[Senate Hearing 115-]
[From the U.S. Government Publishing Office]




 
  STATE, FOREIGN OPERATIONS, AND RELATED PROGRAMS APPROPRIATIONS FOR 
                            FISCAL YEAR 2018

                              ----------                              


                         TUESDAY, MAY 23, 2017

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.

    The subcommittee met at 2:30 p.m. in room SD-124, Dirksen 
Senate Office Building, Hon. Lindsey Graham (chairman) 
presiding.
    Present: Senators Graham, Shaheen, Lankford, Leahy, Daines, 
Boozman, Merkley, and Van Hollen.

      U.S. ASSISTANCE FOR THE NORTHERN TRIANGLE OF CENTRAL AMERICA

STATEMENTS OF:
        HON. JOHN D. NEGROPONTE, VICE CHAIRMAN OF McLARTY ASSOCIATES, 
            U.S. CO-CHAIR, NORTHERN TRIANGLE SECURITY AND ECONOMIC 
            OPPORTUNITY TASK FORCE, ATLANTIC COUNCIL
        ADRIANA BELTRAN, SENIOR ASSOCIATE FOR CITIZEN SECURITY, 
            WASHINGTON OFFICE ON LATIN AMERICA
        ERIC FARNSWORTH, VICE PRESIDENT OF THE COUNCIL OF THE AMERICAS
        JOHN WINGLE, COUNTRY DIRECTOR FOR HONDURAS AND GUATEMALA, 
            MILLENNIUM CHALLENGE CORPORATION

              OPENING STATEMENT OF SENATOR LINDSEY GRAHAM

    Senator Graham. The hearing will come to order. Senator 
Leahy is on his way. We have Senator Shaheen and Senator 
Lankford, along with myself.
    We have a great panel here. John Negroponte, Vice Chairman 
at McLarty Associates, who has had about every job you can have 
from Director of National Intelligence to ambassadorships all 
over the world, and has been involved in this part of the world 
for a very long time. Thanks, John, for taking time out to 
pariticipate. Eric Farnsworth, Vice President, Council of the 
Americas. Thank you for coming. John Wingle, the Millennium 
Challenge Corporation Country Director for Honduras and 
Guatemala. Adriana Beltran, Senior Associate for Citizen 
Security, Washington Office on Latin America, an NGO heavily 
involved in rule of law issues.
    The purposes of this hearing is that the American people, 
through our budget process, are going to spend some money in 
the Northern Triangle countries, and I want to make sure that 
they understand why we are spending, what we hope to get for 
it, and how important it is for us to stay involved in our own 
backyard. If you are worried about illegal immigration, I think 
this subcommittee hearing is very important because we are 
going to try to address the root cause of why a lot of people 
leave these countries, try to come to America for a better 
life.
    I worry about losing influence in our backyard. Russia and 
China are all over the place. If people in the region think we 
are indifferent, take their support for granted, we are making 
a mistake. What we are going to ask for in terms of money given 
is deliverables. I can go back to South Carolina or we can go 
back to New Hampshire and Oklahoma and say, ``You are getting 
better government in a part of the world that really matters. 
It means less illegal immigration. It means better trading 
partners. It means more stability in our own backyard.''
    So that is the purpose of this hearing and the four people 
on the panel have unique experiences and perspectives and we 
appreciate you coming and sharing your thoughts with us so we 
can make an informed decision.
    Senator Lankford is the brainchild behind this hearing. He 
has taken a unique interest in these three countries and I 
appreciate that very much along with Senator Rubio and Senator 
Durbin and Senator Shaheen and many others on the Democratic 
side. We understand how important this region is to our 
national security and economic wellbeing and dealing with the 
problems like legal immigration.
    So, with that, Senator Shaheen, would you like to make 
opening comments?

                  STATEMENT OF SENATOR JEANNE SHAHEEN

    Senator Shaheen. Just thank you all very much for being 
here. I am sure Senator Leahy would say that as well and echo 
the comments of Senator Graham about the importance of these 
three countries to both Latin America, but also to the United 
States.
    Senator Graham. Senator Lankford, do you want to make a 
statement?

