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20–749PDF 2016

THE STRATEGIC IMPORTANCE OF BUILDING A

STRONGER U.S.–CARIBBEAN PARTNERSHIP

HEARING

BEFORE THE

SUBCOMMITTEE ON 

THE WESTERN HEMISPHERE

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTEENTH CONGRESS

SECOND SESSION

JULY 14, 2016

Serial No. 114–189

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/ or

http://www.gpo.gov/fdsys/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

EDWARD R. ROYCE, California, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

JOE WILSON, South Carolina 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

MATT SALMON, Arizona 

DARRELL E. ISSA, California 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

MO BROOKS, Alabama 

PAUL COOK, California 

RANDY K. WEBER SR., Texas 

SCOTT PERRY, Pennsylvania 

RON DESANTIS, Florida 

MARK MEADOWS, North Carolina 

TED S. YOHO, Florida 

CURT CLAWSON, Florida 

SCOTT DESJARLAIS, Tennessee 

REID J. RIBBLE, Wisconsin 

DAVID A. TROTT, Michigan 

LEE M. ZELDIN, New York 

DANIEL DONOVAN, New York 

ELIOT L. ENGEL, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

BRIAN HIGGINS, New York 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

ALAN GRAYSON, Florida 

AMI BERA, California 

ALAN S. LOWENTHAL, California 

GRACE MENG, New York 

LOIS FRANKEL, Florida 

TULSI GABBARD, Hawaii 

JOAQUIN CASTRO, Texas 

ROBIN L. KELLY, Illinois 

BRENDAN F. BOYLE, Pennsylvania

AMY PORTER, Chief of Staff THOMAS SHEEHY, Staff Director

JASON STEINBAUM, Democratic Staff Director 

SUBCOMMITTEE ON THE WESTERN HEMISPHERE

JEFF DUNCAN, South Carolina, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

ILEANA ROS-LEHTINEN, Florida 

MICHAEL T. MCCAUL, Texas 

MATT SALMON, Arizona 

RON DESANTIS, Florida 

TED S. YOHO, Florida 

DANIEL DONOVAN, New York 

ALBIO SIRES, New Jersey 

JOAQUIN CASTRO, Texas 

ROBIN L. KELLY, Illinois 

GREGORY W. MEEKS, New York 

ALAN GRAYSON, Florida 

ALAN S. LOWENTHAL, California 

(III)

C O N T E N T S 

Page

WITNESSES 

Mr. Eric Farnsworth, vice president, Council of the Americas and Americas 

Society ................................................................................................................... 4

Ms. Sally Yearwood, executive director, Caribbean-Central American Action ... 10

His Excellency Richard Bernal, pro-vice chancellor for global affairs, University of the West Indies in Jamaica ..................................................................... 24

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Mr. Eric Farnsworth: Prepared statement ............................................................ 7

Ms. Sally Yearwood: Prepared statement .............................................................. 13

His Excellency Richard Bernal: Prepared statement ........................................... 26

APPENDIX 

Hearing notice .......................................................................................................... 40

Hearing minutes ...................................................................................................... 41

(1)

THE STRATEGIC IMPORTANCE OF BUILDING 

A STRONGER U.S.–CARIBBEAN PARTNERSHIP 

THURSDAY, JULY 14, 2016

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON THE WESTERN HEMISPHERE,

COMMITTEE ON FOREIGN AFFAIRS,

Washington, DC. 

The committee met, pursuant to notice, at 2 o’clock, in room 2200 

Rayburn House Office Building, Hon. Jeff Duncan (chairman of the 

subcommittee) presiding. 

Mr. DUNCAN. Okay. A quorum being present, the subcommittee 

will come to order. I would now like to recognize myself for an 

opening statement. Thank you, guys, for your patience. 

Today, we need to highlight a very important region in our hemisphere that unfortunately often gets overlooked. Many of our Caribbean friends have repeatedly urged the United States to pay 

more attention to the Caribbean, and I want you to know that I 

have heard you. 

I would also like to thank Ranking Member Sires in particular 

for his leadership in working to prioritize this subcommittee’s focus 

on the Caribbean. These islands, home to many beautiful and popular travel destinations, often come up in conversation for the average American only in the context of tourism and planning a future 

vacation. 

However, while these are certainly important strengths for the 

region, the Caribbean has much more to offer which U.S. businesses, universities, and local communities should consider when 

planning future investment, academic research, or where to develop stronger economic ties. 

One of the primary tools of U.S. engagement with CARICOM 

countries is the Caribbean Basin Initiative, or CBI, which was created in 1983. 

Can we turn that sound down a little bit, sir? Can we turn that 

down just a little bit? Okay. 

Which was created in 1983 and has subsequently expanded to 

provide 17 countries and dependent territories with duty-free access to U.S. market for most goods. This engagement has led to a 

44-percent increase in U.S. exports to the Caribbean over the past 

10 years, and last year the total trade relationship between the 

U.S. and the Caribbean was $33.4 billion. 

I believe it is critical to work with our neighbors to mutually promote economic growth through trade liberalization, respect for the 

rule of law, and adherence to free market principles in order to 

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achieve prosperity that is sustainable for the region. In addition, I 

am a firm supporter of deeper U.S.-Caribbean energy relations. To 

me it is a win-win situation. 

U.S. possesses an abundance of oil, natural gas, and technical expertise, and the Caribbean has some of the highest energy costs in 

the world and needs to lower these costs by building infrastructure 

for delivering energy, integrating energy markets to attract investment and financing, and establish pipelines and liquified natural 

gas frameworks. 

In view of Venezuela’s instability, its oil production decline, and 

low global oil prices, countries in the Caribbean dependent upon 

Venezuela’s Petrocaribe programs should seriously consider how 

they can diversify their energy matrix and build stronger energy 

partnerships with the United States and other energy-producing 

countries in the region. After all, the United States is the largest 

energy producer in the Western Hemisphere; collectively with Mexico and Canada, North America accounts for 71 percent of the 

hemisphere’s crude oil and 28 percent of natural gas reserves in 

the hemisphere. 

Similarly, Argentina, Brazil, Colombia, Peru, and Trinidad and 

Tobago have significant oil and natural gas production. In my view, 

freedom-loving, market-friendly, energy-producing countries in this 

hemisphere should be working more closely together to pursue 

hemisphere-acquired, energy independence and that means assisting non-energy producing countries including the Caribbean neighbors in reaching this objective. Ultimately, if the Western Hemisphere were more energy independent it would go a long way to 

transforming our societies and security and independence and our 

economic growth. 

So today, there are many trade energy opportunities for U.S. and 

CARICOM. However, I remain concerned about the growing security challenges in the region from transnational criminal organizations that seek to use the region to ship drugs, migrants, and contraband to United States shores. The Caribbean Basin Security Initiative is another tool the United States has used since 2010 to address regional security issues, and given the Caribbean’s strategic 

location to U.S. homeland, we need to keep considering ways to improve CBSI and more effectively cooperate with the regional partners to control borders, block criminal groups’ ability to exploit permissive environments to their advantage. 

I am also concerned about the people from the Caribbean that 

have joined Islamic extremist organizations. Last year, the former 

head of the U.S. Southern Command, General Kelly, testified before Congress that close to 100 people had left the Caribbean to go 

fight in Syria. At a subsequent briefing, he specifically named Jamaica, Siriname, and Trinidad and Tobago as having had people 

leave for the battlefield. These threats to the United States and regional security should motivate all of us; give us all a greater willingness to do more to strengthen security cooperation. 

Moreover, I want to point out at a previous subcommittee hearing on border security threats in the region, I raised concerns regarding reports that I had seen about citizen by investment programs in the Caribbean which have enabled fraud, corruption, and 

exploitation by foreign nationals. I hope our Caribbean friends will 

3

consider the regional implications of poorly managed CIPs. They 

pose security vulnerabilities to all of us since improperly vetted 

CIP applicants might allow a transnational criminal to evade sanctions and travel restrictions. 

In view of the growing security threats that I have mentioned, 

it is vital for regional security that Caribbean countries, as well as 

all Latin American countries, adopt and follow strong vetting mechanisms according to international best practices using all checks of 

law enforcement sanctions and terrorist database that are available 

to them. 

And finally, I would be remiss if I did not mention the importance the United States places on cooperation in the multilateral 

organizations such as United Nations or the OAS, Organization of 

American States. I want to thank the Caribbean countries that 

voted with the United States recently at the OAS on the situation 

in Venezuela. I recognize your support and friendship, and I commend your courage of conviction to speak the truth to power even 

when it is difficult. 

These countries that chose to abstain from voting or voted 

against the resolution at the OAS regarding the situation in Venezuela, I want you to know that your decision only furthers oppression and tyranny in the Americas. It is my hope that you will reconsider how your vote on these type of issues in the future. 

