Coffee Break at the State Department: Assistant Secretary Shannon

MR. MCCORMACK: Tom Shannon, Assistant Secretary for Western Hemisphere Affairs, thank you very much for joining us at Coffee Break at the State Department.

ASSISTANT SECRETARY SHANNON: Sean, it's great to be here.

MR. MCCORMACK: I'd like to start off and talk a little bit about democracy in the region. There was -- several years ago, there was -- it seemed as though there was a tidal wave that was sweeping the region. We saw democratically elected governments either come into power or transfer, peacefully, power from one to another. Yet it would appear that there have been some setbacks recently.

You've seen Hugo Chavez win reelection in Venezuela . You've seen Evo Morales come into power in Ecuador . You've seen somebody like the President who press reports say, well, we're not necessarily that sympathetic to. And of course, you still have the continuing problem of Cuba . How do you -- what's your response to that? What are we doing? What are we doing to conquer that?

ASSISTANT SECRETARY SHANNON: It's a great question and let me start by saying a couple of things right off the start. First, this past year was really the year of elections. Once you count all the heads of state elections throughout the Americas , we had probably about 13 heads of state, heads of government elections, which mean presidents and prime ministers. And if you add the major parliamentary elections, including in the United States , we've had 17 major elections this -- in 2006, which means of the 34 democracies in the Americas , half of them had some kind of big, important election, either presidential or prime ministerial or legislative.

So from our point of view, this is a real celebration of democracy. It's a real celebration of what this hemisphere has been able to accomplish in terms of consolidating democracy as a means to transfer political power and as a recognition that democracy is really the only legitimate form of government in the region.

But what we're seeing elsewhere in the region is a recognition that democracy as a political system has to be able to deliver the goods. And what I mean by that is it has to be able to provide the economic growth, the economic opportunity, and the services and benefits that the poorest and most vulnerable members of every society wants and are now using democratic means and democratic institutions to demand.

And although there's a lot of political effervescence in the region, although there's a lot of concern and talk about the fate or the future of democratic institutions and of certain kinds of political rights, and all these things are really important and require our attention and require our ability to dialogue with our partners in the region, it's important to understand that what's driving all this political effervescence is the profound social agenda that the region faces.

And what I mean by that is the poverty, the inequality, and the social exclusion that define so many of the societies in our hemisphere today. And this is a hemisphere which has decided that it's going to try to address the development problem, it's going to try to address poverty, inequality, and social exclusion through democracy. This is an incredibly courageous decision by the Americas and it's one that's going to have huge import -- or impact for the rest of the world. Because this is a region which already made the big transformation to democracy, already made the big transition to democracy, has already made the big transition to free markets and open economies.

And so now, they have to show they can deliver. And if we're successful in the Americas, if we can show that democracy can develop a society, if we can show that democracy can deliver the goods, then this is a huge encouragement for those in the Middle East, in south and central Asia, and Africa who are seeking a democratic path to development. But if we fail in the Americas , it will act as succor to those who have always argued that only authoritarianism can address the big development issues.

MR. MCCORMACK: But isn't that the point, that there has been a retrenchment in this democracy? If you look at Chavez, if you look at Morales, there are questions about Ortega in Nicaragua , isn't the question that these are individuals that are using the democratic process, but at the end of the day, aren't going to govern democratically and that's the threat to democracy in the region?

ASSISTANT SECRETARY SHANNON: You know, obviously, for democracy to be successful, they have to govern democratically. And as they address their larger social issues, they have to be able to protect the fundamental rights and liberties of people and create societies in which pluralism is respected and in which consensus is really the goal. They should not be societies that drive confrontation or conflict.

But the reality we have to face in the region is that the leaders you talked about were elected and in the case of Hugo Chavez and Evo Morales, were elected with considerable majorities. And so they reflect an aspiration of the people that we have to be able to work with. Now obviously, all these democracies, in their own ways, face special challenges. And some of them are really about rebuilding social fabrics and rebuilding social consensus.

But what we need to be prepared to do is engage with these governments, have dialogues with them, and show that we can be an indispensable partner in helping all of them solve their problems.

MR. MCCORMACK: What sort of -- you were just down for the inauguration of Daniel Ortega in Nicaragua . What sort of response did you get from him? This must have been an unusual moment for an American diplomat, after all these years, to engage with Daniel Ortega once again as president of Nicaragua . How did -- what was your sort of -- what was your personal interaction with him?