                  STATEMENT OF SENATOR JAMES LANKFORD

    Senator Lankford. I would just only make a brief comment, 
and one is to thank the Chairman for holding this hearing. This 
is a tremendous amount of money that needs some accountability 
and oversight. This started with a dream and a purpose to say 
what are we doing to be able to help encounter narcotics, what 
are we doing to help stabilize a region of the world that is 
incredibly important to us that we are geographically close to, 
but also relationally close to with many people that are 
Americans that have their heritage in Guatemala, Honduras, or 
El Salvador, but also what are we doing with immigration?
    We saw a flood of immigration starting in 2014 from this 
particular region that came into our country illegally. The 
countries in that area all raised their hand and said, ``We 
want our citizens to stay home. We do not want them to run to 
another country. We want to have a stable environment here.''
    It is to our benefit to be able to have a stable Central 
America. We want an ongoing trade partner in that area. We want 
ongoing relationships. This is in our hemisphere and we should 
take this to account. So these three nations have worked to be 
able to cooperate together economically. They are democracies 
that are passionate about serving their own people and about 
staying connected to our country and I think it is right that 
we pay attention.
    But every tax dollar that has been in place, whether it is 
a tax dollar they are spending locally, they should be able to 
show people in their own nation how they are gaining value. We 
should certainly be able to do that for American citizens as 
well in saying, ``Is the money that we are being spent just 
throwing money and saying we did something or what can we show 
that we accomplished?'' So the metrics of it will be 
exceptionally important in the days ahead to say, ``Millions of 
dollars were spent. This is what the American taxpayer got from 
it. And this is how it affected the families and the 
communities there in Central America as well.''
    So I look forward to this conversation and I would assume 
within the hour we will solve all of those problems.
    Senator Graham. Or at least try. Let us start with Mr. 
Negroponte.
STATEMENT OF HON. JOHN D. NEGROPONTE, VICE CHAIRMAN OF 
            McLARTY ASSOCIATES, U.S. CO-CHAIR, NORTHERN 
            TRIANGLE SECURITY AND ECONOMIC OPPORTUNITY 
            TASK FORCE, ATLANTIC COUNCIL
    Mr. Negroponte. Thank you very much, Mr. Chairman and 
Members of the subcommittee. I am delighted to be here today. 
As somebody who served as United States Ambassador to Honduras 
from 1981, believe it or not, to 1985, I feel a little bit like 
Rip Van Winkle here and sort of ask myself, you know, what am I 
doing here and what has happened in all these intervening years 
that we should still be having hearings on Central America. But 
be that as it may, that is the situation we find ourselves in. 
And have to deal with it.
    I have an additional reason for being interested in Central 
America and Honduras. I have a permanent recollection of that 
country in that I have five adopted Honduran children that I 
have raised in my household over these many years and very 
proud indeed of those five children.
    And lastly, by way of introduction, because General John 
Kelly was asked by President Trump to be the Secretary of 
Homeland Security and he had been chairing an Atlantic Council 
Task Force on Central America, I was at the, kind of last 
minute, invited to stand in for him as the American co-chair. 
This was a four-way task force with co-chairs from the U.S., 
Guatemala, El Salvador, and Honduras. And we just published our 
report about 2 weeks ago and we have made it available to 
various Members of the subcommittee. And it is one task force's 
opinion on what we should do about the situation down there, 
but the general thrust of it is that we should continue to be 
supportive.
    So let me just say by way of a brief opening statement that 
I believe that the problems of the Northern Triangle have a 
direct bearing on the security and the economic wellbeing of 
the people of the United States. Illicit drug flows, 
trafficking in persons, and unauthorized migration can and do 
have adverse impacts throughout our country. The root causes 
for these activities are complex. There are the so-called pull 
factors in our own country such as high drug demand and the 
need for unskilled labor, among other factors. On the push 
side, the Northern Triangle countries have been afflicted by 
chronically poor governance, although that situation is 
improving, and generally poor development of social and 
economic institutions.
    Intense population growth, especially in Guatemala and 
Honduras, has also been a factor. Also, although the 
ideological wars of the 1980s are over, the gang wars of this 
century are very much in evidence. Indeed, the size of armed 
groups in these three countries exceeds--I am talking about the 
gangs now--exceeds the size of their armed forces.
    Under the Alliance for Prosperity Plan, very useful 
assistance has been provided to Guatemala, Honduras, and El 
Salvador in the areas of security, institution building, and 
economic development. I think we can see palpable progress, but 
there is work that remains to be done and our continued 
engagement will be an encouragement to those Central Americans 
seeking to better the lives of their people and consolidate a 
true partnership with the United States to deal with the 
scourge of transnational crime and the other ills that I 
mentioned previously.
    The Atlantic Council Task Force report, which I co-chaired 
along with representatives from Guatemala, Honduras, and El 
Salvador, recommends continued support for the Alliance for 
Prosperity Plan, if possible, on a multiyear basis. This is a 
recommendation which I wholeheartedly support and believe to be 
in the national security interest of the United States.
    I thank you for your attention and I would be pleased to 
try and answer any questions which you might have. Thank you 
very much, Chairman.
    [The statement follows:]
             Prepared Statement of Hon. John D. Negroponte
    Chairman Graham, Ranking Member Leahy, and members: thank you very 
much for the invitation to testify this afternoon on U.S. assistance to 
the Northern Triangle of Central America. This region--and the issues 
it faces--are very dear to me. I was U.S. Ambassador to Honduras from 
1981 to 1985. While in Honduras, my wife and I adopted two Honduran 
children. In later years we adopted another three Honduran infants into 
our household. So, this is not just an interesting subject study for 
me, my connection to the region runs deeper than that. As I analyze 
where the region stands today, I would be remiss not to reflect on how 
the situation unfolded when I was Ambassador. Back then, 35 years ago, 
the problems in the region involved Cold War tensions and ideological 
violence. People were fleeing to Honduras from El Salvador and 
Guatemala.
    Today, the situation is different, but not any less concerning. The 
region has seen 50,000 murders over the past 3 years, high-profile 
corruption scandals have tested overburdened institutions and 
exacerbated discontent, and nearly 10 percent of the region's 30 
million residents have left in recent years. As you very well know, the 
combination of these issues in the Northern Triangle have direct 
implications for U.S. national security. These issues end up at our 
doorstep and become our problem if we neglect to collaborate with the 
three countries to address root causes. We saw it in 2014 with the 
unaccompanied children and we will inevitably continue to see it happen 
if we do not change the status quo.
    However, we are usually more focused on conflicts in the Middle 
East or tensions with North Korea instead of looking at our own 
hemisphere. Realistically speaking, the issues of Northern Triangle 
matter more to--and have a greater impact on --the American taxpayer 
than conflicts on the other side of the world. It is justifiable to 
spend U.S. taxpayer money on helping the Northern Triangle deal with 
its problems. Simply put, what happens in San Salvador has direct 
implications for the citizens of Charleston and Burlington. Combatting 
drug trafficking and illicit flows--and working to curb unauthorized 
migration to the U.S.--are naturally the most pressing issues from the 
prism of national security. Moreover, the Northern Triangle represents 
a key opportunity for the U.S. economy and U.S. businesses. There is an 
enormous need for employment generation in the Northern Triangle in 
order to achieve greater prosperity. U.S. businesses can help do 
exactly that, through investments in infrastructure, agriculture, and 
customs modernization, in a way that benefits the U.S. economy as well 
as our national security.
                       factors driving migration
    For the past 6 months, I have been the U.S. co-chair of the 
Atlantic Council's Northern Triangle Security and Economic Opportunity 
Task Force. As part of the Task Force, the Atlantic Council 
commissioned a tri-country poll that gauged citizen's perception of 
their situation and their leaders. Unsurprisingly, the results were a 
scathing indictment of the situation in the Northern Triangle.
    Poll respondents expressed virtually no trust in their 
institutions. Whether it's judges, members of the police, tax 
authorities, more than 75 percent of respondents said they had little 
to no confidence in any of them. Even public trust in priests and 
pastors barely reached 50 percent in Guatemala and Honduras, failing to 
register 30 percent in El Salvador. The deep challenges faced by people 
in the region must be solved with a holistic solution that focuses on 
economic development, rule of law, and security.
                successes and failures of us assistance
    History has shown that any concerted effort cannot neglect key 
development issues. For instance, the Central America Regional Security 
Initiative (CARSI), which achieved some significant successes, was 
nevertheless insufficient in improving economic development and 
strengthening the rule of law.
    That, of course, improved with the Plan of the Alliance for 
Prosperity, which cut across three main interconnected themes: economic 
development, institution building, and security. The plan underscored 
that to reduce migration and remove stress from our Southwest border, 
it was imperative to tackle the root causes of violence and 
joblessness.
    There has been one aspect that has been key to the success of this 
plan: the commitment and collaboration of the Northern Triangle 
governments. The fact is that 80 percent of Alliance for Prosperity 
funding comes from the three countries themselves. These countries have 
shown a real, tangible commitment to taking the necessary steps to 
bolster economic development and curb migration. The reforms that have 
been enacted and the admirable work of attorneys general in the region, 
while supported by the U.S., are homegrown efforts.
                        a renewed call to action
    It is thus crucial, in my view, to push for a renewed call to 
action here in the U.S. that builds on the laudable efforts of this 
honorable Congress and that of the three countries.
    Earlier this month, I participated in the release of the report of 
the Atlantic Council Task Force (Attachment 1) that focuses precisely 
on the issue at hand today. Along with esteemed colleagues from El 
Salvador, Honduras, and Guatemala--and under the direction of the 
Atlantic Council--we devised what we consider to be a blueprint for 
building a brighter future for the Northern Triangle countries in 
Central America.
    As we think about fiscal year 2018, we must build off the Plan of 
the Alliance but go beyond what we are currently doing. First, we 
should be thinking about a multi-year authorization rather than a 
yearly package, providing a plan that goes beyond short-term measures.
    Second, a new strategy for U.S. engagement in the Northern Triangle 
should not be simply about providing more funds or creating new 
projects. It is important to take stock of what is working and what is 
not. Thus, any fiscal year 2018 strategy must have a large 
accountability component. Our report suggests working with the Inter-
American Development Bank to track host country spending in areas that 
complement U.S. support. That way, through open and transparent access 
to data, we will be able to ensure that (a) the three countries 
continue to complement U.S. funding with their own and (b) U.S. funding 
is spent effectively and efficiently.
    Before getting into other actions the U.S. should take, it is 
crucial to discuss conditionality. The support provided through the 
Alliance for Prosperity was heavily conditioned on enacting a series of 
measures to strengthen institutions and curb migration. The recent 
omnibus bill approved by Congress did the same.
    While there is a discussion to be had about the swiftness of the 
certification process to disburse funds, conditionality has proven 
effective in spurring important reforms and will continue to be a key 
tool to ensure that recent anti-corruption efforts are sustained.
                        specific recommendations
    In terms of concrete actions, our Northern Triangle Task Force 
report outlines recommendations directed at the administration as well 
as Congress for building sustainable economic development, 
strengthening the rule of law, and improving security.
    On rule of law, we must continue supporting the work of CICIG, 
MACCIH, and El Salvador's anti-impunity unit, while also pushing 
heavily for more structural reforms to be enacted. This is the only way 
to ensure sustained institution building and reduce dependency on 
international commissions that depend on the sitting president for 
renewal. One such reform would be improving transparency of secondary 
public officials such as supreme court magistrates and attorneys 
general to depoliticize the process.
    On security, we must move beyond mere iron fist strategies. 
Strengthening and promoting properly implemented community policing 
initiatives such as the model police precincts (MPPs) is crucial. 
Promoting an increase in the number of women in the police force could 
reduce rates of sexual assault, rape, and violence. We've done this in 
Afghanistan and Iraq and could replicate it in the Northern Triangle.
    On sustainable economic development, the Inter-American Development 
Bank has been behind setting up an infrastructure fund in the region. 
U.S. support of such efforts is essential in order to spur and provide 
reassurance to private investment, as well as incentivize American 
businesses to participate. We already have the capacity to expand in 
this area via OPIC and USTDA. Any new strategy must balance investment 
in migrant-sending communities with investment in intermediary cities 
that have the highest employment-generating potential. It is simple: if 
jobs are not created in the region, people will continue to migrate 
north.
    Regarding human capital, I am reminded of the time when I was 
Ambassador to Honduras and the National Bipartisan Commission on 
Central America, chaired by Dr. Henry Kissinger, analyzed the problems 
of the region then. The Commission concluded that reforming the 
region's schools and funding scholarships for study in the U.S. were 
critical steps toward stability and prosperity. We should provide more 
funding for scholarships that bring Central American students to the 
United States, targeting low-income applicants and requiring them to 
return to their home countries after completing their education.
    On immigration, we need to expand information sharing on deported 
gang members and criminals. Otherwise, we will continue to feed into 
this vicious cycle in which we deport criminals to ameliorate violence 
in our own streets but simultaneously contribute to heightened 
insecurity in the Northern Triangle, which eventually boils over into 
our borders once again.
                        multi-year authorization
    Before concluding, I would like to emphasize the following. We see 
this happen every time: the issues in the Northern Triangle boil over 
and it becomes news in the United States. Once they are back on our 
radar and that of the media, only then are we compelled to act. Once 
the frenzy dies down, we put the region on the backburner again and 
shift to focusing on other parts of the world. We must be more 
consistent in the attention we give to this critical region.
    It is essential that assistance to the region is not only holistic, 
but most importantly, sustained. A multi-year authorization for the 
region would help build lasting change in Guatemala, El Salvador, and 
Honduras.
    Thank you, once again. I look forward to answering your questions.

