[Senate Hearing 114-798]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 114-798

                  POLITICAL AND ECONOMIC DEVELOPMENTS
                   IN LATIN AMERICA AND OPPORTUNITIES
                          FOR U.S. ENGAGEMENT

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

                                HEARING

                               BEFORE THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           JANUARY 21, 2016

                               __________



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                  COMMITTEE ON FOREIGN RELATIONS         

                BOB CORKER, Tennessee, Chairman        
JAMES E. RISCH, Idaho                BENJAMIN L. CARDIN, Maryland
MARCO RUBIO, Florida                 BARBARA BOXER, California
RON JOHNSON, Wisconsin               ROBERT MENENDEZ, New Jersey
JEFF FLAKE, Arizona                  JEANNE SHAHEEN, New Hampshire
CORY GARDNER, Colorado               CHRISTOPHER A. COONS, Delaware
DAVID PERDUE, Georgia                TOM UDALL, New Mexico
JOHNNY ISAKSON, Georgia              CHRISTOPHER MURPHY, Connecticut
RAND PAUL, Kentucky                  TIM KAINE, Virginia
JOHN BARRASSO, Wyoming               EDWARD J. MARKEY, Massachusetts


                  Todd Womack, Staff Director        
            Jessica Lewis, Democratic Staff Director        
                    John Dutton, Chief Clerk        


                              (ii)        

  


                            C O N T E N T S

                              ----------                              
                                                                   Page

Corker, Hon. Bob, U.S. Senator From Tennessee....................     1


Cardin, Hon. Benjamin L., U.S. Senator From Maryland.............     2


McLarty, III, Hon. Thomas F., Chairman, McLarty Associates, and 
  Former White House Chief of Staff and Special Envoy to the 
  Americas in the Clinton Administration, Washington, DC.........     3

    Prepared statement...........................................     5


Farnsworth, Eric, Vice President, Americas Society and Council of 
  the Americas, Washington, DC...................................     7

    Prepared statement...........................................     9


O'Neil, Ph.D., Shannon K., Nelson and David Rockefeller Senior 
  Fellow for Latin America, Council on Foreign Relations, 
  Washington, DC.................................................    12

    Prepared statement...........................................    13


                             (iii)        
 

 
                  POLITICAL AND ECONOMIC DEVELOPMENTS
                   IN LATIN AMERICA AND OPPORTUNITIES
                          FOR U.S. ENGAGEMENT

                              ----------                              


                       THURSDAY, JANUARY 21, 2016

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:47 a.m., in 
Room SD-419, Dirksen Senate Office Building, Hon. Bob Corker, 
chairman of the committee, presiding.
    Present: Senators Corker [presiding], Gardner, Cardin, 
Menendez, Udall, Murphy, and Kaine.

             OPENING STATEMENT OF HON. BOB CORKER, 
                  U.S. SENATOR FROM TENNESSEE

    The Chairman. The Foreign Relations Committee will come to 
order. We want to thank our witnesses for being here on a snowy 
day.
    This morning, we are going to look--we are going to be 
looking for a different take on the Western Hemisphere. It 
seems like every time we have hearings relative to the Western 
Hemisphere, what grabs our attention is threats to democracy or 
problems like drug trafficking. However, recent political and 
economic developments in Latin America suggests there may be 
opportunities--I know you all are going to talk about those 
today--for the U.S. to ramp up our engagement in constructive 
ways.
    The Western Hemisphere is a region largely at peace and 
increasingly integrated in the global supply chains where the 
tools of democracy are available to resolve conflicts and 
fostering economic growth, education, and the rule of law, our 
shared interests. More importantly, it is the region where our 
neighbors are exercising leadership, particularly on the 
economic integration front.
    This hearing will explore where we stand and hopefully 
allow us to identify concrete steps that we can take as a 
Nation to influence outcomes in our mutual interests. We 
welcome our witnesses, and we will now turn to the 
distinguished ranking member, Senator Cardin, for any comments 
he may wish to make. And I would say to you it is my 
understanding that all three of these witnesses are Democrats, 
so this ought to be a very good.

             STATEMENT OF HON. BENJAMIN L. CARDIN, 
                   U.S. SENATOR FROM MARYLAND

    Senator Cardin. Well, I really want to welcome this very 
distinguished panel that we have. [Laughter.]
    Senator Cardin. I am glad to see the chairman chose wisely 
the witnesses that we have before us today. So thank you for 
being here, and I appreciate your input on the Western 
Hemisphere. This is obviously an extremely important hearing 
dealing with our own neighborhood.
    2015 has been a year of major change with the dramatic 
changes in U.S. relations in Cuba, to the elections to 
Argentina, to the arrival of bold new leadership in the 
Organization of American States. This hearing is a space to 
analyze these changing dynamics and identify how the United 
States can take advantage of opportunities in a region that is 
fundamentally important to our economy, our national security, 
and our national interests.
    As we review the region's advances over the last year, one 
that cannot go unnoticed is how civil societies, from Guatemala 
to Brazil, raised its voice against corruption. I mention that 
because, to me, one of our fundamental global problems is how 
do we get more attention to the spread of corruption. I was in 
Central America, democratic countries, but to deal with the 
problems of corruption has been very, very challenging.
    So we saw a renewed Latin America leadership regarding the 
critical situation in Venezuela where an alarming level of 
economic hardship and criminal violence prompted voters to 
elect the democratic opposition to a legislative super 
majority. It will be interesting to follow that particular 
circumstance. In Colombia, and I know the Colombian president 
will be here this year, a potential peace agreement would end a 
half a century of conflict and provide an opportunity to 
promote a new era of broad-based sustainable development.
    Additionally, I want to recognize the Mexican government's 
recent capture of El Chapo Guzman, and the decision to 
extradite him to the United States. I must say, though, and all 
due respect, Mr. Chairman, that our policies with Mexico would 
be much more effective if we could confirm our ambassador, 
Roberta Jacobson. It is very difficult without having a 
confirmed ambassador, and I appreciate the chairman's 
cooperation in trying to get that done.
    I want to note the steady progress being made by Mexico, 
Colombia, Peru, and Chile to advance the Pacific Alliance Trade 
Block, which is demonstrating the advantages of strong 
democratic institutions and responsible economic policies. We 
have several trade agreements in our hemisphere, and they are 
critically important to us.
    But despite these opportunities, our hemisphere is not 
without its difficulties, and I put at the top of that the 
concerns in Central America for the safety of its population. I 
had a chance to visit Central America and saw firsthand the 
challenges of people, families, trying to grow up with the 
influences of gangs and the protection of their people. It is a 
humanitarian crisis, and we have to be engaged.
    I was disappointed, Mr. Chairman, at the actions of the 
Obama Administration on recent enforcement actions, on full 
enforcement of our laws. But these children need to be--have 
due process. These children need to be understood because 
they--if they are forced to leave our country, their fate is 
very much in doubt, and their safety is very much in doubt. And 
I think we need to make sure that particularly children, that 
their rights are fully protected, and I would urge us to pay 
more attention to the humanitarian crisis in our own 
hemisphere, as well as, of course, the global challenges that 
we saw--that we see in Syria and other countries.
    Finally, we cannot ignore the looming challenges 
surrounding Sunday's elections in Haiti. Once again political 
brinkmanship is jeopardizing Haiti's chance for broad-based 
economic growth and the Haitian people's efforts to continue 
rebuilding their country.
    So you can see we have a lot of things to talk about, and 
we look forward to hearing from the witnesses.
    The. Chairman.  Well, thank you, Senator Cardin. I think 
you know I support Roberta Jacobson's nomination, and I hope 
that at some point both sides of the aisle candidly will 
release that to be voted on.
    But with that, I would like to introduce our distinguished 
witnesses. Our first witness is Mr. Mack McLarty. He served in 
the White House as chief of staff in the Clinton Administration 
and helped shepherd the North American Free Trade Agreement 
through Congress. We thank you for being here. Our second 
witness Eric Farnsworth. He is vice president of the American 
Society and Council of the Americas here in Washington. Thank 
you so much for lending your expertise. And our third witness 
is Dr. Shannon O'Neil, the senior fellow for Latin American 
Studies at the Council on Foreign Relations. We thank you so 
much, all three of you, for being here.
    Without objection, your written testimony will be entered 
into the record, so if you would, summarize in about five 
minutes what you would like to say. And why do you not just go 
in the order that I just introduced you, if you would.

  STATEMENT OF HON. THOMAS F. McLARTY, III, CHAIRMAN, McLARTY 
 ASSOCIATES, AND FORMER WHITE HOUSE CHIEF OF STAFF AND SPECIAL 
     ENVOY TO THE AMERICAS IN THE CLINTON ADMINISTRATION, 
                         WASHINGTON, DC

    Mr. McLarty. Chairman Corker, Ranking Member Cardin, 
distinguished members of the committee, and staff, I am honored 
to appear before you today to discuss the political and 
economic developments in Latin America, and the opportunities, 
as both of you noted, for engagement of the United States in 
the region.
    I have indeed been engaged for the past 25 years in trying 
to build cooperation between our country and Latin America in 
both the public and the private sector. Serving almost two 
decades ago as special envy of the Americas, I am more 
convinced than ever that we have a shared future with the 
region.
    The decision by President Obama to normalize relations with 
Cuba dominated the headlines in the region in the recent Summit 
of the Americas meeting, and understandably so. It was a 
historic moment, but it should not overshadow the rest of the 
continent. As both of you noted, we have a huge stake in the 
entire region, an area of 600 million people, with a broad 
range of issues from trade, to immigration, energy, education, 
narco trafficking, and certainly underscoring democracy.
    Overall to be fair, we face a pretty complicated situation 
in the region, but in my view, the positives and opportunities 
largely outweigh the negatives. To be realistic, several 
countries in the region are facing the most serious economic 
times that they have seen since 2008, and that comes after 
years of robust growth, which dramatically increased the size 
of the middle class, and moved a third of the country out of 
poverty.
    Those are positive developments, but they were driven in 
some measure by commodity prices, and now we see a fall in 
commodity prices, which are hitting many countries very hard. A 
couple of countries will have growth, but most will be flat to 
down, and so the real issue is whether this will have a ripple 
in the politics. Will it cause instability? We are already 
seeing some of that in Brazil where President Rousseff faces 
growing opposition, in Venezuela, as Senator Cardin noted, 
after a stunning victory in the polls where the opposition did 
indeed claim majority in the parliament for the first time in 
17 years. And in Argentina, Mauricio Macri swept aside a dozen 
years of Peronist rule by winning the presidency, and has a 
much more pro-United States stance.
    But I would be careful to say there has been an ideological 
shift in the region. The truth is the region, like our country, 
is pretty equally divided in their politics, and in many ways 
they are non-ideological. Somehow voters there and the citizens 
there, are focused on jobs, and education, and healthcare, and 
the environment, issues very familiar to you and all the 
constituents that you represent. Security is certainly a major 
issue in the region. It is good news in Colombia with the peace 
accord. I think it reflects the bipartisan and multi-
administration support of Plan Colombia, and President Santos, 
whom I have known for over two decades, will be indeed coming 
here early in February to celebrate that.
    The $750 million package of support for Central America 
under the Alliance for Prosperity was critical in stabilizing 
conditions there. I think the sharply-drawn conditions of that 
agreement are important to combat the violence, corruption, and 
poverty that are sending thousands of desperate migrants on the 
southern border. Vice President Biden's leadership and 
engagement, I think, has been critically important.
    The United States meets Latin America at our border with 
Mexico. It is a powerful symbol, frankly, of what unites us and 
what divides us. Building on President Pena's reforms there, I 
think the United States should grasp firmly the concept of a 
North American platform which was written about in a 
thoughtful, serious way by General Petraeus and Ambassador Bob 
Zoellick at the Council on Foreign Relations.
    Trade and energy are at the heart of that, but I would 
underscore that commerce should go hand-in-hand with the 
support of democracy, human rights, and the strengthening of 
civil society. There is a natural linkage in the region with 
the growing Hispanic population in our country, and that will 
certainly help shape U.S. relations in the region in years to 
come.
    Finally, I would say that Article 1 of the Inter-American 
Democratic Charter states that ``Peoples of the Americas have a 
right to democracy.'' Firm commitment to the--to that promise 
will be a measure of U.S. credibility in the region. The United 
States' relationship with Latin America is a critically 
important one, in my view. Developments across the region 
indicate indeed there is an opening, an opportunity, for the 
U.S. to engage in a purposeful, proactive, thoughtful way, and 
it is a moment we should seize.
    Mr. Chairman, thank you very much.
    [Mr. McLarty's prepared statement follows:]


