American Democratic Charter. Report of the Secretary 
General pursuant to resolutions AG/RES. 2154 and AG/RES. 2251. 
Presented to the Permanent Council. 4 April 2007.
---------------------------------------------------------------------------
    The USG should encourage other branches of government to 
request action by the Permanent Council. It will be up to the 
Permanent Council to determine whether the complaint is valid, 
but the term ``government'' should not be restricted to the 
executive branch. The OAS would be further strengthened if the 
Democratic Charter is invoked before an institutional 
breakdown, in cases in which there is a clear erosion of the 
democratic process. Until now, Resolution 1080 and the 
Democratic Charter have been invoked only after an 
institutional breakdown, reducing their preventive value. In 
part, their invocation has been hindered by the traditional 
reliance on consensus, which allows the affected country or its 
allies to block a decision. Although staff recommends 
maintaining the practice of consensus decision making, the OAS 
could explore the possibility of creating an exceptional 
mechanism for voting on application of the Democratic Charter.
    In addition, the USG should continue to support and 
strengthen the participation of civil society organizations in 
OAS activities. Civil society participation has already 
increased in the past ten years; attendance at the General 
Assembly and the Summits of the Americas is significant, and 
many human rights groups work with the Inter-American 
Commission on Human Rights. Nevertheless, according to an NGO 
representative, ``the vast majority of groups in the region 
remain disengaged from OAS initiatives,'' in part due to the 
obstacles posed by the complexities of the OAS system for small 
or emerging organizations, as well as to the effective ``veto'' 
power wielded by certain OAS member-states over applications 
submitted by civil society organizations to the Committee on 
Inter-American Summits Management and Civil Society 
Participation in OAS Activities (CISC). The USG should 
encourage programs that promote better understanding between 
the OAS and civil society. It should also assess the viability 
of creating a permanent and institutionalized mechanism for 
civil society consultations that could guarantee the right to a 
voice for non-governmental actors.

                               Conclusion

    The OAS has a significant role to play in the Americas, 
especially regarding the strengthening of democracy, respect 
for human rights, and promotion of human development. In the 
final analysis, the OAS will be judged by its ability to act 
effectively in line with its doctrinal commitment to the 
defense of democracy. As a former U.S. Permanent Representative 
to the OAS stated, ``Let's face it, when people think of the 
OAS, they don't think of all of the services it provides around 
the region, they assess its value based on whether the 
organization promotes democracy effectively, nothing more, 
nothing less.'' Unfortunately, the OAS is faltering in this 
endeavor. If more governments in the hemisphere become less 
democratic, the OAS will be even less capable of collectively 
enforcing the procedures for defending democracy.
    Exacerbating these challenges is the dire financial 
condition of the organization. In part, this is the result of 
years of financial mismanagement and a proliferation of 
unfunded mandates, dating back to the organization's inception, 
which has undermined the OAS's ability to realize its core 
mission and strengthen its organizational integrity. This issue 
can no longer be ignored.
    Finally, the organization must address the crucial issue of 
leadership. Upon taking office in May 2005, Secretary General 
Insulza pledged to ``make the OAS a more effective institution 
with a targeted agenda.'' He also aimed to strengthen the 
organization's political relevance and its capacity for action. 
After initial high hopes, these challenges have not been met.
    Instead, Insulza has been repeatedly accused of 
demonstrating more interest in his political fortunes in his 
native Chile. Further complicating the political environment 
for Insulza were statements made by President-elect of Chile, 
Sebastian Pinera, who, during the later stages of his campaign 
in January 2010, said he was unsure whether he would support 
Insulza as continuing head of the OAS when the diplomat faces 
reelection later this year. Insulza returned to Chile several 
times during the presidential campaign to speak publicly in 
favor of Pinera's opponent, Eduardo Frei, and participate in 
political rallies in his support.
    Most recently, Secretary General Insulza has called for a 
special session of the General Assembly to conduct his 
reelection in March 2010, thus allowing for a transition period 
before his term expires in May. Although no set date exists for 
elections, this is an appropriate time to regularize the 
process, so that, except in extraordinary circumstances, 
elections take place at the annual General Assembly. A special 
session would incur significant costs for the organization and 
prevent the return to a normal election cycle.
    Furthermore, any reelection should involve a deliberative 
evaluation of the incumbent's first term in office. As 
suggested by a General Assembly resolution proposed by 
Argentina and passed in June 2005, an opportunity should be 
provided for candidates to give a public presentation to the 
Permanent Council on their proposals and initiatives prior to 
the election (see Appendix IV).
    For the sake of the organization, it is essential for 
member governments to appreciate the importance of this 
leadership position and the qualities an aspirant must possess. 
Given the challenges described in this report, no reelection 
should be rushed or rubber stamped.