                              ATTACHMENT 1

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STATEMENT OF ADRIANA BELTRAN, SENIOR ASSOCIATE FOR 
            CITIZEN SECURITY, WASHINGTON OFFICE ON 
            LATIN AMERICA
    Ms. Beltran. Good afternoon, Mr. Chairman and Members of 
the subcommittee. It is a real pleasure to be here with you 
today on behalf of the Washington Office on Latin America, or 
WOLA.
    As you are aware, Central America faces many challenges. 
Today I will focus on why strengthening the rule of law and 
tackling corruption is critical to breaking the cycle of 
violence and impunity and how the United States can best 
support the region in doing so. In Honduras, Guatemala, and El 
Salvador, violence, corruption, and justice are inextricably 
linked. Corruption and neglect have resulted in weak and 
ineffective justice institutions incapable of adequately 
responding to the high levels of violence. On average, 19 out 
of 20 murders in the region remain unsolved.
    The fact that perpetrators rarely face justice means people 
feel they have nowhere to turn for security. They will not stop 
fleeing their homes and communities until they know that they 
are going to be protected rather than ignored or even 
victimized by their own police and judicial system. But the 
situation is not hopeless and the U.S. assistance can help.
    The Alliance for Prosperity was developed by the three 
countries of the Northern Triangle as a new opportunity to 
tackle the region's problems. The United States has 
appropriated $700 million in fiscal year 2016 and $655 million 
in 2017 to help with these efforts. I hope Congress will 
approve a comparable assistance package for fiscal year 2018. 
However, the success of U.S. efforts will be limited without 
the commitment from the region's governments. The conditions on 
aid enacted by Congress are critical. They require recipient 
governments to strengthen the rule of law, address corruption, 
and create independent justice systems and functioning law 
enforcement institutions.
    There are important actors in the region, some in key 
government positions, some in innovative internationally backed 
organizations, and some in civil society who are leading reform 
efforts. The U.S. should continue to support the Attorney 
Generals of all three countries as well as the International 
Commission Against Impunity in Guatemala, known as CICIG, and 
the mechanism to support the fight against corruption and 
impunity in Honduras, or MACCIH. These institutions are on the 
front lines of combating corruption and have achieved important 
results.
    However, they have faced substantial pushback from certain 
elements within and outside of government who want to undermine 
their efforts. In Guatemala, efforts to curb corruption have 
experienced legal obstructions, threats, and smear campaigns. 
MACCHI and the Attorneys General have faced similar problems. 
It is imperative that the Central American governments fully 
cooperate with these institutions. The U.S. must continue to 
politically and to financially back them.
    Equally important is supporting independent courts. Too 
often judges can be bought, influenced, or manipulated. And 
this allows criminal networks to operate unencumbered. 
Government should establish a transparent process to select and 
promote judges based on merit while offering protection to 
justice officials who have had the courage to uphold the rule 
of law.
    And finally, professional, accountable civilian police 
forces are crucial to lowering violence. In all three 
countries, police are involved in a range of illicit 
activities, abuse, and extrajudicial executions, but there have 
been some positives steps to a reform in Honduras and 
Guatemala, but much more needs to be done.
    Improvement will require ongoing professionalization, the 
creation of strong internal controls, increasing investigative 
capacities, and cooperation with community policing 
initiatives. An effective U.S. strategy to reduce violence and 
corruption requires clearly defined goals, tangible metrics to 
measure improvement, and ongoing monitoring and evaluation. 
This is why WOLA, working with local civil society partners, 
developed the Central America Monitor. This is a tool that 
tracks U.S. assistance and uses a set of objective indicators 
to assess progress on the ground. The goal of the monitor is to 
move the discussion beyond abstract calls for reform to 
specific measures of change.
    The process of change may be slow, but with a willingness 
to be smart and strategic about our investment, we can see real 
results.
    Thank you and I look forward to your questions.
    [The statement follows:]
                 Prepared Statement of Adriana Beltran
    Good afternoon. Mr. Chairman, Ranking Member Leahy, and members of 
the subcommittee. I appreciate the opportunity to appear before the 
subcommittee today on behalf of the Washington Office on Latin America, 
or WOLA, to discuss U.S. assistance to Central America.
    As you are aware, Central America faces many challenges--deep 
social inequality, endemic levels of violence, and a lack of economic 
opportunities--some of which my counterparts on the panel will address. 
While U.S. assistance should support a comprehensive strategy to 
address all of these concerns, I will focus on why strengthening the 
rule of law and tackling corruption is critical to breaking the cycle 
of violence and impunity, and how the United States can best support 
Central America to strengthen police and judicial institutions and 
promote accountability.
    Corruption permeates nearly all government institutions throughout 
the region. According to Transparency International's 2016 Corruption 
Perception Index, El Salvador, Guatemala and Honduras ranked 95, 136, 
and 123 respectively, out of 166 countries.\1\ This corruption has 
allowed criminal networks to co-opt state institutions while corroding 
access to, and the quality of, public services such education, health, 
and public security. Not only has this corruption depleted public trust 
in institutions, it has exacted tremendous economic costs. For 
instance, a 2015 study carried out by Oxfam and the Central American 
Institute of Fiscal Studies estimated corruption could cost Guatemala 
at least 6 percent of its GDP just that year.\2\
---------------------------------------------------------------------------
    \1\ Transparency International, ``Corruption Perceptions Index 
2016,'' January 25, 2017, https://www.transparency.org/news/feature/
corruption_perceptions_index_2016.
    \2\ Instituto Centroamericano de Estudios Fiscales and Oxfam 
Guatemala, ``La corrupcion: Sus caminos, su impacto en la sociedad y 
una agenda para su eliminacion,'' August 12, 2015, https://
www.oxfam.org/es/informes/la-corrupcion.
---------------------------------------------------------------------------
    In Central America violence, corruption, and justice are 
inextricably linked. Corruption and neglect have resulted in woefully 
weak and ineffective criminal justice institutions incapable of 
responding to the violence impacting many marginalized communities. 
Throughout the Northern Triangle, impunity rates for homicides average 
95 percent at best. This means that 19 out of every 20 murders remain 
unsolved, and the chances of being caught, prosecuted, and convicted 
for committing a murder are practically zero. The low prospect that 
perpetrators will ever face justice means that many crimes go 
unreported. In many communities in the region, people feel they have 
nowhere to turn for security. They will not stop fleeing until they 
know that they are going to be protected, rather than ignored or even 
victimized, by their own police and judicial system. But in Honduras, 
Guatemala, and El Salvador, that is not currently the case.
    Despite these harsh realities, the situation is not hopeless. U.S. 
assistance can make a difference. Actors in the region--some in civil 
society, some in key government positions such as the attorneys 
general, and some in innovative internationally-backed organizations, 
such as the International Commission against Impunity in Guatemala 
(Comision Internacional contra la Impunidad en Guatemala, CICIG) and 
the Mechanism to Support the Fight against Corruption and Impunity in 
Honduras (Mecanismo de Apoyo contra la Corrupcion y la Impunidad en 
Honduras, MACCIH)--are paving the path toward reform. But without 
independent justice systems, functioning law enforcement institutions, 
and adherence to the rule of law, the success of these efforts will be 
limited in both scope and duration. The United States needs to be 
clear-eyed and principled in targeting assistance in a way that will 
support comprehensive and lasting changes.
    The Alliance for Prosperity, which U.S. assistance supports, was 
initiated as a new opportunity developed by the three countries of the 
Northern Triangle to tackle the shared problems of violence, drug 
trafficking, irregular migration, and unemployment or underemployment. 
However, this is not the first time we have been down this road. From 
fiscal year 2008 to fiscal year 2015, the United States provided $1.2 
billion in assistance through the Central America Regional Security 
Initiative (CARSI), the main vehicle of U.S. assistance to the region 
during this time. But conditions on the ground have not improved to the 
degree that we would have hoped. Past assistance lacked a clear 
strategy to guide the series of programs and initiatives, emphasized 
training over concrete institutional reform, and did not give enough 
attention to ensuring adequate coordination among U.S. agencies and 
between donors.
                      moving into fiscal year 2018
    Now is the time to ask ourselves: how do we avoid repeating the 
mistakes of the past? How do we ensure that U.S. investments are paying 
off and making a difference?
    The U.S. Government has demonstrated its willingness to be a 
partner by appropriating $750 million in fiscal year 2016 and $655 
million in fiscal year 2017. We support a comparable assistance package 
for fiscal year 2018. However, our assistance can only go so far if the 
recipient countries are not serious about tackling corruption, 
supporting transparency, and sending the message that no one is above 
the law. Conditioning aid is an important tool to ensure our partners 
are making these changes and that U.S. investments are being used 
wisely. WOLA strongly supports the conditions that Congress placed on 
50 percent of aid to El Salvador, Guatemala, and Honduras in both 
fiscal year 2016 and fiscal year 2017, and we recommend that Congress 
include these conditions in fiscal year 2018. These conditions require 
recipient governments to demonstrate a firm commitment to strengthening 
the rule of law and addressing corruption, poverty, and inequality. In 
providing assistance we should not ignore or excuse conduct that 
undermines reform. Our support is critical, but ultimately there is no 
substitute for the commitment of the governments in the region to take 
decisive actions to enact necessary reforms.
    There are four key areas I recommend we pay particular attention to 
in order to help build strong institutions, strengthen the rule of law, 
and ultimately improve security in Central America:

(1) International anti-impunity commissions in Central America

    Independent, internationally-backed institutions such as the CICIG 
and the MACCIH are important and innovative tools to build capacity in 
domestic justice systems. These bodies, set up at the request of the 
host governments by the United Nations and Organization of the American 
States, respectively, have both enjoyed strong U.S. bipartisan support. 
The CICIG, created in 2006, has revealed the depth of corruption in 
Guatemala and unearthed criminal networks that have leveraged their 
links to government to embezzle public funds. Its investigations have 
resulted in the indictment of the former president and vice president 
for corruption, as well as the prosecution of several ministers and 
high-level public officials, legislators, retired generals, police 
officers, and members of the private sector. The Commission has also 
boosted the investigative capacity of the Guatemalan Attorney General's 
Office by promoting the adoption of legal reforms and use of modern 
investigative techniques and tools. The MACCIH, established in Honduras 
just last year, has started investigating a multi-million dollar 
embezzlement scandal within the Honduran social security system and 
other high-profile cases. It has also championed the adoption of a 
much-needed campaign finance law and been instrumental in creating 
anti-corruption tribunals with national jurisdiction.
    Both entities have faced substantial pushback from certain elements 
within the government and private sector who want to undermine their 
efforts. In the case of Guatemala, reforms have stalled in Congress, 
cases have been delayed through the abuse of legal motions and 
remedies, and the Commission and its leadership have been the target of 
smear campaigns. For progress to continue, the Honduran and Guatemalan 
governments must fully cooperate with these entities. For its part, the 
United States must continue to make clear it will politically and 
financially support them.

