Testimony of Mr. Adolfo A. Franco,
Assistant Administrator,
Bureau for Latin America and the Caribbean
Before the House Committee on International Relations
Subcommittee on the Western Hemisphere
Thursday, February 27, 2003 at 2 o’clock p.m.
Rayburn House Office Building, Room 2172
"OVERVIEW OF U.S. POLICY TOWARD THE WESTERN HEMISPHERE"
Mr. Chairman, Members of the Committee, it is a pleasure once again to
appear before the Subcommittee on the Western Hemisphere of the House
International Relations Committee to tell you about the ways in which USAID’
s Bureau for Latin America and the Caribbean is promoting the President’s
vision for the Western Hemisphere.
President Bush's National Security Strategy reflects the urgent needs of our
country following the September 11 terrorist attacks. It states clearly that
the U.S. Government's aim is to help make the world not just a safer place
but a better place. At USAID, we work closely with our colleagues in other
agencies and departments, from the Department of State to the Office of the
U.S. Trade Representative, to promote political and economic freedom for all
nations, and particularly among our closest neighbors with whom we have such
strong social and cultural ties.
The President has said the future of our Hemisphere depends "on the strength
of three commitments: democracy, security and market-based development."
USAID’s Bureau for Latin America and the Caribbean (LAC), supports the
President’s goal of market-based development with a comprehensive program of
trade capacity building programs to support the President’s goals of a Free
Trade Area of the Americas (FTAA) and a U.S.-Central America Free Trade
Agreement (CAFTA). Both the President and Secretary Powell have said free
trade will lead to the sustained economic growth essential for development
to occur. I wish for you to know that I have made our efforts at trade
capacity building a priority for the Bureau for this year.
The LAC Bureau also supports the President’s other priorities for our
region. I will tell you about our efforts to promote democracy and good
governance, and reduce corruption, in the countries of our Hemisphere. I
will also tell you what we are doing to promote health and education, both
essential for the security about which the President spoke.
The President’s National Security Strategy recognizes the important role of
development assistance. In his landmark March 14, 2002 speech to the
community of donor nations in Monterrey, Mexico, the President pledged to
create a Millennium Challenge Account (MCA) which would make additional
development assistance available to countries that show progress in ruling
justly, in promoting economic freedom and investing in people. The
Administration has forwarded legislation authorizing the MCA to Congress,
and I hope this Committee will act quickly to enact it.
At USAID, we know that the way in which we do things is as important as what
we do. During his tenure as USAID Administrator, Andrew Natsios has taken
the President’s challenge to heart and tried to make foreign assistance more
effective and results-oriented, and I work toward this daily in my role as
Assistant Administrator for Latin America and the Caribbean. I have
initiated a substantial review of management practices in each of the
sixteen missions in my region with an eye to increasing efficiency and
reducing duplication of effort.
Despite the continuing challenges, USAID is proud of its contribution to the
broader U.S. Government policy objectives in Latin America and the
Caribbean. We have been working assiduously to remold our program to respond
to the development challenges in the region and to promote the President’s
priorities for our Hemisphere.
Continuing Challenge
Over the past several years, the Latin America and Caribbean region has
faced increasing development challenges that threaten the national security
and economy of the United States. Contracting economic growth rates,
extensive poverty, unemployment, skewed income distribution, crime and
lawlessness, a thriving narcotics industry and a deteriorating natural
resource base continue to undermine the stability of the region. The risks
of HIV/AIDS and drug-resistant tuberculosis on our borders also threaten the
population of the United States. Civil unrest due to poor economic
conditions threatens countries in Central and South America, while political
instability in Colombia, Venezuela, and Haiti continues unabated.
Increasingly, citizens’ confidence in the ability of democratically-elected
governments to provide security and prosperity is waning. Bolivia has also
recently emerged as a country where democracy is at risk.
The region’s GDP shrank by approximately 0.8% in 2002, the worst economic
performance since 1983. Inflation has edged up after eight years of steady
decline. Mediocre economic performance has caused per capita income in LAC
countries to decline significantly since 1998, while poverty has increased.
These woes have brought discontent and political turbulence, raised
questions about the health of democracy in the region, about investment
priorities, social sector policies, and the benefits of a decade of liberal
reforms. The effects in the poorest countries--Haiti, for instance—and even
regions within countries with generally solid economic performance—the
Northeast of Brazil, for example—have been even more disheartening.
