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[Senate Hearing 111-783]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 111-783
 
INSERT TITLE HERELATIN AMERICA IN 2010: OPPORTUNITIES, CHALLENGES AND 
              THE FUTURE OF U.S. POLICY IN THE HEMISPHERE 

=======================================================================

                                HEARING

                               BEFORE THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                 INSERT DATE HERE deg.DECEMBER 1, 2010

                               __________

       Printed for the use of the Committee on Foreign Relations

                   Available via the World Wide Web:
                        http://www.fdsys.gpo.gov

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Washington, DC 20402-0001 

                COMMITTEE ON FOREIGN RELATIONS          

            JOHN F. KERRY, Massachusetts, Chairman          
CHRISTOPHER J. DODD, Connecticut     RICHARD G. LUGAR, Indiana
RUSSELL D. FEINGOLD, Wisconsin       BOB CORKER, Tennessee
BARBARA BOXER, California            JOHNNY ISAKSON, Georgia
ROBERT MENENDEZ, New Jersey          JAMES E. RISCH, Idaho
BENJAMIN L. CARDIN, Maryland         JIM DEMINT, South Carolina
ROBERT P. CASEY, JR., Pennsylvania   JOHN BARRASSO, Wyoming
JIM WEBB, Virginia                   ROGER F. WICKER, Mississippi
JEANNE SHAHEEN, New Hampshire        JAMES M. INHOFE, Oklahoma
KIRSTEN E. GILLIBRAND, New York
CHRISTOPHER A. COONS, Delaware
             Frank G. Lowenstein, Staff Director          
       Kenneth A. Myers, Jr., Republican Staff Director          

                             (ii)          

  

                            C O N T E N T S

                              ----------                              
                                                                   Page

Arnson, Dr. Cynthia, director, Latin American Program, Woodrow 
  Wilson International Center for Scholars, Washington, DC.......    14
    Prepared statement...........................................    17
Corker, Hon. Bob, U.S. Senator from Tennessee, statement.........     8
Daremblum, Hon. Jaime, director, Center for Latin American 
  Studies, senior fellow, Hudson Institute, Washington, DC.......    31
    Prepared statement...........................................    33
    Dodd, Hon. Christopher J., U.S. Senator from Connecticut, 
      opening statement..........................................     1
Lugar, Hon. Richard G., U.S. Senator from Indiana, opening 
  statement......................................................     6
Olson, Joy, executive director, Washington Office on Latin 
  America, Washington, DC........................................     9
    Prepared statement...........................................    11
Schneider, Mark, senior vice president/special advisor on Latin 
  America, International Crisis Group, Washington, DC............    21
    Prepared statement...........................................    25

                                 (iii)

  

LATIN AMERICA IN 2010: OPPORTUNITIES, CHALLENGES AND THE FUTURE OF U.S. 
                        POLICY IN THE HEMISPHERE

                              ----------                              

                      WEDNESDAY, DECEMBER 1, 2010

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 2:35 p.m., in 
room SD-419, Dirksen Office Building, Hon. Christopher J. Dodd, 
presiding.
    Present: Senators Dodd, Menendez, Lugar, Corker, and Risch.

        OPENING STATEMENT OF HON. CHRISTOPHER J. DODD, 
                 U.S. SENATOR FROM CONNECTICUT

    Senator Dodd. The hearing will come to order. Let me 
apologize to the witnesses and to my colleagues. I'm grateful 
to my friends and staff, as well as the witnesses. Some of you, 
once again, many of whom I've known for a long time, and I 
welcome you to the committee to have a discussion about Latin 
America in 2010, what we call ``Opportunities, Challenges and 
the Future of U.S. Policy in the Hemisphere.''
    Normally, first of all, John Kerry would be here, and I'm 
deeply grateful to John for conceding the gavel to me here to 
allow me to chair this hearing. In fact, I notice there are 
caucuses and conferences going on. I know there is a Democratic 
caucus going on, and so I anticipate some of my colleagues will 
get a chance to come over here when that caucus concludes, to 
share their own thoughts and views.
    My opening comments are a little bit longer than they 
normally would be since this will be my last hearing that I'll 
be participating in. Well, we may meet again; I don't know. But 
certainly chairing a hearing, on the Foreign Relations 
Committee. So I wanted to share a few more thoughts about a 
subject matter that I've obviously been deeply involved in and 
cared about from the day I arrived here, with a full head of 
black hair, 30 years ago. So with your indulgence, I'll take a 
couple of minutes and then turn to my great friend Dick Lugar 
for any thoughts he would have, and then we'll get to our 
wonderful witnesses to share your observations and thoughts as 
well as we kind of make an assessment of where we are here at 
the end of the first decade of the 21st century.
    So let me begin by thanking again John Kerry for allowing 
me to take the gavel. Today will mark my last hearing as a 
member of the Senate Foreign Relations Committee. Thirty years 
ago-in fact, when I arrived in the Senate in January 1981-I've 
often told this story, that Alan Dixon and I were the only two 
Democrats elected that year. I think there were about 16 
Republicans that came in in that Reagan landslide of 1980.
    Unlike others, when you arrive in the Senate and you go to 
the leadership and express your choices about committees and 
where you'd like to be, Alan Dixon and I were told the 
following: There are two seats on the Banking Committee, 
there's one seat on Agriculture, and one seat on Foreign 
Relations.
    Well, needless to say, the Senator from Illinois had an 
interest in agriculture. Not that I didn't, but he had 
certainly more of a legitimate case to make. The two seats on 
Banking, we each took one. And I ended up with a seat on 
Foreign Relations.
    Now, to put that in perspective for people, I've often told 
the story, Jacob Javits and John Fitzgerald Kennedy, both 
Members of this great body the Senate for years, waited 9 and 
11 years respectively to get a seat on the Foreign Relations 
Committee. There was a time not long before I arrived here when 
this was one of the most coveted committees and you waited a 
long time, sometimes into your second term, before a seat would 
become available to you.
    I say this with total politeness and respect. Today most of 
our members on this committee are in their first term on the 
Foreign Relations Committee, and good members, I might add. But 
just a difference in how the ground has shifted over the past 
number of years.
    For me, this has been a remarkable experience, to be a part 
of this committee over the past three decades. So it is with a 
note of sadness, but also with tremendously fond memories of 
having been a part of this committee and all the work that's 
gone on, and particularly because I've had the wonderful 
pleasure of serving with the gentleman here to my left, who has 
just been a remarkable leader, inspiration.
    I told someone the other day the only time I think in 
recent memory-someone correct me, the staff-that we ever 
actually had a foreign assistance bill that got out of this 
committee on the floor and we passed was when Dick Lugar 
chaired the committee, back a number of years ago. That and 
work on the Philippines and so many other issues.
    So throughout my service I've had the opportunity to work 
with a number of people, obviously; also chaired or been the 
ranking member on the Subcommittee on the Western Hemisphere. 
My friend Bob Corker has been a great partner in recent days on 
that committee as well. Both Republicans and Democrats have 
served here; the most significant challenges facing our country 
in the last more than a quarter of a century.
    There isn't the time to go into all of those details, but 
when I arrived Chuck Percy was the chairman of the committee, 
in January 1981. Then Jesse Helms was chairman, Claiborne Pell 
was chairman, and of course Dick Lugar, and Vice President 
Biden, as all of you recall, chaired this committee, along now 
with Senator Kerry. The committee has benefited from a truly 
illustrious group of Senators at the helm over the years, 
grappling with some of the most difficult questions of the day.
    Again, I'm delighted that Dick Lugar is here, because 
again-I know there's an expectation we say these things, but if 
I had to list my pantheon of the several hundred people I've 
served with, I don't know who I would include in the top five 
necessarily, but I tell you who definitely would be in the top 
five and the fellow on my left without a any question in my 
mind would be in that list.
    I believe that anybody that has talked to or watched the 
Senate for more than half a century would have to include the 
gentleman to my left as part of one of the most remarkable 
people that has ever served here. So I thank you, dear friend, 
for that.
    Let me also-Bob Corker has been through. We traveled 
together to Central America and he went to Mexico with me a few 
years ago at an interparliamentary meeting when he first 
arrived here, and has been a wonderful friend. I am confident 
over the years, if he'll stay engaged in these matters-I hope 
he will-he'll play a real contribution to this committee.
    Ms. Joy Olson, who's here with us-and I thank her-she's the 
executive director of the Washington Office on Latin America 
and has had decades of experience working to improve the human 
rights conditions in Latin America, raising issues that would 
otherwise have been ignored.
    Mark Schneider and I have been great friends for almost-I 
think that entire time of 30 years or more. We go back to the 
days of his time at the Peace Corps and USAID, and he's now 
with the International Crisis Group, where he serves as the 
senior vice president and special advisor on Latin America; has 
a deep knowledge of Haiti, by the way. I look forward to 
hearing his thoughts on that matter and others.
    Cynthia Arnson, Dr. Arnson, is the director of the Latin 
American Program at the Woodrow Wilson International Center for 
Scholars. Her academic work over the years on governance, human 
rights, conflict in Latin America, has been very significant, 
profound, and extremely important, and we thank you, doctor, 
for your work.
    Finally, I'm happy to welcome Ambassador Jaime Daremblum, 
who is a senior fellow and the director of the Center for Latin 
American Studies at the Hudson Institute, and again someone 
I've spent a lot of time with over the years, listening to his 
thoughts and views; served as the Ambassador of Costa Rica when 
my brother Tom also served as Ambassador. He was the Ambassador 
there from 1988-1998, excuse me-to 2004.
    In 1996-and I know my colleagues, some of them have heard 
me repeat this over and over again, but I can't say it often 
enough because they made such a profound effect on my life-I 
arrived in a very rural mountain village called Benito Moncion 
in the Dominican Republic as a volunteer with the Peace Corps, 
in 1966.
    Today, nearly half a century later, I'm chairing my last 
hearing as the chairman of the Senate Subcommittee on the 
Western Hemisphere, the Peace Corps, and Global Narcotic 
Affairs. In that time, Latin America has undergone remarkable 
change, much of it positive, I would add. We're now seeing the 
development of a new middle class, the consolidation of 
democracy, the propagation of effective fiscal and social 
policies, as well as the rise of some new global powers that 
are occurring in this hemisphere as well.
    Over the course of my service in the Senate, I've tried to 
play a role in shaping that policy toward our neighbors to the 
south and, although we've made progress, as I leave the Senate 
it's long past time for a fundamental shift, I think, in how we 
think and relate to this important region of the world, because 
Latin America is not our back yard; it is our neighborhood in a 
sense, and there's a very important distinction to make. When 
we focus exclusively on the challenges still faced by our 
neighbors and the related dangers we ourselves face, we run the 
risk of missing out on the opportunities their progress has 
created.
    The Latin American economy, long defined as emerging, has 
finally emerged. In the 5 years leading up to the 2008 global 
financial crisis, Latin American economies experienced growth 
rates of 5.5 percent while keeping inflation in single digits. 
When the crisis did hit, Latin America stood strong, weathering 
the crisis better than any other region in the world. While 
income inequality remains a significant issue, as it does in 
our own country, I might add as well, 40 million Americans, 
Latin Americans, were lifted out of poverty, 40 million, 
between the years of 2002 and 2008. It's not just the 
increasingly stable economies that is providing opportunities 
for historically poor Latin Americans. Governments are 
beginning to deliver the education, health care, and social 
services necessary for sustaining growth and progress. 
Additional cash transfers, such as Mexico's Oportunidadas 
program and Brazil's Bolsa Familia, have reduced poverty, 
increased school attendance, and provided hope for a generation 
of low-income families that otherwise have remained 
marginalized.
    Obviously, there's still much work to be done. I'm not 
trying to sound like a Pollyanna, but I think it's worthwhile 
to talk about progress. Too often all we talk about are the 
trouble spots and the difficulties. Drug trafficking and 
related violence on our Mexican border with our Mexican 
neighbors is compelling, to put it mildly. In many parts of 
Central America, citizens are forced to live and work behind 
barbed wire and blast walls because of the violence that is 
occurring.
    Venezuela and Cuba remain examples of democracy denied in 
my view. Again, I want to thank Dick Lugar for initiating an 
effort we joined together on a few weeks ago, I believe it was, 
expressing our concerns about the denial of democracy and 
democratic institutions in Venezuela, and I thank him for his 
leadership on that and was pleased to join him in that effort. 
I have serious questions about the integrity of the November 
28th elections as well, I might point out, in that area.
    Out of the spotlight, there are still developmental 
challenges. Productivity is growing too slowly. Savings are too 
low and much of the labor force remains in the informal 
economy. Women and indigenous populations still face 
discrimination and the poor still often live in excluded parts 
of the economy.
    But that old metaphor, Latin America is the United States 
back yard, is indicative I think of our habit of viewing the 
region solely in terms of problems to be solved, not 
opportunities to be celebrated. In turn, our neighbors too 
often see us as paternalistic, instead of recognizing our 
commonality. What a shame that is, because, despite these 
challenges, there is much opportunity to be found in Latin 
America.
    After all, we are the No. 2 nation in the world in Spanish 
speakers. Our enormous and influential Latin community has 
brought cultural and familiar ties to the forefront, along with 
our geographical proximity. Not only do we share a common 
colonial history; there's reason to believe that our paths 
forward may converge as well.
    But to harness these opportunities, each of us of course 
must play a role. Latin American and Caribbean nations have 
concerns about sovereignty and I appreciate those concerns. But 
the challenges we face respect no border, and we must be able 
to encourage our neighbors to strengthen their social programs, 
invest in their infrastructure, trust in democracy, and to work 
together in a collaborative fashion if we're going to 
effectively meet these challenges that are so compelling.
    The Obama administration's work to integrate Central 
American regional security initiative and the Caribbean Basin 
security initiative with the Merida program is a step, I 
believe, in the right direction, as is the administration's 
new, though long overdue, focus on vital institution-building 
and civil society programs in Mexico.
    But the militarization of our responses to the challenges 
we face in Mexico I think can also be a large mistake, and I 
remain deeply concerned that not enough effort, creativity, and 
attention is being focused on tackling the root causes of these 
problems that exist in Mexico and other parts of Central 
America.
    We must look beyond the elites with whom we traditionally 
engage and work with new emerging leaders, including the 
dynamic mayors, governors, and other local leaders who have 
emerged in a region where 75 percent of the population live in 
urban centers. This outreach must also include women, the 
indigenous populations that I've mentioned, poor and 
minorities, who have traditionally been excluded from the 
public square. I know this is a priority of Secretary Clinton 
and I applaud her for her leadership in this area.
    To strengthen our economic ties, I urge Congress to pass 
the Colombian and Panamanian Free Trade Agreements. I was sort 
of hoping that might happen in this lame duck session. They're 
due, they're ready. It would be an incredible message with the 
new government in Colombia under President Santos, and in 
Panama, which has been a great partner, has gone through 
several transitions peacefully and democracy, I think a warning 
of our support.
    In Venezuela there is a real cause for concern. We cannot 
bury our heads in the sand. We've got to address this challenge 
collectively in a smart and sophisticated way. Earlier this 
year, the Inter-American Commission on Human Rights released a 
report that raised serious concerns regarding the further 
degradation of human rights in Venezuela.
    The situation is unacceptable, not just to us, but to all 
in the region, in my view. But this is not a case of the United 
States versus Venezuela, but rather Venezuela versus democracy 
and those who embrace and cherish those principles.
    The same principle applies to Cuba. I returned from Cuba 
just a few weeks ago, stunned to see that the country is 
finally making some of the critical changes in its own society 
that many of us, including the Cuban people, have wanted for 
years and years. The Cuban Government recently announced that 1 
million Cubans have been let go from the government payrolls 
and instead will be allowed to run their own businesses.
    With the help of Cardinal Ortega and the Spanish 
Government, what played very important roles, political 
prisoners are also being released. So we welcome that.
    No, you don't have to approve the way Cuba is run, and I 
certainly don't. Cuba clearly has a long way to go, and it was 
quite obvious and apparent to me just walking the streets of 
Havana and visiting other communities out in the far west of 
that island nation that there is a deep sense of frustration 
that people on that island feel, after 40, almost 50, years of 
the rule under Fidel Castro.
    Nobody's arguing to the contrary, I might add. But the 
simple truth is that Cuba is changing, so I question-the 
question I have to ask is, why shouldn't we also be thinking 
about how we can help this change occur and move it further 
along. I count my extensive travel through Latin America as one 
of the great privileges of my life as a Senator, and the recent 
trip, as I said, to Cuba, and before that throughout the region 
last winter, to meet with heads of state and others to get a 
more current reading of the present situation as it exists in 
this hemisphere.
    So today I apologize for what is normally a little longer 
statement on the issues, but I wanted to at least share with my 
colleagues and the committee sort of my observations at the end 
of this 30-year career on this side of the dais, and I again 
look forward to hearing from the witnesses. Before doing that, 
I ask my colleagues if they have any thoughts.

          OPENING STATEMENT OF HON. RICHARD G. LUGAR, 
                   U.S. SENATOR FROM INDIANA

    Senator Lugar. Well, I thank Senator Chris Dodd, a truly 
trusted and thoughtful partner on this committee during three 
decades of our service together, for chairing this important 
hearing on Latin America.
    Given recent developments, today's hearing is especially 
timely. Our foreign policy in Latin America continues to 
struggle with perceptions that the United States has neglected 
the region in the past. These perceptions often have been 
inaccurate or incomplete, but there is little doubt that United 
States engagement with Latin America over a period of decades 
has been crisis-driven.
    If we are going to achieve stronger regional cohesion and 
prosperity, we must establish a clear sense of our interests 
and develop a more comprehensive means of engaging with our 
neighbors. This engagement must go beyond managing perceptions 
in the region. We need to underscore that the United States is 
dedicated to working with our Western Hemisphere partners on 
economic development and growth, strong democratic 
institutions, the rule of law, energy security, environmental 
protection, human rights, and many other objectives.
    An immediate step in this direction would be passage of the 
Colombia Free Trade Agreement, which would provide new markets 
and additional jobs for the United States and Colombia alike.
    Similarly, we need to conclude a United States-Brazil Tax 
Treaty, which would expand business opportunities in both 
countries and equalize the playing field for many American 
firms doing business in Brazil.
    Our collaboration with Mexico has helped to create an 
institutional framework that did not previously exist to fight 
organized crime and drug trafficking. This framework is 
essential if progress against the cartels is to be sustained 
over time. But much more coordination may be required to help 
Mexico degrade the capacity and influence of the cartels, which 
has become a near, existential national security objective for 
our neighbor.
    The situation in Venezuela requires more attention to 
building a regional consensus on opposing that government's 
challenges to international norms. The erosion of democracy in 
Venezuela is now accompanied by rising crime and economic 
stagnation. Senior Venezuelan military officials have been 
implicated in narcotics activities and the government 
increasingly makes common cause with Iran, Syria, Burma, and 
North Korea regarding international security and weapons of 
mass destruction issues.
    Our hearing also coincides with elections in Haiti. I and 
others urged President Preval to enact much-needed reforms to 
ensure the credibility of these elections. He refused to do 
that. As a result, the elections have been fraught with 
numerous reports of irregularities and fraud.
    Political uncertainty now threatens to exacerbate the human 
suffering in Haiti, where more than 200,000 people died as a 
result of the January earthquake and 1.3 million people 
continue to live in tents. A cholera epidemic has killed more 
than 1,700 people in the past month.
    The United States has an interest in helping to address the 
ongoing humanitarian problems in Haiti, and we will continue to 
do that through various means. But our willingness to direct 
funds through the Haitian Government depends on the fair, 
transparent, and legal resolution of the current political 
crisis.
    Today's hearing is an opportunity to discuss our relations 
with Latin America, but it's also Senator Dodd's last 
appearance as chairman of the Subcommittee on Western 
Hemisphere, Peace Corps, and Global Narcotics Affairs. He has 
served with distinction as chairman or ranking member of this 
key subcommittee for more than 20 years. Even when others have 
lost focus, he has been a consistent and passionate advocate 
for strengthening United States ties with Latin American 
nations.
    I have appreciated greatly the opportunity to work with my 
good friend over many years on issues pertaining to Latin 
America and broader national security questions. Recently, 
these collaborations have included a bipartisan resolution 
expressing concern regarding transgressions against freedom of 
expression in Venezuela and legislation urging multilateral 
banks and development institutions to cancel Haiti's debts. 
Although I know Senator Dodd will continue to play an important 
role in Latin American affairs from some other vantage point, 
his departure from the Senate will be felt deeply by all people 
who are working to expand mutual respect, security, and 
prosperity in the hemisphere, and I thank the Senator.
    Senator Dodd. Thank you, Dick, very much. Thank you, my 
good friend. That's very gracious of you in your comments.
    I turn to my friend from Tennessee.

