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Transcript of Press Interview with
Assistant Secretary of State Otto J. Reich 

at the U.S. Embassy in Brasilia, Brazil

Otto J. Reich, Assistant Secretary of State
July 9, 2002

[Transcript of Press Interview with Assistant Secretary of State Otto J. Reich at the U.S. Embassy in Brasilia, Brazil]
Otto Reich's Remarks at  the Center for Strategic and International Studies (CSIS) about his trip to South America]

La Batalla Crucial por Colombia]

Las relaciones de los Estados Unidos con los países de América Latina]

Otto J. Reich con la prensa uruguaya]
Otto J. Reich con la prensa argentina]

Thank you. Very briefly, just to fill you in here, I am here because Brazil is a very important country for the United States. This is the first trip to South America that I've taken on my own. I accompanied the Under-Secretary of State Mark Grossman, who was also here, on a trip to Colombia. But I wanted to come as soon as possible -- I have been to other parts of the hemisphere -- to Brazil, and I am going on to Argentina and Uruguay, to primarily to learn all about what is happening and try to find out how we work even more closely together. We consider Brazil a very good friend of the United States, a fellow democracy, a country with which we have very good relations, so good in fact that when a problem arises such as trade, some trade problem, it becomes magnified because of the lack of other more serious problems. I am not minimizing the importance of trade, but when taken in the context of international relations today, what is happening in the world with terrorism, narco-trafficking, organized crime, pollution and everything else, our relations with Brazil stand out as very good. So however, they require constant observation, even with our close friends, and so I am here to ... I've had a series of meetings with a broad range of government officials -- primarily, of course, with Foreign Ministry, which is our counterpart -- and discussed a number of topics. So, I'd be happy to try and answer some of your questions.

Q: Can you tell us, Mr. Ambassador, what your talks with General Cardoso, today were about?

Asst. Sec. Reich: Actually, I started out by congratulating him on the Brazilian victory in the World Cup, and that is the truth. What?... There were other issues, sure. We talked about the cooperation we have received from Brazil on some of these serious issues that I had discussed: terrorism, narco-trafficking, international crime, for example. And I have to say that we have excellent cooperation with the Brazilian authorities on those matters. But I'd rather not get into specific details, obviously.

Q: About Foz do Iguaçu too? 

Asst. Sec. Reich: Say again?

Q: Foz do Iguaçu. The frontier.

Asst. Sec. Reich: We talked about the whole range of common threats to Brazil and the United States and to the democracies of the region. And we have talked with our friends in Argentina, in Paraguay, and now Brazil about the problems that exist in that region.

Q: I would like to ask you a question: In your opinion, is the Mercosul becoming weaker and weaker? I mean, Brazil used to see the Mercosul as a step in order to reach the FTAA. Do you think this is real? Does it make sense?

Asst. Sec. Reich: Well, look, every country and region – sometimes entire continents -- go through cycles, economic cycles, ups and downs. And there is no question that right now the countries of Mercosul are going through one of the down stages in the cycle. The United States still believes that the best way to build a Free Trade Area of the Americas by the year 2005 is through negotiations with sub-regional groupings -- such as Mercosul; such as the five Central American countries with which we have begun conversations leading to a free trade agreement; such as the Andean Pact; or Caricom for the Caribbean.

But we are also willing to talk to individual countries. We are close to negotiating a bilateral free trade agreement with Chile, for example. We believe that a free trade agreement will benefit the entire hemisphere. We have seen countries that participate in free trade grow much faster than those that do not participate in free trade and we believe this will be good, a free trade agreement will be good for all the nations of the Hemisphere. But, whether we get there through bilateral or multilateral negotiations will depend on what the other countries want to do and on the circumstances prevailing at the time.

Q: Is it possible that this is the case between the United States and Brazil: bilateral?

Asst. Sec. Reich: Anything is possible but I think that is up to Brazil to decide whether they prefer to negotiate as part of a group or bilateral.

Q: But is this an invitation?

Asst. Sec. Reich: No, this is not an invitation. You asked me a hypothetical question, meaning -- is it possible? Anything is possible but I am not issuing an invitation. I mean, the purpose of my visit, contrary to one of the headlines I saw in one of the newspaper reports, I am not here to negotiate a free trade agreement. I am here, as I said earlier, to convey the importance that the United States assigns to Brazil in our global relations and to learn more about the situation here on the ground.

Q: So, do you think it easier to negotiate tète a tète, face to face, than in the framework of regional agreements?

