As Prepared

Chairman and Members of the Committee:

Thank you for the opportunity to discuss the Administration's foreign assistance priorities for the Western Hemisphere. No region of the world is more important to our prosperity and security than the Western Hemisphere. In no other region do events have the capacity to so directly and so immediately affect our national interests and the well-being of the American people.

We are at a critical juncture in the economic and political development of the Americas. The weaker and more vulnerable economies of Latin America have been badly hurt by the combination of a U.S. economic slowdown, a more risk-averse attitude among international investors, and the impact of September 11, 2001 on tourism and hemispheric trade. The ensuing financial crises have been contained for now, though there are no grounds for complacency. Even during the "good times," hemispheric growth was weak except for star performers like Chile, El Salvador, Mexico, and the Dominican Republic, which embraced reform and moved to open their economies. Too many of our hemisphere's citizens have begun to question whether the triumph of democracy – the crowning achievement of the hemisphere in the last 20 years – can better their lives.

At the same time, there are encouraging signs that the framework for success has been built throughout the region: economic development in Mexico resulting from the North American Free Trade Agreement (NAFTA); Chile's strong economic performance; and the predominance of democracy, which has brought freedom to every nation in the hemisphere save one. Recent elections in the hemisphere have been celebrations of democracy, including peaceful transitions to new administrations. With the Inter-American Democratic Charter, we have recognized the hemispheric consensus for the freedoms we cherish and responsibilities we accept. Economic progress, though often tenuous, has been achieved through effort and sacrifice. Poverty has declined in countries embracing reform, such as Mexico, Chile, and El Salvador. We have created partnerships to advance common interests with Canada, Chile, Brazil, Argentina, and of, course, Mexico. In short, we have made great progress. U.S. assistance has been, and continues to be, a major factor in our success. That said, our work is far from over.

We pursue three objectives in the hemisphere: deepening democracy, including increasing governmental integrity; encouraging both national and individual development, including expanding economies to strengthen trade; and enhancing security, including securing our hemisphere against the depredations of terrorism, increased personal security, and heightened regional stability.

Our continued progress in achieving these aims in the hemisphere requires that we confront, in a systematic way, those problems that have seemed too large and entrenched to address directly. They include corruption, failures of governance, inadequate education systems, insufficient health care, and crime. We can no longer afford to dismiss these issues as endemic or to address transnational threats in a piecemeal fashion. The kind of progress we want – the kind that creates strong, resilient democracies and growing, modern economies – requires a broad commitment to address these issues.

Democracy

Democracy has come a long way in this hemisphere over the last 20 years. While free elections are now the norm throughout most of the Americas, free elections alone are not enough. The people of the hemisphere are expressing discontent with the quality of their democracy and the perceived inability of their governments to deliver higher standards of living, safe streets, and good schools. They want, and we promote, the second-generation democratic reforms of deepening democratic institutions and investing in people.

To deepen and develop democracy, the member states of the Organization of American States (OAS) adopted the Inter-American Democratic Charter on September 11, 2001. At the very moment our nation confronted terrible tragedy, the free nations of the Western Hemisphere reaffirmed our commitment to the principles of democracy targeted by the terrorists. The Charter acknowledges collective responsibility to promote, protect, and advance democracy in this hemisphere and has been the basis for more active regional engagement in crises in the region.

The President announced on May 20, 2002, an initiative to promote a transition to democracy in the only nation in the hemisphere that did not adopt the Charter – Cuba. In his landmark speech, President Bush made clear that a rapid, peaceful transition to democracy characterized by strong respect for human rights and open markets in Cuba remains one of the critical priorities of U.S. foreign policy. Through our democracy outreach program, we provide books, radios, and other informational material to Cuban dissidents, opposition leaders, and human rights workers. We seek to expand this program, and so request an increase in ESF for Cuba to $7 million in fiscal year (FY) 2004. Unfortunately, our efforts to encourage democratic reform and transition were answered by the regime's arrests of dozens of opposition leaders and representatives of independent civil society since March 19, in the most significant act of political repression in years.