(2) Independent, professional, and well-resourced attorneys general

    Currently, all three countries have attorneys general who have 
shown some political will to advance high-level corruption cases and 
improve the investigative capabilities of their institutions. El 
Salvador's attorney general has created an anti-impunity unit, arrested 
a well-known criminal leader with deep political ties, and indicted 
three former presidents and the former attorney general on corruption-
related charges. In Honduras, the attorney general has investigated 
several top criminal leaders and created a special investigative unit 
trained in scientific and technical techniques to increase prosecution 
of high-impact crimes. The Guatemalan Attorney General's Office has led 
the charge on anti-corruption efforts and taken on several organized 
crime and corruption cases without the assistance of the CICIG.
    Still, these offices remain understaffed, susceptible to outside 
pressures, and absent in many areas of the countries. In Guatemala, for 
example, only 10 percent of municipalities have prosecutor's 
offices.\3\ This lack of personnel has contributed to a huge backlog of 
cases, adding to high impunity rates. Recent death threats and an 
assassination attempt against Guatemalan Attorney General Thelma Aldana 
highlight the danger justice officials in all three countries face when 
taking on cases targeting high-level corruption.
---------------------------------------------------------------------------
    \3\ Presentation by the Guatemalan Attorney General's Office 
(Ministerio Publico de Guatemala), February 2016.
---------------------------------------------------------------------------
    In fiscal year 2017, Congress appropriated significant direct 
funding for Attorneys General Offices in the Northern Triangle, and 
this support should continue. Attention should be given to creating or 
strengthening specialized investigative units, implementing special 
investigative methods, improving prosecutorial capabilities, 
strengthening internal control bodies to help root out corruption, and 
improving regional witness protection mechanisms.

(3) Independent courts

    A functioning judiciary is critical to ensuring all other areas of 
a country's government act in the public interest. But in Central 
America, justice systems are rife with corruption and lack 
transparency. Their fairness and effectiveness is determined in large 
part by the judges trying the cases, how transparent the proceedings 
are, and the scope and quality of convictions.
    Too often in Central America, judges can be bought, influenced, or 
manipulated by political figures, business elites, and others who stand 
to lose or gain profit or power from their decisions. This makes 
uncovering the truth a near-impossible task and allows criminal 
networks to operate unencumbered. Judges who have been compromised not 
only sway decisions in favor of those pulling the strings, but will 
stall cases, sometimes indefinitely. This has decimated public trust in 
the system--the Supreme Court in El Salvador for instance is trusted by 
just 8 percent of the population, according to a survey from the 
Institute of Public Opinion at the Jose Simeon Canas Central American 
University in San Salvador.\4\ Independent, functioning courts are the 
key to ensuring the environment shifts from one that rewards corruption 
and violence to one in which the system works for all.
---------------------------------------------------------------------------
    \4\ Instituto Universitario de Opinion Publica-Universidad 
Centroamericana Jose Simeon Canas, ``Los salvadorenos evaluan la 
situacion del pais a finales de 2016,'' Boletin de prensa ano XXXI, 
no.1, http://www.uca.edu.sv/iudop/wp-content/uploads/Bolet%C3%ADn-
Evaluaci%C3%B3n-A%C3%B1o-2016-10-01-2017.pdf.
---------------------------------------------------------------------------
    To this end, judges and other justice officials must be selected 
and promoted through a transparent process based on merit. But 
addressing corruption is just one crucial piece of strengthening a 
justice system. U.S. assistance should also support efforts to improve 
judicial independence, help ensure that laws and norms meet 
international standards, and support mechanisms that offer protection 
to judges who have the courage to uphold the rule of law.

(4) Professional and accountable police forces, trusted by the public

    In all three countries, citizens do not feel that the police will 
protect them or enforce law and order. Accused of everything from 
bribery to drug trafficking to extrajudicial executions, officers are 
often seen as a threat. In Honduras, 83 percent of the population 
believes the police are corrupt, according to a 2016 survey carried out 
by the Violence Observatory at the National Autonomous University of 
Honduras.\5\ Similarly, in El Salvador, 36 percent of people said 
violence carried out by the state was most harmful to the country, the 
Latinobarometro Corporation's 2016 study found.\6\ More often than not, 
neither internal nor external mechanisms effectively hold security 
forces to account for corruption or abuses against the population. 
Compounding this corruption and impunity, police capacity is limited. 
Officers are often underpaid, lack the training and resources necessary 
to carry out investigations, and are not trusted by the justice system 
to cooperate in, or properly conduct, investigations.
---------------------------------------------------------------------------
    \5\ Instituto Universitario en Democracia, Paz y Seguridad-
Universidad Nacional Autonoma de Honduras, ``Percepcion Ciudadana sobre 
Inseguridad y Victimizacion en Honduras,'' May 2016, http://
www.iudpas.org/pdf/Estu_InvestNacionales/
2016_percepcion_ciudadana_inseguridad_
victimizacion.pdf.
    \6\ Corporacion Latinobarometro, ``Informe Latinobarometro 2016,'' 
September 2016, http://www.latinobarometro.org/latNewsShow.jsp.
---------------------------------------------------------------------------
    In lieu of functioning civilian police, all three Northern Triangle 
presidents have deployed their militaries to provide internal security. 
Not only has this diverted much-needed resources away from civilian law 
enforcement, it has changed the nature of violence in each country, 
given the armed forces' undue political influence over civilian 
agencies, and escalated human rights concerns. The military is trained 
to overcome an enemy with as much force as necessary, not to maintain 
public order and investigate crimes. When soldiers get sent to the 
streets, the line between citizen and enemy becomes blurred and abuses 
happen. Further, no state in the region has sustainably brought crime 
rates down by relying on troops to act as de facto police for an 
extended period of time.
    The answer, then, is to focus on strengthening civilian police 
forces. There have been some positive steps. The Honduran Government 
established a special commission to clean up the civilian police force 
following media reports of high-level police involvement and cover-up 
in the assassination of the anti-drug czar in 2009 and his advisor in 
2011. To date, out of 9,234 police officers evaluated, nearly 4,000 
have been removed for reasons of restructuring, voluntary withdrawal, 
and for alleged involvement in corruption or criminal acts.\7\ Yet the 
state has been slow to investigate and prosecute officers involved in 
abuses and criminal activities, and there have been no convictions to 
date. But to create a reliable civilian police force will require more 
than a cleanup. It will take ongoing measures to professionalize 
officers, strong internal controls to hold all ranks to account, and 
cooperation with community policing initiatives.
---------------------------------------------------------------------------
    \7\ ``Comision depuradora en un ano ha realizado una agresiva 
limpieza de la Policia,'' La Tribuna, April 12, 2017, accessed May 22, 
2017. http://www.latribuna.hn/2017/04/12/estos-los-logros-la-comision-
especial-la-depuracion-transformacion-la-policia-nacional-ano-
funciones/.
---------------------------------------------------------------------------
    In Guatemala, improvements in police investigative capacity and 
collaboration with justice officials has led to a declining homicide 
rate since 2010. Although Guatemala's homicide rate still remains above 
the Latin America and the Caribbean regional average of 22.5 homicides 
per 100,000 inhabitants, sustained reforms in justice and security 
policies have made a difference, and further professionalization is 
essential to seeing continued improvement.\8\
---------------------------------------------------------------------------
    \8\ World Bank, ``Intentional homicides (per 100,000 people),'' 
accessed May 22, 2017, http://datos.bancomundial.org/indicador/
VC.IHR.PSRC.P5?locations=ZJ.
---------------------------------------------------------------------------
    In El Salvador, there have been significant improvements in police 
recruiting, vetting, and training at the police academy. But police 
investigation units remain understaffed and overworked, and the ability 
to conduct scientific and forensic investigations remains limited. 
Perhaps most troubling, aggressive police anti-gang tactics have led to 
a rise in allegations of police abuse, including extrajudicial 
executions of suspected gang members. The internal affairs units that 
ought to investigate and deter this kind of police abuse have been 
ineffective, and there do not appear to be sufficient controls over 
police misconduct.
    Without a police force they can trust, and without a justice system 
that has the ability to convict criminals and hold state actors 
accountable, Central Americans are left without a lifeline. U.S. 
assistance can help by improving internal and external control bodies 
to address corruption and wrongdoing, bolstering criminal investigative 
capacity, and working to change the culture of police forces by 
focusing aid on how officers are recruited, selected, promoted, and 
trained.
                       evaluating u.s. assistance
    An effective U.S. strategy in Central America requires clearly 
defined goals in each of these areas, tangible metrics to measure 
improvement, and ongoing monitoring and evaluation.
    This is why WOLA, working with local civil society organizations 
committed to promoting reforms, developed the Central America Monitor, 
a tool that tracks U.S. assistance and uses a set of objective 
quantitative and qualitative indicators to assess progress on the 
ground. Its goal is to move the discussion beyond abstract calls for 
reform to specific measures of change. These indicators look at many of 
the issues I have highlighted, including each country's degree of 
judicial independence, selection and promotion processes for justice 
officials, resources allocated for law enforcement, and conviction 
rates, among many others. WOLA's Central America Monitor and other 
monitoring and evaluation efforts are essential to ensuring U.S. 
assistance is properly implemented.
    In conclusion, it is possible for conditions in the Northern 
Triangle to improve, but the situation is far beyond the capacity of 
the governments to tackle on their own. The problems there are not 
isolated: they are rooted in decades of shared history with the United 
States, and their consequences now extend up to the U.S. border. 
Working together to support and monitor specific and substantial 
reforms, we can achieve results that will reduce violence and create 
conditions for greater prosperity in Central America. The process may 
be slow. But, with a willingness to be smart and strategic about our 
investment in fighting corruption, improving transparency, and 
bolstering respect for the rule of law, we can see real results.
    Thank you. I look forward to your questions.

    Senator Graham. We will hear from Senator Leahy. He just 
arrived. A brief statement and then we will continue with our 
witnesses.

