International Public and NGO Management

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Internal Management

3 October 2023

Managing international organizations is different from managing national public, private or even national not-for-profit organizations. There are also similarities. Here, the focus is on international public organizations. We'll deal with international NGO's separately.

Similarities with national governments

• Publicly provided moneys. The funding is from public appropriations, raised from national taxes or user fees.
• Legislative oversight. The providers of funds insist on some form of control over expenditures.
• Concern with efficiency, translated as "biggest bang for a buck". 
• Growing concern with effectiveness, including “re-inventing government”.

Differences

While the similarities are appealing, the differences are more determinative of the management style.

• Non-sovereign. The lack of sovereignty means that managers have no one to appeal to but their Member States. Forceful decisions are difficult, since they may not be supported.
• Open system model works. What is called the "open systems" model in public administration is dominant. The concern of managers is more with the external environment than with the internal. And yet, because all of the staff have actual or potential connections to Member States, no one can be assumed to merely be part of the internal context.
• Nature of power and authority (legitimacy). The use of legitimacy as the main form of power functions in internal management as well. While staff can be dismissed or sanctioned for certain forms of malfeasance (e.g. theft), it is rarely possible to dismiss them for failure to perform. Absent this ability to use coercion, the only recourse is to ask staff to do what is asked of them because it is right and right because they sense that they are participants in the decision to take the actdion.
• Time span is longer. Governments typically have a time horizon of a single term (four to six years), businesses have quarterly and yearly reports. International organizations, to the extent that their funding is assured (which is usually the case with assessment-based organizations), can take a much longer time horizon. It is possible to consider activities that might take ten to twenty years.
• No bottom line in financial terms. In measuring performance, many governments, as well as private sector institutions, use a kind of economic cost/benefit analysis. For most international organizations (including the World Bank), no such easy indicator exists. The "bottom line" is usually not expressible in monetary terms. This is partly because the work of the international organizations is indirect (they effect economic results mostly by affecting national governments' actions), mostly because what they are doing is developing regimes, based on ideas and procedures, rather than services delivered directly or products produced. Even services delivered, like humanitarian assistance, would be difficult to evaluate using cost-benefit calculi.
• Consensus decision-making. As a result, the dominant form of decision-making within international organizations is consensus. Even to implement a program or introduce a procedural change in the name of reform, involves convincing the staff that these are in their best interest. Fiat is not a viable method. A manager in an international organization, to be effective, has to be a team player.
• Lack of enforceable hierarchy. As a result, also, the classical bureaucratic structure of a pyramid does not work well in international organizations. Rather, de facto structures are non-hierarchical. What does happen is that, because major unit designations (e.g. department), reflect professional as well as historical factors in any organization, there is an increasing need for inter-departmental work. This implies more than coordination and many international organizations have not yet been able to find ways of avoiding inter-departmental or inter-agency conflict. Some organizational techniques that have had sparse use at the national public level, like matrix management, are having a renaissance in some international organizations as a result of needs to overcome this problem.

While internal management is a complex phenomenon, it can be analyzed in terms of three processes:

1. The budget
2. Oversight
3. Human resources management

The budgetary process

The importance of budgetary process can be summarized in four words: no money, no fun.

It is the basis for intergovernmental control. Governments have to approve budgets if they are to commit themselves to fund them.

It is the place where an organization decides how to get its act together. It is the only point at which programmatic aspects merge with political. It should be noted that all of the major crises of international organizations as international organizations have revolved around finance and budget. While this masks real political differences (e.g. the Congo operation in the '60s or the Somalia operation), it reflects the fact that administration is the only place where the political and financial converge in debatable ways.)

Our interest is how different programmes[1] do their planning and budgeting. We need to start with a sense of the process and then look at the differences between programmes. It will be your job to do that analysis for the area that you chose.

Most organizations have adopted a planning and budgeting system. There is supposed to be an agreement on longer-term objectives (five to six years). Then, biennial budgets are proposed, reviewed and funded to implement the plan.  Or, as has now happened in the UN itself, there can be annual budgets.

I. History of budgeting in the United Nations

Budgeting in the United Nations began with line item budgets, plus an explanation of use. This was considered to be an inadequate method from the point of view of control, but it was a flexible tool for managers.

The next step was what is called programme budgeting and planning. It was brought into play in the mid-1970’s, based on a match between plans and budgets. A problem was an apparently rigid structure and lack of reality in planning.

As can be seen from the time-line for the 2018-2019 Plan Period in which the performance for the previous biennium is only available in 2018, but the plan for the period was decided in 2016 and the budget in 2017, it would be difficult for the plan to be realistic, if drafted by projecting the present into the future. It would be impossible for performance monitoring to affect budgeting. One consequence was the tendency to increase the budget in the second year. With this, the Secretariat could maintain the fiction of a zero-growth budget while having growth.  Because of these issues, the Secretary-General in 2020 proposed that the UN should have an annual budget and this is now in force.

Concept of ceiling and contingency fund. These were initiatives as a result of the Group of 18 reforms in 1986. They were a reaction to mid-biennium budget-busting. The concept is agreeing on a ceiling on the total amount to be included in a biennial budget, decided in advance (through the budget outline). It usually allows only a certain amount of increase, built into the ceiling through a contingency fund. The decision on the ceiling has to be made by consensus, thus giving the major contributors veto power.

The problem with this method is that, absent some method of re-allocating priorities, (a very difficult exercise in the best of times, an impossible one in a period of zero growth), there would be no flexibility in responding to priorities. Existing shares across programs would be maintained over time. Any change would be a politically-difficult zero-sum game. Were there to be growth, the growth could be allocated to higher priority areas, creating a non-zero sum game.

A new device has been created in the UN to bypass the impasse, so to speak. A development account has been created out of "efficiency savings". The UN reform is expected to lead to "efficiencies" in the form of "more bang for the buck". This will theoretically release funds for other purposes. The development account is intended to permit a competition among worthy programs that allows, in effect, a re-allocation of priorities. It is politically-wise because it is only to be used for "development" purposes, thus obtaining the support of the developing countries. It implies that there are savings, but what if there aren't any?

Recently, the biennial budget was replaced by an annual budgeting, connected to a longer term plan.  This is still in the testing phase.

II. Programme aspects

How does a programme manager decide on what should be done?

How much discretion? The answer is, it depends on the organization.

Increasingly international organizations are seeking to adopt what is called 'Results-based budgeting", a method whereby budgets are approved on the basis of the results they are expected to achieve, and once approved, managers have considerable discretion about how they are going to mix inputs and outputs to achieve the intended results. Is this a solution or just another part of the problem? The process was explained by Joseph Connors, the American Under-Secretary-General for Management in testimony to a US Senate Committee. Senator Grams was a conservative Republican from Minnesota who, fortunately, was defeated for re-election (by a comedian named Al Frankel who has turned out to be a serious and very effective senator). Mr. Connors had come to the United Nations after having been CEO of Price Waterhouse and had the orientation of an auditor.

From Connor testimony: Speaking about reform objective eight, adopt results-based budgeting.

MR. CONNOR: We have rigid input controls; how many P-4s, how many P-3s, how many D-1s you can have. You can’t cross budget lines. There’s no flexibility.

What we don’t have is a focus on what we’re trying to get out of the budget -- (word inaudible). That doesn’t mean how many meetings, how many reports, what’s the quality, what’s the receptivity, did it answer the problem. We’ve got to do what member states themselves are doing, identifying the actual costs of producing results, allocate resources accordingly, and measure what you got.

SEN. GRAMS: Results of base budgeting. Budget proposals currently submitted to the UNGA contain specific results or budgets, implementation of planned activities, is measured in the evaluation cycle which occurs upon the completion of the budget biennium. So under the results-based budgeting, what authority would member states have to determine budget levels and revised staff or resource allocations proposed by the secretary general?

MR. CONNOR: That’s a good question. Member states are always going to have total control over the total budget. What we are trying to do in results-based budgeting is lessen the control on specific inputs. Senator, I’ll be perfectly frank: the currency in operation in the debate is people—"I’ll give you a P-3 in this department, if you’ll back up my P-4 in that department." That goes on all the time.

We sit there after having prepared a budget and watch resources shifted around to the point where sometimes we can’t do what we are supposed to do because we have the wrong recourses. The emphasis should be on defining what the member states get out of the money they spend. I used an example before—we simply don’t know how much the Security Council costs. We don’t know how much the (fifth ?) committee costs. I bet the (fifth ?) committee costs more than the Security Council. We don’t know. We have great statistics. We know exactly how much it costs to produce a page of documentation. We know exactly how much it costs to service the meetings. But we have never channeled what types of meetings into the 140 program outputs. And we haven’t defined exactly what is an acceptable performance.

Mr. Paschke [Theodor Paschke, the Under-Secretary-General for Internal Oversight Services -- the first UN Inspector-General] and I have spent hours on this process. He’s the one who now operates the performance measuring system. [Note: in 2008, the function was transferred to the Department of Management, to the relief of OIOS.] It doesn’t measure performance; it counts documents. It counts meetings. For example, results-based budgeting in the economic and social side. Very few U.N. papers that are on the Internet have a high hit rate.