              Prepared Statement of Thomas (Mack) McLarty

    Chairman Corker, Ranking Member Cardin, members of the committee, 
I'm honored to appear before you today to discuss political and 
economic developments in Latin America and opportunities for engagement 
by the United States.
    I've devoted much of the last 25 years to building cooperation 
between the United States and Latin America in both the public and 
private sector. Almost two decades after serving as Special Envoy for 
the Americas, I am more convinced than ever that despite important 
differences, the countries of the Western Hemisphere are bound together 
by common interests and a shared future.
    The decision by President Obama to normalize relations with Cuba 
dominated headlines about the region last year, and deservedly so. It 
was an historic moment with far-reaching consequences, as I'll discuss 
below. But it shouldn't overshadow the rest of the continent. We have a 
huge stake in the entire region, an area of 600 million people, on 
issues ranging from trade, drugs and immigration to energy, education 
and certainly democracy.
    Overall, we face a complicated picture in the hemisphere. But, in 
my view, the positives are larger than the negatives.
    Several countries in Latin America are facing the most serious 
economic headwinds since the global economic crisis of 2008. For many, 
the hardships follow an era of robust growth--during which the size of 
Latin America's middle class doubled and the percentage of people 
living in poverty dropped by one-third--thanks in large part to 
worldwide demand for commodities.
    Today, a declining commodities market has hit these countries hard. 
Brazil's economy is in the midst of its worst economic performance in 
decades, with no relief in sight. In Venezuela, with the world's 
largest oil reserves, $30 a barrel oil is compounding the government's 
incompetent management and the economy is in free-fall.
    While Peru and Panama are expected to have healthy growth (Panama 
leading the region at 6.3 percent and Peru projected at 3.6 percent ), 
other countries in the region can expect growth to be modest at best. 
The slowdown is raising questions about how far the ripple effects will 
extend. Will economic hardship increase social unrest, shake up 
politics and undermine stability? In some countries, this has already 
occurred or is unfolding now.
    In Brazil, President Rousseff faces growing opposition and 
impeachment proceedings in Congress.
    In Venezuela, after a stunning victory at the polls, the opposition 
claimed the majority in parliament for the first time in 17 years of 
autocratic rule.
    In Argentina, Mauricio Macri swept aside a dozen years of Peronist 
rule by winning the presidency. One of President Macri's priorities is 
better relations with the United States.
    These developments have led some commentators to see the eclipse of 
leftist, populist politics in Latin America. While there may be truth 
in this, it is also true that voters across the region seem decisively 
non-ideological. They want results. Much like in the United States, the 
electorate overall in Latin America--from Chile to Argentina, from 
Brazil to Mexico--is divided when it comes to ideology. Polls show 
their priority issues are those of many U.S. voters: jobs, education, 
equality, trade, energy, health and the environment.
    Security remains a major concern across the hemisphere. There is 
some promising news, such as in Colombia. After three years or arduous 
negotiations, President Juan Manuel Santos is poised to complete a 
peace process with the FARC. President Santos is scheduled to visit 
Washington next month to commemorate the launch of Plan Colombia, the 
bipartisan U.S. effort that was essential to turning the tide against 
the FARC.
    Congress's approval in December of $750 million for the Alliance 
for Prosperity in Central America is on a smaller scale than Plan 
Colombia, but its goals are no less urgent. This assistance to 
Guatemala, Honduras and El Salvador, with strongly drawn conditions, is 
designed to combat the violence, corruption and poverty that are 
sending thousands of desperate migrants to our southern border.
    The security and humanitarian catastrophe in the Northern Triangle 
of Central America is far from over. There has been a surge in recent 
months of women and children migrants seeking to enter the United 
States. Vice President Biden, who visited Guatemala again last week, 
has been critical to leading U.S. efforts to address this crisis.
    The United States meets Latin America at our border with Mexico. 
The border is a powerful symbol of what unites and divides us. It also 
underscores the pre-eminent position of our southern neighbor as a 
crucial partner of the United States. Few international relationships 
are as important for our security, prosperity and our future.
    Since taking office in 2012, President Enrique Pea Nieto has pushed 
through dozens of major reforms. New laws have brought competition to 
telecommunications and the financial and banking sectors. Most notably, 
he navigated what had been the ``third rail'' of Mexican politics for 
nearly 80 years, ending a state monopoly on the oil industry and 
opening the energy sector to private and foreign investment. This was 
an historic achievement.
    President Pea Nieto faced setbacks in 2015 with a stagnant economy 
and high-profile episodes of drug-related violence. This year is off to 
a better start. The capture of Joaquin ``El Chapo'' Guzman closed an 
embarrassing chapter. The economy seems poised to grow. To the 
government's credit, Mexico is a more stable country than it was a 
generation ago. Its key challenge today is translating stability into 
growth.
    The United States should lead in creating a North American platform 
for manufacturing, energy, environment and security. A report authored 
by Gen. David Petraeus and Robert Zoellick for the Council on Foreign 
Relations called for a regional strategy that would build on Mexico's 
reforms and lead to ``free and unimpeded movement of goods and services 
across North America's common borders.''
    Energy is just one opportunity for the United States to seize the 
moment to deepen ties with Latin America while advancing our mutual 
economic interest and universal values. With Latin American economies 
slowing, leaders have strong incentives to expand trade and integration 
with the north, which can also benefit the U.S. economy.
    Trade remains an engine for progress. U.S. exports and imports from 
the rest of the hemisphere have grown 50 percent during the Obama 
administration. The United States has free trade agreements with 11 
countries in Latin America. Five countries in the hemisphere -Canada, 
the United States, Mexico, Peru and Chile--have a direct stake in the 
Trans-Pacific Partnership with Asian countries. Chile in particular has 
been a key partner to the U.S. on the environment and rule as law, as 
well as a defender of economic liberalization.
    Commerce should go hand in hand with support of democracy, human 
rights and the spread of civil society. This is a natural linkage 
fueled by immigration, technology and commerce. Integration is altering 
both Latin America and the United States. As the Economist magazine 
pointed out, nearly one million Latinos reach voting age in the United 
States each year. Increasingly, they will help shape U.S. relations 
with the region.
    Traditionally, two frequent laments about Washington in Latin 
America are that it is either dangerously disengaged or overly 
meddlesome--sometimes at the same time. Bernard Aronson, President 
Obama's special representative to the Colombian peace process, has used 
the analogy of a telescope to describe how each side has seen the 
other. To Latin Americans looking through the small end of the 
telescope, the United States can loom larger than life. To North 
Americans looking through the wide end of the telescope, Latin America 
can seem faintly visible, if at all.
    I believe this distortion effect, so true for many decades, is 
becoming a thing of the past. Latin American countries operate in a 
global context in which the United States is not the only major actor. 
Business and cultural ties--and, yes, changes in U.S. Cuba policy after 
50 years--demonstrate that the United States is a dynamic force in the 
region.
    In Cuba and elsewhere, the United States should be a champion of 
openness and stronger civil society across Latin America. It should be 
a relentless, reliable and constructive ally of Venezuelans and others 
seeking to express their political rights.
    Article 1 of the Inter-American Democratic Charter states that 
``the peoples of the Americas have a right to democracy.'' Firm 
commitment to this promise is a measure of U.S. credibility in the 
region.
    The U.S. relationship with Latin America is a critically important 
one. Developments across the region indicate an opening for the U.S. to 
engage in a proactive and thoughtful way, and it is a moment we should 
seize.


    The. Chairman.  Thank you very much. Mr. Farnsworth?

STATEMENT OF ERIC FARNSWORTH, VICE PRESIDENT, AMERICAS SOCIETY 
          AND COUNCIL OF THE AMERICAS, WASHINGTON, DC

    Mr. Farnsworth. Well, good morning, Mr. Chairman, Mr. 
Ranking Member, members. Thank you for the opportunity to 
appear before you on such an important topic.
    This hearing today is timely. Latin America is a region 
very much in flux. Hopeful indicators, as we look ahead, are 
mixed with real challenges, both political and economic. 
Citizens' expectations have grown significantly as economies 
have expanded and personal circumstances have improved, while a 
generation of democratic reforms has provided the means to 
register demands and affect governance.
    Latin America today looks nothing like it did even 20 years 
ago, and we cannot forget that. At the same time, 2015 was a 
year of recession for many and slow growth for all, and 2016 
looks to be equally difficult economically. The question now is 
whether leaders will be able to show the continued progress 
their people demand and under what conditions. As recent 
elections across the region have shown, voters are seeking 
pragmatic solutions, rejecting ideology and excess, as Mr. 
McLarty has just indicated.
    In this context, Washington has as important and relevant a 
role to play today as we have had this century. Judicious U.S. 
focus on a bipartisan basis this year could have a lasting 
impact in strengthening and supporting positive impulses and 
trends, while promoting a vision that draws the region more 
closely together toward a shared future of healthy democratic 
governance, economic prosperity, and security. This I believe 
to be a fundamental U.S. strategic interest.
    Democracy across Latin America is broadly accepted. When 
challenges arise, the United States, working with partners in 
the region and also multilateral organizations, must find 
appropriate means to support healthy democracies.
    Without U.S. leadership, the international community tends 
not to coalesce around active support for democracy in the 
hemisphere.
    By now it is clear, for example, that Venezuela faces 
political and economic difficulties that can only be addressed 
through political cooperation with the democratically-elected 
legislature, yet the government has taken a number of steps to 
undermine the new congress. This threatens to become a full-
blown institutional crisis with regional implications.
    Mobilizing the OAS and the UN, engaging with like-minded 
regional partners, and continuing to identify and expose 
illegal actions, including corruption and drug trafficking, 
will help hold the government accountable for its actions and 
decisions. And as an aside, may I just take a moment to 
congratulate you, Mr. Cardin, for your leadership in organizing 
the letter signed by 157 legislatures across the hemisphere 
that put the focus squarely on Venezuelan democracy and helped 
achieve the results of the December 6th elections that are now 
having such important consequences in Venezuela.
    We have also seen recent elections in Argentina and 
Guatemala that provide an opportunity to build a new agenda. 
Since his December inauguration, Argentina's new president, 
Mauricio Macri, has already taken a number of actions to 
liberalize the economy, and has also spoken in support of 
democracy issues at home and abroad. His mandate offers the 
prospect for enhanced engagement with one of Latin America's 
largest economies, which Washington should actively explore at 
the most senior levels. In Guatemala, the new president was 
elected on a wave of popular revulsion against corruption, and 
can serve as an example, with U.S. support, of transparency and 
inclusion going forward.
    Corruption issues have also touched Latin America's largest 
democracy, Brazil, and will play out to their conclusion over 
time. The good news is that Brazilian judicial institutions are 
strong and meaningfully responding. Economic growth will also 
be a challenge for Brazil this year as the country looks for 
ways to generate new growth.
    This is exactly why, in my view, now is the time for 
Washington to lean into this bilateral relationship. The United 
States and Brazil share a significant interest in agriculture, 
education, energy, healthcare, the list goes on. In the wake of 
the visit last June of President Dilma Rousseff to Washington, 
we should be working purposefully together now in support of 
each of these agenda items when Brazil is, in particular, in 
need of economic growth.
    From a U.S. economic perspective, North America should be a 
priority, requiring us to be work intensively with our Canadian 
and Mexican partners to develop an even more competitive, 
unified economic space. This will require greater collaboration 
on trade and investment relations, supply chains, energy 
integration, and borders. Given our close interconnectedness, 
we should also be thinking bigger about North America, working 
collaboratively as a region on the issues that impact our 
citizens the most.
    Further, North America can be the foundation on which we 
build out the broader hemispheric economic agenda. For example, 
the Trans-Pacific Partnership, once passed and implemented, 
will include all three North American nations and also Chile 
and Peru. The Pacific Alliance is an exciting regional economic 
initiative that includes Mexico, Chile, Peru, and Colombia. Let 
us bring all these U.S. free trade partners together, inviting 
Pacific Alliance and North American leaders to join together to 
develop a broader agenda for regional economic engagement. As a 
strategic matter, this would change the game in the Americas.
    We also have to note the seismic shifts that energy markets 
are having in the Americas and note the technology, and know-
how, and management expertise that the United States can offer 
to countries who desire that.
    Let me briefly say one final word about security issues, if 
I may. Building a secure society, including cyber-related 
issues, is fundamental to maintaining the gains that I have 
been talking about in terms of economics and democracy. Mr. 
Chairman, this year offers a historic opportunity to 
essentially conclude the longest-running final guerilla 
conflict plaguing the hemisphere in Colombia.
    As you know, President Juan Manuel Santos will be in 
Washington in two weeks acknowledging the support of the 
American people on a bipartisan basis in Colombia's ongoing 
transformation, while seeking new funding for implementation 
for peace accords that his government is working to finalize 
with the main guerilla group, the FARC. Like the initial 
support for Plan Colombia, follow-on funding from the United 
States and other international donors to build peace will be 
crucial to solidify the gains that put Colombia on a path to 
development.
    And finally, working with partners in Mexico and Central 
America to address the regional security crisis in the northern 
part of Central America will help restore communities there 
that are being torn apart by criminal gangs. The appropriation 
of some $750 million to address these issues is a valuable 
contribution. Increasing security must go hand-in-hand with 
economic development, competitiveness, and job creation. And 
the United States will also need to remain diligent in support 
of and working with the Caribbean base of nations to address 
their growing security concerns as well.
    The agenda is large, but trends for cooperation are very 
favorable, and perhaps more favorable now than they have been 
in some time. Mr. Chairman, Mr. Ranking Member, thank you 
again. I look forward to your questions.
    [Mr. Farnsworth's prepared statement follows:]


