[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
        ENERGY OPPORTUNITIES IN LATIN AMERICA AND THE CARIBBEAN

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                         THE WESTERN HEMISPHERE

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 11, 2013

                               __________

                           Serial No. 113-20

                               __________

        Printed for the use of the Committee on Foreign Affairs


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                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida         ENI F.H. FALEOMAVAEGA, American 
DANA ROHRABACHER, California             Samoa
STEVE CHABOT, Ohio                   BRAD SHERMAN, California
JOE WILSON, South Carolina           GREGORY W. MEEKS, New York
MICHAEL T. McCAUL, Texas             ALBIO SIRES, New Jersey
TED POE, Texas                       GERALD E. CONNOLLY, Virginia
MATT SALMON, Arizona                 THEODORE E. DEUTCH, Florida
TOM MARINO, Pennsylvania             BRIAN HIGGINS, New York
JEFF DUNCAN, South Carolina          KAREN BASS, California
ADAM KINZINGER, Illinois             WILLIAM KEATING, Massachusetts
MO BROOKS, Alabama                   DAVID CICILLINE, Rhode Island
TOM COTTON, Arkansas                 ALAN GRAYSON, Florida
PAUL COOK, California                JUAN VARGAS, California
GEORGE HOLDING, North Carolina       BRADLEY S. SCHNEIDER, Illinois
RANDY K. WEBER SR., Texas            JOSEPH P. KENNEDY III, 
SCOTT PERRY, Pennsylvania                Massachusetts
STEVE STOCKMAN, Texas                AMI BERA, California
RON DeSANTIS, Florida                ALAN S. LOWENTHAL, California
TREY RADEL, Florida                  GRACE MENG, New York
DOUG COLLINS, Georgia                LOIS FRANKEL, Florida
MARK MEADOWS, North Carolina         TULSI GABBARD, Hawaii
TED S. YOHO, Florida                 JOAQUIN CASTRO, Texas
LUKE MESSER, Indiana

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

               Jason Steinbaum, Democratic Staff Director
                                 ------                                

                 Subcommittee on the Western Hemisphere

                     MATT SALMON, Arizona, Chairman
CHRISTOPHER H. SMITH, New Jersey     ALBIO SIRES, New Jersey
ILEANA ROS-LEHTINEN, Florida         GREGORY W. MEEKS, New York
MICHAEL T. McCAUL, Texas             ENI F.H. FALEOMAVAEGA, American 
JEFF DUNCAN, South Carolina              Samoa
RON DeSANTIS, Florida                THEODORE E. DEUTCH, Florida
TREY RADEL, Florida                  ALAN GRAYSON, Florida


                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

The Honorable Carlos Pascual, Special Envoy and Coordinator for 
  International Energy Affairs, U.S. Department of State.........     4
Mr. Matthew M. Rooney, Deputy Assistant Secretary, Bureau of 
  Western Hemisphere Affairs, U.S. Department of State...........    14
Mr. Jorge R. Pinon, associate director, Latin America and the 
  Caribbean Program, Center for International Energy and 
  Environmental Policy...........................................    31
Mr. Eric Farnsworth, vice president, Council of the Americas and 
  Americas Society...............................................    42
The Honorable David L. Goldwyn, president and founder, Goldwyn 
  Global Strategies..............................................    50

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Carlos Pascual: Prepared statement.................     7
Mr. Matthew M. Rooney: Prepared statement........................    16
Mr. Jorge R. Pinon: Prepared statement...........................    34
Mr. Eric Farnsworth: Prepared statement..........................    45
The Honorable David L. Goldwyn: Prepared statement...............    53

                                APPENDIX

Hearing notice...................................................    84
Hearing minutes..................................................    85
The Honorable Matt Salmon, a Representative in Congress from the 
  State of Arizona, and chairman, Subcommittee on the Western 
  Hemisphere: Material submitted for the record..................    86


        ENERGY OPPORTUNITIES IN LATIN AMERICA AND THE CARIBBEAN

                              ----------                              


                        THURSDAY, APRIL 11, 2013

                       House of Representatives,

                Subcommittee on the Western Hemisphere,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The subcommittee met, pursuant to notice, at 3:04 p.m., in 
room 2200, Rayburn House Office Building, Hon. Matt Salmon 
(chairman of the subcommittee) presiding.
    Mr. Salmon. Thank you so much for being here. I am usually 
overly concerned about time, so I apologize for keeping you 
waiting.
    The quorum is present, and the subcommittee will come to 
order. I am going to start by recognizing myself and the 
ranking member to present our opening statements. And without 
objection, the members of the subcommittee can submit their 
opening remarks for the record.
    Now I yield myself as much time as I may consume for my 
opening statement.
    Good afternoon, and welcome to what is really part II of 
our subcommittee's look at energy security and prosperity in 
the Western Hemisphere. Our last hearing focused on Canada and 
Mexico specifically. We had the opportunity to discuss the 
Obama administration's unfortunate pattern of obstructing and 
delaying some of these energy-related projects, such as the 
Keystone XL Pipeline that will stand to benefit job creation 
and increased energy security.
    We also talked about the real possibility of structural 
reforms to the Mexican state-owned oil company Pemex, and hope 
that these reforms will lead to increased production and 
increased prosperity for Mexico as well as the United States.
    We also lamented the administration's failure to send the 
transboundary Hydrocarbons Agreement with Mexico to Congress 
for approval, putting in question our Nation's commitment to 
partnering with Mexico to improve its production and 
exploration in pursuit of energy security and mutual 
prosperity.
    But I will say that at some of the recent meetings that we 
have had with the administration, I have been very pleased that 
language has been submitted that is acceptable to the 
administration. And I want you to know we are now doing 
everything we can to work with Members of Congress to move this 
forward as quickly as possible, because I think it's a win/win.
    Today we are going to take a look at the rest of the region 
and hear from administration officials, industry, and regional 
experts on what the energy matrix looks like in Latin America. 
I wanted this subcommittee to lead the discussion on how to 
focus on energy production in the Western Hemisphere, and how 
this focus should be centered on leveraging vast energy 
resources to help the region as a whole achieve energy security 
and prosperity through true market reforms to the sector and 
beyond.
    The United States needs to be a constructive and willing 
partner in the region and truly become a shining example about 
how opening up energy regimes can help resource-rich nations 
create jobs, stimulate growth, and generate prosperity. 
Unfortunately, as we review the opportunities available, again 
we find some examples of the administration standing in the way 
of some of the initiatives that will benefit our Nation's 
energy security and job creation.
    Similar to delays in the Keystone XL Pipeline approvals, 
the administration has been delaying approving of the LNG 
export licenses to the Caribbean, Europe, and Asia. And I hope 
to hear more about this from our witnesses. In my view, the 
delays are just more of the same, and I would like to--I 
believe it is important for this subcommittee to make clear we 
want to see the U.S. move forward with energy-related efforts 
and end some of the perceived stall tactics.
    There is so much promise in the region, from pre-salt 
discoveries off the coast of Brazil to the successes brought on 
by Colombia's energy sector reforms, and, most importantly, 
from the oil and gas renaissance we have enjoyed right here in 
the United States. We are now in the great position to truly 
help our region achieve greater prosperity, job creation, and 
energy security.
    This subcommittee will be a loud voice in favor of 
exporting our values of free enterprise and open markets to the 
betterment of the region's growth and energy security. I truly 
believe we have a real opportunity to achieve energy 
independence right here in this Western Hemisphere if we unlock 
our true potential.
    I want to thank Ambassador Pascual, State Department's 
Energy Envoy and Coordinator for International Energy Affairs; 
and Mr. Matthew Rooney, Deputy Assistant Secretary of State for 
Western Hemisphere Affairs.
    I want to welcome our second panel of witnesses also: Jorge 
Pinon of the University of Texas at Austin; Mr. Eric 
Farnsworth, the Council of the Americas; and Mr. David Goldwyn 
of Goldwyn Global Strategies. I look forward to their testimony 
and hearing their perspectives on how we can achieve our goals 
of a more prosperous and energy-independent hemisphere.
    Thank you. Thank you all very, very much for taking the 
time to be with us today to discuss this important and timely 
topic.
    I would like to now recognize Ranking Member Sires for his 
remarks.
    Mr. Sires. Thank you, Mr. Chairman.
    Good afternoon, and thank you to our witnesses for being 
here today.
    Today's discussion is an effort to address what has long 
been an oversight in our foreign policy: Integrating energy 
policy with our national security interest. Oil production has 
increased in the United States, but it has not increased enough 
to overcome our need to import oil. The United States imported 
four times the amount of--it exported in 2011 alone. This is a 
worrisome--this is worrisome, giving our energy dependence to 
nations residing in unstable regions of the world and to 
nations whose governments are at times hostile to our national 
interest. As a result, it is imperative that our energy 
security policy be not knee-jerk reactionor an afterthought in 
our foreign policy considerations.
    The resurgence of oil and gas productions in the U.S. will 
change both the global landscape and geopolitics of energy. The 
United States is predicted to overtake Saudi Arabia as the 
largest the global oil producer by 2020. And a significant 
expansion of U.S. oil production could push oil prices down 
enough to devastate oil-producing nations. Regardless, I am 
realistic in regards to the nature of our energy independence.
    Inasmuch as the United States remains integrated with 
global energy markets, no amount of oil or gas will completely 
insulate the United States from global events and price 
disruption. The more likely scenario is that the future in the 
U.S. production will simply have a shock-absorber effect to 
sudden spikes in energy prices. So in light of these 
predictions and in spite of our energy renaissance, I believe 
it is dangerous to allow ourselves a false sentence of 
security.
    We get about half of our oil petroleum from the Western 
Hemisphere, half of which is from Canada. And after Saudi 
Arabia, Mexico is the United States' third largest supplier of 
petroleum. Venezuela has up to 88 percent of the region's 
proven oil reserve and accounts for roughly one-third of our 
oil imports from the region. And Brazil is the world's second-
largest producer of ethanol in the world after United States.
    On the other hand, in countries like Venezuela, Bolivia, 
Ecuador, and Argentina, expropriations and the nationalization 
of private industries have become the norm rather than the 
exception. Many of the beneficiaries of Venezuela's Petrocaribe 
program have few energy resources and are heavily dependent on 
oil imports. And with oil accounting for nearly 70 percent of 
the energy need of smaller countries, economic growth has been 
a difficult achievement. Meanwhile, in Mexico, we will not--we 
will have to wait and see if President Pena Nieto's energy 
reform will be realized.
    It is for these reasons that the Western Hemisphere must 
play a critical role in our energy security policy, and why I 
believe committed engagement on energy cooperation throughout 
the hemisphere, it is in the national interest of the United 
States. Our national security requires energy policy be a 
central component of our foreign policy. We should build upon 
and expand our energy diplomacy effort, mitigate the 
Caribbean's dependence on subsidized Venezuelan oil, and 
support the economic growth of the region in ways that are both 
relevant and practical to the needs of everyday people.
    And I thank you, Chairman, for holding this meeting.
    Mr. Salmon. Before I introduce the witnesses, I do want to 
say something else for the record. What an honor and pleasure 
it has been to serve with the ranking member. You know, we talk 
a lot in this country about the need for bipartisanship, and I 
have never seen a gentleman more willing to reach across the 
aisle on policy in the Western Hemisphere than Mr. Sires.
    It is just a real pleasure to work with you. And I am 
really excited. I think that maybe we can show the rest of this 
place how bipartisanship can really work.
    Mr. Sires. I feel the same way about you. Must be my Cuban 
genes.
    Mr. Salmon. All right. Pursuant to committee rule 7, the 
members of the subcommittee will be permitted to submit written 
statements to be included in the official hearing record. 
Without objection, the hearing record will remain open for 7 
days to allow statements, questions, and extraneous materials 
for the record, subject to the limitation of the rules.
    I would like to introduce the first panel. Honorable Carlos 
Pascual. Ambassador Pascual is the State Department's Special 
Envoy and Coordinator for the International Energy Affairs. In 
this capacity he advises the Secretary on energy issues, 
ensuring that the energy security is advanced at all levels of 
U.S. foreign policy.
    Prior to his appointment, Ambassador Pascual served as the 
United States Ambassador to Mexico and was vice president/
director of the Foreign Policies Studies Program at the 
Brookings Institution. Ambassador Pascual received his M.P.P. 
from the Kennedy School of Government at Harvard University and 
his B.A. from Stanford University.
    Matthew M. Rooney is the Deputy Assistant Secretary of the 
Bureau of Western Hemisphere Affairs. He led interagency and 
international negotiations that produced the Secretary's 
Pathways to Prosperity in the Americas initiative and the 
President's Energy and Climate Partnership of the Americas.
    Mr. Rooney has served in the Ivory Coast, Germany, Gabon, 
and El Salvador, focusing on macroeconomic policy, energy 
exploration, and trade issues.
    Mr. Rooney studied economics, German, and French at the 
University of Texas at Austin, and received his master's degree 
in international management at the University of Texas at 
Dallas.
    Before I recognize you, I have done this before, and I 
apologize, it is just one of those things, but I am going to 
explain the lighting system in front of you. You each will have 
5 minutes to present your oral statement. When you begin, the 
light will turn green; when you have 1 minute left, the light 
will turn yellow; when your time has expired, the light will 
turn red. I ask you to conclude your testimony once the red 
light comes on. I am not going to have a heavy gavel today, 
though; we want to hear what you have to say.
    After our witnesses testify, all members will have 5 
minutes to ask questions. And I urge my colleagues--looks like 
me and you--to stick to the 5-minute rule to ensure that the 
members get an opportunity to ask questions.
    Let us begin, Ambassador Pascual. You are recognized.