Ultimately, we all have a responsibility to actively safeguard 

freedom in the Americas, but that can only require very tough 

choices. I realize these decisions are complex, and I look forward 

to hearing from our witnesses on all these topics today, and so with 

that I will turn to the ranking member for his opening remarks. 

Mr. SIRES. Thank you, Mr. Chairman, for working together on 

this hearing, and I want to thank the witnesses for being here 

today. Thank you very much. 

The Caribbean is often described as America’s third border and 

I agree with this description. With almost 45 million people encompassing 16 independent countries and 14 overseas territories, the 

Caribbean is a diverse region that includes some of the hemisphere’s richest and poorest nations. It is a region of great economic and cultural, political and security ties to the United States. 

The U.S.-Caribbean relationship is characterized by extensive economic linkages, significant security cooperation, and continued U.S. 

assistance to support economic and social development, including 

efforts to combat HIV/AIDS and to mitigate the effects of climate 

change. 

Over the past 3 years, the administration has put forth a new 

effort supporting energy diversification and clean, sustainable energy projects to improve the region’s energy security and to help it 

move away from its dependence on oil from Venezuela. Venezuela, 

which has long subsidized energy costs to many Latin American 

and Caribbean countries, must turn inward to rescue itself from 

economic and political collapse. Amidst these troubling times we 

must work with our Caribbean partners to diversify energy 

sources, strengthen their economies, and build upon a mutual security interest. 

On the legislative front, last month the House approved H.R. 

4939, the United States-Caribbean Strategic Engagement Act of 

4

2016. This act is designed to increase engagement with the Caribbean that requires the Secretary of State to submit a multiyear 

plan to Congress for U.S. engagement with the Caribbean regions 

and update on its U.S. diplomatic effort to engage the eastern Caribbean countries. 

As a global power, the United States faces challenges and threats 

from every corner of the world. However, it is vital that we remain 

engaged in the Western Hemisphere and not lose sight of our interests so close to home. I look forward to hearing from our witnesses 

on how the U.S. efforts in the Caribbean can improve and how 

America can continue to strengthen its partnership with our Caribbean neighbors. Thank you. 

Mr. DUNCAN. I will thank the ranking member, and I will just 

say I don’t know how many other members we are going to have 

today. We have adjourned for the August recess break and we 

wanted to continue. Knowing that we were going to adjourn, we 

were willing to continue with this hearing because that is how important it is to the ranking member and myself, so don’t think because no other members show up that it isn’t a vital issue to the 

committee and to the subcommittee. And I look forward to hearing 

from the witnesses who are very well known to the committee so 

their bios are available to us, and I will recognize Eric Farnsworth 

for 5 minutes. 

STATEMENT OF MR. ERIC FARNSWORTH, VICE PRESIDENT, 

COUNCIL OF THE AMERICAS AND AMERICAS SOCIETY 

Mr. FARNSWORTH. Well, Mr. Chairman, thank you very much for 

continuing with the hearing on such a vital topic. Thank you for 

your leadership overall on these issues as well as the Caribbean 

specifically, and Mr. Ranking Member, you as well. It is really important to have a bipartisan voice on these issues and we note that. 

We take satisfaction in that and thank you for that leadership, and 

we ask that that would continue in some way given the importance 

of the issues at hand. 

The United States does have strategic issues in the Caribbean 

Basin and we don’t often talk about it in that way, but in my view 

they are strategic, from support for democratic institutions—some 

of which are quite fragile; some of which are strong and enduring—

we have security interests including drug trafficking, counterterrorism, the fight against financial crimes, obviously immigration 

and humanitarian concerns, energy, the environment, economic development; it is a very wide range of issues to which the United 

States has interest. The United States also maintains significant 

diplomatic interests in the region most notably in the current context related to Venezuela’s slow motion collapse and related discussions at the OAS and the United Nations, and both of you have referred to those issues as well. 

Recognizing this, the administration has made a number of efforts along these lines to improve relations with the Caribbean. 

Presidential and vice presidential travel has been well received as 

have initiatives on security and energy. The Caribbean Basin Security Initiative, for example, has proven to be a workable concept. 

In my view, enhanced results would be anticipated with the availability of greater resources for that program. 

5

At the same time at least in this instance, geography really is 

destiny and the hard reality is that the Caribbean lies between the 

major drug producing region of the Andes and the overwhelming 

demand for drugs in North America and also in Europe. It has also 

been a jump-off point for extraregional migration to the United 

States. Security is a constant challenge for regional law enforcement requiring close coordination and assistance from the United 

States and other interested parties. 

Economically, the Caribbean Basin is also under strain. With 

generally small productive capacities, the region has relied on preferential trade access with the United States and Europe, robust 

tourism receipts, and most recently Venezuelan energy largesse via 

Petrocaribe. With the reduction both in global energy prices and 

also Venezuelan production Petrocaribe is less important now than 

it once was, but the program has nonetheless left a significant debt 

overhang for a number of Caribbean nations. 

Likewise, tourism is being impacted by new market entrants in 

the region as well as the possibility of reduced demand from the 

United Kingdom in the wake of Brexit and also health related concerns such as the Zika virus which we are hearing so much about. 

The Obama administration has sought to address several of these 

economic concerns by promoting the Caribbean Energy Security 

Initiative to catalyze a cleaner, more energy secure future, consistent with the Paris climate change accords, nonetheless still 

greater progress might be made. 

I thought for some time, Mr. Chairman and Mr. Ranking Member, that we need to think bigger and bolder and more strategically 

about the Caribbean, and this hearing is part of that process and 

again I thank you for doing it. In my judgment and with the new 

expansion of the Panama Canal, it is time perhaps for a new Caribbean Basin Initiative which will bring a number of the policy priorities together under one strategic initiative. For this reason I am 

particularly pleased that the House has just passed the United 

States-Caribbean Strategic Engagement Act, and Mr. Sires you referenced that in your opening comments. This is a worthy bipartisan effort to begin the process and I urge prompt Senate passage 

of the bill. 

Several related initiatives might also be considered, learning 

from successes like Costa Rica, for example. The Caribbean should 

consider branding itself the cleanest, most environmentally friendly 

region for tourists and citizens which the United States can actively support. Not just technical assistance, but also concessionary 

financing, technology transfer, debt-for-nature swaps, and a regional commitment to open markets perhaps through expanded 

trade investment ties with the United States particularly in natural gas exports, which would all be part of a new CBI designed 

in full consultation and coordination with Caribbean leaders themselves to rebrand the region as a model for environmental and 

clean energy development. 

Caribbean leaders for their part would be encouraged to 

strengthen regional integration and cooperation, reduce barriers to 

trade and investment, create efficiencies particularly in clean energy related sectors including standards and regulations, and proVerDate 0ct 09 2002 15:09 Aug 23, 2016 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 F:\WORK\_WH\071416\20749 SHIRL
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mote a regional vision not just a national vision for each individual 

nation. 

A focus on investment climate issues would also be welcome as 

would mechanisms to ensure that de-risking by U.S. banks not unduly burden the Caribbean banking sector or reduce access to trade 

finance and development support including remittances. 

Diplomatically, we could anticipate a favorable response from the 

region if the United States took a more proactive approach. Additional Embassies and pre-clearance facilities, a commitment to ongoing high level consultations including visits, and the naming of 

a senior level envoy for Caribbean Basin affairs could all be considered. In the meantime, recognizing the collective weight of Caribbean nations within the OAS and other international bodies should 

motivate the United States to look for quick dispersing deliverables 

which can be highlighted. One of these in my view should be a high 

profile, joint assault on Zika including subsidized access to vaccines 

as soon as they can be developed and effectively deployed. 

Other nations, including China and Venezuela, are particularly 

good at these sorts of diplomatic initiatives. The goodwill they have 

engendered in the region through such activities should be a wakeup call for Washington that the Caribbean Basin cannot be taken 

for granted. In the current environment the United States must 

contend for the Caribbean as indeed we have to contend for all of 

Latin America, and I believe that additional U.S. efforts in the Caribbean would be rewarded. So Mr. Chairman, Mr. Ranking Member, thank you again for the opportunity to join you. It is a privilege to do so, and I look forward to the questions you might have. 

[The prepared statement of Mr. Farnsworth follows:]

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Mr. DUNCAN. Thank you, Eric. Next witness very well known to 

the committee as well, Sally Yearwood, you are recognized for 5 

minutes. 

STATEMENT OF MS. SALLY YEARWOOD, EXECUTIVE 

DIRECTOR, CARIBBEAN-CENTRAL AMERICAN ACTION 

Ms. YEARWOOD. Thank you, Mr. Chairman, Ranking Member 

Sires. Thank you for holding this timely hearing on the U.S.-Caribbean partnership. Coming as it does in the wake of the House passage of H.R. 4939, we have an important opportunity to assess and 

recalibrate the relationship. 

