Identifier
Created
Classification
Origin
05ROME1821
2005-05-27 16:30:00
UNCLASSIFIED
Embassy Rome
Cable title:  

RESOURCES AND THE FAO: ACHIEVING RESULTS AND

Tags:  AORC EAGR EAID FAO WFP 
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UNCLAS ROME 001821 

SIPDIS


STATE FOR IO FOR TERRY MILLER; IO/EDA FOR BEHREND AND
KOTOK
USDA FOR BOST AND BUTLER; FAS FOR REICH AND HUGHES
USAID FOR FFP LANDIS AND SKORIC

FROM THE U.S. MISSION TO THE UN AGENCIES IN ROME

E.O. 12958: N/A
TAGS: AORC EAGR EAID FAO WFP
SUBJECT: RESOURCES AND THE FAO: ACHIEVING RESULTS AND
COMMON CAUSE

--------------
Summary
--------------

UNCLAS ROME 001821

SIPDIS


STATE FOR IO FOR TERRY MILLER; IO/EDA FOR BEHREND AND
KOTOK
USDA FOR BOST AND BUTLER; FAS FOR REICH AND HUGHES
USAID FOR FFP LANDIS AND SKORIC

FROM THE U.S. MISSION TO THE UN AGENCIES IN ROME

E.O. 12958: N/A
TAGS: AORC EAGR EAID FAO WFP
SUBJECT: RESOURCES AND THE FAO: ACHIEVING RESULTS AND
COMMON CAUSE

--------------
Summary
--------------


1. Ten years of zero nominal growth budgets at FAO have
resulted in a greatly downsized organization. FAO is
more efficient and modernized in many respects. But
there is no evidence of an increased prioritization or
significant improvement in the organization's
effectiveness. Simply put, FAO has no member state
mandate to achieve a more focused program within the
parameters of agreed priorities. Despite repeated
governing body efforts, there has not been, nor is there
likely to be, an agreed set of priorities within the
status quo arrangement. To break this logjam requires a
different approach from merely tight budgets: one
predicated on improved member relationships, greater
confidence, and the use of political tools tailored to
facilitate results in the zero-sum program scenario.


2. The independent external evaluation (IEE) currently
being developed by an intersessional working group of
the FAO Council seems to have promise in this latter
regard. The IEE has already produced improvements in
the political atmosphere among the major regional
groupings. US leadership in this area is now welcomed
and even expected, and our opinions widely respected.
Nevertheless, the consensus remains fragile and is ever
susceptible to doubt and suspicion. We are careful to
avoid the perception that we are promoting the
evaluation as a means to justify further budget cuts.

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Ten Years of Zero Nominal Growth
--------------


3. As a result of ten years of zero nominal growth
(ZNG) or near-ZNG budgets, FAO's regular assessed budget
dropped in real terms nearly 25 percent. Some of FAO's
activity in selected areas was sustained by expanding
extra-budgetary donations that in 2004-5 may reach $650
million. Along with various efforts at reform and
modernization, the organization responded to their tight
budgets by cutting staff over this period from 5,560
positions to 3,972, a 29 percent drop. In making these
cuts, FAO targeted management: director-level staff

dropped 27 percent while junior-level professionals
increased 42 percent. Most of the positions lost came
from headquarters: the ratio of field to headquarters
staff rose from 18.5 to 27.3 percent over the period.


4. FAO's weak financial position also stems from acute
cash flow problems mainly generated by Japan's and the
US's practice of paying contributions in the last
quarter of the calendar year. Over 40 percent of the
annual revenue is arriving after over 75 percent of the
expenditures have already been incurred. With fewer
reserves available, FAO is now looking at ever-earlier
borrowing of ever-larger amounts: as much as $40 million
as early as August in CY 2005. Aggravating the US's
awkward position as the one responsible for a good deal
of the problem is the prohibition against US funding of
interest associated with external borrowings.


5. The organization has taken a number of measures to
absorb the shortfalls, such as outsourcing, office
automation, and cutting international travel. Most of
its programs have also experienced a continued series of
budget reductions.

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The Dynamics of Focus
--------------


6. The ZNG policy, of course, was engineered as a belt-
tightening exercise meant to motivate streamlining,
greater efficiency, and greater focus. We, and many
other large contributors, saw budget stringency as a
badly needed incentive for tackling reforms the
organization had not achieved on its own. On the
streamlining and efficiency fronts, there are many signs
our policy worked. On focus and prioritization, it
probably failed. After a decade of negative real growth
in the FAO budget, we see little evidence that these
budget stringencies have led to prioritization and
greater excellence in the organization.