 STATEMENT OF THE HONORABLE CARLOS PASCUAL, SPECIAL ENVOY AND 
 COORDINATOR FOR INTERNATIONAL ENERGY AFFAIRS, U.S. DEPARTMENT 
                            OF STATE

    Ambassador Pascual. Thanks so much, Chairman Salmon, 
Ranking Member Sires. It is a great pleasure to be with you 
here today and to have this opportunity to have a discussion of 
the Western Hemisphere to look at the energy potential in the 
region and to be able to learn from one another on how we can 
develop this great potential that you have been mentioning 
already.
    The United States is undergoing an energy revolution. 
Innovative technology, entrepreneurship and strong commodity 
prices have spurred the production of shale gas, shale oil, and 
offshore oil. Combined with vehicle-efficiency measures, the 
United States has decreased fossil fuel import dependence. Our 
experience in unconventional oil and gas opens commercial and 
technological opportunities for U.S. businesses. We are on the 
verge of comparable breakthroughs in renewable energy, which 
could provide similar benefits for U.S. industry and job 
creation. U.S. leadership on these opportunities will have an 
important implication for continuing and long-term energy 
security in North America and the rest of the Western 
Hemisphere.
    The U.S. Energy Information Administration estimates that 
the United States has 24 billion barrels of shale oil 
resources. The State of North Dakota produces more oil than 
Ecuador, an OPEC member. We have gone from importing more than 
60 percent of the oil we consumed in 2005 to less than 40 
percent last year. Canada and Mexico alone accounted for 38 
percent of our oil imports in 2012. The potential for North 
America can multiply this type of transformation that we are 
seeing today.
    While Canadian and U.S. oil production have been rising, 
Mexican production has dropped since 2004. Mexican President 
Enrique Pena Nieto, as Congressman Sires has noted, has now 
made energy reform a priority. If it is successful, imagine 
these possibilities: If Mexican production could regain the 
level it had in 2004, by 2035 North American production can 
rise from 18 million barrels a day to over 23 million barrels a 
day. That jump alone in volume approaches the current combined 
production of Iraq and Venezuela, to give you the scale of 
possibility that exists in our hemisphere.
    A similar story is playing out in global natural gas 
markets. In the last 5 years, U.S. gas production has increased 
24 percent. Natural gas once intended for the United States is 
meeting demands in markets around the world. New supplies for 
Mozambique, Norway, Russia, and Australia are revolutionizing 
the world's gas markets. The potential in Mexico has only 
started to be explored.
    These revolutions in oil and gas build a picture in which 
North America can be a hub not only for U.S. energy security, 
but global energy security. We have to keep seeing the 
hemisphere in that context that is the foundation for stability 
and security for the entire world, and this can come with 
benefits for stabilizing markets and contributing to our 
economic growth at home.
    There are also opportunities in Argentina, Brazil, 
Colombia, Peru, Trinidad and Tobago. Their challenge, the 
challenge of these countries, will be to attract the commercial 
investment needed to enable development, and each country is 
approaching this challenge differently.
    Venezuela, with one of the largest oil reserves in the 
world, faces a critical moment. Since a peak in 1997, 
production has declined by about 1 million barrels per day. 
With the upcoming elections Venezuela's new leadership will 
have the chance to create an environment that attracts 
investments and technologies that are revolutionizing global 
markets elsewhere and potentially could benefit Venezuela's 
people, its economy, and world markets as well. That choice is 
one they have to make regarding the kind of policy environment 
they set for international investment.
    Throughout the Americas, the exciting prospects for 
commercial opportunities and economic growth are just as great 
in the power sector. The International Energy Agency estimates 
that the Americas, excluding the United States, will require 
$1.4 trillion in power sector investments by 2035 to meet 
electricity demand.
    Our companies are already associated with 4.5 gigawatts of 
lower-carbon-energy development in the region. For example, a 
U.S. company, Sempra, plans to build a 1.2-gigawatt wind farm 
in Mexico, where the first phase will generate 156 megawatts 
with a U.S. $300 million investment. OPEC and Ex-Im are 
considering an additional $650 million in clean-energy projects 
in Mesoamerica in 2014. The Brazilian Government has announced 
plans to spend more than U.S. $330 billion in power generation 
and transmission through 2021. These are all opportunities for 
American business for trade and investment.
    As we work to expand the potential for energy revolution in 
the region, we cannot forget the Caribbean. The islands of the 
Caribbean have been saddled with some of the highest 
electricity prices in the world, as much as four to five times 
what we pay here in Washington, due to their dependence on 
imported diesel fuels. Technology and good business practices 
can give them an alternative.
    For example, Ex-Im Bank has provided a $6.4 million loan 
guarantee to finance the export of the SolarWorld Americas 
solar modules to Barbados. OPEC is going to provide $50 million 
to support the Caribbean Idea Marketplace, a business 
competition designed to foster collaboration among Caribbean 
diaspora entrepreneurs. Just in the past few days, we heard 
from colleagues in the Dominican Republic, new projects that 
are being considered to tap the vast gas potential that could 
exist in the United States and could allow creative power-
generation projects in the Dominican Republic.
    Entrepreneurship and innovation rooted here in the United 
States has given us a remarkable opportunity for this 
hemisphere with global significance. Innovation and resources 
are allowing us to grow economically and to protect our 
national security. We can do this in ways that protect the 
planet, and as we expand these opportunities regionally and 
globally, we will create jobs at home. It is a moment of 
opportunity that we cannot waste.
    Thank you for the opportunity to discuss these important 
issues with you today. And I appreciate your willingness to add 
our witness statement to the record as well.
    Mr. Salmon. Thank you, Ambassador.
    [The prepared statement of Ambassador Pascual follows:]

    
    
    
    
    
    
    
    
    
    
    
    
    
    
                              ----------                              

    Mr. Salmon. Mr. Rooney.

STATEMENT OF MR. MATTHEW M. ROONEY, DEPUTY ASSISTANT SECRETARY, 
 BUREAU OF WESTERN HEMISPHERE AFFAIRS, U.S. DEPARTMENT OF STATE

    Mr. Rooney. Thank you, very much, Mr. Chairman, Mr. Ranking 
Member. Thanks for this opportunity to be here with you today 
to discuss these issues. We are grateful for this committee's 
attention to this set of issues, and we look forward to working 
closely with you to advance U.S. energy security in the Western 
Hemisphere.
    As Ambassador Pascual has already noted, the Americas hold 
tremendous strategic importance for the United States in terms 
of energy. As energy demand continues to grow, both globally 
and in the region, all countries in the hemisphere have a 
vested interest in developing energy resources and the capacity 
to fuel sustainable economic growth. That is why the Bureau of 
Western Hemisphere Affairs has made it a central component of 
its economic strategy for the region for the last several years 
to conduct a dialogue with our partners throughout the region 
on energy, energy security, and renewable energy.
    Through both bilateral and multilateral efforts, we have 
supported renewable--we have supported regional energy security 
by promoting the safe, sustainable development of energy 
resources. We have promoted increased access to affordable, 
reliable energy services, and the development of transparent, 
effective market structures that incentivize private-sector 
investment and provide opportunities for U.S. businesses in the 
region.
    In the coming years, we expect our energy interdependence 
with the region to increase, as oil producers such as Canada, 
Brazil, and Colombia ramp up output, and as Mexico considers 
important reforms to increase its production. But while 
countries like Canada, Mexico, Brazil, and Venezuela have 
significant hydrocarbon resources, others in Central America 
and the Caribbean remain dependent on imported energy. This is 
one of the many reason it makes sense to focus on the Western 
Hemisphere's large potential for renewable energy.
    In many Latin American countries, hydropower has 
traditionally played an important part in the energy matrix. 
Most countries also possess significant wind, solar, geothermal 
and bioenergy potential, and a number are setting targets to 
integrate renewables in their energy grids.
    Through the Energy and Climate Partnership of the 
Americans, which was launched by President Obama at the 2009 
Summit of the Americans in Trinidad, the United States is 
working with governments, the private sector, and NGOs in the 
region to promote development and deployment of renewable 
resources and technologies.
    It is important to acknowledge that energy development 
projects even with conventional or renewable resources are not 
without controversy. In recent years large-scale hydropower 
projects have begun to attract more concern among human rights 
and environmental and indigenous groups. The construction of 
new transmission lines can improve the stability of power 
markets and lower prices for consumers, but their construction 
can also have adverse environmental and community impacts. We 
have used diplomatic engagements through out the region to urge 
governments to take full account of these impacts.
    From the point of view of the United States, our work on 
promoting renewables, access and reliability under ECPA and the 
Connect 2022 initiative supports not just regional market 
development, but, equally importantly, more importantly, 
significant trade and investment opportunities for U.S. 
companies. Increased electrical interconnection in the region 
will open opportunities for investment in electrical generation 
and transmission, as well as good management technologies, all 
areas where U.S. businesses are highly competitive and where we 
work very closely with the Department of Commerce, the Export-
Import Bank, and the Overseas Private Investment Corporation to 
ensure that the U.S. private sector has up-to-the-minute 
information on opportunities that exist.
    We still face major challenges in the Americas. Countries 
that have pursued statist, nontransparent energy policies have 
seen their production decline, despite the high energy prices 
of the past several years. These countries have found it 
difficult to attract the necessary investments, both foreign 
and domestic, to help their energy production and economies 
grow. We continue nonetheless to advocate open and transparent 
energy markets free from corruption and reinforced by strong 
protections for investment to help countries enhance output and 
promote long-term economic growth.
    As our closest neighbors and strongest trading partners, 
the energy and economic security of the Western Hemisphere is 
critically linked to our own. We have maintained a sharp focus 
on furthering our national energy security, promoting 
alternative and renewable sources of energy, fostering energy 
efficiency, promoting environmentally sound production and use 
of energy, and ensuring the stability and security of 
international energy supply. Continued progress will require 
patience, continued commitment and robust engagement, which our 
bureau, in partnership with Ambassador Pascual, are prepared to 
provide.
    Thank you very much, Mr. Chairman, Mr. Ranking Member, 
other members of the committee, for your interest. I appreciate 
your willingness to enter the larger statement into the record 
and to present this shorter summary to you today. I appreciate 
very much your continued interest in this issue, and look 
forward to answering any specific questions or concerns that 
you might have.
    Mr. Salmon. Thank you very much.
    [The prepared statement of Mr. Rooney follows:]

    
    
    
    
    
    
    
    
    
    
    
    
