Inter-American Organizations: Efforts Ongoing for Quota Reform at the Organization of American States, but Reaching Agreement Will Be Difficult
Published: 2017-06-06T00:00:00

Fast Facts:
The United States belongs to several multilateral organizations with North and South American countries—such as the Organization of American States, Pan American Health Organization, Inter-American Institute for Cooperation on Agriculture, and Pan-American Institute of Geography and History. We found that the U.S. paid over 57% of the total annual fees (assessed contributions) for these organizations between 2014 and 2016.
The State Department continues to work with OAS to reform its fee structure so that no country pays more than 50% of its total assessed contributions—though this may be difficult to negotiate with other member countries.

Highlights:
section_title: Why GAO Did This Study
paragraphs: The United States belongs to several inter-American organizations, including the OAS, PAHO, IICA, and PAIGH, which promote democracy, security, health care, agricultural development, and scientific exchange in the Western Hemisphere. The United States helps finance these organizations' operating expenses through assessed contributions (fees) that are based in part on the size of the U.S. economy relative to those of other members. The Reform Act required State to submit a strategy identifying, among other things, a path toward the adoption of reforms to the OAS's assessed quota structure to ensure that no member will pay more than 50 percent of OAS assessed contributions. In addition, the United States also provides the OAS, PAHO, and IICA with project-specific voluntary contributions.
GAO was asked to review U.S. financial contributions to these four organizations. In this report, GAO (1) determines the amounts and percentages of U.S. contributions assessed by these organizations and voluntary contributions paid to them in calendar years 2014 to 2016, and (2) describes State's efforts to comply with the Reform Act's requirements regarding a strategy for reform of the assessed quota structure of the OAS. GAO analyzed documents and interviewed officials from State, the Department of Health and Human Services, the U.S. Agency for International Development, the U.S. Department of Agriculture, and the four organizations. GAO also analyzed the four organizations' annual audited financial reports.
section_title: What GAO Found
paragraphs: The United States' assessed contributions constituted over 57 percent of total assessed contributions by member states to four inter-American organizations from 2014 to 2016. These organizations are the Organization of American States (OAS), the Pan American Health Organization (PAHO), the Inter-American Institute for Cooperation on Agriculture (IICA), and the Pan-American Institute of Geography and History (PAIGH). During this time, the annual U.S. percentages (or quotas) of these organizations' assessed contributions have remained about the same. The United States also provided voluntary contributions to three of these organizations, as shown in the table.
In response to a requirement in the Organization of American States Revitalization and Reform Act of 2013 (Reform Act), the Department of State (State) submitted to Congress a strategy that included working with OAS member states toward ensuring that the OAS would not assess any single member state a quota of more than 50 percent of all OAS assessed contributions. State officials told GAO that reaching member state agreement on assessed quota reform by 2018 will be difficult, although not impossible. State officials informed GAO that State continues to implement a strategy that includes engaging with other OAS member states, such as Canada and Mexico, to explore assessed quota reform options. For example, State officials have consulted with their counterparts from Mexico to review the OAS's assessed quota structure and to consult on alternatives that would adjust all member states' quotas so that no member state's quota exceeds 50 percent of the OAS's assessed contributions. According to State and OAS officials, obstacles to assessed quota reform include tensions among member states. For example, State officials noted that Venezuela's contentious political relationship with the OAS has hindered progress on various reforms, including assessed quota reform. State officials explained that some member states' failure to fully pay assessed contributions from previous years and smaller member states' reluctance to increase their annual assessed contributions have also impeded assessed quota reform efforts.

section_title: Letter
paragraphs: The United States engages with other countries in the Western  Hemisphere through its membership in inter-American organizations that,  among other things, promote democracy, security, health care,  agricultural development, and scientific exchange. These organizations  include the Organization of American States (OAS), the Pan American  Health Organization (PAHO), the Inter-American Institute for Cooperation  on Agriculture (IICA), and the Pan-American Institute of Geography and  History (PAIGH). The United States uses its membership in these  organizations to promote U.S. interests in the Western Hemisphere.  According to the Department of State (State), the OAS is the premier  multilateral forum in the Western Hemisphere for regional dispute  resolution and promotion of democratic governance. The United States  also works with PAHO, IICA, and PAIGH to provide technical support and  guidance in areas including public health, agriculture, and cartography.