The Caribbean is the United States’ third border. U.S. security 

interests in regional stability are intrinsically linked and so, by extension, collaboration on critical economic, political, and social development issues must be a foreign policy priority. 

Today there is no dominant partner in the region. Russia, China, 

Canada, Taiwan, Venezuela, and the European Union all have a 

substantial presence. The Islamic Development Bank has established significant ties with financing in some Caribbean nations, 

and other countries ranging from Qatar to Japan and Brazil have 

had a significant impact on how and where the countries of the 

Caribbean have turned to search for trade and financing alternatives. 

The United States remains the region’s primary trading partner, 

but there is no doubt that when it comes to overall engagement 

other countries are filling, and in some cases exploiting, a vacuum. 

What can be done to build this stronger partnership? I will speak 

to the areas of economic cooperation that we believe could have an 

impact. 

Trade and Assistance. The 1983 Caribbean Basin Economic Recovery Act remains one of the most generous nonreciprocal trade 

bills ever granted by the U.S. The Caribbean Basin remains a top 

ten trading partner with a balance of trade surplus in favor of the 

U.S. It is also worth noting that the Caribbean is the only area of 

the world where U.S. ship operators and U.S. nationals remain significant players in the international carriage of goods by sea. 

When CBERA was passed, regional economies were very much 

oriented around agricultural and manufactured products. However, 

the world has changed. The economies today with some exceptions 

are largely dominated by travel and tourism, the financial services 

sector and other service based industries. 

At the Inter-American Development Bank, the World Bank, and 

the United States Agency for International Development there are 

substantial programs that are designed to build regional competitiveness. With H.R. 4939, the U.S. Government can examine what 

exists, where there are gaps, and recommend potential areas for 

trade and cooperation which reflect today’s reality. 

Correspondent Banking and De-risking. While the technical 

issues behind this are under discussion among your colleagues in 

the Financial Services Committee, and recently they sent a letter 

to the OCC requesting clarity on the application of rules and compliance, this issue has been front and center for the countries of the 

Caribbean for a while. 

11

This is a global problem, but it is widely acknowledged that the 

Caribbean has been disproportionately affected because of the size 

of the markets and the perception of risk. CCAA has been working 

with the region, the U.S. Government, international financial institutions, associations, and the private sector to help identify solutions for the Caribbean. The CEO of the FIBA describes the situation as follows: We are working on financial inclusion in developing 

countries and de-risking is then blocking access to finance. This 

amounts to a de facto embargo on the region in the area of financial services. 

When international banks sever relationships with regional 

banks, there is a direct impact on economic growth, trade, and remittances. As important, when the costs of complying with regulations create a burden on the legitimate banks and they shut down, 

there is a threat that underground or less regulated institutions 

will take their place. This brings the issue into the territory of economic stability, viability, and ultimately security for the region and 

the United States. 

While we can all agree that the banking community’s ability to 

combat money laundering and terrorist financing is a shared priority, what we cannot do is place undue burdens on any individual 

party. There exists an opportunity for all stakeholders to come together to craft a balanced, risk-based approach between regulation 

and inclusion, where all parties recognize that they have a role in 

the problem as well as in the solution. 

Travel and Tourism. Millions of travelers move by air and sea between the Caribbean and the U.S. every year. Air and sea ports are 

a critical part of the security apparatus every day. Sharing the security responsibility at the front lines gives the U.S. additional control over its borders and creates a collaborative environment for 

managing terrorist watch lists as well as trafficking of guns, drugs, 

and other contraband. 

Pre-clearance facilities in-region are an instrument for building 

a security partnership. While the cost does not justify pre-clearance 

in every Caribbean country, a strategic look at increasing pre-clearance presence through a hub and spoke system would be beneficial 

to shared collaboration and security. 

Diplomatic Presence. Representative Engel has long called for 

the establishment of a diplomatic presence in the countries of the 

Eastern Caribbean. There are nine member states of the Organization of Eastern Caribbean States, six of which are independent. 

The OECS is a political and economic union that has proven effective and proactive. If there is no appetite for diplomatic presence 

in all of the countries of the Eastern Caribbean, I believe that 

there should at least be stronger recognition of the force that the 

OECS represents in the region, and at least one full Embassy 

should be established there. 

Security and Disaster Resilience. CCAA has run a Disaster Management Workshop Series with our partners from Tropical Shipping and other regional partners for almost two decades. This 

event underscores the importance of public-private partnerships in 

disaster management. Previously focused very much on natural 

disasters, we now look at broader threats to the specific countries. 

12

The United States Southern Command is an important collaborator and I would be remiss not to mention their ongoing engagement as well as their responsiveness to regional disasters whenever called upon. The region is vulnerable to range of natural and 

other disasters and resilience is critical. Any breakdown has trade, 

economic, and security implications for the broader region and for 

its partners outside the region. A multi-country strategy forged in 

collaboration with regional partners should be a part of the engagement. 

Time does not allow for the full range of matters to be addressed. 

Energy, for one, is a regional priority and there I would urge continued U.S. engagement on the sustainable energy front, building 

on the Vice President’s hallmark Caribbean Energy Security Initiative. Furthermore, Haiti remains an ongoing challenge and the current political crisis has implications for the region as a whole. 

In conclusion, the United States and the Caribbean are natural 

allies, and today, with the uncertainty over the future of Venezuela 

and the added uncertainty about what Brexit means for the countries of the Commonwealth Caribbean, we can alleviate the insecurities that these small, vulnerable economies face when there is a 

direct disruption on the horizon. A quick look at the communique 

issued after the recent CARICOM Heads of Government meeting 

reflects the wide range of issues that the region is dealing with. 

H.R. 4939 could not have come at a more strategically important 

time for the relationship. 

Thank you Mr. Chairman, Ranking Member Sires, members of 

the committee for the opportunity to be with you today. I look forward to any questions. 

[The prepared statement of Ms. Yearwood follows:]

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Mr. DUNCAN. Thank you so much, Ms. Yearwood. 

We will now enter in the question phase of it. We have a lighting 

system in here. I don’t know if we are going to use that with just 

the three of us here, and I think Representative Meeks is coming. 

So we will just try to get through it and I will try to monitor it. 

All eyes are on Venezuela right now, and Venezuela’s impact on 

the Caribbean nations from energy to trade and other things are 

very concerning, especially Eastern Caribbean nations. So, I guess 

the question that I have is, all six countries of the Organization of 

Eastern Caribbean States are members of the Bolivarian Alliance 

known as ALBA, which includes efforts to promote regional cooperation and alleviate poverty; so to what extent have ALBA and 

Petrocaribe increased Venezuela’s influence in the Caribbean? I 

think I can answer that question tremendously. 

What effect will it have with the waning influence of Venezuela 

given the nature of the Maduro government and the issues with 

energy, and the issues with poverty, and food security and that sort 

of thing? So Eric, you know, let’s just delve into how Venezuela and 

the situation there is actually going to impact especially the Eastern Caribbean ALBA countries. 

Mr. FARNSWORTH. Mr. Chairman, thank you. And I agree it is 

the pregnant issue if you will of the region. Venezuela is a country 

that is in collapse. Economically, some are saying it is no longer 

a democracy. It is a country that has severe and lasting internal 

problems which it is going to take years to get beyond. 

And so, the relationship that Venezuela has developed with a 

number of countries of the Caribbean in good times has become 

strained, because the largesse that Venezuela has been able to 

frankly give away or to provide a concessionary on concessionary 

terms has been much constrained in the current environment. You 

know, you talk to Caribbean leaders and they say we are not big 

fans of the Venezuelan regime, but if they are giving us free stuff 

why not take it? And I think in some ways, it is very much a commercial relationship or, it has been a commercial relationship. 

I guess what I would say is in the current environment, because 

of the troubles that Venezuela is having and frankly because of the 

opportunities that we have in the United States through the entire 

revolution of energy that we have seen in our own country over the 

last several years, we have an opportunity to come into the Caribbean as a partner and say, look, you know the programs and the 

activities that you may have been doing with Venezuela are no 

longer relevant and we can provide the same things that you need 

without the political or without the ideological overhang that you 

might have had previously. 

Mr. DUNCAN. Let me ask you something about that. Is there 

enough trust of the United States for us to step into that void with 

those countries? I don’t know the answer to that. 

Mr. FARNSWORTH. Well, I think in the current environment we 

need to do some groundwork. We need to do some spade work. I 

mean, look, Petrocaribe was a very successful program and we understand why. I mean, it was timely, it provided something that 

the leaders needed when they needed it. It was symbolic. It was 

very, very easy to explain to people. I mean, we are getting oil from 

Venezuela. It was focused. It was on one issue. 

