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


 
           U.S. POLICY TOWARD THE AMERICAS IN 2010 AND BEYOND

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                         THE WESTERN HEMISPHERE

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 10, 2010

                               __________

                           Serial No. 111-101

                               __________

        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
ELIOT L. ENGEL, New York             DONALD A. MANZULLO, Illinois
BILL DELAHUNT, Massachusetts         EDWARD R. ROYCE, California
GREGORY W. MEEKS, New York           RON PAUL, Texas
DIANE E. WATSON, California          JEFF FLAKE, Arizona
RUSS CARNAHAN, Missouri              MIKE PENCE, Indiana
ALBIO SIRES, New Jersey              JOE WILSON, South Carolina
GERALD E. CONNOLLY, Virginia         JOHN BOOZMAN, Arkansas
MICHAEL E. McMAHON, New York         J. GRESHAM BARRETT, South Carolina
JOHN S. TANNER, Tennessee            CONNIE MACK, Florida
GENE GREEN, Texas                    JEFF FORTENBERRY, Nebraska
LYNN WOOLSEY, California             MICHAEL T. McCAUL, Texas
SHEILA JACKSON LEE, Texas            TED POE, Texas
BARBARA LEE, California              BOB INGLIS, South Carolina
SHELLEY BERKLEY, Nevada              GUS BILIRAKIS, Florida
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
VACANTUntil 5/5/10 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


                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

The Honorable Arturo Valenzuela, Assistant Secretary, Bureau of 
  Western Hemisphere Affairs, U.S. Department of State...........    14
Mr. Peter Hakim, President, Inter-American Dialogue..............    48
Riordan Roett, Ph.D., Sarita and Don Johnston Professor, 
  Director, Western Hemisphere Studies and the Latin American 
  Studies Program, The Paul H. Nitze School of Advanced 
  International Studies (SAIS), The Johns Hopkins University.....    58
The Honorable Otto J. Reich, President, Otto Reich Associates, 
  LLC (Former Assistant Secretary of State for Western Hemisphere 
  Affairs).......................................................    73

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Eliot L. Engel, a Representative in Congress from 
  the State of New York, and Chairman, Subcommittee on the 
  Western Hemisphere: Prepared statement.........................     5
The Honorable Connie Mack, a Representative in Congress from the 
  State of Florida: Prepared statement...........................    10
The Honorable Arturo Valenzuela: Prepared statement..............    17
Mr. Peter Hakim: Prepared statement..............................    51
Riordan Roett, Ph.D.: Prepared statement.........................    61
The Honorable Otto J. Reich: Prepared statement..................    75

                                APPENDIX

Hearing notice...................................................   100
Hearing minutes..................................................   101
The Honorable Gene Green, a Representative in Congress from the 
  State of Texas: Prepared statement.............................   102
Written response and attachment from the Honorable Arturo 
  Valenzuela to question submitted for the record by the 
  Honorable Eliot L. Engel.......................................   103
Written responses from the Honorable Arturo Valenzuela to 
  questions submitted for the record by:
  The Honorable Michael T. McCaul, a Representative in Congress 
    from the State of Texas......................................   110
  The Honorable Barbara Lee, a Representative in Congress from 
    the State of California......................................   114
The Honorable Eliot L. Engel: Material submitted for the record..   125
The Honorable Dan Burton, a Representative in Congress from the 
  State of Indiana: Material submitted for the record............   132


           U.S. POLICY TOWARD THE AMERICAS IN 2010 AND BEYOND

                              ----------                              


                       WEDNESDAY, MARCH 10, 2010

                  House of Representatives,
            Subcommittee on the Western Hemisphere,
                              Committee on Foreign Affairs,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:55 p.m. in 
room 2172, Rayburn House Office Building, the Honorable Eliot 
L. Engel (chairman of the subcommittee) presiding.
    Mr. Engel. The hearing will come to order. I am happy that 
we have so many people in the audience with interest, and Mr. 
Mack and I were just at a meeting with the President of Haiti, 
Mr. Preval, and that is why we are late. So we both apologize 
to our colleagues, Mr. Burton, and everybody else but Haiti is 
obviously, I am sure, Dr. Valenzuela will mention Haiti, I am 
sure, in his testimony.
    I just came back for Haiti on Friday, and obviously there 
is a lot of work to be done and the United States needs to play 
and will play an important role in helping to rebuild Haiti. I 
was at the White House this afternoon at the Rose Garden with 
President Obama and President Preval, and it was really 
heartwarming to hear both Presidents speak and talk about how 
we are going to work together to rebuild Haiti.
    Before I begin, I want to acknowledge several of our guests 
in the audience, several Ambassadors, and I welcome them all: 
Ambassador Barney Karran from Guyana; Ambassador Luis Gallegos 
from Ecuador; Ambassador Francisco Villagran from Guatemala; 
Ambassador Jaime Aleman from Panama; and Ambassador Valdivieso 
from Peru: And Ann Grut-Philips who is the Minister 
Plenipotentiary for the Netherlands Antilles, so welcome to 
everybody. I think I told the Minister Plenipotentiary that is 
where I went for my honeymoon 30 years ago, so something with 
the Netherland Antilles works, and welcome to all the 
distinguished people here today, and all the Ambassadors.
    So, the Subcommittee on the Western Hemisphere will come to 
order. Last April at the Summit of the Americas United States-
Latin American relations began to change for the better. I was 
in Trinidad as President Obama pledged an equal partnership and 
engagement based on mutual respect, common interests and shared 
values, and that was the President's quote.
    In June, I saw a renewed U.S. commitment to multilateralism 
when I joined Secretary of State Hillary Clinton in San Pedro 
Sula, Honduras, for the General Assembly of the OAS. Secretary 
Clinton's trip to Latin America last week certainly is an 
excellent start to the year, and I hope in 2010 the Obama 
administration will build on the momentum from its first year 
in office. I would like to briefly share some thoughts on the 
direction that I think U.S. policy should take in a number of 
key areas.
    Firstly, we must work diligently to help Haiti from crisis 
to recovery. The Obama administration has so far done an 
outstanding job in responding to the catastrophic earthquake 
that hit Haiti on January 12th. I saw the devastation and our 
relief efforts firsthand when I visited the country on Friday. 
As we look ahead, we must assure the Haitian people that we 
will be there for the long term. The Donors Conference on March 
31st in my home city of New York will be a key step in 
demonstrating the U.S. commitment to the Haitian people.
    Our hearts also go out to the people of Chile who suffered 
a tragic earthquake on February 27th. We in Congress stand 
ready to help our Chilean friends as they move toward 
reconstruction.
    Secondly, in 2010, I hope we can take a fresh look at our 
counternarcotics policies both here at home and throughout the 
region. I had a conference this afternoon and I spoke a little 
bit about that. Billions of U.S. taxpayer dollars have been 
spent over the years in combating the drug trade. 
Unfortunately, the positive results are few and far between.
    In December, the House of Representatives unanimously 
passed the bipartisan Western Hemisphere Drug Policy Commission 
Act of 2009. It is H.R. 2134, and I authored it with my good 
friend, the ranking member Connie Mack, and it was a pleasure 
working together with him in a bipartisan basis, and this bill 
would provide a long-needed assessment of our counternarcotics 
efforts, and Connie Mack as co-sponsor was also very essential 
in helping to move this bill forward.
    I am a strong supporter for security initiates in the 
hemisphere, but I believe we need to have a more holistic 
approach for our counternarcotics strategy and could withstand 
the so-called ``balloon effect'' that results from pressure in 
one region causing the drug trade to move to another region, so 
think about it. If we go to a region to try to prevent the drug 
trade, but we don't do things to present it from moving, it 
will just take root in another region and obviously we don't 
want that to happen.
    When I first became chairman of the subcommittee I traveled 
to Trinidad and Tobago where Prime Minister Manning told me 
that calls for just a small amount of security assistance were 
reportedly ignored. That was in the previous administration. I 
hope this is no longer the case. It seems to be no longer the 
case and I am pleased that the Obama administration if offering 
security assistance to the Caribbean, through the Caribbean 
Basic Security Initiate which is CBSI.
    This week I am sending a letter to the Appropriations 
Committee and again along with Ranking Member Mack and several 
members of the subcommittee urging full funding of President 
Obama's $79 million CBSI request.
    You know, these issues that we deal with on this 
subcommittee are really bipartisan, and we have very little 
difference between the parties. We understand that the United 
States needs to work with our friends and our partners in the 
hemisphere.
    Thirdly, I am increasingly concerned about the closing of 
democratic space in the Americas, and I know Mr. Mack will 
certainly agree with me again on this one. Just 2 weeks ago the 
OAS's independent Inter-American Commission on Human Rights 
criticized Venezuela for its deteriorating human rights 
situation. In the coming year, I would like to see the OAS 
Permanent Council be more vocal in speaking out about the 
closing of democratic space in the region.
    On a more positive note, Colombia's constitutional court 
recently voted to bar Colombians from voting on a referendum to 
lift the ban on third Presidential terms. This decision by the 
court and President Alvaro Uribe's respect of the court's 
ruling is proof of the country's strong institutions and 
adherence to the rule of law, and it should serve as an example 
to all of us, and I admire President Uribe for his compliance 
and for his going along, and that has added to all the other 
things, frankly, that I admire him for.
    Fourth, I am pleased to see steps by the United States and 
several countries in the hemisphere to reach out to Honduran 
President Pepe Lobo; resuming our foreign assistance to 
Honduras and working closely with the Lobo administration is 
crucial. I know again our ranking member would agree.
    But the inter-American community must also ensure that 
steps are taken to implement key pieces of the Tegucigalpa/San 
Jose Accord. This includes the establishment of a robust truth 
commission to investigate events from last year; and finally, 
we must continue to closely monitor the increasingly worrisome 
human rights situations in Honduras. The recent murders of 
three Hondurans who were active in their resistance to the coup 
or related to activists must not go unnoticed.
    Fifth, we must continue to keep an eye on Iran's expanded 
presence in the Western Hemisphere. I was deeply disappointed 
with Brazilian President Lula da Silva recently hosted Iranian 
President Mahmoud Ahmadinejad in Brazil and I am concerned with 
Brazil's lack of interest in new U.N. sanctions against Iran. 
Brazil is a rapidly modernizing country which wants to gain a 
permanent seat on the U.N. Security Council, but I believe its 
failure to take Iran's nuclear program seriously is impeding 
its rise as a global leader.
    Sixth, I would urge the Obama administration to focus on El 
Salvador and Paraguay. It may seem odd that I single out these 
two small countries, but they are key partners who want to have 
strong relations with the United States.
    I attended the inauguration of Salvadoran President 
Mauricio Funes in June. He is the first President from the FMLN 
since the country's peace accords in 1992. Funes, who was in 
Washington to meet with President Obama this week, faces 
opposition in his country from both the far right and the far 
left.
    In Paraguay, the second poorest country in South America, 
President Fernando Lula was the first President not elected 
from the Colorado party in 60 years. Both Presidents want to 
have ties with the U.S. and we must continue to nourish this 
important relationship.
    In the case of Paraguay, last year I introduced the U.S.-
Paraguay Partnership Act, which is H.R. 1837, which would add 
the country to the Andean Trade Promotion and Drug Eradication 
Act, or ATPDEA.
    On a more personal note, I am extremely concerned about the 
imprisonment of USAID contractor, Allan Gross in Cuba. I 
understand that Mr. Gross's health has been on the decline 
while in detention and he has lost over 50 pounds. His release 
needs to be a top priority, and again the impression of the 
Castro Regime is something that concerns us all.
    President Obama, when he became our President, lifted the 
travel ban to Cuba for Cuban-Americans, and yet I think we have 
yet to see reciprocity from the regime in Havana. We need to 
see reciprocity. We need to see more, and we haven't seen it 
yet.
    I hope that today's hearing will help create a framework 
for the Obama administration to build on its successful first 
year on the Americas through a number of key concrete actions. 
We all look forward to the hearing of the testimony of our 
excellent new Assistant Secretary of State for Western 
Hemisphere Affairs, Arturo Valenzuela, as well as our private 
witnesses.
    Just 2 months ago this subcommittee and other interested 
people went on a trip to the hemisphere where we visited, one 
of the places was Argentina. I want to state that I was 
particularly glad that Secretary of State Clinton decided to 
visit Buenos Aires and meet with President Fernandes de 
Kirchner. I thought that was a very, very important step. I 
think Argentina is an important country, and I think that the 
United States needs to work closely with Argentina. I think 
that we can talk about differences and accentuate the 
differences. That is a mistake. I think we should accentuate 
the similarities with Argentina, and I feel very, very strongly 
about doing that as well.
    So I am now pleased to call on Ranking Member Mack for his 
opening statement.
    [The prepared statement of Mr. Engel 
follows:]Engel statement deg.







    Mr. Mack. Thank you, Mr. Chairman, and it is a pleasure 
working with you, and I think as you outline, there are many 
things that we can agree on and work together on, and I think 
it is our responsibility to find those areas of agreement and 
work toward an overall policy toward Latin America that 
ultimately will help the people of Latin America in their 
struggle for freedom, security and prosperity.
    Before I begin, I wanted to speak on the tragedies of both 
Haiti and Chile. Although these two earthquakes were very 
different, both ended the lives of so many, and I want the 
people of Chile and Haiti to know that our thoughts and prayers 
are with them. And Mr. Chairman, earlier today we had the 
opportunity to meet with the President of Haiti, and there are 
many challenges, and this is really going to take an effort, I 
think, not only from the United States but from other countries 
as well to come together to help the people of both Haiti and 
Chile recover and move forward.
    Ensuring the greatest freedom, security and prosperity for 
the people of Latin America is my ultimate goal as the ranking 
member of the subcommittee, and during this hearing I hope that 
we will hear the thoughts of our witnesses on how we can move 
toward a goal that does just that--ensure freedom, security and 
prosperity for Latin America.
    In Venezuela, Ecuador, Bolivia, Nicaragua, Cuba, the 
struggle for freedom and democracy continues. In the past 
several years we have seen thugocrats in the hemisphere alter 
their constitutions so they can remain leaders for life. We 
have seen elections stolen in Nicaragua and Venezuela, and in 
the streets of Caracas we see democracy being stolen in plain 
daylight. I firmly believe that Hugo Chavez is turning 
Venezuela into a dictatorship and has made Venezuela a country 
who Samone Boulevard himself would be ashamed of.
    Whether it is squashing free and independent media outlets 
like RCTV or threatening his political opponents with violence 
and imprisonment, Hugo Chavez epitomizes what it means to be a 
thugocrat. His actions threaten the freedom, security and 
prosperity of the entire hemisphere and we cannot continue to 
let this stand.
    I also believe that populism is the worst enemy of 
prosperity in Latin America. Without fail every time one of 
these so-called revolutionaries or populists come to power the 
few generating industries or resources that the country has are 
targeted. They are either nationalized, confiscated, or stolen, 
and history proves that these populace leaders rarely, if ever, 
return any wealth to their people.
    Mr. Chairman, I have introduced legislation which supports 
President Obama and his agenda to strength U.S. trade relations 
with key partners like South Korea, Panama, and Colombia. I 
cannot think of a better way to fight populism and to bring 
greater prosperity to these countries than by passing these 
three trade agreements. These trade agreements will create 
jobs, grow our economy, and level the playing field for 
American manufacturers and businesses.
    Finally, Mr. Chairman, one cannot have prosperity without 
security. Hugo Chavez's intent is making Venezuela the 
launching point for terrorism in the hemisphere. He has become 
Iran leader Mahmoud Ahmadinejad his best friend, allowing 
terrorist organizations like Hezzollah and Hamas to enter the 
hemisphere and infiltrate the capital of the region.
    In the resolution which I introduced with my good friend 
Ron Kline, Venezuela would be designated as a state-sponsor of 
terrorism. This is a resolution which I hope this committee 
will consider this year. We all have seen the reports. 
Unchecked flights from Iran to Venezuela, easy access to 
Venezuelan passports, lack security at Venezuelan airports, and 
Iran banks working with Venezuelan banks to avoid sanctions and 
fund terrorists.
    I must ask, Mr. Secretary, what is the administration doing 
to curb the terrorism coming out of Venezuela which could 
eventually find its way to our very shores?
    As we address these very important issues, I look forward 
to hearing the testimony of our witnesses today and having an 
open conversation that, frankly, the people of Venezuela and 
Latin America are fighting for every day, it is their freedom 
to speech without being punished by its governments.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Mack follows:]Mack 
statement deg.





