[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
                 U.S.-BOLIVIA RELATIONS: LOOKING AHEAD

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                         THE WESTERN HEMISPHERE

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 3, 2009

                               __________

                            Serial No. 111-3

                               __________

        Printed for the use of the Committee on Foreign Affairs


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

                                 ______


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                      COMMITTEE ON FOREIGN AFFAIRS

                 HOWARD L. BERMAN, California, Chairman
GARY L. ACKERMAN, New York           ILEANA ROS-LEHTINEN, Florida
ENI F.H. FALEOMAVAEGA, American      CHRISTOPHER H. SMITH, New Jersey
    Samoa                            DAN BURTON, Indiana
DONALD M. PAYNE, New Jersey          ELTON GALLEGLY, California
BRAD SHERMAN, California             DANA ROHRABACHER, California
ROBERT WEXLER, Florida               DONALD A. MANZULLO, Illinois
ELIOT L. ENGEL, New York             EDWARD R. ROYCE, California
BILL DELAHUNT, Massachusetts         RON PAUL, Texas
GREGORY W. MEEKS, New York           JEFF FLAKE, Arizona
DIANE E. WATSON,                     MIKE PENCE, Indiana
    California              JOE WILSON, South Carolina
ADAM SMITH,                          JOHN BOOZMAN, Arkansas
    Washington deg.Until    J. GRESHAM BARRETT, South Carolina
    2/9/09 deg.                      CONNIE MACK, Florida
RUSS CARNAHAN, Missouri              JEFF FORTENBERRY, Nebraska
ALBIO SIRES, New Jersey              MICHAEL T. McCAUL, Texas
GERALD E. CONNOLLY, Virginia         TED POE, Texas
MICHAEL E. McMAHON, New York         BOB INGLIS, South Carolina
JOHN S. TANNER, Tennessee            GUS BILIRAKIS, Florida
GENE GREEN, Texas
SHEILA JACKSON LEE, Texas
BARBARA LEE, California
SHELLEY BERKLEY, Nevada
JOSEPH CROWLEY, New York
MIKE ROSS, Arkansas
BRAD MILLER, North Carolina
DAVID SCOTT, Georgia
JIM COSTA, California
KEITH ELLISON, Minnesota
GABRIELLE GIFFORDS, Arizona
RON KLEIN, Florida
VACANTFrom 2/10/09 through 
    3/12/09 deg.
                   Richard J. Kessler, Staff Director
                Yleem Poblete, Republican Staff Director
                                 ------                                

                 Subcommittee on the Western Hemisphere

                   ELIOT L. ENGEL, New York, Chairman
GREGORY W. MEEKS, New York           CONNIE MACK, Florida
ALBIO SIRES, New Jersey              MICHAEL T. McCAUL, Texas
GENE GREEN, Texas                    CHRISTOPHER H. SMITH, New Jersey
GABRIELLE GIFFORDS, Arizona          DAN BURTON, Indiana
ENI F. H. FALEOMAVAEGA, American     ELTON GALLEGLY, California
    Samoa                            RON PAUL, Texas
DONALD M. PAYNE, New Jersey          JEFF FORTENBERRY, Nebraska
JOHN S. TANNER, Tennessee            GUS BILIRAKIS, Florida
BARBARA LEE, California
JOSEPH CROWLEY, New York
RON KLEIN, Florida
              Jason Steinbaum, Subcommittee Staff Director
        Eric Jacobstein, Subcommittee Professional Staff Member
          Francis Gibbs, Republican Professional Staff Member
                  Julie Schoenthaler, Staff Associate


                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

The Honorable Peter DeShazo, Director, Americas Program, Center 
  for Strategic and International Studies........................     3
Ms. Kathryn Ledebur, Director, Andean Information Network........    15
Mr. Ivan Rebolledo, President, Bolivian-American Chamber of 
  Commerce, Inc..................................................    27
Jaime Daremblum, Ph.D., Senior Fellow, Director, Center for Latin 
  American Studies, Hudson Institute.............................    36
Mr. Marcos Iberkleid, Chief Executive Officer, Ametex, America 
  Textil S.A.....................................................    44

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Peter DeShazo: Prepared statement..................     7
Ms. Kathryn Ledebur: Prepared statement..........................    17
Mr. Ivan Rebolledo: Prepared statement...........................    30
Jaime Daremblum, Ph.D.: Prepared statement.......................    38
Mr. Marcos Iberkleid: Prepared statement.........................    46
The Honorable Eliot L. Engel, a Representative in Congress from 
  the State of New York, and Chairman, Subcommittee on the 
  Western Hemisphere: Prepared statement.........................    53

                                APPENDIX

Material Submitted for the Hearing Record........................    67


                 U.S.-BOLIVIA RELATIONS: LOOKING AHEAD

                              ----------                              


                         TUESDAY, MARCH 3, 2009

                  House of Representatives,
            Subcommittee on the Western Hemisphere,
                              Committee on Foreign Affairs,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:13 p.m. in 
room 2172, Rayburn House Office Building, the Honorable Eliot 
L. Engel (chairman of the subcommittee) presiding.
    Mr. Sires [presiding]. Good afternoon, everyone. The 
chairman is a little tied up and we will begin this hearing, 
and I want to make sure I thank everybody that is here this 
afternoon.
    We have with us the Honorable Peter DeShazo, director of 
Americas Program, Center for Strategic and International 
studies; Ms. Kathryn Ledebur, director of Andean Information 
Network; Mr. Ivan Rebolledo, president of Bolivian-American 
Chamber of Commerce, Incorporated; Mr. Marcos Iberkleid--nice 
to see you again--chief executive officer, Ametex, America 
Textil; and Dr. Jaime Daremblum, senior fellow, director, 
Center for Latin American Studies, Hudson Institute.
    I just want to welcome you all. The chairman will be here 
shortly. He will read his statement, and will get started. I 
would like to offer the ranking member to say a few words.
    Mr. Mack. Thank you very much, and I want to thank the 
panel for being here as well, and the other members that are 
with us today. We have got an interesting hearing and I am 
looking forward to hearing your insight on our relationship 
with Bolivia, and I guess the over-arching question is, is 
there still hope for a better relationship with Bolivia or is 
Evo Morales bound and determined to continue the stance that he 
is in, and I really would like to, as each one of you in your 
opening remarks go forward, I would like to hear your thoughts 
on that.
    Largely, though, I think this committee has a duty to 
really explore what it is, what options there are. I think we 
understand the problems in Latin America. We understand that 
there are many, and I think it is time now we start looking for 
solutions. So again, maybe in your opening statements you can 
point out a few things that you think would help.
    I would offer one of the things that the United States 
needs to do a better job at is reaching our hand out to our 
friends and allies that have supported us, who are our friends, 
who are looking to the United States for leadership, and I 
think there has been a void there, and I think the more we can 
do that arena the better off we will, and in fact, the void 
that was created is what has let Hugo Chavez and others kind of 
fill that void, and I think it is important that, again, that 
this committee begin to start formulating an overall arching 
plan for Latin America, and I believe it has to speak directly 
to the people of Latin America.
    If we just do this government to government, the message 
will not get through; that what we need to let the people of 
Latin America know is that we stand with the; that we 
understand the challenges that they are facing; that we want to 
share in the responsibility in creating the hope and 
opportunity for everyone.
    So again thank you for being here. I look forward to your 
opening statements.
    Mr. Sires. Thank you, Congressman Mack. Anyone else have an 
opening statement? Congressman Green.
    Mr. Green. Thank you, Mr. Chairman, for holding this 
hearing today, and I would like to welcome our panel. Last 
spring I had the honor of traveling with Chairman Engel and a 
few of our colleagues to Bolivia, and one of the things we did 
while we were there was to visit Catholic University, a site 
where we saw USAID dollars at work. We were in a rural part of 
Bolivia and the students had computer labs and access to the 
Internet, thanks to the USAID.
    I also have served on the Telecommunications and Internet 
Subcommittee of our Energy and Commerce Committee, and I know 
our own challenges in trying to get broadband to our rural 
areas, but I saw that outside the capital in Bolivia. I found 
it great that our foreign assistance dollars are going toward 
such useful efforts in Bolivia, and this is one of the great 
things that USAID was doing with the university in a 
partnership.
    I also had the opportunity to visit textile workers and 
small business owners while we were in Bolivia to see how the 
Andean Trade Preferences have helped the Bolivian people. 
Having seen firsthand these preferences, it seems very 
beneficial to the Bolivian people.
    We concluded our trip with a visit with President Morales, 
and I was hopeful that our relations with Bolivia would 
improve, but how times have changed.
    Last September President Morales expelled the U.S. 
Ambassador to Bolivia, which we spent a great deal of time 
with, after accusing him of supporting opposition forces. I 
have to admit we also met with some of the prefects from the 
eastern part of the country while we were there.
    Then in November, President Morales announced an indefinite 
suspension of U.S. DEA operations in Bolivia after accusing DEA 
agents of espionage. In response to this, President Bush 
suspended the Bolivian Trade Preferences of the Andean Trade 
Preferences Program.
    Finally, just last month President Morales accused the CIA 
of infiltrating a Bolivian state oil company. The U.S. Embassy 
in Bolivia strongly denies this accusation.
    When President Obama was elected, President Morales 
indicated that he was open to improving relations with the 
U.S., but his actions and rhetoric seem to dictate otherwise. I 
am interested to hear from our panel and their recommendations 
as to how and, even if, relations can be improved with Bolivia 
with President Morales as President, and I know he was just 
reelected and given an indefinite term. I believe in the 
Bolivian people, and especially the opportunity the trade 
preferences and our foreign assistance dollars can bring the 
Bolivian people.
    I also believe that partnering with Bolivia is important to 
our counternarcotics strategy in the area. For the past several 
years, Bolivia has been the recipient of U.S.--largest 
recipient of United States foreign assistance in Latin America, 
and how can we continue with this given the current state of 
United States-Bolivian relations?
    Mr. Chairman, again, I look forward to hearing from our 
panel and I welcome each of them.
    Mr. Sires [presiding]. Thank you, Congressman. 
Congresswoman Lee, do you have an opening statement? 
Congressman Klein?
    Mr. Klein. Yes, Mr. Chairman.
    Thank you, Mr. Chairman and Ranking Member, and thank you 
to the guests today who will be testifying before us. We 
understand the importance of relationship between our Latin 
America neighbors. Those of us who live in Florida, Congressman 
Mack and I, are particularly sensitive because what happens in 
those countries, because of the family relationships, cultural 
relationships, business relationships, are very important to 
all of us, to make sure that they are stable.
    There have been problems in recent years with the 
leadership of Bolivia. There is a certain amount of foreign aid 
and assistance that the United States provides to Bolivia. I 
would be interested in your comments, if you can talk about 
that aid, the nature of the aid, and the quantity of the aid, 
and give some thoughts as to are we doing the right amount, are 
we doing any amount that is appropriate, and the type of aid 
that, as we revisit our USAID issues, it would be most 
effective in reaching the people of Bolivia and to try to re-
establish a better working relationship.
    It is an issue that I think is very important to the whole 
region, and I think it is very important to our foreign policy 
in Latin America. So with that, Mr. Chairman, I give the 
balance of my time.
    Mr. Sires. Thank you, Congressman Klein.
    Ambassador DeShazo, will you please start? Try to keep your 
opening statement within 5 minutes. Thank you very much.