                 STATEMENT OF HON. BOB CORKER, 
                  U.S. SENATOR FROM TENNESSEE

    Senator Corker. I don't think I've ever given any 
introductory comments in the Foreign Relations Committee, but 
I'll do it this time. I first of all want to thank our 
witnesses for coming. I know some very familiar faces here, 
offering very credible testimony.
    But I'm really here because this is the last hearing that 
Chairman Dodd will participate in. The Foreign Relations 
Committee is an odd committee, especially from the Republican 
side, as Senator Lugar knows, in that it's a committee that in 
order to stay on it you have to bypass other very desirous and 
important committees. For that reason, we haven't had the 
tenure on the Republican side that you might have on your side 
of the aisle and certainly that we have on other committees.
    You know, each of us has to figure out a way of making a 
mark in the Senate. There are 100 Senators and each of us sort 
of choose different avenues as to how to do that. Senator Lugar 
with arms negotiations certainly has been a leader for our 
country and certainly here in the Senate.
    But I want to say to Chairman Dodd, I had the privilege of 
traveling with him to Latin America and to Mexico and 
throughout Central America, and I have to tell you that the 
thing that was so impactful was seeing the long, long-term 
personal relationships that existed between you and the leaders 
of these countries; the fact that when we entered these 
countries it wasn't just the leaders that you knew and had 
personal relationships; it was people throughout the country 
that you continue to talk to on cell phone, back and forth to 
the airport.
    I think that that's something that we here in the Senate 
don't do enough of. I think it's an era that is passing in some 
ways and certainly should be refocused upon, if you will.
    But I want to thank you for your commitment, especially to 
this part of the world, to the way that you've shown the rest 
of us who are coming along the real way of engaging in foreign 
relations. That is actually having those personal relationships 
that both of you have.
    So I want to thank you for that and, as I said earlier 
today, thank you for your general nature, your aspirational 
nature, in causing all of us to want to be better Senators.
    Senator Dodd. Well, thank you very, very much. I appreciate 
that.
    Senator, any comments
    Senator Risch. I just want to associate myself with those 
remarks.
    Senator Dodd. Take as much time as you like. [Laughter.]
    Senator Risch. Thank you.
    Senator Dodd. Thank you, my friend, as well. I thank my 
colleagues, and we'll hear from our witnesses. Again, I'm very 
honored you're all here, and to be a part of this discussion. 
As I said, almost everyone at this table, we've been an ongoing 
discussion for many years about this area. So why don't I just 
begin in the order we introduced you.
    Joy, we'll begin with you if that's OK and go down. Is that 
OK with you? Good.

statement of joy olson, executive director, washington office on latin 
                        america, washington, dc

    Ms. Olson. Well, Senator Dodd and other members of the 
committee, thank you for inviting me to testify today on the 
future of United States-Latin American relations.
    Senator Dodd. it's an honor to testify at your final 
hearing. Among the many accomplishments in your distinguished 
career, you will be remembered for your courageous support for 
democracy and peace processes in Central America, and for the 
beginnings of change in United States-Cuba policy. You've drawn 
on your own deep knowledge and commitment to Latin America to 
challenge the Congress to adopt policies that would form the 
basis of a more cooperative relationship with the region. It's 
been a privilege to work with you. You leave the Senate having 
made concrete improvements in United States-Latin American 
relations.
    I would also like to recognize the staff that you've had 
over the years. I've worked many years with Janice O'Connell 
and now with Fulton Armstrong, and I remember Bob Dockery. 
You've had great staff.
    Senator Dodd. And Josh Blumenthal, who is here today.
    Ms. Olson. And Josh as well. I'm sorry.
    I will take this opportunity to reflect on some of the 
issues you've worked on over the years and how change will 
produce both challenge and opportunity in the years ahead. 
Change in the region is taking place at every level. This is 
not the Latin America of the 1970s. Parts of Latin America, for 
example, are the most violent in the world, but the causes of 
violence are quite different. Violence today is generally not 
created by guerrilla movements or state-sponsored human rights 
violators, but by street criminals, youth gangs, or organized 
crime.
    The challenge today is to make police and justice systems 
function in a rights-respecting fashion. These systems must 
work to hold accountable both organized crime and human rights 
abusers. Governments must have the political will and ability 
to arrest and prosecute criminals while not committing human 
rights violations of their own, and the will to implement tax 
structures while supporting a functioning justice system.
    Poverty alleviation is another example of change. 
Innovative conditional cash transfer programs have made 
progress in reducing poverty. There is evidence that children 
stay in school longer and are healthier. The question is will 
these programs be sustainable and lead to economic development, 
or will kids stay in school longer and then enter the work 
force to find little opportunity in the formal sector. These 
are some of the challenges today.
    Notably, most of Latin America has weathered the economic 
downturn much better than the United States. The economies that 
are less dependent on the United States have been the least 
affected. While of course there are many contributing factors 
to this, what has been demonstrated is that the region's 
stability, prosperity, and, in many ways, its future, are not 
dependent on the United States.
    While Latin America is facing long-term problems in new 
contexts, it's also developing new political organizations, 
like UNASUR, which do not include the United States. The 
challenge for the United States is to be relevant to Latin 
America.
    While the problem of drugs is old, the good news is that 
there is a vibrant drug policy debate happening in Latin 
America. Information is being shared between countries about 
drug control strategies that have reduced the harm caused by 
drugs, and drug policies are beginning to change. 
Unfortunately, in the region the United States is seen as the 
enemy of an open drug policy dialogue. There is real 
opportunity for greater collaboration and cooperation in Latin 
America on drug policy.
    While changes in the drug certification process that you 
shepherded through the Congress, Senator Dodd, were an 
important step forward, more affirmative actions need to be 
taken. One step the Senate could take during the lame duck 
session would be passing the bill to establish a Western 
Hemisphere Drug Policy Commission, which has already cleared 
the House.
    Unfortunately, prevailing debates in the U.S. Congress 
about Latin America are often polarized and seem somewhat stuck 
in the past. The polarization we see in Congress and in 
politics here today has a damaging effect on foreign policy. 
Its spillover distorts our understanding, diminishes our 
credibility, and complicates our relationship with the region. 
The debate in Congress too often reinforces an ``us against 
them'' mentality.
    The immigration debate is one example. We build higher and 
longer walls to keep ``them'' out, and the tone and the visual 
here is enormously offensive to Latin Americans. Missing from 
the U.S. policy debate on immigration is an analysis of why 
people leave their homes. We need to start thinking 
``intermestically'' about domestic immigration and 
international economic development policies at the same time, 
because thinking intermestically we will make better policies, 
and not thinking intermestically can create downright dangerous 
policies. For example, dramatically increased border control at 
the U.S. southern border has inadvertently contributed to the 
consolidation of organized crime, as human and drug trafficking 
routes have merged.
    Overcoming polarization will be the challenge for this next 
Congress. I had the privilege of testifying before the Western 
Hemisphere Subcommittee of House Foreign Affairs after the coup 
in Honduras, and the polarized nature of the debate was like a 
flashback to the Central America years of the cold war. 
Lingering cold war frameworks that see the region in black and 
white terms are likely to get substantial air time in the next 
Congress, and this cold war conceptualization can distort our 
relationship with Latin America by placing too much emphasis on 
extremes, instead of marginalizing them, and inhibiting our 
ability to work together with the other 90 percent of the 
region on common problems.
    Finally-and I hate to say this-but the United States has 
lost its credibility on human rights in Latin America because 
we haven't practiced what we've preached. The United States is 
seen as hypocritical. Our government uses human rights to beat 
up its adversaries and soft-pedals when it comes to its 
friends. The region thinks we consider ourselves above the law. 
We haven't ratified the Inter-American Convention on Human 
Rights. We have the posse comitatus law here in the United 
States that divides policing and military functions, but with 
Latin America we routinely promote the opposite. And let's not 
forget, Guantanamo is in this hemisphere and, while many U.S. 
citizens have forgotten that we're imprisoning people for years 
without trial, Latin America certainly has not.
    This is a moment of tremendous opportunity in United 
States-Latin American relations. We need not lead Latin 
America. We need to convince Latin America that it's worth 
partnering with us, and that the United States wants to be a 
partner in the solution of regional problems. To seize these 
opportunities, we must change. We must think intermestically 
and develop policies that demonstrate it. We must be consistent 
on human rights at home and in foreign policy, and we must 
demonstrate that Latin America matters to our future, even if 
it means spending some money, using up some political capital, 
and confronting hard-liners who want to relive cold war 
conflicts of the past.
    Senator Dodd. you were instrumental in fighting for peace, 
human rights, and democratic governance in the Americas, and it 
is my hope that others in the Congress, in the Senate in 
particular, will rise to the occasion upon your departure and 
help focus the U.S. attention on this new agenda. Thank you.
    [The prepared statement of Ms. Olson follows:]

Prepared Statement of Joy Olson, Executive Director, Washington Office 
                    on Latin America, Washington, DC

    Senator Dodd and other members of the committee, thank you for 
inviting me to testify today on the future of United States/Latin 
American relations. Senator Dodd, it is an honor to testify at your 
final hearing. Among the many accomplishments in your distinguished 
career in the Senate, you will be remembered for your courageous 
support of democracy and peace processes in Central America and for the 
beginnings of change in United States/Cuba policy. You have drawn on 
your own deep knowledge and commitment to Latin America to challenge 
the U.S. Congress to adopt policies that would form the basis of a more 
cooperative relationship with the region. It has been a privilege to 
work with you. You leave the Senate having made concrete improvements 
in United States/Latin American relations.
    I will take this opportunity to reflect on some of the issues you 
have worked on over the years and how changes taking place today will 
produce both challenge and opportunity in the years ahead.
                           navigating change
    Change in the region-new political dynamics, new economic patterns-
is taking place at every level. This is not the Latin America of 1970. 
The issues confronting the region are changing, and regional leaders-
governmental, civil society, and business-at many levels are working on 
solutions.
    Parts of Latin America are the most violent in the world, but the 
causes of violence are different now. The violence that still afflicts 
too many in the region is generally not created by guerilla movements 
or state sponsored human rights violators, but by street criminals, 
youth gangs and/or organized crime. Organized crime groups, which 
include contraband smugglers, extortionists, and robbery rings along 
with drug traffickers, are not only engaging in violence, but 
corrupting government officials and undermining democratic 
institutions. Cities like Ciudad Juarez, San Salvador, Medellin, 
Caracas, and Rio de Janiero are all trying to figure out how to cope 
with these powerful groups that, in extremes, can rival or replace 
state structures. Too much of this violence is rooted in the 
trafficking of illicit drugs, destined for the U.S. market-an issue 
that must be addressed anew in the policy arena.
    In Latin America, the challenge today is to make police and justice 
systems function in a rights respecting fashion. These systems must 
work to hold accountable both organized crime and human rights abusers. 
There has to be the political will and the ability for governments to 
arrest and prosecute criminals while not committing human rights 
violations. And, the will to implement tax structures to support a 
functioning justice system
    Poverty alleviation is another example of change. Innovative 
targeted cash transfer programs (CCTs) have made progress in reducing 
absolute poverty. This model- new to Latin America in the last decade-
makes much-needed financial resources available to poor households, but 
requires certain actions from the cash recipients, such as keeping 
children in school and having health checkups. Twenty-six countries in 
Latin America have now implemented CCTs. There is evidence of children 
staying in school longer and being healthier. The question now is, will 
these programs be sustainable and lead to economic development? Or, 
will kids stay in school longer and then enter the workforce to find 
little opportunity in the formal sector?
    If Latin America is facing long-term problems in new contexts, it 
is also developing new approaches. There are exciting moves to develop 
institutions that will facilitate regional solutions to regional 
problems. One can critique UNASUR or the Mexican-sponsored Summit of 
Latin America and the Caribbean (CALC), but it is clear that Latin 
America, or a large part of it, is seeking to manage regional 
conflicts, development and trade on its own. The United States needs to 
recognize this reality.
    Notably, most of Latin America has weathered the ``economic 
downturn'' much better than the United States. And economies that are 
less dependent on the United States have been the least affected. While 
of course there are many factors contributing to this, what has been 
demonstrated is that the region's stability, prosperity, and in many 
ways, its future need not depend upon the United States.
    Of course there are exceptions to everything I've said, but the 
point remains the same. The challenges and opportunities Latin America 
faces have taken new shapes under new circumstances. The challenge for 
the United States is to be relevant to Latin America.
    And yet, I'm sorry to say this, but many of the prevailing 
attitudes and debates in the U.S. Congress about Latin America policy 
tend to be polarized and seem stuck in the past.
     polarization, collaboration and the need for ``intermestic'' 
                              policymaking
    President Obama, in addressing the last Summit of the Americas, 
pledged that, ``. . . the United States will be there as a friend and a 
partner, because our futures are inextricably bound to the future of 
the people of the entire hemisphere. And we are committed to shaping 
that future through engagement that is strong and sustained, that is 
meaningful, that is successful, and that is based on mutual respect and 
equality.''
    In foreign policy circles, we all talk a good game about 
``partnership'' and ``collaboration'' with our neighbors to the south, 
but the United States hasn't really figured out how to play by the new 
rules. And, many policymakers haven't figured out that, for better or 
for worse, the United States doesn't write those rules anymore. The 
United States has to change how it conceives of its role with the 
region and incorporate that into how it makes policy. It means thinking 
more ``intermestically''- attempting to conceive of domestic and 
international U.S. policy at the same time. It means working with our 
neighbors to develop common solutions to common problems.
    The polarization we see too often in Congress today has a damaging 
effect on foreign policy. This polarization distorts our understanding, 
diminishes our credibility, and complicates our relationship with the 
region. The debate in Congress too often reinforces the ``us'' versus 
``them'' mentality.
    The immigration debate is a good example. In the United States, 
immigration is currently at the forefront of polarizing issues, and it 
spills over into our relationship with Latin America. We build bigger 
and longer walls to keep ``them'' out. The tone and the visual here is 
enormously offensive to Latin Americans.
    Missing from the U.S. policy debate on immigration is an analysis 
of why people leave their homes to make the treacherous journey north. 
Migrants are certainly central to economic growth in the United States, 
and sending countries certainly depend on the remittances sent by 
migrants. But people leave their homelands and face terrible hardships, 
even death-as we saw recently with the massacre of 72 Central American 
migrants in Mexico-because they are desperate, facing a lack of 
economic opportunity that enables them to sustain themselves and their 
families at home.
    We need to start thinking about migration and development as one. 
And realize that immigration isn't only about domestic U.S. policies. 
Economic development that will create more and better paying jobs in 
Latin America is in our interest. If we think more intermestically, we 
will make better policies for the United States.
    Not thinking ``intermestically'' can create dangerous policies. 
Dramatically increased border control at the U.S. southern border is 
one example of a policy with serious unintended consequences. Those who 
follow migration patterns in Mexico will tell you that as the United 
States made it harder to cross our southern border, the way people 
crossed the border changed. Now migrants need more sophisticated 
knowledge of the weak links in the system. It is organized criminal 
networks who have that information. And so the migration networks that 
were once ``mom and pop'' operations have given way to drug trafficking 
networks that control routes into the United States. Let me be clear. 
The migrants are not criminals. They are the victims of organized 
crime. \1\ And with those criminal networks come a much greater abuse 
of migrants and more violence on the border. Although we once thought 
it would keep us safer, more border security has lead to the 
consolidation of organized crime on our border.
---------------------------------------------------------------------------
    \1\ In December WOLA, in conjunction with the Mexico-based Miguel 
Agustin Pro Juarez Human Rights Center, will publish a paper on the 
kidnapping of migrants in Mexico.
---------------------------------------------------------------------------
    So many of the issues we face today cannot be addressed by us 
alone, but require new ways of thinking-ones that embrace understanding 
transnational issues and develops national policies that are mutually 
reinforcing.
    Drug policy is one of the easiest issues to understand and one of 
the hardest to affect. Drugs are a part of our societies and are not 
going away. We can't win a war against them. Drugs and our policies to 
control them create tremendous damage at many levels-consumption, 
crime, disease, expense, and violence-with an often devastating impact 
on families. The United States has spent years focusing its 
international drug policy on source country eradication and regional 
interdiction. When ``successful,'' these strategies have moved 
production and transport to new areas. Every time it moves, some new 
region of Latin America has been devastated by the violence and 
corruption that follow the drug trade.
    There is a vibrant drug policy debate happening in Latin America. 
WOLA has been facilitating informal intergovernmental drug policy 
dialogues for the past 3 years, and they are exciting. Information is 
being shared between countries about drug control strategies that have 
reduced the harm caused by drugs. Drug policies are being changed. The 
consequences of drugs and drug policy are as controversial in Latin 
America as they are here in the United States, and in some countries 
like Mexico, even more so. But there is an underlying understanding 
that the status quo is not good enough. Next week WOLA is releasing an 
eight-country study looking at the impact of drug laws on incarceration 
and prison overcrowding in Latin America. The study has revealed that 
prisons are bursting at the seams with low-level/ nonviolent drug 
offenders who are easily replaced in the drug trade. The human and 
financial cost of the drug war is too high, and basically something's 
got to give.
    In the region, the United States is seen as the enemy of an open 
discussion of drug policy. For too long the United States has judged 
and conditioned other countries on their adherence to prescribed 
approaches to drug policy.
    There is a real opportunity for greater collaboration and 
cooperation with Latin America on drug policy. While changes in the 
drug certification process that you shepherded through Congress, 
Senator Dodd, were an important step forward, more affirmative actions 
need to be taken to change this dynamic. One small step the Senate 
could take during the lame duck session would be passing the bill to 
establish a Western Hemisphere drug policy commission, which has 
already cleared the House.
    Overcoming polarization will be the challenge for the next Congress 
and the rest of this administration.
    I had the privilege of testifying before the Western Hemisphere 
Subcommittee of House Foreign Affairs after the coup in Honduras. This 
hearing was a disturbing experience, not just because the region had 
not seen a military coup in years, but because the subcommittee's 
analysis of the situation broke down along party lines. All of the 
Democrats described the events in Honduras as a coup, and none of the 
Republicans were willing to make that determination. The debate was 
like a flashback to the Central America years of the cold war.
    In Latin America, calling what happened in Honduras a coup was a 
given. All the region's governments condemned it in those terms. In 
some ways, the congressional debate here complicated efforts at 
collaboration and engagement with Latin America on Honduras. Lingering 
cold war frameworks that see the region in black and white terms are 
likely to get substantial air time in the next Congress, including 
spending too much time on Venezuela and Cuba.
    This cold war conceptualization can distort our relationship with 
Latin America by placing too much emphasis on extremes-instead of 
marginalizing the extremes-and inhibiting our ability to work together 
with the other 90 percent of the region on common problems.
    To work together across party lines and with governments of 
different political inclinations in the hemisphere, we should think in 
terms of good government. Good government should not be a partisan 
issue.
    Finally, and I hate to say it, but the United States has lost its 
credibility on human rights in Latin America. We have not practiced 
what we preached. If you try to talk about human rights in Latin 
America, which I do and I'm sure many of you do as well, you are 
constantly reminded of this.
    The United States is seen as hypocritical. Our government uses 
human rights to beat up its adversaries (Cuba and Venezuela) and soft-
pedal when it comes to its friends (Colombia, Honduras, and Mexico). 
Cuba and Venezuela deserve criticism, but so do Colombia, Honduras, and 
Mexico. We need to confront the fact that we are not taken seriously on 
human rights matters. The State Department writes in-depth annual human 
rights reports and then both Republican and Democratic administrations 
turn around and flout the human rights conditions that Congress has 
imposed on aid to Colombia and Mexico.
    The region views us as considering ourselves above the law. We 
won't submit to the Inter-American Court on Human Rights. We have the 
posse comitatus law here that divides police and military functions, 
but in our engagement with Latin America we routinely promote the 
opposite, encouraging militaries to take on policing functions. \2\ We 
even train Latin American police at U.S. military schools. And let's 
not forget that Guantanamo is in this hemisphere. While many U.S. 
citizens may have forgotten that we are imprisoning people for years 
without trial, Latin America has certainly not.
---------------------------------------------------------------------------
    \2\ See ``Preach What you Practice: The Separation of Military and 
Police Roles in the Americas,'' Washington Office on Latin America, 
November, 2010.
---------------------------------------------------------------------------
                               conclusion
    This is a moment of tremendous opportunity in United States/Latin 
American relations. Prosperity in the region is increasing, and we are 
one of its main trading partners. It is developing its own policies and 
leadership and focusing on regional solutions to regional problems. We 
do not need to ``lead'' Latin America. We need to convince Latin 
America that it is worth partnering with us and that the UnitedStates 
wants to be a partner in the solution of regional problems. Not just 
their problems, but our problems-drugs, poverty, human rights, the 
environment, migration, and development.
    To seize these opportunities, we must change. We must think 
intermestically and develop policies that demonstrate it. We must be 
consistent on human rights-intermestically-at home and in foreign 
policy. We must demonstrate that Latin America matters to our future-
even if it means spending some money, using up some political capital, 
and confronting hard-liners who want to be reliving conflicts of the 
past.
    Senator Dodd. you were instrumental in fighting for peace, human 
rights, and democratic governance in Central America during the 1980s 
and 1990s. It is my hope that others in the U.S. Senate will rise to 
the occasion upon your departure and help focus U.S. attention on this 
new agenda.
    Senator Dodd. Thank you very much, Joy. I really appreciate 
those nice comments as well.
    Dr. Arnson, thank you. Once again, nice to see you, and I 
appreciate your being here.