That’s an expression of how good they are. We don’t have that in our performance measurement system. We have in our performance measurement system a produced paper. We are trying to put into the system an evaluation of how good the paper was, not the fact that it was produced. When we come up with this array of measurements we will change the focus of the program managers into the valuable items that they produce or don’t produce as opposed to just the number that they produce. That’s performance measurement. It’s going to take three or four years. It’s not going to come easily. We have sent teams to New Zealand, Singapore, Australia, because they have put an end in their government. It’s working and it’s good. They’ve also shrunk the size of their people as a result. I think this is one of the things that has always hampered the U.N., the output. We’re not quite conscious of exactly how department A’s output may or may not duplicate department B’s. This will sharpen that up.

I think it’s an exciting change. It will also be an encouraging one to our managers. We can’t, for example within a budget for a department, decide to use a consultant instead of hiring staff. In approaching this development account, the initial $12.5 million, we will be taking costs out of administration and we will be reducing the personnel that used to do that. The program manager who has the responsibility for the output of the development account wants to hire particular capabilities on a short-term basis to produce certain results. That’s giving him flexibility. Before he was stuck with a cost structure that was 70 percent personnel. He couldn’t go with the better output. He had to deal with what was given by way of input. That’s a change.

The problem with results-based budgeting as described by Mr. Connors is that it still talks about products (outputs) rather than outcomes. In contrast, the IAEA has looked at results-oriented resourcing (as opposed to budgeting) on the basis of outcomes induced.

Efforts to install results-based budgeting (RBB) in all of the UN system encountered opposition from the developing countries that, seeing that it has been pushed by the major contributors, saw it as a device to cut budgets. However, the pressure from the major contributors has been such that it is in place in most organizations.  However, in the United Nations proper, program managers have had considerable difficulties in expressing their programs in results-based terms and the system has become so complex that, in his reform proposals, Secretary-General Kofi Annan stated:

The present United Nations planning and budgeting system is complex and labour-intensive. It involves three separate committees, voluminous documentation and hundreds of meetings. The UN now has a medium-term plan covering only two years (rather than four as recently and six as originally designed), which would be combined with the budget outline submitted one year before the actual budget is tabled. The budget document itself is less detailed and more strategic, and gives the Secretary- General some flexibility to move resources according to needs, although this is limited. Intergovernmental review of plans and budgets should is conducted exclusively in the Fifth Committee of the General Assembly, rather than being shared as in the past between that body and the Committee for Programme and Coordination (which resulted in a great deal of unnecessary duplication). Measures have been taken to streamline peacekeeping budgets, and to improve the management of the large number of trust funds through which Member States provide voluntary contributions to supplement the regular budget.

This was one of the reforms proposed by Kofi Annan.  In one sense, it involved a major retreat from program planning, by establishing a two year time horizon.  The argument is that events happen too quickly to be planned, but the reality is probably that thinking long-term is too difficult for most program managers.  (When, during one of the reform processes, the Secretariat decided not to revise the medium-term plan on schedule – see my article on Who Controls the Machine, Revisited – I remarked to the UN’s controller at the time, “this proves that the organization can’t walk and chew gum at the same time.”  He was not amused. [See also later.]

The second feature that emerges from the Secretary-General’s proposal is the recognition that the CPC has failed in its task.  Whether the failure was due to the Member States or the servicing provided by the Secretariat is an open question. The Secretary-General has presented a report on the experience in planning and budgeting, which is in your reading for the week, in which he says both that "things are fine in this the best of all possible worlds" (see Voltaire's Candide) and "the check is in the mail". I commented on this with a different perspective and you may want to read my comment as well. I did some work with the US State Department to determine how the CPC could be used to help ensure that the UN Secretariat is accountable for results, but that did not result in any change.

In the review that led to a modification of the budget process in 2019, including the idea that an annual budget should be seen in the context of a five-year plan, the CPC was given a more precise role of reviewing the plans on which each annual budget process was based. It did so for the first time in 2019, and produced a detailed analysis that may be taken into account by the Assembly when budget proposals are reviewed. However, it should be noted that the plans presented were still fairly vague.

III. Financial aspects

In a world of Weberian rationality, the budgetary process would be as follows: needs would be identified, objectives set, outcomes defined, outputs selected, the best mix of inputs determined and costed, the costs converted into budgetary lines, presented and approved.

This was actually, more or less, how most international organizations set up their program and budgeting systems. The net effect was that each successive budget involved growth, since, based on needs analysis and their derivative objectives, the organizations were supposed to do more and this increased their costs. Every successive budget involved growth. During the 1960's and 1970's, Member States were willing to accept growth, but by the 1980's the major contributors sensed that the budgetary process was out of control.

The assessment financing system

With few exceptions, the standing organizations of the UN system finance their core activities through assessments. Contribution to financing the budget is a condition of membership in the organization, paying agreed contributions is a treaty obligation. [The exceptions are organizations that are set up to be entirely funded from voluntary contributions. These are mostly development agencies like UNDP, UNICEF and the World Food Programme. Also exceptions are the Bretton Woods institutions – the IMF and the World Bank, who fund their administrative costs from interest earnings. In addition, WIPO obtains some of its resources from service charges relating to its registration and dispute resolution services on trademarks and copyrights.]

The basis of assessment is ability to pay. Wealthier countries are expected to contribute more than poorer countries. Therefore most assessments are a function of Gross Domestic Product (GDP) per capita and population size. The minimum amount is now 0.001 percent of the budget. Most international organizations use the UN assessment rate as their base, to avoid having different standards. [There are exceptions: The Universal Postal Union (UPU) has a different rate based on percentage of total mail accounted for by a given country, and the International Maritime Organization (IMO) bases its rates on the percentage of ships registered in the name of a given country.]

The basic method is to establish how the pie is to be sliced, then apply to the size of the pie.

The scale of assessments is a complex formula: a five-year rolling average of GDP and population: larger, richer countries pay more, smaller, richer countries pay somewhat less, small, poor countries pay least. A 25% cap was imposed in the 1960’s, to make the organization less hostage to the U.S.  It is ironic, in that sense, that in the last year of the Clinton administration, Richard Holbrooke, its ambassador to the United Nations, spent most of his time negotiating a further reduction to 22 percent. This meant that the United States has been paying far less than its fair share and other countries, like Japan, who had to make up the difference, are beginning to complain that (at 20 percent and without being given a permanent seat on the Security Council) they are paying more than their fair share. And, of course, President Trump of the United States said in his first speech to the General Assembly that the US was paying too much.  Fortunately, President Biden has not made such a statement but his Ambassador to the UN defended US support in a statement to the US Congress in June 2022.

The scale is periodically revised and as a new state enters, its assessment is calculated. This was done in 2014 and has always been one of the major controversies in the Fifth Committee of the UN General Assembly.

Payment is expected to be at the beginning of the year. A few states make it. Most don’t. Why? [A: different legislative processes: e.g. US, Japan] A: some small states don’t have the money [or more precisely, foreign exchange] to pay.

What this means is, in foreign exchange and ability to pay terms, each country in effects pays the same amount. (That is, the $17,066 that a country like Burundi was expected to pay in 2006 is supposed to be the same relative proportion of foreign exchange as the $104,563,268 that the United Kingdom was expected to (and did) pay. In fact, in scarcity terms, the developing countries probably pay more.)  For example, at the beginning of the 77^th General Assembly on 13 September 2022, four countries were in arrears in their payments to the budget and would lose their right to vote.  These were Comoros, Sao Tome and Principe, Somalia and Venezuela.  Venezuela’s arrears were $ 39 080 977.

The difficulty arose that States who paid only one percent of the budgets could, in principle, produce a majority to vote a budget that was opposed by the States that paid 99 percent of the budget. This was clearly not tenable.

Here the difference with national practice is striking. At the national level, a parliament can decide on a budget and raise the funds for it through tax revenues and other sources, including emitting debt instruments. At the international level, international organizations have to ask Member State representatives to ask their parliaments to provide an allocation of scarce national resources raised from taxpayers.

The equivalent in United States practice would be if the US Federal Government had to request the legislatures of the fifty states to appropriate funds to be given to the Federal Government. No one today would suggest this form of public finance. [But, it should be noted, the United States experimented with this procedure during the period of the Articles of Confederation from 1781 to 1788 when, in effect, the central government was intended to be funded by the states. This was killed by the reluctance of many legislatures to appropriate the federal funds and was one factor leading to the decision to write the current federal Constitution.]

[The situation is made more complex by the United States, the largest contributor to all organizations, in which the federal budget is annual and is initiated in the Congress. Because of the way in which domestic politics develop, the Congress can instruct the Executive Branch to withhold funds, even though the United States is bound by treaty to pay. It is further complicated by the fact that the United States pays according to its fiscal year, which begins in October rather than in January. This means in the best of circumstances, the United States contribution will not be paid until the final quarter of the year in which it is due and, usually, not in full.]