 STATEMENT OF THE HONORABLE PETER DESHAZO, DIRECTOR, AMERICAS 
    PROGRAM, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES

    Mr. DeShazo. Thank you very much, Mr. Chairman, 
distinguished members. I am delighted to be here. I ask that my 
written statement be introduced into the record, and I will 
give a brief resume.
    Since the inauguration of Evo Morales as President of 
Bolivia in January 2006, bilateral relations have deteriorated 
seriously. Morales' campaign for President was peppered with 
anti-U.S. references, vowing that if elected he would be a 
``nightmare'' for the United States. This notwithstanding U.S. 
policymakers pursued a course of seeking constructive 
engagement while waiting to see how developments unfolded on 
the Bolivian side.
    By mid-2008, however, the pace of deterioration quickened 
to the point where U.S. development personnel and the Drug 
Enforcement Administration were forced to leave a major cocoa-
growing region of Bolivia, the U.S. Ambassador was declared 
persona non grata, Peace Corps volunteers were withdrawn from 
Bolivia, the United States suspended Bolivia as a recipient of 
trade preferences, and President Morales expelled the DEA from 
Bolivia altogether.
    Looking forward, there is potential for repairing some of 
the damage to the bilateral relationship, but there is also a 
real possibility that it could deteriorate further. It is in 
the U.S. interest that Bolivia be stable and democratic, able 
and willing to meet its international obligation on matters 
related to regional security, including narcotics, and pursuing 
policies that lead to economic development and poverty 
reduction. U.S. policy should be aimed at advancing these goals 
and promoting a bilateral relationship based on cooperation and 
mutual respect.
    The inauguration of the Obama administration provides an 
opportunity to reexamine the relations with Bolivia and attempt 
to put them on a more positive track. For starters, however, 
there must be a mutual desire to rebuild ties. The United 
States may undertake any number of initiatives but 
realistically there will be no improvement if President Morales 
remains fixed in his negative outlook toward the United States.
    Nonetheless, it behooves the United States to take a first 
step. This could be done by a unilateral initiative aimed at 
creating a positive environment and then by a series of further 
measures. One such initiative on the part of the United States 
could be to announce its intention to return Peace Corps 
volunteers to Bolivia, of course after consultations with the 
Bolivian Government to ensure that they would be welcome.
    Another opportunity will come at the Summit of the 
Americans meeting in April in Trinidad and Tobago where 
President Obama could underscore directly to President Morales 
the intention of the new U.S. administration to seek better 
relations based on mutual respect and to urge bilateral 
engagement.
    Rebuilding the relationship beyond such steps will require 
quiet diplomacy and patience. A key ingredient will be Bolivian 
narcotics policy and its intersection with U.S. concerns. 
Narcotics will continue to influence bilateral relations and 
both countries should seek a common understanding in dealing 
with it. A means must be found to work through the drug 
impasse. The Government of Bolivia needs to demonstrate to U.S. 
and international opinion that is prepared to take additional 
steps to try to fill the gap in counternarcotics capability 
left by the DEA's expulsion, and indicate a rekindled desire to 
work with the United States.
    Progress on the narcotics front could unlock the door to 
restoring Bolivia's trade preferences under ATPDEA. That would 
be a positive step that would help preserve thousands of jobs 
in Bolivia, benefit working class, often indigenous families, 
and strengthen Bolivia's perennially weak private sector. The 
exchange of ambassadors between the United States and Bolivia 
should come at a time when relations are clearly on the road to 
improvement. Ambassador Goldberg was the target of baseless 
accusations and his expulsion was unjustified. There is no need 
to name a new U.S. ambassador only to face similar treatment.
    Regardless of the outcome of the initiatives I have just 
mentioned, the United States should maintain or better still, 
augment its bilateral assistance to Bolivia through USAID and 
other mechanisms. USAID programs in areas such as 
infrastructure, health, nutrition, agriculture, sanitation, the 
environment, democracy building, et cetera, have built bridges 
between the peoples of Bolivia and the United States and 
supported Bolivia's own development goals.
    Other mechanisms exist for strengthening people-to-people 
ties, including academic and professional exchanges programs, 
and the Bolivian-American centers that exist and operate in 
five Bolivian cities and teach English.
    Bolivia will continue to be a country in flux. The 
implementation of the new Bolivian constitution will present 
many challenges to a political system in which confrontation 
often trumps consensus, and deep ethic and religion and 
regional divisions exist.
    The Obama administration should approach Bolivia with 
patience and realistic expectations, seeking constructive 
engagement with its people and, to the extent possible, with 
its government. The United States should work with Bolivia's 
neighbors, Brazil above all, to encourage moderation on the 
part of the Bolivian Government and an effective 
counternarcotics effort.
    The extent to which Evo Morales is able to overcome his 
mistrust and dislike of the United States, or on the other 
hand, the degree to which he might translate these views into 
action, especially regarding Bolivia's international affairs, 
will be key factors as the bilateral relationship evolves.
    Thank you.
    [The prepared statement of Mr. DeShazo 
follows:]Peter DeShazo deg.



















    Mr. Sires. Thank you very much, Mr. Ambassador.
    Ms. Ledebur.