    Mr. Engel. Thank you, Mr. Mack.
    I am now pleased to introduce our distinguished Assistant 
Secretary for Western Hemisphere Affairs, Arturo Valenzuela.
    Mr. Burton. Mr. Chairman.
    Mr. Engel. Oh, I am sorry, Mr. Burton. I thought you were 
gone.
    Mr. Burton. You know, I can understand why you had missed 
me. I was just chairman of this committee and ranking member of 
this committee for about 10 years.
    Mr. Engel. You are a good champion, Mr. Burton, but I liked 
you better when you were ranking member.
    Mr. Burton. Did you really? Oh, you don't like Mr. Mack 
now. No, I am just kidding.
    Well, first of all, let me just say real briefly that I 
share Mr. Mack's concerns about Mr. Chavez. He is trying to 
cause his revolution to spread throughout Central and South 
America. He has put all kinds of money in Nicaragua and 
Bolivia, all over the place. And so I think one of the things 
that we ought to really address at the State Department level 
is the entire influence that his oil money is making on Central 
and South America, and we ought to realize that while we have 
problems in other parts of the world, in the Middle East, and I 
am the ranking member on the Middle East subcommittee, we still 
need to worry about our front yard and pay particular attention 
to what Mr. Chavez is doing, so I agree with everything you 
said, everything you said, Connie.
    I want to ask you a question. I am going to come back and 
ask these questions later, but I would like you to think about 
them while I am making my opening remarks. We have an awful lot 
of confiscation of property in Nicaragua when the communists 
and the Sandinistas took over in the eighties, and we were able 
to get the Government of Nicaragua to make good some of the 
losses that these people suffered.
    Now, in Honduras, we have one particular case that I have 
worked on for some time, it is called the Cemar case, C-E-M-A-R 
case, and it is a company, a cement company down there, that 
was forced into selling their company by, in part, our State 
Department for something far, far less than what it was worth, 
and I want to read to you real quickly what was said.
    In 2008, more than 150 Members of Congress, including 
myself, wrote the Secretary of State about this case, and I 
quote from the letter, ``Many, if not most, of the key facts in 
this case have already been established in various Honduras 
official findings of statements.''
    I would like to introduce for the record one of those 
official findings, a report issued by the Honduras attorney 
general in 2004, stating that the Cemar plant was eliminated 
from the market and bankrupted, bankrupted through illegal 
practice, and I have got a blue folder here I am going to give 
you so you can take a hard look at it. I think this is 
something that really needs to be looked into. It is probably 
not the only case. And I would like to know why the State 
Department forced one of our citizens to go through an 
expensive arbitration when the Honduras Government itself 
already ruled in favor of this company.
    I would also like to introduce for the record a letter to 
Secretary Clinton written by Mr. Conyers, which I quote, Mr. 
Conyers said, ``I am concerned that in this case the actions of 
the Honduras Government may have violated Article 3 of the BIT 
which prohibits expropriation,` and there is a letter attached.
    So, I would like you to take a look at that and if you have 
some current knowledge on it I would like you to comment when 
we get to the question and answer period, and this is something 
that is really a bad state of affairs. This company was forced 
to take $3 million when the assets were worth probably tens of 
millions of dollars, and it was forced in part by our State 
Department after the attorney general of Honduras said that 
there was illegal activity in forcing the sale of this by the 
Government of Honduras. It is something that we should not 
allow to happen.
    It happened in Nicaragua. We have helped some of the people 
get their money back and get restitution in Nicaragua. But this 
is one case I think really should be looked into, and with that 
I will yield back my time and I will wait until we get to the 
questions and answers, and thank you for remembering me, Mr. 
Chairman, I really appreciate it.
    Mr. Engel. Well, thank you very much. Mr. Burton.
    Before I call on the Secretary, I just want everyone to 
know, before you leave, Dan, I agree with everything you said 
about the plant in Honduras, and I was also one of the 150 
members who signed that letter, and it is a bipartisan letter, 
and certainly the new Government of Honduras, in my opinion, 
because they are new and they are looking at us for support, 
and I think we should support them, but I think responsibility 
comes with support. And when our American citizens are not 
being treated properly, that is something with which we all 
have concern, and I would hope that that would be one of the 
things that the Honduran Government would look at quickly and 
respond to it quickly because it is intolerable that this 
American citizen is being treated the way he was treated and 
continues to be treated.
    So I wanted to say that I do agree with that, and the last 
thing I want to say before I call on you, I mentioned the trip 
we took just about 2 months ago, it was to Argentina. We also 
went to Colombia and Panama, and I cannot think of better 
friends that we have in this hemisphere than Panama and 
Colombia. We meet with the Presidents of both countries, 
President Martinelli of Panama and President Uribe of Colombia, 
and it just warms my heart to feel the good feelings in both 
countries, and in Argentina as well, President Fernandez de 
Kirchner. We had a wonderful meeting for 2 hours and the 
friendship was there as well.
    But I know the Ambassador, as I said before, of Panama is 
here and he was with us when we were in Panama City, and 
everyone in the delegation just felt really a good feeling of 
warmth. We have had a long relationship with Panama, some of it 
good and some of it not so good, and the fact of the matter is 
there is a government there and a people there who feel kindly 
disposed to us. I think it is something that I appreciate very 
much, and as I mentioned before, I think that Colombia has done 
everything that we have asked of them and is a good ally.
    And finally, I want to mention something about Mexico since 
it shares a border with us and it is a very important border, 
bilateral relations with that country are so important, and I 
admire President Calderon for his war against the drug lords 
and for his courage to take them on, and he and his country are 
suffering for it, but he has courage in taking them on, and we 
need to do everything we can to support him.
    So I am going to stop. Mr. Sires, I don't know if you want 
to make an opening statement.
    Mr. Sires. I will be very brief. Shall I say welcome, and I 
want to thank the chairman for holding this meeting, and I have 
the same concerns along the way as the chairman has. I am very 
concerned about Colombian, the fact that we cut some money to 
Colombia. I am also concerned about the Panama treaty, the 
agreement. Hopefully, we can vote on those soon, and I am also 
concerned about the migration to Cuba, and if you could expand 
on that a little bit, that would be great. Very brief.
    Mr. Engel. That was very brief. Thank you.
    I am now pleased to introduce our distinguished Assistant 
Secretary of State for the Western Hemisphere Affairs, Arturo 
Valenzuela. It is a real delight for me to welcome Secretary 
Valenzuela to the subcommittee, particularly after a 
confirmation process that took far, far too long. I was 
delighted when the President nominated him, and know that he 
will do and is doing a fine job in his office.
    Secretary Valenzuela comes from Georgetown University 
School of Foreign Service, where he was professor of government 
and director of the Center for Latin American Studies. During 
the Clinton administration, he served as Senior Director for 
Inter-American Affairs of the National Security Council, and 
was Deputy Assistant Secretary for Inter-American Affairs.
    So, Mr. Secretary, you have had to listen to all of us, and 
that is probably the worst thing about testifying, but finally 
the floor is now yours and I am eagerly awaiting what you have 
to say.

    STATEMENT OF THE HONORABLE ARTURO VALENZUELA, ASSISTANT 
     SECRETARY, BUREAU OF WESTERN HEMISPHERE AFFAIRS, U.S. 
                      DEPARTMENT OF STATE

    Mr. Valenzuela. Thank you, Mr. Chairman. I appreciate your 
words. I appreciate your travel to the region. I appreciate the 
comments of the members of the committee, and I very much look 
forward to exchanging views today, and also as we move forward 
in the relationship with the Americas. I very much value this 
conversation that we have had, and I have been pleased at the 
exchange of views that we have had before you trip and 
afterwards.
    I just returned myself now from a lengthy trip to the 
Americas with Secretary Clinton. In 5 days she went to six 
countries. We met with a dozen heads of state, as many foreign 
ministers, attended a Presidential inauguration, attended aids 
to Chile and promised more. She attended the Pathways to 
Prosperity Ministerial and a gathering of Central American 
Presidents, met with civil society and private sector leaders, 
reached out to hundreds of students at large Afro-Brazilian 
University. The trip was what you might call intensive 
engagement.
    I would add it continued here this week in meeting with 
President Preval of Haiti and President Funes of El Salvador, 
and as the President and Secretary have said, United States is 
committed to Haiti, and as you have said, Mr. Chairman, after 
speaking with them today, committed to Haiti and its long-term 
recovery and development efforts.
    On that trip we were particularly moved, Mr. Chairman, by 
the eloquent words of President-elect Mujica of Uruguay in his 
inaugural address. He outlined a bold vision of progress for 
his nation. It was a powerful, powerful defense of democratic 
values and institutions, including respect for our position 
parties and the value of dialogue and compromise and public 
affairs.
    In Chile, of course, we saw firsthand the efforts of the 
Chilean people to cope and recover from another catastrophic 
earthquake. The Secretary was able to express her condolences 
and that of the American people to the Chilean people and 
extend, of course, our disposition to assist Chile, as we have 
done.
    Everywhere we felt a dynamic agenda as animating democratic 
governments and societies in the region. It is an agenda we 
share. It is based on opportunity, effective democratic 
institutions, and the need to ensure our peoples' safety. The 
Secretary sent a clear message of U.S. commitment to practical 
partnership to advance this shared agenda, and a clear message 
that this had to be based on two-way responsibility.
    That partnership is alive and well and growing in the 
Americas. I tried in my written testimony to capture its scope 
and ambition. To summary, we face very serious challenges, 
including assisting poverty and equality, transnational crime, 
democratic reversals, as so many of you have mentioned this 
morning in a few countries, the effects of the global economic 
crisis, and the effects of climate change.
    To address these challenges, the policy of the United 
States to help catalyze networks of practical partnerships 
among all capable stakeholders in the Americas focused on three 
priorities critical to people in every country: One, promoting 
a social and economic opportunity for everyone; two, ensuring 
the safety of all of our citizens; and three, strengthening 
effective institutions of democratic governments, respect for 
human rights and accountability. An important element across 
all of these efforts is advancing the goal of a secure and 
clean energy future, a matter that the President himself raised 
at the Summit of the Americas.
    Examples of this approach includes such initiatives, Mr. 
Chairman, as pathways to prosperity, the economic and climate 
partnership of the Americas, the inter-American social network, 
the joint action plan to eliminate racial and ethnic 
discrimination and promote equality. On the citizens' safety 
side, we are partnering with countries in the Americas in the 
Merida Initiative, Central American Regional Initiative, the 
Colombian Strategic Development Initiative, and the Caribbean 
Basin Security Initiative.
    I think the Secretary was struck by the pragmatic 
understanding in the region that our success is linked, and 
that it hinges on our societies' ability to meet challenges and 
to compete and win in an integrated world. We have done so much 
to open our economies to trade and investment, but being 
successful and competitive takes a lot more. It requires 
investment and infrastructure and then people, and most of all 
it requires effective institutions that are governed by the 
rule of law. The quality and integrity of institutions is 
perhaps the most critical determinant of a nation's success. 
This is why so much of our partnership in the region is focused 
on institution building and the need to fight for impunity and 
other threats to the rule of law.
    By every measure we are more engaged in Latin America than 
ever with the governments, with the private sector, with civil 
society, between all three in ways that highlight shared values 
and common hopes, and in ways that broker opportunity on a 
scale that perhaps was once unimaginable. Bit by bit it is 
defining the community that is greater than the sum of the 
parts. It is a community were, as Secretary Clinton said in 
Costa Rica last week, ``We all want the same things, the chance 
to live safe and healthy lives, to see our families productive 
and moving forward, a better future, to participate fully in 
our communities, and to do all that we can to extend those 
opportunities to others.''
    The Obama administration's approach in this hemisphere is 
that we are prepared to establish partnerships for joint action 
based on best practices. This is about the U.S. as 
``indispensable partners.'' This is no longer about a hegemonic 
presumption, but about engagement based on shared interests 
driven by mutual respect, and based on common values.
    Mr. Chairman, thank you for your support, for your 
leadership and that of the members of the committee, you show 
on so many key hemispheric issues. I appreciate the candid 
dialogue that we have had and I wish to have with this 
committee, and look forward to addressing the points that you 
might raise. Thank you.
    [The prepared statement of Mr. Valenzuela 
follows:]Arturo Valenzuela deg.

