                 Prepared Statement of Eric Farnsworth

    Good morning, Mr. Chairman, Mr. Ranking Member, and members. Thank 
you for the opportunity to testify on such an important topic. It is an 
honor to appear before you and the full committee today, and a 
particular pleasure as well to join the other witnesses of such stature 
and prominence.
    This hearing is timely. Latin America is a region very much in 
flux. Hopeful indicators as we look ahead are mixed with real 
challenges, both political and economic. Citizens' expectations have 
grown significantly as economies have expanded and personal 
circumstances have improved, while a generation of democratic reforms 
has provided the means to register demands and affect governance. Latin 
America today looks nothing like it did even 20 years ago and we cannot 
forget that. At the same time, 2015 was a year of recession for many 
and slow growth for all, and 2016 looks to be equally difficult 
economically. The question now is whether leaders will be able to show 
the continued progress their people demand, and under what conditions. 
It is in our interests to support these efforts.
             latin america is undergoing significant change
    By now the story is well-known. More than a decade of relatively 
easy growth fueled by historically high global commodities markets 
brought millions of citizens out of grinding poverty and created a new 
middle class with increased purchasing power and rising expectations. 
Leaders found their voices globally and intentionally sought to 
diversify relations away from the United States elsewhere, most notably 
toward China--which is now the top trade partner of several South 
American nations--and other rapidly growing emerging economies. Talk of 
Latin America ``decoupling'' from North America was amplified by the 
strident exhortations of a new generation of populist leaders, 
supporting a proliferation of regional institutions that excluded the 
United States and Canada while decreasing the effectiveness of existing 
multilateral organizations such as the Organization of American States. 
Washington's focus was elsewhere, given numerous global crises as well 
as a historic economic recession.
    Of course, not all countries pursued exactly the same path; 
geographic proximity to the United States and the relative importance 
of commodities versus manufactured products in individual economies 
proved to be important variables. So too did the conclusion of freer 
trade agreements with the United States and the development of 
integrated supply chains among trade partners. On the whole, however, 
the commodities supercycle, increasing alternatives, and a less robust 
U.S. economy constrained the ability of the United States to develop 
and promote a regional narrative beyond support for basic development 
activities and goals and an appeal for partnership.
    Now, however, as recent elections across the region have shown, the 
tide may be turning. Voters are tiring of ideological excesses and 
corruption, and they are seeking pragmatic results instead. As the easy 
money from commodities runs out, they want to know where it went, how 
it was spent, why their roads are crumbling and their public 
transportation is creaking, why their employment, healthcare, and 
schooling may suddenly be at risk, and why they can no longer walk 
unhindered down the streets at night and sometimes even during the day. 
They have become wary of leaders who promise more of the same. They 
acknowledge that a full-on embrace of China is not the answer. They 
seek a different path: protecting social gains while demanding more 
effective, transparent leadership, and they seek partners to help them 
do it.
           the united states is a valued and valuable partner
    In this context, Washington has as important and relevant a role to 
play today as we have had this century. Judicious U.S. focus on a 
bipartisan basis this year could have a lasting impact in strengthening 
and supporting positive impulses and trends while promoting a vision 
that draws the region more closely toward a shared future of healthy 
democratic governance, economic prosperity, and security. This I 
believe to be a strategic interest.
Support for Democratic Governance
    Democracy across Latin America, as espoused in the Inter-American 
Democratic Charter, is broadly accepted as the underlying principle 
organizing hemispheric engagement. When challenges arise, the United 
States, working with partners in the region and also multilateral 
organizations including the OAS and the United Nations, must find 
appropriate means to support healthy democratic governance. Without 
U.S. leadership the international community finds it difficult to 
coalesce around active support for democracy in the hemisphere. And 
there are ways to do this without engendering regional pushback. By now 
it's clear, for example, that Venezuela faces political and economic 
difficulties that can only be addressed through political cooperation 
with the democratically-elected legislature, yet the government has 
taken a number of steps to undermine the new Congress. This threatens 
to become a full-blown institutional crisis with regional implications. 
Mobilizing the OAS and the UN (given Venezuela's seat on the Security 
Council), engaging with like-minded regional partners, and continuing 
to identify and expose illegal actions including corruption and drug 
trafficking will help hold the government accountable for its actions 
and decisions.
    We've also seen recent elections in Argentina and Guatemala that 
provide an opportunity to build a new agenda with both of these 
nations. Since his December inauguration, Argentina's new President 
Mauricio Macri has already taken a number of actions to liberalize the 
economy, and has also spoken in support of democracy issues including 
Venezuela. His mandate offers the prospect for enhanced engagement with 
one of South America's largest economies, which Washington should 
actively explore at the most senior levels. In Guatemala, the new 
president was elected on a wave of popular revulsion against 
corruption, and can serve as an example, with U.S. support, of 
transparency and inclusion going forward. Other elections in 2016 will 
also bear watching, including Haiti, Peru, and Nicaragua, as well as 
constitutional reforms in other nations that may further strengthen the 
hand of various leaders.
    Corruption issues have also touched Latin Americas largest 
democracy, Brazil, and will play out to their conclusion over time. The 
good news is that Brazilian judicial institutions are strong and 
meaningfully responding. Economic growth will again be a challenge for 
Brazil this year and, as almost 50 percent of Latin America's total 
economy, this will hit the region broadly. When the eyes of the world 
turn to Brazil in August for the Olympic Summer Games in Rio de 
Janeiro, they will likely find a nation in recession looking for new 
ways to generate growth. This is exactly why, in my view, now is the 
time for Washington to lean in to the bilateral relationship. The 
United States and Brazil share significant interests in agriculture, 
education, energy, health care, peacekeeping operations, technology 
development and global climate change and environmental protection, 
among other issues. In the wake of the visit last June of President 
Dilma Rousseff, we should work purposefully together in support of each 
of these agenda items. More broadly, Brazil should also gain a greater 
say in existing institutions of global governance, and should be 
invited to join the G8 now that Russian membership is suspended and the 
size of Brazil's economy exceeds others in the group.
Strengthening Regional Economies
    The U.S. position in the hemisphere comes from our democratic 
example, but also our economic strength. North America should be a 
priority, in my view, requiring us to work even more intensively with 
our Canadian and Mexican partners to develop a more competitive, 
unified economic space. This will require intensive collaboration on 
trade and investment relations, supply chains, energy integration, and 
borders. With the High Level Economic Dialogue in Mexico in February, 
and the State Visit of Prime Minister Trudeau in March, we are on the 
right track. But we should also be thinking bigger, in particular 
turning the North America Leaders Summit into an annual event, and 
working collaboratively and regionally on global issues including 
climate change. We can also use North America as the foundation on 
which to build out a broader hemispheric economic agenda. For example, 
the Trans-Pacific Partnership, once passed and implemented, will 
include all three North American nations and also Chile and Peru. The 
Pacific Alliance is an exciting regional economic initiative that 
includes Mexico, Chile, Peru, and Colombia. Let's bring all these 
together, inviting the Pacific Alliance to join with North America to 
develop a broader agenda for regional economic engagement. To be 
consistent, we should also be advocating for Colombia's early accession 
to TPP and, if required, APEC, which will meet this year in Peru, while 
also holding the door open to others in Central and South America who 
might be interested and able to meet the high-standards trade and 
investment requirements that have been negotiated as a new benchmark 
for global agreements. As a strategic matter, this would change the 
game.
    Economically, we must also note the impact that seismic shifts in 
global energy markets have had in our hemisphere, and find ways to work 
with our partners to help diversify their own economies while building 
countercyclical policies that will reduce market volatility caused by 
commodities market swings. And we should also be looking for ways to 
cooperate on new energy technologies, for example by inviting other 
producers to join a hemispheric Shale Gas Council, to share best 
practices including clean technology, efficiencies, and environmental 
protections which could later be expanded more broadly. As the expected 
opening of the expanded Panama Canal this year reminds us, the United 
States is a valued partner in providing the capital, technology, and 
management expertise needed for the infrastructure and other 
development projects that the region both wants and needs.
Helping to Build a Safe and Secure Region
    Of course, a secure society including cyber-related issues is 
fundamental to these gains. Mr. Chairman, this year offers a historic 
opportunity to conclude the longest-running, final guerrilla conflict 
plaguing the hemisphere, in Colombia. As you know, President Juan 
Manuel Santos will be in Washington in two weeks, acknowledging the 
support of the American people on a bipartisan basis in Colombia's 
ongoing transformation while seeking new funding for implementation of 
peace accords that his government is working to finalize. Like the 
initial support for Plan Colombia at the beginning of the century which 
helped get us to this point, follow-on funding from the United States 
and other international donors to build peace will be crucial to 
solidify the gains and put Colombia on a path to further development.
    Similarly, working with partners in Mexico and Central America to 
address the regional security crisis in the northern part of Central 
America will help restore communities that are being torn apart by 
criminal gangs and desperate efforts to migrate to the United States 
that we have increasingly seen. The recent re-capture of Joaquin ``El 
Chapo'' Guzman in Mexico was just one very prominent example of success 
that law enforcement cooperation can achieve. But the issues in Central 
America are equally if not more difficult, and the appropriation of 
$750 million to address these issues is a valuable contribution. 
Increasing security must go hand in hand with economic development, 
competitiveness, and job creation. And, as the program for Central 
America is implemented and, in reaction, illegal activities potentially 
migrate again toward the Caribbean Basin, the United States will need 
to remain diligent and supportive in working with those nations to 
address their growing security concerns, too.
    The hemispheric agenda is large, but trends for cooperation are 
perhaps more favorable now than they have been for some time. Mr. 
Chairman, Mr. Ranking Member, thank you again for the opportunity to 
testify. I look forward to your questions.


    The. Chairman.  Thank you. Thank you very much. Dr. O'Neil.

    STATEMENT OF SHANNON K. O'NEIL, PH.D., NELSON AND DAVID 
ROCKEFELLER SENIOR FELLOW FOR LATIN AMERICA, COUNCIL ON FOREIGN 
                   RELATIONS, WASHINGTON, DC

    Dr. O'Neil.  Thank you, Mr. Chairman, Ranking Member, and 
members of the committee. I appreciate the opportunity to 
testify here today.
    As the United States grapples with extremism and 
authoritarianism abroad, Latin America is largely a good news 
story. The region has changed dramatically over the past few 
decades, mostly for the better. Today the region is 
overwhelmingly democratic. It is home to an increasing number 
of market friendly economies with close ties to the United 
States, buying over a quarter of all U.S. exports, and so 
supporting tens of millions of jobs here at home. These more 
open politics and economics are supported by a sizable middle 
class, which grew by over a hundred million people in the last 
decade. And while it does face problems in security, 
corruption, and economic slowdown, the opportunities outweigh 
the challenges in the region and for U.S.-Latin America 
relations.
    So in my opening remarks, I would like to talk about two 
potential areas where I believe the U.S. Congress can advance a 
positive agenda with the region, and these involve 
strengthening North America, something that Eric has mentioned, 
as well as supporting the proliferation of home-grown efforts 
to combat corruption.
    So thinking about North America. Sharing 7,500 miles of 
peaceful borders, Canada and Mexico now play a vital role in 
U.S. stability, security, and prosperity. And today, each of 
these nations is among the other's largest trading partners 
with inter-regional trade surpassing a trillion dollars each 
year.
    And as important, we form together a growing regional 
production platform, so the back and forth across the borders 
of the making of every car, plane, computer, flat screen TV. It 
means for every item we import from Mexico, on average 40 
percent of that value was actually made in the United States, 
and for Canada, it is 25 percent.
    Now, facilitating and deepening this integration and 
partnership will increase competitiveness, standards of living, 
and ultimately the ability to shape world affairs for 
generations to come. To do so, I believe Congress should focus 
on working towards the free and unimpeded movement of goods and 
services across North America's common borders. This will 
require reducing non-tariff barriers, revising rules of origin, 
mutually recognizing or harmonizing differing regulations, 
expanding preclearance and other proven programs for trusted 
travelers, and investing in border infrastructure.
    It also means passing the Trans-Pacific partnership, of 
which our neighbors, Canada and Mexico, are a part. And 
finally, as has been mentioned here already, it means 
confirming an ambassador to Mexico. As the several months-long 
absence of a top in-country diplomat, it slows the resolution 
of complex problems, it limits our ability to take care of--
take advantage of opportunities, and overall hinders our U.S. 
national interests.
    The second area to prioritize involves combatting 
corruption. And in the wake of the economic downturn, the 
region has seen a proliferation of corruption scandals. Some, 
particularly in Guatemala and Brazil, have led to high-level 
prosecutions and convictions. Others in Argentina, Chile, 
Mexico, Peru, have yet to show similar results, though some of 
these processes are ongoing.
    Now, while corruption revelations can undermine government 
credibility, particularly when they are not followed by 
prosecutions and convictions, the recent wave reveals 
significant advances. These include widespread passage of 
freedom information acts, a movement towards greater public 
transparency, and expanding press freedoms in the region.
    It also reflects an active civil society and the rise in 
many countries of a true democratic citizenry. And the United 
States can and should expand its support for these efforts. And 
it can do so by first making anti-corruption a consistent 
element of U.S. foreign policy in the hemisphere. So this means 
encouraging Department of State and other officials to 
consistently emphasize anti-corruption as a policy and 
priority. It means calling for better coordination with 
agencies that actually have the tools to investigate and 
prosecute offenders, and it means using new tools, things like 
the new Global Magnitsky Act when it comes into law, using them 
to deny and revoke visas of corrupt Latin American officials.
    Congress should also expand anti-corruption rule of law 
programming in Latin America. Congress can champion and fund 
efforts to improve judicial capacity, train law enforcement 
officials, strengthen and professionalize independent 
monitoring in anti-corruption agencies, and generally support 
civil society-led anti-corruption efforts. I believe we should 
continue to back Guatemala's CICIG, and it can help the new 
OAS-funded support mission against corruption and impunity in 
Honduras.
    And finally, it can and should support Mexico's judicial 
reform process. Though scheduled to come online this June, in 
June 2016, implementing and, importantly, improving the quality 
of the new justice system will require significant effort, 
significant resources, and will take many years.
    Now, prioritizing North America and supporting the fight 
against corruption will enable the United States to improve 
bilateral and multilateral relations in the region. And as 
importantly, it will improve the lives of citizens throughout 
the hemisphere, including those here in the United States. 
Thank you.
    [Dr. O'Neil's prepared statement follows:]


