September 11 and Its Aftermath: The Impact of Doing Business in the Americas

Good morning.  It is a pleasure to be here today.  Last September 11, I was in Peru with Secretary of State Powell.  We had arrived there the previous evening to attend the signing of the Organization of American States (OAS) Democratic Charter.  The following day we were scheduled to be in Colombia; that morning we were having breakfast with the new President of Peru, Alejandro Toledo.  It had been a pleasant meeting.  The agenda with Peru's new democratic government was rich and far ranging.  And then, the Secretary was handed the first of several notes by his staff.  An airplane had hit the World Trade Center in New York.  Our lives would not be the same.  As Secretary Powell said, "We are in this worldwide campaign together for the long haul.  We have endured an enormous tragedy but we will overcome.  We will defend the rule of law against the lawless.  We will not allow murderers to destroy our democracies and devastate our economies.  We will never let our future be hijacked by terrorists."

After September 11th, the response of the entire hemisphere was immediate, strong, and supportive.  Prime Minister Ingraham of the Bahamas summed up the feelings of many at a Caribbean Community and Caribbean Common Market (CARICOM) meeting, "Contrary to the pronouncements of the missionaries of death who promote such barbaric acts among their young while themselves ensconced without risk in safe havens, terrorism will bring them neither victory nor glory; rather, indelibly, they will forever be known and remembered as purveyors of death, destruction, and evil."  We have received messages of support, condolence, and condemnation of the attacks from heads of state, foreign ministries, and legislatures throughout the hemisphere and around the world.  Some of our Caribbean neighbors have offered free vacations for rescue workers and the families of victims, and Jamaica and The Bahamas sent hospitality workers to New York to help tend to the rescue workers.

The Central American leaders condemned the attacks and pledged to take immediate measures to combat terrorism, including placing troops at the disposal of the U.S. for search and rescue operations.  CARICOM reaffirmed its ongoing support for the United States response and pledged to ensure the widest possible adherence by member states to all the relevant regional and international conventions and to increase cooperation.  The Organization of American States acted immediately, convening a Foreign Ministers' meeting just days after the attack.  At the same time, the foreign ministers of the states parties to the Rio Treaty, led by Brazil and Argentina, invoked the collective security arrangements of that hemispheric pact.  The OAS has also convoked the hemisphere's counterterrorism apparatus and validated the right to self-defense and is developing a new hemispheric counterterrorism treaty.  In the United Nations, Jamaica assumed the Security Council Presidency in November and has played a leadership role in the response.  The nations of the hemisphere have offered military support and collaboration on diplomatic and security initiatives.  The support has been broad-based and unwavering, with the usual exception of Cuba, whose Foreign Minister, in a speech to the United Nations last week, accused the U.S. and its allies of "targeting Afghan babies."

Many of our neighbors have provided this support while simultaneously dealing with their own sorrow as a result of the attack.  More than 350 nationals from 28 Western Hemisphere countries were lost in the attack, El Salvador and the Dominican Republic suffering almost half of the casualties.

The September terrorist attacks have weakened growth prospects and the business climate throughout the hemisphere.  As our domestic economy was affected, so were the economies of our neighbors.  Growth could fall .5% to 1.1% in 2001 and rise only to 1.7% in 2002 as a result of the attacks.  Countries with strong trade and tourism links to the U.S., such as Canada, Mexico, and Central America and the Caribbean are particularly vulnerable to economic fallout from the attacks.  Lower capital flows, due to higher investor risk aversion, will affect Brazil, Chile and other countries.  Andean countries should see weaker growth.

In the region, the Caribbean is the most vulnerable to economic fallout.  The World Bank says the Caribbean has been the most severely affected part of the world -- primarily via the drop in tourism -- after Afghanistan's immediate neighbors.  The Bank predicts a 25% drop in tourism earnings in 2002, as consumers defer spending or fear to travel.  For some time to come, the high degree of uncertainty involved in the war on terrorism and the path of global recovery could harm the business climate throughout the hemisphere, reduce investment and other capital flows, and affect business prospects.  My colleague Linda Eddleman will discuss this with you more in depth in the panel this morning.

What does this have to do with security?  With economic difficulties come other problems.  As President Roosevelt said, "Necessitous men are not free men.  People who are out of a job are the stuff of which dictatorships are made."  Economic difficulties always threaten to worsen democratic and security problems. 

