News Review Special Edition

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International Developments, October 1 - November 15, 2002

OPCW Budget Problems Explored in Report to Congress

On October 25, the US General Accounting Office (GAO) submitted a report to Congress criticising budgetary and management practices in the Organisation for the Prohibition of Chemical Weapons (OPCW). The report - Organization for the Prohibition of Chemical Weapons Needs Comprehensive Plan to Correct Budgetary Weaknesses - was based on an analysis of documents and information dating from the OPCW's establishment in 1997 to June 2002. In April this year, OPCW Director-General José Bustani of Brazil was controversially dismissed by a Special Session of the Conference of States Parties (CSP) to the Chemical Weapons Convention (CWC), largely at the prompting of a US administration expressing deep concern over Mr. Bustani's handling of the Organisation. Many other delegations identified inadequate funding and attempts by some powerful states to secure preferential treatment as the root causes of the OPWC's undoubted troubles. The new Director-General, Ambassador Rogelio Pfirter of Argentina, has received widespread support and credit, including vociferous commendation from Washington, for his early moves to restore equilibrium within the OPCW and improve its functioning. In its written review of the GAO study, the State Department notes that the Office's "observation that there is no coherent plan to address these problems, while accurately portraying the situation for the first half of 2002, does not reflect the current situation".

In its opening 'Results in Brief' section, the report states that since "1997, the Secretariat's budgets have not been based on accurate projections of income and expenses", a claim justified as follows:

"The organization's budgets (like those of other international organizations) are based on the presumption that all member states will pay their assessments in full, and the budgets have therefore recorded as income nearly $1 million in unpaid assessments owed by 30 member states as of August 2002. In addition, the Secretariat has overestimated reimbursement income from inspections conducted in countries possessing chemical weapons and has not collected the inspection reimbursements in a timely manner. As of June 2002, member states with chemical weapons-related facilities owed the organization more than $2 million from inspections completed over the past 2 years; the United States owed more than $1.4 million. In addition, the budgets for 2000 through 2002 underestimated the organization's personnel expenses. These collective problems contributed to a budget deficit of more than $5.2 million in 2002, despite the organization's plans to achieve a balanced budget during these years. Since 1998, the organization's external auditor and financial advisory body have recommended changes to the organization's budgeting process to address these problems. However, the organization has yet to fully implement their recommendations."

The detrimental effect of these "weak budgeting practices and budget deficits" on the effective implementation of the CWC have, the study argues, been significant: "As a result of these problems, the Secretariat completed 200 of the 293 inspections planned for 2001. For 2002, the Secretariat plans to reduce the number of inspections to compensate for the projected deficit. The Secretariat also reduced funding for international cooperation and assistance activities and imposed a hiring freeze to offset its budget shortfalls. According to organization documents, the workload of the organization is expected to grow as the number of operational chemical weapons destruction facilities increases from 6 to 12 by 2006 and member states declare more industry facilities. According to the Deputy Director-General, the Secretariat may have to increase its budget by 50 percent to support the growth in inspection activities, thus increasing budgetary pressures and the probability that it will request increased funding from member states."

The report recommends "that the Secretary of State annually report to Congress on the extent to which the organization is correcting its budgetary weaknesses and implementing the budget-related recommendations made by the organization's oversight bodies." Acknowledging that, in its review of the study, the State Department had "disagreed" with this recommendation on the grounds it would "impose an administrative burden", the GAO maintained: "We believe that such a reporting requirement would help improve Congressional oversight of the OPCW and would not impose an undue burden on the State Department, since it already provides various reports to Congress on international organizations."

On October 23, Director-General Pfirter delivered a statement to the UN First Committee on Disarmament and International Security in New York, expressing measured optimism that the OPCW was now on the right track to increased efficiency: "As you know, I was designated Director-General of the OPCW by a Special Conference of the States Parties only three months ago. I arrived at the Organisation determined to adhere to the few simple but very clear principles of sound, prudent administration, transparency and efficient management. I am firmly committed to it being so. It is no secret that the organisation had been through an extremely delicate period, both from the institutional and the financial point of view, and this inevitably affected its capacity to discharge its mission adequately. But we can say now that the OPCW has weathered the storm and is back to normal business."