Democracy also remains at risk in Haiti. The Caribbean Community (CARICOM) worked closely with us on Resolution 822 of the OAS, which provides clear guidelines to restore a climate of security to Haiti and to enable a return to full democracy through free and fair elections. The United States was an integral part of a joint high-level OAS-CARICOM delegation that visited Haiti March 19 and 20. The delegation delivered a strong message to the government about the crucial importance of meeting commitments under Resolution 822 and urged the opposition and civil society to participate in the electoral process once the government meets its commitments.

The situation in Venezuela continues to deteriorate, undermining Venezuela's democracy and economy while threatening regional stability. We must help Venezuela find a solution to the current impasse to avoid further harm. The only politically viable solution is a peaceful, constitutional, democratic electoral process agreed upon by both the government and the opposition. The dialogue led by the OAS Secretary General remains the best hope for Venezuelans to reach such a solution. The proposals tabled January 21 by former President Carter – either a constitutional amendment to enable early elections or an August recall referendum – present viable options to break the impasse.

Achieving fully the democratic objectives that our hemisphere’s leaders have established requires responsible government stewardship. Secretary Powell has said, "Promoting integrity in government and the marketplace improves the global governance climate, nurtures long-term growth, and extends the benefits of prosperity to all people." Corruption is the millstone the citizens of the hemisphere continue to drag as they strive toward modern economies and effective democracies.

Corruption distorts markets and undermines faith in the institutions of government.

It limits opportunity to only the elite and steals resources that should be used for health care, schools, and community police. Most of all, it creates disappointment and resentment that can destroy free and open systems.

To improve governance, we offer enhanced help in the fight against corruption across the hemisphere. For example, we support the efforts of President Bolaños of Nicaragua to beat back impunity in his nation. A U.S. government-funded and trained anticorruption unit in the police force carried out initial investigations against tainted high-level figures. We have adopted a "no safe haven" approach to corruption. We will deny U.S. visas to corrupt officials as appropriate under existing law, we will monitor aid to ensure it is used transparently, and we will assist countries in recovering stolen funds. We have also developed a comprehensive program to combat corruption in the hemisphere, not just through bilateral and multilateral programs, but also through collaborative actions with our partners.

Creating governments with integrity, where impunity is not tolerated and law applies to everyone, requires a major commitment of effort and resources, but virtually every U.S. national interest, from regional stability to trade, from democracy to combating transnational crime, requires government integrity and eradication of impunity. We work to build strong government institutions, broad-based and effective national political parties, independent labor unions, and a free and responsible press; enhance the rule of law and investigatory and prosecutorial capacity; and develop ethics education at the secondary and professional levels. We have supported the protection of workers’ rights by insisting that the rule of law be observed and applied and that acts of violence against workers and their representatives be fully investigated and prosecuted. In FY 2002, we spent almost $75 million in Economic Support Funds (ESF) on democracy and good governance in the region. These resources helped to support emerging democracies in Latin America and the Caribbean through training and technical assistance to municipalities, judiciaries and legislatures, and programs that support prosecutors in their battles against corruption, money laundering, and other criminal activities.

Urgent global priorities will reduce that amount in FY 2003, but we look to Congress for support for our FY 2004 budget so that we can continue to consolidate the region's gains. Specifically, we seek full funding for our ESF request of $86 million, a significant portion of which will be devoted to democracy and governance activities.

Our regional administration of justice program strengthens rule of law, with a special emphasis on police reform. The development of strong civilian police organizations is essential for citizen security in emerging democracies and also for international cooperation to combat the threat of transnational crime. For FY 2004, funding is needed to continue programs underway in El Salvador, Guatemala, Honduras, and Nicaragua that focus on the implementation of new criminal procedure codes and related anti-crime initiatives. Another ongoing activity funded from this account is the Justice Studies Center of the Americas, an initiative of the Summit of the Americas to provide a forum for comparative research and coordination of justice sector reform initiatives throughout the hemisphere. Political and legislative developments permitting, we may also initiate programs in Venezuela, the Dominican Republic, and the English-speaking Caribbean. We hope that you will fully fund our request for $7 million – which is part of our overall $86 million ESF request – to continue these efforts in FY 2004.