   STATEMENT OF DR. CYNTHIA ARNSON, DIRECTOR, LATIN AMERICAN 
  PROGRAM, WOODROW WILSON INTERNATIONAL CENTER FOR SCHOLARS, 
                         WASHINGTON, DC

    Dr. Arnson. Thank you very much.
    I'd like to associate myself with Joy's remarks in 
expressing how much of an honor it is to be here at this 
hearing, your last as chair of the subcommittee. Mr. Dodd, you 
have been a leading voice on Latin American issues for decades. 
You have rightfully earned the respect and admiration of people 
in the United States and throughout the hemisphere for your 
leadership.
    I'm also particularly honored to have been a constituent of 
yours back in the 1970s, when I lived in Middletown, and I'm 
probably the only witness that has ever come before you who has 
your picture on the cover of my first book. It's at a peasant 
cooperative in El Salvador, along with your colleagues Jim 
Leach from Iowa and the late Steven Solarz from New York.
    Over the last decade, it's become more and more difficult 
to conceive of, let alone implement, a one-size-fits-all policy 
for Latin America and the Caribbean. I think for the most part 
that the cold war ideological divisions have receded. Leaders 
in the region of the center-right and the center-left have 
converged around a commitment to democratic practices, to 
macroeconomic stability, as well as the belief that the state 
has an important role in the provision of social welfare.
    At the same time, the differences between and among 
countries of the region are growing. These differences have to 
deal with levels of economic development, wealth, human 
capital, social cohesion, the strength of democratic 
institutions, adherence to the principles of representative 
democracy, and the density of relations with the United States.
    Thus, while it's appealing to speak of U.S. policy in the 
Western Hemisphere, the truth is that diplomacy must take into 
account the tremendous variety among and between countries and 
subregions. The Obama administration's recognition of this 
diversity and the more nuanced diplomacy that is required to 
meet it represent, in my view, an advance over previous 
decades.
    As South American democracies have matured in the decade 
since the transition from authoritarian rule, leaders have 
sought to diversify their partners in the foreign policy and 
economic arenas and to give priority to relationships beyond 
the United States. The high levels of economic growth over the 
last 10 years coupled, as you have mentioned, with policies 
that have greatly reduced poverty and to some extent 
inequality, have created the conditions for the exercise of 
``soft power'' on the part of many countries in the hemisphere.
    Some of this projection, particularly that exercised by a 
country such as Venezuela, is aimed explicitly at limiting or 
undermining
    U.S. influence in the hemisphere. Other manifestations of 
independence and assertiveness, however, reflect the increased 
political as well as economic capacity of stable democracies. 
Virtually all countries of the region, regardless of their 
political orientation, have sought to expand their trading 
partners and political alliances. In this environment, United 
States and Latin American interests will inevitably clash at 
times, as they did mightily in the last few months over 
Brazilian President Lula's attempt to broker an agreement with 
Iran over that country's nuclear ambitions, in opposition not 
only to this country but also to the major powers of the U.N. 
Security Council.
    Aggressive efforts by actors such as China, Russia, and 
Iran to expand their political, economic, and military 
relationships in the hemisphere are a reality and pose many 
challenges for U.S. interests. But our power to control, let 
alone prevent, the diversification of Latin American foreign 
relations is limited and in some cases, nonexistent.
    I believe that U.S. influence, which is different from 
control, will be maximized to the extent that the United States 
recognizes, accepts, and works to situate itself within the 
changed circumstances in the hemisphere. This is the normal 
functioning of diplomacy among allies, whose interests will 
converge some, but not all of the time.
    Trade partners and trade patterns are rapidly changing 
throughout the region. The United States remains by far Latin 
America's largest trading partner, with trade totaling over 
$500 billion last year. Asia is Latin America's second largest 
partner, primarily but not exclusively represented by trade 
with China. Asia has overtaken the European Union as Latin 
America's second-largest trading partner. China has surpassed 
the United States as the top export destination for Brazil, 
Chile, and Peru. It's the second-largest export destination for 
Argentina, Costa Rica, and Cuba.
    When it comes to foreign direct investment in Latin 
America, the United States share continues to dwarf that of 
other countries or regions. However, the ability of the United 
States to take advantage of the growth and dynamism in South 
America has not been fully realized. The U.S. trade agenda is 
stalled, largely because trade agreements have become proxies 
for an unspoken national debate that has taken place only 
indirectly, over who wins and who loses in the process of 
globalization.
    I believe that open trade contributes overall to the growth 
of the
    U.S. economy, but it does so unevenly and to the direct 
detriment of certain regions and economic sectors. A time of 
jobless recovery and burgeoning inequality in this country sets 
the stage for rising protectionism. This will remain difficult 
to counter absent a broader social pact in our own country that 
invests in productivity and spreads the benefits as well as the 
costs of free trade more equitably. Ultimately, United States 
policy toward Latin America will be a product of domestic 
United States priorities as well as partisan considerations as 
they interact with the changed realities in the region. There 
is little evidence to suggest, and indeed much to refute, the 
notion that the United States is irrelevant to Latin America or 
no longer considers the hemisphere a priority in diplomatic or 
economic terms.
    At the same time, quite frankly, many Latin American 
countries are unimpressed with the United States own record on 
issues that we have declared to be our priority, including the 
reduction of poverty and inequality, addressing climate change, 
and developing alternative energy. Latin American countries are 
rightly proud of their own innovation, their example, their 
progress; and our own inability, as Joy has mentioned, to 
practice at times what we preach undermines the credibility 
that is essential to foreign policy success.
    I agree that the growing polarization of our own domestic 
politics is an added impediment to productive engagement with 
the hemisphere. There are sharp divisions in the policy 
community and indeed at this witness table over how to 
characterize the nature of Iran's relationship with such 
countries as Venezuela, Bolivia, and Ecuador, and the degree of 
threat that that relationship represents.
    Similarly, there is no consensus over the proper ways to 
respond to the sharp reversals in the democratic process in 
such countries as Venezuela and Nicaragua, let alone agreement 
over how to engage with the process of change taking place in 
Cuba.
    I believe it's time for us to rethink what it is that we 
want from the hemisphere. We should avoid the historic impulses 
toward paternalism, on the one hand, as well as the tendency, 
on the other hand, to pay attention only in the face of 
security threats, real or imagined. The U.S. economy, it's no 
secret to all of you, is in deep crisis, and will remain so for 
the foreseeable future. Our country is still in the midst of 
two major wars. We should not pretend to ourselves, let alone 
to our allies in the region, that Latin America will be a 
foreign policy priority. Claims to the contrary will only ring 
hollow.
    That said, there is all the room in the world for 
recognizing that the political and economic advances in the 
region over the last decade constitute a strategic asset for 
the United States. Forging partnerships among equals means by 
definition that we cannot get our own way all of the time or 
even most of the time. I believe, however, that there is enough 
common ground for the United States and the countries of the 
Americas to recognize each other as paths to the realization of 
their own interests and goals.
    Thank you.
    [The prepared statement of Dr. Arnson follows:]

 Prepared Statement of Dr. Cynthia J. Arnson, Director, Latin American 
 Program, Woodrow Wilson International Center for Scholars, Washngton, 
                                   DC

    Mr. Chairman and members of the subcommittee, I am honored to offer 
this testimony today, and especially honored to be included in the last 
session of this subcommittee chaired by Senator Christopher Dodd. 
Senator Dodd has been a leading voice on Latin American issues within 
the Congress for many decades. His tireless efforts on behalf of 
democracy, human rights, and social justice have rightly earned him the 
respect and admiration of public officials and private citizens 
throughout the United States and the hemisphere.
    My remarks will briefly address some major of the major political 
and economic trends in Latin America and therefore the principal 
challenges for U.S. policy.
                        disaggregate the region
    Over the last decade, it has become more and more difficult to 
conceive of, let alone implement, a one-size-fits-all U.S. policy for 
Latin America and the Caribbean. It is true that the sharp ideological 
divisions of the cold war have receded. And leaders of the center left 
and center right have converged around a commitment to democratic 
practices, macroeconomic stability, as well as the belief that state 
has an important role to play in advancing social welfare.
    At the same time, differences between and among countries and 
subregions are growing. These differences have to do with levels of 
economic development, wealth, human capital, and social cohesion; the 
strength of democratic institutions and adherence to the principles of 
representative democracy; and the density of relations with the United 
States.
    For example, Brazil is now the world's eighth largest economy, and 
alone accounts for 40 percent of the entire region's GDP. Brazil's 
state-controlled oil company, Petrobras, is the world's fourth largest 
corporation (trailing only Exxon Mobil, Apple, and PetroChina). 
According to the World Bank, South America as a whole grew an average 
rate of 5-6 percent between 2004 and 2008, double the rate of U.S. 
growth in this same period; and this gap has only widened since the 
onset of the 2008 recession. Commodity and agriculturally rich 
countries such as Chile, Peru, and Argentina have grown robustly during 
a period of global recession, largely due to Chinese demand.
    By contrast, the U.S. financial crisis of September 2008 has 
brought havoc to those countries most deeply integrated with the United 
States: Mexico, Central America, and the Caribbean. Mexico has begun to 
recover, but many smaller countries remain mired in recession. Mexico, 
Central America, and the Caribbean are densely linked to the United 
States due to patterns of trade, investment, remittances, and 
migration. Their proximity to drug consumption and other illegal 
markets in the United States has drawn us together in more perverse and 
destructive terms as well.
    In the Andean region, it is hard to imagine countries more 
different in their political and economic orientations than Colombia 
and Venezuela, despite the recent warming of relations between these 
two neighbors. Colombia's economy is booming and foreign investment is 
at record levels while oil-rich Venezuela is the only country in South 
America to be mired in recession. The so-called ALBA nations of 
Venezuela, Bolivia, Ecuador, and Nicaragua share similar patterns of 
hyper-presidentialism, autocracy, and authoritarianism. But there are 
also important differences among them, including the constituencies 
that constitute their core of support, and the strength, coherence, and 
broad-based appeal of their political opposition.
    Thus, while it is appealing to speak of U.S policy in the Western 
Hemisphere, the truth is that diplomacy must take into account the 
variety among and between countries and subregions. The Obama 
administration's recognition of this diversity, and the more nuanced 
diplomacy required to meet it, represent an advance over previous 
decades.
              diminished control or diminished influence?
    As South American democracies have matured and deepened in the 
decades since the transition from authoritarian rule, leaders have 
sought to diversify foreign policy partners and to give priority to 
relationships beyond the United States. High levels of economic growth 
over the last 10 years, coupled with social policies that have reduced 
poverty and expanded social cohesion, have created the conditions for 
the projection and exercise of ``soft power'' by many countries of the 
hemisphere. Some of this projection, particularly that exercised by 
Venezuela-is aimed explicitly at limiting or undermining U.S. influence 
in the region. Other manifestations of assertiveness and independence, 
however, reflect the increased economic and political capacity of 
stable democracies. Virtually all countries of the region, regardless 
of political orientation, have sought to expand their trading partners 
and political alliances.
    In this environment, U.S. and Latin American interests will 
inevitably clash at times, as they did mightily when Brazil's President 
Lula attempted earlier this year to broker an agreement with Iran over 
that country's nuclear ambitions, in opposition to the United States as 
well as the major powers of the U.N. Security Council. In recent weeks, 
by agreeing to extradite accused drug trafficker Walid Makled to 
Venezuela rather than to the United States, Colombia demonstrated the 
priority it attaches to the relationship with its immediate neighbor, 
rather than Washington. Aggressive efforts by actors such as China, 
Russia, Iran, to expand their political, economic, and military 
relationships in the hemisphere is a reality and poses many challenges 
for U.S. interests. But U.S. power to control, let alone prevent, the 
diversification of Latin American foreign relations is limited and, in 
some cases, nonexistent. Indeed, U.S. influence-something different 
from control-will be maximized to the extent the United States 
recognizes, accepts, and works to situate itself within the changed 
circumstances in the hemisphere. This is the normal functioning of 
diplomacy among allies, whose interests will converge some but not all 
of the time. The current administration's emphasis on multilateralism 
and partnership is promising in that it recognizes not only that the 
United States does not have all the answers, but quite often, has much 
to learn from Latin American countries themselves. It is not 
coincidental that our greatest policy fiascos in the hemisphere over 
these last 2 years-the dreadful handling of negotiations over a United 
States-Colombia base agreement and the decision to break with the 
hemisphere over how to respond to the 2009 coup in Honduras-occurred 
precisely because the impulse to ``go it alone'' prevailed over the 
more time-consuming processes of consultation and consensus-building.
                 patterns of trade, aid, and investment
    Trade partners and trade patterns are rapidly changing throughout 
the region. The United States remains by far Latin America's largest 
trading partner (with trade totaling just over $500 billion last year), 
although once Mexico is factored out of the equation, the U.S. role is 
more limited. Asia (primarily but not exclusively China) is Latin 
America's second largest partner, overtaking the European Union. 
According to a 2010 study by the United Nations Economic Commission for 
Latin America and the Caribbean (CEPAL), China has now surpassed the 
United States as the top export destination for Brazil and Chile; the 
same became true for Peru by mid-2010. China is also the second-largest 
export destination for Argentina, Costa Rica, and Cuba. China's growth 
has had a profound impact on countries throughout the hemisphere. The 
impact has been most positive for net exporters of energy, raw 
materials, and agricultural products, and most negative for those 
countries whose manufactured exports have been undermined by Chinese 
competition in such major markets as the United States. All told, 
China's trade deficit with Latin America totaled some $8.9 billion in 
2009, largely due to raw materials exports from Brazil and Chile. At 
the same time, there are growing concerns expressed within Latin 
America as well as by international financial institutions about 
China's commitment to environmental and labor standards, and about the 
ways that Chinese patterns of trade and investment reinforce centuries-
old patterns of commodity dependence on the part of Latin American 
economies. Clearly, managing the growing relationship with China and 
ensuring that deepening economic ties contribute to Latin America's own 
development goals and priorities is a challenge for the countries of 
the hemisphere.
    When it comes to foreign direct investment in Latin America, the 
U.S. share continues to dwarf that of other countries or regions. 
According to CEPAL, the United States accounted for 37 percent of total 
FDI in Latin America and the Caribbean from 1998-2008. It is also the 
case that, even at a time of deep recession, U.S. assistance to Latin 
America from the Agency for International Development has actually 
increased, as did the commitment to the proven development practice of 
micro-enterprise. And the United States is still-by overwhelming 
margins-the largest single donor to the reconstruction of earthquake-
devastated Haiti.
    However, the U.S. ability to take advantage of the growth and 
dynamism in South America has not been fully realized. The U.S. trade 
agenda has stalled, largely because free trade agreements have become 
proxies for a national debate that has taken place only indirectly, 
over winners and losers in a process of globalization. While more open 
trade contributes overall to growth in the U.S. economy, it does so 
unevenly and to the direct detriment of certain regions and economic 
sectors. A time of jobless recovery and burgeoning inequality in the 
United States sets the stage for rising protectionist sentiment. This 
will remain difficult to counter absent a broader social pact in our 
own country that invests in productivity and spreads the benefits as 
well as the costs of free trade more equitably. The stalled free trade 
agreements with Colombia and Panama, for example, deserve to move 
forward. But they are unlikely to do so absent a coherent and shared 
vision of the role of trade in U.S. economic growth, coupled with a 
strategy for cushioning the adverse effects of trade on specific 
sectors and communities. Trade adjustment assistance has been a 
positive component of the trade policy agenda in the past, and should 
remain so in the future.
                       north versus south america
    Much of the focus, and certainly the resources, pertaining to U.S. 
policy in the hemisphere have been devoted to addressing the security 
crises in Mexico and Central America, and to a lesser extent the 
Caribbean, due to drug trafficking and other activities of organized 
crime. Given U.S. proximity to these countries and subregions, the role 
of U.S. demand for illegal narcotics in fueling the violence, and the 
role of arms trafficking and money laundering on the U.S. side of the 
border, it is entirely appropriate and urgent that we do so. The Obama 
administration has made great strides in embracing the notion of shared 
responsibility for the orgy of drug violence engulfing Mexico; 
Secretary of State Hillary Clinton set the tone during a March 2009 
trip to Mexico, stating that ``our insatiable demand for illegal drugs 
fuels the drug trade; our inability to prevent weapons from being 
illegally smuggled across the border to arm these criminals, causes the 
deaths of police, of soldiers, of civilians.'' President Obama himself 
has acknowledged that ``a demand for these drugs in the United States 
is what is helping to keep these cartels in business.''
    The reality behind these words is that U.S. consumption of cocaine, 
heroin, marijuana, and methamphetamines is estimated to exceed $60 
billion annually. And an estimated $18-39 billion flows south in the 
form of bulk cash and high-caliber weapons for the cartels. Research 
commissioned by the Mexico Institute of the Woodrow Wilson Center has 
highlighted that, of the 75,000 firearms seized by the Mexican 
Government in the last 3 years, about 80 percent, or 60,000, came from 
the United States. A widening array of U.S. agencies-the Bureau of 
Alcohol, Tobacco, Firearms and Explosives; the Justice Department; 
Customs; Homeland Security-have deepened strategic cooperation with 
Mexican counterparts on issues from intelligence-sharing to banking 
regulations. U.S. security cooperation with Mexico under the Merida 
Initiative has now shifted, de-emphasizing the transfer of arms and 
heavy equipment to the Mexican army to focus in favor of the longer 
term task of strengthening institutions, including the judicial system, 
prosecutors, and the police. Cooperation among federal, state, and 
local actors on both sides of the border increased on local as well as 
national issues, and greater attention was devoted to modernizing 
border infrastructure and helping border communities. U.S. assistance 
to the countries of Central America and the Caribbean has also gone up, 
but may not be sufficient. Meanwhile, Gil Kerlikowske, director of the 
White House Office of National Drug Control Policy, has made modest but 
nonetheless significant shifts in U.S. counter-narcotics budgets, 
increasing spending for prevention and treatment of drug use by more 
than 17 percent in 2010 and treating domestic drug consumption as a 
public health as well as law enforcement problem. But there is no 
national debate over more fundamental ways to reduce the demand for 
drugs in this country, which remains a central driver of violence and 
institutional decay throughout the region.
    Despite the shift of U.S. policy emphasis, Mexico demonstrates more 
than any other Latin American country how U.S. domestic political 
considerations trump foreign policy in ways that undermine hopes for a 
new direction. Promises aside, by September 2009 the Bureau of Alcohol, 
Tobacco, Firearms, and Explosives (ATFE) had revoked the licenses of 
only 11 of the thousands of gun shops along the 2,000-mile United 
States-Mexican border. There has been no push, by the administration or 
by Congress, to renew the 10-year ban on assault weapons that expired 
in 2004. And neither the administration nor the Senate have made 
ratification of the Inter-American Convention Against the Illicit 
Manufacturing of and Trafficking in Firearms, Ammunition, Explosives 
and other Related Items, known as CIFTA, a priority. CIFTA was adopted 
by the OAS in 1997 and submitted to the Congress the following year by 
President Bill Clinton.
    the dangers of partisan polarization
    Ultimately, U.S. policy toward Latin America will be a product of 
domestic U.S. priorities and partisan considerations as they interact 
with changed realities in Latin America. There is little evidence to 
suggest-and much to refute-the notion that the United States is 
irrelevant to Latin America or no longer considers the hemisphere a 
priority in diplomatic or economic terms. At the same time, many Latin 
American countries are unimpressed with the United States' own record 
on issues that we have declared to be our priority, including the 
reduction of poverty and inequality, addressing climate change, and 
developing alternative energy; Latin American countries are rightly 
proud of their own innovation, example, and progress, and our own 
inability at times to practice what we preach undermines the 
credibility that is essential to our success.
    The growing polarization of our own domestic politics is an added 
impediment to productive engagement with the hemisphere. There are 
sharp divisions in the policy community, for example, over how to 
characterize the nature of Iran's relationship with such countries as 
Venezuela, Bolivia, and Ecuador, and the degree of ``threat'' that 
relationship represents. Similarly, there is no consensus over the 
proper ways to respond to sharp reversals of the democratic process in 
such countries as Venezuela and Nicaragua, let alone over how to engage 
with the process of change taking place in Cuba. (It is worth noting 
that, according to the U.S. Department of Energy, more than 60 percent 
of Venezuela's oil exports are destined for the United States-that 
amounts to about 12 percent of U.S. oil imports-creating a bizarre form 
of economic interdependence at odds with the chill in political 
relations.) The temptation to use such hot-button issues for partisan 
advantage is enormous, although the end-result of such debates is 
rarely better policy.
    It is time for us to rethink what we ``want'' from hemispheric 
relations, avoiding historic impulses to paternalism, on the one hand, 
or the tendency to pay attention only in the face of security threats, 
real or imagined, on the other. The U.S. economy is in deep crisis, and 
will remain so for the foreseeable future; our country is still in the 
midst of two major wars. We should not pretend that Latin America will 
be a foreign policy priority, and claims to the contrary will only ring 
hollow. That said, there is all the room in the world for recognizing 
that the political and economic advances in the region over the last 
decade constitute a strategic asset for the United States. Forging 
partnerships among equals means by definition that we cannot get our 
own way all or even most of the time. There is enough common ground, 
however, for the United States and countries of the Americas to 
recognize each other as paths to the realization of their own interests 
and goals.
    Senator Dodd. Thank you very much, doctor. I appreciate that very 
much.
    Mark, thank you once again. I don't know how many times you've been 
sitting at that table with Senator Lugar and myself over the years, but 
we welcome you once again.