Terrorism is an issue in the Western Hemisphere.   Designated foreign terrorist organizations are operating in the hemisphere, most notably in Colombia, Peru, and the tri-border region of Argentina, Paraguay, and Brazil.  Terrorists operating in the latter area have connections to the Middle East and are suspected of executing and/or supporting terrorist attacks, such as bombings in Argentina in the early 90s.  We also suspect that cells in the region are involved in financing terrorist organizations in the Middle East.  In Colombia, the Revolutionary Armed Forces of Colombia (FARC,) the National Liberation Army (ELN,) and the United Self-Defense Forces of Colombia (AUC) continue to murder and kidnap civilians -- both Colombians and foreigners -- and attack the country's economic infrastructure.  Their reliance on extortion, kidnapping, and narcotics trafficking for funding not only gives them ready access to cash, but also fuels political violence.  Elsewhere, there are concerns about terrorists with international ties abusing the Caribbean financial system to raise funds or launder money.

The problem is more elusive than identifying terrorist cells.  The Western Hemisphere forms a critical part of the world's criminal pipelines -- drugs, arms, and people are smuggled up, down, around, and through these nations every day of the year.  When the economies struggle and unemployment rises, this "shadow" economy -- already supporting many in the region -- becomes more powerful.  This, in turn, leads to corruption and undermines the rule of law.

Economic citizenship remains in place in some countries.  The ability to "purchase" nationality offers international criminals the chance to use such countries as a base of operations with all the benefits of citizenship.  When coupled with tax havens and the not always well-regulated off-shore financial sectors, nations run the risk of being attractive as a haven for the smuggler, the money launderer, and possibly the terrorist.

In terms of the movement of people through the region, many are the traditional economic migrants that most of us think of when we hear about "alien smuggling" and "human trafficking."  Intermingled with those, however, are drug smugglers, possibly foreign terrorists, and any and all who need to get into or out of the United States without coming to the attention of law enforcement.  The alien smuggling and human trafficking industry is rapidly becoming the most lucrative form of organized crime in the world.  Whether trafficked or smuggled, even those who are simply trying to find a better life are horrendously abused, packed into tiny, unseaworthy craft to risk their lives on the open waters or wander through the desert without food or water.  Smugglers are known to abandon their charges if it looks like they may be intercepted or if the engine fails, leaving them to fend for themselves alone among the elements.

Combating this scourge is a high priority.  Hemisphere nations are striving to modernize their immigration systems, but they have much work still to do.  The large number of countries whose citizens can enter without the preliminary precaution of a visa also needs to be addressed.  Patrolling the seas is extremely difficult and many of the region's navies are not up to the task.  Although many have signed maritime agreements that allow the U.S. Coast Guard to patrol, the Coast Guard does not have the capacity to cover the entire region, especially now when they are so needed at home.  The aviation industry needs greater security, not only for safety reasons but also to attract tourists back.  What all of this comes down to, in the end, is money.  And it is money that so many of these nations simply do not have.  It is not primarily a lack of willingness or dedication on the part of the governments; rather, it is more a matter of capacity.  Further strained by the recent tragedies, governments are faced with stretching already strapped budgets to the breaking point.  The task can seem overwhelming.

This seems to be a fairly bleak picture.  Were the nations of the hemisphere trying to fight these battles on their own, it would be.  They are, however, not on their own.  They are coming together to devise responses, rethink positions, and fix problems.  Throughout the Western Hemisphere, things recently thought too tough to tackle are being attempted.  In response to the attacks, the United States government and its allies have developed a four-part approach to address all these threats.

First, we have asked all countries to ratify the 12 international counterterrorism treaties.  Since the crisis began, many countries have moved immediately to become parties to those to which they had not already acceded.  These treaties allow international cooperation to work smoothly, enabling the exercise of universal jurisdiction over terrorists.  This is an important step to securing the hemisphere collectively, empowering each country to help stabilize the whole.  The Organization of American States, through its counterterrorism arm, the Inter-American Counterterrorism Committee, known as CICTE, is using the treaties to develop a hemispheric security program that will institutionalize the collaborative structure being created.

Second, we are working with the nations of the hemisphere to ensure the identification and seizure of the financial assets of terrorism.  All of the democratic nations of the region moved quickly to review financial records.  The Financial Action Task Force is assisting in the passage of anti-money laundering legislation in all countries.  Through FATF, Mexico, Canada, France, the Netherlands, Spain, the United Kingdom, and the United States assist nations in improving capacity to combat financial crimes.  Many nations have created or are now creating financial intelligence units, some with the assistance of the United States.  Many hemisphere nations are members of the Egmont Group, which works to create a global network of financial intelligence units to facilitate international cooperation, in part through a secure Internet web site.  The places where terrorists can hide their assets are rapidly dwindling.