                              ----------                              

    Mr. Salmon. I would like to yield myself 5 minutes for 
questions, and I would like to start with you, Ambassador. 
Thanks for the testimony and the time that you have given to us 
to come before the subcommittee and talk about this extremely 
important topic.
    My question is about the LNG licenses that have yet to be 
resolved. And how the DOE continues to, in my view, stall on 
issuing those licenses despite its own commission's study 
confirming that price increase concerns are not really the 
issue. I am wondering if you can tell me from the 
administration's perspective why the delay? I have heard it 
described just as with the delay and approving the Keystone XL 
Pipeline of paralysis by analysis. And this continued 
paralysis, is it affecting job creation and prosperity that can 
result from moving ahead with LNG exports? We have such a low 
price right now with LNG and such a vast supply in the United 
States, and it seems to me that could be a win/win. Is this 
something that we can find some common ground on and move 
ahead?
    Ambassador Pascual. Mr. Chairman, thank you for the 
interest you have taken on the topic. And you really put your 
finger on an issue which has been critical in global markets, 
which is what has happened with the emergence of natural gas. 
And part of that has been here in the United States, but what 
we have also seen is a radically changing gas market throughout 
the world.
    We have had some--the biggest finds in the world that we 
have seen in Mozambique in the last 30 years, in Australia, in 
Israel, in Cypress, and in Norway. So we need to think about 
this from a broader global perspective and the United States 
fitting into that picture.
    I can assure you that our colleagues in the Department of 
Energy are serious about this issue. It is a topic that we talk 
about on a regular basis, and that they are proceeding with due 
diligence.
    They published a study, as required under the Natural Gas 
Act of 1926, in December. That study laid out the parameters 
for what the benefits would be from natural gas exports for the 
United States. In accordance with that law, they had two 
comment periods that have been completed. The first comment 
period is open to everybody; the second comment period is to 
accept rebuttals of any of the first comments. That closed on 
February 22nd. There has been a relatively short period of time 
since then to take into account all of those comments.
    What they now need to do is go back through the 16 
applications that they have received and make final judgments. 
In making those judgments, they have to take into account both 
the initial study and the broad commentary that has been 
received.
    I know that they have an interest in being able to review 
that, and bring it to conclusion, and be able to come forward 
with recommendations that they think are going to be consistent 
with the national interests of the United States. It would be 
premature for me to suggest what those outcomes would be, but I 
think it is fair to say that with the urging that you have 
given, the urging and the interest that the industry has had, 
that they recognize the importance of trying to move this issue 
along as quickly as possible.
    Mr. Salmon. Okay. Thank you very much. I just would like to 
note that there is a lot of interest on both sides of the aisle 
in getting this issue revolved as quickly as possible so that 
we can get on with prosperity and energy independence, and I 
think that that achieves both objectives in due measure.
    I have one other question, Ambassador. It is just kind of a 
personal bone to pick, and it is not necessarily with the 
administration. I think it is our policy on ethanol here in our 
country, and it deals with Brazilian ethanol, because you 
mentioned that in some of your comments.
    I understand that we put a pretty heavy import fee on 
Brazilian ethanol, which is derived from sugarcane, as opposed 
to corn as it is here in the United States. And I am just 
wondering, it appears that the reason that we put such a--given 
the administration's strong support for free trade and 
constructive engagement, especially within our hemisphere, it 
kind of appears that what we are trying to do is provide some 
kind of unfair protection for our own home-grown ethanol when 
it appears that the Brazilian opportunity might be a pretty 
good one. And I would just like your thoughts or comments, and 
if I am asking the wrong person, you just tell me. But I feel 
frustrated that it feels a little bit protectionist that we are 
importing--you know, we are putting these high tariffs on the 
importation of Brazilian ethanol, and I would like to maybe 
understand what the rationale might be.
    Ambassador Pascual. You are right, Chairman, to keep 
focused on this market and the potential that it has.
    Let me just mention a couple of things. Specifically the 
tariff that you mentioned expired last year. There is an ironic 
situation that the Brazilians face right now that international 
sugar prices have been so high that they have actually been 
exporting the sugarcane for sugar rather than using as much of 
it as they have in the past for the production of ethanol. So, 
ironically, we have been in a situation where the Brazilians 
have actually been importing ethanol from the United States.
    Together we have actually been working and identifying 
projects in Central America, the Caribbean, and even in some 
African states where we are trying to take some of the 
technologies, the commercially competitive technologies in the 
development of ethanol, and share them with others, as well as 
advice on the regulatory and pricing structure to make those 
markets more competitive and viable.
    So the competitive environment has improved, and the record 
of our cooperation with Brazil has indeed improved. Ranking 
member indicated that you might be going there. If you talk 
with them about the work that they are doing on ethanol, I 
would be interested in any feedback that you get on that.
    Mr. Salmon. Thank you very much.
    I would now like to recognize the ranking member Mr. Sires.
    Mr. Sires. Thank you, Mr. Chairman.
    Yes, the chairman has planned a trip to Argentina, Brazil, 
and Colombia. So at the end of the month, and I guess we will 
give him some feedback on what we----
    Mr. Salmon. Your big focus will be on energy issues.
    Mr. Sires. You know, I sit through these hearings now a 
couple years, and I have to say I hear the same thing all the 
time, the opportunities that are available in the Western 
Hemisphere, how we can--you know, we should take advantage of 
it. You know, the growth, and, you know, power, electrical 
power, grids, everything.
    But, you know, I also get a lot of people in my office 
complaining about the corruption and how they can't do business 
in the Western Hemisphere in some of these countries. So I was 
just wondering if you could comment, Assistant Secretary, on 
that, because I do get a number of people. And now we are 
looking at some of these countries. Argentina just nationalized 
the oil industry from Spain. You have going on in Ecuador. So 
can you just comment, because if I were a businessman, you 
know, I certainly don't know if I want to invest in a country 
there is no stability. So, to me, it is going to be another 
situation where the countries in the Western Hemisphere are 
going to miss an opportunity to--you know, to move ahead. And 
can you just talk a little bit about that.
    Mr. Rooney. Sure. Thank you very much, Mr. Ranking Member.
    There is certainly a range of experiences out there. And 
there are countries, you mentioned Argentina and Ecuador, where 
I think American companies and other foreign companies have 
found it very difficult to operate. In those cases, in 
Argentina, for example, we have made it very clear, I think, to 
the Government of Argentina repeatedly and at the highest 
levels of that government that we think that expropriating 
assets of foreign companies is not a very promising economic 
policy, that it is likely to scare investors away, and that 
private investment is important to growth in any sector. And 
certainly in the energy sector, private investment is 
indispensable to sustain long-term development of those assets.
    By the same token, in Ecuador we have been following very 
closely the disputes that have taken place there. We are very 
clearly aware of the many court cases and arbitrations that are 
unfolding with respect to Chevron--Texaco Chevron in Ecuador. I 
think the government there has no doubt about our view of that 
set of policies.
    There are other countries at the other end of the range 
that are actually pretty clean. Chile has a very clean 
investment environment, and very transparent system, and a very 
transparent way----
    Mr. Sires. Can you name a couple of those countries?
    Mr. Salmon. So we can recommend them.
    Mr. Sires. So we can recommend them.
    Mr. Rooney. So you can go there, right?
    And then there is a bunch in the middle, where admittedly I 
think even they would admit they struggle with lack of 
transparency, they struggle with conditions of corruption in 
public service and in the courts. I think in those cases we 
have tried now in general, not just with respect to energy, to 
use different tools to encourage those governments to clean up 
their acts.
    Our free trade agreements that we have with a number of 
countries, in particular Central America, provide a number of 
tools and protections that U.S. investors can use to protect 
their interests. And we have, I think, seen over time that 
those relationships have encouraged those countries to become 
more transparent as things go along. There is no question that 
in many of these countries you have to you have a strong 
stomach to do business.
    Mr. Sires. Deep pocket, too.
    Mr. Rooney. That being said, I think a number of American 
investors have proven to have pretty strong stomachs. And you 
have major U.S. corporations that have been engaged in many of 
these countries for years and years and years, have found ways 
to do business and thrive.
    So I think certainly when we talk to American companies 
that are doing business or considering doing business in these 
regions, we advise them to take great care in selecting their 
business partners, to take great care in the way they draft 
their contracts, to take great care in who they hire to 
represent them, and to stay in close touch with the political 
environment as things unfold, because things can shift under 
your feet quite quickly.
    Mr. Sires. Thank you very much.
    I am sorry, I have just got one more question. Mr. 
Ambassador, can you talk a little about the new President of 
Mexico, his effort to modernize Pemex, and what it would mean 
if it was able to pass through their legislation--legislature?
    Ambassador Pascual. One of the things which President Pena 
Nieto has indicated is that his government and his party is 
very committed to pursuing comprehensive energy reform. It is a 
landmark step for Mexico. As you know, natural resources, 
hydrocarbon resources in Mexico were nationalized in the 1930s. 
It is a national day in Mexico celebrating the naturalization 
of those resources.
    But Mexico has also taken a very realistic perspective, 
understanding that they haven't had the capacity to develop 
deepwater resources or the kind of shale gas and shale oil 
potential that exists here in the United States. And in order 
to do that, it is going to require significant private 
investment.
    The first step that President Pena Nieto has taken has been 
to work within his party to gain the endorsement of the party 
to actually move forward with comprehensive energy reform. They 
have been working across a triparty basis of three major 
parties to build support for that. They have indicated that 
they want to introduce that reform measure after they complete 
the telecommunications reform, which is currently in process of 
working itself through the political system. After going 
through the parliamentary process, it would have to pass 
through the states; 21 out of--23 out of 31 states are actually 
controlled by the PRI.
    So there has been quite extensive effort that has been 
taken to build the coalition for the prospects of energy reform 
that would welcome the possibility of private investments in a 
way that protects Mexico's resources, but allows them to be 
developed in participation with international actors. It is an 
issue which has very nationalistic resonance within Mexico. 
Mexico has to take the lead in it, because if they are not seen 
as leading, if it is seen as being opposed by the outside, that 
will become a constraint. But at the same time it is quite 
impressive that there has been a measure, a set of measures 
that are being developed that are quite as comprehensive and 
extensive as they are.
    I would say, Mr. Chairman, as well, thank you for your 
mention of the transboundary issues, because I think one of the 
important steps that can be taken on the part of the United 
States is to indicate that we can pass the authorizing 
legislation for the transboundary agreement that would suggest 
that the U.S. is committed to the agreement that we have 
already signed together with Mexico that would allow for 
exploitation and sound environmental management of those 
transboundary resources between our borders.
    Mr. Salmon. Thank you very much.
    The chair now recognizes the gentleman from Florida Mr. 
Radel.
    Mr. Radel. Thank you, Mr. Chair.
    I go back to Colombia when we talk about some of these 
countries where people may be a little apprehensive in terms of 
investing in. We have seen that Colombia has done partial 
privatization of their state-owned oil company, and because it 
is now more of a market-oriented energy sector, it is booming 
there.
    Have we been able to--I guess I would even use the word 
``educate'' or share the message of this kind of great example 
that we have had in working with Colombia to other countries in 
an effort to reach out and work with them? Has the 
administration or anyone from the Department?
    Mr. Rooney. Thank you, Mr. Radel. I think the--the short 
answer is yes. We are, of course, not shy about pointing out 
that kind of experience to others in the region. In general, 
particularly over the last several years, we found it very 
useful. I think the chairman mentioned an initiative that I was 
involved in launching a couple of years ago, which was a trade-
related initiative called Pathways to Prosperity. There, and in 
the energy area as well, we found it very useful to create 
platforms so that experiences like Colombia's can be 
highlighted so that it is not us making those points to others 
about the desirability of this kind of privatization and 
restructuring of an important sector like that, but it is a 
Latin country outlining its own experience. We found that to be 
a very powerful--a very powerful way to carry that message. And 
the experience, as you say, is--pretty much speaks for itself.
    Mr. Radel. With that said, I would actually transition into 
Mexico with you, Mr. Ambassador. I mean, I am a firm believer 
that we hear a lot of talk about illegal immigration and 
fingers point south of all these people who want to cross the 
border come here illegally. The best way to solve that problem 
is with a booming economy south of us, and it is imperative for 
us to work with these countries to foster this kind of growth 
through market-oriented ways of doing so.
    That said, the hydrocarbon agreement, what kind of a signal 
are we sending Mexico right now with the hold-up in this? And 
if you could give us some context of the hydrocarbon agreement, 