 STATEMENT OF MARK L. SCHNEIDER, SENIOR VICE PRESIDENT/SPECIAL 
     ADVISOR ON LATIN AMERICA, INTERNATIONAL CRISIS GROUP, 
                         WASHINGTON, DC

    Mr. Schneider. Thank you. I want to express my appreciation 
to the committee for the opportunity to testify today on Latin 
America in 2010 and the future of U.S. policy in the 
hemisphere. I also want to thank Senator Lugar, Senator Corker, 
and other Senators on the committee for this opportunity, but I 
particularly want to commend Senator Dodd for his leadership 
and commitment over the years in strengthening ties between the 
United States and Latin America. You've always understood that 
advancing justice for the peoples of the Americas puts the 
United States on the right side of history and advances U.S. 
national security at the same time.
    The International Crisis Group works to prevent and resolve 
deadly conflict and we work now in some 60 countries. In Latin 
America, we're headquartered in Bogota and we focus on the 
Andes, the Colombian conflict, and we've been in Haiti since 
2004. We've just opened a new project in Guatemala, for obvious 
reasons.
    To assess U.S. relations with Latin America, as you've 
heard, to some degree one has to look backward. Both Senator 
Dodd and I served as Peace Corps volunteers in the late 1960s 
in countries under authoritarian rule, Senator Dodd in the 
Dominican Republic and me in El Salvador. We saw the desires of 
the people we worked with for decent futures for their 
families, better education for their children, and greater 
freedom for their countries-opportunities that we took for 
granted here.
    Many of the obstacles to those opportunities are gone. The 
military dictatorships thankfully are a thing of the past. The 
ideological conflict that one has to remember took more than 
300,000 lives in Central America over decades has largely 
disappeared. And the region's economies have done even better 
through reform and intelligent management than most of the 
world in rebounding from the financial crisis of 2008.
    But I do want to stress that there are serious challenges. 
First, there is inequality and exclusion. Today the Economic 
Commission for Latin America and the Caribbean is releasing its 
annual report on the social panorama. It will show that in 2009 
some 183 million persons in the region were forced to live on 
less than $2 a day and more than 74 million live in extreme 
poverty, on less than $1 a day. Eleven of the eighteen worst 
countries in the world in income inequality are in Latin 
America. Indigenous peoples and Afro-Latin Americans also still 
face discrimination on a daily basis.
    The consequences also have to be seen politically. In 
Bolivia, after almost 500 years of exclusion and discrimination 
the majority turned to Evo Morales, in some sense expressing 
the success of the expansion of the democratic franchise, but 
at the same time also reflecting the failure of economic and 
social policies and of democratic leadership.
    It seems to us that there are three ways, at least three 
ways, that the United States can help the countries of the 
region in dealing with that challenge: First, by expanding our 
assistance for rural development. It's vital to know that when 
one looks across the board at where the FARC and the ELN are 
able to locate, where drug cultivation takes place, where 
migration to the United States is initiated, it's largely in 
the rural poverty areas of these countries. We can do more in 
terms of strengthening them and helping them move in the area 
of rural development.
    Second, in expanding quality education. We all know that 
that's fundamental, both in the short term and in the long 
term, in terms of development.
    Finally, as you've heard, encouraging tax reform. There's 
no other answer in terms of dealing with the problems of income 
inequality right now in the region than responding to every 
analysis of the World Bank, the IMF, the Inter-American 
Development Bank, and the U.S. Government that one has to do a 
better job in helping the countries reform their tax systems, 
halt tax evasion, and begin to focus more directly on providing 
the resources necessary to provide education and health care in 
those countries.
    The second challenge in the region today is combating crime 
and drugs. There's just no question that today organized crime 
and cartels directly assault state institutions and citizen 
security from the Andes through the Caribbean, Central America, 
and Mexico to this country. There's a war against the state 
going on across our southern border in Mexico, which is the 
final jumping-off point to carry the bulk of Colombian and 
Andean cocaine into this market.
    Mexico is simply a democracy under siege. It's also clear 
that while the response of the Mexican state, with United 
States support, under Plan Merida has blocked the cartels from 
taking full control over the border region, it's also pushed 
more of the drug flow to Central America. Since 2008, for the 
first time ever, drug traffickers shifted their first stop from 
the Andes coming into the United States market to Central 
America rather than Mexico, and those governments are far less 
capable of responding to the threat.
    In Guatemala, we've reported that traffickers control 
municipalities and local authorities through money and 
coercion. They've penetrated the high echelons of law 
enforcement institutions. In fact, the U.N.-sponsored 
International Commission against Impunity, known by its 
initials of CICIG, has probably saved Guatemala's justice 
system from total implosion.
    The drugs originate largely in Colombia, where during the 
past 8 years under President Uribe and Plan Colombia the 
capacity of the Colombian state to defend itself against the 
FARC and the ELN was strengthened; but we've yet to see a fully 
adequate response to serious human rights abuses, impunity, or 
the sustainable expansion of state institutions and services, 
except on a very small pilot basis. There has also yet to be a 
real breakthrough in halting the violence from combat over 
control in drug corridors in Colombia, and we've seen a 
surprising and very worrisome rise of illegal armed groups in 
that country; new ones. Some of the cultivation, once again, 
has moved back to Peru and Bolivia, but the bulk of the cocaine 
still originates in Colombia. From the Andes, year in and year 
out, there's approximately 1,000 metric tons of cocaine heading 
north.
    We believe that tackling drugs and crime will require 
fundamental changes in the U.S. counterdrug policy. Demand 
reduction policies need to be addressed here, fundamentally as 
a public health issue not solely as a crime enforcement issue, 
and must move away from a one-size-fits-all approach to 
criminal incarceration. We have to do a better job to stop the 
arms smuggling flow south and the money-laundering flow north, 
and that's going to require a high-level review of current 
counterdrug policies by the Congress and by the administration.
    In Colombia today under President Santos, we see a welcome 
set of new initiatives on land restitution, eliminating a rogue 
intelligence agency, expanding victims' rights, and recognizing 
the important role of an independent judiciary. Our report last 
month argued that now is the time for a more integrated and 
comprehensive conflict resolution strategy, focused not only on 
strengthening the military, but on advancing justice, economic, 
and political reform. Given the weakness of the FARC, the high 
political standing of President Santos, and these initiatives, 
we believe a window of opportunity now exists to pursue a 
negotiated end to 40 years of Colombia's conflict.
    The third challenge-and we've heard some of it from you as 
well-is strengthening democracy and confronting corruption. 
Democratic partners are the best guarantors of our values, our 
interests, and our security. In most of the region, there is a 
basic acceptance of the core values and institutions of 
democratic governance. Yet key elements of pluralism, checks 
and balances, and separation of powers are no longer viewed as 
essential in a few countries.
    The fact is that those are exceptions to the norm; the norm 
set out in the Inter-American Democratic Charter, and we have 
to think in a different way about how we help countries close 
the gap between the principles of democracy and national 
realities. The United States needs to link itself much more 
closely with other democracies in the hemisphere in pursuing 
that effort.
    In this regard, finally, let me just note that democracy, 
stability, and economic development require a functioning, 
fair, and independent criminal justice system. The United 
States needs to organize itself better to help support other 
countries in this effort bilaterally as well as multilaterally. 
One example is CICIG. Its success in Guatemala has prompted the 
Presidents of both El Salvador and Honduras to express interest 
in a similar mechanism. Finding a way to replicate CICIG in 
other Central American countries should be high on everyone's 
agenda.
    Finally, in a hemisphere where a third of the population is 
under 15 and nearly 50 percent is under 18, new ways must be 
found to encourage young people to see the value in political 
participation and to offer more opportunities for youth to 
exercise their rights as citizens.
    Mr. Chairman, you asked me to briefly talk about Haiti and 
I will do that for 1 minute. Last Sunday's election in the 
midst of a cholera epidemic was messy, confusing, and 
disappointing, and the outcome still remains unclear. The 
country sadly failed to overcome perennial distrust and 
polarization despite the pressing need for national consensus 
on state-building and reconstruction following last January's 
devastating earthquake.
    It will be several days before we know the two top 
Presidential candidates who are supposed to face each other in 
a runoff. But even more important, there is a crucial question 
as to the numbers and percentage of eligible voters who were 
disenfranchised, and that's an issue that we need to be 
concerned about. Almost everything went wrong that could go 
wrong, in one place or another. An undetermined number of 
voters did not get their ID cards and therefore could not vote. 
Some of those who did could not find their names on the lists 
where they were told to vote. Voter verification telephone 
lines were saturated. Party agents were denied access to some 
polling stations. Ballots did not arrive in time in some 
places. Some polling places opened late, others not at all.
    The initial response of a dozen of the opposition 
candidates, most of whom, frankly, had little chance, was to 
say annul the election. The OAS and CARICOM's joint electoral 
observation mission issued a statement that, despite the 
irregularities, the initial call for annulment was precipitous 
and stated that the magnitude of the irregularities had not yet 
invalidated the vote. They urged calm and for everyone to await 
the results of the tabulation and dispute resolution process.
    That process is fundamental to any outcome that's going to 
be considered credible. Two leading opposition candidates, 
Mirlande Manigat and ``Sweet Mickey'' Martelly, are in fact 
waiting and have not joined the position calling for the 
annulment of the election.
    We have reported on the problems a month ago. Basically, 
even before the earthquake, Haiti's weak infrastructure in 
terms of electoral machinery was clear. They've had a makeshift 
electoral council for decades. Political parties have yet to 
generate policy choices. There is an often corrupt judiciary, 
limited public security.
    Then the earthquake destroyed the capital, killed 230,000, 
and displaced 1.5 million people. Then we had cholera. Right 
now, the numbers are somewhere in the neighborhood of over 
80,000 who have been affected and close to 2,000 have died.
    During these last couple of weeks as they tried to respond 
to cholera with a weak government and overstretched 
international agencies, there's no question that that had some 
impact on the ability to manage the logistics of the electoral 
preparation.
    So now what? First we have to let the process play itself 
out. Tabulation, we understand, of some 4,000 of the 11,000 
polling places has taken place and they're moving day to day. 
They should have by the end of the week the rest of the 11,000. 
At that point, those places where people could not vote or they 
make claims of fraud, have to be investigated and a resolution 
determined, perhaps re-voting in some places.
    Ultimately, Haiti, even now, needs to forge a political 
consensus and agreement on completing the current electoral 
process to elect a President and Parliament. Even before a 
second round, what's clearly required is for the government, 
the international community, and the opposition political 
leaders to sit down and come together for the good of the 
country and forge a path to a new government and an accelerated 
rebuilding of Haiti.
    Thank you.
    [The prepared statement of Mr. Schneider follows:]

    Prepared Statement of Mark L. Schneider, senior vice president, 
               International Crisis Group, Washington, DC

    I want to express my appreciation to the Senate Foreign Relations 
Committee forthe opportunity to testify today on ``Latin America in 
2010: Opportunities, Challenges, and the Future of U.S. Policy in the 
Hemisphere.'' I particularly want to commend Senator Chris Dodd for his 
leadership and commitment to strengthening ties between the United 
States and the countries of the region. He has always understood that 
advancing justice for the peoples of the Americas puts the United 
States on the right side of history and advances U.S. national 
security.
    The International Crisis Group has been recognized as the 
independent, nonpartisan, nongovernmental source of field-based 
analysis, policy advice, and advocacy to governments, the United 
Nations, OAS, and other multilateral organizations on the prevention 
and resolution of deadly conflict. Crisis Group publishes annually more 
than 80 reports and briefing papers, as well as the monthly CrisisWatch 
bulletin.
    Our staff is located on the ground in 12 regional offices and 17 
other locations, covering over 60 countries. We maintain advocacy 
offices in Brussels (the global headquarters), Washington, and New 
York, and we now have liaison presences in Moscow and Beijing.
    In Latin America, the Crisis Group regional program headquarters 
are in Bogota, and Colombia's civil conflict has been the central focus 
of our Andean project. However, we also have published reports on 
Venezuela, Ecuador, and Bolivia identifying the drivers of conflict in 
those countries. We have also been in Haiti since 2004, and have just 
opened a project in Guatemala.
    To assess U.S. relations with Latin America today, it is worth 
quickly looking backward. Both Senator Dodd and I served as Peace Corps 
volunteers in the late 1960s in countries under authoritarian rule in 
the hemisphere-Senator Dodd in the Dominican Republican and me in El 
Salvador. We saw the desires of the people we worked with for decent 
futures for their families, better education for their children and 
greater freedom for their countries-opportunities that we took for 
granted.
    Since then, many obstacles to those opportunities have been 
removed; most countries in the Americas are now democracies, and in 
2001, the members of the Organization of American States adopted an 
Inter-American Charter for Democracy that enunciated fundamental 
democratic principles. The exceptions to that norm are clearly seen as 
just that exceptions.
    The hemisphere is also largely free of the ideological conflict 
that sparked deadly violence for decades and cost tens of thousands of 
lives in Central America. And in Colombia the last remaining insurgency 
has been weakened and splintered, and the once powerful and equally 
brutal paramilitary has been largely demobilized. Still, serious 
concerns remain.
    Hemisphere economies of many countries are solid and competitive. 
The financial structures of most countries were sufficiently resilient 
to do better than most of the world-including the United States-in 
withstanding and quickly recovering from the global financial crisis. 
The economies in the region have grown steadily during this century, 
averaging 5.5 percent annual growth until the 2008 financial crisis. 
However, this was far below Asia's 9 percent growth, and too low to 
make a sustainable impact on poverty reduction. After declining by 
nearly 2 percent in overall GDP in 2009, the Economic Commission on 
Latin America and the Caribbean now expects recovery to boost GDP by 
more than 5 percent this year, with Brazil leading the way at 7.6 
percent. Unfortunately, in 2011 GDP growth is likely to slow to below 4 
percent. Innovative social policies-from conditional cash transfer 
programs such as Bolsa Familha in Brazil or oportunidades in Mexico, to 
widespread access to microcredit and village banking-actually began in 
Latin America and spread across the globe and, along with growth, 
helped millions escape poverty for the first time, but still amounted 
to only 0.4 percent of regional GDP.
    However serious challenges remain to the governments of the 
hemisphere, to the regional political and financial organizations, and 
to U.S. policy. The primary challenges are: (1) confronting inequality 
and exclusion; (2) combating crime and drugs; and (3) strengthening 
democracy and combating corruption.
    First, there is inequality and exclusion. Despite economic growth, 
in 2009, some 183 million were report to live on less than $2 per day 
and more than 74 million on less than $1 per day. Many who climbed 
above the poverty line during the ``boom'' years fell back into poverty 
last year and have yet to feel the impact of the recovery.
    The reality remains that 11 of the 18 worst countries in income 
inequality are in Latin America. UNDP and ECLAC report that on average, 
the top 10 percent of the population makes 48 percent of national 
income, while the bottom 10 percent only captures 1.6 percent. These 
income disparity figures not only reflect lost opportunities for 
millions, they also may make political extremes more attractive to a 
frustrated population that now has access to the voting booth-and the 
results are evident in Venezuela.
    Indigenous peoples and Afro-Latin-Americans still face 
discrimination on a daily basis-not dissimilar from the discrimination 
that has scarred this country.
    A World Bank study found indigenous men earn 65 percent less than 
whites in the seven countries with the highest numbers of indigenous 
people. Indigenous women have the least access to potable water, 
education, and employment in the hemisphere. In Bolivia, almost 500 
years of exclusion and discrimination had barred its indigenous 
majority from meaningful participation in national life. Turning to Evo 
Morales was an expression of the success of expansion of the democratic 
franchise even as it reflected the failure of economic and social 
policies, and of democratic leadership.
    Response: There are at least three ways the United States can 
significantly reduce inequity and exclusion: (1) expand help for rural 
development and small farmers; (2) expand quality education; and (3) 
encourage tax reform. Reexamining and prioritizing U.S., Inter-American 
Development Bank, and World Bank assistance in these areas would 
contribute significantly to altering inequity and exclusion in the 
Americas. Rural investment: It is in the rural areas that investing in 
physical infrastructure, land reform, income generating opportunities 
and social services can make the greatest direct impact on growth and 
poverty reduction. And there are well-proven ways to do so:

   Support ways to expand access of the rural poor to land through 
        land markets, land funds, and what Brazil calls ``land market-
        assisted land reform,'' by expropriating unproductive land, or 
        using a land tax mechanism that encourages making more land 
        available to small farmers.
   Help provide secure title to the land that the poor own so they can 
        acquire working capital for their farming and micro and small 
        loans for off-farm activities;
    Invest substantially more in micro- and small-credit facilities. 
        In 1999, USAID was financing credit for close to 1 million 
        microentrepreneurs and the IDB, World Bank, and others did the 
        same for another 1 million. But 50 million needed such credit. 
        Today the need is even greater.
   Invest in human capital formation-in schools, health, nutrition-and 
        in social capital, cooperatives, joint ventures, and small and 
        medium businesses to create formal sector employment and 
        increase funding for labor rights enforcement.
   Invest in technology and rural infrastructure-so that rural roads, 
        electricity, water and sewers, and information technology 
        actually reach the rural poor. As part of the ``New Deal,'' the 
        United States made a massive investment in rural 
        infrastructure. The same needs to happen in Latin America. Let 
        me highlight the reasons these actions are in the U.S. national 
        interest.

