INTERAMERICAN DEFENSE BOARD Budgetary and Administrative Affairs Committee (BAAC) Rear Admiral Bento Costa Lima Leite de Albuquerque Junior September 12, 2013 Washington, D.C. Notes…. LADIES AND GENTLEMEN, IT IS AN HONOR FOR THE IADB TO WELCOME THE BUDGETARY AND ADMINISTRATIVE AFFAIRS COMMITTEE AND THE SECREATARIAT FOR FINANCE AND ADMINISTRATION OF THE OAS, AND FOR US TO GIVE A BRIEF PRESENTATION ABOUT OUR ORGANIZATION . . THIS PRESENTATION WILL PROCEED WITH THE FOLLOWING SUMMARY:

INTERAMERICAN DEFENSE BOARD BAAC 2013 INTERAMERICAN DEFENSE BOARD Summary: Background Mission and Relationship with the OAS Budget and Expenses Conclusion 2

INTERAMERICAN DEFENSE BOARD Background Provides opportunities for exchanging views, examining issues, and close collaboration among the Armed Forces and Security Forces of the Countries of the Americas Has been modernized to keep pace with the today’s changing word Stands as the world’s first regional defense organization in the world THE IADB WAS CREATED ON MARCH 30, 1942, IN THE MIDST OF A WORLD WAR THAT DEMANDED THE CREATION OF AN INTER-AMERICAN DEFENSE SYSTEM IT WAS DESIGNED AS AN ORGANIZATION FOR EXCHANGING VIEWPOINTS, EXAMINING ISSUES AND FORMULATING RECOMMENDATIONS FOR HEMESPHERIC DEFENSE, AND TO PROMOTE CLOSE COOPERATION AMONG THE ARMIES, NAVIES, AIR FORCES AND SECURITY FORCES OF THE NATIONS OF THE AMERICAS. IT IS THE LONGEST STANDING REGIONAL DEFENSE ORGANIZATION IN THE WORLD, HAVING ALSO SERVED AS INSPIRATION AND MODEL FOR CREATING REGIONAL ORGANIZATIONS IN OTHER PARTS OF THE WORLD. IT HAS BEEN MODERNIZED TO KEEP PACE WITH CHANGES TAKING PLACE IN THE WORLD TODAY 3

INTERAMERICAN DEFENSE BOARD Relationship with the OAS The Organization of American States (OAS) was founded in 1948 to: Ensure Peace and Security Promote Democracy Seek peaceful solutions Offer solidarity in response to aggression Limit the use of conventional weapons IN ORDER TO UNDERSTAND THE ROLE OF THE IADB IN TODAY’S WORLD, IT IS NECESSARY TO UNDERSTAND ITS RELATIONSHIP WITH THE ORGANIZATION OF AMERICAN STATES. THE OAS WAS FOUNDED IN 1948 TO FULFILL SPECIFIC GOALS. I WILL MENTION THOSE THAT ARE ASSOCIATED WITH DEFENSE AND SECURITY: ENSURE PEACE AND SECURITY IN THE HEMISPHERE; PROMOTE AND CONSOLIDADE REPRESENTATIVE DEMOCRACY, UPHOLDING THE PRINCIPLE OF NON-INTERVENTION; PREVENT POTENCIAL CAUSES OF DIFFICULTIES AND ENSURE A PEACEFUL SOLUTION TO DISPUTES THAT ARISE AMONG ITS MEMBER STATES; IMPLEMENT ACTIONS TO PROVIDE SOLIDARITY IN THE EVENT OF AGGRESSION; AND ACHIEVE AN EFFECTIVE REDUCTION IN CONVENTIONAL WEAPONS THAT ALLOWS FOR THE ALLOCATION OF MOST RESOURCES TO THE SOCIAL AND ECONOMIC DEVELOPMENT OF MEMBER STATES. 4

INTERAMERICAN DEFENSE BOARD BAAC 2013 INTERAMERICAN DEFENSE BOARD IADB’s Mission Provide the Organization of American States and its Member States with technical, consultative and educational advisory services regarding the military and hemispheric defense, in compliance with the OAS Charter    THROUGH THE 2006 OAS GENERAL ASSEMBLY, THE IADB WAS FORMALLY LINKED TO THAT ORGANIZATION. ACCORDING TO ITS INTERNAL REGULATIONS, THE IADB’S MISSION IS TO PROVIDE THE ORGANIZATION OF AMERICAN STATES AND ITS MEMBER STATES WITH TECHNICAL, CONSULTATIVE, AND EDUCATIONAL ADVISORY SERVICES ON TOPICS ASSOCIATED WITH THE MILITARY AND HEMISPHERIC DEFENSE, IN COMPLIANCE WITH THE OAS CHARTER. 5