As a result of the situation, an agreement was reached in the mid 1980's to adjust the budget process in the United Nations, and by example in the remaining organizations, to ensure that the major contributors would be able to control the level of expenditure. (In the case of the United States it would allow the Executive Branch to reassure the Congress that contributing to international organizations was not the equivalent of inserting a tap on the national treasury and watching it flow to other countries.) The procedure chosen was to place the responsibility for setting the size of the budget with the General Assembly's Fifth Committee and insist that it reach decisions by consensus. In the year preceding the formulation of the budget, the Fifth would agree on the "budget outline". In programmatic terms, the outline should indicate in very general terms the priorities to be followed in the next biennium. In financial terms, it would set the level of the budget. This budget envelope would constrain the Secretary-General. He could not propose programs that would exceed the limit set in advance.

This, in fact, had been in place for some time. The major contributors had constituted an informal negotiating group, called the Geneva Group that would discuss the levels of expenditure that each State thought it could provide given national concerns and, in reality, the mood of their parliaments. Prior to the 1986 reform, this constituted a joint negotiating position. After the 1986 reform it became the way in which the budget envelope was set. The piperpayers were mandated to call the tune in all of the organizations. Any contrary position would be met by a lack of consensus in the CPC. [As one of the more recent reforms, the CPC no longer agrees on the budget outline; this is done by the Fifth Committee of the General Assembly.]

Since then, based on the premise that it is easier to ask for funds on the basis of carrying over agreed levels (most legislatures get into the habit of appropriating a specific amount and as long is it is not increased, except to adjust for inflation, it is rarely reconsidered) rather than showing increases. The result has been zero growth budgets. Initially these were zero real growth, meaning that inflation and currency fluctuations were included. Recently they have been zero nominal growth, meaning that the same dollar amount is to be appropriated regardless of inflation. Most international organizations, therefore, are in fact faced with shrinking budgets.

For program managers, from executive heads on down, this has some serious consequences. Priorities are difficult to set, because every program has supporters. Many programs that might be considered dubious from the point of view of what the United Nations can actually do are related to issues of high priority. An example is science and technology for development. What the United Nations proper can do to further science and technology is highly limited. However, any effort to reduce the program on the grounds that the UN had little beyond policy visibility to offer would be seen by the developing countries as an effort to downgrade the issue itself.

The result is a system where the first step in the process is the approval of the budgetary level.

Specifically, the Secretariat is given a budgetary envelope, which it must then divide with reference to what it believes needs to be done, the political realities of objectives and the capacity of the organization. In well-managed organizations this constitutes an opportunity to review and redefine programs so that they can do the best possible with the resources available, taking advantage of all of the strengths of international organizations. They use the limitations on resources as a basis to justify tough choices. In less well-managed organizations it leads to projecting the same programs with the same priorities (or more precisely, with no real priorities) and a further undercutting of the organization's credibility.

Extrabudgetary funds: Faustian bargain?

Faced with zero growth or even negative growth, many organizations fall back on extra-budgetary funds. Major contributors are approached to provide funding above and beyond what they have agreed as part of the regular budget process. In most cases, these major contributors are in fact willing to provide additional funds, but for programs that they particularly favor, and often in return for some political considerations. Some of these are made available because discretionary funds have been placed in budgets for just such a purpose. In other cases, sectorial budgets make provision for international activities. The areas where a given country is willing to contribute is determined by that country's political interest, as well as historical factors. The Nordic countries, for example, have been particularly interested in contributing for human rights activities. Italy has provided funds for drug control and crime prevention. Japan has provided funds for management reform and disability. Often this has a wider purpose for the donor. Japan, for example, endowed a fund dealing with violence against women to be implemented by UNIFEM (now UN Women) as a response to criticism about that country's treatment of "comfort women" during World War II.

XB funding has been growing, and was probably helped, inter alia, by the declining value of the dollar (which is the currency in which most UN organization budgets are denominated) during the late 1990's and early 21st century, although that has now changed. The WHO, for example, gets about 80 percent of its funds from XB, and the UN Office on Drugs and Crime gets about 70 percent. For European countries (who, collectively, are the largest contributors to the UN budget), their assessed contributions are appropriated by parliaments in Euros (or Pounds or Kroner) which, when they appreciate against the dollar, release funds that can be used for XB.

The difficulty with reliance on extra-budgetary funds is that they can distort the organization's overall priorities. For example, many argued that endowing UNIFEM with funds for dealing with violence against women distorted its priorities away from its development focus to a human rights focus. They can also involve difficult political tradeoffs. Because of Italy's large voluntary contribution to UN drug control and crime prevention programs, the head of both programs was, from 1987 to 2011, an Italian. Similarly, when a Danish candidate for head of UNDP was not selected, the Danish government reduced its contribution. (The US, which had provided the administrator to UNDP since the beginning, did not field a candidate, preferring to maintain UNICEF with a US executive head, but halved its contribution to UNDP). More recently, donors have somewhat revolted againt providing UNDP with core funding, especially for country offices. UNDP has tried to compensate for this by increasing the allocation of overhead into multi-donor thematic funds that are the new vehicle for central fund provision by donors.

The reliance on extra-budgetary funding to maintain certain programs is, for many observers, a Faustian bargain (after Goethe's Dr. Faustus, who gave his soul to the Devil in return for material success in this world.)

Pay for service

A third source of funding, but not one used at all for the United Nations, is pay for service, providing a charge for provision of something like inspections. Because public services are supposed to be free (imagine charging refugees for food in a refugee camp... ) this should not be a means of finance. However, several organizations are funded this way, including the World Intellectual Property Organization (WIPO), which charges for cross-registering copyrights and patents. A longer-term approach was to finance organizations by poviding a tax on currency training. Proposed by James Tobin in 1972 and called the Tobin Tax it was intended to penalize short-term international currency speculations, but the funds obtained could be used to finance international organizations. It has, however, not received much support from governments like the United States.

IV. The budget process as reconciling program and financial needs

Budgetary processes are essentially political. They consist of matching program needs with financial realities in such a way that all Member States are satisfied with the result. It should be no surprise that the major crises faced by the United Nations and the Specialized Agencies have not revolved around political issues, but rather have been expressed in terms of budgetary and administration issues. This is where politics takes on a tangible presence.

The internal process of budget preparation and administration demonstrates the complex nature of international management.

Internal politics of budget preparation

Since the process of budget preparation essentially starts with the determination of the budgetary envelope, the internal process is based on competition for the scarce resources implied in the envelope. Almost by definition, no program manager has enough, particularly if tasks are expressed rhetorically. A manager who sees his task as poverty-eradication or advancement of women will inevitably believe that their programs need more resources both because of the importance of the issues and what the Secretariat believes it can do to address them. There is therefore a tendency to lobby for recognition of under-funding.

Most organizations have an internal budget committee, usually made up of the senior managers. Most of these see their task as defending their programs and as a result, they are only infrequently able to suggest significant changes. In effect, they involve tradeoffs between departments. The extent to which the mechanism can be altered depends on the willingness and ability of the executive head and his administrative head to use the need to reconcile program considerations with financial constraints to insist on some changes. Even so, most changes are incremental (a bit of growth here, a slight reduction there) rather than dramatic.

Most systems of program budgeting start with the budget and then consider the program. The envelope notion reinforces this approach. At one point, the United Nations (as part of a mid-1970's reform) separated program planning from budgeting. The theory was that the program should be prepared first, then allocated budgetary resources. The overall experience was not a happy one. In effect, the budget division wielded far more power than than the Office of Programme Planning and Coordination, since ultimately all program considerations had to fit into the financial straitjacket. Still, the process allowed for some re-thinking of programs, particularly when they were new and lacked the incremental base that permitted rolling over a program from budget to budget. [Truth in advertising: I was a staff member of the Office of Programme Planning and Coordination at the time, so this observation reflects my biases.]

As a result of the 1986 reform, program and budget were again combined and budgetary considerations once again dominated. As an indicator, the UN was working a six-year fixed horizon plan, which meant that there should have been a new plan to cover the period 1988-1993. As a result of the reforms (which mainly amounted to post reductions and elimination of high level posts), the UN argued that it was not in a position to prepare the plan on time. [Again, I commented at the time, since I was then in the program planning office, that it was the equivalent of admitting that the UN couldn't walk and chew gum at the same time. What I meant was that if reform killed forward-thinking, then it was a very dumb organization that was being reformed. I was not much appreciated for that comment by my bosses.] The UN's medium-term planning has continued to be suboptimal, consisting primarily of projecting activities from the present infinitely into the future, rather than determining what changes should be achieved within the plan period.

In contrast, the IAEA has decided to reverse the practice and let programs be developed and changed, then given budgetary resources, although within the same budgetary envelopes that constrain what organizations can do.