    The flow of illegal migration from Central America and Mexico 
originates in the poorest rural communities of those countries. Coca 
cultivation takes place in the poorest regions of the Andean ridge 
countries. Those are the same regions where the FARC and the illegal 
armed groups have found a home in the past-and today. They also are the 
regions where the indigenous live.
    Quality education: Promoting access to quality education reduces 
inequality. The USAID FY 2011 $2 billion budget request only included 
$55 million for basic education. Yet, education-especially girls' 
education-remains one of the most cost effective investments in the 
region's future. More needs to be done. The real question is how to 
partner with the IDB, World Bank, and donors to press for some kind of 
matching increase in Latin American governments' education spending for 
strengthening teacher training, keeping children in school longer, and 
improving educational quality.
    Tax reform: A third avenue is to generate adequate tax revenues to 
fund some of these needs and to do it in a way that promotes greater 
equity. Despite all of the commitments to increase tax revenues in the 
Guatemala 1996 peace accord, tax revenues still represent barely 10 
percent of GDP. Not surprisingly the state's ability to offer education 
and health, or reach the rural population with basic infrastructure, is 
severely limited. In Colombia, tax revenues are not much higher. And in 
both countries-and most of the region-the structure is hugely 
regressive, depending significantly on indirect taxes that makes little 
distinction between rich and poor. Even then, tax evasion is extremely 
high. Hopefully, Secretary Clinton's strong statement on the need for 
the rich to pay their fair share of taxes will be heeded.
    A second challenge is combating crime and drugs. Organized crime 
and drug cartels directly assault state institutions and citizen 
security in the Andes, Central America, and Mexico. There is a war 
against the state going on just across our southern border in Mexico, 
which has become the final jumping off point to carry the bulk of 
Colombian cocaine into the United States.
    Well-armed drug cartels-with assault rifles and grenade launchers 
made or purchased in the United States-kill each other for control over 
drug corridors, and combat Mexican state and municipal police and the 
army for control over city halls and state capitals. Since 2005, some 
28,000 Mexicans have been killed in the violent waves across Mexico. 
Despite Mexican troops patrolling streets, mayors and governors have 
been kidnapped and killed, and entire regions live in fear. Mexico is 
by no means a failed state, but it is a democracy under siege. Charges 
of human rights abuses have proliferated against Mexico's armed forces 
since these are not forces trained to undertake the task of civilian 
law enforcement.
    It is also clear that while the response of the Mexican state, with 
U.S. support under Plan Merida, has blocked the cartels from acquiring 
full control over border regions, it has also pushed more of the drug 
flow to Central America. In 2008, drug traffickers shifted their first 
stop from the Andes to the U.S. market from Mexicoto Central America, 
and those governments are far less able to defend themselves.
    Crisis Group has reported that for many years, Guatemala was the 
domain of the Sinaloa cartel. That era came to an end when the Gulf 
cartel arrived to challenge those territorial rights, bringing with it 
paid assassins, the ``Zetas.'' From 2004 to 2008, homicides rose by 50 
percent according to the U.N.-sponsored International Commission 
against Impunity (CICIG). Last year, the death toll climbed to morethan 
6,000, matching the toll in Mexico, a country with a population nearly 
10 times larger. Impunity is starkly evident when fewer than 4 percent 
of the murder cases result in convictions.
    Traffickers control municipalities and local authorities through 
money and coercion. These same well-financed and well-armed networks of 
traffickers have also penetrated the high echelons of law enforcement 
institutions. In fact, CICIG hasbeen one of the last bastions of the 
rule of law and has probably saved Guatemala's justice system from 
itself.
    While the United States has marginally increased its support to 
those countries through the Central American Regional Security 
Initiative, the reality is that Central America, once the center of 
ideologically based cold-war violence, now finds itself the arena for a 
new and equally deadly conflict.
    While Plan Colombia has strengthened the capacity of the Colombian 
state to defend itself against the FARC and the ELN, tangentially 
encouraged paramilitary demobilization, we have yet to see more than a 
limited start to sustainably extending state presence. There also is 
yet to be a real breakthrough in halting the pattern of drug 
cultivation and trafficking which continues to fuel violence in 
Colombia. The upswing in coca cultivation in Peru and the continuing 
trafficking-driven violencein Central America underscores the patchwork 
progress the Plan has made in achieving its counterdrug objectives. 
Even while arguments over coca cultivation statistics persist between 
UNODC and the United States, there appears to be little argument, 
according to the Inter-Agency Assessment of Cocaine Movement (IACM), 
that the amount of cocaine being moved north-not to mention east to 
Europe through West Africa, continues at levels above 1,000 metric tons 
year in and year out.
    One other thing to note is that the Colombia drug flow remains in 
the hands of the FARC, of some undemobilized paramilitary, of new 
illegal armed groups and of ``pure'' drug traffickers. There were 12 
departments where coca was grown in 1999, and while it now appears in 
smaller plots of lands, coca is cultivated, today in 22 of 34 
departments.
    Response: In Colombia under President Santos, we are seeing a 
welcome set of new initiatives on land restitution, eliminating a rogue 
intelligence agency, expanding victim rights, and recognizing the 
important role of an independent judiciary. Crisis Group report last 
month ``Colombia: President Santos's Conflict Resolution Opportunity'' 
argued that now is the time for a more integrated and comprehensive 
conflict resolution strategy, focused not only on the military, but 
also on advancing justice reforms to protect human rights, economic 
reforms to reduce inequalities, and political reforms to strengthen the 
country's institutions. The roots of Colombia's conflict need to be 
frontally tackled.
    Respect for human rights needs to be more fully integrated into the 
fabric of Colombia's security forces, starting with pursuing the 
perpetrators of almost 2,300 civilian extrajudicial executions. Those 
responsible should be prosecuted vigorously in civilian, not military, 
courts.
    The President must broaden his focus beyond the FARC and ELN to 
include combating new illegal armed groups. In particular, he should 
investigate ties between illegal armed groups and state security 
forces, which undermine government legitimacy. President Santos' 
political support is at a peak now, and that backing, coupled with the 
relative weakness of the FARC and ELN, gives him a real chance to put a 
permanent end to the country's armed insurgency. Convincing progress on 
key reforms could lay the groundwork for a negotiation with the 
guerrillas that ends the Colombian insurgency once and for all, and 
does so while respecting the rights of victims.
    Tackling drugs and crime will require fundamental changes in the 
counterdrug strategy which do a better job of reducing cocaine 
production and trafficking and combating an organized criminal network 
that reaches from the Andes to corrupt government officials across the 
Caribbean and Central America and Mexico.
    Demand reduction policies need to be addressed as a public health 
issue, not a crime enforcement issue, and must move away from a one-
size-fits-all approach to criminal incarceration. Treating chronic 
users through a public health prism and mainly traffickers as criminals 
would produce more effective policy, and perhaps allow law enforcement 
to do a better job breaking up the trafficking combines. This will 
require a high-level review of current counterdrug policies by the 
administration and Congress. That effort needs to focus on 
strengthening demand reduction here and relevant rule of law 
institutions throughout the Americas.
    It also needs to include much more stringent measures to end arms 
trafficking from the United States to illegal groups in Latin America. 
And a far stronger effort must be made to follow the money laundering 
that permits dirty money from dirty drugs to line the pockets of 
organized crime.
    A third challenge is strengthening democracy and confronting 
corruption. We have seen the end-hopefully forever-of the era of 
military dictatorships, some of which this country supported in 
reacting to the cold war. Democratic partners are the best guarantors 
of our values, our interests, and our security. In most of the region 
there is a basic acceptance of the core values and institutions of 
governance-all underlined in the Inter-American Democratic Charter. Yet 
key elements of pluralism, checks and balances, and separation of 
powers are no longer considered essential in a few countries. And 
political parties are failing the job of representation in others.
    Foreign policy and foreign assistance programs still pay 
insufficient attention to issues of governance. Despite the 1996 
adoption of the Inter-American Convention Against Corruption and follow 
up mechanisms, in 2005, the Latinobarometro, a hemisphere wide poll, 
found that more than 68 percent of respondents believed that their 
public officials were corrupt, ranging from 41 percent in Uruguay to 82 
percent in Ecuador. Over the past 15 years in Latin America and the 
Caribbean, we have seen 15 elected Presidents who did not finish their 
term of office, some removed with only minimal legal trimmings.
    The twin to corruption is the impunity that enables the elites in 
their countries to evade paying taxes, fail to treat their employees 
with dignity, receive favored access to contracts and buy their way out 
of any brush with the law. The consequent popular belief that those 
with power operate with impunity undercuts the democratic ethos. It 
violates the social contract. A few years ago, a poll found that 66 
percent of Latin Americans said they had little to no confidence in 
their judicial system.
    Response: Strengthening the rule of law has to be a high priority 
for anyone interested in political stability, sustaining economic 
reform policies and strengthening social cohesion. It also is critical 
to addressing underlying causes of conflict in many of the countries of 
the region. They need more competent police, an impartial judiciary, 
and access to justice for the poor.
    To date, the United States has not been well-organized enough to 
provide that kind of integrated assistance in countries, either before 
or after conflict occurs. Nor have the international financial 
institutions been brought on board fully when it comes to helping 
countries invest in police, criminal justice reform, prison 
construction, and correctional services. Democracy, stability, and 
economic development require a functioning, fair, and independent 
criminal justice system. The United States needs to do more bilaterally 
as well as with institutions like the IDB, the U.N., the World Bank, 
and the OAS, the latter being specifically charged with the monitoring 
observation of the Inter-American Democratic Charter.
    CICIG's success in Guatemala has prompted both El Salvadoran and 
Honduran Presidents to express interest in similar support. Finding a 
way to replicate CICIG in other Central American countries should be 
high on everyone's agenda.
    In countries where the distance is greatest between the principles 
of democracy and national realities, it is essential that the United 
States link itself to other democracies in trying to design new more 
effective policies and programs that can help close the gap as soon as 
possible. The Inter-American Commission and Court of Human Rights are 
valuable independent agencies that should be supported in promoting the 
full range of rights under the convention. The OAS itself should be 
supported to strengthen its own analytic capabilities with respect to 
identifying compliance failures under the Democratic Charter. Those 
failures more often than not also constitute warning signs of future 
conflict.
    In a hemisphere where a third of the population is under the age of 
15, new ways must be found to encourage young people to see the value 
in political participation and to offer more opportunities for youth to 
exercise their rights as citizens more fully.
    Haiti: Mr. Chairman, I was also asked to speak to the current 
situation in Haiti. The election last Sunday in Haiti appears to 
constitute a step backward in the state-building task that must 
accompany any successful earthquake reconstruction effort.
    Many things went wrong in many places around the country. An 
undetermined number of voters could not find their names on the lists; 
voter verification telephone lines were saturated; party agents were 
denied access to polling stations due to limited space or manipulation; 
ballots did not arrive in time in some places, some voters who had 
registered to obtain new ID cards never received them and were turned 
away from polling places, some polling places opened late, others not 
at all. The initial reaction of a dozen of the opposition candidates, 
including Michel Martelly, Mirlande Manigat, Jean Henry Ceant, Jacques 
Edouard Alexis, Charles H. Baker, and independent Josette Bijou was to 
call for an annulment of the election, and for the population to 
mobilize in peaceful protest. Subsequently the two leading opposition 
candidates Manigat and Martelly, decided to await the results of the 
tabulation, and their names reportedly were not on the formal request 
for annulment submittedto the provisional electoral council (CEP) last 
night by others.
    The CEP has acknowledged some irregularities, but believes the 
elections met acceptable standards. The elections results, which are 
now being tallied by the CEP at the Vote Tabulation Center, are 
expected to be published on 5 December. But charges of fraud in some 
sites and obvious procedural problems in many polling places, have 
already opened up further questions about the credibility of the 
process. The dispute resolution process, which should begin today, must 
be completely transparent. Parties must be prepared to come forward 
with proof of the alleged fraudulent acts using the legal channels 
provided by the electoral law. The CEP and international partners 
supporting the elections must hold the process up to full scrutiny if 
the results of the polls are to be accepted, and a government with some 
measure of legitimacy elected.
    The OAS/CARICOM international coordinating monitoring group issued 
a statement that despite the irregularities, which the CEP had claimed 
affected 4 percent of the 1,500 voting sites but an undetermined number 
of tables, the initial call for annulment was viewed as 
``precipitous.'' They urged calm and for everyone to await the results 
of the tabulation and dispute resolution process. The crucial question 
is the numbers and percentage of eligible voters who were 
disenfranchised.
    Crisis Group's report Haiti: the ``Stakes of the Post-Quake 
Elections'' assessed election preparations a month ago, We recalled 
that the task was daunting even before the earthquake that had 
destroyed infrastructure and diplaced 1.5 million people. Three 
quarters of the population lived in poverty, most urban income earners 
relied on the informal economy, and the inequalities of the elite-
dominated society were the most glaring in the hemisphere. The weak 
institutional infrastructure was reflected in the protracted makeshift 
status of the (CEP); a ramshackle political system featuring scores of 
parties unable to generate coherent policy choices for voters; an often 
corrupt judiciary and limited public security. Unresolved discord 
between the executive and opposition parties over the CEP's composition 
and perceived bias in favour of outgoing President Rene Preval added to 
the credibility challenge. All this lies at the root of a perpetual 
crisis of confidence in the electoral process.
    The tragic earthquake produced neither the change in the ``all or 
nothing'' style of politics nor the broad national consensus on 
reconstruction that would have eased the way to elections.
    The parties and candidates, even with international technical and 
financial assistance, struggled to energize and facilitate voting for 
4.5 million citizens, some whom lost their identification cards in the 
earthquake, and many of whom are among the IDPs living in spontaneous 
and insecure camps.
    Beyond the difficult logistics, Crisis Group had underscored the 
confusion that was likely to affect the voters themselves. Some 400,000 
new national ID cards had to be distributed to voters who had recently 
turned 18, moved, or lost their cards in the earthquake, even if their 
names were already on the voting lists. Training of some 35,000 poll 
workers to handle the eligible voters was completed the day before the 
election. Voters had to choose a President from among 19 candidates, 
and 110 parliamentarians from close to 1,000 candidates. They were 
voting at 1,500 polling locations around the country, which were for 
many, completely new polling places since old ones were destroyed in 
the earthquake, or because they themselves were displaced in camps or 
communities far from their usual neighborhoods.
    To compound this difficult situation, the response to the cholera 
epidemic likely added to the pressures on an already weakened public 
administration and overstretched international agencies. For the past 
month, they were forced to manage emergency treatment of cholera 
victims, water purification, sanitation disposal and public health 
education, and they still had to carry off the final logistics for 
Sunday's election.
    Cholera still threatens Port-au-Prince's tent camps teeming with 
more than a million earthquake victims and the city slums surrounding 
them, where several dozen deaths have already been recorded. More than 
70,000 people have been infected, 31,000 treated in hospitals or 
centers, and 1,650 people have died. Those numbers are expected to more 
than double over coming months, before water purification, basic 
sanitation, rapid treatment and behavioral changes based on public 
health messages can begin to stem the epidemic.
    It is a nightmare scenario that many feared after January's quake, 
the region's worst natural disaster in history. Early on, it appeared 
that the massive outpouring of volunteers, money, and civilian and 
military emergency workers would be able to stave off a cholera 
outbreak as they treated the trauma and performed triage as well as 
possible. However, the U.N. emergency appeal for $150 million just to 
stem the current death toll has generated barely 19 percent response.
    Unfortunately, there is no panacea to quickly end to the epidemic, 
but the rapid expansion of treatment centers and distribution of ORT 
and medicines can save lives: The failure of both national and 
international institutions to move more quickly to adopt a resettlement 
policy for the 1.5 million displaced persons is impacting Haiti's 
chances for long-term recovery. It has also created rising frustration 
and anger among the population that over the last 2 weeks exploded in 
violence directed at U.N. peacekeepers and government public health 
centers. Today, 7 months after it was pledged, only a tiny amount of 
the $5.3 billion promised for the first 18 months of recovery has 
materialized in Haiti in the form of projects that people can actually 
see and benefit from.
    More work must be done to quickly move displaced people from tents 
to stable housing and from joblessness to employment. Haitians need to 
see progress being made on building transitional and permanent housing, 
on removing more rubble faster, with more equipment imported for that 
purpose if need be. More Haitian laborers need to be hired-and paid-to 
help. Delays on making these policy decisions have to end, and donors 
need to quicken the pace in funding this reconstruction. Some $300 m. 
of the U.S. funds, after delays of several months following enactment, 
have been made available for disbursement and the remainder of the 
$1.15 billion pledged last March can be obligated once projects are 
approved.
    With all of Haiti's complicated and seemingly herculean challenges, 
a few things remain clear:

   More than a million Haitians in the 21st century should not be 
        living in misery in tent cities, some dying of a disease whose 
        origins were known more than a century ago, and which is 
        preventable with that knowledge and access to clean water and 
        sanitation.
   Donors who have promised reconstruction help need to fulfill those 
        promises- no matter what other demands on their time and money.
   Personal power struggles need to end now with a commitment by every 
        political leader to a national consensus on recovery and 
        reconstruction, backed by an international community that 
        demands no less.
   And the next government's reforms must include electoral reforms 
        spanning the electoral registry, civil service and nonpartisan 
        elections management, a permanent electoral council and 
        reducing the frequency of elections. Immediately, Haiti needs 
        to forge a political consensus and agreement on completing the 
        current electoral process. The country needs to insure that 
        this process of electing a new government is viewed in the end 
        as acceptable. Under the current emergency legislation, until 
        next May, there is a constitutional President and 19 elected 
        Senators. Even before a second round, which still is likely to 
        be required, the IHRC and the international community and the 
        opposition political parties and other sectors, need to come 
        together for the good of the country and forge a path to a new 
        government and an accelerated rebuilding of their country.

    Senator Dodd. Thank you very much, Mark.
    Mr. Ambassador, you've been very patient through all of 
this and we thank you very, very much. Thank you for your 
service to our country as well. Delighted you're here with us 
today.

 STATEMENT OF HON. JAIME DAREMBLUM, DIRECTOR, CENTER FOR LATIN 
AMERICAN STUDIES, SENIOR FELLOW, HUDSON INSTITUTE, WASHINGTON, 
                               DC

    Mr. Daremblum. Thank you, Mr. Chairman, Senator Lugar, 
distinguished members of the committee. It is a great honor to 
be speaking before you today. I would first like to thank 
Senator Dodd for all his many years of service, and 
particularly for his efforts to improve United States relations 
with Latin America, including my home country of Costa Rica, 
where he has many friends.
    On a more personal note, I want to thank Senator Dodd for 
all the help and friendship shown to Costa Rica and myself 
during the years I served as Ambassador here in Washington.
    I would also like to thank Senator Lugar for his consistent 
efforts to defend democracy and safeguard regional security 
throughout the Western Hemisphere through the years, as 
evidenced recently by the fundamental questions submitted as 
part of the confirmation process of Ambassador-designate to 
Venezuela Larry Palmer.
    Our topic is the current state of Latin America, a region 
that is often neglected in United States foreign policy 
debates, but is vitally important to United States interests. 
As we survey the political and economic landscape, we find many 
encouraging signs. Democracy has become firmly entrenched in 
most countries and the successful resolution of the 2009 
Honduran crisis showed that even small, poor democracies have 
the institutional strength to withstand autocratic challenges.
    After decades of boom and bust volatility, Latin American 
economies finally seem to be moving toward a trajectory of 
stable growth. They have generally become more resilient, as 
was evidenced during the recent global recession.
    On the other hand, some economies have been weakened by 
radical populism, which has taken root in Venezuela, Bolivia, 
Ecuador, and Nicaragua. In Venezuela, the Chavez regime has 
formed a strategic alliance with the world's leading state 
sponsor of terrorism, Iran, and has aided multiple terrorist 
groups, including the Colombian FARC, the Spanish ETA, and the 
Iranian-backed Hezbollah. In Nicaragua, Sandinista leader 
Daniel Ortega has returned to his old ways and he is gradually 
eroding constitutional checks and balances. With the world 
distracted by other news, Nicaraguan armed forces recently 
invaded the territory of Costa Rica, a country that has no 
military. As we meet here today, Nicaraguan troops continue to 
occupy a Costa Rican river island, despite an OAS resolution 
calling for them to leave the area.
    In short, Latin America offers much to make us cheer and 
much to make us worry. I will discuss the positive developments 
first.
    Smart economic management and increased foreign trade have 
helped many countries become better prepared to weather global 
financial storms. Fiscal deficits have fallen, tariffs have 
been slashed dramatically, and the nontariff barriers to trade 
have been reduced even more. Prior to the 2008 global crisis, 
Latin America was experiencing its best economic performance in 
a quarter of a century, which was fueling the growth of a broad 
middle class. Some 50 million households emerged from poverty 
between 2002 and 2007. It is not unrealistic to expect that a 
majority of the region's population will soon belong to the 
middle class.
    In short, Latin America is on the right economic path, but 
we shouldn't celebrate just as yet. A good part of its pre-2008 
economic growth stemmed from favorable external factors, such 
as high commodity prices and lower interest rates. During the 
pre-2008 expansion, Latin America's growth rates were 
relatively high, but they were still below those in Asia. Latin 
America has also trailed Asia in poverty reduction and its 
levels of income inequality continue to be the steepest in the 
world, largely because of its education deficit.
    Indeed, Latin America is lagging in both the 
competitiveness of its universities and the number of its 
students who attend the world's best schools. As a sample, last 
year the Times of London published a ranking of the top 200 
global universities. Only one Latin American university, the 
National Autonomous University of Mexico, made the list, and it 
ranked 190th.
    Similarly, the number of Latin American students attending 
United States universities is relatively low. And while Asian 
universities emphasize engineering and the hard sciences, Latin 
American universities tend to focus more on social sciences. 
Diversity of knowledge is to be welcomed, of course, but 
information technology is the industry with the largest 
worldwide growth potential. According to a recent report, Latin 
America will experience a shortage of 126,000 computer 
engineers this year.
    Education is clearly one of the region's major long-term 
socioeconomic challenges and offers a wide field of 
collaboration with the United States.
    Its short-term security challenges include the drug war, 
attacks on democracy, and the growing influence of Iran. 
Narcotrafficking has brought terrible bloodshed to Mexico, but, 
even worse, could destabilize small countries in Central 
America and the Caribbean. Populist governments in Venezuela, 
Nicaragua, and elsewhere have undermined democratic 
institutions, scared away foreign investors, and menaced their 
neighbors. Russia has sold billions of dollars worth of arms to 
Venezuelan leader Hugo Chavez, thereby threatening to unleash a 
regional arms race. Meanwhile, Chavez has enabled Iran to 
greatly expand its strategic footprint in Latin America.
    I believe the Venezuela-Iran alliance represents a big 
threat to hemispheric stability. Their close financial 
cooperation is especially disturbing. Iran's Banco 
Internacional de Desarrollo is now operating in Caracas, 
despite being sanctioned by the U.S. Treasury Department for 
its links to the Iranian military. Speaking to the Brookings 
Institution in 2009, former New York City district attorney, 
Robert Morgenthau, warned that ``a foothold into the Venezuelan 
banking system is a perfect `sanctions-busting' method'' for 
Iran.
    As for military collaboration, Russian media recently 
reported that the Kremlin might sell its S-300 air defense 
systems to Venezuela instead of Iran, due to international 
sanctions against the Islamic Republic. The fear is that Chavez 
will then sell those weapons to Iran. Venezuela is working to 
create its own version of the Iranian Revolutionary Guards, and 
last week Chavez claimed to have secured a $4 billion credit 
line to buy even more Russian weapons after those bought during 
his October shopping trip to Moscow. But are all those Russian 
arms solely for Venezuelan armed forces, or the pro-Chavez 
militias? Or is Venezuela planning to funnel at least some of 
the weapons to its allies, including Iran?
    It is no longer possible to deny that Chavez poses a 
serious threat to United States security interests in Latin 
America. Various reports point out that the amount of cocaine 
transiting through Venezuela has increased significantly. That 
is alarming, but not surprising, given the extent to which the 
Chavez regime has supported and sheltered Colombian 
narcoterrorists belonging to the FARC.
    Just a few weeks ago, Chavez promoted Venezuelan military 
officer, Henry Rangel Silva, to the rank of ``General in 
Chief,'' even though the U.S. Treasury Department has accused 
Rangel Silva of aiding the FARC and being a drug kingpin.
    Finally, a word about Cuba. In September, Cuban officials 
announced that they would be laying off nearly 500,000 state 
workers. Weakened by a severe economic crisis, the Castro 
regime is taking small steps to expand private enterprise. It 
has also agreed to release political prisoners in hopes of 
convincing the European Union to normalize relations.
    Julio Cesar Galvez, one of the liberated and expelled 
prisoners now living in Spain, told the Associated Press: ``Our 
departure from Cuba should not be seen as a gesture of 
goodwill, but rather as a desperate measure by a regime 
urgently seeking to gain any kind of credit.''
    The Castro brothers know that the Cuban economy is in a 
dire condition, and they know that Washington could throw their 
government a lifeline if it were to eliminate the United States 
travel ban. Congress is currently debating legislation that 
would scrap travel restrictions and provide Havana with a 
massive infusion of hard currency.
    Yet, as the Washington Post argued in a recent editorial, 
``Fundamental changes of U.S. policy toward Cuba should await 
fundamental reforms by the regime. When average Cubans are 
allowed the right to free speech and free assembly, along with 
that to cut hair and trim palm trees, it will be time for 
American tourists and business executives to return to the 
island.'' That sounds like the correct strategy to me, but I 
look forward to discussing this issue, among others, with the 
committee.
    Thank you very much.
    [The prepared statement of Mr. Daremblum follows:]