where we are at?
    Ambassador Pascual. Certainly. First of all, on the 
transboundary agreement, transboundary maritime agreement, the 
purpose of it was to look at the area which is 1.4 miles on 
north and south of the border between Mexico and the United 
States, the nautical border. What in effect we have had thus 
far is a moratorium in the western gap, but in reality a 
moratorium over that entire area, because any company that 
might be looking at any kind of hydrocarbon development is 
going to look at it with uncertainty because there is a lack of 
clarity over the ownership of resources.
    The discussions on this agreement began in September 2009 
when I was Ambassador to Mexico. We went through a negotiation 
process. There were extensive consultations with industry in 
the United States as well as a nongovernmental sector. The 
agreement was signed in February of last year. The Mexican 
Parliament has actually ratified that. It is now with the 
United States to actually pass the implementing legislation 
that is needed to be able to act on some of the key provisions 
to be able to implement it.
    The language for that agreement has been put forward to the 
Congress. The administration is fully supportive of moving 
forward with it as quickly as it possibly can. This is 
something which the industry feels is positive, because it 
provides a way of giving greater assurance to develop the 
resources that are on our side of the border when there are 
reservoirs that cut across the border; provides a mechanism 
between Mexico and the United States to create units and 
cooperation among those units, and where there is advance 
agreement where in that unit one company gets 60 percent and 
another one gets 30 percent, or whatever it is, and you know 
when the oil comes out, there is no argument about how to 
divide it up because you have already created the unit and 
reached an agreement ahead of time of how to separate it. And 
it provides great environmental benefits as well, because it 
creates a mechanism that allows us to support the Mexican 
Hydrocarbons Commission. It allows us to be able to, within the 
individual agreements, ensure that the standards comply with 
American standards on the environment.
    And so it really is a win/win. And so we are 
extraordinarily encouraged about the positive reception we have 
seen among various Members of Congress.
    What it really needs right now is a vehicle to be able to 
move it forward, and if any of you can be helpful in that and 
give some direction and guidance to how that might be able to 
be done, we would be extraordinarily appreciative.
    Mr. Radel. I am sure that we all have the interest of doing 
that, working together, even if it is just symbolically to 
say--to reach out to all of Latin America to say that we are 
here to work with you.
    Ambassador Pascual. Thank you.
    Mr. Salmon. Thanks, Mr. Radel.
    I would just like to say for the record that I strongly 
support moving that language or some permutation of it that is 
acceptable to the administration as quickly as possible. I 
believe that is a big win/win. And we are really fortunate to 
have a member of our subcommittee who is actually on the 
committee of jurisdiction that will be looking at that 
legislation, I think, ultimately, and that is the Resources 
Committee. And I would like to yield to him. The chair yields 
to Mr. Duncan.
    Mr. Duncan. Thank you.
    First off, I will just mention that I am currently drafting 
legislation. Hope to have it ready for your cosponsorship on 
the transboundary agreement, to move that forward, and working 
with folks here on the Western Hemisphere Subcommittee, but 
also Natural Resources, I think, is vitally important.
    You know, when I approach American energy independence 
issues, often talking about, one, North American energy 
independence, but now I have expanded that on all American 
energy independence, where we work with our neighbors in this 
hemisphere, both in Latin America, Mexico, with Canada, I think 
it is an all-of-the-above approach to truly working with our 
neighbors. And it also helps foster those economies.
    And when the gentleman from Florida was talking about 
Colombia, I couldn't help but recollect last year I was at the 
Summit of the Americas in Cartagena, and we met with the 
Colombian--Albio was there. We met with the Colombian Congress, 
and they said they keep spending-to-GDP ratio to about 4 
percent. They have low taxes. And they just have enough 
government to support a free market. And the Colombian 
Government is really thriving.
    And so we heard some of the concerns they had that are 
concerns of mine dealing with energy, and that is a question I 
have for the gentleman. How are you approaching Venezuela? And 
that may have been answered already, but Venezuela, with the 
death of the leader, Hugo Chavez, there, are there efforts to 
move away from U.S. dependence on Venezuelan oil or natural 
gas? And, you know, how do we work with the other neighbors 
within the Latin American community and in this hemisphere to 
move them away from Venezuelan dependence and maybe more toward 
an American or North American or Western Hemisphere agreement?
    So I think the transboundary agreement helps with that with 
Mexico, but I would like to see how we approach Venezuela and 
those issues now. And I ask that of both of you gentlemen.
    Mr. Rooney. Thank you, sir.
    I think as we look forward over the next couple of days to 
the Presidential election in Venezuela, we are all waiting to 
see what happens. Perhaps not terribly suspenseful, but we are 
waiting to see what happens nonetheless.
    On the subject of Venezuela's energy trade with the United 
States, I think, as I recall, it is something in excess of 40 
percent of Venezuela's exports of oil come to the United 
States, which, in turn, represents something less than 10 
percent of our imports of oil. So it has been our sense 
throughout, and I think it helps explain why Mr. Chavez never 
used oil as a weapon against us, that, in fact, the importance 
to Venezuela of the U.S. as a market and as a place to refine 
its oil is actually quite, quite significant, and perhaps in 
some ways more important than Venezuela as a supplier to the 
United States. Ten percent is nothing to sneeze at, but it is 
nonetheless less than 40 percent.
    We have a testy relationship with Venezuela. We have looked 
for opportunities to engage in areas of mutual interest. We 
think we have mutual interests with Venezuela, potentially, in 
counternarcotics, counterterrorism, and energy, and we have not 
found them terribly receptive in the past.
    We are hopeful that the future will bring an opportunity to 
have a more constructive relationship with Venezuela. 
Nonetheless, I think you are absolutely correct that the 
opportunities for energy integration and energy trade in the 
rest of region are significant and offer us enormous 
opportunities to shift our trade elsewhere and to work more 
closely with other partners.
    Mr. Duncan. And Ambassador?
    Ambassador Pascual. Let me focus on the Caribbean aspect of 
this question, because the subsidies that Venezuela has 
provided the Caribbean countries have perpetuated a dependence 
on imported fuels, particularly diesel fuels.
    I mentioned my in my testimony that right now in the 
Caribbean, countries are paying, people are paying, businesses 
are paying four to five times for electricity than what we pay, 
higher than what we pay here in the Washington, DC, area, about 
35 cents a kilowatt hour. In the past countries have been 
hesitant to raise their concerns about that energy dependence 
because they have been concerned about the subsidies that they 
have been receiving from Petrocaribe.
    The United States has been deeply engaged in the region, 
and we have been working with them through a mechanism called 
the Caribbean Renewable Energy Forum. And increasingly what we 
have heard from country after country is that the demands that 
they are hearing from their people and their businesses is that 
they need to enter in a competitive global economy. And as many 
of you have said, you can't be competitive if you are starting 
off already by paying four or five times more for the price of 
electricity than everybody else.
    So among the things that we have been working on are a 
range of possibilities that could look at possibilities of the 
use of gas, of wind, of solar energies, and ways that can 
reduce the cost of electricity generation. We have already seen 
some prospects, including within the United States and Puerto 
Rico, and not far away, in the Dominican Republic, to lower the 
cost of the generation.
    One of the things that these countries are finding is that 
to make it possible to attract the investment that is 
necessary, they have to create a better business climate, as 
you have indicated. But we have seen, for example, recently 
with the Dominican Republic efforts that they are trying to 
make to meters on their systems so that they can actually gauge 
who is using electricity and who is not and be able to collect 
from them.
    This whole effort of good business climate, real business 
opportunities, the reduced cost of alternative fuel mechanisms 
than what we have seen in the past, together can begin to 
create--is already creating an alternative environment for 
power generation, which offers a real prospect to the region 
that they haven't in the past. And we are very much committed 
to be able to work together directly, with these countries 
directly, with the Inter-American Development Bank, with the 
World Bank, and most importantly with the private sector, 
because in the end one of the key things is going to be can you 
attract private investment to those kinds of projects in a way 
that is sustainable. Because these things can't run on the 
basis of subsidies. They have to run on a sound commercial 
economic basis.
    Mr. Duncan. And I think I applaud the chairman. Earlier in 
his statement he talked about LNG exports. And I think one 
thing the administration can do is help expedite the permitting 
for LNG terminals so that we can export some of this gas. When 
you talk about quality-of-life issues, if we could export 
American gas to Latin American countries, if you travel to that 
area, the prevalent smell is charcoal because a lot of folks in 
that area cook and heat their homes with charcoal. If we could 
change that over to natural gas, refrigeration from propane, 
other things, there are just a world of opportunities to 
improve the quality of life of folks in Latin American through 
American and North American and Western Hemisphere energy 
sources.
    And with that I will yield back, Mr. Chairman.
    Mr. Salmon. Absolutely.
    The chair would like to yield one additional question from 
the ranking member.
    Mr. Sires. You know, as the Congressman said, we spent a 
good deal of time with Members of the Congress in Colombia. It 
was very informative, the way they are moving forward. We also 
talk about their relationship with Chavez.
    I just think that this politics of Chavez to give oil to 
the Caribbean nations basically was just used to turn them 
against the United States. And I do hope that the new 
President, even though he talked to the little bird the other 
day, changes the policy, because I don't think we can afford to 
have all these people that are dependent on Venezuela really 
day by day turn against us.
    So we somehow in the State Department and through our 
energy policies here, we have to find a way of--how can I say 
it--battle that, because really--you know what I am talking 
about. You know. They give money to the Dominican Republic. 
Excuse me. Great prices to the Dominican Republic. Some of the 
small islands. Obviously, Cuba is the biggest beneficiary of 
that policy.
    So I was just wondering, you know here is what they are 
doing. They having an election. How are we going to approach 
that? You know.
    Mr. Rooney. Thank you, sir.
    I think you won't hear us defending Mr. Chavez's approach 
to this set of issues. We have certainly shared the concern 
about Petrocaribe--that is the program we are talking about 
here--over the last several years. I think the economic 
pressures on some of the recipient countries have been acute, 
especially 2 or 3 years ago when petroleum prices had spiked. 
Those countries are very, very dependent on imported fuel, both 
for electricity generation and for vehicle fuels. And so the 
pressures that they were under were simply irresistible, and I 
think they bought into Petrocaribe largely out of economic 
motives, not really for ideological reasons.
    I think the success--I am not sure if I would have 
considered it cost-effective if I were the Venezuelan 
Government in terms of political payoff, because I think some 
of those countries have, you know, indicated that they were not 
entirely comfortable with the political pressures they were 
being put under, and looked for ways for escape.
    When you look, I think, at the production of oil in 
Venezuela, the budget situation of Venezuela, price conditions 
there, you know, inflation is very high. I think you are 
looking at a potentially fragile financial situation. And 
sooner or later the budget realities are going to be such that 
any government is going to be under pressure to question that 
use of resources into the region. So I wouldn't--wouldn't want 
to speculate how long that might be, but I think budget 
realities have a way of catching up with the government.
    Mr. Sires. It is mind-boggling to me to see a country with, 
what, 80 percent, 88 percent of the oil in the Western 
Hemisphere, and they are broke.
    Thank you, Mr. Chairman.
    Mr. Salmon. Well, thank you very much, gentlemen. I 
appreciate your testimony before the subcommittee, and we look 
forward to working with you on all these issues. Thank you.
    Mr. Sires. Thank you very much.
    Mr. Salmon. I would like to seat the next panel if we 
could. Thank you very much.
    Okay. Thank you.
    Looks like we are ready to introduce the next panel. Thank 
you for taking time to testify.
    First we would like to introduce Jorge Pinon. Jorge Pinon 
is the director of the Latin American/Caribbean Program at the 
University of Texas as Austin. He was president and CEO of 
Transworld Oil USA prior to joining AMOCO Corporation as the 
president of AMOCO Corporate Development Company Latin America. 
In this position Mr. Pinon represented the business, 
development, and joint venture efforts in Latin America between 
AMOCO Corporation and state oil companies. He holds a degree in 
economics and a certificate in Latin American studies from the 
University of Florida.
    Now I would like to turn to Mr. Farnsworth. Eric Farnsworth 
is a vice president of the Council of the Americas and Americas 
Society. Mr. Farnsworth began his career in Washington with the 
U.S. Department of State. Also, he was a senior advisor to the 
White House Special Envoy for the Americas. Eric Farnsworth 
holds an M.P.A.--that is a great degree; I have the same one--
in international relations from Princeton's Woodrow Wilson 
School.
    Next up, Mr. Goldwyn, David L. Goldwyn, is president of 
Goldwyn Global Strategies. Under his supervision GGS has staged 
shale gas regulatory workshops for government regulators in 
Belgium, Poland, Rumania, Bulgaria, and Ukraine. Also, Mr. 
Goldwyn served as the U.S. State Department Special Envoy and 
Coordinator for International Energy Affairs.
    Mr. Goldwyn holds a B.A. in government from Georgetown 
University and a master's in public affairs from the Woodrow 
Wilson School of Public and International Affairs at Princeton 
University, and a J.D. from New York University School of Law.
    Mr. Pinon, we would like to start with you.