                          A P P E N D I X E S

                               Appendix I

                              ----------                              

              MEETINGS WITH INDIVIDUALS IN WASHINGTON, DC

Organization of American States
  Jose Miguel Insulza, Secretary General

  Albert Ramdin, Assistant Secretary General

  Frank Amalguer, Secretary for Administration and Finance

  Adam Blackwell, Secretary for External Relations

  Linda Eddleman, Senior Advisor to the Secretary General

  Dale Crowell, Specialist, Secretariat for External Relations

  Alfonso Quinonez, Executive Secretary for Integral 
        Development
United States Mission to the Organization of American States
  Carmen Lomellin, U.S. Permanent Representative

  W. Lewis Amselem, former Acting U.S. Permanent Representative

  John Maisto, former U.S. Permanent Representative

  Hector Morales, former U.S. Permanent Representative
Other Permanent Representatives to the Organization of American States
  Gustavo Albin, Mexico

  CARICOM Caucus

  Graeme Clark, Canada

  Guillermo Cochez, Panama

  Marca Maro Da Silva, Minister-Counselor, Brazil

  Pedro Oyarce, Chile

  Francisco Proano, Ecuador

  Jorge Skinner-Klee, Guatemala
Think Tanks and NGOs

  Jaime Daremblum, Hudson Institute

  Viviana Giacaman, Freedom House

  Peter Hakim, Inter-American Dialogue

  Ted Piccone, Brookings Institution

  Mark Schneider, International Crisis Group
Correspondence via e-mail

  Fernando Cepeda, former Colombian Permanent Representative to 
        the OAS

  Luigi Einaudi, former Acting Secretary General and Assistant 
        Secretary General of the OAS

  John Graham, Canadian Foundation for the Americas

  Viron Vaky, former U.S. diplomat
                              Appendix II

                              ----------                              

                   Embassy of the Republic of Guyana

                                                 December 22, 2009.
Hon. Richard Lugar,
U.S. Senate Committee on Foreign Relations,
Washington, DC.
    Dear Senator Lugar: In keeping with the process which you 
had initiated through the Secretary-General of the OAS, Mr. 
Jose Miguel Insulza, to study the current challenges being 
faced by the Organization including its budget, its core 
mandates and its record in responding to threats to democratic 
governance, CARICOM Permanent Missions to the OAS were pleased 
to have shared our views with the Senate Foreign Relations 
Committee. We trust that when we held discussions with the 
Committee's appointee, Mr. Carl Meacham, on November 12th, our 
perspectives on the issues were informative and productive.
    Our countries subscribe to the fact that the Organization 
of American States is the primary instrument for political 
dialogue and consultation within the hemisphere--the most vital 
edifice in the hemispheric architecture of the establishment 
and maintenance of peace and democracy in our region. All 
member states recognize that the process of multilateralism has 
a bearing on the potency of the Organization's decisions, but 
none would dispute the validity of the OAS and its 
accomplishments in the maintenance of security and stability 
and in the promotion of democracy and human rights in the 
Americas. That the purpose of the OAS is to serve the interests 
of all its members equally, be they large or small, developed 
or underdeveloped, is a matter of fundamental interest to 
CARICOM. Our countries have furthered their commitment to 
integration, democracy, security and stability in the 
hemisphere individually and collectively over the years through 
the OAS. CARICOM is convinced that a strong and effective OAS 
is in the collective interest of all its members.
    As the Foreign Relations Committee is aware, the OAS has 
been assigned by our Heads of Government to implement the 
mandates of the Summit of the Americas. The Organization is 
also vested with responsibilities to foster Integral 
Development among its member states. The instruments of the 
Organization address the barriers which poverty, 
underdevelopment and insecurity pose in the attainment of 
democracy, stability, human rights and good governance in the 
region. Consequently, the development agenda of the OAS is a 
matter of great importance in the countries of CARICOM who are 
Small Island Development States in the thralls of 
Multidimensional Threats ot Security.
    Vulnerable states in the region run the risk of their 
democratic foundations being undermined through social and 
economic underdevelopment. Addressing this situation ought to 
be a matter of priority for the region so that serious problems 
including crime, insecurity and instability being faced by most 
of our countries can be tackled effectively. Given the 
prevailing limitations with funding for development we believe 
that at this time the OAS requires the solidarity and support 
of all of its members. We are certain that other member states 
and sub-regions of the Organization recognize that it is within 
our collective interests and responsibilities not to diminish 
the effectiveness of the OAS as an agency for development.
    We appreciate the exercise upon which the Foreign Relations 
Committee has embarked and we appreciate being able to bring 
these matters to the Committee's attention. We take the 
opportunity to acknowledge and express our appreciation for the 
enormous contributions which the United States has made to the 
Organization over the years and which have contributed in no 
small measure to the pursuit of our common ideals and 
aspirations. We trust that the Committee would continue to 
value the role and performance of the Organization and would 
continue to lend its support wherever necessary.
    We congratulate the United States Senate for its interest 
in strengthening the role of the Organization of American 
States in hemispheric affairs. We would wish to reiterate the 
will and the commitment of the countries of the CARICOM to work 
with all partners to strengthen the Organization in order to 
realize our common objectives so that, together, our peoples 
may attain the benefits of greater peace, democracy, security 
and development.