7. What happened, and is happening, is that the


organization, as in any bureaucratic process including
our own, tended to make resource cuts across the board
rather than through eliminating programs. The fault lay
more in member state dynamics than in the Secretariat,
in that different perspectives between the G77 and OECD
groups prevented reaching a consensus on prioritization.
The Secretariat therefore had no member-state mandate to
make the changes necessary to enhance focus and
prioritization. This dysfunction emanated from
political disharmony among the member states on
priorities. A revealing analogy would be one where
Congress mandated an annual cut in the State Department
budget, but where each party and committee had its own
program they wanted to save from elimination.


8. With that jagged political interface, the
Secretariat's latitude for targeted cuts was severely

SIPDIS
reduced, if not eliminated. Given the organizational
parameters of the question, further cuts in and of
themselves cannot be expected to achieve better
prioritization. We can set budget levels that are
justifiable from the standpoint of US policy, but we
will not force prioritization by doing so. We have long
passed that point, and no one in Rome, including our
best allies, looks to continued budget stringencies to
remedy the problem. It is an unrealistic proposition to
maintain any longer that continued real cuts in the
budget level will lead to greater excellence. We need
to employ other means.

--------------
Goals and Strategies: What Do We Want?
--------------


9. There are certainly other justifications for
stringent budgets, not the least of which is the
availability of resources that contributors have for
FAO. But we need to drive on a separate track to get to
the base of the problem that prevents FAO from achieving
greater and more evenly distributed "excellence." Tight
budgets for the sake of tight budgets should not
logically be our goal, in and of itself.


10. If we agree that the FAO has importance for US
interests and objectives, what we want from it is the
most and best product from the resources we have
available. If we want to make the organization better,
we need to find other organizational means to address
output: the program, itself; what it does well and what
it does poorly; and what level of program serves
American interests. We also need a political process
that generates a consensus-based mandate to the
organization.

--------------
The Evaluation and Budget Stringency
--------------


11. In that latter regard, the IEE is our best hope.
Its measurement of the organization's impact should
allow us to identify areas of comparative advantage. We
will then be in a better position to work with other
member states toward refocusing FAO activities on high-
impact programs, improving programs that we consider
desirable but whose impact has been below expectations,
and eliminating much of the rest. We can use the
independent external evaluation to improve the
efficiency of the organization by establishing baseline
observations on the effectiveness of current programs.


12. All OECD Group and most G77 permanent
representations in Rome seem to want the evaluation to
accomplish this valuable function. That said, as has
been the case with base closings in the US, the many
stakeholders will not be ready to wheel and deal on
cutting programs if (1) they don't have political cover,
and (2) they don't see the process as an honest give-
and-take effort whose ultimate aim is a better, more
effective FAO. The very process of launching the
evaluation has benefits of its own to the extent that it
generates closer collaboration between G77 countries and
ourselves. "Confidence" is the sine qua non of any
successful evaluation. If the permanent representations
believe we are working toward a mutually agreed
objective, albeit from different perspectives, we might
be able to establish a binding prioritization that will
reshape the organization in a more efficient manner. We
have already made great progress unifying member states


in a sense of common cause.


13. There are many lingering fears among both G77 and
OECD member states that the reason the US is pushing the
evaluation is to find justification for further resource
cuts. We have argued against that notion, saying that
the evaluation is to provide insight into how resources
might best be used, without direct reference to the
volume of resources now employed. Although over time
there will be indirect implications for resource levels
(one way or the other),any explicit, direct linkage
expressed by us now would jeopardize the fragile
consensus that holds the evaluation process together at
this early stage.

--------------
End Note
--------------


14. The IEE initiative is the best tool we have at the
moment to deal with the member state impasse on
prioritization. That is not to say that we should not
pursue a policy of budget stringency, nor is it the case
that no countries support continued fiscal restraint.
Our allies on the ZNG front are fewer, but still include
Australia and Japan (taken together, these countries'
contributions and ours amount to 43% of the assessed
budget). To the extent we do continue to push for
budget stringency, however, we should be transparent and
straightforward, like the Japanese are, that this is the
amount of money we have available from Congress. That's
that.


15. We should remember, however, that promoting a ZNG
stance today differs vastly from taking such a position
a decade ago. The knife has already touched bone, and
further cuts are likely to result in possibly crippling
cutbacks in programs important to us. We should also
remain aware of additional costs associated with forced
downsizing, such as the 10 million dollars the
organization expects to need for the termination of 190
positions that a ZNG budget for 2006/7 is estimated to
entail.

HALL


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2005ROME01821 - Classification: UNCLASSIFIED