ASSISTANT SECRETARY SHANNON: I think it was an unusual moment for Daniel Ortega also. And in many ways, what we're in the process of doing right now on both sides is restarting a dialogue that has been stalled for quite some time and looking for ways to build confidence and understanding among ourselves.

But what struck me in our conversations in Nicaragua was an understanding on the part of President Ortega and an understanding on the part of his political party that the United States, through the Central American Free Trade Agreement, through our Millennium Challenge Compact with Nicaragua, which is providing $175 million to Nicaragua for road construction in the poorest part of Nicaragua, through our efforts at debt relief, which have dramatically reshaped the external debt portfolio of Nicaragua, and through remittances that come from the United States to Nicaragua, it's going to play a central role in the success of this government and therefore, it's necessary to have a good relationship. And that was the basis of our talks in Nicaragua and this is going to be the basis of our diplomacy.

MR. MCCORMACK: Let me turn to Cuba and the situation with Fidel Castro. There are all sorts of conflicting news reports about the state of his health; he's on death's door, he has some time to go, he's on the road to recovery. Hugo Chavez said that he was just about jogging, as a matter of fact, the other day.

What is the future of this regime? Clearly, there's some sort of transfer that's going on here. Does the power of the Fidel Castro regime automatically transfer to a Raul Castro or one of the others who are in that inner circle? What's the future? What's your prediction? What are we looking at here?

ASSISTANT SECRETARY SHANNON: Right. Well, there's not much we know about Fidel Castro's health. Cuba is a closed society and the state of a leader's health is considered a state secret, so all we get is what we see in the news. But it's evident that there has been a transfer of day-to-day power from Fidel Castro to his brother and a small group of individuals who really represent the different institutions of the totalitarian state and that --

MR. MCCORMACK: Have we seen any cracks in the support for this regime as that transfer is taking place?

ASSISTANT SECRETARY SHANNON: This is a transfer that seems to have taken place fairly smoothly, but it's evident that whatever Fidel Castro's condition is and -- although he's not managing affairs on a day-to-day basis, that he's still a strategic presence. In other words, this regime that is now running Cuba has not been able to define itself absent of Fidel Castro. In other words, we're not quite sure what his future course is going to be.

But obviously, U.S. policy is to look for ways to work with our partners in the region and directly with the Cuban people to create an environment in which Cubans in Cuba can make a transition from totalitarianism -- a totalitarian regime to a democratic regime. And our goal is really to help provide an environment in which a peaceful transition to democracy can take place in Cuba driven by the Cuban people, recognizing that at the end of the day, Cuba 's political future can only be determined in Cuba . It cannot be imposed from outside.

MR. MCCORMACK: Right. So what mechanism are we looking for to make that transfer from the authoritarian, totalitarian regime that is now in place to democratic elections? How do we see that happening? What's the trigger for that?

ASSISTANT SECRETARY SHANNON: Well, the most important component of this would actually be a dialogue between the Cuban regime and the Cuban people.

And this requires several things. First, it requires a regime which understands that its longevity and its success in the long term requires reconnecting with the Cuban people, which it has dominated over time, and actually making the Cuban people a partner in Cuba's own development. But it also requires, on the part of the Cuban people, an ability to organize, an ability to understand what the stakes of this dialogue are going to be.

And therefore, our strategy has been, first of all, to engage directly with Cuban civil society and look for ways to provide them the means and the tools to organize themselves and to have engagement outside of Cuba so they can better understand what it is the world offers for them in terms of solidarity.

But it has also been working diplomatically with our many partners in the world and in the region to convince the Cuban regime that a process of change, a process of opening political and economic and social and cultural is going to be vital for Cuba's stability and for its future, but more importantly, for Cuba to be reintegrated into the Inter-American system, because it can only be reintegrated as a democracy.

MR. MCCORMACK: Right. Let me turn a little bit more south to Hugo Chavez. He's been in the news a lot recently, making threats to nationalize various industries. He recently made a threat to kick out the United States Ambassador for talking about nationalization.

Does his message of anti-Americanism and this sort of populism, nationalism, pan-regional nationalism, does that have any resonance throughout the hemisphere or is this something that you think is going to -- it's not resonating with the people in the region or it's going to fade over time?

ASSISTANT SECRETARY SHANNON: I think it's important to understand, as I mentioned earlier, that the big challenge we face in the region is not individual politicians. It's not Hugo Chavez, it's not anybody else. The big challenge we face is fighting poverty, fighting inequality, and fighting social exclusion.