INTERAMERICAN DEFESE BOARD CSH ENTIDADES Y ORGANISMOS IN COMPLIANCE WITH ITS OPERATIONAL DUTIES, THE IADB INTERACTS MAINLY WITH THE HEMISPHERIC SECURITY COMMISSION AND THE SECRETARIAT FOR MULTILATERAL SECURITY. CSH: Embajador Duly Brutus SSM: Embajador Adam Blackwell JID SSM 6 6

IADB’S ESTIMATED ANNUAL EXPENSES NON-FINANCIAL (IN KIND CONTR) BAAC 2013 Budget and Expenses IADB’S ESTIMATED ANNUAL EXPENSES FINANCIAL NON-FINANCIAL (IN KIND CONTR) TOTAL PERSONNEL 544,430 20,210,669 20,755,099 OPERATIONS 2,391,270 4,000,000 6,391,270 MAINTENANCE 180,000 - 3,115,700 24,210,669 27,326,369 THE IADB’S ESTIMATED ANNUAL BUDGET IS APPROXIMATELY US$ 27 MILLION. THIS AMOUNT INCLUDES BOTH FINANCIAL AND NON-FINANCIAL COSTS. FINANCIAL COSTS ARE COVERED BY DIRECT CONTRIBUTIONS MADE BY THE OAS AND THE U.S. DEPARTMENT OF DEFENSE. NON-FINANCIAL COSTS ARE IN KIND CONTRIBUTIONS FROM THE U.S. DEPARTMENT OF DEFENSE AND THE MEMBER STATES. PERSONNEL EXPENSES ARE ASSOCIATED WITH CIVIL AND RETIRED EMPLOYEES, AS WELL AS MILITARY AND CIVILIAN OFFICIALS DESIGNATED BY THE MEMBER STATES. OPERATIONAL EXPENSES ARE THOSE ASSOCIATED WITH THE FUNCTIONS AND ACITIVITIES OF THE IADB AND THE IADC. MAINTENANCE OF CASA DO SOLDADO INCLUDES ALL UTILITIES (POWER, WATER, GAS, ETC.) 7

BUDGET SOURCES AND USES CAAP 2013 Budget and Expenses BUDGET SOURCES AND USES CATEGORY FROM TO AMOUNT % FINANCIAL (PERSONNEL AND OPERATIONS) OAS IADB 544,430 1.99 IADC 571,270 2.09 FINANCIAL (OPERATIONS) DoD 2,000,000 7.32 NON FINANCIAL (OPERATIONS) 4,000,000 14.64 NON FINANCIAL (PERSONNEL) MEMBER STATES 10,492,678 38.40 9,717,991 35.56 TOTAL 27,326,369 100.00 THE FINANCIAL CONTRIBUTION FROM THE OAS IS USED FOR EXPENSES ASSOCIATED WITH: PAYING PERSONNEL AT THE IADB AND IADC IADB ACTIVITIES MAINTENANCE OF CASA DO SOLDADO PARTIAL ACTIVITIES OF THE IADC THE FINANCIAL CONTRIBUTIONS FROM THE U.S. DEPARTMENT OF DEFENSE ARE USED FOR EXPENSES ASSOCIATED WITH: HIRING INSTRUCTORS, INTERPRETERS, AND PROTOCOL STAFF ASSISTANCE TO STUDENTS FROM COUNTRIES THAT CANNOT AFFORD TO PAY THEIR EXPENSES SERVICES CONTRACTS INFORMATION TECHNOLOGY REPRESENTATION EXPENSES ASSOCIATED WITH STUDY TRIPS NON-FINANCIAL CONTRIBUTIONS FROM THE U.S. DEPARTMENT OF DEFENSE ARE ASSOCIATED WITH EXPENSES WITH: PROVIDING THE FACILITIES AT FORT MCNAIR – ESTIMATED AMOUNT OF COSTS, MAINTENANCE AND UTILITIES (WATER, ELECTRICITY, GAS) THAT ARE NOT PAID BY THE IADB AIR TRAVEL FOR STUDY TRIPS NON-FINANCIAL CONTRIBUTIONS BY THE MEMBER STATES ARE ASSOCIATED WITH EXPENSES WITH PERSONNEL ASSIGNED BOTH TO THE IADB AND THE IADC – SALARY, BENEFITS, TRANSPORTATION AND MOVING EXPENSES NOT PAID BY THE IADB 8