  Prepared Statement of Ambassador Jaime Daremblum, senior fellow and 
    director, Center for Latin American Studies, Hudson Institute, 
                             Washington, DC

    Mr. Chairman, Senator Lugar, distinguished members of the 
committee, it is a great honor to be speaking before you today. I would 
first like to thank Senator Dodd for his many years of service, and 
particularly for his efforts to improve U.S. relations with the nations 
of Latin America, including my home country of Costa Rica. I would also 
like to thank Senator Lugar for his consistent efforts to defend 
democracy and safeguard regional security throughout the Western 
Hemisphere through the years, as evidenced recently by the questions 
submitted as part of the confirmation process of Ambassador-Designate 
to Venezuela Larry Palmer.
    Our topic is the current state of Latin America, a region that is 
often neglected in U.S. foreign policy debates but is vitally important 
to U.S. interests. As we survey the political and economic landscape, 
we find many encouraging signs. Democracy has become firmly entrenched 
in most countries, and the successful resolution of the 2009 Honduran 
crisis showed that even small, poor democracies have the institutional 
strength to withstand autocratic challenges. After decades of boom-and-
bust volatility, Latin American economies finally seem to be moving 
toward a trajectory of stable growth. They have generally become more 
resilient, as was evidenced during the recent global recession.
    On the other hand, some economies have been weakened by radical 
populism, which has taken root in Venezuela, Bolivia, Ecuador, and 
Nicaragua. In Venezuela, the Chavez regime has formed a strategic 
alliance with the world's leading state sponsor of terrorism (Iran) and 
has aided multiple terrorist groups, including the Colombian FARC, the 
Spanish ETA, and the Iranian-backed Hezbollah. In Nicaragua, Sandinista 
leader Daniel Ortega has returned to his old ways, and he is gradually 
eroding constitutional checks and balances. With the world distracted 
by other news, Nicaraguan armed forces recently invaded the sovereign 
territory of Costa Rica, a country that has no military. As we meet 
here today, Nicaraguan troops continue to occupy a Costa Rican river 
island, despite an OAS resolution calling for them to leave the area.
    In short, Latin America offers much to make us cheer and much to 
make us worry. I will discuss the positive developments first, before 
turning to the negative.
    Smart economic management and increased foreign trade have helped 
many countries become better prepared to weather global financial 
storms. Fiscal deficits have fallen, tariffs have been slashed 
dramatically, and the nontariff barriers to trade have been reduced 
even more. Prior to the 2008 global crisis, Latin America was 
experiencing its best economic performance in a quarter-century, which 
was fueling the growth of a broad middle class. According to the 
Economist magazine, some 15 million households emerged from poverty 
between 2002 and 2007. It is not unrealistic to expect that a majority 
of the region's population will soon belong to the middle class.
    In short, Latin America is on the right economic path-but we 
shouldn't celebrate just yet. A good part of its pre-2008 economic 
growth stemmed from favorable external factors, such as high commodity 
prices and low interest rates. It is worrisome that, with only a few 
exceptions, Latin American governments did not take advantage of the 
commodity boom to push for labor and tax reforms that would have made 
their economies more competitive.
    During the pre-2008 expansion, Latin America's growth rates were 
relatively high, but they were still below those in Asia. Latin America 
has also trailed Asia in poverty reduction, and its levels of income 
inequality continue to be the steepest in the world, largely because of 
its education deficit. Indeed, Latin America is lagging in both the 
competitiveness of its universities and the number of its students who 
attend the world's best schools. Last year, the Times of London 
published a ranking of the top 200 global universities. Only one Latin 
American university-the National Autonomous University of Mexico-made 
the list, and it ranked 190th. Similarly, the number of Latin American 
students attending U.S. universities is relatively low. And while Asian 
universities emphasize engineering and the hard sciences, Latin 
American universities tend to focus more on the social sciences. 
Diversity of knowledge is to be welcomed, of course, but information 
technology is the industry with the largest worldwide growth potential. 
And according to a recent report, Latin America will experience a 
shortage of 126,000 computer engineers this year.
    Education is clearly one of the region's major long-term 
socioeconomic challenges. Its short-term security challenges include 
the drug war, attacks on democracy, and the growing influence of Iran. 
Narcotrafficking has brought terrible bloodshed to Mexico and could 
destabilize small countries in Central America and the Caribbean. 
Populist governments in Venezuela, Nicaragua, and elsewhere have 
undermined democratic institutions, scared away foreign investors, and 
menaced their neighbors. Russia has sold billions of dollars' worth of 
arms to Venezuelan strongman Hugo Chavez, thereby threatening to 
unleash a regional arms race. Meanwhile, Chavez has enabled Iran to 
greatly expand its strategic footprint in Latin America, and his 
government has also assisted the Iranian-sponsored terrorist 
organization Hezbollah.
    I believe the Venezuela-Iran alliance represents the biggest threat 
to hemispheric stability since the cold war. Their close financial 
cooperation is especially disturbing.
    Iran's Banco Internacional de Desarrollo is now operating in 
Caracas, despite being sanctioned by the U.S. Treasury Department for 
its links to the Iranian military. Speaking to the Brookings 
Institution in 2009, former New York City district attorney, Robert 
Morgenthau, warned that ``a foothold into the Venezuelan banking system 
is a perfect `sanctions-busting' method'' for Tehran.
    As for military collaboration, Russian media recently reported that 
the Kremlin might sell its S-300 air-defense systems to Venezuela 
instead of Iran, due to international sanctions against the Islamic 
Republic. The fear is that Chavez would then sell those weapons to 
Tehran. Venezuela is working to create its own version of the Iranian 
Revolutionary Guards, and last week Chavez claimed to have secured a $4 
billion credit line to buy even more Russian weapons after those bought 
during his October shopping trip to Moscow. But are all those Russian 
arms solely for the Venezuelan Armed Forces, or the pro-Chavez 
militias? Or is Venezuela planning to funnel at least some of the 
weapons to its allies in Tehran?
    It is no longer possible to deny that Chavez poses a serious threat 
to U.S. security interests in Latin America. A 2009 Government 
Accountability Office report confirmed that the amount of cocaine 
transiting through Venezuela has increased ``significantly.'' That is 
alarming but not surprising, given the extent to which the Chavez 
regime has supported and sheltered Colombian narcoterrorists belonging 
to the FARC. Just a few weeks ago, Chavez promoted Venezuelan military 
officer, Henry Rangel Silva, to the rank of ``General in Chief,'' even 
though the U.S. Treasury Department has accused Rangel Silva of aiding 
the FARC.
    Finally, a word about Cuba. In September, Communist officials 
announced that they would be laying off nearly 500,000 state workers. 
Weakened by a severe economic crisis, the Castro regime is taking small 
steps to expand private enterprise. It has also agreed to release 
political prisoners in hopes of convincing the European Union to 
normalize relations.
    Julio Cesar Galvez, one of the liberated prisoners now living in 
Spain, told the Associated Press, ``Our departure (from Cuba) should 
not be seen as a gesture of goodwill but rather as a desperate measure 
by a regime urgently seeking to gain any kind of credit.'' The Castro 
brothers know that the Cuban economy is in dire condition, and they 
know that Washington could throw their government a lifeline if it were 
to eliminate the U.S. travel ban. Congress is currently debating 
legislation that would scrap travel restrictions and provide Havana 
with a massive infusion of hard currency.
    Yet, as the Washington Post argued in a recent editorial, 
``Fundamental changes of U.S. policy toward Cuba should await 
fundamental reforms by the regime. When average Cubans are allowed the 
right to free speech and free assembly, along with that to cut hair and 
trim palm trees, it will be time for American tourists and business 
executives to return to the island.''
    That sounds like the correct strategy to me, but I look forward to 
discussing this issue (among many others) with the committee.
    Senator Dodd. Thank you very much, Mr. Ambassador. Again, I 
appreciate your testimony.
    We've been joined by my colleague from New Jersey, Bob 
Menendez. Bob, thanks. Obviously, he has a deep, deep interest 
in the subject matter that has brought us all together.
    I'm going to do something a little bit out of the ordinary 
because I know colleagues have to be in different places. Dick, 
I'm going to defer to you right away for any questions you 
would like to raise, because I know people have schedules to 
do. So I'll defer my questions until you've had a chance to 
raise your own.
    Senator Lugar. I'll wait for you, Mr. Chairman.
    Senator Dodd. Senator.
    Senator Risch. I'll pass, too.
    Senator Dodd. Are you sure?
    Senator Risch. Yes.
    Senator Dodd. Well, let me just-there are so many questions 
that are raised with you here. Let me start with Brazil a 
little bit, because obviously there's a lot of excitement about 
Brazil's role hemispherically, the old expression: Brazil gets 
the sniffles, the rest of the region gets pneumonia. And 
conversely, if Brazil is doing well, then there's also great 
news for the region, given the implications and just the shared 
borders and economics. There's a lot to encourage what's 
occurring in Brazil.
    When I was there early this year, I think in the state of 
Sao Paolo alone, in the midst of our own crisis and with the 
automobile issues, I think there were some 95,000 Chevrolets 
sold in the province of Sao Paolo alone, as an indication of 
how they were doing versus our own economic situation at the 
time.
    Energy issues, very exciting, what's occurring; very green; 
moving in the direction, under President Lula. Had good 
elections, I gather. They hadn't occurred yet, but there was a 
lot of preparation, anticipation of the outcome, although it 
was a little closer than I think people thought it was in the 
end, with the runoff that occurred.
    But we've also seen Brazil-and Secretary Clinton I thought 
made a valiant effort prior to President Lula's decision to go 
to Iran to try and discourage that participation. I was there 
as well and made an effort, quite frankly, to try and dissuade 
him from that step. I didn't see the value in it particularly.
    But I wonder if you might just share with us your own quick 
observations about Brazil's role, both regionally, which is 
important, but also this reaching out to become more of a 
global influence, and what you make of that. Or is that just 
something-was that a particular decision that President Lula 
wanted to make, maybe in anticipation now that the new 
administration will be more focused domestically and 
regionally, rather than internationally as President Lula had 
been?
    Anyone want to start with that? Yes, go ahead, doctor.
    Dr. Arnson. I'll take a crack at that. Brazil is currently 
the eighth largest economy in the world. In the coming decade, 
some projections are that it will be the fourth or fifth 
largest economy. It produces 40 percent of the GDP of the 
entire hemisphere.
    Brazil traditionally has been inward-looking. To the extent 
that it has had foreign policy ambitions, those have been 
focused on its neighbors in South America. But I think that 
under the current leadership there has been a desire to play a 
greater role on the world stage.
    My own sense is that President Lula exaggerated his ability 
as so-called ``third world'' country and as a man of the left 
to play an influential role, for example, in brokering the 
Israeli-Palestinian crisis and certainly in playing a role 
regarding Iran's nuclear policy.
    That said, there are others who believe that the agreement 
that Turkey and Brazil were able to negotiate with the Iranian 
Government should have served as a starting point. It was 
certainly not sufficient, but incorporated a number of the 
elements of previous
    U.S. proposals, and should have been taken up and pushed 
further. I believe that the new government of Dilma Rousseff 
will be less anxious to solidify a relationship with Iran. 
Rousseff herself is a victim of human rights violations in 
Brazil, was brutally tortured, and I think is fully cognizant 
of the role of women in Iran and also of the significant human 
rights violations that take place under the regime.
    We should expect that Brazil will continue to assert itself 
in the hemisphere as well as around the globe. Those 
initiatives will not always be welcomed by the United States, 
but I think to the extent that we can work creatively and 
diplomatically, as our Ambassador, Tom Shannon, has done, to 
engage the Brazilian Government and work toward common ends, we 
will only enhance our influence.
    Brazil is the case par excellence of how the new-found 
economic dynamism, social cohesion, and reductions in poverty 
and inequality have served as a basis for a greater projection 
in many parts of the world. Brazil aspires to a place on the 
U.N. Security Council, as a member of the so-called BRICs, sees 
itself as the wave of the future. And quite frankly many people 
in Brazil and in the Brazilian Government see the United States 
as a power in decline. So we should expect that there will be 
ongoing frictions, but also good opportunities.
    Senator Dodd. Again, this is one of the cases where I think 
President Bush and the relationship between President Bush and 
President Lula was a very dynamic and positive one, and I think 
was the cause of-I hope I didn't sound critical. I disagreed 
with that decision on President Lula and Iran, for the reasons 
you've explained. But there has been a very constructive and 
positive role that Brazil has played regionally as well, and 
very exciting.
    I visited their Bolsa. The exchange is one of the most 
dynamic to see. I think 90 percent of the public companies in 
Latin America exchanged on that highly electronic Bolsa that is 
really a model of what electronic trading can be. So it's a 
very, very exciting place to be, and I think there's a 
tremendous opportunity.
    Anyone else want to comment on the Brazilian situation?
    Yes, Mark.
    Mr. Schneider. I think that the one thing is that Brazil in 
its relations with the rest of the hemisphere clearly has a 
desire to be seen as not a directing figure, but as a country 
that is always ready to cooperate. I think you're going to see 
Lula perhaps playing a role in UNASUR and I think that there's 
a likelihood that Brazil potentially would be one of the 
countries, given its strength economically and its basic 
democratic values, that the United States should be thinking 
about counseling with on issues where we're concerned about 
other countries moving away from democratic values.
    The only other point I would make is that in Africa, Brazil 
has a certain degree of receptivity. Again, where that is 
possible, it's something where we should talk to Brazil about 
issues going on in Africa, particularly development issues. As 
you mentioned earlier, Bolsa Familia is a fantastic program.
    One of the things to remember, though-and here's where 
Brazil could play a role hemispherically through the IDB and 
the World Bank-is that all of the conditional cash transfer 
programs in the hemisphere, all of them, constitute only four-
tenths of 1 percent of GDP. If they were expanded, if they were 
doubled to 0.8 percent, eight-tenths of a percent of GDP, it 
would have an enormous impact on poverty and inequality.
    One of the things in the recent report by Sao Paulo is that 
it shows what just this minor sort of increase could be. Brazil 
could play a leading role in helping make that happen out of 
the World Bank and the IDB.
    Senator Dodd. Well, they're going to have quite a stage 
now, with the World Cup and the Olympics coming up in the next 
few years.
    Mr. Schneider. That's right.
    Senator Dodd. Quickly, anyone else want to comment on this?
    Do you, Mr. Ambassador?
    Mr. Daremblum. Yes, just a couple of very short comments. 
Brazil has really been an example for many Latin American 
countries of how it is possible to have a wise and prudent 
management of the economy, combined with very impressive social 
programs- of which, of course, Bolsa Familia, which was 
initiated by President Cardoso and continued and expanded by 
President Lula, has been replicated throughout Latin America 
and even in cities here in the United States, I think New York, 
are now testing this type of strategy.
    On the foreign policy aspect, I don't tend to get so 
alarmed by Lula's flirting with Ahmadinejad. I think in the 
case of Ahmadinejad he overdid himself. I think that crossed 
the line. But in general, the phenomenon that we have seen in 
Brazil, which is not too different from a phenomenon that 
existed for many years in Mexico, is that leaders who wanted to 
pursue market-type economic measures-opening up to free trade, 
opening up to opportunities for private enterprise-had to play 
the left card in foreign policy as a consolation to their 
constituencies.
    In the case of Lula, Lula comes from the party of the 
workers, Partido dos Trabalhadores-very much to the left. This 
is the same thing we saw in Mexico: how much Presidents, even 
President Zedillo and the ones before him, really exceeded in 
their movements toward the left in order to pacify their 
constituency in the PRI.
    Senator Dodd. Thank you very much.
    Senator Lugar.
    Senator Lugar. Thank you, Mr. Chairman.
    Just following through on the colloquy on Brazil, several 
years ago-and this problem still continues for our country-many 
people saw a great urgency in greater energy independence for 
the United States, with less reliance on oil, especially that 
from the Middle East and hostile states. One of the exciting 
developments in Brazil was the development of ethanol from 
sugar cane and the diversification therefore in the 
transportation system, which gave Brazilians a choice between 
ethanol and a petroleum-based fuel, one which has never been a 
possibility for American motorists.
    That energy situation has grown. It's been desirable as the 
world has begun to take more of a look at climate change 
issues. The Brazilians have resented the fact that we have had 
a tariff really against importation. This is largely because 
the fledgling corn ethanol industry in our country, a first 
attempt really to gain some degree of energy independence, has 
required protection, at least some would feel.
    I mention this because I had many conversations with the 
Brazilian Ambassador and other Brazilian officials during that 
period of time, suggesting perhaps that we ought to have a 
partnership on energy, in which we encouraged other countries 
in South and Central America who had sugar cane or other 
products, for that matter, to develop energy resources that 
were going to be important for the United States and important 
for them as the new method of income, and likewise, to get to a 
point some of you have made in terms of information services, 
scientific endeavors, entrepreneurship, and what have you, to 
move off into different channels.
    This really has never taken off and I am sad that that's 
the case, but it need not be the case forever. But I am 
energized by the discussion today to say that, of course, 
Brazil has gone well beyond leadership in energy resources. 
We've been discussing diplomacy, the increase in gross national 
product, and many aspects of it.
    What if a new initiative were to be created in the United 
States in which we really indicated to the Brazilians, and 
hopefully they reciprocated, that the two of us have an 
opportunity, but maybe also an obligation, to be helpful not 
only to our own citizens and our economies, but together to 
tackle the problems that you have mentioned and I've sort of 
ticked off as you all discussed: the problem of agriculture, 
for example, and the problem of basic nutrition for many 
countries in the region.
    Clearly, the problem of education at all levels, without 
which citizens in our own country are not going to prosper is 
going to be equal in difficulty in Latin America. This is 
particularly crucial given that you've indicated in Brazil, as 
I recall, or some countries, the youth may constitute 50 
percent of the population presently. This is a horrible deficit 
if you start out in a world economy that's already competitive. 
In other words, we've tried to grasp some very big issues-
energy, education, agriculture, and food and nutrition, in 
essence, and see if we can make some progress in this respect, 
where it might appear that the United States is not in a 
preaching attitude, looking at others sort of in a missionary 
aspect, but rather in a partnership with a strong country, the 
eighth-largest economy in the world, in which we all think in a 
compassionate but constructive way about our hemisphere.
    I mention this because in our own country, as all of you 
would observe, we have a great deal of polarization right now 
on the immigration issue. We have problems that are exacerbated 
by the drug problem, because in fact drug demand in our country 
many would say drives the whole train of drug situations 
throughout Latin America. This brings about all kinds of 
misunderstandings with our near neighbor Mexico, which is a 
tremendously helpful partner. But at the same time, when the 
President of Mexico came to the United States, he had some very 
sharp remarks to make in the joint session about arms going 
into Mexico and about various other ways of enforcement.
    So I don't want to skip Mexico, but on the other hand, we 
have some polarization that is not going to evaporate in our 
domestic politics. In any event, it is important to sort of 
reach out to Brazil at this point it may also be helpful, if 
the Brazilian leadership is interested in the prestige which 
comes with recognition of being a leader in this respect. They 
need not then go off to Iran or find the Turks somewhere along 
the trail or try all sorts of unusual alliances to gain 
attention, to gain prestige.
    So let me just ask you for your impressions of a new 
partnership, but in this case a very big one, in which we come 
really into a different kind of relationship voluntarily, but 
likewise as people who are sincere about our humane interests, 
as well as the economic fortunes.
    Mark.
    Mr. Schneider. I think that that would be an excellent 
initiative. I think that actually that would be the kind of 
initiative that could take place not solely with the United 
States and Brazil alone, but would also very quickly draw 
others together, possibly partnering with the IDB and the World 
Bank so that you have available matching resources.
    Brazil, by the way, in the area of education has been doing 
some quite exciting things in terms of expanding access. There 
are programs that provide teachers with special opportunities, 
bonuses for being a good teacher, and opportunities to obtain 
higher education degrees. There's a strong effort in Brazil to 
move education out into their rural poverty area as well.
    So I think in agriculture also, that there are excellent 
areas for potential partnership. I would think that the 
administration here- if you remember, Secretary Clinton and 
President Obama have this initiative on food, nutrition, that 
they're trying to push forward. I would think that that would 
be something that would be very sympathetically received by 
Brazil.
    Senator Lugar. Yes, Joy.
    Ms. Olson. I think it's a wonderful idea, too. I think it 
would be worth giving some real thought to how to set up some 
different kinds of models and discussions. The thing that 
compels me is that there are so many issues where a number of 
countries, not just us and Brazil, but so many countries in the 
hemisphere, are fundamentally addressing the same problems.
    If you talk about urban violence, some of the same gangs 
exist in the United States that exist in Central America. If 
you watch what's been going on in Brazil the past few days in 
trying to deal with gangs in Rio. Colombia has similar issues. 
This issue of violence-it's not just about top-level organized 
crime. It's about violence prevention-what do you do in terms 
of good government on violence prevention. Defining things in 
terms of good government really would be an interesting way to 
do it.
    The other thing I would say is, on drug policy, there is an 
opportunity right now for a drug policy dialogue. My office for 
the past 3 years has been involved in what we've been calling 
``informal intergovernmental drug policy dialogues'' with Latin 
America. Representatives from the Brazilian and other 
governments have been involved in these discussions.
    The fascinating thing is these dialogues have been off the 
record, and an opportunity for vice-minister-level people and 
some academics to sit down and say: What works in terms of harm 
reduction strategies? What's the situation in terms of long-
term incarceration of nonviolent low-level offenders and prison 
overcrowding? Really, the same problems that the United States 
is trying to figure out how to address right now.
    So I think we should try to identify problems where we're 
really dealing with the same thing, in somewhat different 
contexts. We should look at how to create a different kind of 
discussion that's really about how we solve these problems in 
our own communities, while learning from each other.
    Senator Lugar. Yes.
    Mr. Daremblum. I think your initiative, Senator Lugar, is 
excellent. That's really the way to go between the United 
States and Latin America in diplomatically solving a number of 
problems.
    Actually, a partnership on education was announced at the 
Presidential Meeting of the Americas in Trinidad and Tobago in 
April 2009, in which President Obama announced that he would 
inaugurate a major partnership to promote education, to further 
education. Well, unfortunately, we're still waiting for that.
    Also, in terms of energy, I recall that during a visit of 
President Lula with President Bush, a partnership for energy 
was announced and some sort of an accord was established with 
the participation of the Inter-American Development Bank, the 
IDB. It called for the creation, or for the establishment, of a 
number of pilot projects of plants for the production of 
ethanol. One of them was built in El Salvador. Whatever 
happened to this initiative since then, I don't know. But it 
was a great idea.
    Thank you.
    Senator Lugar. Yes.
    Dr. Arnson. If I could just add for one second, because I 
know we're over our time. I believe there are such partnerships 
under way and I simply do not know enough about it. But I think 
that Secretary Clinton and Assistant Secretary Valenzuela have 
been involved in kind of fostering the very kind of alliances 
that you've suggested.
    But I'd also come back to something that you said earlier, 
which is that our own domestic politics complicate our ability 
to engage in these kinds of partnerships. Brazil is deeply 
resentful of the tariffs that exist, that prevent the import of 
Brazilian ethanol into the United States, even though sugar 
cane ethanol is produced much more cheaply and in a much more 
environmentally sustainable way than corn ethanol. So it's a 
classic example in which the United States appears to not 
exactly practice what it preaches, both in terms of open trade 
regimes and the fostering of alternative energy.
    But I agree that this is a critical area, and to the extent 
that the United States and countries of the region can partner 
in ways that are to everyone's benefit, it's only for the good.
    Senator Dodd. I would just make one observation: 75 percent 
of the population of Latin America are living in urban 
settings; 50 percent of the population living is under the age 
of 18. A lot of times our relations are state to state. In 
fact, one of the ideas which I raised with Secretary Clinton, 
and she seemed to have liked, is thinking about how we might 
start talking about these mayors and these governors in Latin 
America, where a lot of the most creative thoughts and 
interesting things are occurring.
    Too often, we overplay that. It is state to state, rather 
than starting to look at emerging leaders. I think of the 
former mayor of Bogota. He lost the Presidential election to 
President Santos, but a very interesting mayor, a very popular 
mayor of Bogota, for instance. Governor Serra of Brazil, lost 
the election, but I think most people recognize him as a very 
competent governor of that state.
    Maybe we ought to be spending a little more time looking at 
the relationships at that level, and given again the urban 
concentration-not to minimize the importance of the rural 
areas, Mark, you talked about-but it might be a way of really 
consolidating.
    And last, to just mention, I don't know if we ever did this 
before-the reason I mentioned President Bush and President Lula 
is because I remember when they met and everyone anticipated 
this very uneasy, uncomfortable meeting. I remember having 
dinner that night with President Lula after the meeting. They 
had spent about 11/2, 2 hours together. They developed a very 
good relationship.
    It's the only time I know that President Bush has suggested 
we establish Cabinet-to-Cabinet meetings, that President Bush's 
Cabinet and the Brazilian Cabinet actually met. I don't think 
it's happened anywhere else since. Maybe it has, but I'm just 
not aware of it.
    But it was intriguing to me that they actually had that 
kind of a relationship. It was interesting.
    Senator Lugar. If I may--
    Senator Dodd. Yes.
    Senator Lugar. My only point, I suppose-and I think those 
are excellent suggestions. But the whole relationship needs to 
be elevated in a public relations way.
    Senator Dodd. Yes.
    Senator Lugar. In other words, if Secretary Clinton were to 
come to this hearing some day and say, I have a great new idea. 
Or the President could announce it during his State of the 
Union and Secretary Clinton subsequently comes to discuss it 
with us in more detail, and so forth. From there, the 
governors, the mayors, and others could participate in the 
initiative. But for the moment, our hearing today is about the 
overall relationship and the need to elevate this in a more 
exciting, intriguing way which captivates the attention of the 
American people and, we hope, maybe the Brazilians. Such an 
initiative could probably only start from the top and then work 
its way down.
    Senator Dodd. You're right. I agree with that.
    Bob, sorry to encroach upon your time.
    Senator Menendez.