The United States and other member states finance most of the regular  budgets for these organizations through assessed contributions, which  are used primarily to fund operating expenses. Each member state’s  percentage (or quota) of the organizations’ assessed contribution is  based, in part, on the size of its economy. Some member states also  provide voluntary contributions for specific projects.
In October 2013, Congress passed the Organization of American States  Revitalization and Reform Act of 2013 (Reform Act). The Reform Act  required State to submit a multiyear strategy to Congress identifying,  among other points, a path toward the adoption of reforms to the OAS’s  assessed quota structure—the percentages that determine the amount of  each member state’s assessed contribution—to ensure that no member  state would pay more than 50 percent of the OAS’s assessed annual  contributions. According to State, a strong and effective OAS requires  increasing regional ownership in the OAS’s success by increasing the  percentage of funding provided in assessed contributions by member  states other than the United States.
You asked us to review several issues related to these four inter- American organizations. In this report, we (1) determine the amounts  and percentages of U.S. contributions assessed by these four  organizations and voluntary contributions paid to them in calendar years  2014 through 2016, and (2) describe State’s efforts to comply with the  Reform Act’s requirements regarding a strategy for reform of the OAS’s  assessed quota structure.
To determine the amounts and percentages of contributions assessed by  the OAS, PAHO, IICA, and PAIGH to the United States and other  member states, as well as the amounts and percentages of additional  voluntary contributions provided to these organizations, we reviewed  documentation from the four organizations for calendar years 2014  through 2016. For calendar years 2014 and 2015, we reviewed externally  audited budget reports from the four organizations. For calendar year  2016, we reviewed budget documents from the four organizations and  verified the accuracy of the data with the organizations and the U.S.  agencies responsible for providing funds to these organizations. We  found the data to be sufficiently reliable for the purposes of our report. We  also interviewed officials from the four organizations, as well as officials  from State, the U.S. Agency for International Development, the U.S.  Department of Agriculture, and the Department of Health and Human  Services which provide assessed contributions and project-specific  voluntary contributions to the four organizations.
To describe State’s efforts to comply with the Reform Act, we analyzed  documents from State outlining its strategy in response to the Reform Act  and its activities to implement the strategy. We also interviewed officials  from the U.S. Mission to the Organization of American States, State’s  Bureau of International Organization Affairs, and the OAS Secretariat for  Administration and Finance. See appendix I for further details on our  scope and methodology.
We conducted this performance audit from July 2016 to June 2017 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: U.S. Contributions to Inter- American Organizations
paragraphs: According to State, the OAS is the primary inter-American political forum  through which the United States engages with other countries in the  Western Hemisphere to promote democracy, human rights, security, and  development. While PAHO, IICA, and PAIGH are independent  organizations, the Charter of the Organization of American States (OAS  Charter) directs them to take into account the recommendations of the  OAS General Assembly and Councils. PAHO, a specialized international  health agency for the Americas, works with member countries throughout  the region to improve and protect people’s health and serves as the  Regional Office for the Americas of the World Health Organization, the  United Nations agency on health. IICA, among other things, supports its  member states’ efforts to achieve agricultural development and rural well- being through consultation and the administration of agricultural projects  through agreements with the OAS and other entities. PAIGH specializes  in regional cartography, geography, history, and geophysics and has  facilitated the settlement of regional border disputes.
Member states collectively finance these organizations by providing  assessed contributions, in accordance with the organizations’ regulations.  The member states’ assessed contributions are intended to finance the  organizations’ regular budgets, which generally cover the organizations’ day-to-day operating expenses, such as facilities and salaries. Member  states of each organization meet to review and approve the organizations’  budgets. The exact dollar amount each member state is responsible for  providing corresponds to its assessed percentage of the total approved  assessment for any given year. The budgets are based on total approved  quota assessment and other projected income.
The OAS’s system for determining member states’ quotas is used to  calculate member states’ assessed contributions by the other three  organizations. Thus, any change in the OAS’s assessed quota structure  should be reflected at PAHO, IICA, and PAIGH, according to their  respective processes regarding the determination of assessed  contributions.
