Pursuant to Articles 90 and 111 of the Charter of the Organization of American States, I am pleased to present to the General Assembly and to the Permanent Council the Annual Report for 1996-1997. This report, which describes the Organization's activities and financial situation, was prepared in accordance with the guidelines set forth in the 1978 General Assembly resolution AG/RES. 331, and covers the period from March 1, 1996, to February 28, 1997.

The presentation of the Annual Report on the Organization's activities is a fitting occasion to reflect upon the course embarked upon in recent months, taking stock of where we succeeded and where we did not, and evaluating the goals accomplished and those that still elude us.

It is no secret that thus far the 90's have been a decade of remarkable change for this Hemisphere, on a scale seldom seen in its history. Although Latin America and the Caribbean are still grappling with old and complex challenges, the Hemisphere's prospects have never been so promising. Our countries' galvanizing integration, privatization, the market's new role, the heightened emphasis now being given to the State's social responsibilities and, of course, the consolidation of democracy and preservation of individual rights, are today the engine driving public debate. Even though we have not yet reached the end of the millennium, this Hemisphere is already launching itself upon a new era, impelled by a reality that is constantly reinventing itself and thus demanding rapid change. In a scenario of increasing interdependence, collective action is the right tool to coordinate mutual interests and cooperation. During the last regular session of the General Assembly, the member states approved the "Consensus of Panama" wherein they declared:

Their conviction that multilateralism, through international cooperation, political dialogue, and joint effort in a framework of respect for the sovereign will of states should be an effective instrument to achieve common aspirations and surmount challenges facing the Hemisphere.

Clearly, multilateral organizations are being called upon to play a leading role. This was apparent at the Summit of the Americas, where the Heads of State and Government of the Americas gave the OAS new mandates and responsibilities in carrying out the initiatives under the Plan of Action.

The changes that have taken place worldwide and in the Americas in recent years have reshaped the Hemisphere's agenda. By extension, it became obvious that the Organization had to be strengthened and revitalized to adapt itself to these new times and to meet the attendant challenges.

In the past year, we continued to make progress in modernizing the OAS, to make it an effective and vibrant instrument in the service of our peoples. That transformation has been realized with the creation of a new structure and a new direction for the Organization's work, both of which were designed to fit the mandates received from the member countries.

The first step was taken when the Protocol of Managua entered into force and the Inter-American Council for Integral Development (CIDI) was created. With these steps, the new machinery of partnership for development were set in motion. Recently, a seemingly immovable budgetary routine has finally started to give way to a system that plans how resources are used and thereby makes certain that they go toward those activities that match the Organization's priorities and exploit its comparative advantages as an institution that can spot and promote opportunities for partnership among the member countries.

The OAS is ceasing to be fundamentally a supplier of technical assistance and executor of projects, and is focusing instead on becoming an organization geared to designing and formulating policy, sharing experiences, and building networks of cooperation and alliances with other institutions to devise and carry out projects in partnership for development. By using its comparative advantages, the Organization can undertake cooperation understood in a broader, more modern and liberal sense, particularly in those areas where its work is essential.

As part of the reorganization process, a number of units and offices were created in strategic areas. In addition to those already existing (the Trade Unit and the Unit for the Promotion of Democracy), we now have a Unit for Social Development and Education, a Unit for Sustainable Development and Environment, the Inter-sectoral Unit for Tourism, the Office of Science and Technology, the Secretariat for Conferences and Meetings and the future Office of Culture.

The Secretariat for Legal Affairs was also reorganized. Still another significant step was taken with the creation of the General Secretariat's Executive Committee, which has met periodically since it was introduced in October 1996. Conceived as a mechanism to help the Secretary General coordinate, supervise, put together and direct the policies, services and activities of the General Secretariat, the Committee is composed of officials from the various areas, departments and units of the General Secretariat.

The OAS' new agenda requires modern, simple, economical and efficient administrative machinery. This necessitated, and will continue to necessitate, changes in structure and staffing, the obvious trend being toward a smaller staff than in the past. With the downsizing in the number of employees, an effort has been made to strike the proper balance to make certain that the Organization's objectives and mandates are in no way compromised.

The restructuring of the OAS must enable it to take proper, efficient and prompt action on the mandates received. And, even with the downsizing, the 1996 performance was on balance satisfactory, as the Organization did work in areas of the utmost importance.