                 STATEMENT OF SENATOR PATRICK J. LEAHY

    Senator Leahy. Thank you, Mr. Chairman, and it is good to 
see all of the witnesses here.
    I know that Secretary Negroponte referred to a Rip Van 
Winkle feeling and maybe several of us feel that way in being 
here.
    For most of the twentieth century, there was a concern that 
our policy towards Central America consisted primarily of 
propping up corrupt and abusive regimes led by families of 
oligarchs that benefitted from the exploitative practices of 
U.S. corporations. During the Cold War, the armies of those 
regimes trained and equipped by the United States committed 
atrocities in the name of anti-Communism. Democratic movements 
were crushed and their leaders assassinated. Very few people 
have been punished for heinous crimes in Guatemala, Honduras, 
and El Salvador to date.
    So what did the people in those countries get from it? They 
got poverty and violence, impunity, inequality, political 
polarization. The situation is worse because of the influx of 
gangs and illegal drugs and all that brings. Since 1980 alone, 
the United States has provided billions and billions of dollars 
in military and economic aid to the Northern Triangle 
countries. Much of that aid, in my opinion, was either wasted 
or contributed to the problems there.
    We made excuses for those governments whose leaders were 
interested only in enriching themselves. But last year we 
embarked on what has been portrayed as a new approach. And, Mr. 
Chairman, I applaud you in working with all of us to do that, 
to address the underlying causes of the flood of undocumented 
migrants fleeing violence and poverty in Central America.
    In fiscal year 2016, we provided $750 million to support 
the Alliance for Prosperity. A few weeks ago, we approved 
another $655 million. Now the President has proposed to cut 
that to $460 million. I strongly support this aid, but we need 
to see real sustainable results. I think Republicans and 
Democrats agree about that. We cannot want equitable economic 
development and human rights in these countries more than their 
own governments want it.
    So thank you for holding this hearing. Central America gets 
too little attention here. These countries are our neighbors. 
The struggles and hardships of their people deeply concern us. 
So I thank you and I want to be supportive.
    Senator Graham. Thank you, Senator Leahy. I know you have a 
long-held interest in this region.
    Mr. Farnsworth.
STATEMENT OF ERIC FARNSWORTH, VICE PRESIDENT OF THE 
            COUNCIL OF THE AMERICAS
    Mr. Farnsworth. Well, Mr. Chairman, good afternoon. Thank 
you for the invitation to be here. Mr. Ranking Member and 
Members of the subcommittee, it is a real privilege to be 
before you this afternoon.
    In 3 weeks [June 15, 16, 2017], the U.S. Secretaries of 
State and Homeland Security, together with their Mexican 
counterparts, plan to host a meeting in Miami of leaders from 
the Northern Triangle countries and ministerial level 
representatives from others in the region. This continues, as 
we have already been talking about, an accumulating body of 
work on a bipartisan basis going back to the conclusion of the 
vicious civil wars just over 20 years ago and continuing with 
significant U.S. assistance and support since that time.
    And yet, the situation on the ground remains fluid and 
difficult. Some 50 percent of Central Americans live in 
poverty, many without access to clean water, electricity, 
healthcare, and quality education. Malnutrition is widespread 
in some areas. High unemployment plagues the region and with 
just over 60 percent of the population under the age of 30 
years old, the high percentage of youth without jobs or going 
to school full time is a significant concern. Periodic natural 
disasters including hurricanes, volcanic eruptions, and 
earthquakes rock the region.
    Meanwhile, security in the Northern Triangle is fraught, 
with homicide rates well above global averages. Located between 
the world's largest illegal drug consuming nation and one of 
the world's largest drug producing regions, as well as a 
Venezuelan regime that allegedly facilitates the narcotics 
trade, Central America is a prime transit route for illegal 
activities that both overwhelm and also undermine the capacity 
of governments to address them.
    Gang activity and the easy availability of high caliber and 
other weapons contribute significantly to insecurity. The 
attractiveness of gang membership is exacerbated by the lack of 
economic opportunity and also the lack of effective policing 
and judicial processes. Impunity is rife, as is corruption, and 
deep social divisions within countries and deep political 
divisions between and among countries hamper governance and 
cross-border cooperation. It is a potent mix, and it is no 
wonder why so many Central Americans have sought to migrate 
from the region.
    While the primary responsibility for addressing these 
issues clearly resides with the nations themselves, the United 
States is in a position to assist our neighbors and friends in 
need and I believe it is in our interest to do so.
    In my view, one of the best ways we can support development 
effectively is by promoting investment and job creation in the 
formal economy. Generating good, legal, sustainable jobs 
offering the prospect for a better life and stability at the 
local and community levels is critical in migrant sending 
nations. A more focused effort by the United States to help the 
Northern Triangle nations develop and improve their business 
climates would therefore be appropriate and meaningful.
    Job creation is not a panacea, but it would provide options 
for those who might otherwise migrate or get wrapped up with 
criminal gangs. Without an attractive business climate that 
includes enhanced personal security, an educated workforce, the 
improved regulatory transparency, and the rule of law, 
investors both foreign and domestic will look elsewhere. And 
that means foregone access to global supply chains, tax 
receipts, and labor protections for workers, among other 
things.
    The key is for U.S. assistance to leverage real results. 
One way to do this might be to allow Northern Triangle 
countries to claim a greater share of the overall aid package 
over time. In other words, rather than dividing assistance co-
equally among the three recipients upfront, we could leverage 
improved outcomes by encouraging each nation, either alone or 
in cooperation with the others, to compete for a larger share 
of the overall assistance package by committing to concrete 
action plans and measurable results consistent with their own 
realities that can be tracked and rewarded after successful 
implementation.
    On the security side, which is fundamental to improving 
conditions for economic growth, metrics employed during Plan 
Colombia with strong bipartisan support could prove beneficial, 
such as reduction in homicides, meaningful reductions in 
criminal impunity, and the reestablishment of a state presence 
in all communities. Metrics in drug trafficking, corruption, 
and judicial effectiveness can also be employed, and greater 
regional law enforcement cooperation could be pursued.
    The same approach should be considered for development 
activities that will help create conditions to draw investment 
that creates jobs and grows the economy. Taking another page 
from what has worked in Colombia, the three nations of the 
Northern Triangle should give priority attention to improving 
their ease of doing business rankings with the World Bank and 
also their respective competitiveness rankings with the World 
Economic Forum to build economic capacity and a framework for 
competitiveness.
    Importantly, regional growth has often been consumption-
led, fueled by remittances from Central Americans living in the 
United States and elsewhere. But remittances do not generally 
build capacity. There must be a new commitment to improving 
business conditions to drive investment led, sustainable 
growth.
    There must also be a more genuine commitment among the 
three nations to linking their economies more closely together, 
to increase economies of scale, and to reduce production costs. 
Freer trade with the United States through the CAFTA Dominican 
Republic Trade Agreement was a beginning. Nonetheless, from 
trade facilitation and customs procedures to infrastructure 
development including an intensive focus on border 
infrastructure, to common, best standards regulatory 
permitting, tax, and commercial frameworks, the simple reality 
is that until the three nations begin to operate more as a 
regional more unified economy, they will continue to lack 
investment attractiveness.
    Currently, it is said that it is easier to export products 
to the United States from nations in Central America than it is 
to export products to each other. This is crazy. It raises 
costs and dramatically reduces the attractiveness of Northern 
Triangle countries for participation in the cross-border market 
expanding supply chains that increasingly drive global 
production.
    Of course, job creation also depends on human capital, 
which requires concrete actions by governments to improve 
education and workforce development and training. The cost of 
labor is relatively attractive, but productivity lags.
    The mismatch in labor skills with currently and potentially 
available jobs is profound, requiring sustained attention. 
Migrants returning to the region, many with English language 
skills, are one pool of workers that could benefit from 
additional training as they seek to transition back to local 
communities.
    Still, the bottom line is this: without job creation in the 
formal economy, prospects for Northern Triangle nations to 
address effectively the twin security and migration crises that 
confront them will be next to impossible. And without adequate 
attention to the factors described above, the domestic and 
direct foreign investment that creates jobs and builds 
economies will materialize only unevenly. U.S. assistance can 
and should be used to prime the pump. But even with U.S. 
support, the primary commitments and achievements, including 
enhanced security, reduced corruption, and increasing job 
creation in the formal economy, must emanate purposefully from 
the region itself.
    So thank you again for the opportunity to testify and I 
look forward with anticipation to your questions.
    [The statement follows:]
                 Prepared Statement of Eric Farnsworth
    Good afternoon, Chairman Graham, Ranking Member Leahy, and members 
of the subcommittee. It is a privilege to appear before you today to 
discuss United States assistance for the Northern Triangle of Central 
America; namely El Salvador, Guatemala, and Honduras. Thank you for the 
attention that you are bringing to these issues, and for your 
leadership in addressing them over the years. We very much appreciate 
your long-term, bipartisan interest in building U.S. policy priorities 
in Central America.
    In three weeks the U.S. Secretaries of State and Homeland Security, 
together with their Mexican counterparts, plan to host a meeting in 
Miami of leaders from the Northern Triangle countries and ministerial 
level representatives from others in the region. This is a serious, 
well-intentioned effort designed to advance discussions on building 
prosperity and improving security as a means to address most 
effectively the national interests of the United States. It is an 
accumulating body of work, on a bipartisan basis, going back to the 
conclusion of the vicious civil wars just over 20 years ago, and 
continuing with significant assistance and support since that time.
        central america requires long-term development attention
    And yet, as evidenced by the crisis of unaccompanied minors and 
others crossing the Southwest border of the United States over the past 
several years, the situation on the ground remains fluid and difficult. 
Some 50 percent of Central Americans live in poverty, many without 
access to clean water, electricity, healthcare, and quality education. 
Malnutrition is widespread in some areas. High unemployment plagues the 
region, and, with over 60 percent of the population under the age of 
30, the high percentage of youth without jobs or going to school full 
time is a significant concern. To complicate matters further, periodic 
natural disasters including hurricanes, volcanic eruptions, and 
earthquakes rock the region, knocking precious percentage points off 
GDP in those nations least-equipped to cover losses.
    Meanwhile, security in the Northern Triangle is fraught, with 
murder rates well above global averages. Located between the world's 
largest illegal drug consuming nation and one of the world's largest 
drug producing regions as well as a Venezuelan regime that allegedly 
facilitates the narcotics trade, Central America is a prime transit 
route for illegal activities that both overwhelm and also undermine the 
capacity of governments to address them. Gang activity and the easy 
availability of high-caliber and other weapons contribute significantly 
to insecurity, at times even giving criminals the ability to outgun 
state actors. The attractiveness of gang membership is exacerbated by 
the lack of economic opportunity and also the lack of effective 
policing and judicial process. Impunity is rife, as is corruption. Deep 
social divisions within countries and deep political divisions between 
and among countries hamper governance and cross-border cooperation.
    It is a potent mix. While the primary responsibility for addressing 
these issues clearly resides with the nations themselves, the United 
States is in a position to continue assisting our neighbors and friends 
in need. Doing so is in our interests, given our history and 
connectivity with the Northern Triangle and the opportunity to address 
core U.S. interests at their source.
              working to create jobs in the formal economy
    To be most effective, U.S. commitment must be sustained, and might 
benefit from another Kissinger-style commission to recommend a high-
level, bipartisan, fully-resourced path forward. In the meantime, one 
of the best ways we can support development effectively is by promoting 