18

And I think sometimes, when the United States engages with the 

countries of the Caribbean, we have a lot of well meaning programs 

and wonderful ideas, but they are diluted, right? Not deluded, but 

diluted in terms of the effort and the focus. Under Petrocaribe, it 

was one product easily explained, highly symbolic, and people said 

Venezuela’s our friend. 

And I think what we need to do better from the United States’ 

perspective is to build that level of trust through an ongoing sustained engagement with the region so that people can say, look, we 

do trust you. We do take this partnership on the terms in which 

it is offered because it is mutually beneficial. 

Mr. DUNCAN. I personally think energy is a great opportunity for 

us, no doubt about that. Let me delve into money laundering and 

terrorism financing a little bit. There is a big push by the U.S. to 

have U.S. banks sever relationship with Caribbean-based banking 

institutions. Does that policy work to reduce money laundering and 

opportunities for terrorist organizations to access the financial system? And that is probably to Sally. 

Ms. YEARWOOD. In a lot of ways it does the opposite, because 

once U.S. banks move out of the region what you have created in 

fact is a void and that becomes filled by other institutions. And 

there are anecdotal accounts of people when taking remittances between jurisdictions that have to carry that in cash in a suitcase. 

So, what is being created is a situation where there is more opportunity for terrorist financing or something to go wrong and somebody to exploit that void. So I would say that the U.S. banks absolutely need to be a key and vital player in the regional money system. 

Mr. DUNCAN. I am probably less concerned, and maybe I 

shouldn’t be, but less concerned about terrorism financing through 

the Caribbean financial institutions as I am about money laundering. We just saw in Panama, a huge $800 million money laundering scheme, real estate involvement, huge number of employees 

involved in a legitimate business—still a money laundering 

scheme. And so I want to make sure that we are cognizant of the 

possibility in the Caribbean nations as well. 

Ms. YEARWOOD. Part of the issue is the perception of risk versus 

the reality of the risk. Banks are not leaving the Caribbean because there is money laundering. Banks are leaving the Caribbean 

because the costs of compliance are overwhelmingly stacked 

against the banking system. You have small jurisdictions and for 

every account that you are dealing with you have to put a huge 

amount of money into making sure that the cost of—that the businesses is clean. 

But what we have to do in effect is create a system where the 

regulators, the banks, everybody is working together, information 

is being shared, and when information is passed between the regulators and the Treasury or the regulators and the banks, people 

know where the voids are. What we need to also do is see what the 

technology, the tools that are out there that can create better compliance that can—the blockchain and other things that can build a 

more stable and more verifiable, transparent banking system. 

And the problem in the Caribbean is that the economies are 

small, putting these systems in place costs a lot, but all the CaribVerDate 0ct 09 2002 15:09 Aug 23, 2016 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 F:\WORK\_WH\071416\20749 SHIRL
19

bean will tell you that they meet the compliance regulations. And 

so there is a disconnect between what is actually happening and 

what people are saying is happening. I think one of the common 

complaints is the breakdown between what is going on in offshore 

financial services and what is going on in banking. 

And the Panama Papers were very largely linked to the offshore 

financial services industry versus the correspondent banking and 

de-risking issue that is currently being faced. And, so, that break 

needs to be made so we can tackle the problem at hand which is 

the ability to move money back and forth in a clean, transparent 

manner. 

Mr. DUNCAN. I am assuming that the Federal Government is 

monitoring—in Panama Papers an individual is never implicated in 

that and start shifting financial resources around, in possibly, the 

Caribbean nation. I am assuming our Treasury and FBI are monitoring that, I would assume. So I am going to go ahead and yield 

to the ranking member. 

Mr. SIRES. One of the reasons that I supported, or I still support 

the export of energy from this country is to offset the influence of 

Venezuela because basically they were using it for political purpose. You know, if you look at the votes they took at the U.N. or 

even the OAS, you know, these people just became so dependent 

on Venezuela that we had to, I felt, offset that influence. 

So now Venezuela is in trouble. I think their production is something like 40, 50 percent less, and there is a void there that we can 

help fill and, you know, we can really help in terms of just having 

a little bit more influence on people. 

The other thing that worries me is that on the eastern part of 

the Caribbean. Basically, we have an Embassy in Barbados and it 

serves all those islands there. Meanwhile, you have Venezuela, 

Cuba, Brazil, they all have a presence there. So I was just wondering how much of a competitive disadvantage this puts us when 

we don’t have, really, a presence in the Eastern Caribbean. 

Mr. FARNSWORTH. Well, Mr. Sires, I think both of your points are 

very well made and I would agree with both of them, the implications of both of them. You can’t ask somebody for their vote and 

their support as an international institution if you haven’t done 

anything to build that rapport in advance, and I think having diplomatic presence is part of that. 

And, you know, again, I go back to what I said earlier. 

Petrocaribe was a very successful program. Now I wish that we 

had done Petrocaribe and not Venezuela, but now there is an opportunity to change that. But we see the results. And when the 

OAS under a very courageous secretary general, Luis Almagro, 

tries to bring the institution toward recognizing that Venezuela is 

no longer in compliance with the Inter-American Democratic Charter, he is not getting the full support of the hemisphere, and indeed 

much of the Caribbean Basin has not gone along with that. And 

if you line up the votes, who voted in favor and who abstained, you 

can do a pretty easy one for one comparison based on who is a 

member of Petrocaribe. 

And so the implication of your question I think is spot on, you 

know, and that is why I think when we talk about the Caribbean 

in Washington, oftentimes we think about it in the context of, you 

20

know, island nations or programs or social development, and all of 

these are very, very important issues. Venezuela looks at this as 

a strategic issue. And the dividends pay off down the road when 

Venezuela itself is in the spotlight of the international community. 

Then they have friends that they can rely on and it pays dividends 

for them. 

So I think that at the end of the day that is a lesson frankly that 

we can learn, and I think we can build toward reversing that 

course. 

Ms. YEARWOOD. I agree 100 percent with Eric. Venezuela stepped 

in at a time that was very important for much of the region and 

now the region is very much paying the price, whether it is in debt 

or other areas related to votes and other requirements that they do 

as a result of the——

Mr. SIRES. Increased costs in energy too now. 

Ms. YEARWOOD. Sorry? 

Mr. SIRES. An increase in the cost of energy also. 

Ms. YEARWOOD. Oh, absolutely, absolutely. And so I think to the 

point, we are at an important juncture now with the cost of energy 

being what it is with the U.S. energy supply going up and the region looking at ways to increase sustainable energy, whether it is 

through natural gas or getting the region less dependent on 

Petrocaribe and able to make these switches to new types of energy 

is going to make a huge difference. 

Mr. SIRES. See, I don’t think things happen by accident. I think 

this was well calculated between Venezuela and Cuba and, you 

know, unfortunately—well, we have an opportunity now to fill in 

a void. 

The other concern that I have is the significant increase of China 

in this region. You know, we seem to be put to a lull of sleep or 

something because everybody seems to move in and then we react. 

And we don’t seem to catch these things until something like this 

happens, you know, like Venezuela. 

So unfortunately, you know, since I have been here we have been 

pushing—and I know Mr. Meeks and the other members that are 

here, you know, this is an important region for us. It is an important region for America and we really should concentrate. So now 

you have the Chinese moving in. They are going to go through the 

Panama Canal and they come in and they throw money, you know, 

at these small countries, which in reality they can’t afford not to 

accept the money. So how much of influence is there now of the 

Chinese? And I know it is growing, but——

Ms. YEARWOOD. The Chinese influence, it is actually very interesting to watch the way China has kind of come into the region and 

the types of projects. Sometimes it is a sports stadium. I think the 

recent, the Baha Mar debacle in the Bahamas, you have seen the 

Chinese Government come in in a way that the U.S. businesses 

cannot come in to any country. If a Chinese developer comes into 

a country in the region they have the Chinese financing and the 

Chinese Government behind them. 

Mr. SIRES. And the employees. 

Ms. YEARWOOD. And the employees. And so you have effectively 

got a package that the U.S. cannot—the Foreign Corrupt Practices 

Act and all sorts of other reasons, the U.S. cannot compete in 

21

terms of the types of investment that they are able to take in without kind of having to do the due diligence behind it. And it is very 

welcome in a lot of places, but what Baha Mar has shown us is 

that it can create a very difficult situation for the countries where 

they go. 

Mr. FARNSWORTH. I think Sally raises a really interesting and 

important point in this context. You know, the Chinese or Venezuelan model is a state-led model, so the capital of the country, 

the leaders in the country can say this is what we are going to do. 