  STATEMENT OF MR. JORGE R. PINON, ASSOCIATE DIRECTOR, LATIN 
  AMERICA AND THE CARIBBEAN PROGRAM, CENTER FOR INTERNATIONAL 
                ENERGY AND ENVIRONMENTAL POLICY

    Mr. Pinon. Thank you, Mr. Chairman. I ask that my written 
testimony be included in the record.
    Geopolitical uncertainties such as political instability, 
resource nationalism, civil conflict, economic downturns, and 
natural disasters in oil-producing countries and exporting 
countries in all regions of the world threaten both rich and 
poor nations alike.
    Crude oil and natural gas, and now ethanol, have become 
true global fungible commodities with limited restrictions in 
their deliverability across oceans and borders. They 
respectively represent 34 and 24 percent of the world's primary 
energy consumption, making hydrocarbons the long-term principal 
fuel of economic growth around the world.
    The role played by emerging markets, many of them, such as 
China, net importers of oil on a grand scale, also adds a new 
complexity to the challenge of international energy security as 
these countries race toward resource control outside of their 
own borders. The energy sector has become to many countries in 
the world the Achilles heel to their economic survival and 
growth, making these challenges strategically important issues 
of geopolitical context.
    The Western Hemisphere represents approximately one-third 
of the world's proven conventional and unconventional 
hydrocarbon reserves. And like it was mentioned here, Venezuela 
alone has approximately 300 billion barrels of proven 
conventional and unconventional reserves. Argentina and Mexico 
are the third and fourth largest holders respectively of 
technically recoverable shale gas reserves in the world. Mr. 
Chairman, nearly 50 percent of world's total shale gas reserves 
are in the Western Hemisphere.
    Today Latin America energy potential is being undermined by 
a number of serious geopolitical uncertainties, along with 
economic, environmental, social, and regulatory issues that 
could impact the monetization of the region's rich hydrocarbon 
resources. High political risk, onerous fiscal contractual 
terms and condition, populist rhetoric, and the nationalization 
of national oil companies' assets have caused the declining 
exploration and production investment in Venezuela, Ecuador, 
Bolivia, Argentina, and Mexico, seriously threatening the 
monetization of the rich hydrocarbon resource in the region.
    Most recently Argentina's confiscation without compensation 
of 51 percent of YPA shares owned by Spanish oil company Repsol 
reenforces the challenge of resource nationalism in the region. 
If Argentina, a member of the G20, can carry on these policies 
without having to face the consequences, the rule of law could 
be seriously undermined, creating a domino effect in other 
Latin America countries, Bolivia, Colombia, and Brazil among 
them.
    If countries want to increase energy and resource 
development activities, they have to offer fiscal and 
contractual terms and conditions which offer an acceptable rate 
of return to investors commensurate with their potential and 
associated technical and commercial risks.
    We need to encourage the design of fiscal and investment 
models that create alignment between the objectives of the host 
government and foreign investors, while promoting good 
governance standards and behaviors by reinforcing through other 
regions the need for, as Congressman Sires raised, rule of law, 
accountability, transparency, and integrity.
    Even though the region, Mr. Chairman, is rich in crude oil 
and natural gas reserves, it has a considerable deficit in the 
refinery capacity needed to monetize liquids production into 
petroleum fuels. Crude-oil-exporting countries, such as 
Venezuela, Mexico, Colombia, Ecuador, Brazil, and Argentina, 
are also importers of refined products.
    For the first time, Mr. Chairman, since 1949, in 2011, the 
U.S. became a net exporter of petroleum products. Approximately 
50 percent, Mr. Chairman, of the total U.S. petroleum exports 
in 2012 were destined to Latin America and Caribbean.
    A comment: Petrocaribe has delivered 96,000 barrels a day 
to the region; we have delivered 300,000 barrels of petroleum 
products to the Caribbean and Central America during the same 
period.
    We believe, Mr. Chairman, that academic institutions can 
play a role of thought leaders and agents of positive change by 
transferring knowledge and best practices, thus providing 
developing countries the opportunity to become fast learners to 
avoid mistakes made by others and to have access to existing 
process, research, and best practices that might be beneficial 
to their specific energy and sustainability needs. The 
University of Texas, Austin president William Powers, Jr., will 
be visiting Brazil June 5, 6, promoting the Scientists without 
Borders program, which will open the way for the Brazilian 
Government to fund graduate study in the United States for 
promoting Brazilian students in the STEM field.
    It is clear to us, Mr. Chairman, that lessons learned and 
best practices have to be shared in order to avoid conflicts 
between good neighbors--Colombia is a good example--and foster 
conditions and relationships toward energy security and 
cooperation in the Western Hemisphere.
    We thank you, Mr. Chairman, for allowing us to share with 
you our views on energy challenges and opportunities for Latin 
America and the Caribbean. Thank you, sir.
    Mr. Salmon. Thank you, Mr. Pinon.
    [The prepared statement of Mr. Pinon follows:]

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
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    Mr. Salmon. We would like to recognize Mr. Farnsworth.

 STATEMENT OF MR. ERIC FARNSWORTH, VICE PRESIDENT, COUNCIL OF 
               THE AMERICAS AND AMERICAS SOCIETY

    Mr. Farnsworth. Thank you very much, Mr. Chairman. Good 
afternoon. And thank you to the ranking minority member as well 
as the other members of the committee. It is a real privilege 
to be with you today. I think you are going to hear a lot of 
similarities among us and with some of the other testimony that 
you have heard previously, and I would like to ask, as well, 
that my full written statement be submitted for the record.
    Mr. Salmon. Without objection.
    Mr. Farnsworth. I would like to give you the bottom line 
first. Energy security is of fundamental strategic importance. 
It has long been a core component of U.S. foreign policy 
globally on a bipartisan basis, and it is within this context 
that the nations of Latin America, the Caribbean, and Canada 
must be considered.
    Already just over half of U.S. energy imports come from the 
Western Hemisphere, meeting approximately one-quarter of our 
daily energy needs. At the same time, a dramatic expansion of 
energy resources across the hemisphere made possible by 
cutting-edge technologies, including ultra deepwater drilling 
offshore and biofuel production and fracking onshore, has 
created the possibility of a new, highly favorable paradigm.
    As a result, we should seek as a first priority to work 
together as a hemisphere to increase energy security for all 
parties in a manner that lowers costs through increased 
production and greater efficiencies; encourages sustainable 
economic growth, development, and job creation; and supports a 
clean-energy matrix with environmental protections. These 
issues will become even more relevant as the middle class grows 
and expectations and energy consumptions continue to rise 
across the hemisphere.
    The reality is, we have heard from others already this 
afternoon, is that the Western Hemisphere is rich in energy 
resources. Latin America already boasts the world's cleanest 
energy matrix in large measure due to a reliance on hydropower 
and the purposeful development of biofuels. Meaningful 
additional projects in wind and solar are under way.
    Nonetheless, traditional fuels will remain critical to meet 
both regional and global energy needs for the foreseeable 
future. And here, too, Latin America and the Caribbean boast 
significant resources. Unfortunately, politics, including 
populist governance and regional rivalries between and among 
states, and a suboptimal investment climate in a number of 
nations, specifically including a weak and malleable rule of 
law, has led to a sectoral underdevelopment and unnecessary 
inefficiencies.
    At the same time, the United States is not the only Nation 
that sees the potential for cooperation in Latin America, 
Caribbean, and Canadian energy. China, for example, which is 
now the world's top energy consumer, is a relatively recent, 
but very active participant in the development of regional 
energy resources, as are other nations, including India and 
Russia. This is a region that is now in play. In my view, the 
United States must, therefore, do a better job making the case 
for regional partnership, because alternatives for the region 
exist today which simply did not exist a decade ago.
    With this in mind, the United States can and should become 
more proactively engaged in regional energy issues, serving as 
a resource and a partner for nations that seek engagement with 
us. In the first instance, we must take several steps in the 
near term that will show a seriousness of purpose and 
leadership in hemispheric energy matters. Three come right to 
mind, and we have discussed all of them to a greater or lesser 
extent already this afternoon: Approval of the Keystone XL 
Pipeline as soon as reasonable environmental concerns are 
addressed; implementation of the pending transboundary 
Hydrocarbons Agreement with Mexico; and greater alacrity in the 
effort to approve exports of natural gas.
    We should begin to view energy, in my view, and 
specifically natural gas, as a potent new tool of regional 
foreign policy, particularly in the Caribbean Basin, including 
Central America. The Caribbean Basin faces economic challenges 
unlike the rest of the hemisphere due to small and less 
competitive economies. As security gains are made in Mexico and 
increasingly Central America, drug traffickers will change 
their routes back into the Caribbean, where they came from 
originally.
    Those realities coupled with Venezuela's growing economic 
challenges and political transition, which may cause Caracas to 
reduce its provision of subsidized energy under the Petrocaribe 
program, suggest that now would be an opportune time for the 
United States to help build will Caribbean competitiveness and 
job creation in the formal economy. The export of cleaner 
natural gas and the focus on regional electricity connectivity 
should, therefore, in my view, underlie such an initiative.
    More broadly, the United States has a strategic interest in 
working with willing nations to develop their own energy 
resources effectively while promoting models that reduce the 
negative, if unintended, consequences of energy development. 
Nations need U.S. technology, management expertise, and 
investment dollars. They need our education system to develop 
their engineers and seismologists. They need help to understand 
regulatory tax and pricing models that work. They need be 
exposed to best practices and environmental mitigation. And 
they need technical assistance to improve the investment 
climate and the rule of law.
    And in this regard, let me just raise very briefly one 
country in particular, because it is so much important in terms 
of hemispheric energy trends, and that is Brazil, which I 
believe offers a case study for consideration.
    Major discoveries in the pre-salt fields off the coast may 
soon catapult Brazil into the ranks of the global energy 
superpowers. Energy cooperation with Brazil is thus a prime 
opportunity for the United States, as the President said when 
he traveled there in 2011. At the same time, despite massive 
potential, development has been slower than predicted due to a 
number of government-mandated requirements, complicated rule of 
law, and continued uncertainty in terms of elements such as the 
sharing out of royalties.
    These issues are not unique to Brazil. The purpose in 
raising them, however, is to suggest that great opportunities 
in hemispheric energy come with certain challenges as well. 
Only by focusing purposefully on the region at the most senior 
levels of government will the United States, in my view, be 
able to take full advantage of a partnership that is clearly in 
our self-interest to pursue.
    So, Mr. Chairman, members of the subcommittee, I want to 
thank you again for the opportunity, and I look forward to your 
questions.
    Mr. Salmon. Thank you much, Mr. Farnsworth.
    [The prepared statement of Mr. Farnsworth follows:]

    
    
    
    
    
    
    
    
    
    
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    Mr. Salmon. Chair recognizes Mr. Goldwyn.