Over the course of the last year, we have defended democracy where it was threatened and taken measures when it was vulnerable. We have fought hard against our enemies: in CICAD we have settled upon a strategy for combating drug trafficking in which all our responsibilities are shared evenly, looking ahead to the twenty-first century; under Venezuela's lead, we have agreed upon a convention against corruption, the first of its kind in the world; with Lima as the host, we issued a declaration and plan of action against terrorism, which for the first time precludes any political argument as a justification or explanation for terrorist acts; we continued to work toward global elimination of antipersonnel land mines and to transform the Western Hemisphere into an antipersonnel-land-mine-free zone; we are beginning an energetic process aimed at strengthening our human rights system; we have made a significant contribution toward preparations for the negotiations that will lead to the creation of a free-trade area; and we have taken on the mandates from the presidential summit in Bolivia to ensure that we in the Americas are guided more and more by the sustainable development paradigm.

At the CIDI meeting in Mexico City, we rededicated ourselves to our cooperative efforts, to assure each other that we remain loyal to the principle of hemispheric partnership and to make certain that many countries, not just a handful, are ready to help those countries most in need. We will use the OAS as a formidable tool for marshaling resources from various agencies, institutions and countries in order to build up our social agenda and achieve our integration goals. This is the best contribution we can make to the Hemisphere's efforts to overcome poverty.

The Organization remains committed to becoming the scenario of multilateral discussions on the most diverse topics. The OAS' role has been an important one, providing secretariat services and technical support to the meetings of the ministers of trade, of education, of sustainable development, of labor, of social development, of science and technology and of culture, to meetings of port authorities and of coordinators of social investment funds. The ministers of the interior and justice also received OAS support during the negotiation of the convention against corruption and the plan of action against terrorism.

We have also attempted to set in motion mechanisms that will ensure orderly and systematic development of the inter-American juridical system whose provisions are the rules by which we settle our differences, which will likely increase in number with fast-paced globalization and integration.

We are coordinating our activities more and more with those of the IDB, the World Bank and with institutions in the United Nations system. The IDB -the OAS' natural partner- is becoming an important source of resources for our projects in the areas of democracy and social policy and we hope that cooperation will spread to other areas in the future.

During the past year, I have brought the OAS' presence to governmental, academic, civic and entrepreneurial fora and circles where the Organization can not only contribute its ideas and initiatives to shape the new Americas, but also glean valuable suggestions helpful in plotting its own course. Among the meetings in which I participated were the inter-American meetings on terrorism, sustainable development, trade and drug traffic; the X Summit of Heads of State and Government of the Rio Group, the VI Ibero-American Summit of Heads of State and Government, and meetings of the Advisory Group on Guatemala.

The countries of the Hemisphere conducted an impressive work program that included numerous meetings and conferences, among them the Second Hemispheric Meeting of Ministers of Trade and the Business Forum of the Americas, held in Cartagena de Indias; the Specialized Conference on the Draft Inter-American Convention against Corruption; the Second Inter-American Conference of Mayors; the Meeting of High-ranking Telecommunications Authorities, and the Hemispheric Summit on Sustainable Development. As the General Assembly, the host governments and the Summit of the Americas planned, the OAS will be a prominent protagonist in all these.

And what are we learning in the process? It is obvious that the Americas need a forum for dialogue to share experiences, agree upon the legal instruments that will govern hemispheric relations, and establish other mechanisms of collective action. In endeavoring to carry out the member states' mandates, the OAS has ceased to be a fundamentally project-oriented institution and is devoting itself instead to helping negotiate hemispheric policy and to reclaiming its role as the principal forum for hemispheric dialogue.

The consensus decisions and work mapped out by the Heads of State are of such enormous scope that political resolve on the part of the countries will not alone suffice; instead, the countries will have to work shoulder-to-shoulder with the agencies of the inter- American system. It has become increasingly imperative that those agencies -the OAS in particular- transform their structures and resources to conform to what the Heads of State and Government have decided. The OAS is currently in the midst of an interesting period, receiving requests and demands from various national officials, ministers and others of differing rank, sometimes coordinated by their foreign ministries and at times with a more tenuous relationship.

The experience of recent months has shown that an initiative stands a far greater chance of prospering when we have been assigned the task expressly and specifically; when the jobs involved are those for which the Organization has experience or a clear comparative advantage; when specialized meetings are held to carry out the mandates; when coordination at the national level, between the sectoral ministries and the foreign ministry, is tight; and when the responsibilities we are given are feasible given our resources, which can be arbitrated by our Committee on Administrative and Budgetary Matters.