STATEMENT OF MS. KATHRYN LEDEBUR, DIRECTOR, ANDEAN INFORMATION 
                            NETWORK

    Ms. Ledebur. Thank you, Mr. Chairman.
    I think that we are at an essential turning point in the 
possibility for improvement in relations between Bolivia and 
the United States. I disagree with Ambassador DeShazo in that I 
feel that the reinstatement of ambassadors is the first logical 
and essential step in order to promote a channel through which 
productive policy dialogue can be carried out. Frequently U.S. 
policymakers complain of statements and criticisms of the 
Morales administration that are made to the press and not dealt 
with diplomatically. At the same time Bolivians frequently 
complain of U.S. criticisms, which they feel are unfounded, in 
official documents such as the International Narcotics Control 
Strategy Report.
    Along with this reinstatement of ambassadors it is 
important to engage in a frank, open, broad dialogue within the 
framework of a very clear Obama administration policy. Without 
the appointment of key Western Hemisphere officials this void 
in decision-making and implementation has created difficulty 
for legislators, advocates and the Bolivian Government to know 
exactly with whom they should engage in the new administration.
    At the same time, the Obama administration should move away 
from programs that condition aid on anti-narcotics and seek to 
de-narcoticize the relationship. This involves the 
reinstatement of Andean Trade Preferences which, within a very 
short time since their suspension, have led to the dismissal of 
almost half the workers in small companies, and the failures of 
small businesses in Bolivia as well as the United States. The 
justification for the suspension through an anti-narcotics 
determination was based on faulty and inaccurate information.
    The certification statement made on February 27th of this 
year also contained inaccurate information and internal 
contradictions, making it difficult for us to understand the 
basis for the suspension.
    At the same time the Bolivian Government must engage 
directly with the United States, seek to reestablish diplomatic 
channels and assume with full responsibility the daunting task 
of replacing the role of the Drug Enforcement Administration, 
profoundly pursue relations with neighboring countries, Brazil 
and Argentina, the destination of most of the cocaine that 
passes through or is produced in Bolivia, and have the ability 
to readjust or shift these policies if, in fact, they fail.
    A focus and new opening for diplomatic relations at this 
period of high tension is possible and both governments have 
shown signs of willingness to do so. President Morales, soon 
after President Obama's election, spoke very highly of 
President Obama and made a visit to Washington in which he 
sought out key legislators to begin an open and frank dialogue 
about possibilities for change.
    In this sense, I believe that time is of the essence and 
that both governments must seek through diplomatic channels a 
bilateral cooperative partnership, not based on conditioning or 
anti-narcotics norms, but instead on a low level of cooperation 
of transparent programs, especially in the area of USAID, 
focusing on a mutual agenda of both governments--health, 
poverty alleviation and education--and move away from some of 
the programs that have created so much bilateral friction in 
the past, such as democracy promotion or regional efforts, 
within a framework where no legal guidelines exist in Bolivia 
for transparency.
    This low level of engagement until broader decisions be 
made is essential in order to refocus diplomatic relations. At 
this point in time, high levels of tension can be avoided and 
we can move forward, but first the framework for trust and 
understanding, and an ability to truly listen, instead of 
engagement on both sides which degenerated into a begrudging 
tolerance of mutual opinions, is essential.
    It is important to note that although the Bolivian 
Government has chosen not to work with the DEA in the Chapare 
region or in the rest of the country or to work with USAID in 
the Chapare, high levels of cooperation do remain on the anti-
narcotics front. The Narcotics Affairs Section, an agency three 
times larger than the DEA in Bolivia, continues to collaborate 
closely on interdiction and eradication issues. There is a high 
level of dialogue and coordination on a variety of other policy 
issues, and I think that these things that are missed often in 
the higher levels of Washington or in the mainstream press, 
where we choose to focus on the negative aspects or the areas 
in which relations have in fact broken down.
    Thank you.
    [The prepared statement of Ms. Ledebur 
follows:]Kathryn Ledebur deg.





















    Mr. Sires. Thank you very much.
    Mr. Rebolledo.

 STATEMENT OF MR. IVAN REBOLLEDO, PRESIDENT, BOLIVIAN-AMERICAN 
                   CHAMBER OF COMMERCE, INC.

    Mr. Rebolledo. Good afternoon, Mr. Chairman, and members of 
the subcommittee. Thank you for the privilege to be with you to 
discuss a topic of such relevance this time of change both in 
Bolivia and the United States. Mr. Mack, we congratulate you as 
a new ranking Minority member.
    In recent years, Bolivia has faced many challenges to its 
stability and constitutional order that many observers have 
wondered how Bolivia has avoided slipping into widespread 
violent conflict. Bolivia has a highly divided society where 
wide sectors of the population have been historically excluded 
from the political arena. Presently it has very weak political 
parties, if any at all, that have been unable to create 
national coalitions, and its political apparatus has been 
unable to effectively guarantee space for the resolution of 
conflict within existing juridical structures. A combination of 
these factors has contributed to the erosion of the legitimacy 
of the state, further exacerbating inter-institutional conflict 
and stability.
    The nineties saw the strengthening of social movements that 
acquired important political science and that demanded a 
rethinking not only of how politics operated, but of the 
configuration of public policy itself. Social movements took 
their demands to the streets, staging massive protests that 
frequently paralyzed the economy. These contentious tactics 
were met with fear and disdain by the political establishment 
which failed to effectively respond to their demands, and it is 
in the backdrop of contesting political discourses and their 
consequent tensions that Evo Morales won the Presidential 
elections. His triumph is part of what has been referred to as 
Latin America's turn to the new populous left after a wave of 
the electoral contest clearly rejected the policies inspired by 
the Washington consensus which had prevailed in the nineties, 
and brought to power left-of-center candidates in Argentina, 
Bolivia, Brazil, Chile, et cetera.
    A tactical alliance with Venezuela and Cuba has provided 
Bolivia with the resources and political support, respectively, 
to allow Morales to move ahead with radial agendas without 
compromising with the opposition.
    Strong regionalism permeates social and political 
relations. The questions deg. of local autonomy has 
become a serious threat for the unity of Bolivia. The divide 
between the center of political power in La Paz and the 
economic prosperity in Santa Cruz has called into question the 
strongly centralized government in Bolivia. The ethic divide 
that accompanies this division has resulted in indigenous 
population who live mostly in western Bolivia supporting 
Morales's quest to retain that centralism as a feature of the 
new constitution while the white and mestizo population of 
eastern Bolivian states, the media luna, demand greater 
autonomy from the center. Morales' agenda has been defined not 
only by the opposition but also by the more radical sector of 
his party, the MAS, which is quick to remind him of the 
promises he made before and during the Presidential elections.
    In 2008, a record fiscal surplus and robust monetary 
reserves, resulting from increased taxation of hydrocarbons and 
mining companies and the global commodity boom, have left 
Bolivia with financial benefits. However, in 2009 and beyond 
will be much more challenging. In addition, Bolivia is now 
dealing with an 8.7 inflation rate, the fifth highest in Latin 
America as per the World Bank. The 5.5 average growth in GDP 
will likely not be maintained as the global financial crisis 
affects Bolivia, creating a wide ranging slow-down.
    The Bolivian Minister of Finance has confirmed that 
Bolivian exports, including hydrocarbons, minerals, and soya 
byproducts have already suffered an acute deceleration.
    The 12 foreign companies that operate in Bolivia in the 
hydrocarbon space, already rattled by the nationalization of 
the country's gas and oil sector, are awaiting implementation 
of the hydrocarbons law required by the new constitution, are 
wary of getting more involved.
    The only United States company operating in this sector in 
Bolivia is Occidental. Exxon-Mobil pulled out a few years ago. 
The electrical sector in Bolivia, which was a wash with U.S. 
investors--Duke, Econergy, PPL Global--have dwindled to one, 
plus a few European investors, and they are concerned that 
their sector might be next in being nationalized.
    The perception of the foreign direct investor is that 
current government has no problem in not following contracts 
and that the legal system is not up to normal standards.
    For the past two decades, U.S. engagement in Bolivia and 
the rest of the Andes has focused on security and counter-
issues--favoring unilateral over multilateral intervention. In 
the final months of the Bush administration, U.S. relations 
with Bolivia turned from bad to worse, including Bolivia's 
expulsion of the U.S. Ambassador Goldberg, and the United 
States expulsion of Bolivian Ambassador Gustavo Guzman, as well 
as the subsequent expulsion of DEA.
    There are lessons to be learned from the current crisis, 
and there is hope that United States-Bolivian relations might 
improve if the Obama administration is open to a new approach. 
Obviously, Washington has more obvious priorities than Bolivia, 
and the current environment in La Paz is no guarantee that 
conciliatory overtures from the U.S. administration would 
immediately be reciprocated.
    All ``politicos'' in La Paz follows with the closest 
attention any developments in Washington that could have an 
impact on their country. The opposite is true in Washington. 
United States relations with Bolivia rank far down in the 
hierarch of foreign policy concerns. During the cold war 
Bolivia had at least some limited leverage, based on the 
possibility that La Paz might switch sides. But in the war on 
terror Bolivia has limited importance, and even in the war on 
drugs it is a second tier player.
    On the flip side, a Morales administration that has limited 
hope of securing construction relations with Bolivia may well 
gain domestic political capital from pursuing the opposite 
course since one result can be to cast rival political parties 
and future candidates in the role of disloyal instructions of 
an overbearing foreign policy.
    As the current U.S. administration attempts to establish 
its eroded international soft power and to repair its tarnished 
reputation as a benevolent regional power, it is essential to 
recognize that Morales also possesses similar assets and a 
legitimate democratic mandate, which has been reaffirmed during 
the recent referenda processes. U.S. policy measures designed 
to discipline his government's conduct are more likely to 
stiffen its resistance and to hurt the Bolivian people by 
further reducing their desire for social progress.
    Thank you.
    [The prepared statement of Mr. Rebolledo 
follows:]Ivan Rebolledo deg.













    Mr. Sires. Thank you very much.
    Dr. Daremblum.