    Mr. Engel. Well, thank you very much, Mr. Secretary, and we 
appreciate it. I know we are going to have some really 
important questions.
    Let me start off by mentioning that last year at the Summit 
of the Americas the President spoke, President Obama, and I 
refer to him as a rock star. Everybody hung on every word he 
said, and he spoke about engaging the hemisphere, and we have 
worked with the OAS.
    There was a recent summit in Cancun. Heads of state of 
Latin America and the Caribbean agreed to form a new 
organization provisionally know as the Community of Latin 
American and Caribbean States. This organization includes every 
country in the hemisphere with the exception of the United 
States and Canada.
    Some have said that this new organization could replace the 
OAS. What does the exclusion of the United States and Canada 
from this new organization say about the current state of 
hemispheric affairs, and are you concerned that the Community 
of Latin America and Caribbean States will replace the OAS?
    Mr. Valenzuela. Thank you very much, Mr. Chairman. That is 
a very valid question because there has been a lot of attention 
paid to this. Let me answer it this way. There have been a 
whole host of initiatives in Latin America over the years going 
way back that are regional initiatives to integrate the 
countries. There was at one point the Andean Pact. We know 
about Miracle Seur. There have been initiatives in Central 
America and others like that, and as we know our European 
friends and allies have their own organizations as well that we 
are not necessarily a part of.
    So, in principle, it is not a problem for the United 
States. If these countries set up mechanisms in order to 
dialogue with one another, to seek to create better 
understanding, to perhaps build better and sort of mutual 
confidence, confidence-building measures, for example in the 
case of differences that exist within countries, or opening 
markets, and that kind of thing, we encourage that. We welcome 
that.
    And I guess the question I would raise, Mr. Chairman, is 
will this be a really effective organization? I don't know. In 
some ways there have been so many organizations formed and so 
many of them have not been that effective. They certainly would 
not, and I would end with this comment, they certainly would 
not replace the Organization of American States, and it is our 
assumption, except for maybe one or two voices out there that 
have said something like that, that all of the countries in the 
Western Hemisphere are committed to the Organization of 
American States and it is their fundamental regional 
institution. After all, it is the oldest regional institution 
in the world. It is one based on treaty. It is one that has 
notable institutions such as the Inter-American Human Rights 
Commission that you referred to earlier, and I see a strong 
commitment, and this was reiterated on this trip that we took 
in Central America where we met with all the Presidents, to not 
only value the Organization of American States but to look for 
ways to try to strengthen the Organization of American States, 
and that is where I think we would be on this.
    Mr. Engel. Well, I support the OAS and I think that it is 
very important for the United States to take a very active role 
in the OAS, but sometimes the OAS disappoints. We have seen a 
closing of democratic space in the Americas, and the OAS's own 
independent Inter-American Commission on Human Rights recently 
criticized Venezuela for its deteriorating human rights 
situation. It follows similar statements regarding the closure 
of RCTV and Venezuelan TV stations.
    How are we, how is the administration dealing with the 
closing of democratic space in the Americas, and what will it 
take for the OAS Permanent Council to be more vocal in speaking 
out about the closing out of democratic space in the region?
    Mr. Valenzuela. Well, this is a matter of big concern, Mr. 
Chairman, and it is something that we want to work on much 
more. As you pointed out, the Inter-American Human Rights 
Commission did come out with a very forthright, very strong 
report on the situation in Venezuela.
    The commission has a long history of strong support for 
human rights going back even to the years where most of the 
countries in the Western Hemisphere were dictatorship. We need 
to strengthen that commission, and we need to make it more 
effective.
    But beyond that, and this is a fundamental point to leave 
you with, after the countries of the Western Hemisphere signed 
the Inter-American Democratic Charter, this took place on the 
fateful day of 9/11, and it was a commitment that arises also 
out of the adoption of the Resolution 1080 in 1991, when 
countries that were coming out of dictatorship asserted 
strongly and forcefully that the commitment of the hemisphere 
was to be representative of democracy.
    That, in turn, means that we need to move forward within 
the OAS to strengthen the institutions in the OAS, not just to 
the Inter-American Human Rights Commission, but also within the 
political secretariat to do several things perhaps; to have an 
early warning system that could help to understand better what 
is happening within particular countries in order to avoid a 
problem that might lead to a disruption or interruption of the 
political order, the democratic order, and to be much more 
forceful in raising issues where there are violations of the 
democratic--there is a history in the OAS of that.
    We will remember, for example, in 2000 when there was a 
contested election where the OAS took significant action. We 
need to return to that notion that it is not just a coup, it 
requires the OAS to intervene. It is also violations of the 
fundamental tenets of democratic process--freedom of the press, 
ability to assemble and that kind of thing.
    And so we are encouraging the OAS to go in that direction. 
To do so, and I will just end with this one thought, Mr. 
Chairman, to do so it really does mean forging a strong 
partnership with other countries to achieve those same 
objectives. We can't do this alone. We have to do it with 
others, and that is why our effort at engagement and dialogue, 
communication with others is so important as we move forward.
    Mr. Engel. I couldn't agree more about the engagement. I 
think that that is absolutely key, and if we do not engage we 
do so at our own peril. You know, if we are going to complain 
that others are going to step into the void, you know, whether 
it is China, Russia, Iran, or whatever, if we do not engage 
others will step into the void. I couldn't agree more.
    I want to ask you one last question, at least for now, and 
then I will turn it over to Mr. Mack, on Haiti. Obviously the 
earthquake in Haiti has highlighted the need for more 
coordination from donors in order to better channel assistance 
to those that need it. There is no doubt that donor 
coordination is hard. As you know, we have a donor conference 
in New York on the 31st of this month, but when donation 
coordination is done well it can have a much bigger difference 
on the ground.
    The region as a whole receives assistance from us, from EU, 
Spain, China and Canada, national financial institutions like 
the IDB, and wealthy countries in the region also provide 
assistance. If more was done to coordinate U.S. assistance with 
other international donors, I believe it could have a much 
bigger impact in the region, and I am especially cognizant of 
that after listening to President Preval today twice.
    Outside of Haiti, do any current assistance programs 
attempt this sort of coordination and are there plans to engage 
other international donors moving forward, and how are we 
coordinating our donations with international community vis-a-
vis Haiti?
    Mr. Valenzuela. Thank you for your question because this is 
something, of course, all of us have been working so hard on 
since the earthquake in Haiti with respect specifically to 
Haiti. This is an enormous challenge. I think we can be proud, 
the United States stood up the way it did at the moment of the 
greatest need. We had to react fast and we did so.
    But this, as you pointed out, is a long-term effort and as 
President Preval made very clear, this is something about a 
development strategy moving ahead to reconstruction, but also 
to build Haiti and this is where these efforts at coordination 
with other donors and other countries is very important.
    Let me just emphasize how pleased we have been that the 
countries of the Western Hemisphere have been very much at the 
top of the list of those who have been working. They may not be 
able to come up with the largest amount of funding at a certain 
particular point, but the Brazilian-led manusta in Haiti has 
played a very important part. The contributions of countries 
like Uruguay, for example, Uruguay is the second largest 
peacekeeper anywhere in the world per capita, and it has forces 
not only in the Western Hemisphere but other places in the 
world. But the Peruvians have also been there, The chileans 
have been there, the Argentines have been there as well. There 
has been collaboration with Haiti.
    The Dominican Republic, a neighbor, where there have been 
some difficulties over the years for complex reasons, has 
really stood up at this particular occasion, and I cannot let 
this opportunity go by without mentioning the fact that Canada, 
another countries in the Western Hemisphere that we work with 
so closely, has indeed taken a very important leadership role 
on this. It is very, very important.
    So, I think that with respect to Haiti we are coordinating 
these things, and this is indispensable as we go forward. But 
your question is a larger one and it is extremely valid, and 
one of the things that we have really been working on very hard 
is to see how our assistance can also be coordinated better 
with other players on the international stage, and in fact the 
main purpose of my own trip to Spain and to France recently was 
to talk not only about Haiti but also to speak with the 
Spanish, with the European Union and with the French, but 
particularly with the Spanish and the European Union, about how 
we might be able to coordinate our assistance say in an area 
like Central America, and we discussed very specifically 
support of CECA, for this Central American immigration process 
whereby we would coordinate our efforts. The Spanish, for 
example, are helping and the EU is helping to improve the 
customs systems in Central America.
    What we would like to do is go beyond assistance here and 
there but have a broader paradigm about how this assistance 
should be done, and let me conclude by emphasizing something 
that the Secretary spoke with all of the Central American 
Presidents, including Central America, if the assistance of the 
United States could be coordinated well with the assistance of 
the European Union, with the Spanish, with the Canadians, and 
with others, but with a notion of co-responsibility where the 
countries also have to come to the table.
    We need to make very, very clear, and I want to make this 
very important point in my testimony, I want to make very, very 
clear that when we go and work with other countries to assist 
them we also expect to have co-responsibility. This means that 
they also need to reform some of their institutions. And these, 
for example, in the case of Central America, they have to be 
willing to tax, you know, their own societies more than they 
have.
    In the case of Guatemala, for example, less than 12 percent 
of GDP is represented by taxes. That is simply not sustainable 
in terms of the infrastructure and development kinds of 
investments that Guatemala has to do.
    So, yes, let us coordinate better with our partners, but 
let us also have better partnerships with the countries that we 
are working with.
    Mr. Engel. Mr. Sires reminded me that we were all watching 
with amazement with what Israel did in terms of its efforts in 
Haiti to try to get people out.
    Before I call on Mr. Mack I just wanted to mention, and if 
you want to comment on any of this we would appreciate it, Mr. 
Mack and I were just as a meeting with President Preval. I want 
to just read to you a little bit from my notes some of the 
things that President Preval said, and if you could comment on 
anything that you feel is relevant.
    He said that 1.5 million Haitians need to go to sustainable 
shelters because the rainy season is coming and their lives are 
in jeopardy if they just stay in tents or makeshift shelters 
because of the rainy season. He said they need agriculture, 
they need seeds to plant because if we don't have aid for 
agriculture more people will just migrate to Port-a-Prince. 
They will leave the rural areas and come to Port-a-Prince which 
would not be helpful.
    He said revenues are decreasing and so budgetary support is 
needed. He quoted a figure of $350 million needed until the end 
of the fiscal year. He said that the trust fund is needed. 
There is a donors' conference, help with the World Bank, and 
the IDB, but he also needed $1-2 million for tents, He said $36 
million for seeds and agriculture. He said 250,000 home were 
destroyed, and that is essentially some of the hard--his point 
to us was Haiti needs assistance and needs it immediately.
    Mr. Valenzuela. Yes, and we have discussed that with him. 
The Secretary met with him yesterday morning, but we have been 
meeting with him and with his government over various different 
venues starting right after the earthquake itself. Indeed, on 
all of these particular points we are prepared to move and to 
assist very specifically to help them out on that. They have 
done their homework. We are there, Mr. Chairman, to work with 
the Government of Haiti, in support of the Government of Haiti, 
mindful of the fact that this is a sovereign country that needs 
our support and is welcoming our support, and it is in that 
spirit that we are going to be working with them.
    Mr. Engel. Because you know that the devastation, I saw it 
with my own eyes, it is never the same when you see it on 
television, when you are actually there and you see the 
devastation with your own eyes, and then you see so many people 
out in the street, as I mentioned, with nothing to do, no 
homes, no jobs, it is just a tragedy of absolute proportion, 
not to mention the estimated 230,000 people that have lost 
their lives.
    Mr. Mack.
    Mr. Valenzuela. Exactly.
    Mr. Mack. Thank you, Mr. Chairman, and I appreciate you 
being here and this opportunity to talk to you and ask you some 
questions, and really try to get an understanding of what your 
perspective is in the hemisphere and maybe an insight on to how 
you think some of the challenges can be overcome, but I have to 
start off--earlier in response to a question from the chairman 
you talked about the OAS, and I believe that the OAS, there 
might be one thing that myself and Hugo Chavez agree on, and 
that is that the OAS is ineffective, and the OAS has been a 
deterrent to freedom, security and prosperity in Latin America.
    I think that one of the things the United States must do is 
also lead in the hemisphere on principle, and when you have an 
organization like the OAS who the leadership of the OAS 
conducts themselves in a way that seems to be more supportive 
of governments and ideas that are in the process of destroying 
democracy, I don't know how we can align ourselves with that 
kind of leadership.
    I do agree with you that the relationships, that we need to 
continue relationships in Latin America, direct one-on-one 
relationships, and that is why I support the free trade 
agreements, and I believe that when the President in the State 
of the Union called for the free trade agreements in Panama, 
and Colombia, and South Korea, that I stand ready to help the 
President on that, and would like to hear your comments about 
the free trade agreements.
    So, on the one hand we are saying--someone could get the 
impression that on one hand when you have a country like 
Honduras who stood up for the rule of law and the quality 
institution, government institutions that you mentioned, they 
look at how we respond to these things, and if on the one hand 
we respond to the Honduras events as a coup, which I completely 
disagree with, but if you respond to it as a coup, but at the 
same time look like you are supporting the actions of let us 
say Bolivia or Cuba, it sends a mixed message. Honduras did 
everything by their constitution, and for anyone to call it a 
coup it is irresponsible and misguided.
    So, I think that we need to show Panama and Colombia that 
we support them, that they are our friends, our allies. We need 
to move the free trade agreements. Not doing so sends the 
message to the rest of the hemisphere that the friendship of 
the United States doesn't matter that much, so I would like to 
get your thoughts on that and then I have a couple of follow-up 
questions.
    Mr. Valenzuela. Okay. Congressman Mack, I will agree with 
you 95 percent on this. With regard to the OAS, there is just 
no question that we need to work to make it a more effective 
organization. As you pointed out, what we saw as an effective 
response from the Inter-American Human Rights Commission we 
need to see also within the organization itself, and I think 
that that requires some changes within the organization. It 
requires better management. I requires strengthening of the 
management. It requires also what I outlined earlier when I 
responded to Chairman Engel, and that was that we need to 
encourage the OAS to have better sort of early warning system, 
but they also need better follow through on these things.
    But let me just add an element that I didn't mention 
earlier, and that is the OAS really is an organization that has 
in some ways, you know, a board of directors with all the 
countries on it, and in my experience and what we can also find 
in the academic literature is that it will only work when there 
are key countries that take a leadership position to move the 
organization. If there isn't a consensus among key countries to 
move the organization, I refer to 2000, for example, with the 
crisis in Peru, there was a consensus, in the Caribbean there 
was a consensus, among countries in South America, there were 
dissident voices then. Venezuela was a dissident voice then. 
Brazil, Mexico were a dissident voice then because they didn't 
want necessarily a robust organization raising issues about an 
election that was in that particular case not handled well.
    We need to get around that, but the way to get around that 
is to establish a stronger leadership among countries, so this 
is where we want to go, and this is why this engagement is so 
important. It is not about the organization alone; it is about 
the leadership of the organization and its board of directors, 
and we need to take strong effort in that regard.
    Now with regard to your second question or comment, the 
free trade agreement with Panama and Colombia, yes, you know, 
we are supportive of that. Both Panama and Colombia, you know, 
have done what they needed to do in order to get these. In my 
estimation, it is a matter of--the President, of course, in the 
State of the Union said that he wanted to have this done, and 
we stand ready to work with USTR and also with Members of 
Congress. I defer to USTR on this, of course, but this is 
something that I think we really ought to do.
    Then the 5 percent disagreement, Congressman, I am afraid 
that what happened in Honduras, in my estimation and in our 
estimation, and we voted in the Organization of American 
States, and I think it has been the unanimous opinion of all 
countries really in the world, I cannot think of any country 
that did not judge the expulsion by force of President Zelaya 
is an interruption of the constitutional order.
    Why? For a very simple reason. He was not given the most 
elementary due process of law.
    Mr. Mack. Well, I would suggest then Honduras and the 
Government of Honduras are the most courageous on the planet 
because they stood up against, as you would say which I don't 
necessary agree with, but they stood up against all or most and 
said that the rule of law, our constitution, our freedom and 
democracy is more important than the pressure that is going to 
come from the United States or other countries.
    In fact, when I went there and met with them, it was 
remarkable because you would have thought that the Honduran 
people and the government would have been very angry but 
instead they were in disbelief. They couldn't believe that 
their friend and their ally, the United States, when we always 
trumpet, as you said earlier, that equality, public 
institutions, and the rule of law, that here you have a country 
who did nothing but defend its constitution and honor its 
constitution and the rule of law, and for us to turn around and 
call it a coup when if you just look at the facts on the ground 
you have the Supreme Court, the Attorney General, the Congress, 
all saying that Zelaya must be removed, and it was the 
government institutions that did the right thing to remove 
Zelaya. The military never took over that country, so I think 
it is a little--you are right, we are going to disagree on that 
and we are probably going to disagree on that forever, and I am 
so proud of the people of Honduras for not only standing up, 
doing what they did, but also then having an election and 
showing the world that when you stick to your principles 
freedom and democracy will prevail.
    Mr. Valenzuela. Could I follow up very briefly?
    Mr. Mack. Sure.
    Mr. Valenzuela. Because what I want to do is agree with 
you, and I think what I want to agree with you is moving 
forward because I think that, and this was very much a part of 
our conversation with the Central American Presidents, it is 
time for Honduras to be brought back into the international 
community, and President Lula has taken all of the necessary 
steps in that direction. He has configured a government of 
national unity. He has made an extraordinary effort to set up a 
truth commission. We met with him, as I said, with the other 
Central American Presidents. They have taken a leadership, 
Congressman Mack, to tell the other countries in Latin America 
it is time for Honduras to be welcomed back into the inter-
American community. We are strongly supportive of that.
    And the reason why we also want to move, not only because 
it is right, but because the Honduran people deserve better at 
this particular point. They have suffered enormously. It is one 
of the poorest countries in the region. We need to sort of 
reestablish our assistance with them to try and strengthen 
their institutions. So moving forward let us see how we can 
work on a bipartisan basis so that we can continue to work with 
Honduras and other countries in the region.
    Mr. Mack. Mr. Secretary, I do want to look forward but part 
of looking forward is recognizing the past, and having a clear 
picture of the past, and so I will let this be for now, but 
hopefully we will have an opportunity to have, and Mr. 
Chairman, if I may, I want to touch on Venezuela real quick.
    First of all, do you believe that the FARC is a terrorist 
organization?
    Mr. Valenzuela. The FARC is a terrorist organization.
    Mr. Mack. Thank you. And do you believe that Venezuela and 
Hugo Chavez have assisted or in any way worked with the FARC or 
supported the FARC?
    Mr. Valenzuela. I think there is some indications that 
there has been some assistance, but with all due respect, 
Congressman, and we are concerned about the FARC and the 
various different kinds of support that they have been getting 
from different kinds of organization, and we could talk about. 
I would prefer to talk about that in closed session rather than 
in an open session, but it is something that we are very 
concerned about, extremely concerned about, and as you know the 
news recently also links the FARC to some other organization. I 
won't say anymore in open session, but let us have a 
conversation where I can have my staff come up and talk to you 
about this.
    Mr. Mack. I would appreciate that. Thank you, Mr. Chairman.
    Mr. Engel. Thank you, Mr. Mack. Mr. Sires.
    Mr. Sires. Thank you, Mr. Chairman.
    I want to talk a little bit about the OAS since it is such 
an old organization. I think that they have been very weak in 
the past with human rights, and they are made up of a board of 
whatever you call--excuse me?
    Mr. Valenzuela. It is a permanent council, it is a board.
    Mr. Sires. It is a board. They must be the same board that 
Toyota is made out of. They just don't admit what is wrong. But 
I wish that the organization would be stronger on human rights, 
and I think that is something that we should insist upon in the 
future.
    I was happy to see 2 weeks ago they spoke up on Venezuela 
which I think is a step in the right direction. And talking 
about Venezuela, I just had a meeting with a group of people in 
Florida, and one of the things they said to me about Venezuela 
in connection with Iran is that the diplomacy, the Ambassador 
and the members of the Embassy of Iran and Venezuela, that the 
amount of personnel they have there makes it one of the largest 
Embassies in the world. Is that correct?
    Mr. Valenzuela. I don't know for a fact whether that is the 
case, Congressman, but we are certainly concerned about Iran's 
intents in Latin America. As the chairman indicated earlier, it 
is our concern as well. We are very concerned about the fact 
that Iran may be trying to establish networks in Latin America.
    Mr. Sires. And they seem to be getting more and more 
aggressive in destabilizing their neighbors. We saw the judge, 
the decision that the judge handed out regarding the fact that 
they were corroborating with FARC and trying to kill Uribe, and 
I also have heard were they were trying to destabilize the 
peasants in Panama, where they would try to stir up trouble in 
Panama also. I just wonder if you heard anything like that.
    Mr. Valenzuela. Well, as I responded to Congressman Mack, I 
would be happy to talk with you in a closed session about some 
of the information that we may have on that score. I prefer not 
to do it in open session.
    But let me just for the record say that we are extremely 
concerned about Iran's intents in Latin America. Its attempt is 
not commercial like perhaps China's is. I think it is openly 
political and in that sense it is reaching out to countries 
like Venezuela or even Ecuador are of significant concerns for 
us and we are tracking it as closely as we can, but it is 
something we take very seriously.
    Mr. Sires. The other issue that I wanted to raise is 
Colombia. I don't think we have had a better friend than 
Colombia in the last few years. I was just wondering if the 
cuts that were made, how is that going to hurt, and why were 
the cuts made? Can you just expand a little bit on that 
regarding the efforts to cut the drugs into this country?
    Mr. Valenzuela. Congressman, I couldn't agree with you more 
than the fact that our collaboration with Colombia going back 
to, in fact, the Clinton administration. I was at the NSE in 
1991 when we first worked on trying to come up with a plan with 
Colombia. In fact, Congressman, it was a bipartisan policy, it 
was an extremely important part of the success of Colombia, and 
we continue to work with the Colombian authorities over the 
years to help them face these extraordinary challenges which in 
some ways are also part, as the Secretary of State said when 
she went to Mexico, it is partly our responsibility too because 
of the fact that so much of the cocaine that is produced out of 
Colombia does wind up in the United States, and so we continue 
to be committed to working with Colombia.
    But let me say this; that if there is a decline in some of 
the assistance to Colombia it is not because we are not 
concerned or because we are walking away from our partnership 
with Colombia. Quite the contrary. Because the decline in some 
of the assistance, it is precisely because our efforts to 
Colombia have been successful because we have been able to move 
to a separate level in terms of our concerns and our assistance 
in Colombia.
    The security situation is so much better in Colombia now 
that this is a chance for us to move away from some of the 
investment on the security side to investments in other areas 
that both the Colombian Government and the United States agree 
are very important, and that has to do with sustainable 
development, that has to do with addressing some of the 
economic problems, that it has to do with, for example, also 
alternative development. Alternative development efforts are 
very important. They may not be as expensive, and this is where 
our decline in Colombia, the amount of money that has gone down 
is about 10 percent, but we are convinced, Congressman, that 
even with a lower budget, because we are spending it in 
different ares, we would be as effective in moving forward in 
our assistance and our work together with Colombia.
    Mr. Sires. I have a question about China and South America. 
Are you concerned that the China is going to supplant the 
influence of the United States in South America, in Central 
America? The reason I say this is I Had dinner with one of the 
presidents of a university in Bogota, Colombia, and he told me 
that now in Colombia the second most studied language in the 
university is Mandarin, which to me that was pretty striking. 
So are you concerned at all that we are going to be supplanted 
as far as influence in South and Central America by the 
Chinese?
    Mr. Valenzuela. No, Congressman, I am not. In fact, my 
answer to that would be, the impression I have is that much of 
the work that China is doing in Latin America, unlike the 
reference I made earlier to Iran, or perhaps some of the 
efforts that Russia may have, those are driven more by a 
perhaps political calculation. China's effort is driven at this 
particular point by an economic calculation, and if China 
invests, if China develops partnerships, and if Colombians at 
universities study Mandarin and so on and so forth and succeed 
in having Colombian exports export more effectively to China, 
more power to Colombia, and more power to the countries in 
Latin America.
    It is in our interest, Congressman, for these countries to 
grow economically, to become more successful competitively at 
the international level, and they are also looking to China, as 
we are, you know, as sort of an engine of world economic grown, 
and so I would encourage that and welcome that obviously so 
long as it doesn't affect our own fundamental security 
interests, and at this particular point that is not an issue.
    Mr. Sires. Thank you.
    Mr. Engel. Thank you, Mr. Sires. Mr. Burton.
    Mr. Burton. You know, years ago we started the maquiladora 
program down in Mexico and a number of other countries joined 
in, and the reason that was done was to try to stabilize Mexico 
and deal with the immigration problem that has grown, grown, 
grown, and American companies and investors have been 
encouraged to invest in Central America and South America to 
try to help those economies and to stabilize the region.
    Ever since the Reagan doctrine took place where we changed 
totalitarian governments into democracies, we have been trying 
to do what we can to help those countries by creating free 
enterprise areas down there where people can invest and create 
jobs. The thing that bothers me is that in addition to having 
the competition from what I consider to be a communist regime, 
Mr. Chavez in Venezuela, so eloquently described by Mr. Mack, 
we also have corruption in an awful lot of these government.
    In Nicaragua, as I told you awhile ago, mentioned awhile 
ago, back in the early eighties they confiscated properly, the 
communists, the Sandinistas did, and it took a long, long time 
for anybody to get any restitution for that. We were able to 
help some businesses and some individuals to get some of their 
money back. Some never did. Some only got pennies on the 
dollar.
    Now, in Honduras, and I don't want to beat a dead horse, 
but I want to talk about this again, there is at least 14 
companies that have had their businesses exappropriated by 