Preparation by substantive organizations

How, then, do offices prepare their proposals? If they were serious, they would go through a visioning exercise, identify concrete objectives and outcomes, and work out strategies than could be turned into budgets. Increasingly this is taking place, but it is still the exception.

Aaron Wildavsky, one of the pioneers of analysis of budgetary politics (in his study The Politics of the Budgetary Process which was focussed on the US federal budget in the 1950's posited that there are essentially two approaches to budget preparation. The first is to be very conservative, only ask for what you really need (i.e. zero growth) and then every few budgets say that new tasks mean a few new resources are needed. These are then granted because the office has the reputation of only asking for what it needs. The second approach is to inflate requests on the assumption that they will be cut, but that the cutting will not be sufficient to curtail growth. Many organizational units did the latter, proposing unrealistic programs to justify the new resources. Unfortunately when the cuts came, they were not allowed to subtract the phony output and as a result their program performance was low (which they then used as a reason for new resources in the next cycle.)

The response of most organizations, confronted with the predominance of the second approach, has been to assign "sub-envelopes" to programs. While this reduces the unreality that had been built into submissions, it also tended to institutionalize the status quo by fixing sub-envelopes. Bad programs were not punished, good ones not rewarded.

The net effect has been relatively non-credible budget submissions. However, a number of organizations are beginning to find ways to relate budgets to results, although the experience to date has been mixed. Success in this requires that the organizations change the mid-set of managers towards a forward-looking rather than present-oriented budget process.

Pre-budget governmental politics

Before the budget process begins there is also an intergovernmental dimension. A major one is the process of establishing the envelope. But an additional one is identifying those programs that need to be reviewed.

The Committee for Programme and Coordination (CPC), is responsible for monitoring and evaluation. As part of its work CPC is expected to identify programs that are in trouble, either in the light of monitoring (matching programmed output with delivery) or evaluation (post-facto assessment of likely impact of the programs). Similar mechanisms exist in other organizations. The IAEA has a Programme Performance Assessment System (PPAS) under which major programs are reviewed by Member States and scientific constituencies to identify weaknesses as well as strengths. While this is set up as an exercise in Weberian rationality, in practice it is an opportunity to obtain an intergovernmental consensus for changes of direction. Some of the PPAS have been resisted by the departments that have had them, but the most politically astute have seen them as an opportunity to prepare the ground for redefined priorities.

Post submission politics

Once submitted, budgets are submitted to review processes. These are remarkably similar across the organizations. Usually there is a budget committee that review the proposals and suggests changes. The matter is then brought to an intergovernmental plenary for approval. The process of the UN can be looked at as a model, although there are differences with specific organizations (and this process is only partially applicable to the Bretton Woods institutions).

CPC

In the UN, the CPC is supposed to look at the budget in its entirety, with an emphasis on its programmatic content. The CPC is an intergovernmental committee, which means that countries are elected and designate their own members. Sometimes they designate diplomats, sometimes budget specialists. The CPC, like any intergovernmental body, depends on Secretariat output to structure its discussions. In practice, the Secretariat sees the CPC as a kind of opponent. The Committee's task is to identify inadequate programs, inconsistencies, where the Secretariat has deviated from mandates. For a number of reasons, some based on printing logistics, the CPC never receives the proposed budget in one piece and never with analysis of its overall content. CPC is not supposed to look ata the financial details (that being the province of the ACABQ). As a result, the CPC has been singularly ineffective in identifying problem areas and suggesting remedies. This is complicated by the need of the CPC to reach consensus and this is difficult on priority changes.

The one tool that CPC might use to identify programs in need of re-thinking, the program performance monitoring report, is not available at the time the budget is reviewed (it is presented after the budget is approved). Once the budgetary envelope was approved, largely on the basis of agreement by the Geneva group, the CPC proved to be ineffective.

As noted, the CPC had been largely removed from the process. The Secretary-General proposed, in 2005, that it be abolished and its functions taken over by the Fifth Committee. This, however, has been resisted by the Group of 77 which sees the CPC as the only place where, effectively, developing countries can have their programmatic views known. A recent session, however, failed to resolve the problems and several countries (especially Japan), simply refused to participate. Many members of the Western European and Other Group (WEOG) have been boycotting the CPC over the past several years (including, especially, Japan and the United States). Japan has now returned, mostly because the Secretary-General appointed a Japanese national as Under Secretary-General for Management (although they won't say this). The US returned several years ago based on the Obama Administration's concern with the effectiveness of the UN. How long that will last under the Trump Administration is still an unknown.

The Secretary-General's new proposals in 2018 gave the CPC a renewed mandate to review the plans on which the annual budget proposals are to be based and did so for the first time in 2019.

ACABQ

The Advisory Committee on Administrative and Budgetary Questions (ACABQ) was established as an expert committee that would analyze UN budgets and provide Member States with an unbiased sense of the financial implications of budget proposals. In contrast to the CPC, its members are elected as individuals (although representing a distribution of Member States) and the Committee is, in principle, in session all year (not during one or two periods, as is the case with CPC). While most are diplomats, some are known administrative specialists. Moreover, the Committee has its own secretariat, that will prepare independent analysis for the Committee's use.

However, under existing mandates, the Committee's concern is almost exclusively with input mixes and policies related to them, rather than program content. Thus, the Committee is concerned with such as issues as the methodology for estimating inflation, the ratio of secretaries to professionals, judgements about whether post upgrading proposals are reasonable. While these are important (the decision about the delayed recruitment factor can affect budget allocations as well as program implementation), it is essentially "bean counting" since it is divorced from program content.

Moreover, over time, some quirks have developed in the Committee's work. Its most important member is the chairman, one of whom held office for over twenty years (Ambassador Mselle from Tanzania) and who was a single person institutional memory. Because the Committee's recommendations are infrequently reversed by the General Assembly, many program managers try to obtain favorable rulings by dealing directly with ACABQ and its members. Even this device is in need of reform. [And, to underscore this, a chair of the Committee, from the Russian Federation, was indicted for fraud and money-laundering as part of the Oil for Food Scandal. The current chair is the member from Mexico.]

Fifth Committee

The responsibility for ruling on the budget rests with the Fifth Committee of the General Assembly. Although theoretically, the Assembly completes its work during its September-December session, the Fifth usually does not finish its work and, in effect, has several additional sessions. Moreover, it is the Fifth that has to review proposals for peacekeeping financing, so it has a key intersessional character for that reason as well.

The Fifth is dominated by the developing countries. It looks at more than plans and budgets. It also approves changes in personnel administration, pension fund, oversight and security of staff, to name a few issues. Its decisions are complex and involve considerable negotiation and tradeoffs.

We will return to this when we deal with accountability.

V. Implementation of the budget

Once a budget is approved, two things can happen: the organization can proceed deliberately to implement it based on the plan that has been agreed, or the organization can try to find a way to implement the main elements within what is really an unreal budget.

Whether one or the other approach is taken depends on whether the organization is subject to withholding or late payment by one or more of its major contributors. If this happens, there will be a basic cash flow problem that will prevent reasonable implementation. For 2007, for example, the Secretary-General reported:

34. The Secretary-General wishes to pay a special tribute to the Member States that had paid in full all assessments for the regular budget, the international tribunals, the peacekeeping operations and the capital master plan that were due and payable at 16 May 2007; Australia, Austria, Azerbaijan, Botswana, Canada, Denmark, Finland, Ireland, Italy, Liechtenstein, Monaco, Mozambique, New Zealand, the Republic of Korea, the Russian Federation, Singapore, Sweden, Switzerland, Thailand and the United Kingdom. In addition, South Africa has paid in full its due and payable assessments since 16 May 2007.

This means that the rest of the countries (171 to be exact) had not paid their contributions in full or on time. This is the usual pattern.

For the UN, the US withholdings mean that the approved budget is completely unrealistic. Budgeted funds are simply not available. In order to maintain solvency, the Budget Division must constrain the flow of funds to divisions. There is a built-in incentive to not spend. This means that many programs cannot be implemented because the staff or other resources are not available to them.

This is not a new problem. The agenda item "financial crisis of the United Nations" has existed since the mid-fifties. There have always been withholdings, but never quite as seriously as now. The solution used to be to solve cash flow problems in the regular budget by borrowing from other funds, like peace keeping, or from extra-budgetary contributions. This is the fiscal equivalent of "robbing Peter to pay Paul". Short-term problems can be solved by this (although, as will be seen, this is a declining option as the number of peacekeeping operations is reduced and troop contributing countries become unwilling to support the regular budget by accepting delayed payment.)

A. The allotment system

The method used to implement the budget is a system of allotments. These are claims on central resources that are provided to programs. They are a sum of money to be spent over a given period of time, by object of expenditure (personnel, travel, meetings, equipment). In good times, allotments would be annual, or even biannual. At present, in view of the uncertainty caused by withholdings, they are even semi-annual. This means that program managers do not know in advance how much money they have to spend.