Budget and Expenses BAAC 2013 CONTRIBUTIONS 9 THE IADC HAS BEEN ABLE TO OBTAIN FUNDS FROM THE DoD BECAUSE THE U.S. IS THE HOST COUNTRY, BUT WE DON’T KNOW FOR HOW LONG. MEMBER STATES PROVIDE PERSONNEL THROUGH THEIR MINISTRIES OF DEFENSE, WHICH MAY NOT PROVIDE FINANCIAL RESOURCES TO THE OAS. USUALLY ONLY THE MINISTRIES OF FOREIGN RELATIONS ARE ALLOWED TO DO THAT. IT IS ALSO WORTH HIGHLIGHTING THAT A SIGNIFICANT SHARE OF OPERATIONAL COSTS OF THE SECRETARIAT AND THE COUNCIL’S OFFICE OF THE PRESIDENT ARE PAID BY MEMBER STATES, AS THEY SUPPORT THE HEADS OF SAID AGENCIES WHILE EXERCISING THE DUTIES OF THEIR OFFICES (TRANSPORTATION, PER DIEM, AND TICKETS) FINALLY, THE OAS CONTRIBUTION IS SMALL, BUT ESSENTIONAL TO THE IADB’S OPERATIONS. 9

BUDGETARY CONTRIBUTIONS FROM THE OAS OVER TIME BAAC 2013 Budget and Expenses BUDGETARY CONTRIBUTIONS FROM THE OAS OVER TIME FUNDS MADE AVAILABLE BY THE OAS HAVE BEEN DECREASING OVER THE YEARS. THE INCREASE IN THE AMOUNT REQUESTED BY THE IADB OVER THE LAST 3 YEARS REFLETS THE INCREASE IN REQUESTS MADE BY THE OAS GENERAL ASSEMBLY AND ITS DEPARTMENTS TO THE IADB, AND ALSO THE ESTABLISHMENT OF A MASTER’S DEGREE PROGRAM AT THE IADC. 10

ALLOCATION OF OAS CONTRIBUTIONS BAAC 2013 Budget and EXPENSES ALLOCATION OF OAS CONTRIBUTIONS BASED ON THE GRAPH, IT IS EASY TO SEE THAT ALMOST HALF OF BUDGETARY FUNDS ARE ALLOCATED TO PAYING PERSONNEL (5 CIVILIAN EMPLOYEES AND 17 RETIRED PERSONNEL). MAINTAINING THE CASA DO SOLDADO REPRESENTS LESS THAN ONE PERCENT OF OVERALL ESTIMATED COSTS (27 MILLION), WHICH CAN BE CONSIDERED NEGLIGIBLE. OPERATING COSTS PAID BY THE OAS ARE LESS THAN 2 PERCENT OF THE OVERALL ESTIMATED AMOUNT (27 MILLION). DECREASING BUDGETARY FUNDS FOR THE IADB HAMPERS PRODUCTIVITY OF THE WORKFORCE PROVIDED BY MEMBER STATES, ALSO, THE SITUATION MAKES IT DIFFICULT TO KEEP THE SALARY OF CIVILIAN EMPLOYEES CURRENT. 11

Budget and Expenses BAAC 2013 WORKFORCE Rank OAS equivalent IADC IADB Total GENERAL D-2 / D-1 3 6 SENIOR OFFICER/PROFESSOR P-5 / P-4 / P-3 47 42 89 PETTY OFFICER / CIVILIAN P-2 / P-1 8 14 SOLDIER /CIVILIAN G-4 25 39 81 67 148 FOR THE PURPOSE OF PROVIDING AN OVERVIEW OF THE AVAILABLE WORKFORCE, WE PREPARED THE FOLLOWING CHART, WHICH DESCRIBES THE CURRENT SITUATION WITH OUR STAFF. MINOR CHANGES MAY OCCUR SEASONALLY ACCORDING TO THE NUMBER OF PERSONNEL ASSINED BY MEMBER STATES. EQUIVALENCY IS BASED ON THE JOB SCALE USED BY THE OAS FOR ITS PROFESSIONAL (P-1 A P-5) AND SUPPORT SERVICES (G-4) CATEGORIES. THE HIGH NUMBER OF P-5, P-4 AND P-3 POSITIONS REFLECTS THE NEED FOR SENIOR OFFICERS TO SERVE AS HIGH LEVEL ADVISORS AT THE IADB AND IADC (MOST OF WHOM ARE CORONELS AND COMMANDERS WITH OVER 30 YEARS OF SERVICE AND WHO ARE HIGHLY-SPECIALIZED). IT IS ALSO IMPORTANT TO POINT OUT THAT IT WOULD BE IMPOSSIBLE TO HIRE SUCH PROFESSIONALS IN THE MARKETPLACE, AS MOST MUST BE MILITARY PERSONNEL. 12