the--with the help of the Honduran Government, and all of these 
companies have contacted our Government, and many of my 
colleagues and I have contacted the State Department saying, 
you know, you guys really ought to try and do something about 
that; otherwise people in the United States aren't going to 
want to invest and risk their money if they think that we are 
not going to stand up for them in accordance with these 
agreements if they try to have their property taken away from 
them through exappropriation tactics.
    And here in Honduras they have a new government, they have 
at least 14 cases that I know of, including the one I talked to 
you about, this cement company, and we are not doing anything 
about it. Now, if I am a businessman and I say, okay, I know 
that Chavez is pouring our money, our money, 25 percent of the 
oil we buy in the world I am told comes from Venezuela, so we 
are giving him our money instead of drilling here--that is 
another subject--instead of becoming energy independent we are 
still giving it to a communist dictator down in South America, 
all the leftist groups. But we are giving our money and our 
support to some of these countries down there, and we are also 
encouraging American investment wherever possible.
    I don't know why anybody is going to want to invest in 
these countries in Central and South America if the United 
States Government doesn't back them up, and this company here, 
this is just one example, and there are 14 others, this one 
example in Honduras lost tens of millions of dollars because 
they were forced, forced to settle for $3 million in order to 
get anything out of it.
    And when we wrote to the State Department, the chairman of 
the Judiciary Committee, the chairman of this committee, 
myself, hundreds of us have contacted the State Department and 
they don't do anything. So what are you guys good for over 
there if you are not going to at least back up some of the 
American business people who have made investments down there? 
And how are we going to help Central and South America to 
continue to be democracies if the people that would invest in 
there are scared to death to do so because they will have their 
property exappropriated by some entity, the government or 
somebody else?
    So, I would like you to answer that question for me. Why 
would anybody in this country want to invest in Central and 
South American unless they knew that you and the State 
Department and our Government was going to back up these people 
in the event they had to have their property taken away from 
them with the coercion and the help of the governments 
involved? So why would we do that, and why aren't we doing 
something about it?
    Mr. Valenzuela. Thank you, Congressman.
    Let me agree with you, with all your premises.
    Mr. Burton. But I don't want you to agree with me, I want 
you to do something about it.
    Mr. Valenzuela. I will tell you what I will do. Since I 
don't really know the particulars of the Cemar case that you 
mentioned earlier, I will look into it and get back to you on 
it because I don't have the specifics on that particular case.
    Mr. Burton. Let me just interrupt quickly, and then I will 
let you answer any way you want to.
    It is not just this case. In Honduras alone there is at 
least 14 others, and if you go through Central and South 
America you are going to find tons of companies that have had 
this same kind of problem, and this is our front yard, and when 
these companies go, are forced out by the government or by some 
entity working with a corrupt government down there, the people 
in many cases lose their jobs, and they end up coming north 
into the United States. The only way to stabilize Central and 
South America is to create economies where people want to stay 
home instead of coming up here to the golden country, and in 
order to do that they get investment from the United States and 
businessmen. We are going to have to let them know that we are 
going to stand by them, so go ahead.
    Mr. Valenzuela. I agree with you completely. Congressman, I 
said in my oral remarks, it is in my testimony too, that I 
think the single most important thing that could be done as we 
move forward with all these various different kinds of 
initiatives is to pay attention to the fundamental role of 
institutions and the rule of law, and that means that you need 
to have--if Latin America is going to be competitive in the 
world stage it has to have transparent procedures, it has to 
have rule of law, and this is not the case in a lot of 
countries.
    You know, there is what is called judicial insecurity in 
many different countries where the laws are bend to favor 
certain kinds of private interests, and unfortunately that has 
been the case in Honduras, so we have been worried about the 
fact in Honduras there has not been that strong a tradition of 
the rule of law.
    So two answers to your question. One is, our policy has to 
be and is indeed to work with these countries in order to 
strengthen institutions and the rule of law. When I referred to 
the conversations that we had with the Secretary in Central 
America with all the Central American Presidents, this was one 
of the single most important things that the Secretary said 
when she said there has to be co-responsibility on your side as 
well. This is not just about the United States providing 
assistance to particular countries; this is about the United 
States working with countries that are serious enough to get 
their rules and procedures right so that in fact people can 
invest with assurance.
    Mr. Engel. Now----
    Mr. Valenzuela. On the second point.
    Mr. Engel. Okay.
    Mr. Valenzuela. I agree with you. We, as the U.S. 
Government, should support our businesses if they run into 
difficulties, and I will look into these cases for you.
    Mr. Engel. One more, I will let you talk, I want to just 
jump in and help you a little bit----
    Mr. Valenzuela. Sure.
    Mr. Engel [continuing]. Because I do agree. I think the 
point that Mr. Burton is making, and by the way, there wasn't 
much progress made on these cases in the Bush administration, I 
think we have to be fair and say that as well, but Mr. Burton's 
premise is absolutely right. Honduras is rebuilding, and they 
need the United States' assistance at this very important time 
to help them, to support them, and that we should give it, but 
at the same time we would be fools if we gave the assistance 
without saying, you know what, we are very concerned about 
these American companies and these American citizens, and if 
you are expecting help from us, we expect you to take care of 
the things that we are concerned with.
    So, I just want to make that point, and I think that is the 
point Mr. Burton was making, and I also want to say that next 
week, on March 18, this subcommittee will be holding a hearing 
on Honduras, your Principal Deputy Craig Kelly is coming, and I 
am sure we will be able to explore a lot of those things, but 
if you could comment on that point, that, you know, they need 
our help now but there is reciprocity, we need their help in 
doing something with these cases.
    Mr. Burton. The chairman just made my point, and that is 
there are a number of these countries, including Honduras, that 
get Federal aid, get government aid from the United States, and 
if there are Americans who are suffering because of the 
policies that I talked about in this particular case, then it 
seems to me that we ought to say to them through the State 
Department, if you want our help then you had better solve 
these cases; otherwise, when you need the help that is obvious 
we are not going to be able to help you because we don't want 
American citizens who come down there to try to invest in your 
company to get the shaft. Okay? Thank you. Thank you, Mr. 
Chairman, for your comments.
    Mr. Engel. Mr. Meeks.
    Mr. Meeks. Thank you, Mr. Chairman.
    Mr. Secretary, I am just going to tell you, and as others, 
I am just passionate about the Western Hemisphere, and when I 
think about the people from visiting down there where you are 
dealing with the Caribbean, Central America or South America, 
they are magnificent, and I am so pleased that I believe we are 
moving forward from what had been a Cold War mentality in 
dealing with Central, South America and the Caribbean, to a 
post-Cold War type of deal, and I just think that is so 
important.
    When I look at individuals like those that are in this room 
from a good friend, the Ambassador from Ecuador, and Guatemala, 
the Bahamas and Panama, you know, in talking with them and 
working with them I am reminded all the time of the great 
people that we have as our neighbors to the South.
    You said you agreed with Mr. Mack 95 percent of the time. I 
don't think I would ever say that, but this 5 percent or a 
major part that I do agree with Mr. Mack on, and I will be 
willing to work with him and with you tooth and nail. Our 
friends in Panama and Colombia need that CAFTA, and I think 
that that is significant. And when we look at, I think, the 
results of CAFTA, if anybody really take a deep look at it, it 
is specifically because of some capacity building clauses that 
we had in the CAFTA amendment which I think that if we go 
forward even in Honduras and try to make sure that we then 
through capacity building build the judicial system that had 
heretofore had not been there, then we are in fact also helping 
our American companies.
    So, one of the things that we have to do, and I think focus 
and target our dollars, when we are working whether it is trade 
agreements or others, is capacity building because that had not 
been there, and I have yet to go to someone who said they would 
not take help and capacity building, whether it was 
institutions and/or the workforce because what happens in many 
of the countries that we are talking about that have problems, 
the major problem is poverty, and we have got to figure out how 
we reduce poverty, and what individuals are looking for in a 
lot of these countries is show me how having a democracy means 
to me that I am going to be able to feed my family and live 
like other people, because until they have food on their table 
then no matter what form of government they have it doesn't 
mean anything to them. It is not relevant to them.
    One of the things I hear, whether it is in Central or South 
America or in Africa, why China and others we are concerned 
about, when they go in they are developing infrastructure and 
roads that can help people get jobs, and we do a great job, the 
United States, especially the humanitarian aid. I think we do 
that better than anyone else, but we do have to look at some of 
these other capacity building aspects that is going to help 
people sustain themselves by creating those jobs and 
opportunities within their own countries. I think that is so 
important.
    I know, for example, Secretary Clinton went down, and one 
of the questions I had in regards to, and she was the keynote 
speaker at the Americas for Pathways for Prosperity, and that 
is an area in which I know is focusing on reduction of poverty, 
and so I was wondering if you can tell us in regards are you 
focused on addressing those key problems in the region? And I 
will add all my questions at one time.
    The other issue that I am passionate about in the area 
because when you talk about the poorest of the poor, they are 
more often than not those who are African Latinos an indigenous 
individuals of the various countries. They are the ones that 
get the least and suffering the most of anyone in a number of 
these countries. And so as we have passed the Joint Action Plan 
with Brazil, and I know we have recently done a Joint Action 
Plan with Colombia, and I have asked and put in an amendment 
that I believe that the government--that the State Department 
should give us a report back on the progress of these joint 
actions.
    I am pleased with what I see has been the progress of 
Brazil, and I would like to see the same thing in regard to 
Colombia, so I hope that you can also tell me about your plans 
to address the plight of African Latino and the indigenous 
populations, and whether or not they have been prioritized at 
all in the plans from a budgetary concept because sometimes it 
is about money.
    Then, you know, I do believe in how you join countries 
together in some regional development, regional planning, et 
cetera, so I was wondering if you could tell me what you see as 
the biggest priorities or development in the Caribbean, because 
too often we leave them out when we are talking about the 
Western Hemisphere, but they are a part of it, but also Central 
and South America because they are our neighbors, they are 
great people, and they love Americans to a great degree no 
matter where you go, and that is even to some places where we 
have a doubt.
    Then just finally, I am getting ready to travel to Bolivia, 
and so I was wondering if you could tell me where we are with 
the Bolivia bilateral dialogue. Are the talks stalled? Do we 
expect to exchange ambassadors between our two countries? Are 
they coming here? Where are we with that?
    Mr. Valenzuela. Thank you so much, Congressman, and thank 
you particularly also for your passion and your concern for 
this hemisphere. I will start out with a few of your concluding 
points and then go back to your earlier point.
    The Joint Action Plan, which I know you have been very 
close to, I think is a terrific initiative. There was a meeting 
in Salvador between--this is a joint action plan to eliminate 
racism and ethnic discrimination and promote equality known as 
JAPR, and we had a great meeting in Salvador and Brazil, and 
there is going to be a subsequent meeting now in May in 
Atlanta, so it is Brazilian and U.S. counterparts meeting to 
discussion how we can address issues of racial discrimination 
and ethnic discrimination. And as you say, Congressman, we are 
also developing that program with the Colombians, to address 
the issues of African Colombians. It is a great program.
    The passion and commitment of the Secretary to this program 
was indicated by the fact that one public occasion on her 
entire trip that was not something that had to do with official 
meeting was when she went to the leading--first Afro-Brazilian 
university in Sao Paolo, Zumi dos Myras Permados, to interact 
with the students. It was a great occasion, she was very happy. 
This is an initiative that we want to continue to work on. It 
is very important.
    Number two real quickly because I know we are running out 
of time, we are committed to the free trade agreements with 
Colombia and Panama, as I said earlier. This is a very 
important----
    Mr. Meeks. I know Panama, the new administration, they 
would love to get it done. President Uribe, the time that he 
has been President, the improvements in that country it is 
almost--and I am going to say to the President also--it is a 
shame that we don't get something done while he is still the 
President.
    Mr. Valenzuela. Yes, I would agree with you. Let us work on 
it and see if we can get it done.
    And then finally on some of your specifics, the Caribbean, 
met yesterday for lunch with the Caribbean Ambassador. He is 
here in Washington along with Carmen Lomellin, U.S. Ambassador 
to the OAS. Many of the ambassadors are duel hatted. They are 
before the White House as well as the OAS. We had a great 
discussion, and this is a very, very important commitment.
    When Secretary Clinton first asked me if I would be willing 
to take this position she underscored for me her commitment, 
her personal commitment to the Caribbeans, something we are 
working on very significantly, and in the spirit, Mr. Chairman, 
of your own concern over addressing issues such as security in 
a holistic fashion, not just focusing on one country but 
looking at it more broadly at the regional implications of 
this, you know, we are working both in Central America and 
through the Caribbean Basin Security Initiative.
    We are very exciting about this because this would be the 
first time that we have been working closely with the countries 
of the Caribbean on something as important as their security 
challenges right now, and we are pleased, for example, that the 
budget for that has gone up, in 2011, by 50 percent, so there 
are resources there. We want to move forward very, very 
strongly to try to train, to partner, and to work together on 
the security side, but also on broader initiatives in order to 
better the peoples of the Caribbean. We are committed to that.
    On Bolivia, I should confess that it is slow. We continue 
to try to work with them on this framework agreement that we 
wish to pursue. We have had dialogue with them. It is slow in 
coming. You know, this is a President who was elected with 62 
percent of the vote. He had strong support among the Bolivian 
people, but it hasn't been easy to engage, and of course we are 
concerned about their lack of cooperation, for example, on such 
an important issue as counternarcotics cooperation. So we have 
some real issues there, but we continue to work on it, so I 
appreciate your going down there. Maybe when you come back you 
can give us a readout of your trip there.
    Finally, if I might, Mr. Chairman, the broad point that you 
raised at the beginning, and that is, you know, the challenge 
is that if democracy doesn't deliver, if representative 
institutions don't address the fundamental problems that 
ordinary people have--poverty, inequality and things like 
that--people get frustrated, and institutions begin to wane, 
they become less popular, political parties become less 
popular, and this is what fuels the rise in populist leaders. 
So there is a direct relationship between that.
    If countries can be effective in addressing the problems of 
people, then the challenges to democratic governments become 
greater and we wind up in a vicious circle. So our commandment 
then is to strengthen institutions as a fundamental part of 
this whole process. You know, it is only with strong 
institutions, with the rule of law, with genuine representative 
governments that speak to the people and address their real 
issues that we are going to be able to move forward and be able 
to be adequate partners, and this is what we are trying to do, 
Mr. Meeks. We are really committed to this.
    It is a dialogue that is going to be long in coming but 
actually we are very optimistic about this. I must say we are 
very optimistic. This is where we want to look and see that the 
glass is half full, and we see countries throughout the 
hemisphere coming to us and saying, yes, we do want to have 
this dialogue. The dissidents are very few. Those that are 
coming to the table are very, very many, and we are really 
quite enthused and in that sense optimistic about our 
prospects. Thank you.
    Mr. Engel. Thank you, Mr. Secretary. I should probably let 
that be the last word except we have talked among ourselves and 
we have a couple more questions we would like to ask. We will 
start with Mr. Sires.
    Mr. Sires. Thank you, Mr. Chairman; thanks the members.
    Dr. Valenzuela, can you just give me an update on the 
negotiations with migrations in terms of Cuba, and if you know 
what is going on with Alan Gross, the situation there?
    Mr. Valenzuela. Well, first of all, let me say that we 
express our sympathy with Mr. Gross and his family. At the 
migration meetings, Craig Kelly, the Principal Deputy Assistant 
Secretary, was there heading up these migration talks. He made 
it very clear at the highest level of the Cuban Government that 
we wanted the immediate release of Mr. Gross; that we find it 
untenable that they should keep them.
    The conversations on migration issues went fairly well in 
the sense that we were able to exchange views on things that 
concern us and concern them, but these are very small steps so 
far, Congressman, and our concern is--you know, the fundamental 
policy of the United States Government is that we see a vision 
of an open and free democratic Cuba with respect to human 
rights, with a competitive democracy, you know, with a vibrant 
society that can rejoin the inter-American system. Is that 
sense our policy is oriented toward engaging directly as much 
as possible with the Cuban people.
    But on Mr. Gross, there is no question this is the highest 
priority for the government and we are working hard to try to 
get him released.
    Mr. Sires. Thank you very much.
    Mr. Engel. Mr. Secretary, I want to briefly talk to you 
about Mexico because we haven't touched on it in this hearing 
and it is so important. Obviously with the long border that we 
share with Mexico, as I said in my opening statement that what 
goes on over there affects us and vice-versa. As you know, I 
have a bill which has just passed the House which would set up 
a commission to look at drug policy in the region, in the 
Western Hemisphere, and I have long believed that we need to 
address the consumption side as well as the supply side. All 
these are intertwined with Mexico.
    Just last month 16 teenagers were killed in Juarez, right 
across the United States-Mexican border. They were killed by a 
group of masked gunmen, and Mexican journalists are being 
abducted in the Reynosa area, which is across from McAllen, 
Texas. What can you tell us? I have been a very strong 
supporter of Merida. I noticed that in the proposed budget 
Merida funds have been cut. Can you just talk to me a little 
bit about Mexico and what our progress has been there?
    Mr. Valenzuela. Sure, I am delighted to do so. Again, 
Mexico is at the highest priority. There is no question about 
it. If you push me as to where I would put things, I would put 
it very much at the top.
    Mr. Engel. As would I.
    Mr. Valenzuela. And this is of fundamental interest to the 
United States. You know, a prosperous Mexico is of fundamental 
interest. There is just no question about that. And Mexico is 
facing some significant challenges.
    Let me say right at the outset, Congressmen, that the 
reduction in some of the expenditures, as with my earlier 
discussion with the reductions to Colombia, means simply the 
fact that now we can recalibrate some of the assistance. The 
earlier assistance went to some of the really expensive sort of 
items that you have to use, such as equipment for combatting 
the drug trafficking directly, helicopters and that sort of 
thing. Now we are actually funding other areas that are equally 
as important now that those other expenditures have been made, 
and that would include working very closely with what the 
Mexican Government has determined to be fundamental priority in 
this, and that is, again, what is needed is a strengthening of 
the institutions of the state, particularly local government 
and low enforcement operations.
    So we are working with them on different levels. We are 
working with them to strengthen, you know, these institutions 
and other institutions as I say, but also working with them in 
a far better way than we have ever worked before.
    I have some experience with this, Mr. Chairman, because I 
was the Deputy Assistant Secretary in the first Clinton 
administration in charge of Mexico, and I see now an quantum 
leap in the kind of cooperation that we have with Mexico today 
than what we had at that particular time.
    So I am encouraged about this, but that does not mean that 
I want to be Polly-Annish about the challenges that Mexico 
faces. These are significant challenges that I, again, am 
optimistic that we are working well together; that Mexico has 
things in hand; and that in fact we are moving a head to make 
some progress on it.
    The violence that you referred to in some ways is almost 
the inevitable result also of some of the success because as 
you bring down certain kinds of criminal organizations you 
incur a certain degree of conflict between them. But we are 
here for the long haul there as well, I think, because this is 
such fundamental interest of the United States to make sure 
that we get this right. Appreciate your help on all of this.
    Mr. Engel. Thank you. I want to just finally comment on a 
few things and you could comment on any or all of the things I 
mention now.
    Mr. Meeks mentioned the Caribbean, and I think it is 
important to state that I think it is very, very important for 
us not to neglect our friends in the Caribbean and the West 
Indies and other places in the Caribbean. I think they are very 
close in geography to the United States. There are close ties. 
There are hyphenated Americans in all the Caribbean nations, in 
my City of New York, and in the country, and I think those 
communities are really a treasure of linkage between the United 
States and those Caribbean nations, and we talk about the 
Caribbean Basin Initiative and things like that. I hope that we 
make that a priority.
    I want to mention Iran. We spoke a lot about Iran and this 
subcommittee has held a hearing on Iran and the penetration 
into the hemisphere, and it is clear to all of us that Hugo 
Chavez is facilitating Iranian influence in this hemisphere, 
but I must say that I was very, very disappointed recently when 
President Ahmadinejad came to South America. I would expect him 
to speak in Venezuela and Bolivia. I was very disappointed that 
he was welcomed with open arms by President Lula in Brazil, and 
it is very disconcerting when you look at Brazil and how they 
voted in the IAEA. You know, when we voted to criticize Iran, 
Brazil I believe abstained, didn't vote for it. Argentina voted 
yes, and other countries voted yes, but Brazil did not. He was 
welcomed with open arms and given a platform to spew his hate, 
and we are told that President Lula is going or has gone, I 
think is going to Iran. He welcomed Ahmadinejad with open arms 
after the dispute over the election that was stolen, and I know 
Brazil wants to be a player on the world scene and maybe get a 
permanent seat in the Security Council, but this is a heck of a 
way to do it, and I wonder if you can mention that.
    And finally let me say, you know, we contrast that vote 
with the vote of Argentina who voted against Iran having a 
nuclear weapon and voted for sanctions, and I know that 
President Fernandez de Kirchner of Argentina is going to be in 
Washington next month when they have discussions of the IAEA 
and nuclear discussions, and I would just say publicly that I 
hope that President Obama can find time to meet with them. I 
think a meeting between the two of them is long overdue and I 
hope we can facilitate that.
    So if you can comment on any of these thing, I would be 
very grateful.
    Mr. Valenzuela. Thank you, Mr. Chairman.
    On the Caribbean, again I would reiterate how much this one 
is going to be a priority of this administration. The Secretary 
is very, very committed to that. And I might add, too, your 
remark about how in some ways, you know, many of these 
societies are blending in with our society, and it is part of 
the strength of our society too that we have been able to 
welcome so many of peoples from these various places, so there 
is a special bond that is there, Mr. Chairman, and that we need 
to as we move forward cultivate more in terms of our work in 
the Western Hemisphere as a whole.
    When we talk about partners and friendships we are talking 
in some cases of a family, you know, in the case of many people 
in certain constituencies, and so I really want to reiterate 
our commitment to the Caribbean, to the countries of Central 
America in that sense too as we move forward.
    Iran is a very, very serious problem. In my earlier 
testimony I underscored how serious we see their influence in 
the region. Let me say that this was, of course, a major item 
on the agenda of the Secretary's trip. She raised this issue 
with both President Fernandez de Kirchner in Argentina and 
reiterated that the United States kind of gratitude and 
pleasure that they agreed with us on this particular thing, and 
at the same time very forcefully indicated in Brazil too to 
Foreign Minister Amorim and to President Lula the United 
States' position that Iran is in violation of its international 
obligations, that it is in violation of IAEA, but also of 
United Nations Security Council resolution, and that in fact it 
is the responsibility of countries to abide by those particular 
resolutions. She did not mince any words on that and was very 
forceful in stating our concerns in that regard, and, you know, 
we are going to have to continue to move forward on this 
because it really is a very important element.
    So, I would agree, Mr. Chairman, that we cannot sit back on 
this issue, and you know very specifically she also raised the 
discomfort over the sort of communications with Mr. 
Ahmadinejad. We agree on this.
    With regard to the meeting on nuclear nonproliferation 
issues, I will defer to the White House in terms of scheduling 
meetings. They know what they are going to be doing, but we 
will certainly raise this as an issue of concern for us as 
well.
    Thank you very much, Mr. Chairman.
    Mr. Engel. Thank you, Mr. Secretary. I know my colleagues 
on both sides of the aisle appreciate your testimony and 
thoroughness. I am going to tell you, as I told your 
predecessor, Tom Shannon, we had him back to the subcommittee 
many, many times, and I look forward to your coming again and 
our exchanges of views, and we are going to take you up on some 
of the private discussions you offered to have with members of 
the subcommittee.
    So I thank you. I will call a brief recess for 2 or 3 
minutes to have our second panel seated. Thank you.
    Mr. Valenzuela. Thank you, Mr. Chairman.
    [Brief recess.]
    Mr. Engel. The subcommittee will come to order and our 
second panel is here, and I am very pleased to introduce our 
distinguished private witnesses, and sorry that they had to 
wait so long, but the testimony of the Secretary was very 
enlightening, and I look forward to hearing the testimony of 
these three gentlemen who have many, many, many years of 
expertise in the area.
    Peter Hakim is president of the Inter-American Dialogue and 
no stranger to this subcommittee. Today will mark Peter's last 
time testifying as dialogue president as he will be handing 
over the reins to Michael Shifter and becoming president 
emeritus. Peter, congratulations. I want to tell you that in 
honor of your outstanding work and your outstanding service 
Ranking Member Mack and Congressman Meeks and I have inserted 
statements into the official Congressional Record commending 
your excellent work at the Inter-American Dialogue, and when 
you finish your testimony and we put you through the mill and 
the grill I will give you these three Congressional Records and 
statements from myself, Mr. Mack and Mr. Meeks. So 
congratulations to you.
    Riordan Roett, I hope I am not botching your name, is a 
Sarita and Don Johnston professor and director of Western 
Hemisphere Studies at the Johns Hopkins School of Advanced 
International Studies. I generally don't read these things, but 
they did not put the ``s'' on Johns, I am sure that is done a 
lot of times, but I knew to put the ``s'' on.
    I notice on your CV that you testified before the 
Subcommittee of Inter-American Affairs in 1982, well before we 
came to Congress although I came 6 years later so it wasn't 
much before, at a hearing entitled ``U.S. Relations with Latin 
American after the Falklands Crisis,'' so perhaps you will have 
some insight to provide our subcommittee on recent developments 
involving that issue as well.
    And last but certainly not least I am pleased to welcome 
Otto Reich back to the subcommittee. Ambassador Reich is a 
friend and served as Assistant Secretary of State for Western 
Hemisphere Affairs during the administration of President 
George W. Bush. He also served as U.S. Ambassador to Venezuela 
from 1986 to 1989, and I am sure you have some very interesting 
comments on your service in Venezuela as we look at it today.
    So let me stop and let me ask you all to give us your 
testimony in 5 minutes. No need to read your testimony if you 
don't want to. So moved to insert your testimony into the 
record as if you had testified and read it all, and if you want 
to add anything without reading your testimony, we will put 
them both into the record. So let me start with you, Mr. Hakim.