[As a program manager I was once caught up in the web of contradictions. At the beginning of the biennium, we were only given an allotment for the first six months amounting to about 20% of the biennial total. Unfortunately, one of our committees met in the first month of the first year and was programmed to use up about 60 percent of one of our expenditure lines. An exception had to be made, but it took days’ worth of paper drafting to obtain.]

Some of the means by which cash flow is maintained are pernicious. One of these is to create a "delayed recruitment" factor. This reflects the fact that, because the recruitment system is inefficient, it takes longer to fill vacant posts than it should. To avoid appropriating funds that will not be spent, the Assembly decided to subtract from the budget the amount of money that would not be spent if the recruitment system continued to be inefficient. This was estimated at six months. What this meant was that for every post that was new, a six month lag would be assumed and no funds appropriated. This meant that the post could not be filled before six months, even if candidates were available. It had the effect of institutionalizing inefficiency in recruitment.

The allotment system had an additional defect. In most public organizations, if all funds appropriated are not used, they will not be appropriated the next budget cycle. Good managers seek to spend all of their allotments. Very good managers try to spend them steadily over the course of a year. Bad managers hoard money until the end of a cycle and then, to preserve the levels in the future, work madly to spend them at the end of a cycle. This is called "use it or lose it". [As a manager, I was always very good at spending all of my allotments, and on time. At the end of the period, I was sure than other managers would have failed to spend their allotments and I could always count on another 10-15 percent of resources from their savings…] This procedure, which in the UN is based on the premise that at the end of every year of the biennium, the Secretary-General has to present a "budget performance" report, means that much expenditure is not well planned.

B. Peacekeeping

Peacekeeping is a variant on the assessment method. Each peacekeeping mission is separately assessed and the normal term is three months, sometimes six.

Why a separate assessment for peacekeeping? [A: not predictable] Why not make payments voluntary? [A: Peacekeeping is political, also central to the charter.]

Assessment top is 27.1%, with US in it. Why? A: greater responsibility of members of the Security Council. Withal, the US has unilaterally decided that it will only pay 25%, which creates an automatic arrearage, even if the US paid, which it doesn't.

The delay in finding funding means that many operations cannot start on time. There was a peacekeeping fund that was intended to finance start-up costs. But it had to be used to cover the US arrearages.

D. Inter-budget adjustments

No organization can assume that what is budgeted will account for everything that is likely to happen. There can be new priorities derived from unanticipated events, for example. Early in the United Nations history, a technique for increasing the budget was to make adjustments in the off-budget year. A resolution would be tabled asking the Secretariat for new work, the Secretariat would say that it needed additional resources (because the budget had to be implemented as proposed) and new resources would be approved. This would then be entered in the base and, voila, the budget was increased. This meant that all budgets as presented would be at or close to zero growth but that, after the fact, there would have been growth. In one of my subversive analyses, I examined six successive biennial zero-growth budgets in constant dollar terms. I found that the real rate of growth over the period was 16 percent.

The major contributors eventually caught on to this and a system was set up under which included in the budgetary ceiling was a contingency fund of about 10 percent of the budget. Unforeseen and new expenditures were expected to come from those funds. . In order to ensure that Member States are aware of the obligations they are undertaking when approving activities through their resolutions, the rules of the UN (and of the specialized agencies, individually) require that the programme budget implications of each resolution be stated by the Secretariat (and reviewed by intergovernmental bodies like the ACABQ). If the work requested in a resolution could be absorbed by existing resources, there would be a statement that the resolution had no program budget implications.

However, if, in the judgement of the Secretariat, the work could not be accommodated within existing resources, a statement of implications would have to be issued. There were three possible sources of funds:

• Additional resources. (A fatal implication, since the major contributors are unwilling to provide additional assessed resources).

• Drawing down on the contingency fund.

• Redeploying resources. (presumably from low to higher priority activities. However, since there are no low priority activities -- if an activity were low priority it wouldn't be included in the budget in the first place -- this is extremely difficult).

In practice, the only real source is the contingency fund, but, given the cash flow problem of the organizations, that is in many ways a fiction. Therefore, new activities are not possible.

Whoa! But new activities happen. How?

I can only speak for myself. We never said that an activity asked of us that we considered important had program budget implications (we would only say that if we wanted to kill an idea by a Member State). Instead, we would grit our teeth and say that we could absorb it within existing resources. And use diverse tricks, like obtaining extra-budgetary resources for meetings, finding co-sponsors, and, in fact, redeploying staff from projects that we thought less important. We also tried to build a cushion into our budget.

One of the means of flexibility had to do with conference servicing. As will have been noted in the analysis of functions and services in the first session, this is a major service provided. For years, it was budgeted as a lump sum covering the translation and interpretation staff (and part-timers hired for periods of peak load like the General Assembly). Whenever a new meeting was proposed, it would be absorbed, as long as it wasn't scheduled in a period where it was known that all facilities would be booked. For Member States, it was as though conference servicing was a free good. Whenever a new meeting was requested in a resolution, the Secretariat would produce a cost estimate based on "full cost" (i.e. what it would cost to hold the meeting if all of the elements -- translators, interpreters, room cleaners -- had to be acquired on the open market). Then, the statement of program budget implications would go on to say "the budget for conference services included all meetings scheduled as well as an allowance for unforeseen meetings based on experience." That meant that the new meeting could be absorbed without additional cost.

However, as resources have gotten tighter and demands for meetings greater, the organization has begun to tighten up on this element, by not allowing certain types of meetings (e.g. of the Group of 77 or the EU) to take place with full conference facilities (i.e. no interpretation).

D. Accounting: the travails of IMIS and then the travails of UMOJA.

The Integrated Management Information System was designed to solve a major set of problems: in order to manage funds, need to know expenditures; expenditures are based on personnel and procurement costs, which need to be projected.

Manual systems did not work and were not timely. Didn’t know at any time who worked for the UN. Or how much money the organization had in the bank, or how much had been spent.

The IMIS designed as a solution. It was about the most complex accounting software probably ever designed, since it theoretically had to accommodate the needs of the most complex organization in the world, at least in terms of finance (numbers of currencies to deal with, variety of suppliers, massive number of different country offices). The IMIS took at least three times longer to develop and implement than thought and had significant cost overruns. It is still not completely operative.

It was designed to provide administrative assistants with a tool to enter obligations directly into the mainframe.

As in any software where technology changes rapidly, there have been problems with IMIS. It required considerable training and proved to be somewhat inflexible (e.g. it was difficult to correct errors). It illustrates one of the problems in administering an organization as complex as the United Nations. As a result, one of the reform proposals is to set up a new system.

In addition, the UN was set up to do accounting on a cash rather than accrual basis. This meant that long-term obligations (like pension and health insurance) were not included in the budgets. This is now going to change since the UN will have to follow international standards that are based on accrual and this is causing serious problems, since it will result in an increase in the budget.

In about 2011, the UN decided to replace IMIS with a new generation system, called Umoja (Swahili for "unity"). They have made a serious effort to train staff in its use. We will see how well it works, although the initial evidence is that it was very complicated.

VI. Alternative methods of finance

For top management, the problem of secure financing remains a major issue and one that is likely to continue. Louis XIV's finance minister, Colbert, once said "The art of taxation consists of so plucking the goose so that you obtain the greatest amount of feathers with the least amount of hissing." If so, for CEO's of international organizations, the goose is hissing more and giving less feathers. A number of options have been suggested to solve this problem. 

A. Tinkering with the status quo

A number of measures have been proposed: permitting borrowing, charging interest on late payments, scheduling installment payments. The major contributors oppose the first two because it would increase their cost (either they would have to pay the interest on the loans, or if they were in default, would have to pay interest themselves). In effect, installment payments are what many major contributors use. The tinkering options really won't address the problem, which is an unwillingness of national parliaments to appropriate funds in sufficient quantity and on time.

B. IMF Gold sales

Another option raised has been to sell part of the IMF’s collateral (which is gold bullion), especially since no longer a gold standard. This would, however, be a one-time solution and, in fact, is being used instead to write down some of the debt of developing countries through an accounting change.

C. User charges

Some have argued that since certain businesses benefit from the order produced by interntional organizations, the organizations should levy user charges as a means of financing operations. These include such things as charging for the use of the global commons: airline tickets, bills of lading. It is opposed by those who do not want international organizations to have independent fund-raising capacity since, it is felt, this would remove them from legislative control. Whether this is true or not is highly dubious, since the programs of the organizations are subject to thorough review. It probably would mean that the control the major contributors have over organizations through the power of the purse would be reduced.

The Bretton Woods institutions finance their administrative costs from interest earnings on their loans, but, of course, the decision-making structure in those organizations is stacked in favor of the major contributors. The only UN system organization that currently receives much of its resources from user fees is the World Intellectual Property Organization, which charges fees for registering copyrights and trademarks and for a burgeoning business of dispute resolution for domain names.

