Thursday, 3 April 2003, 12:03 pm Press Release: US State Department

Pursuit of Three Important Objectives in the Western Hemisphere

J. Curtis Struble, Acting Assistant Secretary Of State, Bureau of Western Hemisphere Affairs Remarks to the United States Senate Committee On Foreign Relations Washington, DC April 2, 2003

As prepared Chairman and Members of the Committee:

Thank you for the opportunity to discuss the Administration's foreign assistance priorities for the Western Hemisphere. No region of the world is more important to our prosperity and security than the Western Hemisphere. In no other region do events have the capacity to so directly and so immediately affect our national interests and the well-being of the American people.

We are at a critical juncture in the economic and political development of the Americas. The weaker and more vulnerable economies of Latin America have been badly hurt by the combination of a U.S. economic slowdown, a more risk-averse attitude among international investors, and the impact of September 11, 2001 on tourism and hemispheric trade. The ensuing financial crises have been contained for now, though there are no grounds for complacency. Even during the "good times," hemispheric growth was weak except for star performers like Chile, El Salvador, Mexico, and the Dominican Republic, which embraced reform and moved to open their economies. Too many of our hemisphere's citizens have begun to question whether the triumph of democracy the crowning achievement of the hemisphere in the last 20 years can better their lives.

At the same time, there are encouraging signs that the framework for success has been built throughout the region: economic development in Mexico resulting from the North American Free Trade Agreement (NAFTA); Chile's strong economic performance; and the predominance of democracy, which has brought freedom to every nation in the hemisphere save one. Recent elections in the hemisphere have been celebrations of democracy, including peaceful transitions to new administrations. With the Inter-American Democratic Charter, we have recognized the hemispheric consensus for the freedoms we cherish and responsibilities we accept. Economic progress, though often tenuous, has been achieved through effort and sacrifice. Poverty has declined in countries embracing reform, such as Mexico, Chile, and El Salvador. We have created partnerships to advance common interests with Canada, Chile, Brazil, Argentina, and of, course, Mexico. In short, we have made great progress. U.S. assistance has been, and continues to be, a major factor in our success. That said, our work is far from over.

We pursue three objectives in the hemisphere: deepening democracy, including increasing governmental integrity; encouraging both national and individual development, including expanding economies to strengthen trade; and enhancing security, including securing our hemisphere against the depredations of terrorism, increased personal security, and heightened regional stability.

Our continued progress in achieving these aims in the hemisphere requires that we confront, in a systematic way, those problems that have seemed too large and entrenched to address directly. They include corruption, failures of governance, inadequate education systems, insufficient health care, and crime. We can no longer afford to dismiss these issues as endemic or to address transnational threats in a piecemeal fashion. The kind of progress we want the kind that creates strong, resilient democracies and growing, modern economies requires a broad commitment to address these issues. Read More

<a href=usinfo.state.gov>News from the Washington File 02 April 2003 (Promotion of democracy, security and development are priorities) (6970)

The United States Agency for International Development (USAID) works with other U.S. agencies and departments to promote political and economic freedom for all nations, particularly among those in the Western Hemisphere, says USAID Assistant Administrator for LatinAmerica and the Caribbean Adolfo Franco.

"The United States is committed to helping build a hemisphere that lives in liberty and trades in freedom," Franco said in April 2 testimony before the Senate Foreign Relations Committee.

Noting that President Bush has said that the strength of the hemispheric commitment to democracy, security and market-based development will shape the region's future, Franco outlined USAID'sefforts to bolster these commitments.

Through its programs that help governments strengthen democratic processes, promote equitable economic growth and improve health and education standards, USAID is bolstering the region's will to reform, Franco said. In turn, these reforms will move nations in the hemisphere toward eligibility for additional development assistance under the auspices of the Millennium Challenge Account.

USAID efforts to strengthen democracy in Latin America and the Caribbean include anti-corruption, rule of law, municipal governance and civil society strengthening programs, Franco noted. "USAID-supported training and technical assistance help strengthen the capacity of national and local government to demonstrate that responsible leaders can deliver benefits to communities," he added.

Sustained development, Franco said, depends on "market-based economies, sound monetary and fiscal policies, and increased trade and investment." He indicated that through support for legal, policy and regulatory reforms, USAID has worked with regional governments to enhance the environment for trade and investment -- the "twin engines for economic growth and poverty reduction."

Franco said that USAID support for trade capacity building in Latin America and the Caribbean has increased from $5 million in 2001 to more than $23.5 million in 2002, with plans to increase future funding. Among the current examples of USAID trade capacity building assistance he cited was support for eight Caribbean nations that are preparing national trade capacity building strategies.