    STATEMENT OF MR. PETER HAKIM, PRESIDENT, INTER-AMERICAN 
                            DIALOGUE

    Mr. Hakim. Thank you very much, Mr. Chairman, Mr. Mack, and 
of course greatly appreciate the honor of being written into 
the record. I presume it is an honor, and it is also an honor 
to be here today. I am hoping your questions are softer for a 
lame duck, but anyway it is a great pleasure to be back, and 
let me say my own view, my conclusion is the past year has not 
been a very good year for U.S.-Latin American relations. It is 
very clear that U.S.-Latin American relations remain 
unsatisfactory, as unsatisfactory as they were under President 
Bush, and there is no real clear course for getting them back 
on track.
    Let me just say this is not mainly, primarily the 
responsibility, it is not mainly a failure of the Obama 
administration, either its concept of policy or in its 
implementation. What it really demonstrates is how difficult, 
how complicated, it is to make U.S.-Latin America relations 
more productive, to improve the quality of those relations. 
This is not a simple task, and what are the obstacles that make 
it so difficult?
    First, and I won't even say one more than a sentence: The 
U.S. has an overcrowded agenda, and Latin America has a great 
deal of difficulty finding its way onto that agenda except when 
there is a crisis here or an emergency there.
    Secondly, the politics of Washington are very difficult. I 
think we saw the Assistant Secretary Valenzuela whose 
appointment was delayed for at least 6 months because of 
Washington politics. It is also true that there is a range of 
policy issues that politics makes it very hard to act on. All 
of the people on the panel suggested they supported the free 
trade agreement with Colombia and Panama. It is clearly the 
politics of Washington that is holding that up. There are a 
number of other issues that are blocked in the same way. 
Politics made dealing with the Honduras issue very difficult as 
well, and that is just part of Washington.
    And last, the Latin American countries themselves have not 
been particularly cooperative over the past year. On some 
issues they really pushed the United States further than it 
wanted to go. We could talk about bringing Cuba back to the 
OAS. We could talk about the pressure on the United States to 
act in certain ways on Honduras. Several countries were very 
critical of the United States, and now we are talking about the 
Venezuelans and company, but almost all of South America was 
very, very critical of the security arrangement between the 
United States and Colombia, and I thought that maybe the United 
States didn't handle it well, but at the same time I think 
there was an exaggerated response from the countries of Latin 
America. Some countries blatantly pursued policies they 
recognize fly in the face of U.S. interests, and really didn't 
want to negotiate them.
    The most important one of those and it is not the only one 
is the Iran issue with Brazil, Brazil's relations with Iran. I 
think that Brazil has a perfect right to establish its own 
relationship, but it seems to me that they ought to be more 
willing to sit down and really discuss that and deal with that 
with the United States. I don't have to go into Chavez.
    What is going to be the U.S. agenda in the coming period? 
Let me say I think that Honduras is almost solved. I think we 
are on the right track there. Haiti is going to be a long-term 
issue. It is not going to be an immediate issue. I think that 
we are working together with other countries in the hemisphere. 
We ought to keep it that way. I think it is just very long 
term, very difficult.
    The big issues immediately are getting the United States-
Brazil relationship back on track. Brazil is just too important 
in South America and globally. We have to find a way to manage 
our differences there, managing our disagreement and find ways 
to cooperate where we need to.
    We have to reassure Colombia. I think that has been talked 
about. Colombia is getting uneasy about the U.S. relationship 
and it is an important ally and we really do have to find the 
best way to do that is to pass the FTA agreement, I think, and 
I think we should also pass it with Panama as well.
    Mexico, I think we have surprising good relations, but 
there are a number of long-term issues that remain unresolved 
and are difficult to resolve. You go to Mexico and these emerge 
very quickly on the agenda. Immigration being the essential 
issue, on which we seem unable to make progress on, and I am 
not very hopeful that we are going to in the short term, but I 
hope we can find some path toward managing that better. I would 
like to see the United States find a way to repair or allow 
Mexican trucks to use U.S. highways as we agreed to in NAFTA 
some 15 years ago. I think that is an important issue, and it 
is another irritant. And I think that we really do have to keep 
finding ways to work with Mexico. I think we are doing better 
than we have at anytime in the past, but it is still not enough 
on that issue, and that is an issue that really has to go 
beyond Mexico into Central America, and the Caribbean. If we 
are successful in Mexico and we don't really have a major 
effort in Central America and the Caribbean, it is just going 
to spill out into 15 countries instead of Mexico.
    Lastly, and with this I will close, I think we do need to 
spend more attention, more effort on the economic dimensions of 
our relationship with Latin America. What Latin America most 
needs from the United States, I believe, are our capital 
investment. It needs access to our markets. It needs access to 
our science and technology. That is where if we could find ways 
to move toward a greater integration on the economic front that 
would really create the core. That is the core of the European 
Union, it is the core of almost any integration, and I don't 
think we are giving enough attention to that.
    [The prepared statement of Mr. Hakim 
follows:]Peter Hakim deg.

















    Mr. Engel. Thank you, Mr. Hakim. Dr. Roett. If you could 
pull the microphone a little closer, there is a button.