investment and job creation in the formal economy as a pillar of 
longer-term development. Generating good, legal, sustainable jobs 
offering the prospect for a better life and stability at the local and 
community level in migrant-sending nations is critical.
    Regional job creation is not a panacea, but it would provide 
options for those who might otherwise migrate or get wrapped up with 
criminal gangs. Freer trade with the United States through the CAFTA-DR 
agreement was a beginning, but the agreement only establishes a 
baseline; it does not guarantee results. Without an attractive business 
climate that includes enhanced personal security, an educated 
workforce, improved regulatory transparency and the rule of law, 
investors both foreign and domestic will look elsewhere. And that means 
foregone access to global supply chains, tax receipts, and job 
creation, among other deficiencies, providing, along with deep security 
concerns, a continued push for intending migrants.
    As a result, a more focused effort by the United States to help the 
Northern Triangle nations develop and improve their business climates 
would be appropriate and meaningful. The good news, at least from the 
Central American perspective, is that U.S. participation the Trans-
Pacific Partnership has been shelved for now, offering temporary relief 
from enhanced global competition with their most competitive products 
and markets. Although important from a strategic U.S. perspective in 
Asia and Latin America, TPP threatened to divert U.S. trade and 
investment activities away from the Northern Triangle and others in 
Central America in favor of nations such as Vietnam and Malaysia. But 
this is only a reprieve, and nations including the United States should 
be encouraged to redouble their efforts to focus on improved regional 
economic competitiveness.
               security and job creation go hand-in-hand
    U.S. assistance can be used primarily to leverage results. On the 
security side, which is fundamental to improving conditions for 
economic growth, metrics employed during Plan Colombia with strong 
bipartisan support proved beneficial, such as a reduction in murders 
and the re-establishment of a state presence in all communities. 
Appropriate metrics on drug trafficking, corruption, and judicial 
effectiveness can also be employed, and greater regional security 
cooperation should be actively considered. More importantly, Northern 
Triangle countries should be incentivized to produce real results by 
allowing them to claim a greater share of the overall assistance 
package over time. In other words, rather than dividing assistance co-
equally among the three recipients up front, we can be more creative, 
leveraging improved outcomes by encouraging each nation, either alone 
or in cooperation with the others, to compete for a larger share of the 
overall assistance package by committing to concrete actions plans and 
measurable results that can be tracked and rewarded for successful 
implementation.
    The same approach should be considered for economic development 
activities that will help create conditions to draw the investment that 
creates jobs and grows the economy. Taking another page from what has 
worked in Colombia, the three nations of the Northern Triangle should 
give priority attention to improving their ease of doing business 
rankings with the World Bank and also their respective competitiveness 
rankings with the World Economic Forum. Much like the Millennium 
Challenge Corporation approach, these efforts would be designed to 
build economic capacity and a framework for competitiveness.
    And, there must also be a more genuine commitment among the three 
nations to linking their economies more closely together, to increase 
economies of scale and to reduce production costs. From trade 
facilitation and customs procedures, to infrastructure development, to 
common, best standards regulatory, permitting, tax, and commercial 
frameworks, the simple reality is that until the three nations begin to 
operate as a regional, more unified economy, they will continue to lack 
in attractiveness for global investors. Currently, it is said that it 
is easier to export products to the United States from nations in 
Central America than it is to export products to each other. This 
raises costs and dramatically reduces the attractiveness of Northern 
Triangle countries of participation in the cross-border, market 
expanding supply chains that increasingly drive global production.
    Regional growth has often been consumption-led, fueled by 
remittances from Central Americans living in the United States and 
elsewhere. But remittances do not generally build capacity; absent a 
new commitment to improving business conditions, there will be limited 
opportunity for investment-led, sustainable growth.
         increasing human capital and improving peoples' lives
    Of course, job creation also depends on human capital, which 
requires a new commitment by governments to education and workforce 
development and training. The cost of labor is relatively attractive in 
the Northern Triangle but productivity lags. Regional production costs 
are already high, due to enhanced security requirements, high energy 
prices, lack of transparency and predictability, judicial and contract 
issues, and other aggravations. Potential investors report that these 
issues are significantly compounded by difficulties in finding 
adequately trained workers with appropriate abilities including math 
and language skills. The mismatch in labor skills with currently and 
potentially available jobs is profound and will require sustained 
attention over time. Migrants returning to the region, many with 
English language skills, are one pool of workers that could benefit 
from additional training as they seek to transition back to local 
communities.
    But the bottom line is this: without job creation in the formal 
economy, prospects for Northern Triangle nations to address effectively 
the twin security and migration crises that confront them will be next 
to impossible. And without adequate attention to the factors described 
about, the domestic and direct foreign investment that creates jobs and 
builds economies, providing alternatives for men and women alike to 
build better lives in their own communities, will materialize only 
unevenly. U.S. assistance can and should be used to prime the pump. But 
even with U.S. support, the primary commitments and achievements, 
including enhanced security, reduced corruption, and increasingly job 
creation in the formal economy, must emanate purposefully from the 
region itself.
STATEMENT OF JOHN WINGLE, COUNTRY DIRECTOR FOR HONDURAS 
            AND GUATEMALA, MILLENNIUM CHALLENGE 
            CORPORATION
    Mr. Wingle. Thank you, Chairman Graham, Ranking Member 
Leahy, and Members of the subcommittee. I am delighted to be 
here today and I look forward to discussing MCC's work in 
Central America.
    MCC is working in the Northern Triangle countries of El 
Salvador, Honduras, and Guatemala to promote prosperity and 
strengthen governance in the region, supporting the objectives 
of the U.S. strategy for engagement in Central America, as well 
as the Northern Triangle Government's Alliance for Prosperity.
    The subcommittee is already familiar with how MCC uses an 
evidence-based model to drive economic growth and in turn 
create opportunities to escape poverty in three interrelated 
ways: first, in being selective on our partner countries; 
second, in how we design programs with those partner countries; 
and finally, the way we build capacity for our partner 
countries to implement the programs. Underlying this is the 
principle that we cannot solve the problems of our partner 
countries for them. We provide diagnostic tools such as 
constraints to growth analysis, as well as the right incentives 
and support for our partners to make the reforms needed for 
them to address their own problems.
    While we are an important part of the solution, our partner 
countries are ultimately responsible to implement the projects 
funded my MCC, to follow through on the policy reforms, and 
perhaps most importantly, to transfer this knowledge to manage 
their own resources with the same transparency and 
accountability that MCC demands in the projects that we fund.
    In our Constraints to Growth Analysis, we found the 
political economy of Northern Triangle democracies has been 
characterized by patronage-based politics, weak rule of law, 
low effective tax rates, and a lack of accountability. These 
factors have led to governments with small budgets that are 
poorly executed due to corruption and inefficiency, and as a 
result, they have been unable to adequately provide 
infrastructure, health, education, and security services to 
their people. This poor and highly unequal service provision 
has left Northern Triangle countries with low educational 
attainment, high transportation costs, and entrenched crime 
that constrains private investment and job creation and drives 
migration.
    These problems affect both the rich and poor in Central 
America. However, the wealthy can pay for private schools, 
private healthcare, and private security, but the majority of 
the people struggle to provide a decent life for their 
families.
    Annual government expenditures by the Northern Triangle 
countries are more than ten times the amount of official 
development assistance they receive from international donors. 
The efficient and effective use of their own government funds 
therefore is critical to provide the security, health, 
education, and infrastructure needed to achieve sustainable 
economic development and reduce poverty.
    Ultimately, by helping strengthen the policies and 
government institutions, we advance the sustainability of MCC 
and other governments funding and reduce dependency on foreign 
aid. This has been MCC's goal with the Northern Triangle 
programs.
    In 2010, MCC and Honduras successfully completed a compact 
that provided 7,400 farmers with technical training and better 
crop management, irrigation techniques, business, and 
marketing. The compact also improved farm-to-market roads, 
secondary roads, and 110 kilometers of the main highway linking 
the capital with the main Atlantic port.
    Currently, MCC is supporting the government's efforts to 
improve public financial management. MCC's threshold program is 
helping the government of Honduras improve budget practices, 
save money on procurement, improve delivery of public services, 
increase accountability through both their Supreme Audit 
Institution and civil society organizations, and reduce 
opportunities for corruption, ultimately improving the 
efficiency and effectiveness of how the Hondurans use their own 
government resources.
    Turning to El Salvador, in 2012 MCC and El Salvador 
successfully completed a $461 million compact to strengthen the 
transportation and agricultural sectors and improve the 
educational system in the country's Northern Zone. According to 
independent evaluators, more than 600,000 people benefitted 
from the construction of the Northern Transnational Highway and 
households with access to potable water and electricity 
increased significantly with MCC's investments.
    After the success of this compact, MCC and El Salvador 
signed a new compact in 2014 to invest up to $277 million to 
improve education, logistical infrastructure, regulatory 
environment, and institutional capacity. El Salvador will 
contribute $88.2 million to support this compact's investments.
    Finally, in Guatemala MCC and the government are currently 
partnering to implement a $28 million threshold program to 
increase revenues and reduce opportunities for corruption in 
tax and customs administration, attract more private funding 
for infrastructure, and provide Guatemalan youth with the 
skills they need in the job market.
    While the challenge in Central America is great, there has 
undoubtedly been progress. With the support of the United 
States and other development partners, the people of Guatemala, 
Honduras, and El Salvador had made significant efforts recently 
to improve governance. Some examples are the courageous local 
prosecutors that have taken on political corruption and 
organized crime, governments have increased transparency and 
expose themselves to social accountability. There have been 
payroll audits to purge government payrolls of dead, absent, 
and non-working recipients. Progress has been made in making 
teacher appointments based on merit rather than political 
affiliation. Progress has been made on police reform.
    These are deeply entrenched and mutually reinforcing 
problems and progress has not been universal, but there has 
undoubtedly been progress. MCC is committed to continuing our 
work with partner agencies to create the conditions for greater 
economic growth by improving the climate for private 
investment, strengthening human capital, and improving public 
financial management and social accountability to advance good 
governance and reduce corruption.
    Thank you very much for your time and attention and I look 
forward to your questions.
    [The statement follows:]
                   Prepared Statement of John Wingle
    Thank you, Chairman Graham, Ranking Member Leahy and members of the 
subcommittee. I am delighted to be here today and I look forward to 
discussing MCC's work in Central America.
    MCC helps relatively well-governed poor countries reduce poverty 
through economic growth and the agency's work, along with our sister 
agencies in the U.S. Government, advances American security, values and 
prosperity. When people have stability and opportunity, they are more 
likely to stay in their home communities and are better able to address 
health and security challenges that have international implications.
                               mcc model
    MCC is an important tool in U.S. foreign policy. We work to 
catalyze economic growth in the best-governed poor countries, and we 
support and coordinate with other U.S. Government agencies to achieve 
our shared goals. MCC's investments with partner countries drive 
economic growth and create opportunities to escape poverty in three 
interrelated ways.