Still, it is important not to portray the region in a single-minded negative
light. LAC’s economy overall is expected to recover slightly in 2003. The
Argentine economy is expected to grow about 2% this year. Chile, Mexico,
Peru, and the Dominican Republic are expected to top the growth league in
2003, with expansion of 3% or more, assuming that the slowdown in the United
States abates and strong growth resumes. Countries which adopt sound fiscal
policies and orient their economies toward foreign investment, and
rules-based trade under the World Trade Organization (WTO), have tended to
resist the recent downturn. The result of NAFTA has been phenomenal growth
for all three partners. Since 1993, trade among NAFTA nations has climbed
drastically, and U.S. merchandise exports have nearly doubled. This has had
a positive development effects on Mexico, in particular.
Another area of progress is commitment of LAC countries to good governance
as represented by the signing of the Inter-American Democratic Charter and
the Inter-American Convention Against Corruption of the Organization of
American States (OAS). Nicaragua is striving to curb government corruption,
and other countries, such as Mexico, have also made important commitments to
reduce official corruption. Recent elections conducted in Jamaica, Brazil,
Colombia, Bolivia, and Ecuador were all judged to be free and fair.
Priorities
To address the myriad challenges in the LAC region, the United States is
committed strongly to helping build an entire hemisphere that lives in
liberty and trades in freedom. U.S. foreign policy priorities in the Western
Hemisphere, to which USAID is an important contributor, include promoting
equitable trade-led economic growth, strengthening democratic processes,
improving health and education standards, and fostering cooperation on
issues such as drug trafficking and crime.
Trade As The Engine Of Economic Growth
Sustained development depends on market-based economies, sound monetary and
fiscal policies, and increased trade and investment. Our efforts in LAC are
resulting in an improved enabling environment for positive and peaceful
changes. We are mindful of the critical need to continue these efforts and
build on our experiences in order to encourage further economic development.
President Bush, Secretary Powell, and Administrator Natsios have all said
trade and investment are essential to economic growth and poverty reduction.
Without an increase in trade and investment, the region’s substantial
development gains will be put at risk, and hemispheric stability could
falter.
Since the 1980s, USAID has played a lead role in the LAC region by
supporting programs aimed at strengthening the enabling environment for
trade and investment as the twin engines for economic growth and poverty
reduction. In August 2002, President Bush signed the Trade Act of 2002. On
January 8, 2003, Secretary Struble and I participated with U.S. Trade
Representative Ambassador Robert Zoellick in launching the U.S.-Central
America Free Trade Agreement negotiations, and negotiations continue on
track to establish an FTAA agreement by January 2005. USAID has responded to
these opportunities by moving quickly to assist LAC’s smaller economies and
developing countries strengthen their enabling environment for trade and
investment as the essential foundation for building greater capacity to
participate effectively in the global trading system.
Whatever the final shape of the FTAA agreement, the result will mean more
trade, more jobs, and more income for the U.S., Canada, Mexico, and the
other 31 FTAA countries of the Caribbean, Central America, and South
America.
Trade Capacity Building
The following provides an overview of USAID support for trade capacity
building in the LAC region. From FY 1999 through FY 2001, USG support for
trade capacity building in the LAC region averaged in excess of $50 million
per year, with an estimated 70% (approximately $35 million annually)
provided by USAID. For FY 2003, USAID plans to increase its support for
trade capacity building in the LAC region to the extent that funds are
available. Let me highlight some of the current USAID program highlights in
trade capacity building across LAC sub-regions:
USAID activities will continue to build trade-negotiating capacity, develop
markets, and provide assistance for business development. Programs will
assist with complying with the "rules of trade" such as
sanitary/phytosanitary measures, customs reform, and intellectual property
rights. Support for legal, policy, and regulatory reforms will improve the
climate for trade and investment. Recognizing that remittances constitute a
potentially large source of development finance, USAID will continue to
support and implement mechanisms for remittance transfer with lower
transaction costs. Assistance will expand in the area of commercial and
contract law and property rights. USAID will continue to build on its
successful efforts with promoting rural economic diversification and
competitiveness, including non-traditional agricultural exports and access
to specialty coffee markets. Business development and marketing services
will help small and medium farmers and rural enterprises improve
competitiveness and tap new markets.
In Central America and Mexico, USAID will continue the Opportunity Alliance
(formerly the Partnership for Prosperity), emphasizing trade-led rural
competitiveness through diversification and penetrating agricultural niche
markets. The Alliance was initiated in FY 2002 in response to a protracted
drought, collapse of coffee prices and resulting unemployment of seasonal
agricultural workers. An estimated 52% of the population, more than 14
million people, is poor and chronically food-insecure in Guatemala,
Nicaragua, El Salvador, and Honduras. USAID activities in FY 2003 and FY
2004 will continue to support democratic governance, trade and employment
creation, agricultural production, sound environmental management, and
training. USAID is assisting the Central American countries in their efforts
to prepare for the FTAA and, more recently, to prepare for negotiation and
implementation of US-CAFTA. As part of this process, USAID worked closely
with other donors such as the Inter-American Development Bank to assist each
Central American country in preparing a national trade capacity building
strategy in support of their participation in the CAFTA process.