  STATEMENT OF RIORDAN ROETT, PH.D., SARITA AND DON JOHNSTON 
 PROFESSOR, DIRECTOR, WESTERN HEMISPHERE STUDIES AND THE LATIN 
AMERICAN STUDIES PROGRAM, THE PAUL H. NITZE SCHOOL OF ADVANCED 
   INTERNATIONAL STUDIES (SAIS), THE JOHNS HOPKINS UNIVERSITY

    Mr. Roett. Let me take a different tack. I think it is very 
important to look at the bilateral problems we have with Latin 
America and they need to be resolved and they need to be 
addressed. I would argue that the old Latin America that we all 
knew and sometimes loved has literally disappeared. Beginning 
with the Chavez election in 1998, the region has, frankly, 
divided between the good countries and those countries that 
Secretary Clinton visited recently that are democratically 
consolidated countries, and those are the people with which we 
should be working.
    Broader framework, there are three or four major issues in 
a multilateral nature that require U.S. assistance but in 
cooperation with our neighbors in Latin America. The first, of 
course, is climate change. The Copenhagen Conference was not 
particularly good and we can't leave it there, and the three 
important players at the table with President Obama that last 
night--Brazil, China, and India.
    One, climate change would include Brazil, and 
multilateralize it. Two, trade, we must move to restore 
negotiations around the Doha round. If we go back to August 
1998 in Geneva when it collapsed, who were the three 
protagonists that were most important to not wanting to agree, 
one supporting it? Brazil, China and India.
    The last time I did testify before the subcommittee, it was 
on China and Latin America based on a book I had just 
published.
    Third, financial architecture. We must strongly support, 
and you have a very important role here, Mr. Congressmen and 
your colleagues, the new financial architecture. We have had 
three meetings of the G-20. The old G-7, G-8 is dead. Who are 
the most important members of that? Once again, China, India, 
Brazil. There are three Latin American members of the G-20--
Mexico, Argentina and Brazil.
    Those are three multilateral issues in which the Congress 
must take leadership and support the administration. 
Copenhagen, climate, trade, Doha, financial architecture, G-20. 
Those are the new changing realities in which our colleagues in 
the hemisphere are very much interested and which I think this 
country under your leadership and the White House supporting 
you can really begin to talk about a broader multilateral 
agenda.
    Sure, we need to resolve these. Very important to try to 
resolve some of the issue surrounding the presence of our 
troops in Colombia. The Brazil U.N. sanctions issues is 
certainly one very, very complicated; more complicated now with 
the cotton subsidies issue. We had administration people in 
Brazil trying to resolve that. That could become a trade war if 
we don't deal with it very, very carefully.
    My suggestions, and as I was asked to do, for the Congress 
and for the administration in the coming year, first and 
foremost, I am delighted that the President is going to 
Australia and Indonesia next week. Why isn't he going to 
Brazil? There is nothing more important that President Obama 
and Mrs. Obama appearing in Brazil. It would be an 
extraordinary diplomatic move and one that would be widely 
supported throughout the hemisphere. Mr. Obama is extremely 
popular all through the hemisphere, a lovely counterbalance to 
the Chavez and other people who would rather not have take up 
so much newspaper space.
    The interchange of the President of the inter-society group 
could be extraordinary. I mentioned the G-20, I mentioned the 
Doha rounds and I mentioned the Copenhagen round. These are all 
very important issues for Latin American countries. You 
mentioned before, Mr. Chairman, the Merida Initiative. I don't 
understand why there is less money and not more money for the 
Merida Initiative, and that should be redefined and expanded in 
scope to include greater social and economic development goals. 
As you have said before, Mexico is a critical ally of the 
United States. The Merida Initiative is one way to give 
President Calderon strong support that he deserves and that he 
very much so need, as a matter of fact.
    Focus on relations, as I just said, in the hemisphere of 
like-minded democratic states like Brazil, Chile, Colombia, 
Costa Rica, Peru, Uruguay, among others. These are the 
countries that we can work with. These are the countries that 
understand and share our values. The other ALBA countries led 
by Venezuela do not, and I do not think there is much progress 
to be made in the short term in trying to work or reach out or 
cooperate with the ALBA. We can with the countries the 
Secretary has just visited.
    The key challenges in 2010-2011, Brazil, as my colleague 
Peter Hakim mentioned, I spent 45 years studying Brazil. These 
elections are critical, they are crucial and the United States 
cannot allow any one issue, whether it is Iran or trade or 
whether it is other questions on the table that may appear 
bilateral, we need to work through those issues to make sure 
that Brazil is recognized as an important regional leader and 
selectively and increasingly global leader. The BRIC concept, 
Brazil, Russia, India, China, is here to say, and the United 
States must understand that and the way in which we can work 
best, I think, within that context is with Brazil.
    Two, the organization that was created or we think it was 
created, we are not quite sure, in Mexico a few weeks ago, what 
is it? That has been raised in the testimony here this 
afternoon by Mr. Valenzuela, questions from you and your 
colleagues as well. Does it make a difference? We need to 
clarify that. If the OAS is to continue, are we going to re-
elect Mr. Insulza as the secretary general in a few days? What 
is the significance of that? That needs to be clarified and do 
so very, very quickly.
    Finally, I think it is very important that, again, we focus 
on global issues in which the Latin American countries are very 
interested in and increasingly concerned. To allow small 
issues, and some of these are not small issues, to allow small 
issues such as cotton subsidies to stop our dialogue with 
Brazil makes absolutely no sense. They understand and I 
understand and you understand the Farm Bill which the Congress 
has passed cannot be changed. We therefore need to work around 
the Farm Bill and find a diplomatic way in which we can 
continue our dialogue with Brazil on a very wide range on very 
important policy initiatives.
    No question the Iran question is tremendously irritating, 
but I point out--I am not defending the position of Brazil, I 
will not do that--but Brazil has had a very long diplomatic and 
trade relationship with Iran, and Brazil will be in 3-5 years a 
major oil export, as is Iran. Brazil may joint OPEC. There are 
diplomatic, political and economic reasons for Brazil for its 
own independent foreign policy to begin looking at those 
broader global issues that we have never really thought Brazil 
should or could engage. They are not beginning to engage them. 
My sense is after the election in October there will be a 
democratic, transparent election, no matter who wins, will be 
in a position to further the consolidation of democracy in 
Brazil and build a very important economic underpinnings of 
that economy, and that, it seems to me, needs very, very 
important attention by the United States.
    Finally, again, the bilateral questions are very important. 
My sense is in the twenty-first century that this committee 
should really be looking at the broader multilateral context 
into which we put the three members of the G-20, other 
countries that have similar concerns of a social and economic 
sense, don't go back to the nineteenth or the twentieth 
century. The Monroe Doctrine is dead and buried finally.
    But the last time I did testify someone asked me about the 
Monroe Doctrine, and I explained that would have been a good 
question in the nineteenth century but in the twenty-first 
century we probably don't want to go there, don't touch that.
    So, in closing, I appreciate this opportunity. I urge you 
to look at the hemisphere in a broader global context, a 
twenty-first century context; not to get caught up on small 
issues although small issues need to be resolved; and address 
those larger questions in which our neighbors are very deeply 
interested. Thank you.
    [The prepared statement of Mr. Roett 
follows:]Riordan Roett deg.

























    Mr. Engel. Thank you, Dr. Roett. Mr. Reich.

STATEMENT OF THE HONORABLE OTTO J. REICH, PRESIDENT, OTTO REICH 
   ASSOCIATES, LLC (FORMER ASSISTANT SECRETARY OF STATE FOR 
                  WESTERN HEMISPHERE AFFAIRS)

    Ambassador Reich. Thank you, Mr. Chairman and Mr. Mack, for 
this opportunity to address the U.S. policy in the Western 
Hemisphere.
    The overriding objective of U.S. foreign policy in Latin 
America and elsewhere should be to advance U.S. national 
interests, not to win international popularity contests. If we 
can be liked while we are advancing our interests, so much the 
better. But when we try to befriend undemocratic leaders and 
ignore their belligerence, we are neither liked nor do we 
advance our interests.
    Some of the people to whom the Obama administration 
extended an open hand, only to encounter a closed fist, include 
the rulers of Cuba, Venezuela, Bolivia, Nicaragua, ecuador and 
Honduras' former President Zelaya.
    Foremost as among our national interest is security. 
Without security we cannot promote other goals such as 
democracy, human rights, and economic development. I believe 
the U.S. Government today is underestimating the security 
threats in the Western Hemisphere, rather we seem to be 
fighting the ghosts of dictatorships past, and trying too hard 
to be liked.
    The main threat to the peace, freedom, prosperity and 
security of the United States in the hemisphere does not come 
from military coups, but from a from a form of free-thinking 
totalitarianism self-described as twenty-first century 
socialism, and allied with some of the most virulent forms of 
tyranny and anti-Western ideology in the world.
    Today, Latin American is being undermined by autocrats who 
gain power through elections and then dismantle democracy from 
within. This has already happened in Venezuela and Bolivia. It 
is happening in Nicaragua and Ecuador, almost happened in 
Honduras, and could happen in any other nation that falls 
within the grasp of something called ALBA--my colleague Dr. 
Roett has mentioned--or the Bolivarian Alternative for the 
Americas.
    ALBA's takeover pattern is clear. After gaining power 
democratically, they use force to intimidate political 
adversaries and the media, politicize the police and the 
miliary, and place them at the orders of the ruling party, pack 
the judiciary with compliant judges, rewrite electoral laws to 
eliminate opposition candidates and parties, seize private 
property or force businesses to close using bogus charges, 
incite mob violence to force potential opponents into silence 
or exile, and attack the churches, civil associations, the 
press, labor unions, and any other similar institutions that 
dares to challenge the government. Again, this has already 
happened in Venezuela and Bolivia, and it is happening in other 
countries.
    Their stated model is Cuba, and the result will be the 
same, a willing dictatorship, a pauperized prison nation whose 
citizens risk everything to flee. This is what U.S. policy must 
prevent. ALBA is actually the revival of Fidel Castro's half-
century goal of uniting international radical and terrorist 
movements of the developing world under his leadership; a 
movement he organized in the 1960s and called it the Tri-
Continental. The first country Fidel Castro ever visited after 
the overthrow of the Batista dictatorship in 1959 was 
Venezuela. Castro secretly asked Venezuelan President Romulo 
Betancourt for $300 million, about $3 billion, more than $3 
billion today, to underline the Yankees, as he put it, meaning 
us, in Latin America. Castro was rebuffed then but thanks to 
Hugo Chavez he has finally achieved his goal.
    Castro also targeted Bolivia in the 1960s because of its 
strategic location. Bolivia's land borders with Argentina, 
Brazil, Paraguay, Peru and Chile, more than two-thirds of South 
America. In 1967, when Che Guevara selected Bolivia to begin 
his communist takeover of the continent, Guevara failed 
miserably but today a Castro disciple, Evo Morales is turning 
Bolivia into a twenty-first century socialist dictatorship.
    U.S. policy cannot be solely focused on ALBA, but neither 
can we ignore it because the Havana, Caracas, LaPaz acts is 
undermining the peace and prosperity of the rest of the 
hemisphere. Our most sensitive relationships are those with 
Mexico, Brazil and Colombia. I contend that these nations are 
confused with the signals being sent by the Obama 
administration, or at least in the first year. Those nations' 
foreign policies, some of them, Brazil and Mexico in 
particular, seem oddly antagonistic to the United States and 
even self-defeating.
    Mr. Chairman, my testimony is quite lengthy. I will submit 
it for the record. It includes some of the activities of ALBA 
and particularly Chavez, some of which have already been 
discussed here today--the introduction of Iran and Russia and 
even Belarus and other undemocratic nations into the hemisphere 
by Mr. Chavez; the facilitation of Ahmadinejad's visits to 
Nicaragua, Bolivia, possibly even Brazil, and other actions 
which I think are undermining the United States' interest in 
the hemisphere.
    I would like to stop and during the question and answer 
period perhaps answer some of the questions that were addressed 
to my friend Arturo Venezuela that he couldn't answer because, 
of course, the Assistant Secretary can't answer some questions 
on the record about intelligence activities. However, there is 
plenty of open source documentation, for example, of 
Venezuela's support for terrorism. That would make it very easy 
for the United States Government if it so desired to include 
Venezuela in a list of state sponsors of terrorism, and other 
questions that were asked that I would like to express my own 
opinion about.
    Thank you very much.
    [The prepared statement of Ambassador Reich 
follows:]Otto Reich deg.