  STATEMENT OF THE HONORABLE DAVID L. GOLDWYN, PRESIDENT AND 
               FOUNDER, GOLDWYN GLOBAL STRATEGIES

    Mr. Goldwyn. Thank you, Mr. Chairman, Mr. Ranking Member. 
And thank you for your attention to this issue, you and the 
members of the committee. Rather than summarize my quite 
lengthy testimony, I thought I might ask to enter into the 
record and then just talk about the opportunities.
    Mr. Salmon. Without objection.
    Mr. Goldwyn. Thank you.
    We have heard a lot this morning about the impact of this 
tight oil and gas boom on U.S. energy security. Certainly our 
self-sufficiency in gas lets us be an LNG exporter, but not 
only of LNG, but natural gas by pipeline to Mexico and 
potentially by compressed natural gas to the hemisphere. The 
real significance of this is that we can create a more 
competitive market for the hemisphere, which can lower price as 
well as lower emissions.
    Our oil production boom has strategic advantages as well. 
We no longer import light sweet crude. This was the essence of 
what we were seeking for decades in terms of security. With 
supply from Canada, we will have a limited amount of imported 
heavy crudes from outside the Continental North American 
Continent. Some of that will come from Saudi Arabia, through 
its Motiva refinery system, and the rest is really a 
competition between Saudi heavy, Canadian, and Venezuela.
    So our decisions that we make on that will be important, 
but it also means that with our self-sufficiency we are going 
to force the hemisphere, and, frankly, everybody else who is an 
oil producer, to adapt or die, essentially to be more 
competitive, because investment around the world in oil and gas 
as shifted dramatically to North America because we have 
market, we have terms, we have contract security, we have 
infrastructure. So the countries which have the state-led 
models are going to undergo a severe challenge, and the 
countries which have market-oriented models are going to 
attract more investment.
    And this is really--this is the significance of what is 
happening to us, how it is going to shape the hemisphere. It 
is, frankly, an open question. It is a dramatic geopolitical 
pivot for us, because we have more physical security, and we 
have the ability to use exports as a tool of foreign policy. 
And it is going to take a while for Americans to get used to 
the idea that we are resource wealthy and not resource scarce. 
But we have this potential.
    So the question is how do we make the most of this 
opportunity? And I have six suggestions. The first, we have to 
keep up the work on energy efficiency and renewables, because 
there is a huge amount which the hemisphere can do, 
particularly the Caribbean and Central America, to reduce its 
dependence on fuel. That will be an economic boom for them. And 
so we do important work there, and we should keep that going.
    The second thing we need do is to spread this 
unconventional oil and gas boom to countries in the region. I 
began something called the Global Shale Gas Initiative when I 
was at the State Department; now it is called the 
Unconventional Gas Technology Assistance Program, but 
essentially teaching other countries how to produce 
unconventional oil and gas safely and efficiently. Let them 
grow their own. Some of that is about framework, some of that 
is about taxation, some of it is about infrastructure, but also 
it is about the technology and how to protect air and water. 
That brings to the table something that we want to talk about. 
And then we get to have the conversation about framework and 
corruption and other issues, which they may not want to hear, 
but that is the quid pro quo for having that conversation.
    Third is to implement the transboundary agreement. We have 
talked about that a lot this morning, and it is very 
encouraging to know that there will be legislation from 
Representative Duncan to push that through. That is important 
for Mexico, because Mexico is also going to have to adapt, and 
Mexico's national security interests clearly are in our 
interests as well.
    My fourth suggestion is a sharper focus on the Caribbean. 
And here I think the real choice for them is between fuel oil 
and gas. Renewables have a role to play, but they need base-
level electricity. They are small islands, small markets, with 
small transportation distances. So the potential for gas 
penetration is quite large there.
    The question is, how do they get it in? Now, they don't 
need liquified natural gas. They don't need that price, they 
don't need to spend that money. Maybe compressed natural gas is 
the answer. So but if we can find a way to get it out, perhaps 
by finding it is in U.S. national interests for all gas exports 
to the Caribbean to be in the U.S. national interests, make it 
easy for the Department of Energy, and find how to get that in. 
What they need is an engineering study more than anything else 
to figure out as a practical matter what is the most cost-
efficient commercial way to get that in. Maybe that is 
something that the committee could task.
    Fifth, I think we need to reconsider our policy on exports. 
Now, with gas exports we have talked a lot about the Department 
of Energy's process. I think they will get through that 
relatively quickly. I think when they look at the projects 
which are mature, in that they have gone through the prefiling 
process with FERC, they have filed their environmental reports, 
and they have a real contract, I think you will have a small 
number of projects that are ready to be permitted, and they 
will be permitted soon. But maybe there are smaller projects to 
export CNG to the Caribbean. They should get attention also.
    So I think that will move along because it has huge 
benefits economically and for climate, but we are also going to 
have to start looking at oil exports, because we have a surplus 
of light sweet crude. We don't have a place to put it. Rather 
than using it as blend stock with heavy crude to make a refined 
product, we might look at a way to swap that in the hemisphere 
and export as much light as we have heavy, because our primary 
customer base for the products and for the light crudes is in 
the hemisphere. So it is a great thing that we can bring to 
help them.
    Lastly, I think we need to focus our diplomatic and 
commercial engagement in the hemisphere. We have a lot of fora, 
but we need to focus on Brazil, Mexico, Venezuela, and the 
Caribbean. And, in particular, if I can just say just a few 
seconds about Venezuela, the conversation is going to be 
difficult for a while, but we need to start talking to them 
again so when things turn and the wheels turn, we have people 
that we can talk to on the other side; reconnect with Pedevesa 
because they are going downhill, both in terms of where their 
market is and where their production is going and fiscal 
pressure. And so eventually things will change; we just need to 
be ready. Thank you.
    [The prepared statement of Mr. Goldwyn follows:]