D. Tobin Tax

A concept that has entered the debate is the Tobin tax, first proposed by the Nobel Prize-winning economist, James Tobin of the University of Chicago. It is a variant on user charges: a levy on international financial transactions that can be used to finance international activities, including development. For that reason, it has been embraced by organizations like UNDP whose financing has become increasingly precarious. Inge Kaul, the chief of their Development Studies Office, co-edited a scholarly volume on the tax.

The odds of the tax coming into existence in the near term can be estimated from the following. In the 1996 US presidential campaign, Republican candidate Bob Dole stated that if a Tobin Tax were to be enacted by the United Nations, it would be grounds for US withdrawal from the organization.

The issue was discussed at the Monterrey summit on Financing for Development, but so far has gotten nowhere.

VII. Who’s accountable?

The matter of accountability is central to public management generally. A government that is unresponsive can become corrupt, or inefficient, or press issues that are of marginal concern (namely ineffective).

Accountability is easier when government is close. [Example is the Town of Shandaken, in the Catskill Mountains, where I used to live. I used to be able to call the Supervisor -- he lived down the street from me -- and complain if the street wasn’t plowed after a snowstorm. And he had been elected on the Democratic line and I was on the town Democratic Committee.  He didn’t run for re-election, but his replacement was also a Democrat, as was the highway superintendent.  I had no problems with plowing.]

The international public sector is about as far away as you can get. At best it is mediated from the public through Nation-States. Its tangible representatives are rather distant. (Perhaps less so in New York and Geneva...)

And yet, much of the reform impulse is based on some idea of inefficiency or ineffectivenss: bloated bureaucracy. [Example from letter to editor in Kingston Daily Freeman some years ago] Under the headline, ‘Only the NRA can save us’, Frank Toman of Millbrook, NY wrote:

Dear Editor:

Until now, the gun owners in these United States have depended on the Second Amendment to our Constitution to guarantee our right to "keep and bear arms." This right has been challenged by several organizations in America, but our Congress has not seen fit to propose an amendment to repeal the Second Amendment.

However misrepresented, Article VI of the Constitution states, "all Treaties made, or which shall be made under the authority of the United States, shall be the supreme law of the Land - anything in the Constitution or Laws of any State to the contrary notwithstanding. "

The Secretary-General of the United Nations is now preparing a U.N. "Declaration of Principles on Firearms." Once this declaration is prepared, it will likely be followed by an International Treaty. Such a treaty could become law in our country by ratification by the U.S. Senate, alone, without regard for the need for full approval of the Congress and the American people.

This is not the first attempt of the U.N. to interfere with the internal affairs of the United States, but if such a U.N. treaty is ratified, every gun owner will be subject to surrender of his weapon or face a large fine, imprisonment, or both.

This is not a game of "paint balls" and camouflage suits! This is the real thing. When a man, who probably could not even speak English, but wears a U.N. uniform, knocks on your door and demands that you surrender your pistol, rifle or shotgun and your forcibly refuse, he wil1 have the authority to blast you full of holes and claim that you resisted U.N. authority.

With the treacherous cooperation of our "president" the U.N. is already gaining jurisdiction of our national parks and monuments. Foreigners now lead our American soldiers in foreign conflict. Once the U.N. gets control of the arms owned by American citizens, our Constitution and the protection it has provided for 200 years will be flushed down the latrine of history.

No man alone can prevent this. Only the National Rifle Association has the manpower and legislative clout to persuade our Congress to oppose such a U.N. action. You may be proud of your Parker Double or your collection of pistols or rifles, but unless you are a member of the N.R.A. you are become a part of the problem.

Join now and you may save your guns and possibly your life.

The NRA has been given consultative status as a non-governmental organization with the Economic and Social Council and can articulate Frank’s concerns

Still, how can that far-away UN be accountable to Frank Toman? Let alone Senator Tom Coburn, Congresswoman Ileana Ross-Leitenan (former chair of the Foreign Affairs Committee and someone who didn’t like the United Nations) or Ann Marie Buerkel (former Republican member of the SUBCOMMITTEE ON AFRICA, GLOBAL HEALTH, AND HUMAN RIGHTS, who didn't believe in human-caused climte change)?

It is not that simple. In national government, whenever the government changes, so do most of the senior level staff. This is sometimes not good, because this can instantly erase a department’s memory, as we saw in the run-up to the Iraq War. And yet, the intention was to avoid creating a bureaucratic mandarin class (for those of you who want a non-Chinese metaphor, I refer you to "Yes, Minister" – a great old British comedy that focuses on the functioning of that country’s civil service.)

In fact, as we all know, whenever a new SG is elected, all of the old USG’s are instantly out. Right? In your dreams. [For example, James Jonah, a career staff member who had risen to the post of Under-Secretary-General for Human Resources -- the post has subsequently been downgraded -- wrote to all Assistant-Secretary-Generals and above when Perez de Cuellar was elected Secretary-General and suggested that all tender a letter of resignation to allow the new SG to choose his top management team. Only one did so, Jonah himself. And he was replaced.]

But if, as has been argued, one of the main strengths of the international public sector is longevity, neutrality and the ability to serve as bridges among and between governments, changing everyone whenever an SG is elected does not seem to be a very good idea (and, as can be seen, is not even very practical.)

And yet, if we want good governance, we have to solve the accountability problem.

I have looked at it for some time (I was part of the Secretariat of one of the main oversight bodies, the Committee for Programme and Coordination.) My comments on that body are found in an article I wrote in 1996, updating an earlier article from 1987, "Who Controls the Machine: Revisited" I subsequently updated it to cover the new reforms, in Who Controls the Machine III: the United Nations and the Results-Based Revolution.

I refer you it its epigram from Sir Robert Jackson:

Governments created this machine—which over the years has grown into what is probably the most complex organization in the world ... This 'Machine' now has a marked identity of its own and its power is go great that the question must be asked 'Who controls this Machine?' So far, the evidence suggests that governments do not, and also that the machine is incapable of intelligently controlling itself.

Cruel, but somewhat accurate. So what do we do about it?

Accountable for what?

The first question we have to answer about accountability, is accountability for what? Depending on that answer, we can look at the mechanisms and procedures. (In fact, you should look at the recent SG's report on "accountability architecture".)

A. Financial probity

A first answer is, financial probity. The organizations are given money by the people, through the Member States' legislatures, and they must ensure that it is not stolen or lost.

For that reason we have... financial rules and ... AUDITORS. [Humorless people... there are few auditor jokes, and mostly about tax auditors at that].

In fact, as public sector entities go, the UN system is pretty good, but not perfect. There has been some malfeasance that has reached the press. That is the bad news. The good news is that there isn't anything large that hasn't been reported in the press. Some examples:

• Somalia $3 million in cash. During the period in which the UN operation was working in Somalia, there were no banks there (there was no government, either). The payroll for civilians and troops alike had be given in cash. To meet the payroll, three million dollars in non-sequential $100 bills were shipped to Mogadisciu, where they were placed in a locked filing cabinet at the UN headquarters (a safe had been ordered but hadn't been installed yet). Over a weekend, it disappeared. The case has not yet been resolved and, really, there are no suspects
• The UNCTAD $500,000 scam. A senior administrative officer with certifying authority (i.e. could sign checks) had a drinking and gambling problem. He discovered that he could organize expert group meetings, authorize payment of airline tickets and perdiem, as well as honoraria. Unfortunately, the meetings were never held and he pocketed the money. He was discovered in an audit and was turned over to the Swiss authorities for prosecution. They confiscated his house to partly repay the UN and gave him a terrible punishment: he was exiled from Switzerland for ten years. He was, of course, summarily dismissed from the UN.
• The Education Grant scam. At one point, someone discovered that the education grant, which is used to pay for private school tuition, could be abused. The scam consisted of sending children to public school but filing phony invoices from private schools. It was detected in an audit and a number of officials were dismissed or punished. Stricter reporting requirements are now in force.
• Management of the International Tribunal on Rwanda. Allegations of improper activity by the head of the secretariat of the International Tribunal, whose seat is Arusha, Tanzania were made. These were investigated and the official was dismissed.
• A diversion of funds in the UN Mission in Kosovo (UNMIK) by a senior staff member who had been loaned by the European Union that was investigated and the moneys recovered.

Still, taken over 67 years of budgets, averaging probably a $4 billion plus per year in current dollars, the amount of money lost to malfeasance was miniscule. Two factors were involved, loopholes in procedures that have now been closed, or the growth of field operations where the contingencies of the operations and their location make effective controls difficult.

Then, of course, we have Oil for Food. This was the exception, but a very damaging one. As the Volcker report demonstrated, this was a case of the program being designed to have problems. The program was intended to provide a vehicle within the Iraq sanctions regime, to allow the Iraqi government to sell oil to obtain foreign exchange to import food (since Iraq is a net food importer) to feed its population. Rather than assigning authority for administering the program to the United Nations Secretariat directly -- which would have put it under the rather strict, and some would argue, cumbersome, adminstrative rules and regulations -- it was set up as a separate entity reporting to the Security Council (and its Member States). As part of the political compromise, the Iraqi government was given the authority to authorize contracts to purchase oil, and the rest is history. We will discuss the lessons learned in the discussion session.