For the Caribbean, USAID has added a trade component to the Third Border
Initiative (TBI) efforts to strengthen trade capacity and competitiveness of
Caribbean countries. It will build on modest trade activities underway for
several years in a sub-region with many small island economies lacking
diverse sources of income. When launched in 2002, TBI aimed to strengthen
political, economic and security ties between the U.S. and the nations of
the Caribbean. The majority of interventions and bulk of funding thus far
have supported USAID’s HIV/AIDS program. Working closely with the
development assistance community, USAID is now moving quickly to mobilize
trade capacity building support to respond to countries’ priorities
including technical training of government trade officials; developing
trade-related databases; implementing trade agreement commitments in such
areas as customs reforms and sanitary and phytosanitary measures; providing
assistance for small business development; and fostering greater civil
society outreach. USAID’s Caribbean Regional Program is developing
initiatives to strengthen the competitiveness of CARICOM countries in
hemispheric and global trade, and will be assisting eight CARICOM countries
in preparing their national trade capacity building strategies under the
FTAA Hemispheric Cooperation Program.
In South America, USAID has added a trade emphasis to the Andean Regional
Initiative (ARI). USAID initiated trade capacity building activities in FY
2002 and is expanding the program for trade in the sub-region in FY 2003.
USAID/Peru is developing an Andean Regional trade capacity building program
to assist Andean Community countries in addressing "rules of trade" and
competitiveness issues, with an initial emphasis in providing technical
assistance in a variety of trade disciplines areas including customs
reforms, sanitary and phytosanitary measures, competition policy, and
services.
At the bilateral level, more of our missions are developing new or building
upon existing economic growth programs to address trade and investment
issues. For example, in the Dominican Republic, USAID has supported
technical training on trade issues for government trade officials, while in
Jamaica USAID has supported a private sector-led program that provides
succinct information to private and public sector leaders on the benefits of
free trade. As a result of these USAID-supported trade capacity building
efforts, the Dominican Republic has offered better market access in recent
rounds of negotiations, while both the private sector in Jamaica and the
broader English-speaking Caribbean now have a better understanding of the
potential benefits of free trade and have become stronger advocates for the
FTAA.
At the hemispheric level, USAID has a new "quick response mechanism" to
provide greater capacity to address technical assistance and training needs
arising from trade negotiations. Through this mechanism, we are working with
FTAA countries, initially in Central America and Brazil, to provide
government officials and civil society—including business leaders¾ with
information on the benefits of free trade.
An important aspect of building trade capacity is broadening the education
base for a more productive workforce. USAID will support advancements at the
secondary level and in workforce training that will improve the quality of
instruction, increase worker productivity, and help youths prepare for
entering the workforce. For example, USAID’s Training, Internships,
Exchanges, and Scholarships (TIES) program in Mexico will enhance capacity
of Mexican scholars and institutions to respond to the objectives and
strategies of NAFTA and the Partnership for Prosperity, which together
define the emerging U.S.-Mexico Common Development Agenda.
Democracy, Good Governance, and Anti-Corruption
The key to sustained economic growth and poverty reduction, I believe, is
fostering a strong enabling environment for trade and investment. This
requires a mix of "economic governance" institutions vital for attracting
investment, creating jobs, and expanding trade. These systems are predicated
on democratic systems of governance with leaders responsive to citizens’
needs and supportive of transparent public administration. Administration of
justice, commercial and contracts law, property rights, and related legal
and regulatory reform are key to stimulating the enabling environment and
increasing investor confidence. USAID will continue to reinforce linkages
between economic growth and trade on the one hand, and good governance and
the rule of law on the other.
While support for democracy remains solid in the LAC region, popular
disillusionment is growing with those governments that cannot reduce
poverty, corruption, crime, and violence. Although significant strides have
been made (with the exception of Cuba every country in the Hemisphere has a
democratic, constitutionally-installed government), many of these
democracies remain fragile and must make a concerted effort to reinforce the
institutional building blocks of democracy. Economic difficulties tend to
weaken support for free market reforms and the fabric of whole societies.