STATEMENT OF HON. ROBERT MENENDEZ, U.S. SENATOR FROM NEW JERSEY

    Senator Menendez. Thank you, Mr. Chairman.
    First let me say that, as someone who for the last 18 years 
since I came to the House and then the last 5 here in the 
Senate, have been focused on the Western Hemisphere, I 
appreciate your leadership in so many ways, because it's a 
rather small universe of Members of Congress who are focused on 
the Western Hemisphere.
    So while we may not have always agreed, although I think 95 
percent of the time we did, we certainly-I certainly appreciate 
that, and I will miss you not being here in that and other 
regards as well.
    I think a lot about this and I care less about, for 
example, what the Chavezes of the world do and I care more 
about what we do. I had high expectations-the new 
administration, certainly at the outset, did certain things 
that I said, wow, we're finally going to have some real time 
and attention here to our own hemisphere, our own front yard.
    Then it sort of like dissipated. Now, I know there are many 
world events taking place, but I think there's a crying clarion 
call for attention in the Western Hemisphere in our own 
national interest, in our own national security, that goes 
beyond being a good neighbor. Certainly we can and should be a 
good neighbor, but when, as some of my colleagues have said, 
when we talk about undocumented immigration and the challenge 
of immigration reform in this country, people leave their 
countries for only two reasons: civil unrest or dire economic 
circumstances. There's a reason and an opportunity to try to 
work on that.
    There is a real opportunity to understand that our 
challenges with narcotics, if you don't give a poor coca farmer 
something else to grow that is sustainable or some other 
sustainable development opportunity, he's going to do what he 
has to do to take care of his family. But that ends up in the 
streets of New Jersey.
    If in fact we care about growing our economy, then 
certainly having a more robust middle class in Latin America 
and the Caribbean, which has a propensity for U.S. goods and 
services, is in our economic interests.
    Diseases that know no boundaries or borders have re-
surfaced, that we had largely eradicated. The question of 
energy is so pressing for us hemispherically and there are 
great opportunities, including trying to preserve the largest 
carbon sink in the world.
    And the list goes on and on. Collective security in this 
hemisphere. So I listened to the individual issues, but I say 
to myself, what is our agenda? What is the national agenda of 
the United States as it relates to the Western Hemisphere? And 
I'm not quite sure that I can define it.
    I look at the enormous inequality, which is one of the 
underlying root causes of the challenge that we have in the 
hemisphere, and I say, well, we can't do that alone. Why can't 
we find ways to reorient that which we do do in a way that 
ultimately seeks to deal with some of those root causes, which 
is why I created the Social and Development Fund for the 
Americas, which got a fair amount of bipartisan support, but we 
haven't been able to ultimately move it.
    I look at our way-at what's happening in the context of 
narcotics, and I think we've totally lost our way in this 
regard, in terms of understanding all of the elements, 
including demand issues here in the United States. And I say to 
myself, doesn't Elliot Engles, which I support, Western 
Hemisphere drug policy that has provisions that I included in 
some of the things that Senator Kerry and I did here, shouldn't 
we be moving in that direction.
    I think about the OAS as an institution that could and 
should play a more vital role. But it needs some reforms. 
Unfortunately, we have a bill that does exactly that, that has 
bipartisan support, but it is being stopped by some members 
simply because they want to make a statement about Honduras.
    Well, this doesn't give us any sort of an agenda at the end 
of the day. If that doesn't happen legislatively from the 
Congress, and if the administration doesn't really have a 
cohesive agenda that has this and so much more, then the Latin 
Americans look and say: Well, what's the U.S. interest as it 
relates to us?
    So we talk a good game about being interested, but it seems 
to me that we have not quite had the agenda that engages the 
Latin Americans and therefore continues to permit a vacuum in 
which the Chavezes of the world can move forward.
    So I'm wondering-and then I hear in my present role as the 
chairman of the subcommittee of all of our foreign assistance, 
I hear about changes in that regard that may very well mean 
less resources for the Western Hemisphere at a time in which 
there are greater challenges in the Western Hemisphere, and 
that worries me.
    So I'm wondering, from your perspective, how do we get 
control of and create an agenda here that will be meaningful 
for the United States, obviously in its national interest and 
its national security, but at the same time engages the Latin 
Americans in a way that I think Senator Lugar was talking about 
vis-a-vis Brazil leading. But we need hemispheric engagement at 
the end of the day. Maybe some people can be a catalyst to 
that. So I'd love to hear that.
    Then the only other question I have-that's a very generic 
question, and I'd like to hear as part of your answer whether 
any of the things I've mentioned, some of the legislative 
initiatives, make sense.
    Then I have a dear affection for Colombia and have been a 
strong supporter, but I look at the latest set of events with 
President Santos. You know, he took office in August. He has 
met several times with Chavez. They both have vowed to 
dramatically improve their relationships. That may be a good 
thing. He recently complied with Chavez's wishes in granting-
this is President Santos-in granting the extradition of a 
Venezuelan drug kingpin to Venezuela rather than to the United 
States. Both had made requests to do that.
    Some suggest that Chavez wants this gentleman, Macled, at 
home to keep him silent or press him to recant his testimony. 
The Santos government has no immediate plans to submit to the 
Colombian Congress a new bill authorizing the presence of U.S. 
troops in several Colombian military bases. And I see all of 
this and I say it's one of two things. Colombia has Venezuela 
as a major exporter of its goods, so it has economic interests. 
I understand that.
    Then the other thing is he's playing poker, which I like to 
do myself, and whether or not in the process of playing poker 
we're getting closer to Chavez, at least in the honeymoon 
period, so we get the United States to respond, whether on a 
free trade deal or something else.
    So in any event, I'd like to hear some responses to these 
perceptions. In the first instance, how do we get an agenda 
that we can move forward. Then what do you think about what's 
happening with President Santos?
    Ms. Olson. Thank you. If I may, Senator--
    Senator Dodd. Have you got the microphone there, Joy?
    Ms. Olson. Sorry.
    I'm really interested in your early remarks about 
reconceptualization and coming up with an agenda, because I 
really thought about this as I was working on the testimony. It 
feels like we are at this moment where there needs to be a 
different kind of definition of things that in many ways makes 
us more relevant to the region. The term I kept coming back to, 
which I know is not new and I think Abe Lowenthal came up with 
a long time ago, was the idea of being able to think and 
develop policies intermestically- being able to have a policy 
discussion that is about drug policy here and drug policy in 
Mexico and drug policy in Brazil and Europe, to be able to 
think about these things much more holistically than we do 
right now.
    I know that the committee structure of Congress doesn't 
really lend itself to that, but I do think that that's the 
challenge. And not just on drug policy; on others. But I would 
agree with you that this Western Hemisphere Drug Commission-the 
bill that passed the House and is being worked on over here-is 
really a step in the right direction. It also signals that we 
are willing to give some profound thought to what works and 
what doesn't work, which I think is the basic issue that needs 
to be addressed.
    Another thing on the intermestic conceptualization front: I 
think when it comes to migration and development, we have to 
think about them together, but we don't. It's extremely hard, 
and I know you've been working on this for years, to get 
anybody to talk about economic development in the context of 
the immigration debate, or not even the debate, but just in the 
concept of immigration.
    I think that it's the challenge, not just in formulating a 
policy agenda, but almost in reforming how we all think about 
the region and developing policy and problem-solving.
    Just lastly, because I think this is exciting, we're in 
discussions right now that came out of work that WOLA was doing 
on youth gang violence in Central America. What we were seeing 
was there were models of communities both here in the United 
States and in Central America that had reduced violence where 
gangs were present. So one of our questions was, how do you end 
up with national policies and regional citizen security 
policies that learn from and reinforce and support what we know 
works at the local level.
    Senator Dodd. this goes to your point of us sometimes being 
good at these government-to-government discussions. But when it 
comes to violence prevention, it isn't just done at the 
government-to-government level. In places where things really 
work, it's because there's intense coordination going on 
between schools, church programs, after-school programs, local 
business, where there's smart policing that's rights-
respecting, that's targeted on the violent elements of the 
gangs and not just on arresting large numbers of young people.
    It's this coordination piece. So one of the things that 
we're in discussions on right now with people both at the World 
Bank and at the IDB and with almost all of the Central American 
governments-and this came out of the work with the 
nongovernmental community-is: how do we develop a coordinating 
mechanism? Because a lot of money is being spent on citizen 
security issues in Central America. How do we facilitate the 
kinds of discussions that will develop more effective policies 
at violence prevention?
    So I think we're at this point where there's a real need 
for reconceptualization.
    Dr. Arnson. I'd like to briefly address your final comment, 
Senator Menendez, about the actions of the Colombian 
Government. I think that what Santos has done over the last 100 
days is a classic representation of the way South American 
countries are defining their own national interest in ways that 
are not necessarily the same as the way the United States sees 
its national interest vis-a-vis that country.
    I can only speculate as to the reasons that Santos agreed 
to extradite the drug trafficker back to Venezuela as opposed 
to the United States. But the Santos government has a very 
strong interest in preventing the FARC from using Venezuelan 
territory, in securing Venezuelan cooperation in a greater and 
tighter control of the border area, and there are many other 
things that Colombia cares about vis-a-vis its own immediate 
neighborhood that are of critical importance to them, and 
possibly we don't see the same- we don't see the things eye to 
eye.
    I think that the desire to assert independence from the 
United States started with the radical-left, but includes the 
social democratic left as well as the center-right. I think 
this is a classic example. There is a decoupling of the way 
Colombia defines its own national security interests and the 
way the United States has defined that alliance. In other 
words, under the previous administration I think there was a 
complete coincidence, particularly between the Bush 
administration and the agenda of the Uribe government. There 
are many analysts in Colombia on all sides of the political 
spectrum that see that Colombia paid a price for that within 
South America in particular. The bases agreement was very 
costly diplomatically to Colombia within the region because of 
the way it was handled, and there is obvious dissatisfaction 
with the failure of the
    U.S. Congress to move forward on the free trade agreement. 
So I think Santos has decided that Colombia's insertion in 
Latin America, given the degrees of intra-Latin American trade 
and investment and south-south cooperation, is more important 
to him right now than the relationship with the United States. 
He has visited many countries of the region. He came to New 
York for the
    U.N. General Assembly. He has not come to Washington. I 
think the message could not be clearer. Again, it's an 
expression of assertiveness that poses a challenge to us, but 
not necessarily an irreconcilable difference.
    Mr. Schneider. Could I--if I could, let me just take a 
little bit of a different point of view on the last point. I 
don't think there's any problem with respect to Santos and the 
relationship with the United States, No. 1.
    No. 2, I think that Santos made it a significant part of 
his political decision to demonstrate distance from the 
previous administration in a variety of ways. He opened up 
relations with the judiciary, where there had been a horrendous 
confrontation. He made it clear that he was going to look at 
the issue between the previous Colombian Government and civil 
society in a different way. He was going to talk about the 
rights of the human rights activists and the human rights 
groups, that they were not the enemy. He talked about the 
possibility of exploring negotiations with the FARC. All things 
that were not done before. He submitted to the Congress three 
pieces of legislation: one on land restitution, one on land 
reform, one on doing away with the DAS. He also most recently 
submitted a new slate of candidates for Attorney General to the 
Supreme Court.
    These were actions that were designed to say: I'm 
independent, I think that Colombia needs to move in a different 
direction. Yes, we're going to continue to be tough militarily 
against the FARC, but we have an opportunity to go in a 
different direction.
    With respect to Chavez, I think here Cindy is absolutely 
right. When you go to the border and you talk to the local 
authorities about how they deal with the problems, they're 
totally overwhelmed by the capacity of the FARC, the ELN, drug 
traffickers, to move back and forth across the Venezuela border 
as they wish. The reality is that if Santos can get from Chavez 
a decision to actually put some constraints on that flow, 
particularly in terms of the FARC having any sanctuary there, 
it would be a major advance in putting pressure on the FARC, 
hopefully pressure that will ultimately lead to some kind of 
negotiated end to the conflict.
    I think at the same time, it's not in Chavez's interest to 
be seen as someone who cooperates with and provides support for 
drug traffickers. So I think Chavez did extradite a couple of 
suspect traffickers to the United States. He's been playing 
this issue lately.
    I did want to also say with respect to three issues that 
you had raised. One, a social development fund. This issue 
should be a bipartisan issue in terms of our relationship with 
the hemisphere. I would hope that the next Congress would move 
your bill if you can't get it through during this lame duck.
    Second, on the Western Hemisphere Drug Policy Commission. 
That in fact could partner with the blue ribbon panel on the 
same issue that the Latin Americans did themselves, Presidents 
Gaviria, Zedillo, and Fernando Henriquez Cardoso, which 
basically said: This is not working, not only not working in 
terms of U.S. concerns, but also not working in terms of our 
countries. So I think this is an issue where you can in fact 
find a way to move forward together with Latin America.
    On the OAS strengthening, I think it's clear that there's a 
need to do that. I actually would urge giving the OAS greater 
analytic capabilities in terms of conflict prevention through 
an early warning system and the ability to mount more effective 
diplomatic responses.
    Now, in terms of how do you get a new strategic Latin 
America agenda in this administration, I think you have to 
harness the Hispanic Caucus. I think they have to be making 
this one of their priorities going to the President. Ultimately 
a new strategy must come from the White House and I think both 
of you, are better able than I am to set out that kind of a 
strategy. But that's where it has to take place.
    Senator Dodd. Go ahead.
    Mr. Daremblum. I think that I agree with all the previous 
speakers, but I think also that there is another ingredient in 
talking about Santos. It is the ingredient of a vacuum that 
many Presidents, many leaders in South America, are feeling in 
terms of a lack of engagement with the United States on a 
number of problems.
    So I think the idea of partnering with Latin American 
countries on a number of things is a great idea and a way of 
getting them involved and getting them to be a part of a U.S. 
initiative.
    Let me say that, in terms of drugs and narcotrafficking and 
human rights in general, there are two agencies which function 
within the aegis of the OAS, but they are autonomous of the 
OAS, and they have been functioning rather well. One is the 
CICAG, which is cooperation among police forces, law 
enforcement, judiciaries, concerning terrorism and concerning 
narcotrafficking, which has been working. I've heard a great 
deal of satisfaction from the governments in this regard.
    Also in terms of human rights, the Commission on Human 
Rights has been working very well. I think they really 
represent the steppingstone on which to build future 
initiatives among the various governments.
    Senator Dodd. Let me just add. Bob, I think you're so 
terribly thoughtful and cognizant. We just don't talk about 
enlightened self-interest. We talk about what we can do for 
these countries instead of, as you framed it so well, what's in 
our interest, our common interest. There's nothing wrong with 
enlightened self-interest.
    In every one of the subject matters you raised, there is an 
enlightened self-interest that I think we in the public arena 
have not done a very good job of articulating to our 
constituencies. I think, in fairness to the Obama 
administration, I have the same sense of regret in a way, and I 
think you said it well. Obviously, Afghanistan, Iraq, other 
issues. There are only so many issues they can grapple with at 
the same time.
    I had really hoped that President Obama would get to Brazil 
between the election of the new President and the inauguration 
in January. I thought it would be a great visit to make in the 
region. So I know there's a lot of pressure on them to do these 
various things. My hope is that maybe now there will be some 
attention to this, because I think it's good politics for all 
the reasons you've identified.
    I want to just ask you quickly at the table. I expressed my 
view that I thought we ought to-I had hoped we'd get in the 
lame duck session to the ratification of the Colombian Free 
Trade Agreement and the Panamanian Free Trade Agreement. Would 
you just give me a quick yes or no, would you be in favor of 
that? Are you in favor of that, Mr. Ambassador, those two 
treaties?
    Mr. Daremblum. Yes, of course.
    Senator Dodd. Joy? I know the conditions you have. I just 
want to get sort of a yes or no. We all get asked that 
question, too, and we never answer very well.
    Ms. Olson. Panama, yes. Colombia is moving in the right 
direction on some things, and I think figuring out how to 
leverage that progress at this particular moment is a good 
idea.
    Senator Dodd. Cynthia.
    Dr. Arnson. Yes; on both counts.
    Mr. Schneider. I think that I agree with the point that Joy 
just made. You have to come to a judgment that approval-at this 
stage-with respect to Colombia, is going to support Santos in 