                  Prepared statement Shannon K. O'Neil

    Chairman Corker, Ranking Member Cardin, and members of the 
committee: Thank you for the invitation to testify today. I am grateful 
for the committee's interest in Latin America and am pleased to have 
this opportunity to discuss U.S. opportunities in the region. As 
always, I am eager to hear your advice and counsel.
    As the United States grapples with extremism and authoritarianism 
abroad, Latin America is largely a good news story. The region has 
changed dramatically over the past few decades, mostly for the better. 
Today the region is overwhelmingly democratic. Authoritarian rule is 
mostly relegated to the past, replaced by competitive parties, vibrant 
civil societies, and institutional checks and balances.
    Latin America is home to an increasing number of market-friendly 
economies with close ties to the United States. Over the last twenty-
five years trade with the region outpaced that with the rest of the 
world, as U.S. exports to Latin America jumped sevenfold. These nations 
now buy over a quarter of all U.S. exports, supporting tens of millions 
of jobs here at home. Many of our products are bought by the region's 
middle class, which added over 100 million members during the last 
decade's economic prosperity. In South America, this socioeconomic 
center comprises a near majority of the continent's 400 million 
citizens. Latin America is also resource rich, containing 20 percent of 
the world's oil reserves, as well as numerous other commodities.
    Finally, the region largely shares U.S. values, providing many 
current and potential allies for the United States when negotiating 
complicated global issues in multilateral forums, including financial 
architecture, climate change, and transnational organized crime. Recent 
changes, from the normalization of U.S.-Cuba relations to the election 
of Mauricio Macri in Argentina, further the potential for positive 
shifts in bilateral and regional relations.
    There are, of course, real challenges for the Americas. It remains 
one of the most violent regions in the world, with homicide rates three 
times the global average. Robberies, extortion, kidnappings, and sexual 
assault are all too common. Insecurity has direct reverberations for 
the United States, as it is one of the driving factors behind the wave 
of unaccompanied minors and others fleeing Central America.
    Latin American growth has slowed with China's and with the larger 
commodity bust, threatening to send many from the new middle class back 
into poverty. In the boom years several governments overspent, 
aggravating their economic challenges today. These nations largely 
failed to use the commodity largesse to improve the quality of 
education, boost competitiveness, or diversify their economies. Bad 
economics at times dovetailed with bad politics and the erosion of 
democracy, particularly in Venezuela.
    In the wake of the economic downturn, the region has seen a 
proliferation of corruption scandals. In Guatemala, investigations into 
government kickbacks led to the downfall of the president and vice 
president. In Brazil, the Petrobras scandal has sent several prominent 
politicians, public officials, and business leaders to jail. This 
prosecutorial activism and judicial independence is a welcome 
juxtaposition to Brazil's current economic recession and political 
impeachment crisis. Investigations into corruption cases in Argentina, 
Chile, Mexico, and Peru have yet to show similar results (though many 
of these investigations are ongoing).
    These corruption revelations can undermine government credibility, 
particularly when not followed by prosecutions and convictions. 
According to public opinion poll Latinobarometro, Latin Americans rank 
corruption one of the region's biggest challenges.\1\ Still the wave of 
cases reveal significant advances in the region: the widespread passage 
of freedom of information acts, and a move toward greater public 
transparency and press freedoms. It reflects an increasingly active 
civil society, and the rise in many countries of a true democratic 
citizenry.
---------------------------------------------------------------------------
    \1\ Latinobarometro, ``La Confianza En America Latina, 1995-2015,'' 
Latinobarometro, accessed January 15, 2016, http://
www.latinobarometro.org/lat.jsp.
---------------------------------------------------------------------------
    The United States has supported some of Latin America's corruption 
investigations and prosecutions, for instance partially funding 
Guatemala's UN-backed independent investigatory body, the International 
Commission Against Impunity in Guatemala (CICIG), and at times 
providing information to investigators and prosecutors building 
domestic cases against wrongdoing. It also has helped fund a slow and 
steady process of reforming law enforcement and justice in Mexico 
through the Merida Initiative and in Central America through the 
Central America Regional Security Initiative (CARSI). The recently 
approved $750 million for the Alliance for Prosperity incorporates 
programs to improve transparency and accountability, and envisions new 
mechanisms to combat corruption.
    As the United States looks to Latin America, there are important 
roles it can play to bolster and build upon these many positive trends. 
It should deepen engagement with its immediate neighbors, strengthening 
North America. It should prioritize anticorruption efforts within the 
larger assistance programs to the region. And it should take advantage 
of conducive changes to further bilateral and multilateral relations in 
the Western Hemisphere.
Start With North America
    Any set of U.S.-Latin America policy priorities should start with 
North America. Sharing 7,500 miles of peaceful borders, Canada and 
Mexico now play vital roles in U.S. stability, security, and 
prosperity.
    North America is a global economic powerhouse, home to three 
democracies and almost five hundred million people. Totaling over $20 
trillion, their combined economies account for over a quarter of global 
gross domestic product (GDP).
    Because of geography, markets, and the choices of millions of 
individuals and thousands of companies, North America has become one of 
the most integrated and interdependent regions in the world. Regional 
trade of over $1.2 trillion in 2014 makes the United States, Canada, 
and Mexico each other's most important commercial partners. Today, the 
United States exports more than four times as much to Mexico and Canada 
as it does to China and twice as much as to the European Union, 
supporting millions of jobs. The type of trade also differs due to the 
depth of North America's supply chains. A study by the National Bureau 
of Economic Research found that, on average, 40 percent of the value of 
products imported from Mexico and 25 percent of those from Canada 
actually come from the United States; the comparable input percentage 
with the rest of the world is 4 percent.\2\ This means that of the $294 
billion in goods that the United States imported from Mexico in 2014, 
some $118 billion of the value was created in the United States; for 
the $348 billion that the United States imported from Canada, the value 
created in the United States was $87 billion. In comparison, less than 
$20 billion of the $467 billion of U.S. imports from China came from 
U.S. workers.
---------------------------------------------------------------------------
    \2\ Robert Koopman, William Powers, Zhi Wang, and Shang-Jin Wei, 
``Give Credit Where Credit is Due: Tracing Value Added In Global 
Production Chains,'' National Bureau of Economic Research, p. 38, 
September 2010, http://www.nber.org/papers/w16426.pdf.
---------------------------------------------------------------------------
    Facilitating and deepening this integration and partnership will 
increase competitiveness, standards of living, and ultimately the 
ability to shape world affairs for generations to come. Given the 
bedrock nature of these relations, Congress should push forward the 
following policies:


   Confirm an ambassador to Mexico. The several months-long absence of 
        a top in-country diplomat has slowed the resolution of complex 
        problems, limited the ability to take advantage of mutual 
        opportunities, and hampered U.S. national interests. Roberta 
        Jacobson is a talented individual and consummate professional 
        with deep knowledge of the bilateral relationship. She will 
        ably serve to further relations if given the chance.

   Pass the Trans-Pacific Partnership (TPP). The trade agreement will 
        benefit many Western Hemisphere nations, including our North 
        American partners. Its passage is important to maintain and 
        further the competitiveness of the North American production 
        platform, and to strengthen U.S. geopolitical leadership 
        regionally and globally.

   Fund border infrastructure. Today there are many physical barriers 
        at the border. Investment in infrastructure lags far behind the 
        increased flows of people, cars, trucks, and goods, hindering 
        the competitiveness of North America as a region. Congress has 
        an important role to play in making infrastructure investment a 
        priority and passing funding legislation for the auxiliary 
        roads, rail infrastructure, bridges, airports, and ports of 
        entry that enable cross-border flows and connect them to the 
        larger U.S. economy. In addition, it should support the 
        expansion of successful preclearance programs to expedite the 
        movement of trusted goods and travelers across borders.

   Reduce regulatory and bureaucratic hurdles to trade. Rules of 
        origin, non-tariff barriers, and multiple customs filings slow 
        or impede regional trade. The U.S. government, working closely 
        with the private sector, should review and revise NAFTA's rules 
        of origin provisions to lower the cost for companies operating 
        in the region. Congress can also push to speed current efforts 
        to reduce expensive and often trivial divergences in 
        regulations, through the U.S.-Mexico High-Level Regulatory 
        Council and the U.S.-Canada Regulatory Cooperation Council. It 
        can encourage accelerating plans to introduce a North American 
        ``single window'' customs system that eliminates multiple 
        filings. Together these changes would streamline regional 
        commerce further, benefiting producers and workers in all three 
        nations.

   Strengthen continental energy infrastructure. From gas and oil 
        pipelines to electricity grids, deeper integration of cross-
        border infrastructure would make supply more stable and 
        resilient, increasing U.S. energy security. Recent reforms in 
        Mexico opening the sector to private investment enhance the 
        possibilities. Congress can help fund these infrastructure 
        investments, and call for speeding the presidential permitting 
        process.

Prioritize Anticorruption and Rule of Law
    Latin America's fundamental challenge today is weak rule of law. It 
erodes public trust, feeds violence, limits investments, and enables 
corruption.
    Corruption consumes tens if not hundreds of billions of dollars 
each year throughout the hemisphere. The prevalence of widespread graft 
discourages entrepreneurship in favor of rent-seeking. And its perverse 
incentives for public spending lead to underfunding of education, 
health care, and other goods that underpin the human-capital building 
vital for creating competitive twenty-first century economies and 
societies. Recognizing these threats, over the last several years U.S. 
security collaboration and assistance in the region broadened from a 
concentration on drug eradication and interdiction to efforts to 
enhance citizen security and strengthen rule of law more generally.
    These shifts in U.S. policy mirror homegrown efforts in many Latin 
American countries by courageous prosecutors and judges, policy 
reformers, and civil society advocates to change their polities and 
societies for the better. The U.S. Executive Branch and Congress should 
look for opportunities to bolster the changes underway, working with 
local reformers in and out of public office to hold governments 
accountable.


   Make anticorruption a consistent element of U.S. foreign policy in 
        the Western Hemisphere. Congress should call on the U.S. 
        Department of State and other U.S. administration officials to 
        consistently emphasize anticorruption as a policy priority in 
        Latin America. Congress should also encourage the Department of 
        State to better coordinate with counterparts in other agencies 
        with the tools to investigate corruption, bribery, and money 
        laundering, and to work with these agencies in expanding its 
        efforts to engage with governments working to address 
        corruption and improve rule of law.

   Urge the active use of the Global Magnitsky Human Rights 
        Accountability Act in Latin America. The U.S. House of 
        Representatives should pass this important piece of 
        legislation. Once enacted, Congress should urge the Executive, 
        guided by the Department of State, to actively use this new 
        foreign policy tool, denying and revoking U.S. entry visas and 
        imposing property sanctions for corrupt Latin American 
        officials.

   Expand anticorruption and rule of law programming in Latin America. 
        Congress should champion and fund efforts to improve judicial 
        capacity, train law enforcement officials, strengthen and 
        professionalize independent monitoring and anticorruption 
        agencies, and support civil society-led anticorruption efforts. 
        Building on the success of CICIG, Congress should back the OAS-
        funded Support Mission against Corruption and Impunity in 
        Honduras (MACCIH), and the potential creation of other 
        independent investigatory or prosecutorial bodies where needed 
        to address deep-seated graft.

   Support Mexico's judicial reforms. With Mexico, Congress should 
        help fund the ongoing transition to an accusatorial justice 
        system through the Merida Initiative and other programs. Though 
        scheduled to occur by June 2016, implementing and improving the 
        quality of this new system will require considerable effort and 
        resources over the next several years.

   Develop anticorruption indicators for future foreign assistance 
        programs. Congress could include indicators similar to those 
        used by the Millennium Challenge Corporation (MCC) to ensure 
        that foreign assistance programs in Latin America consider 
        country-level corruption when determining funding, and when 
        structuring development and security programs. As with human 
        right protections, Congress could withhold a percentage of 
        funds when violations of these measures occur.

Seek Opportunities for Greater Bilateral and Regional Cooperation
    Recent national, regional, and global changes provide openings for 
greater cooperation with many nations in Latin America.
    In part this shift comes from new leadership. Argentina's new 
government, with its more pragmatic economic and foreign policies, 
should enable warmer U.S.-Argentine relations. The recent election of 
Luis Almagro as secretary general of the Organization of American 
States (OAS) is also an opportunity to revive the at times moribund 
multilateral institution. The turn away by these and other regional 
leaders from their populist colleagues raises the possibility of 
constructing new twenty-first-century partnerships in the Americas, 
bringing the U.S. significant benefits.
    The normalization of U.S. relations with Cuba furthers this 
potential. The change in policy and tone removed a long-standing 
controversy in U.S.-Latin American relations. And it has opened an 
opportunity for current and potential allies in the region to speak out 
against democratic backsliding and other human rights violations. The 
change has at times empowered friends, new and old, to call out abuses. 
These include public statements by the secretary general of OAS, a 
letter from legislators from Peru, Colombia, Brazil, Chile, Costa Rica, 
as well as the United States, urging President Maduro to allow 
international observers for the December legislative election, and 
calls from Argentina to free political prisoners in Venezuela and 
repair its democratic deficit.
    To take advantage of these initial welcome shifts, the United 
States should:


   Revive U.S-Argentine relations. After weakening under former 
        president Cristina Fernandez de Kirchner, the U.S. Congress and 
        Executive should look for selective ways to work with the new 
        Mauricio Macri government. These include supporting Argentina 
        if and when it chooses to reengage with the International 
        Monetary Fund (IMF) and other multilateral institutions, and 
        once the nation resolves its legal disputes, its reentry into 
        international credit markets. At that point the Executive 
        should restore access to Export-Import Bank financing for U.S. 
        exporters to Argentina.

   Support Colombia's transition to democratic peace after decades of 
        war. This long-standing U.S. ally may be entering a new phase 
        as its decades-long conflict with the FARC (the Revolutionary 
        Armed Forces of Colombia) comes to a negotiated end. Congress 
        should provide funding to help implement the peace deal.