We are going to create Petrocaribe or we are going to build a sports 

stadium or we are going to declare that we are going to develop 

these projects, whereas the U.S. model is private sector-led model. 

And the disconnect here is that we are dealing with smaller 

economies, island nations, and in comparison of other investment 

opportunities in other countries in Latin America, much less worldwide, these are economies that generally aren’t going to draw that 

large investment except in a couple sectors like tourism like we 

have been talking about. 

And so there is a place, in my view, for the United States Government to help leverage and facilitate private sector engagement 

in the Caribbean Basin, but I think we have to be very intentional 

about it. We can’t just assume that okay, the private sector will 

show up or they won’t based on market conditions and we will be 

happy with that. I think that this is where the strategic emphasis 

comes in to say, look, you know, during the 1980s we created the 

Caribbean Basin Initiative. It was private sector-led, right, but the 

government facilitated it, and that has been in large measure how 

we have worked in terms of Caribbean issues. 

I don’t have any problem with that. I think that is appropriate. 

But we are competing against state-led competitors with a lot of 

money. And so this is some of the disconnect and I think we have 

to recognize that and then develop the approach based on what the 

reality is so that we can be more effective in our approach. 

Mr. SIRES. Thank you. Mr. Chairman. 

Mr. DUNCAN. The Chair will now go to Mr. Yoho from Florida. 

Mr. YOHO. Mr. Chairman, I appreciate you putting this together, 

and I want to thank you for putting the pivot on our neighbors in 

the Caribbean. 

As you have stated and that we have seen, and it is not just this 

administration, it is probably over the last 20 or 30 years where 

we have taken our eye off the ball in the Caribbean. When we have 

nation states that close to us with like cultures, you know, we 

value the same things, our family values, things like that, that 

close to us, and we take the eye off of that we start losing our competitiveness and we have seen that. 

I come from Florida, and we have over 105 million visitors a year 

in the tourist trade and it is the gateway to the Caribbean whether 

it is through our airports or through our shipping ports. And it is 

so important down in that area and we want people, you know, 

number one is to be secure in that area. And with the conflicts 

going on in the world we don’t want them to invade in that area 

and unfortunately, we are starting to see that. 

And I think one of the biggest things is President Maduro, after 

Chavez, seeing what is going on in Venezuela. 

22

And we have seen in the past, when you have self-appointed dictators that come to power and when they fall there is a vacuum 

filled. We have seen that around the world. We have seen it in the 

Middle East. And when that happens you are never quite sure who 

is going to fill that void. 

And we want to make sure that we can have, I don’t want to say 

an influence, but we want to, you know, promote the people with 

the ideals, the same values that we have and help them succeed 

in that without being meddling into their societies. And it is just 

so important, especially with this time in our nation and around 

the world with the conflicts going on. You know, there is a collection of islands down there—nation states, satellite countries—and 

like I said earlier we share the same cultures, values in all except 

maybe for that one sore thumb about 90 miles off our coast, and 

there is possibility of changing. 

And I think my questions are with the energy for the Caribbean 

islands, if Venezuela collapses, which I know the oil production will 

still go on, it is going to hurt all the Caribbean nations. And so who 

will fill that void? Who would best be to fill that? And what I want 

you to think about, I am being a little bit jaded here. I think I 

would like to see an American company come in there and fill that 

void. How would you see that happening and what would you recommend? We will start with you, Ms. Yearwood. 

Ms. YEARWOOD. Thank you, Mr. Yoho. I think that the U.S. is 

well placed to fill the void in the event that Venezuela is no longer 

able to provide through the Petrocaribe program. I think the surplus natural gas, I think the growth of clean and renewable energy, 

the region is really at a crossroads in terms of transitioning to 

clean and renewable energy whether its solar or wind. 

But there are other areas if I can make a couple of recommendations. One of the issues, for example, is OPEC has a large amount 

of investment in the Caribbean in the energy area. But there are 

two issues. The size of the markets in the smaller countries of the 

Caribbean don’t necessarily enable them to receive OPEC financing 

or really be able to put together a good package for OPEC financing, and the second point is lack of feasibility studies. OPEC 

doesn’t make grants and it doesn’t do feasibility studies and so 

there is a lot of legwork that needs to be done in order bring some 

of this new technology into the space. 

Mr. YOHO. Is there any private partnerships, private-public partnerships or NGOs that you would recommend that would be best 

suited, you know, with the oil companies and, you know, one of our 

think tanks up here? 

Ms. YEARWOOD. I would recommend Eric. No. 

Mr. YOHO. You have to like that. Is that a segue you want to——

Ms. YEARWOOD. No, I think there are a lot of entities in the U.S. 

that are working on energy in the Caribbean. 

Mr. YOHO. Okay. And I guess my concern is we can’t worry about 

what happened in the past over the last 20 or 30 years. We can 

start from this point forward so that we have policies in place so 

that we have a strong foothold in there. And I know our feelings 

are we don’t want to tell you how to live, we just want to be good 

trading partners with you, but help become strong trading partners 

where we develop an economic base in your countries. 

23

And with the influence of China, all my life China was kind of 

an adolescent, but in the last, say 10 years, I have seen them grow 

into puberty and they have a lot of money and they are starting 

to feel the effects of their testosterone. And we have seen that in 

the South China Sea, but we have seen the investments they have 

done in the Caribbean, you know, in the Bahamas—I think it was 

$31⁄2 billion—and what they have done in Panama and Honduras 

and all that. 

I don’t want to deny anybody doing business. I just think there 

are better partners that we can have and I think that would come 

from the good ol’ U.S. of A. And so policies that you would help direct us, you know, whether it is ag, energy, just merchandise trade, 

what would you recommend, Mr. Farnsworth? 

Mr. FARNSWORTH. Well, Mr. Yoho, thank you for the question. 

And let me make a quick footnote on the China issue, first, if I can. 

You know, China’s engagement in the Caribbean—and Ambassador 

Bernal is the true expert on this. I don’t want to step on your toes. 

But it is different in the Caribbean than it is in South America, 

for example, where it is much more commercial, it is much more 

commodities based. In the Caribbean, there is a very healthy political component because of the desire for China to be recognized 

globally, right. You still have the political competition with Taiwan 

in parts of the Caribbean and Central America, et cetera, et cetera, 

so we have to remember that part of the aspect as well. 

In terms of the energy relationship, one of the things we are 

learning from the reforms in Mexico is it is not just oil and gas 

drilling, for example. Everybody focuses on that in the majors in 

the deepwater in the Gulf of Mexico and when is the next bid 

round and all that. But what it is even more impactful in Mexico 

is the power grid, the electricity, and when that gets freed up the 

cost of electricity comes down and that is really good for the consumer. 

And what we see in the Caribbean, across the Caribbean is the 

cost of electricity is really, really high. And so if you can bring that 

cost down to the consumer, first of all, you have more disposable 

income to spend on other things, but also it becomes a much more 

competitive commercial platform to begin to produce and so that 

begins to bring investment, which right now is more limited because again on the size of the economy. 

So if there is one aspect that could really be focused on, you 

know, it is not let’s continue to import dirty diesel fuel and some 

of the really dirty pollutants that Venezuela is providing. Let’s help 

convert the Caribbean to a clean energy power grid that can be 

used much more efficiently that where the cost of electricity can 

come down and make the entire region a much more competitive 

productive platform which will help their economies long term. 

So energy isn’t just then seen as an energy sector issue, it is seen 

as an economic issue which I think is how we need to begin to view 

it. 

Mr. YOHO. And I appreciate it. And I am out of time, but I look 

forward to working with you in the future so that we can draft legislation to help bolster the presence of America there, and I think 

everybody wins in that situation. And I yield back, Mr. Chairman. 

24

Mr. DUNCAN. Thank you. We are then joined by Ambassador 

Bernal. Thanks for coming. I am sorry about the DC traffic and 

probably exacerbated by the DC heat. But we are going to go ahead 

and recognize you for 5 minutes for an opening statement. 

STATEMENT OF HIS EXCELLENCY RICHARD BERNAL, PROVICE CHANCELLOR FOR GLOBAL AFFAIRS, UNIVERSITY OF 

THE WEST INDIES IN JAMAICA 

Mr. BERNAL. Thank you, Mr. Chairman, my apologies for being 

late. I left my house at 3 o’clock a.m. this morning. I was going well 

until the Falun Gong had a demonstration on Constitution Avenue. 

I will very briefly summarize my verbal statement which is that 

I think this is an important time for the U.S. to re-examine its policy toward the Caribbean and to take a new bold initiative in the 

Caribbean; because, the Caribbean has been having a very difficult 

time since the global economic crisis; a combination of long term 

structural institutional factors as well as some short term cyclical 

factors, such as oil prices. 