            Yours faithfully,

Bayney R. Karran, Ambassador of Guyana

Deborah Mae-Lowell, Ambassador of Antigua and Barbuda

Rhoda M. Jackson, Ambassador to the Commonwealth of the Bahamas

John E. Beale, Ambassador of Barbados

Nestor Mendez, Ambassador of Belize

Ms. Judith-Anne Rolle, Charge d'Affairs of the Commonwealth of Dominica

Dennis Antoine, Ambassador of Grenada

Duly Brutus, Ambassador of Haiti

Anthony Johnson, Ambassador of Jamaica

Izben C. Williams, Ambassador of Saint Kitts and Nevis

Clenie Greer-Lacasde, Ambassador of Saint Lucia

La Celia A. Prince, Ambassador of Saint Vincent and the Grenadines

Jacques Kross, Ambassador of Suriname

Marina Valere, Ambassador of Trinidad and Tobago
                              Appendix III

                              ----------                              

    Excerpted from the General Standards to Govern the 
Operations of the General Secretariat of the Organization of 
American States:

    Article 72. Regular Fund. This is made up mainly of the 
quotas collected from the Member States and includes the 
contributions from other funds for technical supervision and 
administrative support provided by the General Secretariat. 
Funds received for unspecified purposes shall be treated as 
miscellaneous income under the Regular Fund. The purpose of 
this Fund is to finance: the regular secretariat and general 
support services provided by the Secretariat; technical 
supervision and administrative support to the programs; and 
multilateral integral development programs, as established in 
Article 32 of the Charter and as specified in the approved 
program-budget. The Career Service may be financed only by the 
Regular Fund of the Organization.
    The Regular Fund includes the following sub funds:
          a. Operations Subfund to which shall be credited all 
        income of the Regular Fund, and against which shall be 
        charged all obligations and expenditures in accordance 
        with the Regular Fund program-budget.
          At the end of each year, any excess in income over 
        obligations and expenditures shall be transferred from 
        the Operations Subfund to the Reserve Subfund, or any 
        excess in obligations and expenditures over income 
        shall be transferred from the Reserve Subfund to the 
        Operations Subfund. The General Secretariat shall 
        report on these actions to the Permanent Council within 
        thirty days of the date the transfer was made.

          b. Reserve Subfund, the purpose of which is to ensure 
        the regular and continuous financial functioning of the 
        General Secretariat.
          The amount of this Subfund shall be 30 percent of the 
        total of the annual quotas of the Member States. This 
        amount shall be reached through crediting to this 
        Subfund the annual income in excess of the obligations 
        and expenditures of the Operations Subfund. To the 
        extent that the Subfund exceeds 30 percent of the total 
        of the annual quotas of the Member States, the excess 
        shall be available for any purpose approved by the 
        General Assembly.