Pfirter then reviewed the challenge facing the major challenges and choices facing the Organisation:

"[T]he coming in line of new destruction facilities expected in the coming years will inevitably and considerably increase the verification workload of the OPCW. Some estimates indicate that inspection activities might multiply by a factor of five. In any case, it is clear that in the very near future the organisation will be facing a steep rise in verification activity due to a growing number of eligible facilities and installations around the world. The number of inspections will therefore not only increase but also adapt to the new circumstances five years after entry into force of the CWC. Equally, we should bear in mind that verification has concentrated so far on monitoring the destruction of existing chemical weapons stockpiles, rather than detecting illegal new production. More attention and resources will be devoted, in accordance with the recent decision taken by states parties, to monitoring the global chemical industry, in line with the Convention. ... The progress of the verification coverage is one of the most crucial tasks in our agenda and we have started to take action on it as early as two weeks ago, when the Conference of the States Parties decided to rebalance the number of inspections in 2003 to include more of the relevant installations producing, consuming or processing discrete organic chemicals. It is encouraging to see that Member States are actively engaged in a dialogue that will enable us to evolve in our verification activities in a manner that is fully consistent with the terms of the Convention and that reflects the increasing number of the 'inspectable' facilities. This fact reveals the dynamic nature of the CWC and does not represent in any way a change in focus or the philosophy of inspections."

In an interview with the Global Security Newswire, published on October 25, Pfirter addressed the issue of funding: "While we still are faced in the future with a very lean budget, I'm confident the Organisation is back on its feet and will be able to cope with future commitments, including the crucial ones on verification, and will be able to address the expectations in terms of international cooperation. ... What I believe is that the present budget does contain sufficient resources for the number of inspections member states want us to make, both on the chemical weapons as well as on the industry sites. ... There is a renewed political support for the Organisation. So I hope that member states...will reflect that in terms of coming forward with assessed contributions."

On October 16, the UK Verification Research, Training and Information Centre (VERTIC) released a report on Getting Verification Right: Proposals for Enhancing Verification of the Chemical Weapons Convention. Arguing that the OPCW "has suffered from misgovernance, mismanagement and financial shortfalls", the report contains five key recommendations: 1) an urgent correction to the current "imbalance" in the inspections regime "skewed towards monitoring" chemical weapons stockpiles and their destruction, rather than "verifying that illicit production of new chemical weapons is not occurring, including in the chemical industry"; 2) movement towards a "faster, better informed decision-making process...along with the more active engagement of all states parties"; 3) urgent steps "to improve the OPCW's staffing situation, including staff morale"; 4) more expeditious implementation of "measures currently being considered to improve the financial management of the OPCW", together with "a review...to consider more radical reforms, including a solution to the problems caused by the 'possessor pays' principle"; 5) increased OPCW openness and transparency, with more public meetings and "consultative status...granted to appropriate non-governmental organisations".

Note: for analysis of recent developments in the OPCW, see Fiona Tregonning, 'Emerging from a Trial by Fire? The Seventh Session of the Conference of States Parties', Disarmament Diplomacy No. 67 (October/November 2002), pp. 10-16. For coverage of the dismissal of José Bustani, see 'US Diplomatic Offensive Removes OPCW Director-General', Disarmament Diplomacy No. 64 (May/June 2002), pp. 28-33.

Reports: Getting Verification Right - Proposals for Enhancing the Implementation of the Chemical Weapons Convention, VERTIC (http://www.vertic.org), October 2002, released October 16; Address by the Director-General of the Technical Secretariat of the OPCW, Mr Rogelio Pfirter, to the First Committee on Disarmament and International Security to the Fifty-Seventh Session of the General Assembly of the United Nations, New York, 23 October 2002, OPCW website (http://www.opcw.org); Chemical Weapons - Organization for the Prohibition of Chemical Weapons Needs Comprehensive Plan to Correct Budgeting Weaknesses, United States General Accounting Office, GAO-03-5, October 2002, released October 25; CWC - Director-General says organization 'back on its feet', Global Security Newswire, October 25; CWC - budget problems have thwarted treaty inspections, Global Security Newswire, October 28.

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© 2002 The Acronym Institute.