Member states also finance certain OAS, PAHO, and IICA activities  through voluntary contributions. Member states generally target these  contributions toward specific programs or issue areas. According to U.S.  officials, the United States provides voluntary contributions to the OAS,  IICA, and PAHO primarily through grants for specific projects from State,  the U.S. Agency for International Development, the U.S. Department of  Agriculture, and the Department of Health and Human Services. For  example, according to OAS documentation, in 2015, State contributed  slightly more than $200,000 to the OAS to fund judicial training to combat  money laundering. According to U.S. agency officials, the organizations’  regional knowledge and technical expertise make them effective  implementing partners for projects serving U.S. national interests and  priorities throughout the hemisphere.
section_title: 2013 Reform Act
paragraphs: The Reform Act directs the Secretary of State to submit “a multiyear  strategy that…identifies a path toward the adoption of necessary reforms  that would lead to an assessed fee structure in which no member state  would pay more than 50 percent of the OAS’s assessed yearly fees.”  According to the Reform Act, it is the sense of Congress that it is in the  interest of the United States, OAS member states, and a modernized  OAS that the OAS move toward an assessed quota structure that (1)  assures the financial sustainability of the organization and (2) establishes,  by October 2018, that no member state pays more than 50 percent of the  organization’s assessed contributions.
section_title: U.S. Assessed Contributions Constituted Over Half of Total Assessed Contributions to the Four Organizations, and the United States Also Made Voluntary Contributions to Three of Them
paragraphs: The United States’ assessed contributions constituted over 57 percent of  total assessed contributions by member states to the OAS, PAHO, IICA,  and PAIGH from 2014 through 2016, as shown in table 1. During this  time, the United States’ assessed quota for these organizations did not  change, and the total assessed contributions for all member states of  these organizations remained about the same; thus, the actual amounts  assessed to the United States generally remained the same.
All four organizations apply a similar assessed quota structure that uses  the relative size of member states’ economies, among other things, to  help determine each member state’s assessed contributions. The OAS  determines the assessed quota for each member state based on the  United Nations’ methodology, as adapted for the OAS, using criteria that  include gross national income, debt burden, and per capita income. In  addition, the OAS applies a minimum assessed quota of 0.022 percent  and a maximum assessed quota of 59.470 percent. According to State  officials, the OAS last made a major revision to its assessed quota  structure in 1990 when Canada joined the organization, and the United  States’ and other members’ assessed quotas were reduced as a result.  OAS officials said that while member states seek, as far as possible, to  adjust the assessed quota structure through consensus, the OAS General  Assembly may force a vote and adopt changes with a two-thirds majority.
The United States also provided voluntary contributions totaling about  $105 million to the OAS, PAHO, and IICA from calendar years 2014  through 2016, as shown in table 2. In 2014, the United States contributed  $37 million in voluntary contributions, or approximately 22 percent of the  total of $168 million in such contributions from all member states. In 2015,  the United States contributed $36 million, or approximately 29 percent of  the total of $123 million from all member states. In 2016, the United  States contributed $32 million, or approximately 22 percent of the total of  $143 million from all member states. According to U.S. officials, levels of  U.S. voluntary contributions vary year-to-year due to factors that include  the schedule of multiyear grant disbursements, member states’ priorities,  and sudden crises. For example, the U.S. Agency for International  Development made a $200,000 contribution to PAHO in 2016 for post- earthquake reconstruction and resilience-building in Ecuador.
section_title: State Is Working toward Reforming the OAS Quota Structure for Assessed Contributions, but Reaching Agreement with OAS Member States Will Be Difficult
paragraphs: State is working with other member states toward reforming the OAS’s  quota structure for assessed contributions so that no member state  provides more than 50 percent of the organization’s annual assessed  contributions, but State officials told us that reaching consensus among  OAS member states will be difficult. In response to the Reform Act, State  developed a strategy that identified a path toward the adoption of  necessary reforms that would lead to an assessed quota structure in  which no member state would pay more than 50 percent of the OAS’s  annual assessed contributions. State officials told us that they submitted  the strategy to Congress in April 2014. The strategy included efforts to  engage member state governments to explore options for reforming the  quota structure and to examine the extent to which the OAS’s quota- setting methodology reflects member states’ capacity to finance the  organization’s activities. According to the OAS and State’s 2015 report to  Congress, achieving quota structure reform will require one or more of the  other major contributors to accept an increase in their quotas—the  percentages of total annual assessed contributions that they agree to  provide.