Development and Expanding Economies

Economic uncertainty destabilizes nations and regions, just as economic advancement is inhibited by political strife. We have exercised leadership both bilaterally and within the international financial institutions to assist nations suffering from financial crises. Just last month, the United States accelerated the delivery of $10 million in ESF funds for Bolivia to help the democratically-elected government there stave off civil disturbances related to economic conditions. Last year, the United States provided Uruguay with a $1.5 billion bridge loan that was repaid – with interest – in one week. Argentina has now stabilized its economy. With crucial help from the U.S., it reached a transitional accord with the IMF and has begun the long climb back to economic recovery. The U.S. has also assisted Brazil, Colombia, and Bolivia in their efforts to obtain significantly greater resources from the international financial institutions (IFIs). U.S. Government contributions constitute about one-sixth of IFI funds. Thus, U.S. money channeled through IFIs leverages much larger assistance packages. For FY 2004, almost 30 percent of our ESF funds for the region ($24.445 million) are budgeted for economic growth and trade capacity building, in addition to the development assistance funds with USAID to be spent on related activities. Half of those expenditures for economic growth and trade capacity building ($12.37 million) are targeted at the Andean region. These funds reduce barriers to trade, support microfinance lending to the most needy, improve tax administration, and help the historically disadvantaged generate the incomes they need to lift themselves out of poverty.

Recognizing that a strong Mexican economy is in the interest of both Mexico and the U.S., Presidents Bush and Fox launched the U.S.-Mexico Partnership for Prosperity in September 2001 to promote development in the more remote areas of Mexico. This innovative public-private initiative tackles the root cause of migration by fostering an environment in which no Mexican feels compelled to leave his or her home to find work. In its first seventeen months, the Partnership has reduced the cost of sending money home for thousands of Mexicans in the U.S., trained Mexican entrepreneurs in the use of electronic commerce, and launched a hundred million dollar fund to finance environmental projects. The partnership has also provided over a million dollars for feasibility studies for Mexican infrastructure projects and initiated a $50 million, seven-year scholarship program to enhance the capacity of Mexican institutions of higher education. We are seeking $12 million in ESF for Mexico in FY 2004 for a variety of activities in support of democratic and economic development, scholarships and security to promote stability and foster economic growth.

The Third Border Initiative, unveiled by President Bush at the 2001 Quebec Summit of the Americas, is a comprehensive framework of cooperation with the Caribbean region on issues that affect vital mutual interests such as security. It also provides funding and training for disaster preparedness, environmental management, and for the fight against HIV/AIDS. Our $9 million request for FY 2004 for this initiative will allow us to help this region while we help ourselves by improving stability and security in the Caribbean through increased training of local authorities and increased information sharing.

President Bush believes in the transformative power of trade. The effect of the reduced tariffs from NAFTA and the Uruguay Round – equivalent to a $1,300 tax cut for an American family of four – demonstrates what trade can accomplish. That is why the conclusion of a Free Trade Area of the Americas (FTAA) Agreement in 2005, established as a target date by hemispheric leaders at the Quebec City Summit of the Americas in 2001, will be critical. Parallel to those negotiations, our discussions with the Central Americans on a free trade agreement, like the agreement signed with Chile, move us in the direction of a hemispheric market. Some nations of our hemisphere require our assistance to develop the capacity to take advantage of the agreements as fully as possible. My colleague, Adolfo Franco of USAID, will discuss in greater detail our efforts to build trade capacity throughout the hemisphere.

Security

For democracy and development to thrive, a nation must be secure. Promoting hemispheric security remains a key U.S. objective, as it is a precondition to every objective we share – stopping terrorism; ending the trafficking in arms, illicit narcotics, and people; strengthening the rule of law and respect for human rights; halting environmental degradation; ending lawlessness and criminality; and expanding economies. Foreign terrorist organizations and their supporters operate in the hemisphere, most notably in and on the borders of Colombia, in Peru, and in the tri-border region of Argentina, Paraguay, and Brazil.

We are encouraged by the response of the Guatemalan government to our concerns about counternarcotics. The March 19 seizure of over a ton of cocaine was a vivid demonstration of Guatemala's commitment to improve counternarcotics operations.