It is important for the U.S. and for Jamaica because the U.S. is 

the main and largest trading partner and main source of investment and tourists. It is in the interest of the U.S. to have a prosperous, peaceful, and democratic Caribbean. In that regard I focus 

on the economic issues, because I think the economic issues impinge on all the other issues which are important such as governance, democracy, anti-narcotics campaigns. 

I have identified six issues which I think need to be addressed. 

The first issue which I think needs to be addressed is the debt situation. The Caribbean countries have become some of the most highly indebted countries in the world. The levels of debt now for many 

countries have the necessity of several restructuring exercises, and 

indeed the debt is now at a level where these countries cannot 

grow out of debt; that something has to be done. 

The debt is in three forms and it is multilateral debt, bilateral 

debt, and commercial debt. It is time to take an initiative which 

significantly reduces the debt structure which will free these economies to try to stimulate their own growth process. 

The multilateral debt needs to be stretched out and at a much 

lower interest rate. The bilateral debt can be reduced through a 

range of initiatives from debt-for-environment swaps to cancellation. The commercial debt needs to be transferred over to the 

multilaterals. This will give some fiscal space and allow these countries to resume public investment and investment in health and 

education. 

Second issue is what I call international financial intermediation. 

The de-risking of the correspondent banking relationships are very 

important to the Caribbean because international financial banks 

have been critical not only to domestic economy but in its link to 

the global economy. Some services have already been choked off 

and there must be a way for us to find an initiative that combines 

the security goals which we subscribe to, and also at the same 

time, allow financial intermediation such as trade financing, transfers of profits, debt payments, et cetera, to continue. 

Thirdly, security. The small states of the Caribbean find it very 

difficult to contend with transnational crime linked to narcotics 

25

trafficking, international terrorism, cybersecurity, et cetera. The 

U.S. has done an outstanding job in supporting these countries, but 

I think there is room to do more in the interest of our mutual security. Security these days can only be defined as international and 

can only be responded to by cooperation among countries. 

Fourthly, in the trade area there are some good legislation in 

place for trade. However, many of the Caribbean countries are now 

service oriented countries and we need to examine possibilities for 

promoting mutual and beneficial value chains which combine U.S. 

and Caribbean in services such as health care, education, and back 

office support. I think by combining the skills on Capitol Hill with 

some of the human resources in the Caribbean, these firms can remain competitive both here and in the U.S. 

Climate change. The Caribbean countries are coastal societies. 

Infrastructure, economic activity, population, the building environment are all concentrated on a narrow strip on the coast, even for 

those countries which are not islands, for example, Belize and Guyana. It means that they are among the most vulnerable countries 

to climate change. More resources need to be made available in a 

more accessible way to mitigate climate change and to assist these 

countries in surviving. And I point particularly to the tourist industry which is critically dependent on the quality of that immediate 

coastal strip. 

Finally, energy. The Caribbean, bar the exceptions of Trinidad 

and Tobago, depend heavily on importation of energy. It is time for 

the Caribbean to move toward alternative energy sources. Solar, 

wind, and thermal all have possibilities, and to shift the production 

of electricity which is among the highest cost in the world onto energy in less expensive sources. That would serve to revive a whole 

range of economic activity, including manufacturing. 

And I conclude, Mr. Chairman, by saying that all of these are 

interrelated aspects that need to be addressed. If we could address 

them in one overall initiative led by the U.S. and involving the development of financial institutions, I think that they reinforce each 

other and it is time for a new bold initiative in U.S. policy toward 

the Caribbean. 

Thank you for allowing me to make this brief statement at this 

late stage in the proceedings. 

[The prepared statement of Mr. Bernal follows:]

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Mr. DUNCAN. Well, thank you so much for making the effort to 

be here. Mr. Meeks has agreed we are going to skip over him and 

go to the former chairman of the full committee, Ms. Ros-Lehtinen, 

for 5 minutes. 

Ms. ROS-LEHTINEN. Thank you so very much and I apologize for 

coming late. And we have another hearing which I am chairing on 

Syria, but thank you, Chairman Duncan and Ranking Member 

Sires, for holding this important hearing. 

And I don’t think that we can discuss U.S. foreign policy initiatives with the Carribean without focusing on PDVSA and 

Petrocaribe. Venezuela established Petrocaribe in 2005 to help influence many countries in the hemisphere and up to this point the 

strategy has worked. However, now we see the collapse of the Venezuelan economy because of the incompetence of the Maduro regime. 

So it gives the U.S. an opportunity to fill that void, and this is 

where we need the State Department and the Department of Energy to be extremely focused on this effort right now because it is 

in our national security interest to coordinate an energy solution; 

a strategy so that fewer countries in the Western Hemisphere 

would be dependent on a very unreliable Venezuela. 

And if we don’t—and when not if Venezuela falls because you see 

the writing on the wall—we mitigate the fall by not allowing other 

countries in the region to go down with the sinking ship. And I 

think that we have got to be working with our partners, our allies 

in the Caribbean to help them take advantage of the abundant and 

cheap natural gas and the new advanced clean wind and solar 

technologies available. This way we strengthen our partners’ economies, we buffer the region from the impacts of Venezuelan collapse 

and take realistic steps toward reducing carbon emissions. 

So the crisis in Venezuela may cause an oil supply disruption. 

What impact would such a disruption have on the Caribbean nations? 

Mr. BERNAL. My colleagues are determined to make sure I carry 

a fair share of the load. First of all, I would like to recognize your 

longstanding interest in Caribbean affairs. Thank you for that. 

The relationship with Venezuela is a long and complicated one. 

Venezuela initiated the Petrocaribe at a time when many Caribbean countries were really very stretched financially and really 

needed some assistance. However, the relationship has its complexities. For example, Venezuela claims a very large share of Guyana 

which is a member of the CARICOM group. It also has extended 

its claims in terms of coastal waters based on an island almost 400 

miles away from Venezuela and mainland, so that the relationship 

is not all the Caribbean benefiting from some financial support. 

I think we are at a juncture where the relationship is going to 

become very unpredictable because of nobody knows exactly what 

will happen in the Caribbean with Venezuela. But I think that this 

is time for a re-examination of the relationship. Several Caribbean 

countries are thinking beyond Petrocaribe because they don’t assume that it will continue in its present form and they have to be 

thinking of alternatives. This creates a juncture in which new initiatives, including from the U.S. in energy, would be very welcome 

in the region. 

31

Ms. ROS-LEHTINEN. Thank you very much, Mr. Chairman and 

Ranking Member Sires. Thank you. 

Mr. DUNCAN. Well, thank you. Thanks for taking time to run 

down here. The Chair will now go to Mr. Meeks. 

Mr. MEEKS. Thank you, Mr. Chairman. And thank you for being 

here, and good to see all of you who, you know, we rely upon very 

much with your expertise and because the Caribbean is extremely 

important, I think. I know it is to all of us in the United States 

of America. It is really, you know when you look at our hemisphere 

and we have got to make sure that we strengthen and working together. 

And I hear my colleagues in regards to especially Petrocaribe, 

but I think that the issues that are confronting a lot of the islands—and I notice, for example, Mr. Ambassador, you listed as 

number six in order of priority the energy crisis, et cetera, in trying 

to make sure. So I want to try to find out as it pertains to the islands themselves the things that are most pressing with them that 

would help them overall with their economy, because I know, for 

example, you can’t just depend upon tourism or you can’t just depend upon, you know, they have the diversification of it needs to 

be there. 

And one of the things that I know we have worked on and I 

would like to get your assessment on the success of it. We have 

been doing a lot in regards to in trading. And let’s talk, for example, in 2020 for Haiti the HOPE Act expires. Is HOPE good? What 

do we need to do? How can we improve it? Would it help the situation in Haiti because Haiti is crucial, I think, also to the Caribbean. I don’t know, and so that is important. 

The two preferential trade programs with reference to Caribbean 

imports the Caribbean Basin Trade Partnership Act. That is—

where are we with that? Is that helpful? Do we need to do more? 

Do we need to relook at it? You know, in some other parts of the 

world, but looking at these trade agreements as a mechanism of 

economic benefits for both sides. 

So how do you see and how do you think that we can continue 

to improve, you know, extend or modify some of the trade agreements that we have with the Caribbean? 

Ms. YEARWOOD. Thank you, Mr. Meeks. Thank you for your leadership on Caribbean issues. I am going to tackle two issues here 

primarily, and I will leave my colleagues to address some of the 

others. 

I think one of the key issues that the Caribbean has is competitiveness. And I think to make better use of U.S.-Caribbean trade 

agreements a lot of the competitive issues need to be addressed. I 

mentioned in my testimony that the IDP they are doing a lot of 

work on trade facilitation. That is going to be important to getting 

the Caribbean more able to kind of have single windows, reduce 

the costs of transportation, and reduce the cost of clearance in moving goods. 