 STATEMENT OF JAIME DAREMBLUM, PH.D., SENIOR FELLOW, DIRECTOR, 
      CENTER FOR LATIN AMERICAN STUDIES, HUDSON INSTITUTE

    Mr. Daremblum. Thank you very much, Mr. Chairman, 
distinguished members of the subcommittee.
    Mr. Sires. Can you please turn the microphone on
    Mr. Daremblum. Oh, I am sorry.
    Mr. Chairman, Ranking Republican Member Connie Mack, 
distinguished members of the subcommittee, I am honored to be 
speaking with you today on the topic of U.S. relations with 
Bolivia.
    Since the election of President Evo Morales in December 
2005, those relations have steadily deteriorated. Meanwhile, 
political polarization on ethic tensions in Bolivia have 
increased substantially. Bolivia suffers from extremely high 
levels of poverty and inequality, and is divided sharply along 
racial and geographic lines. Economic disparities, cultural 
resentments and repeated attacks from democracy by the Morales 
government have turned Bolivia into a bubbling caldron of 
instability.
    Morales seems bent on copying the authoritarian leftism of 
Venezuelan President Hugo Chavez. His policies have triggered 
political violence and raised the specter of large-scale 
turmoil.
    Bolivia has long been a fracture society. Indeed, it is 
really two societies, one consisting of poor indigenous 
Bolivians who are concentrated in the western highland 
departments, the other made up of mixed-race mestizos and 
whites who dominate the eastern lowland departments. Eastern 
Bolivia is the more prosperous region and serves as the 
country's economic engine even though most Bolivians live in 
the west. A majority of the population is indigenous. Morales 
is the first Indian to ever be elected President. Bolivia is 
the poorest country in South America and the overwhelming 
majority of its poor citizens are Indians.
    Bolivia desperately needs a true national leader who can 
repair its many riffs. Unfortunately, Morales is not that type 
of leader. When he was first elected in 2005, a former cocoa 
grower boasted fairly broad support across different racial and 
economic groups. Yet he has pursued this discriminatory and 
exclusionary policies designed to benefit Bolivia's Indians at 
the expense of its mestizos and white.
    Morales has made no serious effort to bridge the country's 
severe social camps. In fact, he has done quite the opposite. 
He has also eroded Bolivia's democratic institutions and 
attempted to reduce both the political and economic power of 
its wealthy eastern departments. Morales has nationalized a 
significant portion of the Bolivian economy, including the 
energy sector and is seeking to implement a far-reaching land 
redistribution agenda. The result is that Bolivia today is more 
divided and more polarized than it was when he first took 
office. Corruption has grown widespread, and the government's 
socialistic economic initiatives have spooked foreign investor.
    Morales has embraced the political model that thrives on 
conflict, on confrontation and on bullying. Much like Hugo 
Chavez, he uses anti-Americanism as a political tool and spins 
wild conspiracy theories about the United States.
    Before leaving office, President George W. Bush responded 
to Bolivia's lack of cooperation with U.S. anti-drug efforts by 
suspending its privileged trade status under the Andean Trade 
Preferences Act and Andean Trade Promotion and Drug Eradication 
Act. Both require the beneficiary countries provide a certain 
level of cooperation to U.S. counternarcotics activities. The 
Bush administration was justified in suspending Bolivia's trade 
benefits, a suspension that came after several warnings to the 
government. No doubt his decision will have a considerable 
economic impact on the South American country, and has been 
used by Morales domestic propaganda purposes.
    In economic terms, those trade preferences mean much more 
to Bolivia than they do to the United States. Before they are 
restored the Obama administration should insist that the 
Morales government agree to a meaningful level of anti-drug 
cooperation. This is what diplomatic engagement is all about. I 
generally do not favor trade sanctions, but this is a special 
case. The terms of the Andean trade legislation are quite 
clear, and Bolivia is the world's third largest coca producer 
and is a key front in the war on drugs.
    U.S. interests in Bolivia go beyond counternarcotics 
programs. The country has huge deposits of natural gas, and 
under Morales it has boosted strategic ties with Iran, partly 
to aid the development of its energy sector. At a time when 
Tehran is expanding its influence across Latin America, its 
emerging partnership with Bolivia is worrying. There is 
evidence that Iran's warm relationship with Hugo Chavez, the 
chief patron and ally of Morales, has allowed the Iranian-
backed terrorist group Hezbollah to establish a presence in 
Venezuela. The Bolivia-Iran connection should not be overblown, 
but it should be monitored intently.
    In its diplomatic efforts to shore up Bolivian democracy 
and build civil society, the United States should work closely 
with democratic governments from Europe and South America. It 
should also promote economic freedom and a more favorable 
business climate in Bolivia. In its latest ranking, rankings of 
the best business climates around the globe, the World Bank 
ranks Bolivia 150th out of 181 economies. The only countries in 
Latin America and the Caribbean that rank lower are Haiti and 
Venezuela.
    The United States should also address the plight of the 
poorest in Bolivia by supporting NGOs working with the National 
Endowment for Democracy, NED. This would help considerable to 
dissipate the notion among the Indians, nurtured by President 
Morales, that the United States is their enemy.
    A final point: Thus far President Obama has disappointed 
those in Latin America who hoped he would move vigorously to 
boost U.S. engagement with the Western Hemisphere. Today, Iran, 
Russia, China, all these countries are working to strengthen 
relations with Latin America. If the United States does not 
make its own hemisphere a priority, it risks losing influence 
there, and that would be bad for the United States and bad for 
Latin America.
    Thank you very much.
    [The prepared statement of Mr. Daremblum 
follows:]Jaime Daremblum deg.













    Mr. Sires. Thank you very much.
    Mr. Iberkleid.

  STATEMENT OF MR. MARCOS IBERKLEID, CHIEF EXECUTIVE OFFICER, 
                  AMETEX, AMERICA TEXTIL S.A.

    Mr. Iberkleid. Mr. Chairman and members of the 
subcommittee, thank you very much for the opportunity to 
testify here today.
    These are difficult times for workers and for private 
industry in Bolivia because of the recent suspension from ATPA. 
Ametex and other firms are on the brink of collapse. Others 
have already closed and thousands of jobs have been lost. Worst 
of all, hope is fading.
    When we first began this journey, the future was very 
bright. With the removal of Tariffs, Ametex and many other 
textile firms were able to improve facilities, expand training 
programs and hire more workers. Ametex stood as a beacon of 
hope, especially to El Alto, our poorest and fastest growing 
city where 50,000 people enter the job-seeking market each 
year.
    As high-end, low-volume producer, Ametex is a reflection of 
our textile industry. The ability of our workers to process 
orders quickly and at the highest level of quality and our 
commitment to the rights of workers and working conditions has 
earned Ametex an unparalleled reputation in the region.
    Without ATPA, none of this would be possible. For this, we 
owe a debt of gratitude to the American people. But ATPA has 
been more than an economic boon, it has generated goodwill from 
the people of Bolivia to the United States and its people. I 
witness this attitude of working Bolivians who still look at 
the U.S. for their hopes and dreams. The benefits of ATPA are 
proven. They have harnessed the productive capacity of working 
people and enabled the expansion of a business sector. Each of 
these elements is recognized as essential to democratic 
institutions in developing countries.
    But lately the path to the future has narrowed. Before the 
recent suspension, ATPA has been extended for short-term 
periods only, creating an uncertain business climate. Under 
these circumstances, we have barely been able to survive. We 
have suffered layoffs, diminished revenues, and the migration 
of our U.S. customers to more secure producers. Nowadays Ametex 
is no longer seen as the vanguard for job creation, but as a 
worsening proposition.
    With the suspension of Bolivia from ATPA, we have 
experienced the final heartbreaking blow. Since the suspension, 
we have been forced to let go of 1,800 direct and indirect 
workers from all areas of the firm. We have had to send the 
remaining workers, nearly 1,000 employees, on paid leave 
because there is no work. Our projected annual revenues from 
the United States have been reduced by half, and we have lost 
most of our U.S. customers.
    It is true that Bolivian authorities have stated their 
intention to secure other markets to replace those in the U.S. 
that were lost as a result of the suspension. I have been told 
that Venezuela is now in the process of establishing a 
preferential trade benefit for Bolivia which would allow us to 
export our goods to their market. But our relationship with 
American brands is not easily replaced. We have become very 
well suited to the U.S. market and its sophisticated customer 
base. In contrast, the alternative markets are less demanding, 
and therefore we are less competitive.
    Chairman Engel, with all that happened last year I believe 
the chairman and the members of the committee who visited us 
last year would barely recognize the company they visited only 
last February. If I could offer a recommendation for the Obama 
administration, it would be for the United States to stay 
engaged with Bolivia by reinstating the benefits and thereby 
helping the private sector maintain the jobs that took us so 
long to build.
    With the price of commodities coming down, minerals and gas 
no longer seem the solution they did for Bolivia only months 
ago. We also see remittances being substantially reduced. With 
manufacturing now limited due to ATPA's suspension, I foresee 
more Bolivians migrating to illegal sectors that might bring 
harm to both Bolivia and the United States.
    I believe in the ability of the Bolivian people to build a 
sustainable life. They have proven they are up to the 
challenge. On this path, the United States has been our 
greatest ally and champion and we, the workers of Ametex, yours 
as well. My company and I stand at the ready and are willing to 
whatever we can do to help.
    Mr. Chairman and members of the committee, thank you for 
your consideration.
    [The prepared statement of Mr. Iberkleid 
follows:]Marcos Iberkleid deg.