Asst. Sec. Reich: No. I said we have done both. We have negotiated bilaterally and we have negotiated... For example: NAFTA. We started out with a free trade agreement with Canada. Then, we negotiated a North American Free Trade Agreement with Canada and Mexico. We are negotiating a bilateral agreement with Chile. At the same time, we've offered the five Central American countries a regional negotiation and they are very enthusiastic about it. So, we are willing to accomplish this end, if it is in the interest of the, if the countries in the region see it in their interest, in the most feasible manner.

Q: In your conversations of common threats, how did you characterize the situation in Colombia? This threat includes of Venezuela, the triple border?

Asst. Sec. Reich: Well, there is no question that Colombia is a country that deserves the support of the Hemisphere. It is a democracy, has a freely-elected government, and has just indicated again -- the vast majority of the people of Colombia who were eligible to vote came out in very large numbers, in spite of threats from the guerrillas and efforts, in fact, to stop the voting. They came out and elected Alvaro Uribe as their president. They are a strategic country. I mean, Colombia is a country with borders on Central America to the North, on the Amazon, in the Andes and on both Oceans. It is the only country in South America, for example, with borders on the Caribbean and the Pacific. It is a friendly country. We have very good relations. I believe Brazil has good relations with Colombia. I understand president-elect Uribe is coming to Brazil sometime in the near future. And he's been to Washington. We've talked with him. In fact, I met with him in Bogota even before he was elected and after he was elected. And we think that the threat to Colombia's democracy is a common threat not just to the United States and Brazil, but to the whole Hemisphere. And, if countries are worried about the spillover effect of, say, "Plan Colombia", they should be even more worried about the effect of not stopping the terrorists and the narcotics traffickers inside Colombian borders. Because, if these people work to ever gain control over larger parts of Colombian territory, I think there is no doubt that they would take their business, which is narcotics and terrorism, to other countries. They, I don't think are only interested in taking control by force of Colombia. I don't think they know any borders. Terrorists sans frontiers, to coin a phrase.

Q: Mister Ambassador, just coming back a little bit on the FTAA process. There is a very difficult situation in Latin American nowadays. Do you think, isn't it very dangerous for Latin America to negotiate such an important negotiation like that with different crisis in different intensities like in Argentina, with the economic crisis, in Uruguay, in Brazil too and with threats to the democracy in Venezuela, Ecuador, with such difficult problems, there is not a favorable scenery for Latin American countries. The scenery is very favorable to the United States, but not favorable to the Latin American countries.

Asst. Sec. Reich: Look, a free trade agreement, by definition, should benefit both or all parties involved. I think in fact you can turn your question around and ask: wouldn't Latin America been better off facing these crises with a free trade agreement already in place? And I will give you the example of Mexico. The free trade agreement was negotiated in early 90's, was ratified in 1993 and came into effect January 1st of 1995. Ten days before that, or 11 days before, on December 20, 1994, the peso collapsed. People who know more about this than I do tell me that as bad as the effect of that collapse of the peso was on the Mexican economy it would have been much worse had it not been for the fact that NAFTA came into effect 11 days later. And the Mexican economy, since 1995 has created three and a half million jobs, of which half are directly related to NAFTA or to exports, or trade and most of their trade is of course with the NAFTA countries. Mexico since 1995 has gone from number 36 in the world in terms of exports to number 8 and is very close to number 5. It is the 2nd largest trading partner of the United States. I think, with all due respect that you can turn you question around and say, wouldn't it be better for the Latin American countries to have a cushion such as a free trade area to enable them to overcome the inevitable economic cycles? Economies have cycles, the United States recently we had a small economic setback. I don't think it was officially declared a recession, I think it requires three quarters or three consecutive quarters. But still, one of the things that helped us is the fact that we are the world leading exporting, or one of the world's leading exporting countries. Korea, a few years ago, the Korean economy practically collapsed. You recall that. You don't hear that any more. Why? Because the Koreans took advantage of their economic collapse. In fact they lowered the value of their currency to export enormously around the world. They now are competing even in the United States. For example, in the automobile sector, companies like Hiundai and Daewoo and Kia were not known fifteen years ago. 

Q: Ambassador, the advantages of free trade just come when you negotiate well and we are not in a good moment to negotiate well.

Asst. Sec. Reich: Why, don't you have confidence in your negotiators?

Q: No, because we are in a difficult scenery.

Asst. Sec. Reich: Look, I think...believe me, I have been across the table from Brazilian diplomats and I can tell you, you should have more confidence. They are very skilled. They are known around the world as some of the toughest, fair, but tough negotiators and I think that you have nothing to fear from the negotiations. And nobody is going to force anyone to sign a treaty that is not in their interest. A negotiation is a process by which both parties feel comfortable in the result.