An independent, efficient, and transparent judiciary is not only fundamental
for a functioning democracy but also a prerequisite for increased external
investment. USAID continues to support a broad range of institution-building
efforts to strengthen judicial systems and increase respect for the rule of
law. Increased crime and violence is consistently ranked as citizens’
primary concern, next to unemployment. The rise of violence in Jamaica has
become so paralyzing to the country’s tourist-driven economy that the
private sector and civil society are joining to help combat the problem at
the community level with USAID assistance. The endemic problems of impunity
for violent crime, as well as corruption, money-laundering and narcotics
crime, undercuts social and economic growth in many LAC countries. USAID is
responding in more than a dozen countries in the Hemisphere by providing
direct assistance for the modernization of justice sector procedures,
systems and institutions. Over the last decade, these countries have worked
to change systems of justice where crimes were not investigated and legal
files were lost. Instead, countries have created new transparent procedures,
are retraining professionals, and are gradually implementing the use of
oral, public trials to determine guilt or innocence for a range of crimes.
In Honduras, for example, USAID supported a group of local reformers who
began work in 1995 to change the justice system. In 2002, after years of
effort, the old system was swept away, and Honduras now has a new code that
entirely restructured the criminal court system and requires open trials
with defense, prosecution and the public presentation of evidence. Although
it will take years to implement these procedures fully, Hondurans are
justifiably proud of reforming a system that responds uniquely to local
needs, adapts the best solutions from many countries, and establishes the
framework for confronting and reducing impunity.
USAID also helps strengthen the capacity of national and local governments
to demonstrate that responsible regimes can deliver benefits to their
citizens. With the direct election of local mayors and the devolution of
authority to municipalities, USAID is helping citizens and elected leaders
devise community development plans that respond to local needs and generate
growth. In fourteen countries, USAID is helping mayors hold public hearings
about annual budgets and allow citizen involvement in public
decision-making. Mayors in many towns have also established transparent
accounting and financial management procedures with USAID assistance to
create the framework for greater revenue generation at the local level for
roads, schools, health centers, and job creation. In turn, citizens monitor
the use of public funds and devise "social audits" in countries such as the
Dominican Republic and Bolivia to track spending in accordance with local
development plans in order to keep officials accountable to the public.
USAID’s anti-corruption programs emphasize prevention and capacity-building
as part of attacking weak governance, entrenched political institutions, and
poor public sector management. Higher levels of corruption are associated
with lower growth and lower levels of per capita income. Since corruption
increases the cost of doing business, failure to act will seriously threaten
the benefits likely to accrue through the FTAA. To improve transparency and
decrease opportunities for corrupt behavior, USAID supports multi-faceted
approaches to anti-corruption programming. In Guatemala, a coalition of
non-governmental organizations has advocated creation of a national plan to
attack corruption as part of local implementation of the Inter-American
Convention Against Corruption. In Ecuador, the Anti-Corruption Commission
has the investigative authority to uncover cases of corruption and with
USAID support has played a leading role in exposing scandals in banking,
municipal budget transfers, and illicit enrichment of public officials. In
Nicaragua, USAID provides assistance to improve the capacity of the Attorney
General’s Office to tackle high-profile corruption cases against the former
government. USAID is also helping the new Office of Public Ethics in the
Nicaraguan Presidency which will have responsibility for setting norms and
standards for ethical conduct, training public employees and monitoring
government agencies’ compliance with internal control systems. Only a
combination of citizen oversight and improved capacity for government action
will increase the costs of fraud and illegal behavior sufficiently to reduce
corruption. USAID is working with other US agencies, international financial
institutions and international organizations to that end.
Health and Education
The LAC Bureau has placed great emphasis on two of the President’s other
stated goals for our region—health and education. In health, there has been
significant progress in raising vaccination coverage, reducing or
eliminating major childhood illnesses such as measles, and improving access
to primary education. Also, because of USAID assistance, affected countries
are more willing to discuss the HIV/AIDS problem. This is particularly
relevant in our region, as the Caribbean has the second highest rate of
HIV/AIDS in the world, after sub-Saharan Africa. USAID programs have had
some success in reducing the social stigma attached to the disease, and
prevention campaigns, including those which promote abstinence, hold even
greater promise for lowering transmission rates. While steady progress is
being made in lowering maternal mortality, and in applying proven
cost-effective protocols for combating malaria, tuberculosis and other
infectious diseases, rates remain unacceptably high, while new strains of
the causative organisms are increasingly resistant to treatment. Because
diseases do not respect geographic boundaries, and due to the high numbers
of legal as well as illegal immigrants traveling to the United States, I
believe USAID assistance to the LAC countries in health care at the policy,
institutional and technical levels is considered critical to the health and
security of the United States.
