US would be on hook for supporting an ISA bureaucracy so bloated and wasteful it even gave Russia pause
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Funding remains a problem as well. The United States, naturally, would be expected to provide the largest share of the ISA’s budget: 25 percent to start. How much that would be is impossible to predict; the budget is to be developed through “consensus” by the Finance Committee, on which the United States is temporarily guaranteed a seat (“until the Authority has sufficient funds other than assessed contributions to meet its administrative expenses”).32 After the Finance Committee vote, the budget must be approved by the Assembly and the council. Years ago the United Nations estimated that the ISA would cost between $41 million and $53 million annually, on top of initial office construction costs of between $104 million and $225 million.33 The Clinton administration contended that the revised agreement provided for “reducing the size and costs of the regime’s institutions.”34 How? By adopting a paragraph pledging that “all organs and subsidiary bodies to be established under the Convention and this Agreement shall be cost-effective.”35 Similarly, states the amended accord, the royalty “system should not be complicated and should not impose major administrative costs on the Authority or on a contractor.”36
These sentiments might be genuine. So far the ISA has been spending only about $5 million annually. But then, the world’s wealthiest nation is not yet a member. Moreover, the revised agreement has changed none of the underlying institutional incentives that bias virtually every international organization, most obviously the UN itself, toward extravagance.
In fact, concern over bloated budgets was a major factor in Moscow’s initial decision in 1994 not to endorse the treaty. (Russia has since ratified the LOST.) Russian ambassador to the UN Yakov Ostrovsky explained to the General Assembly that though the revisions were “a step forward,” he doubted the new agreement would limit costs. Of particular concern was the fact that “general guidelines such as necessity to promote cost-effectiveness cannot be seriously regarded as a reliable dis-incentive [to spending].” Before the treaty had even gone into force Ambassador Ostrovsky pointed to “a trend to establish high-paying positions which are not yet required.”37