    Mr. Engel. Well, thank you. Thank you very much, and I 
thank everybody for their statements and I apologize for not 
being here. I had something that I could not help. I want to 
thank Mr. Sires for stepping in. I do not want him to get too 
used to the chair, but thank you for stepping in, and I know 
that the testimony was very, very important.
    I am going to ask some questions, but I just want to make a 
couple of comments that I would have made had I opened the 
hearing.
    Mr. Iberkleid, as you know, I visited your business when I 
was in Bolivia, the factory, and I was very heartened to see a 
leading example of tens of thousands of jobs that ATPDEA had 
created. In fact, it was at your factory that I became 
convinced that this program was really helping the poor in 
Bolivia. It is one thing to read about it. It is another thing 
to actually see it, and I know that you are either the largest 
employer in Bolivia or certainly one of the largest employers 
in Bolivia.
    Bolivia is the poorest country in South America, and it is 
a country where 54 percent of the population lives in poverty 
with a third earning less than $2 a day, and let us think about 
that, $2 a day. So if you look at this program that we have, 
ATPDEA, it has provided quality jobs to the country's poor, 
including many indigenous women who are among the most 
historically marginalized members of society in Bolivia and 
throughout the Andean region. In fact, Mr. Iberkleid, we saw 
some of these indigenous women when we visited your factory, 
and, of course, when we spoke with Evo Morales, he made a point 
to say that he wanted to do whatever he could to help the 
indigenous and he is part of that group.
    As everyone knows, Bolivia was suspended as an ATPDEA 
beneficiary country this past fall, and I am told that since 
that time, Mr. Iberkleid, you have been having tremendous 
financial difficulties, and there have been massive layoffs and 
you may even be forced to shut down.
    Let me say that there is no one in the Congress more than 
me who wants to see improved relations between the United 
States and Bolivia, and the reinstatement of Bolivia's ATPDEA 
benefits.
    I have met with President Evo Morales twice: Once in La Paz 
and the second time in my office right here in Washington, so 
within the past year I have met with him twice face to face. My 
message to him in our meetings has been consistent, please help 
me to help you. I really want to be an advocate for Bolivia in 
Washington, but President Morales' expulsion of the U.S. 
Ambassador, the Israeli Ambassador, and U.S. Drug Enforcement 
Administration agents, DEA agents, over the past 6 months make 
it increasingly difficult for me to help.
    In particular, our ambassador in Bolivia, Phil Goldberg, I 
have known him for many years, even before he was ambassador of 
Bolivia. So I know him personally. He is a fine career 
diplomat, not a political appointee, and knows how to conduct 
himself, and when I visited him, he told me that the Bolivian 
Government was accusing him of everything under the sun, and 
that these charges were all false and made up, and trumped up, 
and I believe that the Bolivian Government's allegations 
against him were completely unfounded. Both Bolivia and 
Venezuela did the same thing, charged our career diplomats, who 
were our ambassadors, with all kinds of nonsense, and then 
expelled them.
    I was particularly troubled also by President Morales' 
statement at a Summit of Latin American Leaders in Brazil just 
this past December, 3 months ago, and he said, and I want to 
quote it because I just came back from the region and other 
leaders have told me that he said this, and when we looked it 
up, this is what we came up with. Morales said,

        ``We should give the new Government of the United 
        States a deadline in order to end the embargo on Cuba. 
        If a newly elected U.S. Government does not lift the 
        economic embargo, we will lift their ambassadors out of 
        our countries.''

    So he is telling the other countries in Latin America that 
if the United States doesn't lift the embargo against Cuba, 
that everyone should break relations with the United States, 
and he is still saying this. He is his own worst enemy. This 
kind of rhetoric certainly does not help, especially as the 
Bolivian Government now attempts to reach out to the Obama 
administration and says it wants ATPDEA benefits, and yet on 
the other hand every chance Morales gets to thrash the United 
States he does it.
    And I said to him when he came here, I said, what were you 
thinking? You know, you throw out our ambassador, you throw out 
our DEA agents, drugs are a problem, and then you want ATPDEA. 
Well, you know, your actions have a reaction. It makes it 
difficult for me to help you, even though I would like to help 
you, but people say, well, is he not the guy who threw out our 
ambassador and our drug agents, and now he is telling everybody 
else to break relations with us?
    So it is a problem. I mean, I would like to see both of our 
countries move quickly to improve relations, but my message to 
the Bolivian Government is that it takes two to tango. So I 
would urge the Morales and the Obama administrations to 
immediately initiate a high-level bilateral dialogue, and I 
urge that, which would result in an exchange of ambassadors, a 
renewed strategy for joint counternarcotics efforts, and in 
turn the reinstatement of ATPDEA benefits for Bolivia.
    But again, it takes two to tango, and I certainly recognize 
that Bolivia is a sovereign country, and they are not required 
to have our DEA agents present. I know that. But I also believe 
that the way in which the agents were expelled is regrettable, 
very regrettable. And as we look to restore relations and 
reinstate ATPDEA we have to find a way to rebuild trust between 
our leaders and our two governments, and we must move beyond 
the constant suspicions, especially in La Paz, where the most 
negative inference is drawn from every action and reaction. And 
even if our two governments do not agree on every detail, there 
are certainly enough intersections of our mutual interests to 
allow more effective cooperation on counternarcotics and other 
matters.
    As I mentioned before, and then I am going to stop, Evo 
Morales is Bolivia's first indigenous President and is 
committed to lifting up impoverished people in his country. He 
made it a point when we first met him to say that, and I 
applaud him for that. I mean, those are great goals and he 
should do that, and we should help him. I congratulated him for 
his personal achievements, and his commitment to Bolivia's poor 
each time we met.
    I come from a labor background, my family, a working class 
background, and I would certainly like to help President 
Morales and other leaders in Latin America roll back poverty 
and create jobs. Yet, I truly believe that President Morales' 
commitment to Bolivia's poor could in part be shown by a 
renewed effort from his government to improve relations with 
the United States, which I believe would, in turn, lead to the 
return of Bolivia's ATPDEA benefits.
    So I want to thank you all for your testimony, and I know 
Mr. Burton wanted to make a statement, so I am going to let him 
make a statement now.
    [The prepared statement of Mr. Engel 
follows:]Chairman Engel deg.