There are interregional issues as well. Issues such as traveling 

from one Caribbean island to the other can be more expensive than 

going to Miami and then going back down. So there are a lot of 

issues that the Caribbean needs to tackle in order to become a 

more competitive place to do business and to trade more effectively. 

32

I didn’t want to, however, not take the opportunity to say something about Haiti. I did live there for 13 years and I do follow what 

is going on there very closely. And I think it is extremely critical 

that the HOPE bill not just go to 2020, but go—there has to be 

some sustainability to what is going to succeed the HOPE bill following 2020. 

Haiti is in a very difficult situation right now politically. Parliament is shaky to say the least, kind of an interim President that 

may or may not constitutional. I am not a Haitian constitutional 

expert, but I have questions. But at this point in time, what Haiti 

needs more than anything else once this particular juncture of political difficulty is overcome, Haiti is going to need sustainability 

and stability to its relationship for trade and investment with the 

United States. So I think that is a critical issue that the Congress 

needs to keep its eye on. Thank you. 

Mr. MEEKS. Yes, sir. 

Mr. FARNSWORTH. If I could simply reinforce what Sally just 

said, the issue of competitiveness is real and we deal with the business community all the time. And again if you are are dealing with 

smaller economies which don’t have as many prospects as some of 

the other opportunities for the international investor, folks are 

going to go elsewhere. And so there has to be in my view a singular 

attention to investment climate issues. Energy is part of that. It is 

certainly not the only aspect. 

I think we also have to be aware of unintended consequences. 

And you have done some really good work obviously on the trade 

agenda, Mr. Meeks. Clearly the TPP is something that Council of 

the Americas supports. We appreciate your leadership and others 

of the subcommittee on that. 

But there are perhaps some unintended consequences. And for 

example, when the North American Free Trade Agreement was 

first passed one of the strongest advocates for something that became known as NAFTA Parity was Ambassador Richard Bernal of 

Jamaica who came into the U.S. Government of which I was a 

member at the time and said we support, we the Jamaicans, for example, support NAFTA. It is a good thing, but we want to make 

sure that Jamaica and the other Caribbean countries are not negatively impacted by the trade and investment diversion that might 

go to Mexico as a result of NAFTA. 

I think that was a very important point then and it is a very important point now. And to the extent that TPP goes forward, and 

again I hope that it does. I strongly support it and we hope that 

it is a near term issue. Nonetheless, with some new entrants into 

textiles, for example, and agriculture that are highly competitive in 

the global environment that will impact countries in the Caribbean 

Basin. 

It will impact Central American countries, some of the Northern 

Triangle countries where we are giving a lot of U.S. taxpayer assistance to which we support, but again the issue is one of trade 

and investment diversion. We have to be careful that doing the 

‘‘right thing’’ with other economies we are not negatively impacting 

some economies which are already stressed. 

And so what is the answer here? I think the answer is to go back 

to the original idea in some way of NAFTA Parity only this is TPP 

33

parity, right? If Haiti, for example, is dependent on the textiles 

trade with the United States, we I think need to make sure that 

whatever we do in TPP doesn’t unnecessarily undermine that or 

doesn’t create difficulties in a way that would take away some of 

those advantages that Congress has worked so hard over the years 

to develop. And it is not just Haiti of course, but that is perhaps 

the best example. 

So my point is that if we look at these in a more comprehensive 

way, in a way that where you have a lot of different, integration 

of different strands, then I think we will come to a better place. 

And so as we are looking at these issues strategically, I just very 

much support the way that you are putting this in the context of 

it is not just this issue or that issue or another issue, it is all of 

these together and how can we move forward in a comprehensive 

integrated manner in support of the Caribbean, and I think that 

is what we have to keep foremost in mind. 

Mr. BERNAL. Let me begin by thanking you, Congressman 

Meeks, for your consistent leadership on Caribbean issues. In response to the issue that you raise, I believe that the onus is not 

only on the U.S. but is on the Caribbean. We in the Caribbean 

have to do some things to make it easier for business to operate 

and to become internationally competitive. I remain convinced that 

if we create the right kind of environment between the U.S. and 

the Caribbean that there is private sector initiative on investment 

and there are opportunities, very real opportunities which can take 

place by combining Caribbean and U.S. resources in a way beneficial both to the U.S. and to the Caribbean. 

In that regard, I think that we are focused a lot on trade in 

goods. That is going to be difficult for the Caribbean because of its 

energy imports and because of the small scale of production. So I 

think we now have to begin to think about services. After all, services is the fastest growing sector in the world economy. There are 

areas in which the U.S. could provide more services and there are 

areas for collaboration where doing some of it in the Caribbean can 

allow U.S. firms to retain their international competitiveness 

against China, Asia, et cetera. 

And I think we now need to look at what is it we have to do to 

free services? For example, health care, retirement homes, tourism, 

higher education, all of those are potential growth sectors which 

are mutually beneficial. What the onus has to be is to find ways 

to clear and establish a seamless economic space between the U.S. 

and the Caribbean so that private sector capital can work. There 

are opportunities. 

Lastly, I would say that the Caribbean is becoming a much more 

complex area because of the changes in policy toward Cuba, the 

cross-cutting trade agreements such as CAFTA, et cetera, and we 

have to think of the Caribbean now in a wider sense. In regard to 

Haiti, I think very important is its continued integration with the 

English-speaking Caribbean, because these are well established democracies and it is an economic area which holds opportunities for 

Haiti and there is now quite a lot of Caribbean investment going 

into Haiti and vice versa. One very large investment in petroleum 

distribution in the Caribbean is from a Haitian firm. 

34

So I think it is very important for that Caribbean integration to 

continue to embrace Haiti and that should be encouraged from the 

U.S. end as well. 

Mr. MEEKS. I think I will ask one question and that is, what has 

been the engagement activity when you talk about some of the 

planning of folks, say, of some of the international banks like the 

IDB? Are they participating and they have ideas to help and finance some of the businesses there? Or the IMF, are they in—you 

know, in Jamaica we had a big problem at the time when you talk 

about debt and trying to figure out. 

What is the involvement of the international development banks 

in the Caribbean and can, or should, the United States use some 

of its influence with some of the banks that it also makes contributions to? 

Mr. BERNAL. I will take the first shot on this one because I just 

finished a week ago, 8 years on the board of directors of the InterAmerican Development Bank. I can assure you that the InterAmerican Development Bank in particular has been very active 

and has provided substantial support across a range of sectors. I 

believe that our big brother, the World Bank, has contributed, but 

I would venture to suggest that there is scope for much more resources to be put into the region. 

The issue here is that the Caribbean is classified as middle income, developed countries and are therefore excluded from certain 

concessional facilities and are not necessarily seen as a priority 

when it comes to poverty alleviation. But while these are middle 

income countries, the basis of their economies is fragile. Sometimes 

it is one sector, tourism, and therefore while they are middle income they are vulnerable and need continued support. The U.S., I 

think, has a critical role in urging the development institutions to 

continue to play a role in the Caribbean. 

Mr. FARNSWORTH. Just a quick coda to that as well. We have 

talked a little bit about the debt overhang that affects the Caribbean and so there is a potential future role, maybe not too far in 

the future, in terms of the international banks perhaps the IMF as 

well to really help work through some of those debt issues in a 

meaningful and lasting way. So a lot has already been done as the 

Ambassador was indicating, but I think there is even a greater role 

going forward that could be contemplated. 

Mr. DUNCAN. We have time for a few more questions. I thought 

it was going to be just the ranking member and myself. I am glad 

we had such active participation. I am glad you showed up. 

Brazil is concerned about tourism with regard to the Olympics. 

And tourism being such a big part of the Caribbean nations’ economy and a big part of the U.S. tourism headed there—Zika. It has 

got to be on their minds. I guess I am concerned about how much 

U.S. assistance will make it to the Caribbean nations and whether 

Zika is even a concern on the island nations themselves and what 

effect that may have on tourism, or expected effects. So if you all 

could delve on that a little bit because that is on my constituents’ 

minds. 

Eric? 

Mr. FARNSWORTH. It is very much on the minds of the hemisphere community. You referenced Brazil and I think that is absoVerDate 0ct 09 2002 15:09 Aug 23, 2016 Jkt 000000 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 F:\WORK\_WH\071416\20749 SHIRL
35

lutely correct. Although, in Brazil right now it is the winter and 

the mosquito population in the winter tends to go down, and so at 

least we hear from the Olympic organizers that Zika won’t be as 

much of an issue during this current time of the Olympics, et 

cetera. 

But look, Zika is an issue across the region and indeed here in 

the United States too. As I explain in my prepared comments, it 

seems to me that this could be an easy win for the United States 

if we want to put it in those terms. Zika affects all of us. We all 

have a very real incentive to get rid of it as fast and as quickly and 

as comprehensively as possible. 

