The Latin America and Caribbean region has made enormous strides over the past two decades in political development, with all countries but Cuba having regular free and fair elections for head of government. Despite this democratic progress, several nations face considerable challenges, including persistent poverty, violent guerrilla conflicts, autocratic leaders, drug trafficking, and high rates of crime and violence. In some countries, weaknesses remain in the state's ability to deliver public services, ensure accountability and transparency, and advance the rule of law. In the second half of 2008, the global financial crisis and U.S. economic recession began to have a significant negative impact on Latin American and Caribbean economies. Five nations held elections for head of government in 2007 – Argentina, Bahamas, Guatemala, Jamaica, and Trinidad and Tobago – and another five head elections in 2008 – Barbados, Belize, the Dominican Republic, Grenada, and Paraguay. The Caribbean nations of Barbados, Belize, and Grenada held parliamentary elections in January, February, and July 2008 respectively, in which incumbent parties were defeated. Paraguay held presidential elections in April 2008, which resulted in the victory of opposition candidate Fernando Lugo over the long-ruling Colorado Party, while elections in the Dominican Republic in May 2008 saw the re-election of an incumbent President Leonel Fernandez. (For a listing of recent and forthcoming elections, see CRS Report 98-684, Latin America and the Caribbean: Fact Sheet on Leaders and Elections .) In terms of economic growth, while the Latin America and Caribbean region overall experienced a gross domestic product decline of 0.4% in 2002 and only a modest growth rate of 2.2% in 2003, the region rebounded with an estimated average growth rate of 6.1% in 2004, surpassing even the most optimistic predictions. Countries that had suffered the deepest recessions—Argentina, Uruguay, and Venezuela—all experienced significant economic growth in 2004, and even per capita income for the region as a whole increased by almost 5%. Growth continued in subsequent years, with rates of 4.9% growth in 2005, and 5.8% in 2006 and 2007. In 2007, countries with the highest growth rates were Panama, with growth of 11.5% and Antigua and Barbuda, with growth of 10%. Several countries had growth rates between 8 and 9%: Argentina, Peru, the Dominican Republic, and Venezuela. Countries with the lowest economic growth rates included Belize, Jamaica, and St. Lucia, with growth just over 1%. (For information on development indicators in the region, see CRS Report RS22657, Latin America and the Caribbean: Fact Sheet on Economic and Social Indicators , by [author name scrubbed].) Despite strong growth economic growth in the region from 2004-2007, the advent of the global financial crisis in 2008 is having a significant negative effect on the economies of Latin America and the Caribbean. In 2008, economic growth for the region slowed to an estimated 4.6%. The preliminary forecast for 2009 is for 1.9%, with some countries like Mexico that are closely tied to the U.S. economy expecting an economic contraction of between 1-2%. The worldwide recession has led to a drop in demand for exports from Latin America and the Caribbean and services such as tourism, and also has contributed to a drop in commodity prices, which again affects many nations in the region that are dependent on exports for growth. Remittances to the region from the United States and other countries have also begun to decline, and it is likely that the overall tightening of financial conditions worldwide will lead to a decline on foreign direct investment flows to the region. Politically, the Andean region still faces considerable challenges, including the rise of populism in Venezuela, Bolivia, and Ecuador. In Venezuela, President Hugo Chávez won another six-year term decisively in December 2006, but lost a December 2007 constitutional reform referendum that would have removed presidential term limits and allowed him to run again in 2012. The election of Bolivian indigenous leader Evo Morales as President in 2005 complicated U.S. relations given Morales' efforts to decriminalize coca growing. Under the Morales government, Bolivia has become increasingly divided over the issues of constitutional reform and regional autonomy. In Ecuador, Rafael Correa, a left-leaning U.S.