Q: The two countries you mentioned, Mexico and South Korea got a good deal of money, I believe to combat crises. For instance, there is some talks now that Brazil is now to seek more IMF money to see it to its cycle of election cycle which is coinciding with the down cycle in the economy. Would the United States support such a transition package to Brazil.

Asst. Sec. Reich: What I would say is I believe here that you are getting into an area where I know there has been some controversy. We believe the Brazilian economy has been well managed. Secretary O'Neill said that. What I think he was referring to that created controversy was in fact the preface of your question. The fact that the down cycle has coincided with the political or the election. But we are confident about the fundamentals of the Brazilian economy. We think they have an excellent economic team and political leadership, they are a friend, you know I wouldn't what to speculate as to what needs Brazil would have in the future. But we will do whatever is necessary to help Brazil out of a, certainly out of a problem not of his own doing, if you understand.

Q: One more question....

Asst. Sec. Reich: Just one.

Q: Ambassador, could you speak about the situation in Argentina and your expectation.

Asst. Sec. Reich: I am sorry?

Q: About in Argentina? Can the U.S. government support on an agreement between IMF and Argentina?

Asst. Sec. Reich: Well, we have been encouraging both the government of Argentina and the IMF to come to an agreement. I believe that in Argentina the problem basically is the economic policy. It is no secret that people know that there are three obstacles left, three obstacles that were left to reaching an agreement. The bankruptcy law, the economic subversion law which frankly made it very  difficult for foreign investors, and bankers particularly, to do business in Argentina, which is essential to an economic recovery, and the relationship between the central government and the provinces. They've made progress on all of them. I hope that an agreement will be concluded soon. I saw some declarations in the press yesterday by the Argentine finance minister, wasn't it Gerry? That they expect an agreement by next month, by August. 

Aide: Yes, that is what they say.

Asst. Sec. Reich: Yes, that is what the Argentine said. We would like to see it of course sooner, but once again that is an agreement between Argentina, a sovereign country, and the International Monetary Fund, an international organization. People say that we tell the IMF what to do, because we are the largest contributor to the IMF. I remind you that we are also the largest contributor to the UN, and nobody accuses us of telling the UN what to do. We have some differences of opinion on a number of things but we belong to all these international organizations, we think they have an important role to play, and we are encouraged by the progress that has been made and the purpose of my visit is in fact to send a signal to the Argentine people that the United States does stand with them.

Argentina is a democracy and it is interesting to see that in spite of these very difficult problems and I am not trying to minimize what you said, I agree that these are very difficult time in Latin America. But in spite of all these problems, that the Argentine democracy has withstood and that all of the changes of government we have seen there have taken place within their constitutional rule and processes. And we are very encouraged by that. And we want to support that. This is the only continent in the world where democracy is a sine qua non for membership in the regional organization. In our case, in the Organization of the American States. This is not the case in the other developing countries, of Africa, Middle East, Asia, etc. This is a different continent. It is a continent of democracies and, as Winston Churchill said: democracy is the worst system of government with the exception of all others. Everything is relative. Democracy has a lot of problems but the alternatives are much worse. And the same goes for the capitalist system, the free market system. It may be the worse system of all, with the exception of all the others. We know that communism doesn't work, that fascism does not work. So we continue to support democracy, free markets, private enterprises as the best way to provide the most opportunity and freedom to the largest number of people.

Q: Listen, does it sound good to the United States that there will be elections in Argentina in March, next March?

Asst. Sec. Reich: To the United States?

Q: Yes, to the United States.

Asst. Sec. Reich: We have nothing to do with it.

Q: Nothing to do?

Asst. Sec. Reich: Absolutely nothing to do with that. 

Q: What is your expectation about Bolivia. The election... 

Asst. Sec. Reich: We are watching it closely and we congratulate the people of Bolivia for participating in another democratic exercise, but it's up to the Congress of Bolivia to decide.

Q: So can the cocalero go to the...(inaudible)

Asst. Sec. Reich: I think our views are well known. We support democratic leaders. We're very much opposed to drug trafficking or anybody who supports drug trafficking.

Q: Would you be able to just leave a message about steel? I know it's not your area, but...

Asst. Sec. Reich: It's a very strong element, and essential to... construction...

(Inaudible)... [several voices at once; laughing...]

Aide: ...One of your ministers is waiting...

Q: Do you think that President Bush will visit Brazil next year?

Asst. Sec. Reich: I don't have any immediate plans but I would love to see him visit every country in the region.

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July 16, 2002


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