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Latin America and U.S. Policy

Remarks by Jeffrey Davidow, Assistant Secretary of State for Inter-American Affairs, to the Inter-American Development Bank, Forum on the Americas Monthly Luncheon, Washington, DC, November 12, 1996.

It is my great pleasure to be here. Cooperation with the Inter-American Development Bank is one of the pillars of our policy toward Latin America and the Caribbean, and I look forward to working very closely with the Bank in the second term of this Administration.

Latin America and U.S. Policy

Three principal objectives guide U.S. policy in the region:

-- Strengthening democracy, the rule of law and respect for human rights;

-- Combatting the menace of the illegal drug trade, crime, migrant smuggling and terrorism, as well as meeting new challenges such as environmental degradation and sustainable development;

-- And the objective I want to focus on today, promoting economic integration through an open and fair trade policy and the building of a Free Trade Area of the Americas (FTAA).

Overview of Progress to Date

As I look back over the past decade, it is clear to me that the region as a whole has achieved some extraordinary successes. Despite the inevitable turmoil of change, despite some unwelcome surprises (like the Ecuador-Peru hostilities or the tragic aftermath of the Mexican devaluation), the region is stable and growing.

Freely elected and reformist governments are in place throughout the hemisphere. Most importantly perhaps, the region's commitment to market economics within a democratic framework has been tested and found credible. Even the shock of the Mexican peso crisis, and its repercussions in the region, failed to reverse market-oriented policies.

The Summit of the Americas is one of the region's greatest successes. The unity of the hemisphere's leaders in support of the broad goals of democracy, economic integration, protection of the environment, and combatting poverty is unprecedented. Without the unity and clarity of the Summit vision, I am not entirely sure that the region's commitment to reform would have been as sturdy in withstanding the shocks and stresses of the past two years.

There has been remarkable progress toward implementing the 23 initiatives of the Action Plan established by our leaders in Miami. Specific achievements include the world's first anti-corruption convention, as well as agreements on cooperation to fight terrorism, to combat money laundering and to establish a hemisphere-wide capital markets committee to liberalize financial markets, improve financial cooperation, and help reduce currency instability. There are also major initiatives underway for health and education, and to clean up and conserve the environment. The latter will be an important theme at the upcoming Summit on Sustainable Development in Santa Cruz, Bolivia. Finally, we have made very substantial progress toward the Free Trade Area of the Americas, which I will address in a little more detail later.

I want to emphasize how important the Inter-American Development Bank (IDB) has been in implementing the Summit program. In two of the Summit initiatives -- to enhance micro-enterprise, and strengthen hemispheric infrastructure -- the Bank has taken on the overall coordinator role and fulfilled it with distinction. It also served as the very effective secretariat for another initiative -- to strengthen capital markets.

And of course, the Bank's overall lending program has been crucial in promoting rational policies, honest and effective government, and well-targeted social programs -- all critical parts of the Summit program.

Challenges of the Future

Whatever the successes of the past, there are a great many challenges in the future.

The biggest is to sustain the momentum of the reforms which are now underway. The past two years have shown that the reform process is not as fragile as some feared, but neither can we be confident that it is irreversible. While the momentum is there, what is not yet there is the full institutionalization of the reforms. Two simple examples:

-- Privatization is underway, but the regulatory structures for healthy competition in many economies are not in place.

-- Monetary and fiscal policies have been reformed, and many countries have implemented tax reforms. But efficient and honest administration, including tax collection, is still a challenge for many governments.

In this connection, I want to emphasize the importance of the IDB programs for modernization of government. Governments must stop doing what the private sector can do better. But governments must also do better what only governments can do -- such as establishing the basic rules for both the political and economic games, and providing a secure and fair environment in which to play those games.

Another challenge, and probably the most difficult single issue which we must address, is the region's persistent poverty. This is critical both to sustain political support for reform, and to build a broad modern base of consumers and workers for future growth.

I'm not going to look at data or trends in poverty today. Reliable data on poverty are notoriously hard to come by. Whatever the scholars ultimately decide on these issues, one thing we do know NOW and FOR CERTAIN is that a very large proportion of Latin America's people live in conditions that are highly unhealthy and with extremely limited opportunities -- probably more than a third according to several recent estimates, which amounts to well over 150 million people.

The alleviation of poverty requires a well-targeted and comprehensive strategy. Over the long run, the most powerful single weapon against poverty is education. Enrique Iglesias summarizes years of research and experience on this issue across the world as follows:

"The experiences of industrialized and developing countries alike indicate that education has been the cornerstone of economic and social progress attained by people everywhere."