   Support the Pacific Alliance. The regional economic and diplomatic 
        block includes like-minded countries and economies; its 
        expansion and deepening would benefit the United States (which 
        currently sits as an observer to the group). Of the founding 
        members--Mexico, Colombia, Peru, and Chile--all but Colombia 
        are members of the TPP, and that nation has expressed interest 
        in joining as soon as possible. The United States should 
        facilitate this process.

   Reengage with Brazil by strengthening economic ties. To recover 
        from its current severe recession, Brazil may implement 
        structural reforms and begin opening its economy to the world. 
        If and when this occurs, the United States can encourage the 
        shift, negotiating on bilateral tax issues to eliminate double 
        taxation and as well as advancing agreements on trade in 
        services (including education, health, transportation, 
        insurance, and financial and other business services) between 
        the two nations. Both would stimulate investment and sales, 
        benefiting U.S. and Brazilian companies alike.


    The. Chairman.  Thank you all for your testimony, and, 
Mack, you made a comment about the symbolic border between us, 
and it symbolizing a couple of different things. But to all 
three of you, we have had net migration between U.S. and Mexico 
at net zero. And I would like for you to explain, if you will, 
how that has happened, and what factors have contributed to 
that.
    Mr. McLarty. Let me start quickly, and then I am sure my 
fellow panelists will offer their views as well. I think it is 
a combination of factors, Mr. Chairman. I think, number one, I 
had the opportunity to work with former Governor Jeb Bush on a 
commission on the Council on Foreign Relations on immigration 
reform, a subject that the Senate has dealt with for many years 
now.
    Border security is absolutely crucial. I think we have 
strengthened that. I think there are a number of tools from a 
technological standpoint as well as a commitment and just 
better coordination with our Mexican counterparts that have to 
continue to deepen and strengthen. And I think that has been 
part of it.
    But we have also seen, as Dr. O'Neil and Mr. Farnsworth 
noted, a strengthening of the Mexican economy itself with some 
of the reforms that I think yet will even improve their economy 
more. So we have seen a strengthening of economy and jobs 
availability there, so I think that has helped a great deal. I 
think particularly with the energy reforms in Mexico, you will 
see an increasingly competitive environment in Mexico, and I 
think that will add to the economic--their economic growth in 
the future.
    So I think it is a combination of things. I think it is 
absolutely crucial. And I appreciate the chairman underscoring 
that that situation has dramatically changed in the last three 
years.
    The. Chairman.  Go ahead.
    Dr. O'Neil.  Let me just add two points to Mack's issues, 
which are two of the fundamental issues. One is the 
demographics in Mexico. And so, the number of Mexicans turning 
18 each year is falling dramatically because of declining birth 
rates in Mexico, which are now very similar to ours, about 2.1, 
2.2 kids per family. So compared to the height of Mexican 
immigration in the early 2000s, today there is somewhere 
between 100 and 200,000 fewer Mexicans just turning 18 every 
year and needing to enter the job market, whether in Mexico or 
here. So one reason is demographics.
    Another big shift in Mexico is in education. And today the 
average Mexican stays in school twice as long as he or she did 
20 years ago. And so, the average 15-year-old today in Mexico 
is thinking about the test they have on Friday, not on whether 
they will migrate to the United States. And those two factors 
look to be long-term shifts that will not go back, whatever 
happens to the U.S. economy or at the border.
    The. Chairman.  Yeah. Do you want to anything, Eric, or are 
we covered?
    Mr. Farnsworth. I think you have covered it pretty well. I 
think that to the extent this is primarily driven by economic 
considerations, the relative strength of the U.S. economy vis-
`-vis Mexico is a critically important factor. But I would 
concur with the comments of my other two colleagues.
    The. Chairman.  So how would U.S. foreign direct investment 
in the region compare qualitatively or quantitatively to what 
China and/or Europe may be doing?
    Mr. McLarty. Well, Mr. Chairman, I think one major change 
in the region from the time that Mr. Farnsworth and I had the 
opportunity to work together in the White House is the United 
States is not the only single or dominant actor or player in 
the region. Brazil's largest trading relationship, for example, 
is now China.
    But I think this is a unique opportunity, and from our 
family standpoint, led by our older son, we have been investors 
in Brazil for 16 years in the automotive sector where we have 
been involved for four generations, and in Mexico. So we 
believe in the region in terms of opportunities and growth 
because of the factors that we noted here.
    I think this is an ideal time for United States investors, 
both smaller privately-held companies and large corporations, 
to increase their foreign direct investment in the region, 
particularly, frankly, with a strong dollar. So I think it is a 
unique opportunity.
    The. Chairman.  Any other--yes, sir?
    Mr. Farnsworth. I think it is a critically important 
question. Thank you for asking it, Mr. Chairman. In my personal 
view, the entrance of China economically into the Western 
Hemisphere, particularly South America, has been one of the 
transformative issues over the last decade, primarily built on 
the commodities, primarily built on new investment that the 
Chinese have brought.
    But the Chinese have also brought new ways of doing 
business that in some ways differ from the United States. In 
other words, there are different standards of public 
disclosure, transparency, anti-corruption, different standards 
perhaps of environmental protection, labor laws, et cetera, et 
cetera.
    Chinese investors are learning--we have to remember it has 
really only been about a decade since you have seen that 
initial wave of investment into the region, so there is a 
learning curve. It is not as advanced perhaps as Chinese 
investment into Africa. And we are seeing more now of a--of 
attention to social development issues and job creation on the 
local economy, not just bringing Chinese workers abroad, but it 
is a bit of a challenge.
    And I think from the United States investor perspective, we 
still have a very important advantage both in terms of quality, 
in terms of the ability to interact in terms of a certain value 
set with our Latin American and Caribbean neighbors and 
partners. And these are valued issues in the Western 
Hemisphere.
    So I think as China continues to slow and as commodity 
markets continue to reduce, and that is directly impacting the 
relationship--the economic relationship with Latin America, I 
think as Mack said, this is a real opportunity for the United 
States because now the region is looking for a particular 
reengagement with the U.S.
    The. Chairman.  Dr. O'Neil, you mentioned global supply 
chains in Mexico. To what degree is the Mexican economy 
integrated in the global supply chains, and how is that 
affecting our own competitiveness here in the U.S.?
    Dr. O'Neil.  Mexico, especially since NAFTA 20-plus years 
ago, has integrated into a North American supply chain. So 80-
plus percent of Mexican exports come here to the United States. 
But so do--it is one of our top exporting nations, so the back 
and forth is really what is happening. Canada is included in 
this to a lesser extent.
    And so, when you see, you know, an average car that goes 
back and forth, it will go across the border eight times where 
a part from here comes to the United States, something is added 
here, it goes back to Mexico. And you will see this back and 
forth before it becomes a car that is sold in a--in a local 
dealership whether here in the United States or sold in Mexico.
    And that spreads across through a variety of industries, 
whether it is cars, or aerospace, or electronics, or others. 
This is sort of the new Mexico, at least a new part of Mexico, 
and this is the part of the Mexico economy that is booming, the 
one that is tied to the United States.
    And because of these ties, North America, so the United 
States included, is able to become increasingly competitive in 
sending those goods around the world. So North American cars 
increasingly end up being sold not just in North America, but 
also in South America. So this is a huge transformation, this 
creation of an underlying economic platform that ties Mexico to 
the United States that frankly was not the reality just 20 
years ago.
    The. Chairman.  Any additional comments? Are we covered 
there?
    [No response.]
    The. Chairman.  Thank you all very much. Senator Cardin?
    Senator Cardin. Well, let me also join the chairman in 
thanking you all for your--for your testimony. Dr. O'Neil, I 
agree completely with your--how you prioritize anti-corruption 
rule of law issues. I would make an observation. Thanks for the 
plug for Global Magnitsky. We have passed it in the Senate. It 
is now in the House. Hopefully we will get action on that.
    And in regards to corruption indicators, this committee did 
take some action this year in a reauthorization in the State 
Department bill. It has not been enacted, but it starts down 
the process of evaluation of corruption, which would very 
much--could play a role in U.S. development assistance. So we 
are very much mindful.
    But here is the challenge. The challenge is that we have a 
lot of countries where the leadership really would like to 
fight corruption, but are they capable of fighting corruption? 
The Northern Triangle is of particular concern.
    And I am going to start on a positive note because I do 
think Vice President Biden has done an incredible service to 
the people of the Northern Triangle. I think our programs are 
working. I have been in the communities in Honduras and El 
Salvador, and I have seen firsthand the USAID programs for the 
neighborhoods. I have been with the FBI in their anti-gang 
activities. All these are very important efforts, and I do not 
want to minimize it, and I support the $750 million program.
    Having said that, the neighborhoods are not safe. You have 
got corruption. You have got extortion. You have got 
trafficking. You have got drugs. And the gang cliques control 
the country's economy on those--many of these countries' 
economies.
    So is there something we are missing as to how we can get 
more consequential change in the Northern Triangle for the 
safety of the communities and to fight corruption, because I 
must tell you. I do not know whether our ultimate policy is for 
a prosperous, safe, democratic country for its people, or our 
concern that--of the migration of people from the Northern 
Triangle to the United States, which I think is misguided that 
part of our policy.
    So is there something more that we are missing, because I 
must tell you, it is still--I mean, it is very challenging to 
see all the tools that we are using making a consequential--
real consequential change for the people who live in these 
vulnerable neighborhoods.
    Dr. O'Neil.  Let me start, and then I will have you join 
in. Any place like these Central America nations, the weakness 
of the institutions, the increase in violence, nothing is going 
to change overnight. And this will be a long process. And I 
think there are several aspects to what we and the people who 
live in these countries would want changed.
    And one is, as you mentioned, basic safety. You want to be 
able to be safe in your home, to be safe on your streets. And 
here we are helping, but, as important, when you look at other 
programs, like Plan Colombia, the places that have reduced 
violence, it is as important that the local governments also 
step in and participate. So for every dollar we put into Plan 
Colombia, Colombia put in $10. So part of it is leveraging 
resources. So we participate, but so, too, do those 
governments.
    Part of it is looking at the programs that we have, and we 
have a lot of great programs, and actually looking at the 
evaluations that have been done on some of the programs, 
particularly the CARSI programs, the previous to the Alliance 
for Prosperity programs. And the ones that seem to make the 
biggest difference on violence were prevention programs both 
for those not to come into gangs, and then also reaching out to 
those who are already in gangs and trying to bring them out.
    So some of the local community prevention programs seem to 
make a bigger difference in terms of reducing violence and 
increasing confidence in government and the like, then perhaps 
providing training enforcement and other types of things. So 
perhaps moving some of our focus to those types of programs.
    Another factor in looking at some of the statistical 
evaluations that have been done out of Vanderbilt University is 
education. And while often we think about first stopping the 
violence and then turning to things like building up education, 
increasing education had a direct correlation with reducing 
violence. And so, I think those socioeconomic types of programs 
we should be prioritizing, starting from the beginning rather 
than waiting perhaps for safety to improve. That is one side.
    The other side of your question is about corruption and 
transparency. And while violence and corruption are related, 
they are also two different things. And here I think the 
challenge sometimes is, one, having government officials that 
want to focus on these things, but, two, as you say, capacity 
and how do we build capacity.
    And there I do think you start to try to create autonomous 
independent organizations that can take them on, right, 
untouchable units. And we have seen this in Brazil. You have 
seen prosecutors and others actually go after the highest 
people. We have seen this in Guatemala aided by the UN agency, 
the CICIG body.
    And I would hope that the new body set up by the OAS or 
with the OAS in Honduras could try to begin to chip away at 
this impunity that we have seen for so many years.
    Senator Cardin. Mack, what else can we do here?
    Mr. McLarty. Well, first of all, there are no easy or quick 
answers, to be realistic and candid. But I would make three 
quick points, Senator Cardin.
    Number one, when I traveled to Colombia during my time in 
the White House, many thought that was just a hopeless 
situation. The country was lost. I do think U.S. engagement on 
a bipartisan basis, not just with dollars, but the engagement 
itself, and with the leadership and responsibility of the 
Colombian people, truly achieved a miracle turnaround there. So 
it can be done, but over time. So U.S. engagement makes a 
difference for sure.
    Number two, you have to have responsible leadership within 
the countries. It is more difficult likely in Central America 
than a larger country like Colombia, but it can be done. And 
number three, I think some of our Latin countries and leaders 
there are going to have to step up and give their support 
because it is in their interests as well.
    And we are already seeing that. Mexico particularly has a 
direct interest in Central America, and we are already seeing 
some of the procedures, processes, practices that were done in 
Colombia with law enforcement now being--trying to put--to be 
implemented in some of the Northern Triangle countries. So 
those would be the three recommendations or three thoughts, 
suggestions that I would put forward.
    Senator Cardin. Mr. Farnsworth?
    Mr. Farnsworth. Well, thank you for the opportunity to add 
to what my colleagues have said. Let me just said one thing 
that I think will contribute indeed to what both have already 
said, and that is that, you know, you have to provide 
alternatives for people. Otherwise, particularly young men of a 
certain demographic, will join the gang or try to migrate. I 
mean, those are really the options.
    The third option needs to be a good job. Education is 
important obviously, but you also need to bring investment. You 
also have to have a business climate that will stimulate a 
productive sector. And we already have the Central America Free 
Trade Agreement with Central America, bipartisan agreement, 
very, very important. But that is really just getting Central 
America to the starting line. That does not really guarantee 
success.
    One of the things that I think needs to be emphasized more 
and more in Central America, indeed across the region, is that 