In education, the quality and relevance of primary and secondary schooling
in LAC countries continue to cause concern. The proportion of students who
complete secondary school is low compared to the number in Asian countries,
and many of those who do finish lack adequate skills to compete in the
workplace. USAID education and training programs aim to improve the poor
state of public education systems where the majority of youth attend weak
and under-funded public schools and fail to acquire basic skills in
mathematics, language, and science. USAID will continue to provide support
for improving the environment for education reform, enhance the skills of
teachers and administrators, and improve the relevance and skills of the
workforce. USAID will also continue support to the newly launched Centers of
Excellence for Teacher Training (CETT) initiative announced by Presidential
Bush in April 2001. Established in Peru, Honduras, and Jamaica, the three
sub-regional training facilities will improve the cadre of teachers in 23
LAC countries and advance education policy reform in key countries.
Advancements at the secondary level and in faculty and workforce training
will improve the quality of instruction, increase worker productivity, and
help youths prepare for entering the workforce.
Perennial Issues
Mr. Chairman, I would now like to focus on the particularly difficult
development challenges facing some specific countries and describe USAID
efforts to help countries meet these challenges.
Andean Regional Initiative
Colombia
Colombia faces many problems, not the least of which is the lack of state
presence in 40% of the country which has allowed the illegal narcotics
trade, guerilla armies, and paramilitary forces to flourish. Colombia’s
civil war has the potential to destabilize other countries in the region if
guerilla activities and/or drug production spills over the borders. Events
in Colombia affect the entire region. Ecuador’s northern border is
vulnerable, and intensive eradication efforts by the Government of Colombia
may create incentives for the narco-trafficking industry in Peru and
Bolivia.
Colombia’s President Alvaro Uribe is an invaluable ally in the war against
the illicit drug trade who is actively pursuing policies to eliminate that
trade and expand the reach of democracy and rule of law in Colombia. USAID’s
Alternative Development (AD) program in Colombia seeks to increase legal
income opportunities for small producers of opium poppy and cocaine. By
strengthening licit economic opportunities, alternative development gives
small producers a way to abandon illicit crop production permanently. The
program is on track and progressing well. AD has now benefited more that
20,000 families and supported the cultivation of nearly 16,000 hectares of
licit crops such as rubber, cassava, specialty coffee, and cacao in former
coca and poppy growing areas.
Infrastructure initiatives are an important component of the program as they
provide short term employment for laborers during construction projects as
families make the transition to licit crops. Infrastructure projects also
provide communities with the physical access to markets necessary to make a
viable, licit economy sustainable. To date, 208 social infrastructure
projects including roads, bridges, schools, and potable water have been
completed under the Alternative Development program in Colombia.
Closely associated with the Alternative Development program in Colombia is
our Administration of Justice program which is modernizing and increasing
access to the judicial system. Thirty-one casas de justicia (or "justice
houses") currently operate. These centers have handled approximately 1.5
million cases. This year at least 12 oral trial courtrooms will be
established – making the judicial system more accessible and accountable.
Respect for human rights is an important aspect of the rule of law and
administration of justice. Approximately 672 municipal human rights
officials have been trained in basic concepts of human rights, family
violence prevention, and the rights of indigenous and Afro-Colombian groups.
In addition, USAID has helped 600,000 internally displaced persons
reintegrate into Colombian society.
USAID supports numerous activities to assist Afro-Colombians. The projects
are focused on improving governance management and accountability; expanding
social infrastructure; and strengthening citizen participation. Fifteen
social infrastructure projects such as water and sewer system improvements,
schools and community centers constructed recently have benefited
approximately 7,500 Afro-Colombians. Training and assistance is being
provided to the mainly Afro-Colombian Pacific port-city of Buenaventura
(Valle de Cauca) to reduce crime and violence and foster local economic
development. In Bogota, USAID is working with one of the most significant
Afro-Colombian NGOs (AFRODES) to build a community/child education center
and develop income-generation projects.
Peru
Peruvian President Alejandro Toledo has taken steps to promote democracy and
a market-based economy. He has also promised new anti-narcotics efforts.
USAID is working closely with the Government of Peru to help it strengthen
the capacity of its counter-narcotics coordinating body, the organization
which is charged with implementation of the Government’s counter-narcotics
strategy. Projects supporting economic growth and more effective and
responsive state presence in the coca-producing regions link alternative
development to eradication and interdiction efforts directly.
In Peru, USAID’s alternative development activities focus on: providing
immediate economic and social impact through short term, income producing
activities; community organization in areas where coca has been eradicated;
promoting sustainable economic and social development in and around the
primary coca growing area through major road rehabilitation and other
infrastructure works; and assistance and training for local/regional
governments, other Government agencies, private entrepreneurs and small
farmers. To date, USAID’s Alternative Development program has provided
assistance to approximately 18,000 families to grow licit crops on more that
32,000 hectares; given credit to 4,800 clients; completed community
infrastructure projects such as schools, health clinics and sanitation
systems; and rehabilitated and maintained 1,400 kilometers of roads. This
year USAID will rehabilitate a 172 kilometer segment of the principal
national highway thus dramatically reducing transportation costs to
producers and increasing the region’s competitiveness.