State officials told us that they have been working to implement this  strategy. For example, State officials told us they engaged with other  OAS member states, including Canada and Mexico, to explore options for  quota structure reform. According to State officials, Canada led a  modernization committee that produced a strategic plan that included  quota structure reform. State officials added that they also reached out to  member states from the Caribbean to discuss the importance of quota  structure reform while highlighting OAS development programs that  benefit Caribbean nations. In addition, officials at the U.S. Mission to the  OAS worked with their counterparts from Mexico to review the OAS’s  assessed quota structure and to consult on alternatives that would adjust  all member states’ quotas so that no member pays more than 50 percent  of the OAS’s assessed contributions. According to State officials, the four  largest contributing member states, including the United States, have  agreed on the importance of quota structure reform. State officials added  that quota structure reform efforts were bolstered by the selection of a  reform-minded OAS Secretary General in 2015.
However, State officials told us that while it will be difficult, it is not  impossible for OAS member states to reach consensus on reforming the  organization’s assessed quota structure by October of 2018. Several  issues among the member states have impeded the progress of State’s  strategy, according to State and OAS officials. These issues include the  following:
State and OAS officials told us that regional political tensions have  complicated OAS member states’ ability to reach consensus on quota  structure reform. According to State officials, Venezuela’s contentious  political relationship with the OAS has hindered progress on various  efforts promoted by the United States, including quota structure  reform. State officials added that Venezuela has actively worked  against the OAS to undermine the normal procedures of the  organization. State officials told us that some member states have at  times supported Venezuela during committee votes. For example,  according to State officials, some member states voted against  bringing proceedings against Venezuela for violating the Inter- American Democratic Charter in 2016. In this context, State officials  emphasized that it was important for member states other than the  United States to officially propose resolutions on quota structure  reform.
State officials told us that certain member states’ nonpayment of their  assessed contributions also has impeded the quota structure reform  effort, as well as contributing to financial difficulties at the OAS.  Venezuela has expressed publically its unwillingness to pay its  assessed contributions, according to State officials. Additionally, as of  November 2016, the OAS projected that five member states would be  more than $17 million in arrears on their assessed contributions to the  OAS by the end of 2016. Brazil—the OAS’s second largest  contributor—and Venezuela had not fully paid their assessed  contributions for 2015 and 2016, which accounted for approximately  99 percent of the more than $17 million in arrears that member states  owed the OAS. State officials told us that the large amounts owed by  a few member states had contributed to smaller OAS member states’  reluctance to increase their annual assessed quotas to ensure that no  member state provides more than 50 percent by 2018. According to  State officials, the United States repeatedly urged the Brazilian  government to pay its arrears and 2016 contribution as soon as  possible. Brazil recently paid its arrears in full for 2015 and 2016 and  its assessed contribution for 2017. Thus, as of April 5, 2017, the  remaining arrears for all member states at the OAS were lowered to  just over $7 million. State officials told us that on April 28, 2017,  Venezuela officially notified the OAS of its intent to withdraw from the  organization. According to OAS officials, the OAS currently lacks a  mechanism to penalize member states for not paying assessed  contributions, unlike the other three organizations. OAS officials told  us that OAS committees are discussing the potential for defining  negative consequences for member states in arrears.
According to State officials, the OAS’s next opportunity to discuss quota  structure reform at the ministerial level will be at its General Assembly  meeting in Mexico City in June 2017. The Mexican government  announced that the main theme of the meeting will be strengthening  dialogue and cooperation in the OAS. State officials said that high-level  engagement between member states’ officials will be needed to promote  quota structure reform. They informed us that efforts to reform the  assessed quota structure continue at the working level and that they are  seeing some progress toward reform.
section_title: Agency Comments
paragraphs: We provided a draft of this report for comment to State, the Departments  of Agriculture and Health and Human Services, the U.S. Agency for  International Development, the OAS, PAHO, IICA, and PAIGH. The  Departments of Agriculture, Health and Human Services, and the U.S.  Agency for International Development stated that they did not have any  comments on our report. State provided technical comments, which we  incorporated as appropriate.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the appropriate  congressional committees, the Secretary of State, the Secretary of  Agriculture, the Secretary of Health and Human Services, the  Administrator of the U.S. Agency for International Development, the  Secretary General of the Organization of American States, the Secretary  General of the Pan American Health Organization, the Director General of  the Inter-American Institute for Cooperation on Agriculture, the Secretary  General of the Pan-American Institute of History and Geography, and  other interested parties. In addition, the report will be available at no  charge on the GAO website at http://www.gao.gov.