In the last several months, the old counternarcotics police force has been replaced, seizures have increased, and seized drugs have been destroyed. The government of Guatemala has also taken steps to improve and enhance cooperation on extraditions and maritime counternarcotics efforts. Illegal narcotics flows continue to pose a significant threat to Guatemala and the other Central American countries, and it is important that the United States and Guatemala continue to increase our cooperation.

The State Department's Bureau of International Narcotics and Law Enforcement Affairs (INL) – bilaterally as well as multilaterally through the OAS – is supporting a wide variety of programs to address drugs, crime, and violence throughout the hemisphere. There is close coordination between INL and my bureau to ensure that International Narcotics Control and Law Enforcement (INCLE) and ESF-funded programs and activities are complementary. We are improving cooperation with our allies, strengthening the efforts of the Financial Action Task Force (FATF) and the two FATF-styled regional bodies that cover the Caribbean and South America to combat money laundering, and enhance border controls. We can only create a secure environment by working together and the Western Hemisphere has been notably active in this effort.

Following the September 11, 2001 attacks, members of the hemisphere invoked the Rio Treaty, our collective security agreement for the region. The OAS, with strong U.S. leadership, also revitalized the Inter-American Committee Against Terrorism (CICTE) and endowed it with a comprehensive work plan. We are transforming CICTE into an effective body of counterterrorism experts that can take concrete action. In less than one year, the OAS drafted the Inter-American Convention Against Terrorism, a binding legal instrument that establishes mechanisms for coordinated action against terrorism, which has already been signed by thirty-three of the thirty-four member states. Recently, under the leadership of governments in the region, the U.S. has collaborated with Brazil, Paraguay, and Argentina to establish the "Three Plus One” counterterrorism cooperation mechanism to address activities relating to terrorism as well. U.S. officials, in the context of the Commerce Department’s Transshipment Country Export Control Initiative (TECI) and State's Export Control and Border Security (EXBS) Program, also have begun discussions with Panamanian officials on strengthening their trade control and border security systems to prevent terrorists and other entities of concern from acquiring key goods and technologies associated with weapons of mass destruction.

In December 2001, the U.S. and Canada signed the Smart Border Action Plan, creating a more secure and more efficient border. To the south, we enhanced our shared border security with Mexico by signing and implementing a similar Border Partnership Plan in March 2002. Over the past year, we have made significant progress toward our mutual goal of keeping North America safe from terrorism while sustaining trade and transportation flows crucial to our economies and citizens.

We sought and obtained new legal authorities to better help Colombia in its battle against terrorism. With your support, since July 2000, the U.S. has provided Colombia with almost $2 billion to combat the intertwined problems of drug trafficking and terrorism. These resources have strengthened Colombia’s democratic institutions, protected human rights, fostered socio-economic development, and mitigated the impact of the violence on civilians. We requested $37 million in FMF and $34 million in ACI funds as part of the 2003 supplemental to meet these goals.

You also passed the Andean Trade Preference and Drug Eradication Act, creating new jobs and hope for Colombia's people. For FY 2004, we are requesting additional resources for Colombia and its neighbors, to build on these successes. Our request for funds for the Andean Counterdrug Initiative (ACI) -- directed at Colombia, Bolivia, Brazil, Ecuador, Panama, Peru, and Venezuela – is $731 million for FY 2004.

Another threat to stability in the hemisphere is the lingering obstacle of cross-border conflicts, especially a series of unresolved border disputes that can flare into small-scale confrontations. These disputes poison relations between neighbors and impede efforts toward cooperation and integration. To enhance hemispheric integration and guarantee the success of the FTAA, our neighbors must resolve these disputes equitably. Development efforts, such as those we have undertaken on the Peru/Ecuador border, can help cement cross-border economic cooperation and development in the disputed area and beyond. Our FY 2004 request includes $4.5 million for the Peru-Ecuador peace process, part of our pledge to assist in bringing peace to the area.

