February 27, 2003
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 leaders3/4 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.