    Mr. Engel. Thank you very much, Mr. Reich, and without 
objection your entire written testimony will be inserted into 
the record.
    Let me ask you a couple of questions and I will be happy to 
turn to Mr. Mack. I mentioned before that Mr. Mack and I have a 
bill which passed the House unanimously, I believe, which would 
establish a panel to look at drug policy in the Americas. The 
panel would be bipartisan. It would be modeled after the 9/11 
Commission, and it would look at the supply side as well as the 
consumption side, and see what really needs to be done, and 
they would be appointees by the President, the majority and 
minority leaders of both the House and the Senate.
    Hillary Clinton said when she talked about U.S. 
counternarcotic efforts, she said, ``Clearly what we have been 
doing does not work,'' and I would say the same thing.
    So if anyone would like to take a stab at it, have you 
looked at Mr. Mack's and my Western Hemisphere Drug Policy 
Commission bill? What do you think of it? What more should be 
done in 2010 in our counternarcotics efforts in the Americas to 
increase our efforts in the demand side of the drug war? Would 
anyone like to tackle that? Mr. Hakim?
    Mr. Hakim. You participated, Mr. Chair, in a meeting of the 
Inter-American Dialogue with a group of 25-30 experts on drugs, 
and you spent a good deal of time explaining the commission, 
and maybe you don't know this but after you left I asked the 
group a question. I said: ``Well, is this commission, if you 
had a grade or a scale, would you say this is a very important 
initiative, or would you say that it is not bad, it is a modest 
step forward, or would you say it is really not going to help 
very much?''
    And I think that everyone that spoke up at least thought 
that this was a terribly important initiative because the most 
important thing on the drug issue now is to begin to get some 
kind of discussion and debate that is sustained over some time 
and not simply keep repeating what we have been doing for the 
past 20 years when everyone seems to come to the same 
conclusion that it is not working very well. It seems to me the 
only way to get at whether our policy is working, and how it is 
working, and what could be done better, is to open this up to 
real debate. We have not seen a debate on the drug issue. Just 
for example, it never became part of the electoral campaign of 
2008, it was absent from the campaign, and so I vote very 
strongly for the commission.
    Mr. Engel. Thank you. Dr. Roett.
    Mr. Roett. You mentioned again Mexico as being terribly 
important, the Merida Initiative. The Attorney General has said 
a number of times in the meetings that I have attended, the 
Mexican Attorney General, there are three key issues that the 
United States could help Mexico fight this war: Arms, the total 
arms across our border from the United States into Mexico; 
second, a flow of chemicals from American companies, often 
using third companies to get chemical into South America to 
process this garbage, which is then brought back across the 
Mexican border; and third, money laundering. Do we know where 
the money is going? Whose money is it? What banks are holding 
it? That is the critical issue for these guys to buy the arms 
and now buy the submarines and the other armaments they are 
using to kill thousands of people each year throughout the 
hemisphere. Those three critical issues are very important.
    And finally, your comment on consumption and demand is 
marvelous. It is exactly where we need to go and I am delighted 
as a bipartisan position on this subcommittee.
    Mr. Engel. Thank you. I appreciate that and let me also say 
that it is so clear to me that the illegal guns that are going 
from the United States south of the border into Mexico that are 
involved in committing crime, not only in Mexico but Jamaica 
and other places as well, that we really need to do something 
to stop this. There is a law on the books, it just needs to be 
implemented and enforced. It was enforced by every President 
until the last administration.
    The first President Bush, it is a 1968 law, the first 
President Bush enforced it, President Clinton enforced it, and 
it sort of went by the wayside during the George W. Bush 
administration, and it is still by the wayside during the Obama 
administration, and I think that that is something that we need 
to implement, and no one is talking about it. They are treading 
on their Second Amendment rights. These are illegal guns. 
Everybody knows they are illegal guns, and they come into this 
country for the sole purpose of going to south of the border to 
aid and abet the cartels. They are modified just a little bit 
so they kind of skirt our laws, and they illegally go there and 
I think that is something we need to deal with.
    I want to ask a Cuba question and I want to start with Mr. 
Reich. What is your assessment? You know, it was very 
interesting. Fidel Castro stepped down after all those years 
and turned the reins of power over to his brother Raul. 
Everyone suspected that he was terminally ill and that he would 
be gone from the scene in a matter of weeks or months or maybe 
a year or so. It is several years and he is still around, and I 
think increasingly the policies that are coming forward from 
Raul Castro's administration seem more and more like they are 
directed and designed by Fidel. He writes opinions in 
newspapers. He speaks out vocally.
    What is your assessment of all of this? Why did he turn 
over the reins of power and has anything really changed?
    Ambassador Reich. My information, Mr. Chairman, talking to 
a lot of recent defectors. I spend a lot of time in Miami and 
there is a treasure trove of information, you have to filter 
it, but you talk to several people until you pretty much get 
the same story, then I thin it is believable.
    Castro was on the verge of dying. That is why he turned 
over power. But it is interesting, the people I spoke to. There 
is one position he didn't turn over even when he thought it was 
on his deathbed, and that was Secretary General of the 
Communist Party, and in a communist dictatorship that is the 
most important position. He kept that. I guess he was going to 
take it to the grave, god forbid, and then come back. I don't 
know what he was going to do with it, but since he came back he 
has really returned to control in Cuba. I would say he is in 
control. He doesn't manage the day-to-day like he did before. 
He made all the decisions which, of course, were all the wrong 
decisions which is why Cuba is absolutely bankrupt. People 
literally don't have enough to eat. But he doesn't make t hose 
decisions anymore. To him those are insignificant.
    The most important thing for him is the relationships with 
the United States; how to, frankly, win the war as he called it 
back in a letter he wrote in 1956, the war against the United 
States, and the hard line that you see being followed is, I 
think, due to two things.
    One is that Raul is not the reformer that a lot of people 
thought he was going to be. Raul owes everything he has to his 
brother and to the communist dictatorship. The second is that 
Fidel is alive and making the important decisions in Cuba 
today.
    Mr. Engel. Thank you. Let me ask, Mr. Meeks in the first 
panel talked about Bolivia and obviously we have no diplomatic 
relations with Bolivia. Bolivia relations with the United 
States took a turn for the worst when Morales expelled the U.S. 
Ambassador, kicked out the drug agents, and things seem to have 
taken an up-tick with the United States-Bolivia bilateral 
dialogue, but now seems that those talks are stalled. Bolivia 
was dropped form the Andean Trade Preferences.
    How would any of you gentlemen advise the Obama 
administration moving forward with Bolivia in the coming years?
    Mr. Roett. I think this is a very interesting and important 
question. I and my colleagues agree, differentiate Bolivia and 
Morales from Chavez, Venezuela, Correa, Ecuador, the crazy in 
Nicaragua.
    Mr. Morales is an authentic indigenous political leader 
that represents a new wave of democracy defined in Bolivian 
terms. So what we should be doing is working as well as we can 
diplomatically and perhaps through the Brazilians who have very 
good relations with Bolivia, to try to find out exactly what is 
the crux of the issue for not having formal diplomatic 
relations. But I think it is important for this subcommittee 
and for all of us in Washington to differentiate among these 
different ALBA people.
    When you look at Morales, he actually knows how to manage 
an economy. Chavez does not, Correa does not, Nicaragua does 
not, Ortega doesn't even know what the economy means. Morales 
has good people working with him to manage that economy. The 
economy is growing and they are trying to resolve their 
differences with the Brazilians over natural gas. They are 
trying to find ways to develop natural gas. So I would put 
Morales in a different category. He himself as I understand it 
doesn't want to be tossed into the Chavista bucket. He 
understands that is no way to go.
    But if you look at what the Bolivians have done and the way 
in which they manage their economy, then I think there is a 
basis for a conversation and a dialogue with Mr. Morales, which 
we will never have with Ortega, Chavez or Correa.
    Mr. Engel. Anyone else care to comment?
    Mr. Hakim. I tend to agree with Riordan on that. Bolivia is 
a small, poor country that has a history of unstable 
government; has a history of huge differences between the poor 
and the people who were running the country, and the poor are 
mainly indigenous, and it just seems very unfortunate that the 
very important benefit that the U.S. was providing, the trade 
preferences was cut. This really hasn't hurt the government 
very much. They have access to the oil fields and all. It is 
not doing anything to improve relations certainly, and it is 
costing poor people jobs in Bolivia. We ought to be working 
harder to try and figure out a way to restore that and begin 
gradually to bring back that relationship.
    The cost is so little to the United States, even if we make 
a mistake. In fact, Bolivia is worse than it is, I think this 
is worth a try, this is not a sort of major challenge to the 
United States the way Venezuela is.
    Ambassador Reich. I am happy to finally be able to disagree 
with my colleagues. I don't think that Morales--first of all, 
he certainly is not democratic. My Bolivian friends tell me he 
doesn't speak any indigenous languages, for example, so he is 
not a genuine indigenous leader. What he is is a leader of the 
coca growers union. This is his power base in Bolivia for the 
last 20 years has been as the person who has been promoting the 
increased cultivation of coca, coca leaves, he claims, for 
traditional use, but the fact is this is the basis for cocaine. 
We are talking about a drug policy in the United States, and 
Bolivia is one of the major coca growing, coca producing areas 
of the entire world. Most of that, by the way, doesn't come to 
the United States, it goes to Brazil and Europe, but still the 
fact is that Morales has kept three titles. He is President of 
the country, he is head of the political party, which by the 
way is a totally undemocratic party and has used all the ALBA 
elements that I mentioned--the mob violence, the packing of the 
courts, all these undemocratic tactics; and third, he is still 
the head of the cocoa growers union, and it was that coca 
growers union that created the riots, according to two former 
Presidents of Bolivia--Gonzalo Sanchez and Tuto Quiroga--they 
publicly said that the coca growers union were the ones that 
created the violence that brought down to consecutive 
governments in Bolivia, and then created the conditions of 
violence that led to the election of Morales because he did 
win. As Secretary Valenzuela mentioned he won an election. So 
did Chavez, so did Juan Peron at one point, so did a lot of 
other undemocratic people who having gotten to power undermine 
the institutions of democracy and try to stay in power forever 
and it is going to be very bad for the people of Bolivia.
    Mr. Engel. Thank you. Dr. Roett, you had mentioned the 
reaction of the other nations in South America with the U.S.-
Colombia Defense Corporation agreement, I have taken the 
position and said publicly and privately in meetings with heads 
of states of the region that I believe that this agreement 
simply codifies an already existing defense cooperation between 
the United States and Colombia, but yet, as you pointed out, 
its negotiation set of a chain reaction of anger of several 
leaders in South America.
    Can you go into a little more detail about your evaluation 
of this U.S.-Colombia DCA, and the reaction of South American 
leaders because, frankly, I don't understand it? We are kicked 
out of the Manta base in Ecuador, and we have not said that 
these bases are substitutes. There are not supposed to be 
anymore American troops on the ground than we currently have, 
and that this is important in fighting against drug trafficking 
and crime, and we obviously have a stake it, and we are not 
increasing the personnel nor are there permanent base. So what 
is all the fuss about?
    Mr. Roett. Very good question, Mr. Chairman. I am glad to 
referred to American troops, not American bases. Ultimately in 
Washington or in New York you hear we are building American 
bases in Colombia. We are not. We have transferred a small 
number of troops from Ecuador to Colombia bases in a negotiated 
agreement with the Colombian Government.
    The bases are really an excuse by--we are now using the 
ALBA acronym for the bad countries in the region--as a way of 
beating up on Mr. Uribe in the Colombian Government. It is very 
clear it is all propaganda, and Mr. Chavez is pushing this, no 
question.
    The Ecuadorians have come in because of the very 
unfortunate issue of the movement of Colombian troops into 
Ecuadorian territory. So I think this has become one of those 
very, very small and short-lived mini-crises in the Andean 
Region that appear constantly. We would hope that with the 
election of Mr. Uribe's successor, and thank you for pointing 
out that he has agreed to step down. He agreed in the 
constitutional court. He is acting constitutionally that a new 
democratically elected--he will be a democratically elected 
President of Colombia, will be able to move beyond this issue 
as well. But as long a Chavez is in power, Colombia and 
Venezuela have a common border and Chavez is involved as we 
know with the FARC in Colombia. The policies are excellent and 
United States should stand tall and work with the Colombian 
Government, no matter who is the President, with the Colombian 
Government to really characterize what Chavez is doing is not 
only illegal, as immoral, and not to provide any kind of 
diplomatic or legal support.
    Mr. Engel. Anyone else care to comment?
    Mr. Hakim. Just a little bit, that even the U.S. Ambassador 
to Colombia now recognizes that this was going on. The treaty 
was being signed, and that there wasn't a lot of information 
being provided. I agree with you that in fact this didn't mean 
a whole lot. The fact that the Latin American countries 
exaggerated their protest and used it in ways that were weirdly 
suggested. On the other hand there is a sensitivity, and the 
U.S. knows about the sensitivity, and this was well 
communicated, what the U.S. was doing. That was, I think, the 
main problem, that countries that we were trying to sort of 
work closely with just felt that they were not being, and this 
was universally felt in Chile, in Brazil, countries that we got 
along with very, very well, as you well, know, and like I said, 
I think the incident was blown out of proportion and all, but I 
think we could have done a little better as well.
    Mr. Engel. I want to finish my questioning and then turn it 
over to Mr. Mack, about Brazil. Dr. Roett, again I want to 
comment on something that you said. You said that President 
Obama should be visiting Brazil, and I think that is a good 
idea actually. I think he should visit Argentina as well 
because I think that while there may be some disagreements with 
policies from the Argentine Government, I think Argentina is a 
very important country, and I think that we should not push 
them away. I know they had good relations with Chavez but I 
don't think we ought to have a litmus test with countries and 
say, if you have good relations with Chavez, we are your enemy. 
I think that we have a lot in common with Argentina, and I 
would hope we would work very, very hard to nurture that 
relationship, and as I said, I was glad that Secretary Clinton 
traveled to Argentina last week, and I think it is important 
that Argentina gets the high level attention that it deserves. 
So I would be interested in hearing you talk about Argentina, 
and also about Brazil, because I think that it is important for 
us to engage, and one of the ways we engage is if the President 
visits or at least meets with the leaders of those countries. I 
think it is very, very important.
    I co-chair the Brazil Caucus. You have caucuses here, Mr. 
Mack can attest to it, for everything, and you generally have a 
Democrat and a Republican that co-chairs the caucuses. Well, I 
agreed to co-chair the Brazil Caucus because I am very bullish 
on Brazil. I think Brazil is an important country, that we have 
a lot in common with them. They are the most populous country 
in South American. We have the most populous country in the 
Americas, in North America. Their land mass is the size of 
ours. They are a diverse country racially, ethnically, 
religious as we are, and we can learn a lot from them. I am in 
awe of what they did with biofuels and making themselves energy 
independent. I realize it is not exactly what we could do here 
but I have argued long and hard that we should take a page out 
of Brazil's book and try to wean ourselves off of foreign oil 
because now we are at the mercy, whether it is Chavez or the 
Saudi, the royal family, or whatever. We are at their mercy 
because we need their oil and that is why we have this 
symbiotic relationship with Chavez. He needs us to buy his oil 
and we need him for the oil. I would rather tell him that we 
don't need his oil. If we have biofuels--you know, ethanol, 
methanol--and we have other ways of getting our energy needs 
like Brazil did, we would be much more free and more 
independent.
    So I admire Brazil, but I am very, as I mentioned before, 
disappointed, unhappy, perplexed by President Lula's policies. 
Again, it is not only Iran although Iran is very important. You 
know, Ahmadinejad was supposed to come to Iran before the 
Iranian elections, and I argued that would be tantamount to 
endorsing Ahmadinejad for re-election, so they listened. Other 
people said it too. They postponed it and they said he would 
come after the election. Of course, they were tainted 
fraudulent elections in Iran. You have people in Iran who are 
being killed by their own government in demonstrating for 
democracy and freedom, and then Lula welcomes Ahmadinejad with 
open arms, rubber stamping and giving credence to the election 
which we all know was a phony election.
    And then the group that was put together without Canada and 
the United States, Brazil seems to be an important force in 
that, and it seems to go out of its way under Mr. Lula's 
leadership to try to tweak the United States at every turn. So 
I would like to hear some comments from all three of you on 
Brazil and Argentina, if you care, and we will start with you, 
Dr. Roett, because you had mentioned Brazil, so I would like to 
hear what you have to say.
    Mr. Roett. Thank you, Mr. Chairman.
    My new book will be out in August. It is called ``The New 
Brazil'' being published by the Brookings Institution, in which 
I make the argument that the United States needs to be 
extraordinarily sensitive to the new Brazil. This is a new 
country. For the first time since Brazil was founded poverty 
has been reduced by a Bolsa-Familia Program that President Lula 
has made a very strong point of his presidency and is the Afro-
Brazilian population that benefits the most from Bolsa-Familia.
    Second, energy is a very important question. You are 
absolutely right. We need to get away from Venezuela as quickly 
as possible. Brazil will pose within 5 years an interesting 
alternative for supplying us with petroleum. Makes every sense 
in the world to try to find ways in which we can accommodate 
our interests and their interests.
    This cotton issue, we have people in Brazil right now. We 
have got to find a way to get around this cotton issue, and the 
Congress has got to play a role in that and working with the 
administration so that we remove that irritant. The irritants 
should not matter. The big question should. Who was the third 
world country that worked with the United States and the 
European Union in Geneva 2 years ago at the Doha Round? The 
Brazilians, to find a diplomatic solution. The Chinese and 
Indians did not. Brazil broke with them.
    So if we look at the overall set of issues, I beg us not to 
take Iran as the way in which Brazil operates. I would never 
defend the Iranian policy. I would try to interpret it. As I 
mentioned, there is a long tradition of trade and diplomatic 
ties with Iran. Good people make bad mistakes, and President 
Lula's comments and policies on Iran are bad, but if you look 
at the broader picture this has got to be a very important 
dynamic bilateral relationship. The way South American goes it 
will go the way Brazil goes.
    Argentina, I never disagree with the chairman of 
committees, but I disagree with the chairman of the 
subcommittee on Argentina. I follow that fairly closely, and 
you were unkind enough to point out that I testified here in 
1982 when you were probably still in high school.
    I think we have to be very careful with our relationship 
with Argentina. The Kirchners, and there are two of them as you 
know, we are not quite sure who is the President from day to 
day, the current President or the old President, are really 
weakening institutions. Look at what they are doing with the 
Central Bank. Look at what they are doing with a number of 
other decision, ruling by decree, trying to buy off members of 
the opposition in Congress. That is not the kind of country I 
want the United States to be identified with. I wish the 
Secretary had not gone to Argentina, and had stayed in 
Montevideo, and had made good comments, democracy consolidated 
Uruguay, social peace, Uruguay, political stability, Uruguay, 
and then just pointed her finger across the river, and those 
three things are not present in Argentina.
    Finally, on the Falklands, this is a political gambit for 
the elections next year. They did this in 1982, Margaret 
Thatcher took care of that. They are now trying the same thing 
to build up national support among the paradists and 
independents in Argentina. I hope it is not going to work. I 
hope she is defeated or her husband is defeated. It is time we 
end petty dynasties in the region.
    Mr. Engel. Mr. Reich.
    Ambassador Reich. Yes, Mr. Chairman. On Brazil, I happen to 
have been the Assistant Secretary of State in the Bush 
administration, the much maligned Bush administration, when 
Lula was elected. We made a conscious decision to work with 
Lula. Even though he had a very--as you know, has a very left 
wing background, Marxist. I am not talking liberal Democrat. I 
am talking--this guy was in jail for supporting violent 
revolution. He was fighting against the military dictatorship. 
You know, I think probably both sides were at fault.
    However, we should differentiate between Lula and Brazil. 
Lula is going to be President of Brazil only until next January 
1. To the extent, in fact, that he has followed centrist 
economic policies that have resulted in this unprecedented 
development in Brazil, not just growth because they have had 
growth for many decades, but development, and social economic 
development in Brazil which the United States supported. The 
Bush administration established right at the beginning of the 
Lula government bilateral working groups at the ministerial 
level, at the cabinet level.
    I was present at the White House when President Lula came 
right after being inaugurated, and President Bush established 
working groups on things like energy and education, and poverty 
reduction, and we helped and we should be very glad that we 
did. We didn't do it just to help Brazil, we did it because it 
is in the interest of the United States to reduce poverty in 
this hemisphere, our best allies are the countries that are 
making progress and that provide the basic human needs for 
their people.
    But we should be careful, and I agree with my colleague on 
Argentina, also to differentiate between Argentina, which is a 
friend and will be again, and the Kirchner government. There 
are a lot of violations of Argentine law taking place with the 
perhaps participation of the President of Argentina and her 
husband, and it is not clear, by the way, who is running the 
country. They are both very unpopular. As you know, Mr. 
Kirchner ran for Congress and he lost after leaving the 
presidency. There are a lot of things that will come out when 
they leave office that we don't want to be associated with.
    I mean, there was a trial in Miami where it has been 