So there is a lot of good research going on in the United States 

and other places. Once the vaccine or the right approach to address 

Zika comes forward, why not, working with the Caribbean partners 

and others in the hemisphere have a very significant public health 

initiative that affects people where they live? I mean, this is the 

type of thing, these are the types of lessons we are learning that 

are very effective from other countries when they do it whether it 

is Venezuela, whether it is China, whether it is other countries because this is what people need. 

And if the United States could be seen as helping to address a 

very relevant public health issue and do so in a cost effective way 

in partnership with host governments, I think that is an obvious 

area to try to explore. 

Ms. YEARWOOD. The Caribbean Hotel & Tourism Association, the 

Caribbean Tourism Organization, the Caribbean Public Health 

Agency, and the Pan American Health Organization are all intimately involved in trying to deal with the Zika crisis not just at 

the global level but also at the tourism level. People recognize Zika 

as a singular issue that could impact the economy of the entire region and so they are very cognizant and working toward trying to 

contain the threats and dealing with the vector management, et 

cetera. 

I think to Eric’s point, the ability of those agencies to have greater participation by the U.S. Government providing support, technical assistance, and working with CDC, getting additional resources into the fight could only be helpful. 

Mr. BERNAL. Mr. Chairman, if you will permit me. Zika is a 

problem in itself, but it raises a much broader issue which is hemispheric and global pandemics. There are so many people moving 

around the region from the U.S., Canada, from the Caribbean—several million a year—that it is an interest of common and mutual 

importance that we try to combat these pandemics. 

Early intervention is critical. The moment—we need to have a 

fast-acting reaction to the possibility of pandemics. We know, for 

example, that way back in the ’60s when there was an outbreak 

of polio in Jamaica that for a relatively small amount of expenditure on preventive measures, vaccines, we could have prevented a 

major human tragedy. 

So one of the things we can look at is a fast-reacting mechanism 

for possible pandemics. It is in our mutual interest. These are 

issues which are not national or even regional. They are global, 

and the only way to tackle them is by effective cooperation. 

36

In passing, let me say that the debt situation is such that it is 

beginning to constrain the governments and their ability to do 

health and education which has long term adverse consequences 

for development. If we could address the debt, and maybe one of 

the areas to look at is to bring in foundations and development 

agents to look at debt-for-health swaps in which some of the debt 

can be alleviated and that money be put into preventive health 

care. 

Mr. DUNCAN. Thank you for that. I would be remiss if I didn’t 

mention Haiti and Dominican Republic, and ask—I will let you ask 

the question if you would like. 

Mr. MEEKS. I would be remiss if I didn’t ask about Haiti and the 

Dominican Republic. 

Mr. DUNCAN. So migration, economy, situation in Haiti with the 

government, if you all just want to touch on that. 

Ms. YEARWOOD. That is opening a rabbit hole, but there are a lot 

of possible ways to go at this question. Haiti is in a particularly 

interesting situation. As I mentioned I was there for 13 years. I 

have been working on the issue for almost 20 years, and I think 

at this particular point in time it is as bad as I have ever seen it 

in terms of the simple inability to know what is going to happen. 

And whether it is with the Parliament or the government, crime 

is on the rise. 

Budget wise, we know the U.S. and European Union are not 

going to be providing money toward elections. Last I heard, there 

was no money in the Haitian budget for elections, so somehow they 

need to find 55 million to get to a set of elections that nobody is 

certain, you know, if it can happen and if it will happen because 

of the impasse on the ground there. That of course has repercussions on the DR-Haiti migration issue. If Haiti continues to slide 

downhill, it is going to be hard pressed for anybody to be able to 

stop the flight of migrants either to the Dominican Republic, the 

Bahamas, Turks and Caicos, Jamaica, and of course Florida and 

the United States. 

So I don’t know if the question is how do we solve this because 

I don’t know, but it is I think something that is just critical at this 

moment and I think that the potential is there for this to go very 

bad very quickly. 

Mr. DUNCAN. I recognize the ranking member for a question. 

Mr. SIRES. Thank you. You know I would be remiss if I didn’t 

bring up Cuba. You know, many of these island nations, their main 

source of income is tourism. We have this push now to open up 

Cuba, lifting the travel embargo and making it easier for Americans to travel to Cuba. Now how much of a detriment is that going 

to be for the rest of the islands, because Cuba has always been 

seen as the place to go in the Caribbean. And I think that that is 

going to hurt the economy of a lot of these islands. 

First of all, it is 90 miles from Miami, you could practically swim 

there, and, you know, it has always been this destination with this 

mystique. They still think they are going to see Hemingway having 

a drink over there at La Bodeguita. So how do you see that happening? What do you see happening there as tourism keeps increasing and people don’t go to the other destinations? Yes. 

37

Mr. BERNAL. The return of Cuba to as a destination for American 

tourists has both negative and positive effects. In the short run it 

is a new destination. It is going to attract a lot of investment and 

tourists there, and that could divert, particularly, tourists from the 

nearest islands to Cuba such as the Bahamas and Dominican Republic, but it could affect the entire Caribbean. 

However, the tourist industry has grown steadily each year globally and in the Caribbean even in the wake of the global financial 

crisis, so there is room to accommodate further growth. What is important for the Caribbean is to do the following: One, to maintain 

the freshness of the tourism product and its international competitiveness in price and quality; and secondly, to look for the possibility of multiple destination tourism. That is, some time in Cuba, 

some time in the rest of the Caribbean, find collaborative ways. 

Lastly, the Caribbean has tremendous tourism expertise and 

management which it can offer to Cuba in building Cuban tourism. 

One of the essential things is to ensure that as airlift comes from 

new markets like China that the Caribbean also makes sure that 

it is competitive with the new destinations. For example, direct 

flights from China to Cuba, but not yet to the rest of the Caribbean. 

So the Caribbean faces competition, but it is an industry in the 

Caribbean which has shown an ability to remain internationally 

competitive and attractive. I have no doubt that the industry will 

continue to grow, but it needs to up its game because of the new 

competition. 

Ms. YEARWOOD. I don’t have a lot to add to Ambassador Bernal’s 

point. International tourism grew by 4 percent in 2015; global 

trade grew by 2.8 percent. So what we do know it that the tourism 

market continues to expand and the Caribbean’s growth has been 

positive for awhile now. So I think on the whole, the Caribbean is 

doing well. 

To the point, Cuba does present a little bit of a challenge and 

there have been a number of studies done. The Caribbean Hotel & 

Tourism did do a study on the disruption that Cuba could cause. 

But one of the points that there is, is that the U.S. is the only 

country that has the embargo on Cuba and other countries have 

been traveling to Cuba without any interference forever, I guess, 

and so that market is safe. You have the Canadians, the Europeans. To Ambassador Bernal’s point the emerging Chinese and 

Asian market coming into the Caribbean, so I think it is both a 

challenge and an opportunity. But I think as long the Caribbean 

does work on its competitive issues and does remain able to compete with Cuba on cost and quality they should be okay. 

Mr. SIRES. Thank you. 

Mr. DUNCAN. Well, as you can see, on a day when sessions end 

and people are leaving town we have the committee members come 

even unexpected to the chairman, and that shows the importance 

that the Caribbean region is to our subcommittee, to Congress as 

a whole, and I think to the government. 

We are going to continue delving into these issues and figuring 

out ways that we can engage more, especially in light of Venezuela 

as we have talked about, and what may or may not happen with 

Petrocaribe. I think there is great opportunity. I talk about jobs, 

38

energy, and the founding fathers all the time. I think there is opportunity in jobs, opportunity in energy, and opportunity for hemispheric engagement for the country and especially in this region. 

So witnesses are reminded there may be other questions that are 

submitted and we ask you to respond to those. We will leave the 

record open for 10 days. And we want to thank you Eric, Sally, and 

Ambassador. Thanks for coming and I look forward to continuing 

the conversation. Yes, thank you. Yes, sir. 

Mr. BERNAL. It would be remiss of us if we didn’t place on record 

our appreciation to you for your leadership and chairing of the committee and for convening this session to give us an opportunity to 

share some views with you, and we place on record our appreciation. It will be remiss of us. 

Mr. DUNCAN. Well, let’s put the attention where it is directed. 

My ranking member wanted to focus on this issue and I am glad 

he did. We were welcome to, happy to accommodate him and I appreciate that. It kind of directed my focus toward the region and 

I am super glad that he did. 

So we will look forward to seeing you in September after this 

break and I hope everyone has a good break as well. And with that 

the committee will stand adjourned. 

[Whereupon, at 3:39 p.m., the subcommittee was adjourned.] 

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