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
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    Mr. Salmon. Thank you, gentlemen.
    I yield myself now 5 minutes for questions. And the first 
question I would like to direct to Mr. Farnsworth, but it could 
equally be addressed to you, Mr. Goldwyn.
    You touched on the LNG exports and the importance of the 
U.S. finally moving forward with granting export licenses to 
LNG to the Caribbean. Formalizing economies in the Caribbean 
Basin and Central America should be a regional goal. So how 
important would these exports be toward realizing that goal? 
And with the Petrocaribe's largesse in question now, now is the 
time to push, I believe, for free trade agreements with many of 
these nations in the Caribbean Basin. Do you agree with that?
    Mr. Farnsworth. Yes, sir, I do. And thank you for the 
question.
    I caution that it is not a panacea. I mean, there are some 
real issues here in the Caribbean Basin. But fundamentally, if 
you look at a global economy, there aren't a lot of options for 
small island state that is connected only through tourism or 
maybe some small industry or some small agriculture. And if the 
cost of electricity and the cost of fuel imports is three, 
four, five times higher than in advanced economies just next 
door, you are fundamentally economically uncompetitive.
    If you take that and you take away, potentially--we don't 
know, but potentially you take away the subsidies that some of 
the islands have been receiving from Venezuela, and you layer 
on top of that the enhanced security requirements that are 
quite predictable as the United States works with our Latin 
America partners in Central America and Mexico to try to 
address some of those security issues, you have a fairly 
complicated stew here that could compel one of two things. It 
could compel illegal activity, or it could compel additional 
migration. Neither one of those is particular, I think, in 
terms of the U.S. interests.
    So it seems to me we should try get ahead of the curve to 
the extent that we can, recognizing there are lead times in 
terms of permits and infrastructure development and all of 
that. But we should get started now because we can see this 
train coming down the tracks. And this is something that I 
think is both proactive, but it is also positive.
    You know, the United States has a very strong and positive 
relationship with the Caribbean in the context of global 
politics. During the Cold War we were very active with the 
Caribbean Basin Initiative. We saw it in global context. That 
is fine. The beneficiaries, however, were the Caribbean region 
and Central America. And I think we really need to begin to 
look at this region in a new way, a way that recognizes some of 
the obvious limitations, but says, look, we have a foreign 
policy need in the region, and let us use energy as part of 
that. And I think you can't really get there from here unless 
you begin to open the spigot in terms of natural gas exports.
    Mr. Salmon. Right.
    Mr. Goldwyn.
    Mr. Goldwyn. I would just add two quick points. One is 
these are relatively small markets, so in terms of total volume 
of gas, it really shouldn't be a concern on price. And given 
all the studies that have been done, I actually don't think 
there is a legitimate concern on price anyway, but that is 
another question.
    The second is these countries do need a market signal that 
if they sign a purchase agreement, that they will be able to 
get a license relatively quickly. And so that is where I think 
a policy determination would be helpful.
    Mr. Salmon. Thank you.
    Mr. Pinon, thank you for your testimony, and thank you for 
coming all the way from Texas to be here with us.
    With respect to Argentina's recent confiscation of YPF 
shares owned by the Spanish firm Repsol, you correctly point 
out that they flagrantly turned their nose up at the rule of 
law, yet Argentina has significant resources, particularly in 
shale gas fields, and they can benefit from the U.S. shale gas 
revolution.
    Do you see President Kirchner taking more serious steps 
toward attracting foreign investment while moving away from her 
statist and highly politicized policies?
    Mr. Pinon. Well, I believe that a major change has to take 
place. I think the signal that she sent to the industry by the 
confiscation of the Repsol assets sure puts in question who 
else is going to invest money in Argentina. If I was a major 
oil company or an international oil company, I would question 
how long will my assets be safe in Argentina.
    You have also have to remember, Mr. Chairman, that any 
upstream project takes anywhere between 1 to 7 years to bring 
onstream. These are issues that do not happen overnight. There 
is huge amount of capital investment that has to go up front. 
So even if I sign an agreement today that is valid to my 
corporation, what says that after 5 years, when I already have 
2-, 3-, 5 billion on the ground, that the rules of the games 
are not going to change?
    So that is the big issue. That is what happened in 
Venezuela. That is--with Exxon Mobil and with CONOCO. That is 
what happened in Ecuador with Occidental Petroleum. Once these 
international oil companies start putting large amounts of 
capital into the country, they more or less have you; in other 
words, the negotiation rule now is totally different.
    I think she is going to have a problem. There is economic 
problems in Argentina. Argentina is a very wealthy country not 
only in oil and gas, but in many other areas, and the country 
has always failed to materialize. So we will see what happens.
    Mr. Salmon. I think, you know, I learned early in my 
business career that if you take the idea that you have got to 
deal with long-term objectives for your business, and that is 
grow business over time and develop a reputation as an honest 
broker and somebody that people will be willing to do business 
with, and not the mentality that some look at the used car 
salesman--just sell that car and take advantage right here and 
now because we gotta get the sale, gotta squeeze every bit out 
that we possibly can now--it provides long-term success. And 
with Argentina's economic travails and problems, they would be 
well suited to look at focusing on some of these rule-of-law 
issues on investment, not just in regard to Repsol, but in 
regard to many other companies that I have talked to, 
international companies, that are very wary about doing 
business in Argentina because of these contract issues that are 
not being adhered to and rule-of-law issues that are being 
flouted. And I think ultimately if Argentina recognizes it is 
not in their best interests, it is not in their best long-term 
interests to continue going along this road, they have got to 
start recognizing contracts and adhering to rule of law.
    But thank you very much.
    I would like to recognize the ranking member Mr. Sires.
    Mr. Sires. I am glad that the Caribbean Basin has been 
raised, because I think one of the problems that we have had in 
the past, in my opinion, is that we focus on the big fish. You 
know, we focus on Mexico, we focus on Brazil. And obviously the 
large opportunities are in those countries.
    But there is a whole host of small countries, small markets 
that we seem to fly over. So when you said, Mr. Pinon, that we 
give them 300 million gallons, you know, of oil, that--I didn't 
know that figure. I think that bodes well for us, because we 
can certainly rebuff the influence of Venezuela by doing the 
same thing. I guess the 115 million people in Mexico makes 
Mexico the best partner we could ever have because of all the 
resources. And I would think the natural connection that we 
have with Mexico would make it a natural to continue.
    But one of the concerns that I always hear from Mexico is 
that they don't want to be seen as the United States' 
interfering in their business. And even this change that they 
are going to modernize their industry, they are very cautious 
about proceeding so they don't perceive that the United States 
is pushing this.
    Can you comment on that? All three of you? I will start 
with you, David. You don't mind if I call you David do you?
    Mr. Goldman. Please. I think there has been a bit of an 
evolution in Mexico. Traditionally, certainly this was 
nationalization was core to the revolution, it is a very 
sensitive subject. And most of the conversation right now is 
going on among the political parties in Mexico to see what they 
can live with. And they have this hard balance. They want to 
increase production, and they want new technology and their 
capital constrained. So they have to figure out how do they get 
that in, and will they have constitutional reform or not? And 
so it is largely an internal discussion.
    I don't think they see us pushing it. I think they have a 
Petrobras model, they could have a stat oil model. They could 
have a number of models which keep the state as the owner of 
the resource and keep the state as the regulator and keep the 
state in every deal, but still allow foreign companies to be 
operators and to book reserves. They have got to figure that 
out.
    I think what we can do is very quietly we can let our 
geologists talk to their geologists. We can talk to people at 
the Department of Energy about the nature of deepwater 
technology. We can have people in Interior talk about how to 
manage that safely, and none of that has to be in the public 
eye. We can work to give the government privately the 
confidence that it can see its way through to do this. But I 
agree, the less public we are, the better. But I really think 
this is internally driven by the pon and by the pre rather than 
seen as some sort of a U.S. effort to impose this or change 
this.
    Mr. Farnsworth. I would agree with that, and I would simply 
add that from my perspective, it seems that the new government 
of Enrique Pena Nieto sees energy reform in the context of 
overall national competitiveness, and so they don't see it as 
an independent stand-alone but rather integral to Mexico's 
ability to achieve its economic growth targets over time and 
the ability to really turn Mexico into an engine of global 
production and growth which is clearly where the government is 
headed. Now how they do that is really an issue for the Mexican 
people to figure out. There are some good models out there 
which would seem to hit the framework that they need 
politically. But it is their issue.
    And frankly, I have been quite amazed at the restraints 
that has been shown by other countries, not just the United 
States, but other countries saying, look, this is a political 
issue for you, and you need to resolve it in your own way in 
your own terms. But having said that, there is a horizon out 
here by which if you can find a way to reform this sector, it 
will turn Mexico into, or contribute to turning Mexico into 
that type of partner, Mr. Ranking Member, that I think we would 
all see.
    Mr. Pinon. I lived in Mexico for 5 years and I agree with 
David, I think even if the legal and legislature and political 
obstacles can overcome, you still have Pemex. Pemex is not 
Petrobras. Pemex is not Ecopetrol. So even if you can put the 
legal mechanisms in place that would allow Mexico to play ball 
in this game, they won't be able to achieve the goals that we 
are looking for because they have this state oil company that 
is called Pemex. And it is not from the point of view of their 
technical expertise. By the way, many of them are graduates of 
the University of Texas. That is not the issue.
    Is there skills as far as being entrepreneurs, is there 
skills of being able to play the game competitively? Mexico has 
been a national oil company that has stayed inside of Mexico 
for the last 50 years. Petrobras has an international 
experience. Petrobras is a true independent international oil 
company. Ecopetrol today, Colombia's national oil company, is 
doing business with Shell in the U.S. Gulf of Mexico. Why? 
Because they learned from that experience and regrettably Pemex 
is a true national oil company from the point of view that 
technically they might be very competitive. But from an 
entrepreneurial management stewardship point of view I think 
they lack the skills to really take Mexico into what we want it 
to be 5, 7 years from now.
    Mr. Sires. So you are not very hopeful of this?
    Mr. Pinon. No, sir, I am not. Mr. Pena Nieto has 6 years in 
power. It is a 6-year presidential term. And as I share with 
you today, any project upstream takes anywhere between 1 to 5 
years to materialize. I am sorry, I am optimistic for the 
potential of Mexico. It has been shared by all of us this 
morning, this afternoon in the panel. I just don't think that 
they will be able to achieve their goal, again, in particular 
with the organization that they have of the energy sector 
particularly in Pemex, I don't think so.
    Mr. Salmon. The chair recognizes Mr. Radel.
    Mr. Radel. Mr. Pinon, in that same vein looking at Brazil, 
have they reverted to increased resource nationalism? Brazil? 
And I follow up with we have this so-called pre-salt reserves, 
which has the potential to turn the country into one of the top 
five oil and gas producers in the world. Is there opportunity 
there for us?
    Mr. Pinon. Brazil will surpass both Venezuela and Mexico as 
the largest producers of oil in the region, which to many of us 
that have been in this industry for 34 years, we never thought 
that we would mention something like that.
    When Lula da Silva came in power in 2003, I believe, those 
of us that were in the industry said there goes Petrobras. We 
thought that is it, close the doors, go home, there is another 
Venezuela coming. And Lula da Silva is probably to me the best 
President that Latin America has ever had because being a 
leftist, being a socialist, he was able to recognize that 
Petrobras was that golden goose that was laying the eggs, and 
he said, I have to let it run like a true enterprise. I, as the 
state, am more than happy to collect the dividends and part of 
the shares if they go up. I want it to make more money because 
I am collecting 28, 30 percent corporate tax and by the way, 
they are going to make a lot of money for me. Lula knew how to 
run Petrobras. He just let it be Petrobras.
    That is why I am concerned about Argentina. We have two 
poster childs in the region and that is Brazil and Colombia. 
And what I am afraid of is that if we let Venezuela and Ecuador 
and Bolivia and all of these guys and now Argentina go through, 
it might give some of these governments a second thought, 
particularly if they do find all of these resources that now 
they say, by the way, I don't need the techno, I don't need the 
geologist, because I know where it is. I still need the 
engineers because I need to know how to get it out. But I don't 
need the geologists anymore.
    What is the advantage of an Exxon or a marathon or a 
Chevron or a Conoco to any of these countries anymore? Is it 
really technology? You have Schlumberger and Baker Hughes and 
Halliburton today in Mexico doing business that used to belong 
to the international oil companies. So the service business 
even has taken today a role that the majors always never wanted 
to take, which was the service type of business.
    So I have a problem. I think that we really, again, I think 
the future is fantastic. I am optimistic. I think Latin America 
can do it. All that I am saying is we need to take a step back, 
and we need to take the job and the role that some of these 
countries are playing.
    And China, today when China goes and is, and forgive me Mr. 
Chairman, but when China today is negotiating with Brazil and 
in the other room you have an American oil company, there are 
two different type of negotiations going on. I am not saying 
that the U.S. ought to have a national oil company, by the way. 
We don't have a national oil company. So when you have an 
international oil company in one room and you have a Chinese 
oil company in the other room, that Chinese oil company has 
government officials with it, has the National Bank of China 
with it, has all of the infrastructure required, has the 
engineer, has a turn key package.
    We don't have that flexibility because we don't have a 
national oil company. And I am not saying that we need to have 
one. But I just want the members of the committee to understand 
that when you have a China national oil company competing 
versus an American oil company, in many of these countries, and 
it is not--but wait--it is not an issue of corruption. It is 
not an issue of corruption. It is an issue that they have the 
competitive advantage that we don't have. That is what I am 
going to say.
    Mr. Goldman. I will just offer a slightly different view. I 
am a little bit more worried about Brazil because the big boom 
in Brazil happened when they opened the offshore to foreign 
operators and they got in technology and project management, 
what they didn't have, and they learned a lot and they had to 
tag along with that. And now they have taken a step back by 
saying that Petrobras has to be the operator in every project, 
that they have to put capital into every project, that they 
have to evaluate every project, has already slowed them down.
    So their production estimates have declined and the local 
content requirements are understandable, but they are required, 
companies are required to have things that Brazilians don't 
make yet. So all of that is going to slow things down. I think 
they will still be huge and they are very adaptive, so they may 
learn that this is not a revenue maximization model, and maybe 
they wanted to have that money for development and they will 
change. But right now where if that take off looked like this, 
it has flattened out a little bit.
    And I think Brazil, if the prices soften a little bit, 
companies will bid in the next round. But whether they go from 
exploration to production will depend a lot on what the returns 
are and what the price is whether Brazil is competitive. So I 
think they are going to have to compete more or they are not 
going to be the producer that they could be.
    Mr. Farnsworth. If I could just piggyback on that as well; 
this is where the North American play comes in so heavily 
because given a choice between investing in the United States 
or Canada versus uncertain markets in Latin America, most 
people chose North America. And what we have seen with the 
dramatic increase in recoverable energy in North America, 
companies don't have to make those riskier plays. And to the 
extent that any country, Brazil or any country is taking a step 
back, the issue then is how are they going to be able to 
attract the massive investment that is required to develop 
those resources?
    The resources are there. What isn't there is the 
investment. This is why China is so important because it has 
played a role that really didn't exist in the past whereby 
countries--Venezuela is a perfect example--can pursue policies 
and ambitions that the rest of the international community 
might have rejected in the past, but with China's support, they 
have been able to pursue certain policies. Now perhaps the 
Chinese are getting a little bit impatient with Venezuela and 
the inability to repay debts and that sort of thing, that 
remains to be seen.
    But this is where I think an argument in terms of the 
quality of investment can be developed with the western 
hemisphere. And I think the Western hemisphere nations are very 
receptive to that. In other words, a dollar of Western company 
investment isn't necessarily the same as a dollar of Chinese 
investment, not necessarily because the Chinese come with a 
package, but because of all of the externalities that we don't 
discuss: The corporate social responsibility, the hiring on the 
local economy, the support for local education systems, anti-
corruption, Foreign Corrupt Practices Act, corporate 
governance, all of these that Western companies will bring, 
none of those things that the Chinese will bring.
    And so you have a quality of investment. Yes, you can make 
more money in terms of some of the investment coming from other 
parts of the world. But in the longer term, is that a good 
thing to help develop your country along the way that, frankly, 
I think most of the people in the region would want to go, dare 
I say it, does that help support democracy? Now this is the 
Western Hemisphere Subcommittee, so I am comfortable making 
these types of argument.
    But the truth is, I think this is a concrete connection 
between investment policy and energy and resource nationalism 
and the quality of democracy down the road and true 
partnership. And I think we are seeing that develop right 
before our eyes in many of the countries in the region.
    Mr. Radel. Thank you, gentlemen.
    Mr. Salmon. Thank you. The chair recognizes Mr. Duncan.
    Mr. Duncan. Thank you, Mr. Chairman.
    I just want to mention one thing that the gentleman from 
New Jersey talked about in the last panel, and that is 
opportunity with, in a post Castro, post Chavez environment in 
the Latin America region. We have an opportunity there to go 
back and redevelop some relationships and find some opportunity 