  --First, by consistently applying stringent eligibility criteria to 
        select our partners, MCC is able to leverage and incentivize 
        policy, regulatory and institutional reforms. MCC uses third-
        party data to assess a country's policy performance in three 
        categories: ruling justly, investing in people, and encouraging 
        economic freedom. Without good policies in each of these areas, 
        countries cannot achieve sustainable economic growth and, as 
        such, our assistance would not be as effective. In addition to 
        providing a roadmap to determine which partners are more likely 
        to provide better development outcomes, this selection process 
        also drives countries to reform policies to qualify for MCC's 
        assistance. Once a country is selected, MCC is often able to 
        successfully push for major policy and sectoral reforms that 
        complement and sustain project investments. Together, these 
        reforms and investments help draw in private sector investment 
        and create opportunities for sustainable growth long after our 
        5-year partnership.

  --Second, MCC uses an evidence-based, business-like approach to 
        choosing investments that will yield the best return in terms 
        of economic growth and poverty reduction. After selection, MCC 
        immediately begins working with partner governments to identify 
        the most binding constraints to economic growth. This is a 
        data-driven process to understand what is holding countries 
        back and limiting private investment and job creation. The 
        choice of what sector to focus on, therefore, is demand driven 
        and based on the needs of each individual partner country.
       We invest in projects that lead to economic growth and help 
people lift themselves out of poverty, like power, clean water, land 
rights and roads. We also leverage these large investments to ensure 
partners undertake policy reforms that promote the sustainability of 
our investments and benefit the most vulnerable populations. After 
agreeing on the outlines of a project, MCC's economists carefully 
estimate the anticipated costs and benefits of the projects to ensure 
that we design an efficient solution that generates a return on 
investment and fosters self-sufficiency.

  --Finally, MCC's focus is not only on building infrastructure or 
        completing a specific project, but also on building expertise 
        and know-how in our partner governments to transparently and 
        effectively implement other projects after MCC's investment 
        comes to a close. Through MCC's country-led approach, countries 
        learn effective project implementation, accountable fiscal 
        stewardship, and transparent procurement processes that outlast 
        the program. MCC is guided by the principle that we cannot 
        solve the problems of our partner countries for them; we 
        provide diagnostic tools, incentives and support for our 
        partners to make the policy and institutional changes needed 
        for them to address their own problems. We are an important 
        part of the solution, but our partners are ultimately 
        responsible to implement the projects funded by MCC, to follow 
        through on the policy reforms, and, perhaps most important, to 
        transfer this knowledge to manage their own resources with the 
        same transparency and accountability that MCC demands in the 
        projects that we fund.
       Maintaining the maximum level of country ownership over the 
process of implementing MCC-funded projects, which encourages the level 
of responsibility and knowledge sharing we expect, while at the same 
time ensuring the proper oversight of U.S. taxpayer dollars is of 
utmost importance and always a delicate balance. MCC requires that 
partner governments establish an entity to implement the projects, 
usually known as an ``MCA.'' Like MCC, the MCAs are government bodies, 
with governing boards that include public and private sector 
representation and they are accountable for overseeing the day-to-day 
implementation of the projects. In Honduras, where MCC had a compact 
from 2005 to 2010, the government has been using the unit established 
during the compact to implement over $1 billion in other development 
programs. While this country ownership model is unique, MCC uses our 
experience and lessons-learned to support the efforts of our 
interagency partners and the governments of the Northern Triangle 
countries. Moreover, these entities have developed solid reputations 
for transparency and capacity in their countries. They set an important 
example of a government entity delivering effectively, transparently, 
and without regard for political bent. Such examples are scarce and are 
valuable in setting a higher bar for government performance.
                      progress in central america
    MCC is working in the Northern Triangle countries of El Salvador, 
Honduras and Guatemala to promote prosperity and strengthen governance 
in the region, supporting the objectives of the U.S. Strategy for 
Engagement in Central America as well as the Northern Triangle 
governments' Alliance for Prosperity.
    Annual government expenditures by the Northern Triangle countries 
are more than 10 times the amount of official development assistance 
they receive from international donors. The efficient and effective use 
of their own government funds, therefore, is critical to provide the 
security, health, education, and infrastructure needed to achieve 
sustainable economic development and reduce poverty. To promote 
effective, transparent use of government resources, MCC not only 
invests in needed infrastructure and promotes policy and institutional 
reforms, but we also seek to strengthen partner governments' 
implementation capacity to deliver services to their people. MCC is at 
the forefront of this critical but still often elusive effort. Our 
approach involves assessments, training, oversight, and hands-on 
support for human resource management, financial management, 
procurement, and auditing which, along with the vital reforms, are 
leveraged through the large grant funds, or the prospect of grant 
funds. Ultimately, by helping to strengthen policies and government 
institutions, we advance the sustainability of our investments and 
reduce dependency on foreign aid.
    MCC is already part of the solution in Central America with over 
$320 million currently committed through our compact and threshold 
programs. MCC has invested more than $1.1 billion in the region since 
2005 seeking to foster the enabling environment for faster economic 
growth by improving the climate for private sector investment, 
strengthening human capital to create jobs and opportunities in the 
region, and reforming public financial management and increasing 
transparency and accountability to promote good governance and reduce 
corruption.
    After successful completion of its first 5 year compact with El 
Salvador, which invested $461 million to strengthen the transportation, 
power and agricultural sectors, El Salvador and MCC signed a new $277 
million compact in September 2014 to improve the country's regulatory 
environment, enhance the role of public-private partnerships in 
delivering key services, improve the quality of education, and improve 
a key highway and border crossing infrastructure to reduce 
transportation costs.
    MCC also has threshold programs with Guatemala and Honduras. 
Threshold programs are significantly smaller grants for countries that 
are close, but do not yet meet our criteria for a compact. In 2013, we 
launched a $15.6 million threshold program with Honduras to improve the 
country's public financial management and the efficiency and 
transparency of public-private partnerships. In April 2015, we signed a 
$28 million threshold program with Guatemala to support reforms to the 
country's secondary education system that match skills to labor market 
demands, and to improve tax and customs administration so that the 
government can generate greater resources to invest in the Guatemalan 
people.
                constraints to growth in central america
    The political economy of Northern Triangle democracies has been 
characterized by patronage based politics, weak rule of law resulting 
in gang and drug related criminal activity, low effective tax rates, 
and a lack of accountability. These factors have led to governments 
with small budgets that are poorly executed due to corruption and 
inefficiency, and as a result, they have been unable to adequately 
provide infrastructure, health, education, and security services to 
their people.
    A lack of critical services over the years has yielded low 
educational attainment, high transportation costs, and entrenched crime 
that constrains private investment and job creation and drives 
migration. These problems affect both the rich and poor in Central 
America. The wealthy can pay for private schools, healthcare, and 
security, but the majority of the people struggle to provide a decent 
life for their families.
    Over the last 10 years, we have seen many members of the political 
and economic elite call for more transparent government, adequate tax 
revenue, better infrastructure and improved healthcare, education, and 
security services. We have also seen citizens take to the streets and 
social media to hold their leaders accountable for providing 
transparent, efficient and effective government.
    In response to the desire to tackle these problems and with the 
support of the U.S. and other development partners, there have been 
significant efforts recently to improve governance:

  --Courageous local prosecutors have taken on political corruption and 
        organized crime with the help of the International Commission 
        Against Impunity in Guatemala, the Mission to Support the Fight 
        Against Corruption and Impunity in Honduras and El Salvador's 
        Anit-impunity Unit within the AG's office.
  --Governments have increased transparency and exposed themselves to 
        social accountability.
  --There have been payroll audits to purge government payrolls of 
        dead, absent and non-working recipients.
  --Progress has been made in making teacher appointments based on 
        merit.
  --Honduras reduced its fiscal deficit from above 7 percent to below 2 
        percent.
  --Progress has been made on police reform and neighborhood policing 
        and community outreach has been re-established.