    Mr. Burton. Thank you, Mr. Chairman. I will not speak for 
very long, it will be very brief.
    First of all, I want to apologize to our good friends whom 
I have known for so long when I was chairman and then ranking 
member for the problems that are being created there in 
Bolivia. But President Morales and the President of Venezuela 
seem to be committed to a Bolivarian kind of revolution which 
will lead to a socialistic government and control of all of 
Latin America, if they have their way.
    I have mee deg.t with the Vice President of 
Bolivia. We have talked face to face and heart to heart, and I 
think they understand that the United States is for freedom, 
democracy and human rights, and we are not for a socialistic 
kind of economy that is going to destroy Bolivia, create more 
unemployment and exacerbate the problems of poverty that they 
have down there right now, and so I do not know if there is 
anybody here from the press in Bolivia, but the United States, 
in my opinion, at least from my perspective, cannot and will 
not support that government down there when they are so 
repressive as far as economic conditions of that country are 
concerned, and their policies can only lead to more poverty and 
more problems.
    So I hope that message gets back to Mr. Morales. We would 
like to work with him. I know the chairman feels that way and 
the ranking member feels that way, but to support a government 
that they are all trying to model on Cuba is not the answer, 
and I for one will do everything I can to help the people of 
Bolivia where we can, but to oppose the governmental policies 
of Morales.
    With that, Mr. Chairman, thank you very much.
    Mr. Engel. Thank you very much, Mr. Burton.
    Let me ask anyone who cares to answer from our witnesses: 
The United States and Bolivia in the past have had close 
relations, but obviously, as we have mentioned, the relations 
have deteriorated. Our USAID programs, particularly those 
dealing with alternative development in the Chapare region, and 
democracy promotion have been under constant attack. Yet, at 
the same time, Bolivia remains one of the largest recipients of 
United States foreign assistance in Latin America. In Fiscal 
Year 2008, Bolivia received an estimated $100 million. So let 
me ask you this.
    Should the United States cutback on foreign assistance to 
Bolivia or should we maintain funding in spite of anti-U.S. 
rhetoric and actions? Are there any particular areas of U.S. 
assistance to Bolivia that should be cut? Are there any areas 
that should be increased, and what type of assistance works 
best in the current environment? Anyone who would like to 
answer, I am happy to call on them.
    Ambassador, why don't we not  deg.start with you.
    Mr. DeShazo. Thank you very much, Mr. Chairman.
    As I mentioned in my remarks, I am very much in favor of 
aid programs, that I think USAID has played a very important 
role over the decades in promoting development in many areas in 
Bolivia. I would very strongly support enhancements of those 
programs, especially in areas that are most substantially 
needed, including health, the environment, and particularly 
agricultural programs on the Altiplano. There are programs that 
help create jobs in indigenous areas, such as El Alto, that 
have been very successful. In the past, there have been 
important democracy-building programs conducted by USAID and a 
very wide variety of other programs. I think the USAID program 
in Bolivia has been successful over the years and deserves full 
support. Thank you.
    Mr. Engel. Thank you. Ms. Ledebur.
    Ms. Ledebur. Thank you. It is my assessment that the USAID 
funding and projects have become a point of contention in 
Bolivia during the Morales administration. It is essential to 
create a basis of trust and transparency within which both 
governments can be comfortable.
    I think that the amount of aid does not need to continue 
without restructuring or refocusing that can be agreed upon by 
both governments. I would suggest that programs that generated 
a great deal of conflict--and I think it is important to note 
that I have been in Bolivia for 20 years,and I have worked in 
the Chapare region on the ground in the coca growing region and 
evaluated USAID projects for the past 10 years--that it is 
important not to just maintain a quantity of projects without 
looking at their nature.
    I do have concerns with the way that USAID projects work in 
terms of the contractors and the flow of information that 
reaches Washington. We do not necessarily have a precise view 
here of exactly what happens as the information makes its way 
up the bureaucratic channel.
    I would propose that Bolivia and the United States arrive 
at an agreement of a low level of cooperation through USAID, 
with transparency measures incorporated, on issues that are of 
concern of both the Obama and Morales administrations, such as 
education, healthcare, and poverty alleviation. This is the key 
to build trust through lower-level cooperation instead of 
programs that have generated a great deal of friction, 
including regional assistance to departmental governments, when 
there are no transparency measures to regulate their 
relationship with the central government, and democracy 
promotion programs, which have also generated friction. I do 
not perceive this as a punishment for Bolivia. I do not 
perceive this as a result of friction with the Morales 
administration, but I perceive this as a way to start forming a 
new foundation, little by little, in a way that both 
governments can feel satisfied and comfortable. I think that at 
a point in time where there is a severe economic crisis within 
the United States, that we should begin to focus our priorities 
in a way that we can improve relations with Bolivia, but also 
economize at home.
    Mr. Engel. Thank you. When we were there, there was very 
real talk about the possibility of Bolivia splitting in two 
actually. Are any of you concerned about that or has that 
subsided by now? Has that gone back a little bit? Anybody want 
to take that on? Just wondering if anybody has a feel for that. 
Yes.
    Ms. Ledebur. I think that there has been friction as a 
result of regional issues, but that lowland governments and the 
governments that are seeking autonomy are most specifically 
seeking a way to confront Morales to strengthen their power 
base and regional power. They would actually have very little 
to gain from seceding from Bolivia, and I assume that that is 
something that would not happen in any case happen. In fact, 
these hydrocarbon rich departments would have to export their 
hydrocarbons through Bolivia to other nations in order to 
achieve this.
    I think it is important to understand the nature of 
conflict in Bolivia and regional conflict, and the way that the 
autonomy issue has been used to reestablish a balance of power 
within the Bolivian state, but the prospect of real genuine 
division would leave these departments without any leverage 
against Evo Morales.
    Mr. Engel. Let me ask one last question, and let me ask 
this to Mr. Iberkleid, and then I will turn it over to Mr. 
Mack.
    If Bolivia were to be reinstated as an ATPDEA beneficiary 
country, could your business recover? And what if Bolivia were 
to be reinstated say half a year from now, 6 months to 1 year 
from now, what are the circumstances? How long does it take to 
go down the pipeline?
    Mr. Iberkleid. Chairman, thank you very much.
    It will take some time, the damage has been done. We have 
lost most of our customers. It is a matter of seeing where the 
market is. Right now there is a negative market. The market is 
downsizing, and I believe an effort could be made but it will 
take 1 year or 2 years to reestablish an acceptable size 
market. It will not be immediate. It is not like a switch.
    Mr. Engel. It does not move that fast.
    Mr. Iberkleid. It does not move. It will not move that fast 
now.
    Mr. Engel. Thank you. Thank you.
    Mr. Mack? I think he had a response.
    Mr. Engel. Oh, Mr. Daremblum. I am sorry
    Mr. Daremblum. Some of the issues that you have raised 
before. I do not believe it is possible to look at trade 
preferences or USAID or any type of cooperation independently 
of basic diplomatic, modicum relationship, cooperation between 
Bolivia and the United States. I feel, however, that we cannot 
be optimistic in terms of what is going to happen in the 
relationship between Bolivia and the United States, and, of 
course, we will have to wait until we see that there is an 
active engagement between the two of them.
    But the dynamic that Mr. Morales has evidenced, not too 
different from that of Mr. Chavez, it really runs against that 
basic relationship with the United States as well as with 
important sectors of his own society. I do not think we can be 
optimistic about him in general, and I think that we have to 
test whether or not it is possible to advance diplomatically 
with Mr. Morales more than has been possible until today. Thank 
you.
    Mr. Engel. Thank you. Thank you very much.
    Mr. Mack.
    Mr. Mack. Thank you, Mr. Chairman. It is good to be here 
with you again. I offered to take the chair when you were not 
here, but for some reason your side was not too happy about 
that. [Laughter.]
    Mr. Engel. We can dream, Mr. Mack. What can I tell you? 
[Laughter.]
    Mr. Mack. It is good to be with you. Thank you.
    You know, as I was listening a question kept coming to mind 
as I listened to each one of you speak, that, you know, we have 
heard about doing some low-level stuff to keep communications 
open, but my question is, would we be better off, as you look 
at Latin America as a whole, if Evo Morales does not want a 
relationship with the United States, would we be better off to 
take those resources and support our allies and others that may 
be in a position, that want to have a relationship with us?
    Because if it is so heated right now, maybe the best thing 
to do is say, hey, look, let us take a timeout, let us have a 
cooling off period, and we can take those resources and go 
somewhere else where we might get more bang for the buck, where 
we can start developing relationships with people, and then we 
can come back and visit this, because, first of all, the idea 
that somehow it is the United States is the bad guy in all of 
this when it is clear that Hugo Chavez and Evo Morales and 
Fidel Castro are all playing from the same playbook. I mean, it 
is the steady drum beat. You know, it is predictable at this 
point.
    So the question is would we be better off looking at the 
Western Hemisphere as a whole, to take those resources and 
support our friends and allies that need it? Anyone? No one 
wants to touch that?
    Mr. DeShazo. I would be happy to respond. I think we have 
long-term interests in Bolivia in reaching out to the people of 
Bolivia regardless of their government. I believe that the 
kinds of programs that the United States has engaged in over 
time, especially related to addressing issues of poverty, 
education, health, and governance, are matters that have long-
term importance for the United States, and therefore the 
maintenance of them, I believe, promotes a positive image of 
the United States among the people of Bolivia. We also have 
other long-term interests that involve the counternarcotics 
section of our Embassy and others that are there.
    I think that maintaining a base presence of the United 
States, a basic presence of support, or even enhancing that 
support and looking for other ways to improve long-term people-
to-people relations with Bolivia is a very positive thing to 
do. We may have short-term difficulties and controversies with 
one government or another, but generally I think the policy of 
long-term engagement is a good one. Thank you.
    Mr. Rebolledo. Mr. Mack, thank you.
    I think abandoning Bolivia at this point in time or 
disengaging would be an enormous error. If we look at the 
abandonment of Afghanistan in the early eighties--I am sorry?
    Mr. Engel. The microphone?
    Mr. Rebolledo. It is on.
    Mr. Engel. It is on?
    Mr. Rebolledo. Yes.
    Mr. Engel. Pull it a little closer if you can.
    Mr. Rebolledo. Okay. Sorry. So as I was saying, disengaging 
with Bolivia at this point in time I believe would be a serious 
error.
    The primary issue between Bolivia and the United States as 
I see it is our U.S. counternarcotics policy. I strongly 
believe that we should slowly begin to migrate U.S. efforts in 
this arena to the multilateral arena with institutions such as 