Third, we are working with countries to ensure that terrorism is criminalized in all its forms.  United States law enforcement and other agencies are developing technical assistance to governments working on such laws.  Together with the universal jurisdiction created by the treaties, this strips away much of the appeal of using the Caribbean or Central America as a pipeline.  The terrorists and their abettors will soon learn that there is nowhere to hide -- wherever their attack was a crime, they can be tried or extradited, and it will soon be a crime to be a terrorist, conspire with a terrorist, or help a terrorist in every corner of the globe. 

Last, and perhaps most importantly, we are working to improve border controls.  This is in all our interests.  The Federal Aviation Administration has suggested ways to improve airline security, and airlines are complying with those guidelines.  The Immigration and Naturalization Service provides training to immigration and airline personnel around the region to increase airport security and border integrity, as well as to establish cooperative ties to enable international cooperation on immigration issues.  This also helps reduce corruption.  Secure, machine-readable passports together with computerization of immigration systems would also have an enormous impact on migrant flows and this is an area that requires greater attention and resources.  Many nations are reconsidering the merits of economic citizenship.  Information sharing is rapidly on the rise.

Meanwhile, our hemispheric agenda has not ground to a halt.  Now, more than ever, it must continue.  The greatest enemies of terrorism and organized crime are democracy and economic stability.  Our approach to the hemisphere has remained the same, based on three critical pillars: sustainable development, including increasing free trade and economic stability; democratization and rule of law, including human rights and education; and promoting hemispheric security, including combating terrorism and an aggressive but balanced counternarcotics program.  Each of these is necessary to the other.

We continue to work with the hemisphere on free trade initiatives and economic growth.  As U.S. Trade Representative Bob Zoellick put it, "Our nation has drawn together in shock, mourning, and defiance.  Now we must thrust forward the values that define us against our adversary: openness, peaceful exchange, democracy, the rule of law, compassion, and tolerance.  Economic strength, at home and abroad, is the foundation of America's hard and soft power.  Earlier enemies learned that America is the arsenal of democracy; today's enemies will learn that America is the economic engine for freedom, opportunity, and development.  To that end, U.S. leadership in promoting the international economic and trading system is vital.  Trade is about more than economic efficiency.  It promotes the values at the heart of this protracted struggle." 

During the 1980s, per capita income in Latin America fell by 1% per year.  During the 1990s, per capita income grew by 1-1/2% percent per year.  Foreign direct investment in Latin America was $57 billion last year.  The Caribbean Basin Initiative and the Caribbean Basin Trade Partnership Act have taken important steps to further that improvement -- U.S. businesses shipped $76 billion worth of goods to Latin America in 1992; last year we shipped more than twice that amount, over $171 billion.  The free trade negotiations with Chile and plans for enhancing Andean trade will also increase trade flows.

But the ultimate goal is the Free Trade Area of the Americas (FTAA), which has the potential to triple trade flows among the countries of the Americas within a decade.  All 34 democratic leaders of this hemisphere remain committed to free trade, which was reaffirmed at the Quebec Summit of the Americas in April.  The President recognizes that the economic integration of the hemisphere is an important element to the United States' future prosperity, and he and Ambassador Zoellick are working hard to obtain Trade Promotion Authority, a critical step if we are to make good on the commitment made by President Bush and the hemisphere's leaders at the Quebec Summit to move the timetable for the Free Trade Area of the Americas up to 2005.

Economic stability and political stability go hand in hand.  We are working on plans to help the nations of the Hemisphere position themselves better for the FTAA.  We continue to work on these fronts to create a hemisphere of peace and security.  On September 11, after receiving the terrible news from New York and Washington, Secretary Powell knew he had to cut his trip short and return home.  But before leaving, he made it a point to stay for the opening of the OAS special session.  In addressing the delegates, after accepting their condolences, the Secretary urged that the OAS Democracy Charter be adopted by acclamation, which it was.  There could have been no more powerful message about the importance of democracy to the hemisphere.

We continue on our path to a hemisphere that is free, prosperous, and peaceful.  Not even the attacks of September 11 can turn us from that goal.  Secretary Powell reminded us not long after that, "America has got to get back to work.  We have got to get back to some sense of normalcy.  If we stick in our bunkers and walk around afraid, they will have won."  The goals we have now, the goals we have always had, are the best route to defeating terrorists, criminals, and every other threat we face.  Together we will achieve them.  Thank you.