corruption, lack of law enforcement or rule of law, gang 
warfare, these are disincentives to investment. And to the 
extent you are trying to bring that business and job creation 
to your country, which is already small, which already have 
challenges in the global economy, you really need to clean that 
up and make yourself a model for investment and job creation. I 
think over time that can--that can help.
    I think we also have to recognize--the second thing I would 
say, however, is some of this is a fact of geography and 
history. I mean, Central America is on a pathway between the 
world's largest producer of illegal narcotics and the world's 
largest consumer, and somehow Central America is going to be a 
bridge. So that is point number one.
    Point number two, in terms of history, after the brutal 
Central American wars of the 1980s and early 1990s, which are 
thankfully concluded. But there was not enough attention given 
to the actual implementation of peace accords, so you had 
demobilized guerillas, who really had no particular skills 
other than firing a weapon. Well, if you have a weapon and no 
particular skills, and your political moment is over, what are 
you going to do? Turn to crime. And that indeed is what many 
have done in El Salvador, in Guatemala, in Honduras, et cetera. 
And so, this really has implications in terms of Colombia 
looking forward to implementation of the peace process. Some 
ideas to think about.
    Senator Cardin. Thank you. Thank you.
    The. Chairman.  Thank you. Senator Gardner.
    Senator Gardner. Thank you, Mr. Chairman, and thank you to 
the witnesses for your testimony today. I recently had the 
opportunity to visit in Mexico City with members of their 
government talking to the minister of--excuse me--foreign 
affairs, and talking to business leaders and others. And it is 
clear that the determination whether the Pax for Mexico is 
successful really does mean a difference between economic 
success, education success. I think you--when I walked in a 
little bit late, I believe you were talking about some of the 
reforms made to the judicial system.
    Which of these reforms, though, do you believe is perhaps 
more important than the others in terms of success? Obviously 
all of them are very important, whether it is reforms in 
education and how the unions are handled, whether it is energy 
reforms and bringing in outside investment. But to me, the 
judicial reforms and educational reforms seem like two critical 
keys to this. Could you talk a little bit about the Pax for 
Mexico, Mack, if you would like to, or Dr. O'Neil, any of you, 
to talk about which of these do we really need to see success 
to build on for success of the other components of the Pax for 
Mexico.
    Mr. McLarty. I will start briefly, and then defer to Dr. 
O'Neil. Senator Gardner, I think you have to do all of the 
above. And I think with Mexico, the trend line is clearly 
encouraging. If you look at the building of the middle class, 
if you look at direct foreign investment, any measure that 
you--environmental standards and so forth, the trend line is 
favorable.
    Mexico has achieved, I think, a high degree of 
sophistication and competence in their central bank, for 
example, and that has been a great stabilizer in their economy, 
an independent central bank. The reforms by the Pena Nieta 
administration are historic. They have been across the board. 
They have not yet taken full effect. You noted the reforms, not 
just from the economic side, as important as they are because 
without job creation, you are not going to have that positive 
trend line, but also in education, reforming some of the tight 
hold that the unions had in education, for example, in Mexico, 
across the board.
    But the rule of law, the judicial system with Mexico now 
having a very assertive and free press has got to be 
strengthened for Mexico truly to move to the next level and 
continue this positive trend line. I think with the North 
American platform, which we have all spoken about in our own 
way, there is a tremendous opportunity not only for our 
partners and neighbors in Mexico, but for our country and for 
Canada.
    Senator Gardner. Dr. O'Neil.
    Dr. O'Neil.  In echoing some of Max's comments there, I 
mean, the reform package, there was a set of economic reforms 
where Mexico, you know, over the last 20 years has opened up 
its macro side. It has opened up to the world commercially, but 
it had yet to get through the bottlenecks in its own economy. 
So its new anti-trust laws, its new telecommunication laws, its 
energy laws were opening up monopolies or oligopolies over 
there. That is the point of these, which still has yet to do, 
but I think there are some encouraging signs.
    But these other two that particularly you bring up--the 
education reform and the judicial reform--I think these are 
fundamental to really changing Mexico. And the education reform 
is vital because as you look at Mexico, Mexico is not and never 
will be and should not want to be the lowest cost producer in 
the world. There are going to be other countries that are going 
to do that.
    But what it does need to do is be one of the most 
productive in the world. And particularly since Mexico is 
increasingly linked to our workers, to our economy, to our 
companies, we want them to be productive so we can present this 
competitive position vis-`-vis China or vis-`-vis other places 
around the world.
    So how do you do that? Well, you need a 21st century 
education, right? You need workers who can use robotics, who 
can invent robotics, who can do the kinds of things that we 
would like our workers to do as well because they are working 
together. And education reform at least begins to move the 
public system towards that.
    And an interesting aspect of this is so many Mexicans know 
education matters for them, that we have seen this movement out 
of the public system to the private system. So today a quarter 
of Mexican students are in private schools, not just the 
wealthy kids, but middle class, because people know, parents 
know this is your ticket to the future. So one, this education 
reform I think is important so you see inclusive growth there. 
All Mexicans have a chance at better education.
    And then, let me just say a thing about the judicial reform 
because I think this is vital.
    Senator Gardner. Yeah, it is.
    Dr. O'Neil.  Mexico is in the process right now of moving 
from a more inquisitorial system, a written system, to an 
accusatorial system, an oral system, somewhat like our own. And 
this should make it more transparent. It should make it less 
corrupt. It should make it more--and also provide due process 
and the like for those that are arrested that, you know, are 
defendants.
    But what it will do hopefully, if implemented and works 
well, is help with the rule of laws issues because the biggest 
challenge in Mexico, and I hear this when I talk to people who 
think about investing there, is it is great in terms of 
workers. It is great in terms of logistics. It is great in 
terms of access to the United States. But what do you think 
about security? Can I protect people? Or if I invest there, 
will my investment will be safe if there is some sort of 
dispute with partners or others.
    And I think if you implement a much stronger rule of law, 
that is the challenge Mexico has today. And the judicial 
reform, if implemented, I think will help move it in that 
direction. It is not a panacea, but will move it in a direction 
that will be beneficial for that country and to our country as 
well.
    Senator Gardner. And on judicial reform, I mean, we are 
talking about going from a system where basically you file a 
paper complaint with a judge, and the judge kind of goes back 
behind closed doors and makes a determination in essence, is 
that correct, to a system where the police officer who may be 
accusing somebody of a--of a crime is now going to be taking 
the stand in front of the public? Is that the essence of the 
reform?
    Dr. O'Neil.  It is. Before everything was written out. 
There were long--you know, things were written out. The 
prosecuting attorney had a very strong role. The defense 
attorney had a very limited role. This will be much more like 
ours where you will have cross examination and you will be able 
to--all evidence will have to be brought into a court. So it 
changes--the nature of the judges will change. So before 
whereas one judge who started from the beginning all the way 
through, you will have different judges. It is a totally 
different system.
    So one of Mexico's challenges is you need to retrain 
30,000-plus court officials in the new system. You need retrain 
300,000 police officers to collect evidence that will be 
admissible in court. There is a lot of big shifts that need to 
happen. And even if you retrain them, you need to really 
improve the quality of that. So that is somewhere I do think 
the United States can continue to help in this aspect of 
promoting the reform and improving the quality.
    Senator Gardner. Thank you very much. Mr. Farnsworth, I 
have kind of neglected you. If you have anything to add on 
this?
    Mr. Farnsworth. No. I would highlight the energy reforms, 
which indeed I agree with everything that has been said. But 
the energy reforms, in my view, are what the international 
community is really focusing on because it is the potential in 
terms of investment and job creation, et cetera, et cetera.
    I think we are going to see a very interesting continuation 
and expansion of that later this year when, as projected, the 
government of Mexico puts out for bid the deep water licenses, 
which indeed is what most--has attracted most attention in 
terms of international investment.
    Senator Gardner. And the first attempt was a little bit of 
a disappointment. Is that correct?
    Mr. Farnsworth. Well, that is the impression, yes. I mean, 
I think that the collapse of energy prices had something to do 
with the demand, as well as--and, again, this is an iterative 
process. It is a learning process. The government of Mexico 
admits that they did a couple of things in terms of profits and 
this and that that probably were not as attractive to investors 
as they could have been.
    But as energy continues a downward slide and as the bid 
processes continue, the government of Mexico has changed those 
terms, and I think you are going to see that improve even 
further.
    Senator Gardner. Great, thank you. Mr. Chairman, thank you.
    The. Chairman.  Absolutely. Senator Kaine.
    Senator Kaine. Thank you, Mr. Chairman, and thanks to the 
witnesses. I share your sense that while there are challenges, 
it is a--it is a good moment, and it is a good moment for us to 
focus on what we can do to accelerate advances if the peace 
deal is struck and there is a ceasefire in Colombia. I mean, 
you can get into a definitional argument here, but it is not 
only the end of this long-running guerilla war, but, you know, 
two continents without war.
    I do not know when there has been a time in history that 
the Americas have been without war. Asia cannot say that now. 
Africa cannot say that now. Europe really cannot say it with 
what is going on in the Ukraine. But to have two continents, 37 
nations, a billion people without war, that is a pretty big 
deal, and the U.S. has played a very, very important role in 
getting to that moment. And I think as we celebrate hopefully 
with President Santos in a couple of weeks about Colombia's 
progress, we should also broaden the celebration to include a 
marking of that moment.
    President Obama in his budget submission about a year ago 
put in the billion dollars for support for the Alliance for 
Prosperity. And the budget that we passed a month ago, the 
appropriations was about $750, which was very significant. I 
was speaking about this with the president of Honduras who was 
here two days ago, very excited about it.
    A danger is what we would do with the $750 million is we 
would just do what we have already been doing and just plus up, 
you know, the accounts by a little bit or by a lot. And maybe 
we would miss an opportunity to take an investment of that 
magnitude, which is significant, and really rethink it and 
really do things that really matter. The president of Honduras, 
for example, thinks that the allocation of how much of that 
money goes into CARSI versus economic development, things maybe 
too heavy on the CARSI side and too light on the development of 
the education or economic system.
    I hope we might think about having a hearing either in this 
committee or in the subcommittee about what is the best way to 
use that money, and what are we expecting back. What metrics 
are we looking for, because that is a big bipartisan commitment 
that we have all made. And at the front end, maybe get the 
State Department and others and say what are going to do with 
this money and how is it going to work.
    But as people who love this region, what advice would you 
give to us about how we should look at using that $750 million 
in the three Northern Triangle countries to really make a 
difference?
    Mr. McLarty. Well, Senator Kaine, I know you have been 
deeply engaged in this issue, and you have a history to draw 
from in that regard. I think you are on the right track. I 
mean, in these times in our country and really at any time, the 
expenditure or investment of our money in any region, 
particularly our neighbors, needs to be very carefully 
evaluated, and there needs to be accountability. In my 
testimony, I had sharply-drawn lines.
    But I think at the same time, you have to get buy-in. We 
all understand that human dynamic. You have to get ownership 
from those responsible that really have the most to gain and 
the most to lose, and that is the people of the countries where 
we are trying to support. I would not underestimate, and if you 
talk to any of the Colombian leadership over the past three 
presidencies, they will say that Plan Colombia has been a major 
part of that country's history and future. U.S. engagement is 
equally important to U.S. commitment and dollars, and I think 
that is another point worth making.
    Finally, I think you come up or make a great point that 
some degree of creativity here--I mean, the world is changing, 
and how these dollars are allocated, I think is quite 
important. And I think just to plus up, to use your appropriate 
term, is likely not the right way to go. So I think 
accountability is absolutely crucial, but I do commend the 
Administration. I commend the members of the Senate that 
supported the Alliance for Prosperity pact.
    Mr. Farnsworth. Thank you, Senator Kaine. And as a Virginia 
resident, let me thank you for the opportunity to testify 
before you as well.
    Senator Kaine. Absolutely.
    Mr. Farnsworth. I think this is exactly the right question. 
And in my view, we cannot see this as a continuation of 
business as usual. We have to view this as transformative, and, 
frankly, the leaders in the Northern Triangle need to view it 
as transformative as well. And if we do not have that mindset 
going in, I think we are going to get the same results as 
generally we have always had.
    Let me just add a couple things. One of the challenges of 
Central America broadly, not just the three Northern Triangle 
countries, has been cooperation, getting the countries in 
Central America to work together, to see themselves as allies 
and partners, not as competitors, not as, in some cases, 
enemies in the past, but certainly as in competition with each 
other.
    I think one of the challenges of law enforcement in the 
region is when one country cracks down, the bad guys just go to 
another country. There is law enforcement arbitrage. And so, 
for example, when Nicaragua had some success on law enforcement 
issues, the bad guys moved north to Honduras. And as Honduras 
presumably has success, we will see a similar shifting.
    We need to have a regional approach where we work together 
as a region, which will have benefits not just on the law 
enforcement side, but also frankly on the economic side, 
because as the world is going to broader markets and global 
competitiveness, we have to consider that a country with a GDP 
the size of El Salvador, for example, really needs partners to 
be competitive in a global environment. Sure, the United 
States, but also their other friends as well.
    And in that regard, let me just say I am a strong supporter 
of the Trans-Pacific Partnership. I think it should be passed. 
I think it is a good effort, and it will have an impact on 
Latin America. However, it will also potentially have a 
negative impact in Central America, for example, in the 
textiles and agriculture side. So while this is not an argument 
to not do TPP, I think it is an argument to look at what we can 
do to hold harmless those countries in Latin America, and 