Complementing the Alternative Development program are economic growth
activities aimed at increasing access to markets for micro-entrepreneurs and
small producers of licit crops and goods. Occurring mainly in the
seven-department area where Peru’s coca production is concentrated, USAID
will help identify markets for local products and then link
entrepreneurs/producers to organizations that improve their productivity and
competitiveness in the marketplace. USAID will also continue to support
sustainable forest and protected areas management including concessions for
forest products.
Ecuador
In Ecuador, President Lucio Gutierrez has only recently assumed power but
has made anti-corruption one of his top priorities. President Gutierrez
seeks to increase transparency in government procurement; oblige public
officials to declare their financial assets and facilitate the processing of
citizen complaints on corruption. USAID has been actively promoting
anti-corruption efforts through strengthening citizen oversight of local
governments, developing more secure and transparent information systems and
procedures for Customs, the Ministry of Finance, the domestic tax authority
and the Superintendency of Banks and eliminating frivolous and redundant
laws to make the legal system more transparent. We have just completed an
assessment of the corruption problem and will be working closely with the
government to develop strategies for addressing it.
Ecuador’s President Gutierrez also faces economic challenges. He must fight
in order to keep dollarization afloat and strengthen the country’s financial
stability in order to address long standing social issues and to reduce
Ecuador’s vulnerability to spillover from Colombia’s narcotics-related
problems. USAID is assisting the Government of Ecuador to develop a strong
and sustainable microfinance sector in Ecuador and improve the macroeconomic
climate for more equitable growth.
USAID is also paying particular attention to the northern border with
Colombia. USAID’s Northern Border program is improving the lives of people
living in six provinces adjacent to Ecuador’s northern border by
strengthening their communities. Principal activities include support for
social infrastructure such as water, sanitation, and roads; activities to
strengthen civil society organizations; and assistance to displaced
Colombians and receiving communities. Future activities include improving
local government capacity, strengthening democratic governance, and
increasing employment and income. To date, more that 132,000 Ecuadorians
have benefited from water systems or improved access to markets via bridges.
About 50,000 Ecuadorians, mostly Afro-Ecuadorians and members of the
Ecuadorian indigenous community have benefited from better-led community
organizations. During his recent trip to Washington, President Gutierrez
committed himself to a continued fight against illegal narcotics and closer
cooperation with Colombia to combat narcotraffic. We will continue to
support him in these efforts.
Bolivia
In Bolivia, poverty and social unrest are eating away the democratic
processes and economic stability that the country has been trying to
maintain for the past two decades. I will refer later to USAID’s efforts to
stabilize the economic situation following civil unrest earlier this month
but wanted here to mention Bolivia’s development problems. The fact is, many
Bolivian citizens feel neglected by their Government. From 1998 to 2001, due
to the success of counternarcotics efforts, there was a 70% decline in coca
at a cost of $200 million to the Bolivian economy. The loss of this illicit
income was felt most by the small-scale farmer. Financial problems in
neighboring Argentina and Brazil are exacerbating the economic problem, and
illegal coca replanting is a growing threat to the successful implementation
of Bolivia’s anti-narcotics strategy. There is also concern that the
intensive spraying program in Colombia will translate into pressure from the
narcotics industry for new production in Bolivia. These concerns and the
uprisings of early February have heightened the importance of and the need
for USAID’s Alternative Development program in Bolivia.
USAID is working closely with the Government of Bolivia (GOB) to find ways
to meet these challenges. We are working to eliminate illegal and excess
coca from Bolivia by establishing sustainable, farm-level production
capacity and market linkages for licit crops; increasing licit net household
income; and improving municipal planning capacity, social infrastructure and
public health in targeted communities. The Alternative Development program
is focused on reducing the poverty level of former and current coca
producers to allow them to make a successful transition to licit income
generation and bringing the benefits of the Government of Bolivia’s
anti-narcotics strategy to the community level.
* In the coca-producing Chapare region of Bolivia, road maintenance and
improvement assistance will reduce transportation costs for licit crops,
while marketing services and grants will address the shorter-term problems
of farm families in the areas where coca is eradicated.
* In the Yungas region, USAID will introduce improved agricultural
technologies for selected products to improve competitiveness. The adoption
of low cost forestry and agro-forestry practices will improve soil fertility
and increase licit crop yields. USAID will also focus on highly visible,
high-priority projects such as road improvement and bridges. These projects
will be defined by the communities themselves and be contingent on coca
reduction.