And what Hugo Chavez is offering at this point is a competing vision of how you address these issues, a vision which is really out of line with a vision more succinctly stated in the Summit of the Americas process, which is about democracy, it's about free trade, it's about creating economic opportunity, and it's about investing in people. What Hugo Chavez is offering is a vision that, from our point of view, comes from the 1960s. It's about centralized government, it's about personalistic, political authority, it's about authoritarianism, and it's about ensuring public sector control of economies.

We believe that ultimately, this is a model that will not be successful. But what's important to understand is that these competing visions are meeting on a political terrain. In other words, this is a debate and a dialogue or a struggle, if you'd like, which will be settled in political terms and through democratic institutions and processes. But the winner is going to be determined by results and we believe that what we and others in the hemisphere, through the Summit of the Americas process, are offering is a vision that will, indeed, produce the results not only in the long term, but also in the short to medium term.

And that's really where we're focused right now, but talking very briefly about our bilateral relationship with Venezuela , it's -- historically, it's a relationship that's been very positive and very productive and we hope to bring it back to that relationship. And up to this point, the Venezuelan Government has been reluctant to engage with us because obviously, this message of anti-Americanism, this message of some kind of rupture or break with the United States has been important to it, both for domestic reasons, but also as a way to shape its own profile in the hemisphere.

But ultimately, we don't think this is helpful and therefore, you see, it's our intent to do everything we can to improve that relationship.

MR. MCCORMACK: Let me pick up on one thing you said. You talked about the importance of free trade as part of our positive agenda for the hemisphere, the United States ' positive agenda for the hemisphere. We seem to have run into some obstacles in terms of the larger goal of the Free Trade Agreement of the Americas , while in various subregions in the hemisphere, we've actually made quite a bit of progress.

One of the major stumbling blocks in South America seems to be the MERCOSUR trade partnership and they have expressed some hesitancy with regard to a larger regional free trade agreement. What sort of effect is this going to have on our ability to really promote a free trade agenda in the hemisphere? And really, what do you see as the future of the wider Free Trade Agreement of the Americas ?

ASSISTANT SECRETARY SHANNON: First, in terms of the free trade agenda, it's alive and well. I mean, we have recently signed free trade agreements with Colombia and Peru and we've concluded one with Panama . Assuming that we sign that Panama agreement in a short period of time, we will literally have a string of free trade agreements that stretch from Canada to the tip of South America to the tip of Chile .

That's a remarkable accomplishment and we've done it in six years. And if you look at our free trade agreements and our preferential access agreements, we now cover two-thirds of the GDP of the entire hemisphere. And 85 percent of all the goods entering the United States from Latin America and the Caribbean enter duty-free. That's an enormous accomplishment.

MERCOSUR has been reluctant up to this point to engage in broader Free Trade Area of the Americas talks not because it's against free trade; in fact, it has consistently affirmed its -- the importance of free trade, but because it has sought in the Doha round to find a solution to the larger agricultural subsidies issue, because they're -- especially Brazil and Argentina want access to U.S. agricultural markets, just as we want access to their industrial and service markets.

And therefore, they have always seen the Doha round as being the key that unlocks the broader possibility. And at this point in time, absent that, it's hard to see how these countries will engage in the FTAA, but it's important to understand that we have always seen MERCOSUR as a positive integration effort and we have always looked for ways to build off the integration efforts of MERCOSUR and promote a larger understanding of hemispheric integration.

But let me make one last comment on this, which is that as important as free trade is, our integration agenda is more than free trade. Our integration agenda is really about development, with free trade being an important driver of economic growth and opportunity, but that integration also has other components. It has environmental components, it has demographic components, it has labor components.

And as we engage with our partners in the hemisphere, we're making sure that the agenda is as broad as possible so that the average person in each country understands that when we talk about integration, we're not just talking about markets. We're talking about how people relate to each other and how they help each other solve their daily problems.

MR. MCCORMACK: Tom Shannon, that's going to have to be it. Thanks very much for joining us --

ASSISTANT SECRETARY SHANNON: Thank you.

MR. MCCORMACK: -- at Coffee Break at the State Department.

ASSISTANT SECRETARY SHANNON: Great, thank you.

MR. MCCORMACK: Thanks.

ASSISTANT SECRETARY SHANNON: Appreciate it.

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