Most Latin American countries already have a commitment to universal education. The challenge is to provide practical access to quality education -- especially at the basic level -- in both rural and urban areas, to both girls and boys, -- and to ensure that limited resources are well used.

U.S. Policy Agenda

Our agenda within the second Clinton Administration closely tracks the issues I have just reviewed -- democracy, market-based reforms, strengthening basic economic institutions, combatting transnational threats such as narcotics trafficking, and alleviation of poverty.

As to particular initiatives which the Administration will undertake over the next four years, it is clearly premature to get into specifics. However, I can share with you some of my general thinking about what we will need to accomplish.

First, we will continue to build on the Summit accomplishments. As you know, Chile will be hosting the next Summit of the Americas in early 1998. Because we do not want to duplicate the Miami program based on the 23 action initiatives, the Santiago Summit can focus on new initiatives (perhaps a half dozen or so) which will address three priority areas: democracy and human rights, poverty, and economic integration.

As in the case of the Miami Summit, the IDB -- together with other multilateral organizations, business, academia and other private sector organizations -- will play key roles in implementing the program which our leaders will mandate for us in Santiago.

This brings me to a second focus for our work over the next few years -- making the FTAA a reality. As I have noted, there is already considerable movement toward that goal including: two successful ministerial meetings in Denver and Cartagena; the establishment of a private sector trade forum, and the formation of eleven working groups to collect and analyze data, and develop recommendations for negotiating procedures in a wide variety of areas.

Despite some skeptics' view that the FTAA initiative is stalled because of the lack of U.S. fast-track authority, I am convinced we have achieved a lot. For example, establishing an accurate and comprehensive data base may seem unimportant and technical, lacking drama or glory, but it is indispensable to the successful conclusion of negotiations.

At the third ministerial this coming May in Belo Horizonte, I anticipate that the ministers will determine when and how to launch formal negotiations. We want a decisive beginning in Brazil. We will have failed if by the time of the Santiago summit, we have not answered fundamental questions on goals and procedures.

A few words on fast-track: I recognize that the failure to pass fast-track has been widely interpreted in the region as indicating that the U.S. has lost interest in the FTAA and lacks the political will to deliver on its promises. Clearly, this has been a set-back.

But I can assure you that the President remains deeply committed to the FTAA and will be engaged in ensuring its success. We are aware of the importance of fast-track to a successful outcome for FTAA negotiations. Obtaining this authority by working with Congress in a bipartisan fashion will be one of the Administration's top priorities in this hemisphere.

Third, we must strengthen the civil foundations on which to build prosperity, continuing our efforts to build peace and reconciliation:

In Guatemala, the support of the U.S., other international "friends" and the UN is helping the parties reach a final settlement to their 36-year civil war.

Between Peru and Ecuador, the U.S., Argentina, Brazil, and Chile are strongly supporting direct negotiations to find a just and lasting settlement to a border dispute which flared into open conflict less than two-years ago.

We must also continue our efforts to strengthen democracy and the rule of law:

In Haiti, the U.S.-led Operation Uphold Democracy directly restored a democratic government. We are also working in less dramatic ways to nurture new democratic institutions, to share our experience on the appropriate role of the military in a civil society, and to strengthen the administration of justice and rule of law. The IDB has been extraordinarily helpful in Haiti.

On Cuba, we are committed to challenging peacefully the Cuban Government's 37-year reign of tyranny and denial of basic individual and political rights.

Fourth, we must address the transnational threats to economic and social development, such as environmental degradation and crime.

Protection of the environment will continue to be high on our agenda for the region. Under Secretary Christopher's leadership, the Department of State has been working to integrate environmental issues into all aspects of U.S. foreign policy. We are creating regional environmental hubs -- one of the first will be in San Jose, Costa Rica -- to support our diplomacy, address transboundary pollution issues, and better coordinate our efforts.

One of the greatest threats to our objectives in the hemisphere is transnational crime, particularly narcotics trafficking and related activities such as money laundering. These criminal activities increasingly support violence and terrorism, undermine fragile democratic institutions, distort economies and hinder long-term economic growth. The counternarcotics fight requires the fullest cooperation of all nations in the hemisphere.

Conclusion

Let me conclude by noting that, in my view, U.S. policy toward Latin America today is unusually strong and resilient.

We share with Latin America a clear vision of where we want to go. We have a common strategy to achieve that vision which is specific and comprehensive. And we have an ongoing dialogue among governments, and with the other key players of this hemisphere's societies, which ensures that our goals and our strategies reflect changing realities. I view today's meeting as part of that dialogue, and I welcome your comments.

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