Complementing the Alternative Development program is reform of the criminal
justice system through support for implementation of the new Code of
Criminal Procedures. The new code makes justice more accessible and
transparent through use of an oral system and citizen judges. The previous
written, inquisitorial system lent itself to corruption and delays and
discouraged the average citizen from seeking judicial redress. Improved
court processes have reduced case processing time by two-thirds.
Challenges to Democracy/Countries of Concern
I have cited the number of democracies in the Hemisphere as an indicator of
progress in the region. Many of these democracies are fragile, however, and
USAID works in concert with other U.S. Government organizations, in a
variety of ways, to strengthen these democracies.
Bolivia: As I have said, Bolivia has significant development challenges,
many of them linked to the narcotics trade. However, as we all saw earlier
this month, Bolivia faces significant immediate challenges to its democratic
process. Bolivia remains a strategic ally of the U.S. in Andean counter-drug
efforts and played a leading role in South America in democratic reform and
trade liberalization. Its current economic difficulties are in significant
part a result of external factors. Although Bolivia has achieved
unprecedented success in reducing illicit coca, this has also contributed to
economic hardship. The crisis began with Bolivian President Sanchez de
Lozada’s February 9 announcement of an austerity budget and payroll taxes
aimed at securing an agreement with the International Monetary Fund. Coming
on the heels of a multi-year economic downturn and high unemployment, these
fiscal measures triggered violent demonstrations which left 32 dead and over
205 injured. Of particular concern was a nationwide strike by the Bolivian
National Police who demand overdue salaries and a lifting of the salary
freeze imposed by the new budget. The army finally mobilized to restore
order. Despite the turmoil, democracy held and the elected government
remains in control, although the situation remains fragile. President
Sanchez de Lozada requested immediate support from the U.S. and other
donors. The IMF indicated it would consider a more flexible short term
solution to the budget as part of a standby agreement, provided that
additional donor funding became available immediately to meet the financing
gap. USAID intends to obligate $10,000,000 of Economic Support Funds for an
economic stabilization program in Bolivia. USAID’s assistance will be used
by the Government of Bolivia for payment of multilateral development debt
and will leverage additional bilateral and multilateral contributions.
Guatemala: As the members of this Committee are well aware, Guatemala is of
continuing concern because of lack of cooperation with U.S. anti-narcotics
efforts and because of continuing levels of corruption. When I appeared
before you last October 10, I told you about USAID efforts, working through
non-governmental organizations, to increase transparency in the court system
and promote accountability in public institutions. Since then, I have
traveled to Guatemala and expressed my continuing concern to the Guatemalan
Vice-President and Chief Justice. I intend to raise these issues again
during a meeting of the Consultative Group later this year.
Haiti: I would now like to shift to the continuing challenge presented by
Haiti, where the democratization process has stalled and is now actually
moving in reverse. A decade of poor governance and economic mismanagement
has brought the country to a near-standstill, and illegal migration to the
Dominican Republic, the Bahamas, and the United States is again on the rise.
A pernicious drought the country’s Northwest and Central Plateau regions has
made things even worse and placed additional strains on our humanitarian
relief efforts in the country. In the late nineties, USAID channeled tens of
millions of dollars through the Department of Justice’s ICITAP program to
bolster the Haitian judiciary and national police. With the overwhelming
dominance of President Aristide and his Fanmi Lavalas party, however, these
efforts bore little fruit, and we shifted our emphasis to helping civil
society resist the growing authoritarianism of the Haitian government. We
are continuing in this vein, and recently have added activities to
strengthen political parties and the independent media. The country’s
direction now depends on whether the government can establish a climate for
free and fair elections in 2003 and secure the participation of Haiti’s
opposition parties, many of which boycotted the election of President
Aristide in November 2000. We also keep in close contact with the Haitian
human rights community and incorporate these groups whenever possible into
our activities. Last but not least, we are actively engaged with the
Haitian Diaspora, seeking ways to help them foster democracy in Haiti.
In the meantime, USAID will continue with programs designed to meet the
population’s essential humanitarian needs, generate employment in a
difficult economic environment, and strengthen civil society’s ability to
resist growing authoritarianism and lawlessness. Overall, we plan to ensure
that Haiti’s funding for FY 2003 holds steady at $52.5 million (including
$22 million in food aid) in spite of the elimination of ESF funding. The
P.L. 480 Title II food program is a key element of USAID’s support for
humanitarian needs in Haiti. Some food is distributed outright -- formerly
through school feeding programs but now principally through maternal-child
health facilities located in remote areas. This shift in the program is
important to ensure that U.S. food aid is reaching the neediest and most
vulnerable Haitians -- rural children under five and nursing and/or pregnant
mothers. The bulk of the Title II food commodities are sold to local millers
and the proceeds used to finance projects in health care (including
assistance to orphans), primary education, and food production.