We have to realize that the benefits will accrue provided the multilateral process plays itself out within multilateral fora. This way, the work can become institutionalized, the processes can be regarded as cumulative projects and gradually allay any mistrust and the natural disparities between countries with differing levels of development.

And what do we suggest to enhance and galvanize those efforts? Inter-American dialogue is driven by and for the states. However, to be efficient, it must be more orderly, better focused and conducted under the same roof. The OAS and its organs should be the setting for that orderly and focused dialogue. For this, the Organization will have to have a greater responsibility to act upon the mandates that the Summits produce.

For example, at the Summit of the Americas important missions were given to multilateral institutions to carry out certain tasks. However, the same was not true of monitoring and follow- up. This was perhaps a product of fear and mistrust: a suspicion that when the old spirit dissipated, it drained some institutions, particularly the OAS, of all their ability to act swiftly and efficiently on a vast, collective inter-American plan of action.

In this new phase, as the process institutionalizes itself and now that the OAS is once again able to perform certain functions, we believe that the original scheme should be revisited with a view to strengthening it. With that end in mind, I would like to make the following observations:

1. We have to have confidence in the OAS' increasing ability to fully discharge its role as a forum of hemispheric dialogue. Some financial and administrative problems still persist, but we are working to resolve them.

2. With CIDI, the OAS is building itself up to serve as a center for documents and information on the various processes being promoted on the agendas of the hemispheric meetings. The states and their governments need an established body to compile documents, process them and keep them up to date so that they may be used by interested parties.

3. The OAS is reinforcing its capacity to function not merely as a place in which experiences can be shared, but also as an institution in which hemispheric policy is shaped and documents are produced containing consensus policy recommendations in various areas of internal affairs, as happens in multilateral institutions like the OECD.

4. Like other organizations such as the IDB and PAHO, the OAS can provide technical secretariat support for ministerial meetings and meetings on sectoral policy. If meetings and encounters among national authorities are to be used to maximum advantage, working papers ordered by the various countries will need to be prepared.

5. The OAS has the means to be the repository of the institutional memory of the Summits process and of the agreements reached therein, mainly by performing secretariat functions at ministerial and sectoral meetings. As the process of Hemispheric Summits becomes more institutionalized, it might be good to establish a clearly defined space to which member states, the new governments and the community in general can turn for a clear record of the agreements reached, the documents presented by the secretariats and the countries, the statements or information that the countries wanted to contribute and, in general, each thread that ties together the fabric that we began to weave in Miami.

6. The mechanisms that enable the OAS to be the setting and the depository of the legal agreements that must govern our relations need to be strengthened and enhanced. This will necessitate greater attention, more resources and, most of all, a strong political mandate.

7. The OAS and the other institutions in the inter-American system can contribute to the preparations for the forthcoming Summit by preparing working papers ordered by the countries and by relying on the wealth of experience that we have gained within the Tripartite Committee in the area of trade.

8. It is also our job to help fashion a more expedient mechanism so that, through the resolutions approved by our General Assembly, we can quickly and expressly introduce the Summit's mandates into our own agenda. Our Committee on Administrative and Budgetary Matters has to have the authority to make prompt, clearly legitimate budgetary adjustments.

9. Now more than ever, the institutions of the inter-American system are called upon to develop good communication and information systems and to continue the coordination process underway, not only in order to perform better, but to make better use of limited resources as well.

10. The Organization is committed to a policy of getting the most from its resources. However, the countries will have to make some decisions about the future of those activities that were among the Organization's old order of priorities. The magnitude of the OAS' new functions will also necessitate an analysis of alternative sources of funding other than the traditional system of assessments paid by the foreign ministries.

The OAS of the 90's has embarked upon the road of change and progress, taking on new challenges and opportunities. In a word, it is a revitalized and remodeled Organization, with more than a century of experience to draw upon, learning as much from mistakes as from successes.

However, the changes we have undertaken will only succeed and take hold if we see greater support and more active participation on the part of our member states and their citizenry, all of us who dream of a vigorous Organization, open to ideas and capable of grasping the political and development needs of the peoples of the Americas and acting upon them properly and efficiently.

Just over forty years ago, Alberto Lleras Camargo, then Secretary General of the OAS, delivered a lecture with a suggestive title: "The Organization of American States: An Example to the World." In this last year, we have gone far toward reclaiming that title once again.

César Gaviria

Secretary General