the European Union and the U.N. Office on Drugs and Crime. They 
are seen as much more neutral and could contribute to a better 
bilateral relationship. This would obviously mean more funding 
by the U.S. Government to U.N. Office on Drugs and Crime.
    Having just come back from La Paz, I Had the opportunity to 
meet with EU ambassadors, and they are all very concerned with 
the departure of DEA, particularly the Brazilians where we are 
beginning to see a flow--well, we have been seeing a flow of 
cocaine smuggling through Brazil to Africa and to Western 
Europe. But they also are beginning to come around to this idea 
of perhaps giving a more important role to the multilateral 
agencies and having this whole certification process fall to 
them. Thank you.
    Mr. Mack. Thank you, Mr. Chairman. Thank you.
    Mr. Engel. Thank you. Mr. Sires.
    Mr. Sires. Yes. Good afternoon. Thank you for your 
comments.
    I do not know who wants to take this, but with the 
situation in the world like it is, you have a country like 
Bolivia that depends on foreign investment, trying to promote 
keep jobs and create for the people. You have Bolivia is 
nationalizing. Why would I, if I am a foreign country, invest 
in Bolivia when I see the relationship with Tehran, Venezuela, 
Cuba? Why would I invest in a country with the rhetoric that is 
coming out of Bolivia? Anyone want to answer?
    Mr. Rebolledo. I will take a stab at it. I think it all has 
to do with competitive advantage. So if you----
    Mr. Sires. I am sorry?
    Mr. Rebolledo. It all has to do with competitive advantage. 
So if you look at the issue, for example, of lithium right now, 
which is an integral part in batteries for hybrid-powered cars, 
everyone is now interested in lithium reserves in Bolivia. 
President Morales was just in France where he met with various 
investors--Sumitomo of Japan, Mitsubishi, LG, a South Korean 
company, Bollore, a French company. So in their vision the risk 
is probably worth it.
    But obviously for the rest of the private sector the lack 
of transparency in the judicial system and the way the new 
constitution deals with foreign direct investment is a major 
problem.
    Mr. Sires. Anyone else like to take a stab at it? 
Ambassador?
    Mr. DeShazo. Well, clearly the response to the Morales 
administration has been a large drop off in foreign direct 
investment. I think probably the key area here has been the 
hydrocarbons sector, where foreign investment has tailed off 
substantially, leading to problems with production, which 
coupled with lower prices for natural gas, will mean a 
difficult economic situation for the Morales administration as 
it moves forward.
    Bolivia has the second largest natural gas reserves in 
Latin America. It was poised to be a gas hub for the entire 
region, and now it cannot honor its contracts with some of its 
foreign clients. So it has been an opportunity that up until 
now has been lost, and it has been lost largely because of lack 
of investment, and there is a tremendous potential there. Thank 
you.
    Mr. Rebolledo. I would like to add one more thing if I may. 
It is interesting to see as well that President Morales is now 
focusing on state-to-state investment in Bolivia. We are seeing 
a possible GAZPROM investment, PDVSA (Venezuelan state oil 
company) investments, the Iranian National Oil Company. So far 
the only positive state-to-state investment that he has had and 
that has thrived is Petrobras, and even that relationship is a 
tenuous one. Thank you.
    Mr. Sires. You know, somebody mentioned before that we 
should be going away from an anti-narcotic relationship and 
evolve into another relationship. What other relationship could 
we get involved in other than--fine, I will let you----
    Mr. Iberkleid. Our suggestion is to help Bolivians have a 
better life, to create an opportunity for themselves.
    Mr. Sires. We have been doing that all along though, have 
we not?
    Mr. Iberkleid. We have, but we have pulled the carpet under 
the floor in the last couple of years because ATPA was a great 
instrument to build that, and we no longer have an ATPA.
    Mr. Sires. But that our reaction to an action.
    Mr. Iberkleid. Yes. Yes. However, I must say that it is 
through the private sector that we can build these 
opportunities and it is the private sector who is hurting right 
now because of these reactions. That is why we are asking for a 
reconsideration of this policy change.
    Mr. Sires. Anyone else?
    Ms. Ledebur. I think it is essential to note that the 
conditioned role of narcotics policy and the central focus on 
counternarcotics in Bolivia has focused a great deal on the 
elimination of the coca leaf and coca leaf eradication. I would 
suggest that moving away from that, and looking at poverty 
alleviation, education and health care is a way to stimulate 
other economic opportunities to focus on something that is 
viable for both nations.
    It is important to note that, not only has the 
counternarcotics focus created great friction, but it has also 
impeded progress in many, many other areas. The certification 
process and the way that it is carried out tends to generate a 
great deal of friction throughout Latin America.
    I also agree with Ivan. De-narcoticizing the relationship 
and focusing on areas of common concern, a multilateral 
approach, using European partners and the U.N. are important. 
But also looking at the Andes as a region and how to deal with 
things regionally, to not focus solely on coca production are 
essential to improve relations. It is important to note that 
while the relations have been focused on anti-narcotics, coca 
production for the last 20 years has continued to rise in the 
Andean region. We have not been meeting our goals and we have 
not improved relations as a result of the policy that has been 
implemented.
    Mr. Engel. I think Dr. Daremblum----
    Mr. Sires. Thank you very much.
    Mr. Engel. Dr. Daremblum, I think, wants to answer
    Mr. Daremblum. About private investment, the conditions 
that exist seem to be in the immediate future in Bolivia are 
not conducive to foreign investment in the country in terms of 
certainty about the judiciary, certainly about the political 
stability of the country itself.
    I do not believe, and I have to go back to our initial 
discussion, but prior to talk about stimulating private 
investment and to helping in this and any other field in 
Bolivia, it is important to establish a framework on what the 
relationship of the United States with Bolivia is going to be. 
The only way of creating that or agreeing on that framework, 
which of course is a prerequisite of all the others, is 
something that should be handled at the highest level and as 
soon as the Obama administration is ready to engage in the 
Western Hemisphere.
    On the other hand, I do not believe that the United States 
should not have a diplomatic presence in Bolivia. They are 
friends of the United States. There are sectors in which the 
United States can carry on an engagement, important sectors of 
Bolivia society, and therefore I do believe that the presence 
of the Embassy and a basic type of presence of the United 
States in Bolivia continuing is very important. Thank you.
    Mr. Engel. Thank you. Mr. Burton?
    Mr. Burton. Thank you, Mr. Chairman. It is good being with 
you again. I am sorry you were late. I understand you had a 
little difficulty getting in.
    Mr. Engel. I did, but I must say it seems strange not 
having you in your usual seat.
    Mr. Burton. Well, you have got a good man sitting next to 
you. His dad and I were good friends. We watched Chariots of 
Fire in my living room floor when he was a kid.
    But let me start off by saying it is really nice being with 
you guys, and I would love, I would love to be able to be very 
optimistic about our relationship with Bolivia. When I was here 
in the eighties and I remember the Communist and the Leftist, 
Fidel Castro, and Nicaragua and everybody in the--the FLMN in 
El Salvador was trying to move everything to the left, and 
Ronald Reagan and his administration did everything we could to 
create democracy in the Central and South America, and as a 
result we saw democracy flourish all over Latin America and 
Central America.
    Now we have seen with Mr. Chavez everything is starting to 
move to the left. He has taken an awful lot of his oil money 
and used it not to enhance the lives and quality of life for 
his people there in Venezuela, but he has used it to try to 
cause revolution in South America and Central America, his 
Bolivarian goals, and Mr. Morales is going along with him.
    They have kicked out the DEA and our ambassador. They have 
kind of roughed up, at least metaphorically speaking, our Peace 
Corps people, and you know, they are moving to the left, and I 
cannot understand, and I am very sympathetic to you and your 
textile business and the kind of problems that you are 
encountering. My gosh, you have been a good trading partner. 
But the problem is not with you, it is with the government, and 
when I see these countries moving to the left, as they did back 
in the eighties, it seems like a repeat of an old movie, and I 
do not want Raul Castro to emulate his brother, and I do not 
want Chavez to be able to use the oil money to promote 
revolution and move to the left and destroy democracies and 
move toward socialism, and I want to see Mr. Morales, along 
with Mr. Chavez and Mr. Ortega in Nicaragua continue to push 
everything to the left because that is destructive not only of 
their countries but of all of Latin America.
    I understand what you are saying about we really need to do 
something to help the people down there and we should do it 
through USAID, but you have got to do that with the 
government's help. You cannot do it with him opposing us on 
everything that we are trying to do.
    You know, those who do not profit from history are destined 
to have the same result over and over again, and I have used 
this comparison many times and I know it is not this severe, 
but I remember when I was going to school, and we read about 
Lord Chamberlain going to Munich to try to appease Hitler and 
say, hey, we want to get along with you. What do we have to do 
to get along? And we ended up with 50-60 million people being 
killed.
    Now that is probably not going to happen in Latin America, 
but we could see an awful lot of additional poverty and strife 
down there, and maybe more war like we saw in Nicaragua and El 
Salvador if we continue to let these Leftist governments move 
the way they are, the way they have been moving, and we ought 
to be doing everything we can, in my opinion, to bring about 
some positive change as they did during the Reagan years, 
toward democracy, and allowing Mr. Chavez and Mr. Morales and 
other countries down there that are moving to the left to 
continue to be able to get what they want and to negotiate with 
them on their terms is to encourage them and to encourage the 
movement to the left that Fidel Castro was pushing so hard for 
during his reign in Cuba.
    I am just concerned about giving our money to governments 
like the one of Mr. Morales. I am very concerned about working 
with them when they are showing nothing but animosity toward 
the United States. And you have talked about our economic 
problems here in the U.S., and I believe we ought to be very 
concerned about the U.S. economy first, and then be concerned 
about the rest of the world. Charity begins at home, and then 
we should help the rest of the people in this world that are 
our friends, and the ones that continue to oppose us, in my 
opinion, should get zip, and we should let them know that if 
they want our help, if they want to work with us, we want to 
work with them.
    We will negotiate with them, we will talk with them, and we 
will do everything we can to help them and their economies as 
long as they are willing to talk, but when they kick our 
ambassador out, kick the DEA out, bully our people that are 
working in the Embassy down there and our Peace Corps 
volunteers, I cannot see why in the world we should do 
anything, and I apologize to the businesses down there that are 
trying to flourish, but I do not know how to help them as long 
as Morales has the attitude he has, and I am very sympathetic 
to you, I really am. I wish the dickens we could do something, 
but we cannot do it with that government in power unless they 
are wiling to talk and negotiate with us.
    Mr. Engel. Would you like anyone to comment, Mr. Burton?