Venezuela: Political conflict over the policies of President Hugo Chavez has
seriously shaken Venezuela’s economy and threatened development in the
country. Since taking office, Chavez has demonstrated increasing disregard
for democratic institutions and intolerance for dissent. Venezuela now
stands at a dramatic juncture in its democratic history. The two month
strike that recently paralyzed the country has now ended, but President
Chavez is moving against strike leaders. Carlos Fernandez, President of the
Chamber of Commerce was arrested recently for his role in the strike, and
there is a warrant for the arrest of Carlos Ortega, the President of the
Confederation of Venezuela Workers. The arrest of prominent strike leaders
could undermine the dialogue between the two sides. Acts of violence against
strike leaders and participants raise concerns about respect for human
rights in Venezuela.
USAID, through its Office of Transition Initiatives (OTI), supports
non-partisan activities aimed at bringing the two sides together, lowering
tensions, and bridging divisions among the population. USAID has expanded
opportunities for government and opposition forces to meet at the bargaining
table and helped them identify common interests. USAID is also providing
training in conflict mediation and negotiation techniques to government and
opposition representatives involved in the national dialogue. We have also
assisted government institutions to increase transparency and better respond
to the needs of their constituents.
Cuba: The Only Non-Democratic Government in the Hemisphere
The "Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996, enacted
by the U.S. Congress and signed by the President of the United States,
provides important guidelines for helping promote a peaceful transition to
democracy in Cuba. I am very proud to say, since 1997, USAID has provided
more than $20 million to U.S. universities and other U.S. non-governmental
organizations to implement Section 109 of the Act. USAID assistance has been
indispensable in helping increase the flow of accurate information on
democracy, human rights, and free enterprise to, from, and within Cuba.
Among other actions, grantees have: sent more than one million books,
newsletters, videos and other informational materials on democracy, human
rights and free enterprise to the Cuban people; provided more than 7,000
short wave radios to Cuba’s human rights activists, independent journalists
and independent Cuban non-governmental organizations; provided more than 50,
000 pounds of food and medicine to the families of political prisoners and
other victims of repression; helped train over one hundred of Cuba’s
independent journalists and published thousands of their reports on the
Internet as well as in hard copy for distribution on the island; sent
international human rights monitors to the island to help build solidarity
with Cuba’s human rights activists and to report to the international
community the Cuban Government’s violations of human rights; and developed
research papers, conferences and seminars on transitions to democracy in
other countries to exchange information relevant to the future Cuban
transition and share those lessons with the Cuban people.
I believe USAID is uniquely positioned to continue to facilitate progress
toward a peaceful transition to democracy on the island. In accordance with
the President’s Initiative for a New Cuba announced in his landmark speech
of May 20, 2002, USAID has plans to expand its assistance. Additional
support will enable USAID, working with U.S. universities, to offer
scholarships in the United States for Cuban students and professionals who
try to build independent civil institutions in Cuba, and scholarships for
family members of political prisoners. USAID is currently working with
Georgetown University to implement this type of Cuba scholarship program.
There is so much work to do in Cuba, and I thank the Committee for its
continuing support of USAID efforts there.
Conclusion
Hemispheric commitment to democracy remains high, with the creation of the
OAS Democracy Charter and agreement to an ambitious democratic reform agenda
each time the Hemisphere’s leaders meet. So far, democratic systems have
persisted even in the face of severe economic crisis and, in some cases,
either very weak or even virtually no effective governance. The political
crises of Colombia, Venezuela, Ecuador, Bolivia, and Peru -- all very
different -- have not yet caused permanent ruptures in democratic practices.
They nonetheless demonstrate the fragility of institutions and the need to
strengthen the building blocks of democracy if the progress of the past two
decades is not to be undone. As President Bush has 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." President Bush knows there are millions of men and women in the
Americas who share his vision of a free, prosperous, and democratic
hemisphere. At USAID, our programs in trade capacity building, health,
education, and support for good governance are helping our friends and
neighbors in the Hemisphere fulfill their aspirations.
Mr. Chairman, this concludes my testimony. I would be happy to answer any of
your or the Committee’s questions.
--------------------------------
Adam Isacson
Senior Associate, Demilitarization Program
Center for International Policy
1755 Massachusetts Ave NW, Suite 312
Washington DC 20036
+202-232-3317 fax 232-3440
isacson@ciponline.org
http://www.ciponline.org/demilita.htm