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Otto Reich's Remarks at  the Center for Strategic and International Studies (CSIS) about his trip to South America

Otto J. Reich, Assistant Secretary of State
July 18, 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]

Introduction

Thank you, Miguel, for that generous introduction. I am happy to be back at this prestigious center for the study for foreign affairs.  CSIS has been a catalyst for thought over the years, and the work you do here adds to the intellectual vigor of our foreign policy. Today, I would like to briefly discuss my thoughts on Latin America, where we are now and where we ought to be headed, and then share some of my impressions from my recent visit to Brazil, Argentina, and Uruguay.

While in the Southern Cone, I encountered a perception, held by some, that the United States is not engaged with our partners in the hemisphere. In my view, that is not only untrue but would be practically impossible and completely undesirable. My message was that the United States is engaged in Latin America per force of our historical circumstances and by design.

First, we are bound together by shared values. There is now a consensus in the Americas in favor of democratic government. This consensus began to emerge more than twenty years ago. In the late Seventies, only about a quarter of the people in Latin America enjoyed some form of democratic government. Today, all of the nations are democracies except Cuba. We are becoming a community of states based on this common belief, as was codified in the Inter American Democratic Charter that establishes democratic government as the birthright of all citizens of the hemisphere.

Our shared values are derived from a common history. The history of the Americas is a history of the progress of freedom. We struggled for independence here in the New World. We established democratic governments here to secure our rights and allow us to explore the opportunities that this vast and plentiful hemisphere has to offer. No other region has made such progress and has so much potential.

History tells us that natural and political geography dictate patterns of trade. Neighbors of like-mind are our most likely trading partners. The U.S. sells more to Latin America and the Caribbean than to the European Union. Trade with our NAFTA partners is greater than our trade with the EU and Japan combined. We sell more to the Southern Cone common market (MERCOSUR) than to China. Latin America and the Caribbean comprise our fastest growing export market. These commercial relationships bind the prosperity of United States to the prosperity of the hemisphere.

President Bush has said he believes that the 21st century will be known as the "Century of the Americas." Having been the governor of a border state, the President sees the nations of this hemisphere as partners and neighbors. He has been very personally engaged in the affairs of the region. He believes that emergence of democratic states in the Americas ... and the prospects for the growth of hemispheric trade and development ... make this a defining moment.

The United States is engaged with Latin America ... necessarily and happily so. We share values, history, and geography. During the Cold War, American statesman used to say of Europe and NATO, "We are there, and we are committed." One might say of the United States and Latin America today, "We are here, and we are committed." The President believes in the future of the Americas, and our policy reflects his confidence and his vision.

Challenges

This is a very exciting time in the history of the Western Hemisphere.  There are many opportunities. There are also many challenges. While we are optimistic, we are not naive. The enormous progress we have made in the past twenty years has not severed the region from its past. The ideas of freedom and equality are being put into the practice of democracy and markets throughout the hemisphere, but this historic evolution is not without difficulties or opposition. These are nations that are still struggling with the legacy of poverty, statism, and authoritarianism.

U.S. Policy

I am confident that the forces of democracy and freedom are on "right side history," but there have been and will be setbacks. The leadership of the United States is critical to overcoming these obstacles to progress. The Bush Administration's agenda for our hemisphere has four goals: to strengthen security, promote democracy, encourage responsible governance, and stimulate development.

Security

It is often said that security is the first function of the state. Since September 11, no issue has captured the attention of the public as security has. The attacks on that day were brutal reminders to us all of the danger that evil men pose to open and democratic societies, the value of our way of life, and the necessity of our leadership in the world.

We were very heartened by the expressions of sympathy and condolences offered by people throughout the Americas. Led by Brazil, our friends in the OAS invoked the clause in the Rio Treaty recognizing the attack on the United States as an attack against all. We are deeply grateful for the support of our neighbors in the war against terror.

Our first war of the twenty-first century is peculiar to our time. Our enemy is a lethal combination of transnational criminal networks and terror organizations. Today, many challenges to our values and our interests arise from such combinations, even here in our own hemisphere.

Terrorist organizations are operating in Peru and the tri-border region of Argentina, Paraguay, and Brazil. In Colombia, narcotics traffickers and terrorists are waging a vicious campaign of political violence that kills three thousand people every year.

If Colombia is to succeed as a state, it must be able to control its national territory and protect the lives and property of its citizens. President Bush has asked the Congress to allow us to enhance our military and intelligence assistance to the Colombian government in its war against terror.

Colombia can defeat the terrorists, but it needs help from its friends to do it. They need training, arms, equipment, and intelligence to implement a successful military strategy.

The United States has a national interest in the success of democracy in Colombia and the region. Our values and the future of our hemisphere are at stake. As President Bush said, "Our first commitment is to democracy and political freedom. Freedom -- the freedom to vote, speak, worship, and own -- is the great idea of our time, and of all time."

