UN REFORM: GAO TEAM ASSESSES PROGRESS

1. SUMMARY: A four-member GAO team (Government
Accountability Office, International Affairs and Trade
Section) already engaged in an ongoing analysis of UN reform
efforts visited New York July 17-19 to assess progress to
date on management reform and mandate review initiatives.
They met with a wide array of Secretariat Officials and 5th
Committee delegates, accompanied by USUN experts, and also
met with USUN management reform staff.

The meetings focused on three elements:

-- Oversight and Governance: Upcoming Price-Waterhouse-Cooper
(PWC) report on OIOS; efforts to establish OIOS operational
and budgetary independence;

-- Management Reform: effectiveness of U.S. strategy,
including the budget cap; 5th Committee dynamics; ongoing
debate between G-77 vs. developed states; G-77,s "threat of
vote"; and

-- Lack of Progress on Mandate Review



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THE GAO TEAM


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2. The GAO team members participating in the trip were
Assistant Director Phil Thomas, Analyst-in-Charge Jeanette
Espinola, and Senior Analysts Stephanie Robinson and Barbara
Shields.



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UN OVERSIGHT AND GOVERNANCE


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3. The general feedback from Secretariat officials was
decidedly mixed. OIOS U/SYG Ahlenius complained that draft
versions of the PWC report she had seen contained
"fallacious" assumptions and misdirected recommendations. She
blamed the report,s inadequacies on a biased Steering
Committee, accusing its members of having "highjacked" the
report in early May. OIOS Chief of Office Uren Pillay noted
the result, including the proposed transfer of several key
OIOS functions to other UN offices and departments, weakened,
rather than strengthened, the operational function of OIOS,
thereby possibly jeopardizing the future effectiveness of the
office. In particular, Ahlenius and Pillay warned about the
inappropriate conflict of interest that would ensue should
OIOS, Investigative Division (ID) be moved to the UN Office
of Legal Affairs as recommended in the PWC report.



4. Adrian Hills of the Office of D/SYG Malloch Brown (and a
former OIOS auditor) noted that OIOS has a credibility
problem and is hampered by a lack of sufficient resources.
Hills agreed that taking functions, such as investigations,
away from OIOS was not the best way to strengthen OIOS.
UN/SYG for Management Chris Burnham discounted the PWC
report, labeling it "dead on arrival." He de-emphasized the
relevance of the anticipated PWC recommendations, suggesting
calls for OIOS, dismemberment, for example, would be deemed
unacceptable by key Member States, including the U.S.



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MANAGEMENT REFORM


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5. The GAO team,s meeting with U/SYG Burnham served to
highlight previous accomplishments such as the Ethics Office,
Whistle Blower Protection policy, Financial Disclosure and
establishment "in principle" of an independent audit advisory
committee (IAAC); each of which Burnham maintained was a
positive indication of management reform. Burnham also cited
the General Assembly,s recent adoption of a resolution
(A/RES/60/283) supporting UN implementation of international
public sector accounting standards (IPSAS), development of a
new resource planning system (ERP), and creation of a new
post of Chief Information Technology Officer (CITO) as
further proof that UN management reform was proceeding,
albeit at a slow pace. Burnham credited the budget cap as a
driving force in attaining progress on management reform, but
he acknowledged more needed to be done.



6. Adrian Hills expressed a more mixed impression of
management reform. He stated that the language embodied in
recent resolutions was significantly watered down from the
SG's proposals. He added, however, that important advances
had still been made, such as granting greater budgetary
discretion to the Secretary-General, the establishment of the
post of CITO at the ASG level, and the adoption of public
sector accounting standards. GAO members expressed concern
over the insufficient resources provided to date for the
Ethics Office and inadequate whistle blower tracking
procedures.




7. In separate meetings with individual Member States,
delegates from Pakistan and Egypt reiterated the importance
of ensuring a constructive negotiation process, rather than
simply seeking a particular outcome. In addition, both
representatives cited an "intensified mood of suspicion and
distrust" between the G-77 and the developed states,
including the U.S., following the GA,s decision to agree to
a budget cap in December 2005. In their view, a "poisonous
atmosphere" of mistrust had developed within the 5th
Committee, seriously undermining the ability of Member States
to work together and reach consensus on management reform
objectives. (COMMENT: These comments reflect statements made
by these delegations in the 5th Committee. As in the
Committee, the delegations failed to acknowledge that the
decision to allow limited spending was a consensus decision.
End Comment)



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Mandate Review


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8. On mandate review, ASG Robert Orr indicated that at the
time the budget cap was established, it may have served as an
impetus for progress on all fronts, in principle. In
practice, however, he said it became an impediment to
progress for both management reform and mandate review.
Looking back, ASG Orr added that what began as a western
coalition, over time, became construed by G-77 members and
the media as a loose coalition led by the United States.



9. Ambassador Lars-Hjalmar Wide, Chief-of-Staff in the Office
of the General Assembly President, suggested that future
threats by either the G-77 or the developed states to seek
votes on matters coming before the 5th Committee might serve
as a stick, to provoke progress on reform in the 5th
Committee. On mandate review, Wide said three proposed
confidence building measures were intended to reduce tensions
between the G-77 and the developed states. These confidence
building measures included: (i) acknowledgment that mandate
review was not meant to be a cost-cutting exercise; (ii) the
placement of saved funds into "envelopes," principally in
terms of development mandates and (iii) the carving out of
sensitive mandates. Wide regretted the inability to reach
agreement on these matters with the lifting of the cap, but
acknowledged that there simply wasn't sufficient time at the
end to work through all the differences.



10. Looking forward toward the 61st UN General Assembly
session, the GAO team members expressed concern that, in the
absence of a spending cap, management reform and mandate
review initiatives would flounder, given the anticipated
appointment of a new Secretary-General and the preoccupation
of Member States with the ongoing conflict in the Middle East
and other threats to international peace and security. PGA
Chief-of-Staff Wide acknowledged this potential loss of
momentum, but expressed optimism that further progress could
be achieved during the next session. Referring to the
confidence building measures, he perceived a more positive
atmosphere emerging following the budget cap. These points
were noted by both the two G-77 representatives and also by
the Canadian and Australian delegates with whom the GAO team
also met.



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GAO IMPRESSIONS


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11. It appears that the GAO participants may have come away
from these meetings with the following impressions:

-- The budget cap served to focus attention on the need to
make progress on reform initiatives.

-- The budget cap may have been used to increase G-77
cohesion in the 5th Committee;

-- The PWC Report may cause heightened tensions in the 5th
Committee between G-77 Member States and the developed states
on issues related to governance and oversight;

--With respect to governance issues, the G-77 are concerned
that some reform initiatives may reduce the GA's authority
and role or impact the ability of every Member State to have
a voice with regard to administrative and budgetary matters;

--Positive first steps, though small steps, have been taken
with regard to management reform;

-- Mandate review, procurement, OIOS and Human Resources
management will be considered during the 61st UNGA Session;
and

-- The general atmosphere in the 5th Committee, and in
connection with mandate review, is a bit more positive in the
wake of the lifting of the budget cap.



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GAO REPORT TIMEFRAME


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12. Team members indicated that they would begin drafting
their report on UN Management Reform by Labor Day, with a
view to submitting it to Congress in late September/early
October. They subsequently arranged to hold an exit
conference with USUN in early August.

BOLTON