B. Efficiency

A more critical issue, perhaps, is efficiency. Do the Member States get the best bang for the buck?

Here it is a matter of checking whether the input (in terms of assessments of Member States) produce output in the most efficient way.

The UN is quite good at calculating efficiency (one USG for Administration was an auditor, and was formerly the CEO of Price Waterhouse and another recent USG was a banker and investment fund manager.) The programme performance monitoring system was based on that for most of its history. Outputs are counted.

Problem, of course, is that some kinds of output are more easily measured than others: page impressions, meetings interpreted, reports produced. In fact, these were used to estimate efficiency savings. (The number of page impressions were reduced by simply making 16 pages the normal maximum for Secretary-General reports rather than 24. This was somewhat illusory, however, since with new word-processing software -- an smaller point size -- what used to take 24 pages could be packed into 16, with no savings in translation costs, only in paper.)

But, what if the outputs were useless (the meetings didn’t lead to anything, the reports were trivial)?

C. Effectiveness

A better measure is effectiveness, the relationship between output and outcome. (The meetings led to something, the reports were read and changed how governments viewed a problem, the advice given led to development policy changes.)

Harder to measure, but not impossible. However, will inevitably be post-facto. Currently no real mechanism in the UN proper to look at outcomes. However, many of the development agencies like the World Bank do this kind of evaluation. The IAEA does this in the context of their Programme Performance Assessment System.

D. Impact

What you really want is for programs to be accountable in terms of their impact, the longer-term changes in the world.

There is, however, a fundamental problem of attributing causality. The international public sector typically works indirectly. In regime creation, it helps governments reach agreements, but then the governments act.

Example: How are we to appraise the impact of Kyoto, Buenos Aires, Bonn or Paris in Climate Change? (E.g., how are we to appraise the outcome of Paris -- and the role of the Secretariat.)

Accountable by what mechanisms?

Accountability means having institutions that can judge probity, efficiency, effectiveness and impact. That too is not easy. Institutions do exist and we can see how they work.

A. Audit/Investigations

UN has always had audit: Internal and external. The External Auditors report is the first item on the agenda of the Fifth Committee of the General Assembly. [One day, when I was working in my office in Vienna, a Frenchman poked his head in and said, "may I look at the identification number on your computer?" He was from the French external auditors and was checking the fit between the inventory sheets and the physical machines.] Mostly they discover procedures that are loose, only infrequently what could be called malfeasance. Often, however, they can suggest good ideas. For example, one impulse for the management training program in the IAEA came from the U.K. External Auditors who suggested that it would be useful.

The Office of Internal Oversight Services (OIOS). This is a relatively new development (relative means within the last 20 years).. It was modeled alternatively on the GAO and the Inspection facilities within US Departments. It includes internal audit, investigations, evaluation, performance monitoring, inspections. It is investigative, although its charter goes beyond that. The USG for OIOS, who is really the UN's Inspector-General, is elected for a five-year non-renewable term that overlaps the term of the Secretary-General. The first IG, Karl Paschke from Germany, completed his term in 2000 and the second, Mr. Dileep Nair from Singapore finished in April 2005. He was succeeded by Inga-Britt Ahlenius from Sweden, whose non-renewable term ran until 14 July 2010. Paschke's initial priority was to deal with probity (because its cost savings could, presumably, be measured and it addressed a major political issue in the organization: ensuring that there was no administrative corruption.) Mr. Nair had to confront additional problems, including the Iraq Oil-for-Food problem, which was eventually turned over to an external commission headed by Paul Volcker. Ms. Ahlenius presided over a significant increase in resources for oversight, and an emphasis on programme effectiveness. An outside consultant firm hired at great expense (on a no-bid contract) by the UN (led by the USG for Management, a US appointee), recommended limiting OIOS to audit functions. This, however, was successfully resisted by OIOS and at best happened partially. The current USG is Carman Lapointe, whose term goes until 2015 and who was previously director of the Office of Audit and Oversight at the International Fund for Agricultural Development, IFAD. From 2004 to 2009, she was the Auditor General of the World Bank Group.

Carol Bellamy, the former Executive Director of UNICEF, made an observation at a seminar at NYU in 1997 that OIOS' priority was "gotcha". However, towards the end of his term, Paschke's office became more concerned with performance measurement, and this has been continued by Nair, Ahlenius, Lapointe and now Heidi Mendoza.

B. Inspection

Looking at larger issues of management. The main organization is the Joint Inspection Unit (JIU) modeled on the French Corps d’Inspection. Its work depends on the quality of the inspectors (most are re-treaded ambassadors, while others are from national inspectorates) and on their secretariat (e.g. one of the best was an ex-GAO staff member).

But, the JIU is sometimes considered flawed and political. The greatest was Inspector Bertrand, a French inspector out of the French corps d'inspection. (His legacy includes the use of examinations to recruit entry-level professionals, data on women in the Secretariat, the program planning and budgeting process).

C. Internal committees

New cabinet style government of Kofi Annan has committees for management (used to have the Programme Planning and Budgeting Board which did not distinguish itself. It used the wrong criteria, really didn't have the information it needed, engaged in log-rolling and back-scratching.) We will see whether the cabinet approach works better

Absent a functioning sub-structure, can a plenary body made decisions?.

VII. A new bargain?

It is probably time to go back to scratch and look at accountability processes and institutions in terms of service delivery and functions.

Results-oriented budgeting is one of those options and is one being chosen increasingly, although developing countries in New York were a bit leary of it. It is also something that is intimidating to senior managers who are not used to having to specify what their programs are actually going to make happen. You have already seen the budget instructions and other material from the IAEA and the UN.

There is a need to find a way for the public(s) to have an input. Testimony? Critical in the case of the specialized agencies that deal with specialized publics... But the one kind of document that is usually not posted on public web sites is administrative and budgetary documents!

Convincing the public that it is worthwhile

As a public organization, the organizations of the United Nations system have an obligation to inform the publics. And yet, they have problems in doing so that no governments have.

The non-sovereign nature of the international public sector means that, formally, the organizations report only to their Member States: their governments. It would be another matter if they were allowed to reach over the heads of the governments to deal directly with the peoples.

Initially, and to a large extent even now, the UN is limited in its ability to reach the general public. It has a channel through the non-governmental organizations. Many of the technical agencies even have arrangements for joint programs with non-governmental organizations.

One of the first substantive debates in the UN had to do with its proposed public information program.

Technology is changing this.

Classical Public information: product orientation

For most of the history of the United Nations and its System, public information has been seen in terms of information products. Information can be produced, but not disseminated. Dissemination is someone else’s responsibility.

Where, for example, can you see the UN directly in the media? (CNN’s World Report... some radio programs sent out by tape, or you can buy the book)

The UN system on-line

The emergence of the Internet has changed all of that. Most substantive documents can now be obtained. Daily briefings are now public. There are often webcasts, including of all General Assembly plenary sessions. There have been some interactive (at least as list-serves) conferences. This opens up the UN to its specialized publics in ways that never existed before. You no longer need your government as an intermediary between you and your United Nations. We will see in due course (although not in this course) whether that helps make the organizations more accountable and effective.

VIII. Personnel: The international civil service

The main issue of personnel is found in the Charter, where it is specified that should represent the highest standard of competence, efficiency and integrity.

Question is how do you obtain, and maintain, that standard.

The issue is complicated when you have to draw on a multinational sources, multiple disciplines.

It is further complicated when you envisage a career that typically extends for 20-30 years, where the organization's needs change.

It is even further complicated when you realize that the UN lives in a shadow world where there is less cash than there is supposed to be money and the rule is to save $.

The function of the personnel system is to guarantee the main asset of the organizations: their credibility based on the neutrality, professionalism and experience of their staff, who make up 75 percent or more of the expenditures.

              I.         Recruitment

Recruitment is the process that has to reflect all of the elements of the Charter: get the best, but make sure they reflect the full diversity of the world (given that intelligence and talent are normally distributed across countries). Both are essential to credibility. The process itself has to be credible.

1. The formal mechanism

As a good bureaucracy, the UN system sets up rules and procedures to structure the process. It is based on finding means for identifying, selecting and hiring the best and the brightest. There are two formal processes:

1. The examination system

For entry-level posts, (and for the UN Secretariat but not others) there is an examination system, now called the Junior Professional Officer program. The exams are competitive so that the highest scorers on exams are selected. They are given in countries that are under-represented in the Secretariat. A certain percentage of slots are reserved for staff in the non-professional staff who have passed the examination. As a result, the exams should provide, for career-line staff, the best but also contribute to maintaining geographic balance. My own experience (as an examination board member -- and chair on several occasions, and then as a manager employing persons hired through the exams) is that they meet both purposes. Whether the staff develop into the best and brightest, however, depends on how they are used once hired and that is a different story.