documented that Hugo Chavez sent money illegally to her 
campaign for election, that has been established. So there are 
a lot of things that are taking place in Argentina that we 
should, as I said, be very, very careful about.
    But as far as foreign policy issues, like Brazil getting 
close to Ahmadinejad, I think it is a terrible mistake, I agree 
with Riordan. It is a terrible mistake on the part of Lula, but 
it is very similar to what Mexico's policy always has been. 
Mexico's foreign policy has always been way to the left of its 
domestic policy. It is almost like these countries that are 
ruled by left of center politicians give the foreign ministry 
to the left sort of to play with, to keep them occupied so they 
don't fool around with the really important things like fiscal 
policy, and national security, and other matters.
    This was explained to me, by the way, by a Mexican many, 
many years ago because I said, how do you explain the fact that 
Mexico is so anti-American, pro-Castro, you know, pro-
Sandinista, et cetera. And he said it is because the foreign 
policy is run by the left. The important issues are run by the 
center. I am not denigrating foreign policy. I have spent my 
entire life in foreign policy, but that is the way they see it, 
and we should establish those relationship with the countries, 
with the honest politicians because the other politicians are 
going to be history before too long, I hope.
    Mr. Engel. Mr. Hakim, I will give you the last word on this 
before I turn it over to Mr. Mack.
    Mr. Hakim. Well, let me just say it seems to me we have to 
continually ask the question, not only whether a leader or a 
country is good or bad, ethical or unethical, but what the U.S. 
is going to do about it in ways that sort of serve U.S. 
interests best. Brazil is just too important a country in South 
America. Simply, they have a presence that is often an 
influence that is greater than our own in South America. We 
have to work to advance our agenda in South America, we cannot 
do it without the cooperation of Brazil. We have to accept 
that.
    And, similarly, internationally, Brazil has become just 
very, very important on all of these global issues. They are 
now in the U.N., a temporary member of the Security Council, 
and the vote on Iran is not--you know, hasn't been taken yet. 
We can still influence Brazil. Brazil could vote in favor of 
Iran, it could abstain, it could vote with the United States, 
but the wrong thing is to simply sort of challenge Brazil on 
this or make it the fulcrum of our relationship. It seems to me 
we really have to figure out how to find more areas of 
cooperation with Brazil as we have with regard to Haiti, as we 
have with regard to Doha. There are lots of other areas. It is 
the best way to deal with Brazil, and it is probably the best 
way to deal with Argentina as well.
    I am not a great fan of the Kirchner government, I think 
they are very irresponsible, but, frankly, I still think that 
it doesn't make any sense for us to try to isolate or alienate 
them. The question is to continue to work and try to move them 
through diplomacy and directions that we find more beneficial 
to our interests.
    And let me end by saying Lula was never jailed for violent 
revolutions at all. He was a labor leader. Secondly, he has 
been the most successful leader Brazil has ever had, 
politically, economically, and internationally. I don't think 
he leaves foreign policy to anybody but himself and it is 
treated very, very importantly in Brazil. I don't think that 
you can explain it that way. I think there is other 
explanations but I do think that Lula has been a first-rate 
leader. He would be a candidate for lots of international 
positions. We talked about secretary general and all. Lula is a 
very special person.
    Mr. Engel. Thank you. Mr. Mack.
    Mr. Mack. Thank you, Mr. Chairman.
    I am going to kind of pose this question to all of you. In 
the last let us say 4 or 5 years, and I think it began before 
that, there has been--it started with this idea, you know, Hugo 
Chavez gets elected. He then begins to dismantle democracy, if 
you will, in Venezuela, and as he is doing that he is reaching 
out to other countries that may want to follow in the same 
steps, creating a playbook that then gets passed on to 
different countries, and it seemed, and I mean, this is fact, 
we have just seen this happen, and all through that time we 
have had conversations on this committee and all over the place 
about what is the right approach. Do you isolate him? Do you go 
meet him? You know, what do you do? And there is always this--
you know, at some point I think you have to recognize that if 
someone is against you, there is nothing you can do. I mean, I 
don't know that another meeting with Hugo Chavez, you know, at 
some point there is nothing you can do.
    So the question then becomes what is U.S. policy? What 
should we do? What should our policy be to Latin America, and 
what is the best way to implement it?
    So I would like to get from each one of you, if you agree 
with kind of what I have outlined, if you have any thoughts 
of--well, I don't want to go there. Moving forward what do you 
think the policy of the U.S. should be in the current 
environment that we find ourselves in? Some of the countries 
out there that just--it appears that they have no intentions in 
wanting a positive relationship with the U.S. In fact, I think 
that Chavez believes that being antagonistic to the U.S. helps 
him. So what should some of our policy positions should be, and 
what do you think we should do moving forward to strengthen 
those relationship with the countries that are our friends, and 
what to do about some of those countries that appear to be kind 
of on the fence? So that is kind of a big question. It gives 
you a lot of room to work with.
    I will say this, that earlier my friend Congressman Meek 
said that he wouldn't agree with the Secretary, to agree with 
me 95 percent of the time, he gave me 5 percent, and then 
another year from now if we can get to 10 percent, I would be 
happy with that. But of the 5 percent I think that he is 
talking about is the idea that poverty--when you talk about the 
people in Latin America and you talk about the governments, a 
lot of times they are two different things, and the idea of a 
foreign policy that deals with the people of Latin America, 
that gains--you know, the strength of America can be in our 
relationship with the people of Latin America, so it is almost 
two--you almost have to go at this in two ways: One, what to do 
with the governments, if you will, and then what the policy 
should be from the United States for the people of Latin 
America, so big question and I will let you go down the line 
and love to hear your thoughts.
    Mr. Hakim. Let me go first. Let me say first is that I do 
believe that almost every country wants reasonable relations 
with the United States, with the possible exception of 
Venezuela. I think Venezuela is really, and even if you want to 
argue that maybe Ortega in Nicaragua or Morales doesn't want 
good relation, they are not very threatening to the United 
States. These are sort of very small, poor countries that we 
should continue to try through diplomacy.
    Venezuela is really the big issue. That is the country that 
has resources, is disruptive. It has a leader that really sort 
of reaches beyond the borders and all, and how you deal with it 
becomes very, very important. And you know, we have tried 
confrontation. That seems to strengthen him the more he had 
traction from our confrontation. We tried ignoring, that 
doesn't seem to do very much. He continues on his way.
    There is no--I mean, this is one of those problem countries 
that I think we are going to have to live with for sometime, at 
least until Chavez--if things get worse in the country, if 
depression really does get much worse, we may be faced with a 
real challenge. But the fact is I don't think any policy is 
going to work with Venezuela that doesn't have minimal support 
from Brazil, Argentina, and other countries.
    In other words, for any policy to the United States makes 
sense unless on one count, that is, are we willing to sort of 
interrupt our oil commerce and trade with Venezuela? That is 
really in some ways, to use a common term, the nuclear option. 
Venezuela depends more on our imports of oil than we depend on 
their oil. We have never been willing to really go there. We 
hardly ever discussion this. Once in awhile Senator Lugar wrote 
a report on this, but the question is, I think, that unless we 
are willing to sort of think of that as an option, which I 
don't think we should because I think it really is dangerous, I 
think that we really have to find other allies in Latin America 
and sort of work with them.
    It is very interesting, just one anecdote: You know the 
mayor of Caracas who lost his office? Basically he won the 
election and Chavez pushed him out of office. He went to 
Argentina to ask the countries of MEROSUR--Brazil, Argentina, 
Uruguay and Paraguay--to admit Venezuela because they thought 
that by being part of that group would have a moderating 
influence.
    So there are different ways to approach this. I don't think 
there is any perfect way. I mean, I don't think there is any 
really magic wand that is going to solve that problem.
    Mr. Roett. That is an important question, but if you look 
at the electoral results recently in Latin America, nobody has 
fallen into the ALBA family. El Salvador, democratic elections; 
Honduras, we can discuss the past but the present and future is 
more important, there were democratic elections in Honduras; 
Colombia, there will be democratic elections in Colombia. Now, 
there were in Uruguay, there were in Chile, there will be in 
Brazil. Those are the countries the United States needs to work 
with. We have got to find small and big ways to work with those 
countries.
    I agree with Mr. Hakim. There is nothing we can do with 
Venezuela unless we can find an alternative source of energy. 
We cannot do that overnight, although we should begin working 
on it, and I think the issue here is to let the other countries 
in the region look at our policies that work well with the 
democratic countries, and we need not push it in their face, 
but they will get the message very quickly that Washington 
works with democratic, consolidated, socially peaceful 
countries, not with countries in upheaval. That is the kind of 
message Correa needs to hear in Ecuador particularly. You 
cannot do a thing with Ortega in Nicaragua. He is off his meds. 
And Venezuela is just not going to be a serious contender for 
any kind of collaboration with the United States.
    So, the Secretary's trip, as I said before, was excellent 
and it went to the democratic consolidated countries. That is 
the message we need to put out day by day, and if the President 
goes, he should repeat that itinerary and go to those countries 
as well, and he will be wildly received.
    Ambassador Reich. I have had to make basically those 
decisions. What do you do when you, like the Assistant 
Secretary of State, you don't have all the resources you want. 
Our time is limited, our money is limited, our energy, 
resources, the time of our policymakers is limited. What I 
would do, frankly, is look at the hemisphere and do a triage, 
do what they do in a military hospital. They bring in the 
patients. Those that are going to survive no matter what--they 
are only going to survive if they get medical intervention, and 
then the rest.
    We should actively work with our friends, support our 
friends. We know who they are. We talked about Colombia. We 
have not talked about Peru but Peru today is a friend, at least 
a friendly government. Panama, Honduras, we owe Honduras 
because, frankly, this administration made a terrible mistake 
last year, which has been corrected by the Secretary of State, 
against the advice of some of the people in her State 
Department, but it has been corrected. It has been reversed, 
but we owe Honduras. Most of the Caribbean are our friends. We 
need to work with them.
    Then you take the hostile countries, and the most hostile 
is Venezuela, and you actively oppose those hostile countries 
that are hurting our national interests, and I mentioned in my 
testimony what Chavez is doing. Chavez and Castro, because they 
have an alliance.
    What would I do? Three things right now. I would put 
Venezuela on the list of state-sponsored of terrorism. You 
don't have to go into executive session. There is plenty of 
evidence that Venezuela is supporting terrorism.
    Two, I would announce that we are stopping our purchases of 
oil from Venezuela. We buy 8 percent of our consumption from 
Venezuela, about 15 percent of our imports, but it is 72 
percent of what Chavez exports. We are going to replace that 8 
percent a lot faster than he is going to replace 72 percent, I 
guarantee you. In fact, what it may do is reduce the price of 
oil in the market. He is going to have to dump that 72 percent 
because most of the oil is already committed. People have 
contracts for the purchase of oil. His contracts are with us. 
We can replace that oil from Canada, from Mexico, from a lot of 
other places; from Colombia, perhaps.
    Third, I would cancel the visas of the private sector 
people who are becoming multi-millionaires and billionaires 
doing business with Chavez, most of which is illicit or at 
least unethical. There are billionaires now in Venezuela, they 
called the ``Boligueses'' or ``Bolivarian Bourgeoisie.'' If we 
revoke those visas instead of the 70 visas we revoked in 
Honduras from the people--frankly, in a very vindictive action 
by our State Department from the people who supported 
Michelletti.
    No matter what you think of Michelletti the fact is I agree 
with you, Mr. Mack, that his actions--he was named by the 
Congress as the President of Honduras. We canceled visas in 
Honduras for political reason, and by the way just to--I am 
sorry Mr. Burton is not here, but there is a very powerful 
family that is responsible for the bankruptcy of that company 
that he mentioned. Our Embassy knows who they are, and those 
visas haven't been canceled either, and they are in violation 
of our laws. Section 221(f) of the Immigration and 
Nationalities Act, if anybody want to look it up.
    But going back to Venezuela, that is what I would do, and I 
disagree with Peter Hakim. We never confronted Chavez. There 
was no confrontation. We have always extended a hand. Certainly 
the Clinton administration did. Chavez brushed it away. Clinton 
tried to send the CBs, U.S. Navy personnel to help with a 
natural disaster. Chavez said, oh, no, just give us the 
equipment, but we don't want your navy forces. Well, that was 
against our laws so we had to withdraw the navy. That was the 
very beginning, the first year of Chavez, and we know the 
history since then.
    And the other countries, the rest of the hemisphere, if 
they don't want to be our friends, and they are not our 
enemies, well, we will just work with them. You can be neutral. 
I disagree with former President Bush. He said, you know, if 
you are not with us you are against us. There is a place for 
neutrals. I don't have a lot of respect for neutrals, but w e 
will work with them. That is what I would do.
    Mr. Roett. May I mention four words? Fulbright Program 
expand it; Peace Corps expand it; consulates, open more, we 
have closed many, many consulates, make it easier for Latin 
American students to get visas to come to the United States, 
they are not terrorists; and we are losing Latin American 
students in our universities because of the terrible problem of 
either finding a consulate and/or getting a visa. Those four 
things. They are small, but symbols are important and those are 
symbols.
    Mr. Mack. Thank you, and I know time is running out and I 
want to make sure that Congressman Meeks has a chance, but I 
just wanted to leave this last thought. I think whatever policy 
that we move forward in the U.S., it needs to be consistent, 
and I think that for having one policy for one country and 
another policy for another country creates an environment that 
Hugo Chavez and others can use, feed on to pit us against 
others, and you don't need to respond to that. I just wanted to 
put that out on the record, Mr. Chairman.
    Mr. Engel. Well, thank you, Mr. Mack. As you probably can 
hear, we are in the middle of a series of three votes and we 
have about 8 minutes to vote, and of course they don't bang the 
gavel right away, so let me turn this over to Mr. Meeks for 
about 5 or 6 minutes. Mr. Meeks.
    Mr. Meeks. Thank you, Mr. Chairman.
    First, I didn't get a chance, I wanted to come back down 
here to first congratulate Mr. Hakim for his being moved to the 
emeritus status. He has done a great job and I appreciate the 
work that you have done and look forward to continuing to work 
with you on a continuous basis.
    Let me say to Dr. Roett that I want your book. I am been 
impressed listening. I definitely want to read your book when 
it comes out, so please make sure I know how much it costs, 
where I can get it, I want to buy your book, and I very much 
appreciate what I have heard you say this afternoon.
    Before I ask my question the one thing that I think we have 
to, at least the way I look at making statements myself from 
within, so we should focus on governments and that there are 
free and fair elections as opposed to saying after the free and 
fair elections, whether we like this President or that 
President, because can you imagine--you know, they would do the 
same thing here. You know, we have different Presidents that 
come from different parties, and we don't want them to say that 
we don't want to work with our Government based upon who that 
President is. Those governments have to shift to make sure that 
they work with us. There is a difference in President Bush and 
President Obama, so some people, you know, they shift. That 
doesn't mean they should not work with us because we have a 
shift in our presidency. So we shouldn't be focusing and saying 
that, well, because this person is President, without looking 
at the institutions and the fact that it was a democracy and 
the people had spoken, that we are going to deal because we 
don't like this President.
    The other piece that we have got to be aware of, for 
example, in Bolivia where for the first time you have a person 
who was elected, who is an indigenous person from the 
community, where the indigenous people are speaking and voting 
in a democratic manner to forget that perspective, and say that 
because he is--the same thing with President Lula, who is 
indigenous, a different--you know, the people came out in 
record numbers to vote for him, and we can't say because we 
don't like--you now, he is a left-winger or he is a this or 
that we don't like him. It is, I think, a compliment to the 
country that the people who may be historically under other 
governments didn't even have the right to vote before.
    So that is progress, and what we have got to talk about is 
the long-term relationship building, and in those 
relationships, depending upon the President sometimes, you are 
going to have a better relationship with a country than you did 
before, but the main thing is to keep those contacts and to 
open those doors so that you can deal with the people who 
really needs the kind of relationship that we have.
    With that being said in the little time that we have, there 
is so much still to be done and so I try to focus on what we 
can do from our perspective in our country. Where do we start? 
I mean, I don't know, we talk about drugs, we have got that 
issue. We talk about poverty, we talk about government and I 
have talked essentially about capacity building. Is there any 
organizational structure or how do we do those kinds of things 
that we know needs to be done, how do we prioritize them? Let 
me ask that. What do you think our priorities should be as we 
deal with Central America and South American specifically, I 
leave the Caribbean out a little bit because of the size of the 
country, what do you think our priorities should be moving 
forward?
    Ambassador Reich. I was asked that question when I was, 
again when I was Assistant Secretary, and my answer was--it 
actually may surprise you--what Latin America needs is decent 
jobs for its people. I mean the problem is how do you create 
those decent jobs, and the answer is freedom. The system that 
provides individual initiative, that provides the necessary 
role of government, the right role of government, not 
necessarily one where the government stifles enterprise, is the 
kind of government that we should work with, and by the way, we 
made--as I say, we made a conscious decision to work with Lula. 
We actually make that decision with almost anybody, with 
everybody.
    When Morales was elected, President Bush called him to 
congratulate him. We sent our Assistant Secretary, Tom Shannon 
went down to talk to him. Actually, I was the one who went to 
talk to Lula. I was the first Washington official to talk to 
Lula. It was November 2002. Actually he didn't win the first 
time around. He had to go to a run-off election, so he did win 
but it was after a run-off, and right after the run-off I went 
to see him and I took a message from President Bush, and it was 
inviting him to the White House. By the way, he was the first 
President in Latin America to be invited to the Oval Office 
before he took office. He came on December 10, 2002. He took 
office January 1, 2003. President Bush received him in the Oval 
Office to show we wanted to work with Brazil and to end, in 
spite of his leftist background, his radical background, 
radical labor leader, he is missing a finger because he was 
actually--he worked with lathes and he lost a finger in one. I 
gave him, by the way, a Jefferson cup thinking that would be 
nice, and he appreciate it, a pewter cup that was designed by 
President Jefferson a long time ago. I also gave him a pen, a 
Ronald Reagan pen. I couldn't help but, I had to give him 
something Republican. But we had a very good conversation, and 
I spent 2\1/2\ hours with his top three advisors who went into 
the government with him, and we had heated discussions about 
some issues, but we founded the basis for the relationship that 
lasts until today.
    Lula is an example of the left of center leader the United 
States can work with. We are going to have differences of 
opinion, and we do on things like Iran and Cuba and Honduras 
and perhaps other things.
    Morales, on the other hand, having gained power 
democratically has begun to dismantle the institutions of 
democracy, and I don't want to spend too much time, I would be 
happy to come in and tell you what he has done, and that is an 
example of the kind of leader that we cannot--I don't think the 
United States can work with him. That is why the Obama 
administration is having so much trouble restoring relations to 
the ambassadorial level.
    But as far as priorities and what do we do, we should work 
with the leaders who want to work with us to create the 
conditions for economic development in the hemisphere based on 
freedom, on free enterprise, and frankly, the kind of freedoms 
that we enjoy in the United States.
    Mr. Engel. I am going to let that be the last word unless 
Mr. Hakim wants--we have about 30 seconds left. You can each 
give us perhaps 30 seconds if you have a burning desire.
    Mr. Roett. I would first work at the micro level. Let us 
get the cross-border trucking issue with Mexico resolved; 
second, let us get the cotton subsidy with Brazil resolved; 
third, let us get the outstanding bilateral trade deals 
resolved and voted on by the Congress.
    The macro level, I have already explained. Let us work in a 
bigger multilateral framework on things like Doha, energy, 
climate, very important, and trade.
    Mr. Engel. Mr. Hakim, you will be the last word if you can 
do it in 30 seconds.
    Mr. Hakim. I think that Riordan is right. I would go after 
those issues, but I think you have to take Mexico and Brazil as 
rather special countries in the region. Building good, strong 
relations with those two countries would allow us to reach out 
to a whole lot of other countries. They are really the two 
pivotal countries, and I agree that you have to deal with all 
those sub-issues to get there. You have to deal with 
immigration and you have to deal with trucking, or you are not 
going to get there. With Brazil, you have to deal with a whole 
lot of issues as well.
    But if the U.S. can begin to think even in terms of almost 
a G-3, that that would be a very sort of useful, or at least a 
beginning, framework for moving forward.
    Mr. Engel. Thank you. We are going to go because we missed 
a vote. I want to thank the three of you for excellent 
testimony. This entire hearing lasted over 3 hours, and I was 
really intrigued with every minute of it, and I really 
appreciate the work that you gentlemen have done, and obviously 
helped to enlighten us, and I know we will have you all back 
here in the future.
    And Mr. Hakim, please pick up your citations and thank you 
all three of you for excellent testimony. The hearing is 
adjourned.
    [Whereupon, at 6:10 p.m., the subcommittee was adjourned.]
                                     

                                     

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