          The Reserve Subfund may be used only on a temporary 
        basis to cover:

                  i. Expenditures under the program-budget 
                financed by the Regular Fund, pending full 
                receipt of the anticipated income; and

                  ii. Special expenditures not provided for in 
                the program-budget. Such expenditures must be 
                authorized by the General Assembly or, when it 
                is not in session, by the Permanent Council, 
                which shall first hear a report on the 
                condition of the Reserve Subfund and the 
                reasons for such expenditures from its 
                Committee on Administrative and Budgetary 
                Affairs (CAAP).

          No withdrawals shall be made from the Reserve Subfund 
        for purposes other than to ensure the regular and 
        continuous financial functioning of the General 
        Secretariat until such time as the Reserve Subfund 
        shall have reached 10 percent of the annual quotas of 
        the Member States earmarked for the program-budget of 
        the Regular Fund approved by the General Assembly.
          The amounts withdrawn for the purposes set forth in 
        this article shall be reimbursed to the Reserve Subfund 
        in the following manner: in the case covered by 
        subparagraph (i) above, as soon as the corresponding 
        income permits; and, in the case of subparagraph (ii), 
        by means of equivalent appropriations in the program-
        budget for the next fiscal period or in such a manner 
        as may be determined by the General Assembly.
                              Appendix IV

                              ----------                              

                        AG/RES. 2103 (XXXV-O/05)

    PUBLIC PRESENTATION OF CANDIDATES PROPOSED FOR THE POSITIONS OF 
 SECRETARY GENERAL AND ASSISTANT SECRETARY GENERAL OF THE ORGANIZATION 
                           OF AMERICAN STATES

     (Adopted at the fourth plenary session, held on June 7, 2005)

    THE GENERAL ASSEMBLY,

    RECALLING the nature, purposes and principles established 
in the Charter of the Organization of American States (OAS);

    BEARING IN MIND that the Inter-American Democratic Charter 
stipulates that the OAS will continue to carry out programs and 
activities designed to promote democratic principles and 
practices and strengthen a democratic culture in the 
Hemisphere;

    CONSIDERING that the Organization fulfills its purposes 
through the General Secretariat, as well as other organs;

    UNDERSCORING the concern of member states that those who 
serve as Secretary General and Assistant Secretary General of 
the Organization should commit to fulfilling the purposes 
proclaimed in the OAS Charter and diligently performing the 
functions established in said Charter, in other inter-American 
treaties and agreements, and by the General Assembly;

    BEARING IN MIND that resolution CP/RES. 874 (1459/04) 
recommended that, when sponsoring candidates for the positions 
of Secretary General and Assistant Secretary General, member 
states exercise due diligence, to ensure that the candidates 
meet the highest standards of personal integrity, professional 
ability, respect for democracy and democratic institutions, as 
well as for the defense and promotion of human rights;

    BEARING IN MIND ALSO that the same resolution also resolved 
to continue examining this issue in order to develop proposals 
or criteria for strengthening this selection process;

    IT BEING PARTICULARLY IMPORTANT, for the member states and 
for civil society in general, to be familiar in advance with 
the plans, projects, and programs proposed by the candidates to 
the positions of Secretary General and Assistant Secretary 
General, for the sake of greater transparency;

    ACKNOWLEDGING the right of member states to present 
candidates for the positions of Secretary General and Assistant 
Secretary General up to the very day elections are held during 
the General Assembly; and

    TAKING INTO ACCOUNT the duty of the Permanent Council under 
Article 91 of the Charter of the OAS to watch over the 
observance of the standards governing the operation of the 
General Secretariat,

    RESOLVES:

    1. To instruct the Permanent Council to invite the 
candidates put forward by member states for the positions of 
Secretary General and Assistant Secretary General to give a 
public presentation to this Organization prior to the 
elections, in order to describe in greater detail their 
proposals and the initiatives they would undertake should they 
be elected.

    2. The presentations will be made to the Permanent Council 
on a date to be determined by it and, if possible, in the same 
meeting of the Council, which would be disseminated as widely 
as possible.

    3. An opportunity shall also be provided for a separate 
dialogue between the candidates and representatives of civil 
society organizations duly accredited to the Organization; such 
participation shall be governed by the guidelines for the 
participation of civil society organizations in the OAS.

    4. This resolution shall not impair the authority of member 
states, established in Articles 73 and 74 of the Rules of 
Procedure of the General Assembly, to present candidates for 
the positions of Secretary General and Assistant Secretary 
General until the day of the corresponding election.

                                    

      
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