Organization of American States Secretary General Jose Miguel Insulza takes part in the XXXVI OAS General Assembly, 5 June 2006 in Santo Domingo. AFP PHOTO/Juan BARRETO

OAS Secretary-General Jose Miguel Insulza detailed the economic hard times at the Western Hemisphere's top diplomatic body in remarks prepared for delivery during the closing session of its three-day annual general assembly in the Dominican capital.

There has been no increase in the annual quotas, or contributions, paid by the organization's member countries in 15 years, Insulza said, adding that the purchasing power of those same quotas had declined by at least 24 percent since 1995.

Insulza said budget cuts, prompted by large deficits and a lack of sufficient income, had led to sharp reductions in staff and operating expenses.

But the respected Chilean statesman, who was elected head of the OAS in May 2005, warned that budget cuts had already reached their limits at the Washington-based organization.

"This situation reached its height of absurdity when, at the end of 2004, a unilateral and illegal decision was made to reduce staff wages at headquarters and in the national offices," Insulza said.

"Sadly the overall result of these problems is that the organization is less able to fulfill all its mandates satisfactorily, even less effective in implementing them regardless of their number," he said.

While warning that any further erosion in its finances "would lead to a completely ineffective OAS," Insulza called for an automatic readjustment in the annual contributions of its 34 member countries.

Coupled with other measures aimed at shoring up the organization's finances, he said this would allow it to continue paying annual cost-of-living adjustments to OAS staff, which are similar to those granted to staff members at the United Nations.

"We are contractually obligated to pay yearly increases to the staff, we don't have the resources for it, and consequently we are obliged to cut staff, chipping away at the institution," said Insulza.