particularly Central America, that might otherwise be 
negatively impacted, and make sure that what we are doing with 
one hand to give $750 million is not taken away by the other 
hand in terms of our trade policy, but rather that we are 
working together to be mutually supportive.
    Senator Kaine. A very important point. My last question is 
just, members of this committee, other members of the 
committee, Senator Menendez and others, have really focused a 
lot on OAS reform. And my sense, not being an expert in the 
OAS, is it is an institution that is always--that has had 
possibilities, but it has also been limited in its 
effectiveness for a variety of reasons. The stalemate over 
Cuba, a whole series of things have kind of limited its 
effectiveness.
    So as we look at the importance of institutions in this new 
Latin America moment, what advice would you have for the 
committee on that?
    Dr. O'Neil.  I mean, the OAS is a consensus body, so it 
will never be sort of a hard-driving leader on many issues. But 
I do think there is a time here when we can revitalize it and 
revitalize our role in it. One is because the Cuba issue, which 
was very complicated in the OAS, is, at least for the moment, 
taken off the table. That is no longer what many countries just 
want to talk about in the OAS.
    Two, we have new leadership there, and this new leadership 
seems much more amenable to standing out and calling up 
particularly democratic deficits in Venezuela. And so, there 
are incredibly pointed and courageous letters, I would say, 
from the current Secretary General vis-`-vis the elections in 
Venezuela. So I think there is a partner there that we can work 
with.
    But the OAS I do think has played and will continue to play 
an important role as a place to have discussions with those in 
the hemisphere, so it is an ongoing place for us to talk about 
some of these worries, whether they are corruption, whether 
they are how do we--how countries come out of some of the weak 
institutions? How do we help Central America? How do we bring 
in other neighbors to help Central America so it is not just 
the United States thinking about working with El Salvador, and 
Guatemala, and Honduras, but how do we bring in the neighbors? 
The OAS, I think, is a vehicle to begin a lot of those 
conversations. So I do think there is a time to invest in it 
again.
    The other thing I would say with the OAS that could be very 
interesting is the new investigative body that the OAS is 
funding for Honduras. And we have seen some of the success of 
that the UN-backed one has done in Guatemala, and Honduras has 
such deep problems today. Hopefully that is something that we 
can see as a real achievement of the OAS as we look forward 
five or 10 years from now.
    Mr. McLarty. The only thing I would quickly add, I think 
institutions are critically important. The Inter-American 
Development Bank, I think, has played a vital role. I do think 
there is promise at the OAS. The potential has generally--has 
been felt not been fulfilled. I think recent events, 
particularly in Venezuela, are encouraging.
    I would also say that some of the Americas, which I must 
say I am not objective, but I think that has provided an 
architecture for continuing dialogue, and discussion, and 
meetings on a regular basis. And it is critically important, in 
my view, and I cannot emphasize this point enough, sustained 
engagement from the United States both form the White House and 
the Congress is absolutely crucial to our standing and 
partnership in the region, Republican or Democrat. If you look 
at Plan Colombia, if you look at others where we have had a 
continuity of engagement, it has made a real and significant 
and positive difference.
    Senator Kaine. Thank you, Mr. Chairman.
    The. Chairman.  Thank you. Senator Menendez.
    Senator Menendez. Thank you, Mr. Chairman. As someone who 
has intimately followed Latin America for the 24 years that I 
have been in Congress, I share some of your optimism, certainly 
as a strong advocate for Plan Colombia in the House of 
Representatives and helping to get the money; certainly when I 
was the chair of the committee, urging the Administration to 
look at Central America in a different way than just as a 
refugee problem. I am glad to see what we are doing there.
    But I must say that as I listen to your opening 
presentations, you had a rather rosy picture, and there are 
many elements that I would say you are right. But what I do not 
get a sense from your presentations, and I would like to pursue 
with you, is the question of democracy and human rights.
    So give me a brief thumbnail sketch of your view of 
democracy and human rights in the hemisphere, and give me where 
we put it in the order of importance to us in our U.S.-Latin 
America policy. Mr. Farnsworth?
    Mr. Farnsworth. Well, thank you very much, and I completely 
concur. You have been a leader on these issues for many years, 
and we thank you for that.
    What I tried to allude to in my testimony was that indeed I 
think that the support for democracy needs to take a higher 
profile in terms of U.S. policy in the region. I think there 
are challenges to democracy. Broadly speaking, the idea of 
democracy is accepted across the region as the basic underlying 
framework for governance. However, democracy is practiced 
differently in different ways, and I think we have some real 
challenges. I referred to Venezuela. We could refer to Ecuador 
perhaps. There are other countries throughout the region which, 
you know, we could identify.
    I think that one of the things that would be helpful is if 
the United States, in concert with our friends, allies, and the 
OAS, for example--I think there is a new opportunity there. 
There is a new opportunity with the new president of Argentina, 
for example, which can suggest that there are certain behaviors 
in the Western Hemisphere that are accepted and expected.
    And that when a country democratically elects a 
legislature, the executive branch simply is not--it is not 
legitimate for the executive branch to try to undermine that 
legislature to take away its powers, to reduce its budget, to 
indeed create a parallel legislature to create laws, to pack 
the Supreme Court, which will----
    Senator Menendez. It sounds a lot like Venezuela.
    Mr. Farnsworth. It does sound like a lot like Venezuela. 
And my point is that I think there is a need and an opportunity 
to raise our voice in support of democracy. We are not anti any 
government. We are not anti any country. But there are 
principles that need to be obtained and maintained, and my view 
is that now is an opportunity, broadly speaking, to really 
pursue that.
    Senator Menendez. It seems to me that that is the Universal 
Declaration of Human Rights and the OAS Democratic Charter. Dr. 
Shannon--Dr. O'Neil?
    Dr. O'Neil.  You know, I started my remarks saying that the 
big changes in the region now is overwhelmingly democratic. And 
I do believe that when you look back 30-plus years ago, and it 
was many, many countries, authoritarian--pure authoritarianism, 
and that is no longer the case.
    Now, have these countries become perfect democracies? They 
are not in any country around the world, and many of these do 
struggle to balance things. But I do see the shifts in many 
countries moving in a positive direction. I see the returns of 
checks and balances in some places even where they have 
disappeared or been eroded returning.
    So in the new government in Argentina, I think we will see 
a return to checks and balances. Even the events in Venezuela 
over the last month or so, there is a check and balance there. 
Whether it will stand, it is being contested, but there is a 
return, and I see those as positive signs.
    One other thing that I see in terms of the checks and 
balances on a positive side is actually in some countries--not 
all countries--not all countries. In some countries, the growth 
of an independent judiciary, which had never been there, right? 
And so, we see this in Brazil. We are seeing this in Guatemala. 
You are seeing actually the strengthening of that third branch 
of government that for so many years had been so weak.
    So in that sense, it is not perfect, and it is not done. 
But I think there is the start of a movement in a right 
direction, and particularly with reference to the OAS and the 
tools you have there to push forward democracy. I think for 
many years we were, if not a lone voice, a small group that was 
thinking about the erosion of democratic norms and human rights 
in the region.
    And I am somewhat hopeful that some of the changes we have 
seen just over the last year bring more allies and people who 
will be willing to stand up to some of the erosions. So whether 
it is the new Macri government in Argentina, or even some of 
the things that President Rousseff has said in Brazil, showing 
some limits to what Venezuela can do, I think that is positive 
when we think about a democracy, pushing forward democracy and 
deepening democracy.
    Senator Menendez. I think many of our Latin American 
neighbors use the issue of Cuba to excuse the lack of democracy 
and human rights in many of their countries. So if you are--if 
you have a view that, in fact, you do not subscribe to raising 
your voice about democracy and human rights violations in a 
countries, therefore, it will be reciprocated and you will not 
have anybody raise their voices as it relates to undemocratic 
and human rights violations in another country. It is very 
accommodating if you can do that. Mr. McLarty?
    Mr. McLarty. Senator Menendez, first, thank you for your 
long engagement in the region which I have certainly followed 
with interest, and admiration, and respect. Secondly, I think 
the trend line is favorable, but we have a long way to go. I 
tried to emphasize in my opening testimony, temper my remarks 
about the region. Indeed it is facing some difficult economic 
headwinds.
    My point was I think you stand by your friends in difficult 
times, and I do think it presents a unique set of opportunities 
for U.S. engagement in the region in a supportive and 
appropriate way. I also tried to underscore that in terms of 
commerce, and trade, and energy, all of which is important, 
they go hand-in-hand with the support of democracy, human 
rights, and the strengthening of civil society.
    Part of, I think, what has happened in a positive way in 
the region, but still a long way to go, is a much freer press. 
I have long been involved, as I know you have, in the Inter-
American Free Press Association protection of journalists and 
so forth. I think we have also seen much more transparent 
election processes throughout the region. Unfortunately, what 
we have seen where we have relatively open, fair, and free 
elections, when someone is elected, then they consolidate 
power, change the constitution, extend their tenure, and that 
becomes an authoritarian reign. And that is what goes to my 
final comments about Venezuela, where we must be a relentless, 
reliable, and constructive ally of Venezuela and others seeking 
to express their political rights.
    So I think these have to go hand-in-hand. The bottom line, 
the region will not, in my opinion, develop as it should 
without strengthening the rule of law and institutions because 
it will not be able to attract investment in order to build a 
more secure future.
    Senator Menendez. Well, I certainly agree with that. Mr. 
Chairman, let me just say, maybe it is my desire to make things 
better that does not always have me look at the rosiest things, 
because----
    The. Chairman.  I do not think you could be--it would be 
stated that you always look at rosy things. I think that is 
right. [Laughter.]
    Senator Menendez. But you do not make things better by 
ignoring the things that are not good.
    The. Chairman.  I agree with that.
    Senator Menendez. And that has been my experience in 42 
years of public life that you try to, yes, rejoice in what you 
can, but the way that you make lives better is by trying to 
change that which is negative.
    The. Chairman.  No question.
    Senator Menendez. And I just want to just very briefly just 
say, you know, I think we give a lower tier category to 
democracy and human rights, particularly in Latin America. We 
are willing to look at the economic side of things. And for 
some, let us just keep people, you know, in their country even 
though they face gangs, and narco trafficking, and certain 
death if they stay, and that is why people flee.
    They do not flee--those are beautiful countries, but they 
flee only because they are in a situation where I stay and die, 
or I take my risk to go north. Changing that dynamic is good 
for the people of the region. It is good for the United States 
of America in terms of its interests.
    I look at democracy, and I just do not think elections are 
a democracy. And when you see constitutional changes which 
permit presidents to run forever, you have to wonder is that 
democracy. When you see people whose human rights are violated, 
who are thrown in jail simply because they try to create 
peaceful change in their country, or who are beaten savagely, 
like the Women in White in Cuba who just march to church every 
Sunday in peaceful protest and are beaten savagely, we 
basically do not hear much about that. If that was in some 
other country in the world, you know, and I know some of my 
colleagues are very strong human rights advocates. But it is a 
whimper there. It is an outcry someplace else.
    I think about what is happening in Venezuela, and I am glad 
to see Mr. Farnsworth speak to that because at the end of the 
day, there are some who suggested that, you know, we should 
just keep our hands off and not try to be supportive of the 
opposition in Venezuela, including the assistant Secretary for 
Latin America who testified when I was the chairman that the 
opposition in Venezuela did not want to see the sanctions 
legislation that we offered, which ended up being an uproar 
because the opposition said that is never what they said.
    So I just--I see that. I see parts of Mexico, and I think 
Pena Nieta has done a fantastic job in the reforms. But I also 
realize that when I listen to some of my colleagues along the 
southern border, and I have met with citizens of the United 
States who do business in that part of Mexico where the federal 
government in Mexico really does not have control of elements 
of that. And so, you have to worry about that in the national 
interests of the United States.
    And I also look at we get beaten in infrastructure 
investment throughout the hemisphere all the time. I just did a 
map of every major project, and except for a handful, China or 
Brazil beat us across the board in infrastructure investment. 
TPP, I am worried what we are going to do to CAFTA because if 
you are, on one hand, trying to strengthen the economies of 
those countries, rule of law and whatnot, and under CAFTA you 
are going to--under TPP you are going to basically undermine 
the benefit they got in CAFTA, that is a problem. I see the 
Zika virus and increasing health issues in the hemisphere, 
which know no borders.
    So I do rejoice in many of the things, but I cannot allow a 
hearing go by in which we are largely in applause and have no 
concerns. And so, there is a lot to do, Mr. Chairman, and I 
hope both the subcommittee chair and you will continue to look 
at the region beyond this macro one-shot view because I think 
there are many things that are not just our interest in being a 
good neighbor, but in our own interests on immigration, on 
economic opportunity, and on strengthening democracy, which at 
the end of the day ends up being in our national interests, as 
well as the people of those countries, that they can fulfill 
their God-given potential without being oppressed and seeking 
to do so. So thank you.
    The. Chairman.  Well, I think your long-term involvement, 
as has been mentioned by the witnesses, but your critical lie 
and concern is hugely beneficial to all of us. I think one of 
the things that sometimes also does not happen, though, is for 
some reason we do not see the potential, that in the event 
these types of issues are able to be overcome, I do not think 
there is as much focus here in the United States about the vast 
potential and the benefit to our Nation if those things can be 
overcome.
    And I know this hearing is focused on that, but I do not 
think in any way it was meant to diminish some of the problems 
that exist in the region. And personally, I cannot thank you 
enough for your incredible depth of knowledge and concern and 
continually raising those issues.
    So anyway, I think there is a tremendous opportunity for 
us. I think that is what these witnesses are stating. But there 
is no question these other issues diminish those opportunities, 