Franco said USAID's Bureau for Latin America and the Caribbean has also placed great emphasis on health and education in the region -- two of President Bush's other stated priorities.

The USAID official noted that there has been significant progress in raising hemispheric vaccination coverage and in reducing or eliminating major childhood illness. He said USAID assistance has also fostered greater discussion of the region's HIV/AIDS problem.

Because "diseases do not respect geographic boundaries," Franco said USAID health care assistance to Latin America and the Caribbean is "critical" to the health and security of the United States itself.

Addressing the state of education in the region, Franco said the quality and relevance of primary and secondary schooling "continue to cause concern."

Franco explained that USAID education and training programs "aim to improve the poor state of public education systems," adding that "USAID will continue to provide support for education reform, enhancing the skills of teachers and administrators and improving training for application in the workplace." In part, this will be accomplished through continued support for the newly-launched Centers of Excellence for Teacher Training.

In addition to the aforementioned regional efforts, USAID also works with other U.S. government agencies to address issues confronting fragile democracies in the hemisphere. Franco identified problems in Venezuela, Colombia, Bolivia, Guatemala and Haiti as being of particular concern.

Read the following Link for the <a href=usinfo.state.gov>complete text.

MSN Money By Tom Costello 12:55 PM EST April 2, 2003

Already weak, the world's economy now is grappling with the war in Iraq and the SARS outbreak. "The global economy is relatively infirmed right now, relatively weak, and one more shock is not what the economy needs right now," says Steve East, the chief economist at Friedman Billings Ramsey. East has told his clients that they need to watch the SARS, or severe acute respiratory syndrome, outbreak closely if they're investing globally. If consumers in Asia stay away from crowded places such as shops, the implications could be profound. Tipping toward recession? "If that causes these economies in the Pac Rim to tip into recession at a time when the rest of the global economies are weak, we could end up with a rolling global recession," East says. There are plenty of worrisome signs. In Hong Kong, authorities are decontaminating schools and quarantining entire apartment blocks. In Canada, authorities say six people have died from SARS. "People are very frightened here in Hong Kong," says Mark Mobius, who runs the Templeton Emerging Markets Fund (EMF). "I would say it's almost a panic situation." The fear of SARS was put on display Tuesday when an American Airlines plane from Tokyo was briefly detained on fears several passengers had SARS. It turned out they didn't. Surrounded by uncertainty All of this comes at a time of tremendous global uncertainty. With the war in Iraq expected to last longer than originally thought, economists are taking stock of the world's trouble spots. European manufacturing shrank in March, with the German economy teetering near recession. Japanese business confidence also deteriorated, with yet another recession a distinct possibility there. War and civil strife in Nigeria and Venezuela have put even more stress on the world oil market, pushing oil prices to almost $30 a barrel. Even more troubling, the U.S. consumer, the backbone of the nation's economy, is starting to put away the checkbook. Still, economists say we've been through worse. For instance, the 1970s are considered a more difficult time for the global economy. But in this case, the war in Iraq remains a major variable. For some, however, this turmoil represents a buying opportunity. Says Templeton's Mobius, "Right now what we're doing is investing and keeping invested, not only here in Asia but in other parts of the world."

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<a href=usinfo.state.gov>News from the Washington File 02 April 2003

(Workers' remittances another key source of finance, says new report) (2220)

An overall decline in private lending to developing countries has led these states to rely increasingly on foreign direct investment (FDI) and remittances from emigrant workers as sources of finance, according to a new World Bank report.

The new trend could foster a more stable environment in developing countries because FDI and remittances are less volatile than private lending, according to Global Development Finance 2003, the Bank's annual review of financial flows to developing countries.

"Over reliance on debt has been a problem for many countries," the report's lead author Philip Suttle said in an April 2 World Bank news release.

He expressed "cautious optimism" that capital flows to developing countries will be less volatile in the future.

"This would be good for growth and for poor people," Suttle said.

Remittances to developing countries totaled $80,000 million in 2002, up from $60,000 million in 1998. Net foreign direct investment dropped to $143,000 million in 2002, down from its 1999 peak of $179,000 million, but remains the dominant source of external financing for developing countries, the Bank said.

The report also projected that developing economies would grow faster in 2003 than in 2002, as the effects of recent financial difficulties -- including a period of sluggish growth in the industrialized world -- recede.

Developing economies are expected to grow 4 percent in 2003, up from 3.1 percent in 2002, assuming "a quick resolution to current tensions in Iraq," the Bank said. The global economy is expected to grow 2.3 percent, up from 1.7 percent in 2002.