If you or your staff have questions about this report, please contact me at  (202) 512-9601, or melitot@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made key contributions to this report are  listed in appendix III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report responds to a request for GAO to review several issues  related to the Organization of American States (OAS), the Pan American  Health Organization (PAHO), the Inter-American Institute for Cooperation  on Agriculture (IICA), and the Pan-American Institute of Geography and  History (PAIGH). In this report, we (1) determine the amounts and  percentages of U.S. contributions assessed by these organizations and  voluntary contributions paid to them in calendar years 2014 to 2016, and  (2) describe the Department of State’s (State) efforts to comply with  requirements in the Organization of American States Revitalization and  Reform Act of 2013 (Reform Act) regarding a strategy for reform of the  assessed quota structure of the OAS.
To determine the amounts and percentages of contributions assessed by  the OAS, PAHO, IICA, and PAIGH to the United States and other  member states, as well as the amounts and percentages of additional  voluntary contributions paid to these organizations, we reviewed  externally audited budget reports for calendar years 2014 and 2015. For  calendar year 2016, we reviewed budget documents from the four  organizations and corroborated the accuracy of the data with the  organizations and the U.S. agencies that provide funds to these  organizations. For assessed contributions, we reviewed the organizations’  assessed quota structures. We report the quota structure percentage  assessed to the United States over these 3 years and the corresponding  United States’ assessed contribution amounts for this same time period,  based on our analysis of data provided by the organizations. We  determined the 2014 and 2015 data to be sufficiently reliable for the  purpose of reporting the United States’ assessed contributions and quota  percentages because these data had been externally audited. To  determine the reliability of the 2016 data, we reviewed budget documents  that have not yet been audited, discussed these data with knowledgeable  officials at the organizations and U.S. agencies, and corroborated them  with these officials and U.S. agencies. We determined the data were  sufficiently reliable for the purpose of reporting the United States’  assessed contributions and quota percentages in 2016. These data  reflect the quotas assessed to the United States and do not reflect total  payments made by the U.S. government to the organizations’ regular  budget, which include other miscellaneous payments. For voluntary  contributions, we reviewed the same externally audited reports and data  from the organizations to obtain the amounts contributed by member  states and calculated the proportion of the United States’ voluntary  contributions compared with those of the other member states. The four  organizations under review have different categories of voluntary funds,  depending on their source and intended use. For consistency purposes,  we worked with State and officials from the OAS, PAHO, and IICA to  establish our definition of voluntary contributions as funds given from  governments to the organizations for implementing specific projects  outside their respective countries. In accordance with this definition, we  considered the following categories of voluntary contributions: “specific  funds” at the OAS, “government financing of voluntary contributions” at  PAHO, and “external resources by financing source” for each member  state at IICA. We determined the 2014 and 2015 data to be sufficiently  reliable for the purpose of reporting the United States’ voluntary  contributions as a percentage of all members’ voluntary contributions  because they had been externally audited. To determine the reliability of  the 2016 data, we reviewed budget documents that have not yet been  audited, discussed these data with knowledgeable officials at the  organizations and U.S. agencies, and corroborated them with these  officials and U.S. agencies. We determined that the data were sufficiently  reliable for the purpose of reporting the United States’ voluntary  contributions as a percentage of all members’ voluntary contributions in  2016.
To describe State’s efforts to comply with the Reform Act, we analyzed  documents from State regarding its strategy for reform of the assessed  quota structure in response to the Reform Act. We also interviewed  officials from the U.S. Mission to the Organization of American States,  State’s Bureau of International Organization Affairs, and the OAS  Secretariat for Administration and Finance.
We conducted this performance audit from July 2016 to June 2017 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Member States of Four Inter- American Multilateral Organizations
paragraphs: Appendix II: Member States of Four Inter- American Multilateral Organizations organization on April 28, 2017.
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Pierre Toureille (Assistant  Director), Julia Jebo Grant (Analyst-in-Charge), Paul Sturm, Leslie  Stubbs, Kira Self, and Rhonda Horried made key contributions to this  report. In addition, David Dayton, Martin de Alteriis, Neil Doherty, and  Alex Welsh provided technical assistance.