Democracy and Good governance

Terror is not the only threat to democracy and freedom in the region. A democracy ultimately rests on the confidence of the people it serves. It is the responsibility of leaders, not merely political leaders but of all civic leaders, to maintain the trust of the public. Corruption in the leadership class, motivated by greed for money or power, is poison to democracy and inimical to freedom. In Latin America, there are countries that are suffering leadership crises.

I do not say that corruption is unique to Latin America. In my view, moral failings are evenly distributed throughout the human population. One only has to examine the front page of the Wall Street Journal to find evidence of corruption in the United States. It is incumbent upon leaders to create an environment in which the darker side of human nature is held in check and incentives are provided for good behavior.

Absent those restraints and incentives, corruption may run rampant. As Alan Greenspan observed in his testimony two days ago, the corruption in the corporate boardroom resulted from a failure of checks on corporate leaders and frenzied capital markets that offered perverse incentives to express greed.

Some have suggested that the democratic and free market model has failed in certain Latin American states. That is a misinterpretation of events. The model has no more failed in Latin America than in the North America, Europe or Asia. The failures that have occurred are the result of the imperfect and incomplete implementation of democracy and markets. The challenge in Latin America is for the leadership class to overcome the legacy of poverty and statist government... and eliminate the perverse incentives that the remaining elements of the old regime still offer.

On my visit to Argentina, I expressed our sincere desire for economic recovery there.  Argentina has been a stalwart ally of the United States and a champion of democracy in many international fora. We stand ready to aid Argentina directly and through international institutions, but it is incumbent on Argentines to put forward a sustainable economic program. I am sure that they will do so. Despite their real suffering, the Argentines remain committed to democracy.

That commitment is evidence of their faith in themselves and their confidence in their country's future.

Democracy is always a work in progress. It requires the constant effort of leaders and citizens to make sure that its institutions are honest and work as they were intended. That is its great strength and weakness. There is no perfect democracy, as there are no perfect people. But democracy is endlessly perfectible. The challenge is to work continuously toward that end.

To help meet that challenge, the Bush Administration has undertaken to provide incentives for good governance with a new approach to foreign aid. President Bush announced the Millennium Challenge Account initiative last March. We will increase our core development assistance by 50% over the next three years, resulting in a $5 billion annual increase over current levels by fiscal year 2006 and beyond.

These monies will be directed to those countries that govern justly and honestly, uphold the rule of law, fight corruption, invest in their people, and promote economic freedom.

Democracy is more than an election. It is a civic culture. Public integrity, equality before the law, respect for individual rights, economic opportunity, and healthy political institutions are essential to freedom. In the absence of any one of these, the people suffer and lose confidence. The practice of liberal government and market economics is the surest way to a civil society.

Furthermore, scholarly studies demonstrate that there is a strong dynamic relationship between good governance and economic success.

Uruguay, a country with a tradition of good governance, enjoys the most equitable income distribution in Latin America and public confidence in its leadership. Chile, ranked as the top country in Latin America for fighting corruption and other indicators of good governance, has benefited from the fastest economic growth over the past decade.

Development

Our ultimate goal is an American community of democratic states prospering together. The Free Trade Area of the Americas would create the largest free market in the world, stretching from Canada to Chile.

We intend to complete negotiations by January 2005 and fully implement the agreement by the end of that year.

The FTAA will give a powerful impetus to investment, innovation, efficiency and growth in Latin America, as NAFTA did in Mexico. More than half of the 3.5 million new jobs created in Mexico since 1995 are connected to trade. World Bank studies have documented that developing countries which trade freely grow their GDP and reduce poverty faster than developing countries that do not ... faster even than the developed countries, such as the United States. By 2005, the Americas will be a $13 trillion market. Even a very small increase in growth, just one percent, would produce a tremendous amount of new income, roughly $130 billion. Latin America would benefit disproportionately from that new income.

Opening the hemisphere to free trade will provide political benefits as well. Mexico's entrance into NAFTA heralded unprecedented political modernization. The prospect of increasing capital investment is an enormous incentive for reform. Capital goes where it is welcome and where it will be protected from political risk. The competition for capital demands respect for individual rights and the rule of law. FTAA can be a transformational force in Latin America.

Conclusion

Before I conclude, I would like to share an anecdote from my trip to the Southern Cone. Ambassador Hrinak, our envoy to Brasilia, related an interesting observation to me about Brazil. She said that there is a sense of confidence in Brazil today that was not present fifteen years ago. That confidence was well expressed by Foreign Minister Lafer in a recent editorial. He eloquently argued that Brazil had nothing to fear from trade negotiations with the United States ... and everything to gain. I believe that is true also because we are not looking for markets to exploit. We are looking for confident partners with which to build a better future.

I look forward to Brazil and the United States assuming the co-chairmanship of the FTAA negotiations in November. Working together with all our partners in the region, I believe we can fulfill the promise and potential of the Americas.

Thank you for you time and attention. I will be happy to take whatever questions you may have about our policies or my trip to the Southern Cone.

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