2. Recruitment by advertising

To be open, posts should be advertised and recruitment based on application from a wide variety of sources, review by potential supervisors and by peers. All posts are advertised, although not all organizations advertise in places where the vacancies can be seen. For example, the US State Department posts vacancy notices on its web sites. A few UN organizations advertise in major periodicals (UNICEF, for example, places ads in the International Herald Tribune and the Economist.) By now, most organizations of the UN system post their openings on their web sites (see, for example, the UN proper, and a master list of vacancies in international organizations published by the US Department of State.)

Subsequently there is a review process, where candidates are evaluated and compared, recommendations (not decisions) made by the future supervisors, the recommendations reviewed to ensure that existing staff rights are protected and that there is no indication of bias in the selection. The recommendation then is formally accepted by the head of the organization.

The real mechanism

The formal mechanism implies that the personnel system works flawlessly and quickly. Very often neither works. In the United Nations, for example, at one point the average time to recruit a new staff member was in excess of two years. This partly reflected the financial problems (which required posts to be kept vacant to ensure cash flow), but it also reflected the cumbersome nature of the procedures. Many managers, faced with this situation, find ways to bypass the procedures. They hire staff on contracts that do not require them to pass through the review process (e.g. issuing contracts for less than a year, which means that they do not involve international recruitment.). While this can acquire staffing quickly, it essentially exploits the staff members so hired since they do not obtain the benefits held by other staff members. They also distort the geographical balance since they tend to come from over-represented countries (the US in New York, Chileans in Santiago, Austrians in Vienna). It also allows for the implementation of the "known quantity" factor (or more precisely, "better the devil you know than the angel you don't know") which does not necessarily find the best or most innovative staff.

One of the issues is determining who should be hired. This means more than setting up a job description based on tasks. It means as well having a profile of the type of person, in every sense, as an individual, who is needed. To the extent that this can be made explicit, recruitment is more transparent.

            I.         Career development and placement

For an organization to function it can either bring in new people as it needs skills, or create a career. In practice, both are needed. The new people to allow the organizations to adjust to technological (and, to an extent, political) changes and career people to constitute a core. Even in organizations like the IAEA which consciously eschew permanent contracts, there is a de facto career group. For career people, there has been much concern with career development. It has never worked very well. Why?

A. Typical career patterns

If you asked, looking at long-term staff, what is a typical career pattern, the response would be: There aren’t any.

Partly this is because of the diversity of tasks and organizations, as well as people. Partly, it is because the concept of career has not been very carefully studied in most organizations.

There are, however, two rough paths that are followed.

1. Whipsawing and moving and shaking

Many senior staff moved through the organization by spending time in one unit and speciality and then moving on to others, changing duty stations and picking up additional responsibility and knowledge at each step.

Kofi Annan is probably the best example. He started as an entry-level auditor in the UN Economic Commission for Africa, moved to the UNHCR in Geneva in finance, became a personnel officer in New York, took a sabbatical to get a master's degree in industrial management at M.I.T., went to Geneva again in administration, came back to New York as director of personnel, became head of finance (controller), then became head of personnel again at the ASG level, then became head of the peacekeeping department and finally …

My own career also followed that path: I was recruited as a technical assistance expert on evaluation in Venezuela, was recruited to the technical section that backstopped that kind of technical assistance project (I was a "known quantity") in New York, I then took an assignment as a field administrator for UNDP in Pakistan, returned to New York as a rural development coordinator, transferred to an office in New York dealing with program planning, then transferred to the UN Office at Vienna as a senior manager in a substantive program. Each step involved a promotion.

The bottom line here is that a variety of experiences and duty stations equips staff to take on higher levels of responsibility by honing skills and giving a sense of programmatic reality.

In the UN Secretariat, it is reflected in the fact that "mobility" is now one of the criteria for promotion and there is a financial incentive based on number of non-headquarters duty stations in which a staff member have served.

2. Working up a cone

Other persons stayed in the same substantive area and by dint of perserverence and the passage of time, reached management positions. This has the advantage that management staff know the program and its history. It has the potential of having managers wedded to the status quo, who know why things are the way they are but not how they could change and adapt.

Conditions of service

For the international civil service to attract the best and the brightest (or persons having the highest standards of competency, integrity and efficiency), the conditions of service have to be attractive. Of course, the main motivation for most persons is the challenge and purpose of the organization, and in that sense, it should not be based on the magic of the marketplace as is the case in the private sector.

This concern has been a central one in international organizations since the beginning of the last century (the 20^th, in case we have forgotten). The basic premise is that the conditions of service should be fair. But fair in relation to what? This has been the issue in terms of Salaries, post adjustment and other conditions. To be really fair, all of the organizations of the System should have the same conditions of service and for that reason, most belong to what is called the Common System, in which salaries and allowances are set by the General Assembly on recommendation of the International Civil Service Commission. (The Bretton Woods institutions are not part of the system.)

Setting salaries - application of the Nobelmaire principle

Since the first real international civil service was formed in the context of the League of Nations, the basis for setting salaries is what is called the Nobelmaire Principle, named after the man who promoted it. Concisely stated it says that the salaries of interntional officials should be equivalent to those of the best-paid national civil service. And no higher. Since 1945, that comparator has been the United States Federal Civil Service, although many have argued that it is no longer the best-paid (it is argued that the Germans have that). The salaries are set by comparison points with the US Federal Civil Service (plus a maximum of 15% flexibility to account for the fact that US bureaucrats mostly work in Washington, whilst UN bureaucrats mostly work in more-expensive New York City). This means that salaries are probably not very competitive with European standards or the US private sector, but are competitive everywhere else. The World Bank and the IMF argue that government salaries are too low to permit them to compete for economists and those institutions have a separate (arguably better) pay scale.

Setting the post adjustment

The next issue is to achieve fairness for people serving in different duty stations. International organizations have offices in virtually all of the countries of the world. Some are clearly more expensive than others. Fairness is maintained by an elaborate post adjustment system. A cost of living point is set (for many years it was New York City in 1987, set at 0) and each duty station 's cost of living is calculated in terms of that point. When the cost is above that level (and New York City in 2000 is many points higher), additional salary is paid. The specific score of each duty station is established by the International Civil Service Commission, usually on the basis of a comparative survey of costs of indicator items (there are two surveys, one comparing changes over time in the same place -- the time to time survey, and another comparing different places over the same items (the place to place survey)).

3. Other conditions

Finally, an application of the Nobelmaire principle means that other conditions of service (health plans, pensions, vacation) should match. Here there are some differences. The UN, for example, has different plans for staff in New York (based on US HMO's and other group plans) and elsewhere (where a European insurer, Van Breda, takes care of health insurance.) In some European duty stations, staff can opt to be in national government plans.

The area of annual leave is one where there is a difference. The UN allows six weeks of annual leave per year, much more than most national plans. The logic was that international staff, who are eligible for paid leave in their home countries every second year, needed an extra two weeks to travel (because, when the UN was established, they traveled by boat). But, like all acquired rights, they are difficult to withdraw.

Separation from service

Finally, there is the question of how one leaves the service. In theory, you leave when your contract runs out. Over the years, in most of the organizations, staff acquired long-term or permanent contracts, based on the premise that to maintain the Civil Service free from undue political influence and to protect staff from it, staff should have the equivalent of tenure. This has lately been seen by Member States as standing in the way of reform, by maintaining people who are expensive and not as well qualified. (And, of course, blocking posts for new recruitment.)

This could be discussed at length. My own position is that most of the core staff of an international organization should be tenured career staff. Quality differences should be maintained by the promotion process (i.e. incompetents should not be promoted to management ranks) and by assignment of responsibilities on the basis of performance.

Having said that, there are two classes of separations, normal and abnormal.

A. Normal

Retirement

Resignation

Retirement and resignation are the two normal means. The UN system maintains a mandatory retirment age that will be 65 for people who are recruited after 1 January 2014. (This is recent, persons who entered before 1991 have to retire at 60, persons recruited between 1991 and 2013 have to retire at 62). The only exceptions are political appointees (ASG's and above). It is still possible to take early retirement at 55, with reduced benefits.

Resignation is a voluntary act and does not affect acquired benefits.

B. Abnormal

1. Summary dismissal

2. Golden handshakes

There are essentially two "abnormal" ways of separating. Summary dismissal occurs when a staff member has committed a major infraction,usually involved with peculation of funds. It can be appealed, but it takes effect immediately. There are not many cases of this.

A more civilized procedure is what is called a negotiated separation from service (or a "golden handshake") in which a staff member is induced to resign or take early retirement in exchange for a salary and benefit package.

The SG's periodically have had reform proposals that included a massive buy-out program for staff with long-service as a means of "renewing" the organization. This assumed, of course, that over time there is a lot of "deadwood". Whether this was in fact true is doubtful, and since much of the effectiveness of the organization is due to the fact that career staff have learned how to navigate the complex management environment, it may serve to make the organization less effective. And another issue, recruitment of retired staff for specific assignments as consultants has been common -- and a bit controversial.