The Foreign Service Journal, May 2006

mal ways. It is the lifeline of com- munication, a model structure of cooperation and problem solving, a means of addressing new situations and consolidating the successes of the treaty amidst the flux of political events in the region. It operates at multiple levels. From the director general, to his representatives in Cairo and Tel Aviv, to the force com- mander and his liaison staff, the MFO is in daily contact in multiple places with Egyptian and Israeli counterparts, and is often the “hon- est broker” in resolving disputes. For example, did military aircraft actually penetrate the border? Were there military personnel or equip- ment in the wrong place? Were there too many in an area of limita- tion? The intrusive and detailed verifi- cations carried out by the Civilian Observer Unit have resolved ques- tions and built confidence. Both sides voice appreciation for the COU’s military knowledge, capabili- ties and professionalism. The MFO’s ability to use small contingents enables participation by armies not able to send large num- bers and provides the force with skills in short supply, such as engi- neers and police. Importantly, this also broadens political support for the mission. Controlling Costs Traditionally, the MFO has been able to keep operating costs basical- ly flat. In a July 1981 congressional presentation, the State Department estimated that annual ongoing expenses would be over $100 mil- lion. In fact, the MFO successfully operated for 10 straight years through 2004 on a $51 million annu- al budget, half that figure. For the first time ever, the MFO ran a deficit ($418,000) in its Fiscal Year 2005 budget of $51 million. This was due to a combination of inflation- ary, exchange rate and petroleum cost pressures. These, along with higher costs for new Black Hawk heli- copters to replace the venerable Hueys and heightened operations as a result of the Israeli withdrawal from Gaza and the stationing of Egyptian border guards in the Sinai opposite Gaza, have caused an increase to $59 million in the 2006 budget. The protocol provides that Egypt, Israel and the United States each cover one third of those expenses which cannot be covered by other means — e.g., through annual donations from Japan, Germany and Switzerland. To cover the $59 million budget, Egypt, Israel and the United States each have increased their contributions from the FY 2005 level of $16.4 million to $19 million for 2006. No budget numbers have yet been fixed for FY 07, but there will continue to be upward pressure, mainly caused by the deployment of UH-60 heli- copters to replace the Hueys. Also, for this fiscal year the United States made an unprece- dented donation of $3.5 million, both for new force protection needs and to cover partially the enhanced MFO operations noted above. The Netherlands made a one-time dona- tion of $644,000 to cover some of these operational costs. The key to the MFO’s traditional low cost basis is its particular busi- ness model, a kind of public-private partnership. Beginning in the late 1980s, the MFO began to shift its procurement away from military channels except for those few items not available elsewhere. It vigorous- ly seeks to fulfill all other require- ments in the private sector, mainly through its purchasing offices in Cairo and Tel Aviv but also through its force and headquarters staffs. Initially, as a “temporary” organi- zation with no predetermined length of mandate, the MFO hired quali- fied civilians into specific jobs, did no training and expected high turnover. As the mission continued, it became clear that employee stabil- ity could be a strength, so the MFO began to offer training to enhance performance for efficiency, for em- ployee satisfaction and for upward mobility. The MFO has also imple- mented an incentive system to reward and help retain strong per- formers. Staffing is continuously reviewed to determine the best way to meet the force’s needs, whether through military personnel, direct hire inter- national staff, direct hire national staff, support contractor interna- tional staff, or support contractor national staff. A rather recent ini- tiative has been engagement of additional professional- level Egyptian staff. This has provided skilled jobs for the local work force and has enabled the MFO to forgo hiring relatively expensive interna- tional staff. From its beginnings, the MFO also has held down costs by using off-the-shelf equipment and tech- nology. It thus has a strong record of cost containment and financial man- agement to match its strong record of mission execution. 54 F O R E I G N S E R V I C E J O U R N A L / M A Y 2 0 0 6 From the start the MFO made full use of its authorities and drew liberally from the experiences of earlier peacekeeping operations.