-trained economist won the November 2006 presidential elections and has vowed to reform Ecuador's political system, renegotiate Ecuador's foreign debt, and reassert state control over foreign oil companies operating in the country. Colombia continues to be threatened by drug trafficking organizations and by terrorist groups, but the government of President Alvaro Uribe has overseen the demobilization of more than 31,000 paramilitaries and made significant progress in combating the Revolutionary Armed Forces of Colombia (FARC). In 2008, the FARC suffered significant setbacks with the deaths of several of its top leaders, including Manuel Marulanda. Colombia's March 1, 2008 bombing and raid of a FARC camp in Ecuador prompted condemnation from Colombia's neighbors, and increased tensions in relations with Ecuador and Venezuela. Captured FARC computer files from the raid also raised questions about potential Ecuadoran and Venezuelan government ties to FARC. In Central America, countries such as El Salvador, Honduras, and Nicaragua emerged from the turbulent 1980s and 1990s with democratic institutions more firmly entrenched, yet violent crime is a major problem in all countries. Honduras and Nicaragua are among the poorest countries in the hemisphere. In Guatemala, the center-left government of Alvaro Colom took office in January 2008 after elections in 2007 that proved to be the most violent since 1985. The new government's success will depend on its ability to build coalitions since no party in the legislature holds a majority. In Nicaragua, former President and Sandinista party leader Daniel Ortega won the November 2006 presidential election. Critics have raised questions about the Ortega government's lack of transparency in finances, and increasingly authoritarian actions, including municipal elections held in November 2008 that were less than credible. The diverse Caribbean region, which includes some of the hemisphere's richest and poorest nations, also faces significant challenges. The AIDS epidemic in the region, where infection rates are among the highest outside of sub-Saharan Africa, has been a major challenge for economic and social development in several countries. Caribbean nations remain vulnerable to destruction by hurricanes and tropical storms as demonstrated once again by a series of storms in 2008. Haiti—the hemisphere's poorest nation—continues to be plagued by economic, political, and security problems. While for many observers, President René Préval's May 2006 inauguration marked the beginning of a new era, a food crisis in April 2008 led to violent protests and the removal of the country's prime minister. Since Fidel Castro stepped down from power in 2006, Cuba's political succession from Fidel to Raúl Castro has been characterized by a remarkable degree of stability. Since Raúl's official assumption of the presidency in February 2008, the government has implemented a number of economic changes that from the outside might not seem substantial, but are significant for a government that has heretofore followed a centralized communist economic model. While additional economic changes under Raúl Castro are likely, few expect there will be any change to the government's tight control over the political system, which is backed up by a strong security apparatus. U.S. interests in Latin America and the Caribbean are diverse, and include economic, political and security concerns. Geographic proximity has ensured strong economic linkages between the United States and the region, with the United States being the major trading partner and largest source of foreign investment for most countries in the region. Free trade agreements with Mexico and Canada, Chile, Central America and the Dominican Republic (CAFTA-DR), and most recently with Peru have augmented U.S. economic linkages with the region. The region is also the largest source of migration, both legal and illegal, with geographic proximity and economic conditions in the region being major factors in the migration. Curbing the flow of illicit drugs from Mexico and South America into the United States has been a key component of U.S. relations with Latin America for almost two decades. Latin American nations, largely Venezuela and Mexico, supply the United States with just over one-third of its imported oil, but there have been concerns about the security of the region as an oil supplier because of Mexico's declining oil reserves and periodic threats by Venezuela's President to cut oil exports to the United States. In the aftermath of the Cold War, U.S. policy interests in Latin America and the Caribbean shifted away from security concerns and focused more on strengthened economic relations, but the September 2001 terrorist attacks in the United States resulted in security interests re-emerging as a major U.S. interest. As a result, bilateral and regional cooperation on anti-terrorism efforts have intensified. The Bush Administration described the Caribbean region as America's third border, with events in the region having a direct impact on the homeland security of the United States. Cooperation with Mexico on border security and migration issues has also been a key component of the bilateral relationship. Bush Administration officials outlined four themes or pillars of U.S. policy in the Americas: consolidating democracy; promoting prosperity, which includes advancing free trade; investing in people; and protecting the democratic state, which includes support for Colombia through the Andean Counterdrug Program and support for Mexico and Central America through the Mérida Initiative. As noted above, Latin America has made enormous strides in terms of political and economic development over the past 25 years, with considerable U.S. support, but such conditions as persistent poverty and the rise of populism in such countries as Venezuela, Bolivia, and Ecuador continue to pose challenges for U.S. interests and policy in the region.