continuing the reform path, particularly on human rights, on 
which he has embarked. But you have to come to that clear 
judgment.
    Senator Dodd. Let me ask you this, and again going to what 
Bob's point was. One of the things that again struck me when I 
was back in the region again earlier this winter and spring in 
Central America, that Bob Corker went with me on, and we were 
in all four of the countries plus Panama, the Central American 
countries, the sovereignty issue. Again, we would hear this 
over and over again. Obviously, sovereignty is a critically 
important issue in Latin America. Yet when you look at the drug 
issue, in just the Central American countries-and I happen to 
think President Lobo, by the way, is doing a very good job in 
Honduras, in the wake of all the difficulties we're familiar 
with. President Chinchilla, I was there for her inauguration in 
Costa Rica, and I think-I've known her in the past. My brother 
was there. She was the I think Minister of Justice.
    Mr. Daremblum. Minister of Public Security.
    Senator Dodd. Public security, she was at the time.
    President Martinelli in Panama. There are some good people 
there. But the problem is the cartels seem to know where to 
move based on whatever country is investing in its security 
resources. Either offshore, onshore, they play it like a harp. 
So the greatest asset for the cartels are in fact the very 
sovereignty issues that these adjoining countries embrace, so 
that there's very little, or at least not enough, cooperation 
where there is the notion of this is a common threat, a common 
problem.
    I realize there's a lot more to this issue than merely 
this, but it strikes me that until we can convince these 
countries to start to really work cooperatively and get 
resources working in the same direction, sovereignty is the 
greatest asset the cartels have, in a sense. Anyway, that's my 
observation.
    Any thoughts quickly on that subject matter?
    Mr. Schneider. Let me just offer two positive comments. One 
is all the Central American countries now recognize that they 
are under attack and that they don't have the resources 
themselves to withstand it. They all recognize that. So they're 
all reaching out.
    So if we were able in fact to come up with a significant 
cooperative effort-the administration has the Central American 
regional security effort. But it has not yet developed in a way 
that provides the kind of institution-building resources that 
are needed. The other is that you have on the military side 
JIATF-South, which does involve every Central American country. 
I think that that actually is a useful thing. The second is 
through the Central American Integration System-known by its 
Spanish acronym, SICA. That hasn't been used effectively to try 
and deal with the question of sovereignty in a way that permits 
you to have cross-border cooperation, intelligence-sharing, et 
cetera, and that might be an avenue for them to also adopt a 
CICIG model in each Central American country.
    Senator Dodd. Anything else on that quick point?
    Dr. Arnson. There is an attempt to create greater 
cooperation along the lines that Mark was mentioning, fostered 
by the Organization of American States, by the Central American 
Presidents themselves, as well as by the U.S. Government. I 
frankly don't see the sovereignty issue as playing a role as an 
impediment as much as the sheer ability of the cartels to 
corrupt, to take advantage of weaknesses in institutions, 
weaknesses in the police and the judiciary, in countries' 
territorial control, which is the way it began in Colombia, and 
now which is a critical issue in Guatemala.
    The cartels are able to exploit these weaknesses and shift 
their operations in accordance with pressures they might feel 
or other opportunities that they seek. I'm not sure that the 
sovereignty issue is as much an issue here as the weakness of 
the institutions available in the region to combat this.
    Senator Dodd. That's well said.
    There's so much to talk about, obviously, and even in a 
hearing of 2 or 3 hours we hardly-we haven't even mentioned 
President Calderon in Mexico in the last 2 hours, our neighbor 
to the south.
    I was very impressed with President Pinera in Chile and 
very impressed, by the way, with President Correa in Ecuador. 
Knows our country very well, obviously. Was a student at the 
University of Illinois. I was very impressed. I had a long 
lunch with young business leaders in Ecuador, and I fully 
expected sort of a hostile reaction to President Correa based 
on what I had heard. Every one of them to a person applauded 
him, just went out of their way. One of the reasons was because 
he was treating large corporations- making them pay taxes, do 
other things. As smaller entrepreneurs, they were paying taxes. 
They didn't have the influence politically. So he's really 
creating an environment down there that seems to be working.
    I think it's in our interest with people like President 
Pinera and President Correa, that are not big players 
economically, although Chile, most of its trade goes to the 
Pacific Rim, and obviously very stable, but that we realize 
we've got some allies here. We're going to have our 
difficulties with them from time to time, but there are some 
very creative, very smart leadership, new leadership, emerging 
in the hemisphere that can play a very important role in my 
view. Because they come from smaller countries or ones that we 
don't have much to quarrel with, they can become great assets, 
I think.
    President Correa has a great understanding of us and a 
great affection for the United States in my view. I think 
Secretary Clinton had a similar reaction in her meeting with 
him. She met with him shortly after I did. We happened to go in 
different directions. Alan Garcia, who would have thought? I 
mean, Alan Garcia--the Alan Garcia that I knew 25 years ago, 
the one that I know today, is this remarkable leader who's 
leaving office, obviously, but is just doing a great job.
    So can anybody just comment on some of these leaders like 
this in the region that aren't necessarily the focus of our 
attention, but what roles they can play.
    Yes.
    Dr. Arnson. I appreciate that you raise that because I 
think the tendency when one looks particularly at South America 
is to think in terms of Brazil, given the size of the country 
or the size of the economy. President Ronald Reagan once made a 
comment, that was ridiculed at the time, when he traveled to 
the region to say: There are a lot of countries down there. I 
think that's true of South America and it's important not to 
lose sight of the variety of successes that go from Uruguay to 
Chile to Peru.
    Senator Dodd. Cynthia, excuse me one second. I'm going to 
interrupt you before my colleague leaves.
    I appreciate my colleague's kind comments about my imminent 
departure after 30 years on this committee and in the Senate. 
I'll tell you, one of the things I feel very good about is that 
there are people like Bob Menendez, who care about these 
issues. When you leave and you care about something as much as 
I do about Latin America and our relationship, knowing that 
there are people in this body who care as much, if not more, 
than I do. He brings not only intellectual interest in this 
thing, but there are other interests which he brings because of 
ethnicity and background that are critically important in my 
view, a passion about this question.
    So Bob, I thank you. I feel a lot more secure walking away 
knowing that there's someone else who's going to carry on. So 
thank you.
    Senator Menendez. Thank you.
    Senator Dodd. Sorry, Cynthia. I apologize.
    Dr. Arnson. Just to finish, there are countries throughout 
the hemisphere who are very ambivalent about the emergence of 
Brazil or the leadership role that Brazil has tried to play in 
the region, and see themselves as countries with their own 
interests and who collectively represent a significant economic 
block, are models of consolidated democracies to greater or 
lesser degrees.
    We shouldn't forget that there are many countries in the 
hemisphere. The policy right now has focused, quite rightfully, 
on Mexico. In the past it focused on Colombia. But there's a 
big hemisphere down there and I think that we should keep the 
number of countries and their diversity in mind.
    Senator Dodd. Yes, Joy.
    Ms. Olson. I'm reminded of Tip O'Neill's phrase: All 
politics is local. I think that in terms of this kind of 
reconceptualization of relationship, the degree to which we can 
embrace the idea that all politics is local and that we need to 
relate to the reality that exists in very distinctly different 
countries of the region, so that we're engaging with them on 
their self-interest. That's where we'll start building 
something different, and I think have better success.
    Senator Dodd. You made the point earlier, and all of you 
have one way or another, one of the more difficult things we've 
had with, unfortunately, not even colleagues here but others, 
is the tremendous diversity. With the exception obviously of 
Brazil and some of the English-speaking islands, it's far more 
complicated than a common language. Just in Central America 
alone, which the Ambassador knows, the fundamental distinctions 
and differences that exist even with very proximate neighbors 
is something that needs to be-I think there's a growing 
appreciation of that as well.
    Look, I want to come back. I can't let you leave without 
Haiti, because clearly the elections you've talked about, but 
obviously, going back to the loss of 200,000 lives, 70,000 
people have been affected by cholera, 2,000 lives lost, 1.5 
million people living in tents. Typically what happens too 
often is there is obviously this great outpouring, a very 
natural sense of outpouring of benevolence and care and 
generosity in the immediate wake of the tragedy last winter, 
but also we know as time goes on and the cameras leave and the 
nightly news programs and so forth move on to other issues, the 
attention diminishes.
    Tragically, this is a matter that deserves our attention. 
The election obviously is the immediate one in hand. I don't 
know if any of you want to share any thoughts or ideas. 
President Clinton, to his eternal credit in my view, just does 
not quit on this issue. He is just sticking with this thing, 
and I admire him immensely for his commitment to it. but he 
can't do it alone, obviously.
    I wonder if you just have any thoughts on what else we 
could be doing, how could we lead in some way. This has got to 
change, and obviously there's a lot of resources that have gone 
in. Legitimately, people are going to ask, what's coming back 
as a result of billions that are being spent. So I wonder if 
you might just quickly share some thoughts if you have any on 
this subject.
    Mr. Schneider. Just a couple things. By the way, I would 
ask that my full statement be included.
    Senator Dodd. It will be. All of your statement, all your 
thoughts, will be.
    Mr. Schneider. The one thing in there, it seems to me, that 
has not been sufficiently focused on and that can be done is 
the need to have a policy decision on resettlement. You're not 
going to move 1.5 million people from tents to permanent 
housing in the next 6 months or a year. But you've got to have 
a resettlement policy that says, if you're in a particular 
category, this is what the future holds, including for example, 
this is what the package of benefits will be to go back to a 
house which we've decided is structurally sound. I believe that 
that's an issue where there needs to be a much greater degree 
of pressure and consensus-building from here, ``here'' being 
the international community, and in Haiti, to make that happen. 
If there's one thing that I would say between now and whoever 
is inaugurated, you've got to get that done. That just has not 
yet been done, and that's not a question of insufficient money. 
It's a policy issue that just has to be forced through.
    The second is, as you mentioned, of the U.S. money, the 
$1.15 billion that was approved in August, there is still-as I 
understand it, it was only very recently that $300 million was 
made available for disbursement, and the remainder still is not 
available for disbursement. It's available for--
    Senator Dodd. Why is that happening, Mark? What's going on?
    Mr. Schneider. There's a request for the administration to 
come up with a greater specificity in how it plans to use the 
money, and that has not yet been satisfied.
    Senator Dodd. That's not an illegitimate concern.
    Mr. Schneider. Of course it is, but that needs-then they 
need to be pushed to do it, and it needs to move forward more 
quickly.
    Senator Dodd. OK.
    Mr. Schneider. By the way, the United States is actually 
more advanced than other donors relative to moving their 
funding from pledge to disbursement.
    The other thing: Never forget in Haiti, police reform, 
judicial reform, rule of law. If that doesn't happen in the 
next administration-reconstruction and governance is not going 
to take place. They were partially there before the quake. They 
were moving in the right direction on police.
    Senator Dodd. Let me ask you this, Mark. I raised the issue 
some months ago, back earlier this year, and others have raised 
it, of the notion of a trusteeship.
    Mr. Schneider. I know.
    Senator Dodd. I know this is radical thinking, although 
it's not unprecedented, when you have such a failed state 
condition and such desperate needs of literally thousands and 
thousands of people, that the idea-and I'm not unsure this 
would be not unwelcome, by the way, from some of the reaction 
that occurred.
    It is a radical thought, but I was just curious if you had 
any.
    Mr. Schneider. I just don't think, for a whole range of 
historical reasons in Haiti, I just don't think that that is 
likely to be accepted without a great deal of reaction, 
including violent reaction. At the same time, there's no 
question that the role of the international community has to be 
far greater than the normal cooperation relationship.
    You mentioned President Clinton's role. He actually sits as 
a cochair of the Interim Haiti Recover Commission. The 
peacekeeping mission there MINUSTAH, also has to stay there and 
has to be part of the next government's effort to ensure 
adequate citizen security. So I think there is going to be the 
need for much greater international presence and 
responsibility. But I think if you go to the point of 
protectorate--
    Senator Dodd. I hear you.
    I note, by the way, you've appeared 11 times before this 
committee since 1993 and several of them were on Haiti itself.
    Any other comments on Haiti?
    Mr. Daremblum. Yes. There is a problem that has increased 
over the days in Haiti, and I hear this complaint very, very 
often from donors-not only donor countries but also private 
entities, NGOs, et cetera. It is the lack of an adequate human 
apparatus within the government to really expedite the coming 
in of materials, products. Many large shipments of aid are 
waiting in customs and are waiting at the docks.
    That I am afraid is going to aggravate the will to continue 
helping Haiti. But one of the main things for cooperation with 
this country with Haiti, which badly needs it, is really to 
help them create an adequate bureaucracy, an adequate 
administrative structure for dealing and coping with aid.
    Senator Dodd. Let me ask you, by the way, Mark, and I'll 
ask all four of you, but particularly those who've commented, 
if you could in the next maybe few days put together a series 
of things that you think we ought to be asking either of the 
administration, the OAS, the World Bank, the IMF, other donor 
countries. I'd be prepared in the few days I've got left here 
to try and shepherd something like that and get a number of 
people who might be interested in raising the profile of this 
and get some requests going that might jump-start some of these 
very things you're talking about.
    Rather than ask you to enumerate it all right here, if 
you'd give it some thought and get it to us, I'll try and take 
advantage of the few hours I've got left when people might 
answer a phone call to--
    Mr. Schneider. Could I raise one other thing that relates 
to that, as well as what Senator Menendez was talking about, 
which is how do you raise the agenda for Latin America. It's 
something that at least, that I've supported, which is that 
there has not been a special envoy for the Americas in this 
administration. I think that, given where we are and for all of 
the reasons-Iraq, Afghanistan-a special envoy for the Americas 
might be something that would in fact be both a vehicle and a 
locus for developing that kind of agenda.
    Senator Dodd. Well, listen. I thank all of you. You've been 
terrific, and again I thank you. I over the years have enjoyed 
immensely your advice and counsel, and I appreciate it.
    I'd be remiss at the conclusion of a hearing here if I-and 
I appreciate Joy triggering this. I should have done it myself. 
But I've been blessed as a member here with some remarkable 
staff people across the spectrum, on committees and personal 
staff, in 30 years. But beginning with Bob Dockery, who's now a 
pro bono lawyer somewhere in Florida, but worked with Chairman 
Fulbright up here, Senator Byrd before I was elected, and then 
joined me and spent about a decade or so with me, and Janice 
O'Connell, who spent the last 20 years here.
    In fact, the new Senator Kirk from Illinois, I met him the 
other day. I hadn't met him before. He said to me: How's Janice 
O'Connell doing? He said: Well, I worked for Bernie Aronson and 
I love Janice O'Connell. I said: You may have been the only 
person I know at the State Department who's going to react that 
way. Janice did a remarkable job, of course, over the years, 
just terrific. And Josh Blumenthal, who's been working with me, 
has just done a wonderful, wonderful job as well in carrying on 
in that great tradition.
    So I'm very grateful to all of them, and others. There have 
been others who've supported their efforts over the years, and 
I thank them immensely for their service.
    Lastly, I'd be remiss if I didn't point out Steve Solarz. 
We were elected together to the House of Representatives in 
1974. I didn't serve on the House Foreign Affairs Committee 
with him, but we became very good friends over the years. I 
remember Doc Morgan, who was chairing the House Foreign Affairs 
Committee years ago, and when any head of state would come to a 
meeting and complete their opening comments, Doc Morgan would 
say: Aside from Steve Solarz, does anyone else have a question 
in the room? Steve always had-and they were great questions.
    He always was so knowledgeable. I traveled with him once 
and I swore I'd never do it again. I thought I had a lot of 
energy, but I never met anybody like Steve Solarz. He could go 
through a country and knew everybody. Bob Corker said I know a 
lot of people in Latin America. Steve Solarz knew everybody all 
over the world.
    I recently spoke with a fellow-I was in India and we were 
talking about United States-India relations and of course going 
back over the years. He said the one person who deserves more 
credit for revitalizing the United States-India relationship 
was Steve Solarz. Long before anyone else, after the difficult 
years in the early 1970s and the nuclear question, Steve Solarz 
kept on talking about the importance of that bilateral 
relationship pretty much alone, for a long time. Ultimately, 
President Clinton of course was the first American President to 
visit India in years.
    So Steve is no longer with us, having lost his battle with 
cancer about 24 or 48 hours ago. But I thought a lot about him 
here today and his contribution to our country. So I wouldn't 
want a committee meeting of the Senate Foreign Relations 
Committee to conclude without thanking him for his service.
    With that note, I thank all of you again, and this 
committee will stand adjourned.
    [Whereupon, at 4:50 p.m., the hearing was adjourned.]

                                  
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