    Mr. Burton. You are welcome to comment.
    Mr. Engel. If not--see, after Mr. Burton speaks everyone is 
speechless. [Laughter.]
    If not, we will ask Mr. Payne.
    Mr. Payne. Thank you very much. It is really good to hear 
your testimony. I think that it is a great tribute to Bolivia 
that for the first time in its history they have elected an 
indigenous person to lead the country, and I do believe that to 
try to right wrongs of the past is not necessarily the worst 
thing in the world to do. As a matter of fact, if we try to 
accentuate the positive, the foreign minister, I think, 
recently said that Bolivia wants to construct a positive 
relationship with the United States, and we are talking about 
reestablishing our ambassador, he said, and went on to 
congratulate the U.S. for eliminating Guantanamo Bay base, and 
said this is a step in the right direction.
    As a matter of fact, even Senator Lugar, who is from 
Indiana, good friend of Mr. Burton's, said that if our two 
countries can continue to speak--and this was only about 3 or 4 
weeks ago--continue to speak to one another respectfully, and 
if we can each designate ambassadors, yet another step would be 
taken to ensure that these developments represent a positive 
new stage in the relationship between the United States and 
Bolivia.
    So I do think, in my opinion, that we can, with the new 
administration, move toward perhaps a new beginning.
    I do not think it is necessarily bad that a country moves 
to the left. You know, France moved to the left at one time. We 
did not stop relations with France. We see some countries have 
elections that move to the right, the new elections in Israel 
that moved to the right. That is fine. That is what the people 
wanted. If the people in Bolivia wanted to move to the left, 
then that is what they want. I think we need to learn to work 
with countries and try to have some assistance.
    Let me just finally say about the Peace Corps being 
expelled, actually a Peace Corps volunteer admitted that he was 
asked by the U.S. Embassy in Bolivia to basically spy, to see 
whether there were Cubans or Venezuelan doctors or anyone else 
in the country. He jus said the Embassy told him to do that.
    So, you know, sometimes when these actions happen, I think 
we have got to be fair about the way that we disseminate 
information.
    Now, I hope that Bolivia would be pro-democracy, love 
America, do the right thing, but I do think too by the same 
token that we have a responsibility to have the facts out 
straight, and I think our goal should be to try to see if we 
can forge relationships and to try to lower the rhetoric and 
try to see where there can be ways in which our two countries 
who for so many years have had a good relationship, can 
continue to have a decent relationship.
    So since we are going to have a vote soon, I will just kind 
of conclude that I would hope that we can move in a positive 
way to see--and the other thing is a lot of the money that we 
are spending there, of course, is to try to eradicate the drug 
problem, the coca problem, and I wish we could. However, there 
would be no big market for it if Americans were not buying it 
all. We are the ones with the money. It is everybody's problem 
to work on this whole thing, and I would rather see us spend 
money on education for Americans and other people using it, and 
the  deg.we do not need to waste a lot of money on 
eradication. Thank you.
    Mr. Engel. Thank you, Mr. Payne. Mr. Meeks.
    Mr. Meeks. Thank you, Mr. Chairman, and I think I am late 
getting here, but I heard you say that it takes two to tango, 
and I agree, on both sides. Bolivia has to do its side and we 
have to do our side.
    I recently read where a quote of a person from Bolivia 
says, ``With my humble vote, I am creating a little bit of hope 
for my children.'' That is what Imira, an Indian woman, said 
after voting in January for Bolivia's new constitution.
    People are looking at, and I am one who has favored working 
and trading with Bolivia, and I think we have to find a way to 
do that, but on a different platform from which we have in the 
past. When you look at the bright side of things, democracy 
does live in Bolivia. The people voted. The people voted. That 
is what democracy is all about. Not the United States to come 
in and say, well, you did not vote the way we want you to vote, 
or you are not moving the way we tell you to vote. People do 
not want to be told. They want an honest answer, respect us. 
The people of Bolivia talking. So why can't their vote be 
respected? It is their country, and it is our job to figure out 
how to work collectively with them.
    Many of these individuals have never had an opportunity to 
have a voice in government before. Now they have a voice. I 
think that is a good thing. Democracy is not something that you 
just throw around and jus say it happens. It took us a long 
time to do it right here. I mean, I can recall that just a few 
years ago, you know, it is not hard for me to remember that we 
had to amend our constitution. It is called the Fifteenth 
Amendment to the United States Constitution that prohibited 
discrimination against voters, and it was ratified in 1870. But 
even in this great country it was not until 1965, with the 
Voting Rights Act, that African-Americans began to have true 
freedom and exercise the right and responsibility to vote. As 
we all say, we did not have a democracy.
    There is a democracy going on in Bolivia. There is a 
democracy going on in other places. If you talk to other 
leaders on the hemisphere, that is what they like. You talk to 
President Lula as I have. When he was in New York, he recently 
said while he was sitting alongside President Morales that we 
will not have lasting prosperity if all our South American 
brothers do not have prosperity as well. That is what we should 
wish for them. But we should not say that you come in and jus 
do what I tell you to do because I am the United States of 
America and I am bigger than you. I have more military power 
than you.
    I think that is why we are looked at in a bad way, and I am 
hopeful that there is a new message that is being sent by the 
new administration; that we are going to be moving in a 
different direction. Foreign policy is not going to be 
conducted the same as it has been for the last 8 years, and to 
me that is a positive because when we work together, as we have 
in the beginning until we get into these rhetoric 
conversations, is beneficial for the Bolivians and it is 
beneficial for the United States of America, and that is what 
we have got to look at for that compromise. Down the middle. We 
can talk to one another and figure out how we can do together.
    I think, for example, when it comes to economic ties we 
must figure out how to address the ATPDA with Bolivia. This 
program has proven successful in Bolivia; has created jobs and 
given hope to 1,000 of hard-working Bolivians. I look forward 
to working with a new path on the ATPDEA and drug cooperation 
this year.
    But I conclude with a statement that was made by a little 
boy. It was an article that I read just a few minutes ago on 
the way here and reading. It was from a boy from a remote farm 
in Bolivia where--and he was an indigenous boy, and he told 
reporters, ``Now we can be equal to the others. Now there 
should be no more discrimination.''
    That young boy has hope for a better tomorrow because 
people were able to participate in a democracy, and for the 
first time individuals who for decades did not have a voice in 
their own government finally has a voice. That is a good thing. 
They are proud of the fact that they have an indigenous 
President who not only represents them, but represents the old 
country just as I am proud of the fact that in the United 
States of America I have President Barack Obama who happens to 
be an African-American but represents all of the people of the 
United States. It is democracy at work, and we should applaud 
that.
    Mr. Engel. Thank you. Thank you, Mr. Meeks.
    We have a vote so I am not going to prolong the hearing, 
but I just want to throw out a couple of things, and these are 
things to think about. President Bush, in September, 
decertified Bolivia by adding it to the list of countries that 
failed to live up to their obligations under the International 
Narcotics Agreements, and one of the things we need to think 
about is if President Bush decertified Bolivia, is it something 
that we should negotiate now with the Bolivian Government to 
see if they would change their policies and perhaps would not 
be decertified.
    The other thing is that President Obama has the authority 
to unilaterally reinstate Bolivia as an ATPDEA beneficiary 
country anytime, and so the question will be should he do it, 
should it be without preconditions and immediately, or should 
the reinstatement of ATPDEA be contingent upon either an 
exchange of ambassadors and/or the return of U.S. Drug 
Enforcement Administration, DEA personnel, and the 
recertification of Bolivia, someone cooperating with us in the 
fight against drugs. These are all questions that we are going 
to have to look at, and hopefully will be answered in the not 
too distant future.
    I want to thank our guests for testifying. The testimony 
was certainly very interesting. Obviously, this is going to 
continue and United States-Bolivian relations are going to be 
something that we can continue to monitor, and talk about.
    I want to just say that when we are looking at the 
decertification, ATPDEA, and the removal of our ambassadors, we 
also ought to look at the Peace Corps. I think, was it Mr. 
Payne who mentioned the Peace Corps, the Peace Corps 
unilaterally, Peace Corps left Bolivia citing growing 
instability, and announced the suspension of its operations in 
Bolivia, and there was a removal of 113 U.S. volunteers that 
came shortly after the expulsion of our ambassador, and the 
question is was it tit for tat? Should it be tit for tat? 
Should we use the Peace Corps as a tool in diplomacy, or was 
this just something that really didn't have anything to do with 
the removal of the ambassadors? That is also something that we 
will continue to monitor and something that is very interesting 
for us to follow.
    So I want to thank our witnesses. I want to thank you very 
much.
    I want to announce that either on March 18 or March 19 this 
subcommittee, in conjunction with Representative Cuellar, who 
chairs a subcommittee on the Homeland Security Committee, will 
be having a joint hearing on Mexico, and the problems with the 
drug cartels and the ongoing violence and the increase in 
violence in Mexico involving drugs. There is an article in 
today's Washington Times on the front page which talks about 
the drug cartels in Mexico having 100,000 soldiers that it 
controls, and the Mexican Government only has a little bit more 
than 100,000. So this is very, very serious when the drug 
cartels have as many people as the entire Mexican Government in 
terms of soldiers, and we look at the possible destabilization 
of that country.
    Our subcommittee just came back from a trip to Mexico where 
we had discussions with President Calderon for a long, long 
time. And so that will be on March 18 or 19. We are still 
finalizing the time and the place, but that will be with 
Congressman Cuellar, and it will be both our subcommittees, so 
I hope people will come, and we can get to the core of the 
problems in Mexico.
    So, again, thank you for testifying----
    Mr. Meeks. Mr. Chairman.
    Mr. Engel. Yes, Mr. Meeks.
    Mr. Meeks. I would like to submit my entire opening remark 
for the record, without objection.
    Mr. Engel. Without objection, so ordered. His entire 
remarks will be part of the record.
    Thank you, again. Thanks, Mr. Mack and all the witnesses 
for testifying, and the hearing is now adjourned.
    [Whereupon, at 3:45 p.m., the subcommittee was adjourned.]
                                     

                                     

                            A P P E N D I X

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 Material Submitted for the Hearing RecordHearing notice deg.



Hearing minutes deg.



Connie Mack statement deg.





Gregory Meeks statement deg.









Dan Burton statement deg.



Testimony of Republic of Bolivia deg.





















    [Note: The annexes included with the prior material are not 
reprinted here but are available in committee records.]

                                 
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