and certainly those opportunities for the individuals whose 
human rights are being desecrated. So thank you. Senator Udall.
    Senator Udall. Thank you very much, Chairman Corker. And I 
could not agree with you, and Senator Menendez, and Senator 
Cardin in terms of democracy and human rights, and what we--
what we need to do in the region. I wanted to focus a little 
bit on, and I thank you for--I have been listening here to a 
lot of your testimony and waiting in lie to participate. And 
you have been--you have given some very, I think, thoughtful 
approaches to us on the challenges in Latin America.
    And I would like to focus you on the migration issue in 
particular, and that is because it really has a direct impact 
on New Mexico. And I am just going to tell you a little bit 
about that before I ask a question. Beginning in 2014, as you 
know, and continuing to this day, there has been an influx of 
undocumented migrants, many of them women and children from 
Central America's Northern Triangle, whether El Salvador, 
Honduras, Guatemala.
    As these migrants flee their homes, they face many 
incredible dangers traveling along the way. Many are claiming 
refugee statutes, as you well know, to escape gangs in Central 
America, and other violence, and those kinds of things. And for 
those who may be refugees, we have an obligation, I think, to 
adjudicate their cases carefully. And I think we are trying to 
do that at the Federal executive level.
    But until that happens, these children will be housed in 
leased property on an Air Force base in New Mexico, Holloman 
Air Force Base, which is located near White Sands in southern 
New Mexico. And as a result, as many as 700 of these children 
may have a temporary home in New Mexico. So there is really a 
bigger question here. Many Americans are wondering why are 
children fleeing, and what are the root causes of the children 
fleeing.
    And I am wondering if on this migration issue if there are 
not some lessons to be learned from the north. My understanding 
is that the net migration between the United States and Mexico 
is reported to be net zero. How did this happen? What factors 
have contributed to this outcome? Is some of that applicable to 
what happened in the Northern Triangle? And whoever wants to 
start, I am happy to hear from Mack or Shannon--Dr. O'Neil.
    Mr. McLarty. I will be very brief because I think Dr. 
O'Neil spoke to this perhaps a bit, Senator Udall----
    Senator Udall. Yeah.
    Mr. McLarty.--before you were able to join us. Thank you 
for----
    Senator Udall. Yeah, and I apologize. I wish I could have 
been here for the whole thing, I really do.
    Mr. McLarty. No, no, your engagement and dedication has 
never been in question I do not think at all. It is good to see 
you. I think Dr. O'Neil pointed out in Mexico is really what 
you were talking about.
    Senator Udall. And I know she mentioned this because my 
staff told me. But what I would add on top also for you----
    Mr. McLarty. Yeah, go ahead, please.
    Senator Udall.--is Senator Kaine talked about the $750 
million.
    Mr. McLarty. Right, that is where I was going.
    Senator Udall. And the question focusing on my migration, 
how could that best be used in order----
    Mr. McLarty. That is it.
    Senator Udall.--to get to our net situation that we have in 
Mexico. Yeah, please. Sorry to interrupt.
    Mr. McLarty. Yeah, I think--no, no, no. I think you have 
got exactly the link of the two issues. I think in Mexico you 
had a more developed, stronger economy in the country, and, 
therefore, some of the reforms in education with some help from 
the demographics and so forth, the job creation with the 
integration with the North American platform, all of which has 
helped. Very much more fragile situation in Central America, 
and that is where the $750 million is going to have to be spent 
very, very thoughtfully, creatively, and effectively. And those 
problems, in my judgment, are going to be more difficult to 
solve, and they will not be solved overnight.
    So I think you do have to go, though, Senator, to the root 
of the issue there in country because otherwise we have a 
Hobson's choice of humanitarian decisions to make. So with 
that, Dr. O'Neil, I will let you pick it up from there. But I 
think you have got the right link, in my view, between what has 
worked reasonably effectively with Mexico going to the Northern 
Triangle.
    Senator Udall. Yeah. Dr. O'Neil.
    Dr. O'Neil.  Let me add on to Mack's comments. Many of 
those that are looking carefully at what is happening Central 
America see sort of three factors that are--three main factors 
that are driving the influx to our border. One is violence, and 
in many of these communities, especially young people are given 
the choice of joining a gang, being killed, or leaving. That is 
the choice in some neighborhoods and some communities, and so 
that violence is driving them to our borders.
    Another issue is economic opportunity. We have talked a bit 
about the lack of jobs. We talked a bit about the lack of 
education. And today, some two million young Central Americans 
are what they call in Spanish ``ninis.'' They do not work, and 
they do not study. So there are two million young people who 
are in this flux. They do not have a sort of legal role to 
play, nor are they in school, so that is a challenge.
    And then the third are the family ties, and there have been 
some surveys of those that are coming up to the border. And the 
vast majority of them have, especially the young people, have 
either their mother or father that actually live here in the 
United States. So as they are trying to get away from violence, 
as they are in these desperate straits, they are coming to join 
their parents, right? And the other parts have close relatives. 
So those are sort of the three factors.
    And one of the other things that we know about the violence 
in the Northern Triangle countries is it is often very focused. 
So you will have neighborhoods that are incredibly violent and 
not that far away from places that are not that violent, so it 
is not a blanket equal violence. There are some places that are 
extreme and other places that are not so bad.
    And so, I do think as we start thinking about how to use 
the $750 million effectively, one is to target those areas. It 
is not a broad-based approach, but target the places that are 
the most violent, that do have the fewest opportunities, and 
where these migrants are coming from, and see what we can do 
those in those localities, those sets of streets even versus 
just broadly throughout a whole city.
    And I think the other thing is we should take the time 
through the State Department or others to really look at the 
metrics that we are measuring. What are the programs that are 
successful, and measuring inputs, how many officers were 
trained or how many, you know, vehicles did we provide. But I 
am not those are the most effective measures.
    What we care about is reducing violence and creating 
opportunities. And so, I think those should be metrics that we 
think about evaluating the programs the programs we might then 
scale up or expand to other municipalities.
    Senator Udall. And is your judgment right now from what all 
of you know of the programs that we fund now, are they doing 
that targeting of the communities where there is the real 
problem, or would you need to reevaluate or actually target it 
in a more aggressive way on those communities?
    Dr. O'Neil.  My understanding is that there are programs 
that are doing that, but that not all programs are created 
equal in terms of the impact they have on the ground. And so, I 
think a real evaluation of the programs--we have a widespread 
evaluation, and then taking the ones that seem to be the most 
effective and expanding those versus others that may not have 
sort of the bang for the buck.
    Senator Udall. Yeah. Mack, did you have something?
    Mr. McLarty. I think very much like in a business, I 
think--I think the proper people in the government, including 
the Congress, need to have a very, very vigilant and sharp eye 
on this major investment to really see what is making a 
difference. It is not going to be easy, but, again, we have 
seen examples, in Colombia, for example, where our engagement 
has made a difference, but only with the responsibility and 
buy-in of the leadership within the country.
    Senator Udall. Right.
    Mr. McLarty. So I think intense focus on where the money is 
being spent in terms of accountability, and also some fresh 
thinking is needed here.
    Senator Udall. Yeah. Mr. Farnsworth?
    Mr. Farnsworth. Thank you for the opportunity, and let me 
just very quickly say one of the things that seems to be a 
little bit different about migration patterns from Central 
America versus Mexico is the surge of unaccompanied minors. 
And, you know, this adds an element of real pain and concern. I 
have an 11-year-old son. I cannot imagine putting him on a bus 
from Honduras in the--in the care of a coyote and, you know, 
maybe to get to Chicago or someplace in the north to visit with 
an aunt or something like this. It must be so desperate the 
parents are willing to do that with their unaccompanied 
children.
    And to me that speaks to, you know, it has got to be really 
bad to be--and whether it is a community, whether it is, you 
know--but that is the decision families are making. And I think 
for us to be effective, we have to recognize how desperate it 
really is and somehow get to that point where people find that 
it is in their interest to keep their kids at home rather than 
putting them on a dangerous hundreds of miles journey to the 
United States.
    Senator Udall. Thank you very much. I just want to say that 
again because I think you have given us some very, very 
important testimony today. And I would--I would--Chairman 
Corker and Senator Cardin, I would echo what Senator Kaine 
said. I think it is tremendously important that we look at this 
major investment of $750 million and do some oversight, and 
maybe call the Administration in in terms of, you know, what 
are your plans here, and how do you plan to tackle the things 
like the violence, and the migration, and the root causes that 
we have been talking about. Thank you very much, and thank you 
for your courtesies in going over time here.
    The. Chairman.  Thank you. Thank you so much. Absolutely. I 
know Senator Cardin has a follow-up.
    Senator Cardin. Thank you, Mr. Chairman, and to Senator 
Udall, I could not agree with you more. And I must tell you, I 
think, you know, we do travel whenever we can because it is 
useful, and just being there and seeing the communities, it 
just breaks your heart. And it is not only about making sure 
they are safe, it is that they have a future. And I think your 
point about economic issues and education I thought was a very 
strong point.
    I want to just ask a question on Venezuela. You had the 
elections. Very exciting. What should the United States be 
doing now in order to deal with the realities of the government 
of Venezuela, recognize the election, but recognizing who the 
leader of the country is?
    Mr. Farnsworth. Well, I would be happy to jump in with a 
couple of ideas because then I can take the easier ideas, and 
then my colleagues have to come up with the more difficult 
ones. But thank you for the opportunity.
    You know, first of all, we have to recognize it is a 
political crisis. It is a challenge to democracy, and I think 
we have to start from there. Second, I think the United States 
can play a role and needs to play a leadership role, but cannot 
do it by ourselves. In the past, we found, whether it was 
Venezuela or other countries, that to the extent we have been 
too far out in front, it sometimes becomes counterproductive, 
particularly if we do not have regional friends and allies 
together with us.
    I think working with the new secretary general of the OAS, 
Luis Almagro, who has taken a courageous position on the 
Venezuela issue, as well as some perhaps newly-elected leaders, 
but also leaders such as the new--not new, but the president of 
Colombia who will be here in a couple of weeks talking about 
Colombian issues. But we have a lot of friends in the region, 
and I think now is the time to really go to them and say 
together can we not stand up for democracy in Venezuela.
    I think there is also an interesting opportunity at the 
United Nations. The fact is that Venezuela is on the UN 
Security Council. Why not put together a contact group of 
interested countries from the United Nations' perspective to 
try to engage with the executive in a way that will help build 
political space for the opposition, build political space in 
Venezuela for the legislature to do what the legislature has 
been elected to do and what is expected to be done by the 
Venezuelan people.
    I think the final thing is from the United States 
perspective, we have begun to identify individuals in Venezuela 
who have been alleged to be engaged in corrupt activities--drug 
trafficking, what have you. I think that is an appropriate 
subject to U.S. law based on the fact that this really does 
create disincentives for people to engage in further behavior 
to the extent that they might recognize that they will be 
recognized publicly, and may be subject to law enforcement 
actions down the road. So it does have a chilling effect in 
some way in terms of further activities down the line.
    Senator Cardin. Thank you.
    Dr. O'Neil.  Let me just add a couple of things and 
reiterate that I think we should speak out, but it is stronger 
if it is with our neighbors and it is not just alone, and I 
think we have some new options there. I mean, we have 
longstanding allies, like Colombia, but we have perhaps the new 
government in Argentina. We have others to join with to really 
push the issue of democratic and the lack of democracy there.
    Echoing the sanctions, I think we should go after these 
corruption cases. And the other thing is anecdotal evidence or 
rumors suggest that many of the high-ranking military officers 
and others in the nation have sent their families to the United 
States to study to live, and I think we should revoke their 
visas if we find them to be--you know, having abused human 
rights, if we find some that undermine democracy. I think we 
have some mechanisms to do so and should pursue those.
    And then I think we should also be talking about, which I 
know the Administration has been somewhat--those countries that 
have benefitted from some of Venezuela's largesse in terms of 
oil, Jamaica and others that--whose economy may have hit very 
difficult times already because of their worldwide issues, but 
may have some real issues there. I think there are places 
perhaps we can reach out and help them deal with a very bumpy 
or volatile aspect of their economy with the expenses--
increasing expenses in terms of energy and the like.
    Senator Cardin. Thank you.
    Mr. McLarty. Very quickly, two laments you hear about 
United States policy in Latin America is either that we are 
dangerously disengaged or overly meddlesome, sometimes at the 
same time. [Laughter.]
    Mr. McLarty. And I really think, Senator Cardin, in terms 
of Venezuela, we have to just exercise exquisite balance in how 
we deal with this. And I really mean that in a very serious 
manner. I think the opposition has been very pragmatic. They 
have been very, very effective in gaining control of the 
Parliament. Maduro does not come up for election until 2019, 
unless there is a referendum prior to that, which will be 
difficult to get with all the impediments in place.
    But I do think we can be very assertive in certain 
situations, whether it be corruption or otherwise, and I think 
we should do that. I think we have to follow what Senator 
Menendez talked about in terms of speaking out for human rights 
and democracy. And this is a clear case where someone was 
elected and consolidated power. But I think we have got to be 
very careful not to proverbially overplay our hand here and 
somehow strengthen or diminish what we are trying to achieve in 
terms of the overall objectives to help the Venezuelan people.
    Senator Cardin. And that is helpful. I appreciate it. Thank 
you very much, Mr. Chairman.
    The. Chairman.  Thank you all for outstanding testimony. 
The norm is we keep the record open, and this week it will be 
until the close of business Monday. If you would answer, as I 
know you will, promptly, we would appreciate it.
    Your insights have been most helpful, and we look forward 
to continuing to work with you on issues relative to the 
region. Thank you all very much.
    And the meeting is adjourned.
    [Whereupon, at 12:15 p.m., the hearing was adjourned.]


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