for American businesses. But I know we all only want to deal 
with democratic regimes and democratic governments. And so I 
think we have got to find a way to negotiate that, we have got 
to find a way to support pro democracy, and we have got to find 
a way to seize those opportunities. And I look forward to 
working with the ranking member going forward.
    I think the administration should begin that process as 
well, and so I appreciate the efforts, especially with Cuba 
that the ranking member has had.
    Mr. Pinon, you mentioned China and the Chinese example. We 
heard the same thing in the Kurdish region of Iraq that when 
American companies are trying to negotiate with these 
governments, the Chinese have a leg up in that they have got 
the support of their government, and along with that comes the 
bank and everything you mentioned. I think the American 
Government needs to do a better job with supporting American 
businesses going into those negotiations. And I hear that other 
places. So I appreciate your bringing that up.
    And what we see with China is not just negotiating with 
Chinese companies with the government backing, we actually see 
the Chinese Government going in and not only purchasing mineral 
rights and mines and oil and natural gas fields and rights but 
also purchasing companies and rare-earth minerals and just a 
lot of different things.
    And so I guess the question I have, because this is a very 
interesting topic for me, is what can the U.S. Government do to 
better support American businesses so that U.S. business can 
better compete with China, Russia, Iran, and I appreciate you 
guys mentioning Argentina, Argentina has reached out to Iran 
recently, and that concerns me greatly.
    And so what can the government do? Give us some ideas, 
things that we might be able to work on as the legislative 
branch to push forward those concepts?
    Mr. Goldman. I think we can do a number of things. One is 
we can make clear to the countries in the region that the 
expertise in unconventional oil and gas, which is the future of 
their hemisphere was born and raised here in the United States. 
So they are not going to find that expertise from Chinese 
companies. Second, deepwater, ultra deepwater other than 
Petrobras, no Chinese company----
    Mr. Duncan. They are paying big dollars to purchase these 
mining companies, not the rights, but the companies themselves, 
they are paying big dollars for that in order to have access. I 
didn't mean to interrupt you.
    Mr. Goldman. They bought Nexen up in Canada. But I don't 
think anybody is yet trusting SINOC to be the operator of a 
deepwater. Now mining is a different story and I agree with you 
there. But one thing we can say is if your future is in 
unconventionals and in deepwater, you want to go with people 
who actually know how to do this right and do it efficiently 
and those tend to be Western companies, not exclusively 
American, but in this hemisphere, American.
    The second thing I think is to point out to them the 
reliability and the business climate that it creates. If you 
want investment in lots of other areas you have to have a 
positive investment climate and we come with all the things 
Eric has explained so well how in terms of how we behave in 
country.
    The Chinese increasingly being seen as colonialists, 
particularly in Africa, because they have an enclave way of 
operating. They don't bring any jobs. They keep to themselves. 
They don't treat the environment well. And people are getting 
irritated with them. And in the hemisphere so far, they have 
mostly bought assets which Western companies have wanted to 
dump so they haven't made any strategic acquisitions.
    But I think going forward, as you said, we have go to also 
just get in there and have a relationship that is good across 
the board so that we can make the case and be commercial 
advocates.
    Mr. Duncan. Before I come back to Mr. Pinon for some 
additional, let me make just make a comment that I was talking 
with some oil and natural gas folks from the Gulf of Mexico, 
the Louisiana Texas area, and they are talking about a lot of 
those companies left the Gulf and went to the coast of Brazil, 
went to the coast of Africa and now they are coming back 
because what they found dealing with those governments and 
their regulations and the slowness of permitting and other 
things, as bad as the rules and regulations are currently under 
this administration for deepwater drilling in the Gulf of 
Mexico, it is still they understand there is some certainty, 
they understand what the policies are, they may not like them, 
but it is a better business climate for dealing with our U.S. 
Government having to go through the delays and all that, at 
least they know what they are getting, whereas there is so much 
uncertainty.
    So they are pulling a lot of those rigs back to the Gulf of 
Mexico. I thought that was an interesting thing to hear from 
them because of the certainty aspect and the uncertainty, I 
guess, is what I am trying to say dealing with the Brazilian 
Government or the African governments that they had to deal 
with.
    And so going back to what can the U.S. Government do to 
support businesses and these environments, U.S. companies to 
make them better to compete with the Chinese? Mr. Pinon.
    Mr. Pinon. I still think that we do need, we have in this 
country, and by the way one of the things that made this 
country the best country to invest in oil and gas is because we 
do have that separation between the private sector and the 
state, and the government. And so we have to be very careful in 
the amount of support that the United States oil companies can 
get from our Government. We have to be very careful with that.
    But again, I think support in the area of technology 
transfer, the area of STEM education, working with, like 
Brazil, with scientists without borders, we in the United 
States have right now the State Department 100,000 strong in 
the Americas in which we exchange students, in other words, 
there is a lot of ways in which the U.S. can really influence 
and work on changing the behaviors and the knowledge and the 
skills in a lot of these countries.
    But we have to be very careful how the United States 
Government gets involved in the business dealings of U.S. oil 
companies overseas. I think that could set certain precedents 
that I wouldn't be in favor of.
    By the way, another issue that China is doing is China and 
Brazil today have joint ventures with both Statoil and with 
Repsol. So China is also not going necessarily on their own, 
but China is also going into joint ventures with international 
oil companies who have the deepwater expertise like the 
Norwegians and like Repsol.
    So the Chinese, I don't know what David's data shows, but 
we believe that in the next 4 years, if you have all of the 
equity production that China could very well have in Latin 
America, including the oil for loan exchange, China could be 
pulling as much as 600,000 barrels a day out of Latin America 
in equity production.
    In fact, they are looking for a refinery. They have talked 
to Valero, they have talked to a number of people to look for 
refinery capacity in the Caribbean.
    And by the way, China is a good partner. Many of us, ask 
the Exxons and the Chevrons and everybody else, we have 
partnership with China in China and in many other places in the 
world. So that is not necessarily the issue. If, like you said, 
the rules of the game when they go into a lot of these 
countries is totally different than the rules of the games as 
far as it goes with us.
    You mentioned the issue of all of the regulations and all 
of the rules that we have to follow, by the way, not 
necessarily because they are set by the United States 
Government, because from the corporate point of view, is good 
business. So those are the things that we have to work with.
    Mr. Duncan. My time is expired but I just want to mention 
the ranking member talked about fly-over countries, the smaller 
countries in Latin America, because we focus on Argentina, 
Brazil, Colombia, and we focus on the hot spot of Venezuela, 
but there are tremendous opportunities in Honduras and 
Nicaragua and other countries in the isthmus there. But also 
there is opportunities in, I believe, in Ecuador and Bolivia, 
Paraguay, Uruguay.
    There are tremendous opportunities for the U.S. to begin 
fostering, reestablishing those relationships that I think are 
going to be very, very important for us going forward and I 
yield back. Thanks.
    Mr. Salmon. I couldn't agree more.
    Mr. Sires had a follow-up question.
    Mr. Sires. I guess I get a little more reaffirm of the fact 
that I think some of these countries are going to miss the 
opportunity that is there for them by doing all the things that 
we talked about today.
    Here is a golden opportunity to move forward, and they are 
their own worst enemies by doing what, as Congressman Duncan 
said, he spoke to some of the members, some of the companies 
are pulling back and they are coming back into America. Why? 
Because they don't have the same problems that they encounter 
when they do business in those countries.
    I was just telling the chairman the last time I was in 
Colombia, I had dinner with one of the presidents of one of the 
universities. And he said to me that the second most studied 
foreign language in Colombia today is Mandarin. So that tells 
you something that the influence of China, and that is 
Colombia. I could just imagine where they have more influence 
and where they are doing more business than in Colombia, what 
is going to happen? Thank you, Mr. Chairman.
    Mr. Salmon. Thanks. We do have a few more minutes. I would 
like to ask another question, too. I have a significant amount 
of background with China. I have been there over 30 times. I 
speak the language. And I did not learn it in Colombia, but, in 
fact, I learned it in Taiwan. But I would like to say that 
given the fact, it is always easier to move things when you 
deal with an autocratic government, where the business and the 
government are all working in concert with one another.
    And Mr. Pinon, you mentioned that that is an advantage with 
their oil companies, the state-owned oil company where they 
have the government, the financier there, the oil company all 
at the table and they can blow and go. We can't do that, and we 
never will because we live in a government where the system of 
checks and balances and free market sector.
    So what are some of the things beyond--that we can adopt as 
policy to make it so our oil companies can compete a little bit 
more effectively?
    And then one other question to Mr. Goldman, you talked 
about the importance of energy and diplomacy and I couldn't 
agree more. But what can the United States and this 
subcommittee, in particular, do to help encourage energy-rich 
nations like Ecuador and Argentina develop the type investment 
climate that will boost their production and increase 
exploration? Thank you.
    Mr. Pinon. Mr. Chairman my apologies, I am biased, but 52 
of the top geologists in Petrobras today are graduates of the 
University of Texas. Now I can assure you that the University 
of Oklahoma and Texas A&M and those universities also have a 
huge number of graduates from the universities in those 
national oil companies.
    The best way that we have to reach those governments are 
through our own people, whether it is education, whether it is 
technology, whether it is student exchanges, whether it is 
environmental issues, water resources, one of the things that 
we are working now at the University of Texas helping a lot of 
these countries is whether it is shale gas or something else, 
it is going to impact water resources in a lot of these 
countries. So we are focusing on that too.
    We have just had the vice minister of energy of Guatemala, 
Eric was there, so we are looking at Guatemala for geothermal, 
how can we help Guatemala develop their geothermal industry. So 
I think there are a lot of things that we can do as the United 
States not only from the government, but also from the private 
and academic sectors.
    Mr. Salmon. Thank you.
    Mr. Goldman.
    Mr. Goldman. Thank you. Well, I think the market is a 
strict disciplinarian, so I think the first thing that is going 
to happen is they will notice how Colombia is doing, and how 
Chile and Argentina are doing something on gas and the Bolivias 
of the world will have to adapt. But I think the other thing we 
can do is use some of our multilateral mechanisms, the energy 
and climate partnership of the Americas, use demonstration 
examples as you heard from Ambassador Pascual earlier, so 
Colombia can stand up and say this is how we are getting an 
investment; Brazil can say this is what has worked for us so 
far; Mexico can say these are the changes we are looking at so 
they can hear it from their neighbors and not from us.
    And I think we can also our strategic dialogues with Brazil 
and others to talk about whether we can do some triangulation 
and get some, the people who those countries listen to to 
deliver some of this message so it is not coming from us 
directly.
    Mr. Salmon. Great idea. Mr. Radel, did you have any other 
questions you wanted to ask?
    Mr. Radel. Sure, for the record as we talked about Mandarin 
being studied in Colombia, we are learning Spanish here in the 
United States.
    Mr. Sires. You got some oil.
    Mr. Radel. I would like to talk about Ecuador. I think 
maybe Mr. Goldman, this would be best for you. There is a 
vacuum now with Hugo Chavez gone, even just symbolically. Could 
you describe our relations right now with Ecuador? One of the 
biggest splashes that Correa, President Correa made years ago 
was we said we would like to have our air base there and he 
said, sure, I would like one in Miami too. Not going to happen. 
But could you describe our diplomatic relations with them, and 
whether or not you believe that they would try and fill that 
kind of vacuum within the Bolivarian revolution, if you will.
    Mr. Goldman. Well, I think I have been out a little while 
so I don't know how relations are. So my guess is they are 
probably cordial. The foreign investment condition in the 
energy sector is worse than it is in any investment sector in 
Ecuador, but that is where it is worst and the actions against 
Oxy and others have been very serious. So I think the 
Department warns people of the volatility there.
    I don't think Ecuador has the resources, and I don't think 
Correa has the charisma, and I don't think the country has the 
respect to fill that vacuum. I don't think anybody wants to 
follow the Ecuadorian model. Bolivia has tried, I think, to its 
enormous detriment, and maybe permanent detriment as other 
countries find their own sources of gas. So I don't think 
anybody is going to be following President Correa wherever he 
may be trying to lead them.
    And, in fact, we will have to see what happens to Ecuador's 
production, but if it declines at the pace that Venezuela's 
production has declined, my guess is there will be enough 
internal problems there that no one will wish that on 
themselves.
    Mr. Radel. Well, there is one assessment. Thank you. Mr. 
Farnsworth do have something as well?
    Mr. Farnsworth. I agree with what David has said, but also 
to piggyback on what Mr. Sires, the point that you made which I 
think was absolutely correct. You have a boom in global energy 
that threatens to bypass some of the countries in the region 
despite being extraordinarily wealthy in energy. For the last 
several years, production in Venezuela has decreased, even 
though global emergency markets have been at historic highs. 
And any first year business student will tell you you want to 
sell as much as you can in a tight market for the highest price 
you can. And in fact, the production has been decreasing 
because of mismanagement of the energy sector et cetera, et 
cetera, some of the things we have already talked about.
    One country we haven't talked a lot about but which just 
came up is Bolivia. Bolivia is a perfect example of this. 
Bolivia should be, in some ways, the major supplier of natural 
gas in South America because of their geographic location, 
because of the amount of supplies they have. And what happened 
is they created conditions that were so negative to investment 
and delayed so long the actual development of the sector that 
now, discoveries around them have taken over and you have 
surrounding countries, Brazil, Argentina, of course we know 
Peru, Chile even, which traditionally doesn't have a lot of 
energy at all, and now you have Bolivia, instead of being the 
center of energy in South America, is really the hole in the 
doughnut. And the people that lose ultimately, in my view, are 
the people of the country because they are the owners and they 
are the ones who should be receiving the benefit of the natural 
resources, and they are not, because it is just not getting 
sold.
    Now yes, I am overstating the case, yes there is Bolivian 
gas going to Brazil, yes, it is going to Argentina, et cetera, 
but not as much as it should have, and they should have been 
the first mover in South America that would capture those 
markets, capture those patterns of trade and allow them to 
really establish the terms of discussion.
    They haven't done that. But I think if you extrapolate that 
more broadly, you could see and you later on, now some of the 
changes again that we talked about in North America, some of 
the changes in Asia, some of the finds we see that we have seen 
in the Middle East et cetera, et cetera you have a region that 
is rich in resources that might simply miss the boom because of 
politics, and that is a concern to all of us.
    Mr. Salmon. This discussion has been increasingly engaging 
and I don't want to cut anyone off. I believe Mr. Pinon, you 
wanted to talk and then I am going to close with Mr. Sires' 
last question. But you guys have been phenomenally well-spoken 
in giving us your thoughts and ideas, and I think we could 
probably go on for another couple of hours, and none of us 
would be bored. We are really enjoying this, so I don't want to 
clamp it off. We have got another few minutes, Mr. Pinon, and 
then I will go close with Mr. Sires.
    Mr. Pinon. Just one comment, we haven't talked about the 
Guyana basin. We have today Guyana and Surinam who probably 
have 15 billion barrels of reserves offshore. And I was just 
recently in Georgetown, and those countries are not ready to 
what is coming for them. We really have to keep an eye on both 
Guyana and Surinam because they have huge resources. And if 
they do discover oil, we need to be there.
    The other one is Uruguay. Already, international oil 
companies are moving offshore Uruguay. By the way Bolivia is 
looking now at moving gas LNG via barges down the Parana 
because they are now really being landlocked.
    So all that I am saying is that the Western Hemisphere and 
Latin America is going to be a lot of fun, and we look forward 
to come down here often and share with you our thoughts on the 
region. Thank you.
    Mr. Salmon. Mr. Sires.
    Mr. Sires. Mr. Chairman, this has certainly been a very 
informative hearing today, and I thank you for putting it 
together. But I have to end it with disagreeing with you a 
little bit about these countries' adopting. I think some of 
these leaders are making too much money. You look at the 
Nicaragua, whole family is multi millionaires. These people 
were in the mountains years ago. So I don't think they get it 
for their people. Some of these people are getting very, very 
wealthy in this whole process. And to adopt, and they are going 
to have to adopt, I am sorry, I disagree with you. That is just 
the way I think. Thank you for the hearing.
    Mr. Salmon. Thank you so much, Mr. Sires. And thank you so 
much. We are in an exciting crossroads right now, and I think 
that we have phenomenal opportunities if we but use them, and 
it is totally win-win.
    Mr. Radel, you mentioned earlier I believe on some of the 
issues of illegal immigration we are talking about. Is it not 
one of the best things that we could do to stave off some of 
those problems to prop up Mexico's economy or help them to be 
more successful?
    That having been said, their economy is growing at about 7 
percent and their unemployment rate is lower than ours, and I 
have heard that they are about to employ a U.S. guest worker 
program in Mexico.
    So thank you very much for being here today. We appreciate 
your attendance, and we appreciate your wonderful comments and 
intellect. Thank you very much. This meeting is now adjourned.
    [Whereupon, at 4:55 p.m., the subcommittee was adjourned.]
                                     

                                     

                            A P P E N D I X

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     Material Submitted for the Hearing RecordNotice deg.




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   Material submitted for the record by the Honorable Matt Salmon, a 
  Representative in Congress from the State of Arizona, and chairman, 
                 Subcommittee on the Western Hemisphere











                                 
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