We seek an increase in Foreign Military Financing (FMF) for the region. We share the concern of the U.S. Southern Command that a decade of reduced security assistance and local military budgets has left the region's militaries in need of modernization. These militaries, particularly in Central America and the Caribbean, are sorely pressed to protect national airspace and waters from transnational criminals who smuggle drugs, arms, and people. Hurricane Mitch in 1998 and the El Salvador earthquakes of 2001 showed that regional armed forces are a key element of Central America’s ability to cope with large-scale national disasters. Our FMF request for $143 million in FY 2004 is well above the FY 2003 level and focuses on the Andes.

The higher level of FMF is required to support the Colombian government’s efforts to take back control and governance of those areas of Colombia currently dominated by terrorists and narcotics traffickers. FMF support is also critical for Colombia’s neighbors to preclude narcotics and terrorism from spilling over Colombia’s borders. FMF programs will focus on strengthening security forces in border areas and complement the ACI-funded activities that I mentioned earlier.

On the related topic of legal authorities for our work in this region, you have provided us with expanded authorities in Colombia. We ask that you extend these authorities for the coming years, to permit us to assist the Government of Colombia in combating the dual threats of narcotics and terrorism. We also ask that these authorities be free of restrictions that can cause unhelpful delays. In fact, we hope these authorities can be extended indefinitely, removing the need to seek their renewal each year, which injects uncertainties into the planning process.

We would like to explore with the Committee's staff the prospect of reviewing and rationalizing current Colombian reporting requirements. Consolidation of these requirements would, in addition to increasing efficiency, provide you with a clearer picture of our efforts. We have identified several other areas where legislative changes may facilitate implementation of our policies. We are still reviewing these areas within the Administration and would like to engage with you and your staff on these at a later date. For example, there are now so many separate exceptions to the prohibitions on police assistance that it is hard to know what is allowed in any particular situation. This makes coherent planning difficult. There are also gaps between existing authorities that create unintended consequences. We look forward to discussing these issues with you.

At State, we have identified several other areas in which we would like to engage with you and your staff on legislative changes that would facilitate implementation of our policies. For example, there are now so many separate exceptions to the prohibitions on police assistance that it is hard to know what is allowed in any particular situation. This makes coherent planning difficult. There are also gaps between existing authorities that create unintended consequences. We look forward to discussing these issues with you.

Conclusion

Although we are paying close attention to events elsewhere in the world these days, this does not mean we are neglecting our own hemisphere. We are deeply engaged – from negotiations for a historic hemisphere-wide free trade area, to significant contributions toward increasing regional security, to sustained work to improve the governance of our region. Public diplomacy plays a critical role in all our efforts.

From broadening public outreach in Cuba to explaining our objectives in Colombia, from media campaigns in Haiti to deter immigration to support throughout the hemisphere for free elections, public diplomacy is ever-present. We work toward a public diplomacy strategy of broad, continuous engagement with all levels and age groups of American societies. While we have increased efforts to engage those who shape public opinion and make decisions through the American Fellows Program and programs like the Humphrey, Fulbright, and International Visitor programs, we also need to reach out to the average voter and the successor generation in ways that will deepen the understanding Latin Americans have of the United States on a personal level. This means more vigorous information outreach programs, creating opportunities for person-to-person interaction, and actively listening to what our neighbors are saying. These efforts must continue in parallel with the efforts I have described above.

Admittedly, all is not rosy in the Western Hemisphere. Although we have come a long way, there has been backsliding, and growing democracies face threats from all sides. We are optimistic, however, because our problems are not intractable. We can overcome existing challenges together and bring a free, secure, and bright future to all the peoples of the hemisphere.

President Bush believes that freedom is the key to unlocking potential. Freedom allows the creativity that is the essence of human nature to express itself and be realized. Freedom is the path of political, social, and economic progress. As President Bush said, this hemisphere of eight hundred million people strives for the dream of a better life, “A dream of free markets and free people, in a hemisphere free from war and tyranny. That dream has sometimes been frustrated – but it must never be abandoned.” He knows there are millions of men and women in the Americas who share his vision of a free, prosperous and democratic hemisphere. Working together as partners, I am confident that we will achieve this goal.

April 07, 2003

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