Regarding regions and particular countries, the World Bank reported that:

-- China continued to make strong advances in output and helped the East Asia region's gross domestic product (GDP) grow by 6.7 percent in 2002.

-- Growth in Latin America and the Caribbean was held down by the government debt default and banking collapse in Argentina, uncertainty about Brazilian elections and worsening economic conditions in Venezuela.

-- Developing countries with close links to the Euro area were affected by slow European growth, but a sharp recovery of activity in Turkey and continued gains in Russia and the Commonwealth of Independent States [CIS] buoyed growth in Europe and Central Asia.

-- Continued strength in domestic demand in India propelled South Asia to GDP growth of 4.9 percent, despite disruptions associated with continued tensions around Afghanistan and between India and Pakistan.

-- Growth languished in both Sub-Saharan Africa and the Middle East and North Africa, with both regions registering growth rates of 2.6 percent in 2002.

The full World Bank report is available on the Internet at: www.worldbank.org

Following is the text of the news release:

(Note: In the text "billion" means 1,000 million.)

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-- At the other end of the growth spectrum, growth in Latin America and the Caribbean was held down by the government debt default and banking collapse in Argentina, uncertainty about Brazilian elections, worsening conditions in Venezuela, and an associated $31 billion falloff in financial market flows. GDP dropped by 0.9 percent in the year, a sharp 2.4 percent fall in per capita terms.

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Reuters Wednesday, April 2, 2003; 2:14 PM By Pascal Fletcher

CARACAS, Venezuela (Reuters) - The U.S. ambassador to Venezuela on Wednesday fended off President Hugo Chavez's sharp criticism of the U.S.-led war in Iraq, but said U.S. oil imports from its key South American supplier were flowing normally.

The leftist Chavez, who has irked Washington in the past by befriending Iraqi President Saddam Hussein, has deplored Iraqi civilian casualties and said the U.S.-British attack on Iraq applied the "law of the jungle" to world affairs.

"Well, we disagree," American ambassador Charles Shapiro said when asked about the president's comments.

"We are convinced that this war is unfortunately necessary ... we want to have the support of all the world's governments, but that's not the way it is," he told reporters in Caracas.

However, he confirmed that oil shipments from the world's No. 5 petroleum exporter, which supplies more than 13 percent of U.S. oil imports, had returned to normal after a opposition strike that had slashed output in December and January.

"U.S. companies are buying (Venezuelan) oil," he said.

Despite Chavez's vocal anti-war stance, Venezuela has so far ignored calls from fellow OPEC member Iraq for an oil embargo against the United States and Britain to try to force them to abandon the war.

Energy Minister Rafael Ramirez said Sunday Venezuela was guaranteeing supplies to U.S. clients. This was in line with a policy agreed within OPEC (Organization of Petroleum Exporting Countries) not to use oil as a weapon in any conflict.

CARACAS RILED BY U.S. RIGHTS REPORT

In another potential irritant to sensitive bilateral ties, Venezuela's Foreign Minister Roy Chaderton said Wednesday he disagreed with a State Department report this week that called the Chavez government's human rights record "poor."

The document, one of an annual series of country reports by Washington, singled out extrajudicial killings of suspects by the Venezuelan police and military, alleged torture and abuse and what it called a widespread climate of impunity.

"There are no policies to violate human rights in Venezuela," Chaderton told reporters during a trip to his country's western frontier with Colombia. But he said "isolated" cases of such abuses could occur.

The State Department's human rights report for the year 2002 also cited intimidation by Chavez's government against political opponents and said press freedom had deteriorated significantly during the year. But it described Venezuela as a "constitutional democracy" and said no political prisoners were reported.

Chavez, who was first elected in 1998, says his self-styled "revolution" is aimed at closing the wide gap between rich and poor in Venezuela, but his foes accuse him of ruling like a dictator and trying to install Cuba-style communism. He has resisted fierce opposition pressure to hold early elections.

Opponents of Chavez's government reacted angrily Wednesday to a decision by a regional appeals court to release from custody four pro-Chavez militants who were caught on TV film firing pistols during a huge anti-government march last year.

At least 19 people were killed and more than 100 hurt in the April 11, 2002 march, which triggered a brief coup against Chavez. He was restored by loyal troops and supporters.

The appeals court ruled there was no clear proof that the four gunmen had actually killed people with their firing although it said they should still stand trial for weapons offenses and acts of intimidation. Government and opposition have blamed each other for the shootings.

U.S.-Venezuelan relations have been strained in the last few years by Chavez's determinedly friendly ties with states seen as hostile to Washington, such as Cuba, Iraq and Libya, and by the Venezuelan leader's outspoken criticism of the U.S. anti-terrorism war in Afghanistan.