Budget and Expenses CAAP 2013 PERSONNEL EXPENSES IN 2013 ALLOCATION AMOUNT (U$) 5 EMPLOYEES (Salaries and benefits) 466,825 17 RETIRED PERSONNEL (Health and life insurance) 98,500 565,325 FROM TOTAL AVAILABLE STAFF, 5 EMPLOYEES ARE PAID WITH RESOURCES RECEIVED FROM THE OAS. OAS FUNDS ARE ALSO USED TO PAY HEALTH AND LIFE INSURANCE FOR 17 RETIRED PERSONNEL. EXPENSES FOR PERSONNEL ACCOUNT FOR ALMOST 50 PERCENT OF BUDGETARY FUNDS MADE AVAILABLE FOR THE OAS. SALARIES HAVE NOT BEEN ADJUSTED SINCE 2006, DUE TO REPEATED REDUCTIONS IN BUDGETARY FUNDS. SALARIES NEED TO BE READJUSTED, IF WE ARE TO AVOID ADDITIONAL RESIGNATIONS AND THE LOSS OF VITAL PROFESSIONAL INFORMATION, WHILE ENSURING THE CONTINUITY OF INSTITUTIONAL FUNCTIONS WITHIN THE ORGANIZATION. 13

INTERAMERICAN DEFENSE BOARD BAAC 2013 INTERAMERICAN DEFENSE BOARD CONCLUSION Reduced activities within the IADB; Losses in operations at the IADC should DoD fail to guarantee funding; Difficulties organizating and participating in events held at Hemispheric Security and Defense organizations; Gradual decline in maintaining “Casa do Soldado” facilities Flat salaries of IADB employees, relative to those of similar organizations. CONCLUSION: IN VIEW OF WHAT HAS BEEN PRESENTED, WE CAN CONCLUDE THAT THE CURRENT BUDGETARY SITUATION CONTINUE AT THE IADB, IF IT CONTINUES, WOULD RESTRICT THE ACTIVITIES OFIADB AGENCIES, RESULTING IN: POSSIBLE LOSSES IN OPERATIONS AT THE IADC, IF THE DOD WERE NOT TO CONTINUE TO GUARANTEE FUNDING; DIFFICULTIES IN THE ORGANIZATION AND PARTICIPATING IN EVENTS AT HEMISPHERIC SECURITY AND DEFENSE ORGANIZATIONS; GRADUAL DECLINE IN MAINTAINING THE FACILITIES AT “CASA DO SOLDADO;” FLAT SALARIES FOR IADB EMPLOYEES, RELATIVE TO THOSE OF SIMILAR ORGANIZATIONS. 14

INTERAMERICAN DEFENSE BOARD BAAC 2013 INTERAMERICAN DEFENSE BOARD CONCLUSION PROPOSAL FOR THE BAAC Conduct a study with the IADB Secreatariat for the purpose of creating a gradual recovery program for budgets and salaries. THEREFORE, WITH REGARD TO THE IADB’S BUDGETARY SITUATION IN GENERAL AND ITS FLAT SALARIES IN PARTICULAR, WE HEREBY BRING TO THE COMMISSION’S CONSIDERATION A PROPOSAL TO CONDUCT A STUDY WITH THE IADB SECRETARIAT FOR THE PURPOSE OF CREATING A GRADUAL RECOVERY PROGRAM FOR BUDGTS AND SALARIES. 15

INTERAMERICAN DEFENSE BOARD BAAC 2013 INTERAMERICAN DEFENSE BOARD Questions? 16

INTERAMERICAN DEFENSE BOARD BAAC 2013 INTERAMERICAN DEFENSE BOARD Thank you very much! 17