    These are deeply entrenched and mutually reinforcing problems, and 
progress has not been universal, but there has undoubtedly been 
progress.
             mcc's 2006 and 2014 compacts with el salvador
    In 2012, MCC and El Salvador successfully completed a $461 million 
compact to strengthen the transportation and agricultural sectors and 
improve the education system in the country's Northern Zone. The 
program brought people in the Northern Zone training, education, rural 
electrification, community infrastructure and 125 miles of road. 
According to evaluations by independent consultants:

  --146,000 rural residents received access to electrification.
  --More than 600,000 people benefited from the construction of the 
        Northern Transnational Highway.
  --Approximately 26,000 received access to potable water.
  --Approximately 17,000 people were beneficiaries of the Productive 
        Development project, which transitioned producers to higher-
        profit activities, generated new investment, expanded markets 
        and sales, and created new jobs.
  --Approximately 12,000 youths were trained in various technical 
        trades.
  --Approximately 5,000 people, including students and teachers, 
        obtained scholarships for study and training.

    Households with access to potable water in the Northern Zone 
increased from 79 percent in 2007 to 86 percent in 2011. Electricity 
coverage increased from 78 percent in 2007 to 90 percent in 2011.
    After the success of the compact signed in 2006, and with continued 
strong policy performance as reflected by the MCC policy indicators, 
MCC and the Government of El Salvador signed a new compact on September 
30, 2014 to invest up to $277 million on improving education, 
logistical infrastructure, regulatory environment and institutional 
capacity, with the goal of promoting economic growth and private 
investment in the country.
    El Salvador has committed to increase the country's productivity 
and competitiveness in international markets by partnering with the 
private sector to generate economic growth and addressing 
institutional, human, and logistical constraints to international trade 
in goods and services. The Government of El Salvador has committed to 
contribute $88.2 million to support MCC's investment, double the 15 
percent host country contribution required by MCC, reflecting the 
government's solid commitment to the compact.

    The current compact has three primary projects:

  --The Human Capital Project focuses on preparing the people of El 
        Salvador to better meet the demands of a global economy by 
        improving the quality of education and better matching the 
        supply of skills to the labor market. The project is composed 
        of two activities:

    --The Education Quality Activity supports complementary 
            interventions in competency-based education, increased 
            classroom time, teachers training, and improvements to the 
            institutional environment that are conducive to learning. 
            It also includes investments in approximately 344 schools 
            in the coastal zone of El Salvador where dropout rates are 
            the highest, with a focus on grades 7-12.
    --The TVET System Reform Activity seeks to strengthen ties between 
            the skills demanded by the labor market and those supplied 
            by private and public vocational education and training 
            providers. The intended result of the activity is that, 
            students in these TVET programs will graduate with skills 
            that better match the job market.

  --The Investment Climate Project is composed of two activities:

    --The Regulatory Improvement Activity is designed to prioritize and 
            promote business regulation reforms resulting in more 
            efficient and profitable operations for firms doing 
            business in El Salvador. MCC funding supports the 
            development of an institutional framework and system, which 
            includes the establishment of an institution that will 
            focus exclusively on regulatory improvement, and the 
            prioritization and implementation of a select set of key 
            reforms. The first reforms package, submitted in December 
            of 2016, contained 36 recommendations in public 
            administration, international trade, and development of 
            public private infrastructure. These reforms will result in 
            more efficient and profitable business operations for the 
            private sector.
    --The Partnership Development Activity seeks to improve the 
            capacity of the Government of El Salvador to partner with 
            the private sector to provide key public goods and services 
            through the use of: (i) public-private partnerships to 
            enable the government to tap private capital to finance, 
            develop, and manage key infrastructure needed to increase 
            productivity, and (ii) the El Salvador Investment Challenge 
            to identify important private investment potential and 
            efficiently allocate limited government resources to public 
            goods and services needed to support this investment.

  --The Logistical Infrastructure Project will address two 
        transportation bottlenecks that have led to high transportation 
        and logistics costs for regional trade.

    --The Coastal Highway Expansion Activity will serve to relieve 
            congestion at the most trafficked segment of El Salvador's 
            key coastal corridor.
    --The Border Crossing Infrastructure Activity will make significant 
            infrastructure and systems improvements at a major border 
            crossing with Honduras, reducing wait times at the border 
            and relieving freight and passenger traffic congestion.
                  mcc's threshold program in honduras
    Prior to MCC's current partnership, MCC completed a compact with 
Honduras in September 2010. The $205 million compact invested in a 
broad range of constraints to economic growth in the agriculture 
sector, including assisting farmers with technical training, providing 
farmers with access to credit, and building farm-to-market roads. The 
compact also invested in rehabilitating the primary national highway 
that connects Honduras with international markets.
    After completing the compact in 2010, Honduras experienced 
political instability. Because of this, MCC's Board of Directors did 
not select the country for a second compact. Honduras was, however, 
selected as eligible for threshold program assistance to catalyze 
needed reforms.The Honduran Government is subsequently working on 
substantial reforms to fiscal transparency in order to improve 
accountability and limit opportunities for corruption, in hopes of 
qualifying for a compact once again.
    MCC's $15.6 million Honduras Threshold Program is designed to 
improve public financial management and create more effective and 
transparent public-private partnerships. The program is helping the 
Government of Honduras save money in procurement, improve delivery of 
public services, and reduce opportunities for corruption--ultimately 
improving the efficiency and effectiveness of how the Government of 
Honduras uses its own resources. Honduras passed 10 of 20 scorecard 
indicators in fiscal year 2017.

    The Honduras Threshold Program includes two primary projects:

  --The Public Financial Management Project is working to make the 
        management of government finances more efficient and 
        transparent. The project has four activities:

    --The Budget and Treasury Management Activity is strengthening 
            budget formulation and execution in the government's 
            executive and legislative branches. Through the U.S. 
            Department of Treasury's Office of Technical Assistance 
            (OTA), MCC and Honduras are working to strengthen the 
            Ministry of Finance's budgeting capabilities and increase 
            legislative oversight of the budget process. In addition, 
            MCC is supporting an audit of government payment arrears 
            and promoting institutional reforms so that vendors are 
            paid consistently and on time, resulting in increased 
            competition and reduced opportunities for corruption.
    --The Procurement Activity is increasing the transparency, 
            accountability and quality of public procurement. MCC 
            funding is supporting: an e-catalogue that allows bulk 
            purchases, saving time and money; the creation of a 
            procurement evaluation unit to assess the quality of 
            procurement throughout the government; and a procurement 
            training and certification program that includes a legal 
            change to phase-in a requirement for a procurement 
            certified government official to manage procurement 
            processes.
    --The Supreme Audit Authority Activity is strengthening the ability 
            of this governance institution to conduct performance 
            audits.
    --The Grant Facility for Social Accountability Activity is designed 
            to increase demand for greater accountability and 
            responsiveness from Honduran public officials and service 
            providers, with the ultimate objective of improving 
            national and municipal government efficiency and 
            effectiveness. The largest grant is $1.2 million to the 
            local chapter of Transparency International (the 
            Association for a More Just Society) to implement their 
            agreement with the Honduran Government to review the 
            performance in procurement and human resource management in 
            the Ministries of Health, Education, Infrastructure, and 
            Security as well as the tax authority.

  --The Public-Private Partnerships (PPP) Project aims to improve the 
        efficiency and transparency of PPPs in Honduras by supporting 
        activities designed to increase the government's capacity to 
        develop, negotiate, implement and oversee PPPs. The activities 
        under this project include:

    --The Core PPP Capacity Activity is designed to improve the 
            capacity of, and procedures utilized by, Honduran 
            Government agencies with key PPP responsibilities to 
            develop and implement PPPs in accordance with best 
            practices, including by supporting the Ministry of Finance 
            in properly identifying and managing fiscal risks in its 
            PPP portfolio; and
    --The Design and Implementation of PPPs Activity provides 
            specialized technical assistance to improve the development 
            and implementation of PPPs.
                  mcc's threshold program in guatemala
    MCC and the Government of Guatemala are currently partnering to 
implement a $28 million threshold program to increase revenues and 
reduce opportunities for corruption in tax and customs administration, 
attract more private funding for infrastructure, and provide Guatemalan 
youth with the skills they need in the job market.
    Guatemala did not pass MCC's fiscal year 2017 scorecard although 
they did improve and now pass 9 out of 20 indicators--one more than 
fiscal year 2016. While Guatemala does pass the democratic rights 
scorecard indicators--a prerequisite for passing the scorecard 
overall--it fails the control of corruption indicator at the 22nd 
percentile. MCC recognizes that work remains to improve Guatemala's 
scorecard performance and its control of corruption score, but believes 
progress can be made through our partnership to benefit the Guatemalan 
people.

    The Guatemala Threshold Program includes two primary components:

  --Education Project:

    --This $19.3 million project supports the Government of Guatemala 
            in improving the quality and relevance of secondary 
            education to prepare its youth to succeed in the labor 
            market. The threshold program is supporting efforts by the 
            Ministry of Education to develop programs that improve 
            teacher skills, the quality of teaching, and the 
            effectiveness of technical and vocational education and 
            training.
    --The project promotes high-quality teaching in lower-secondary 
            schools by supporting the Ministry of Education to develop, 
            implement, and refine a continuous professional development 
            system for teachers, as well as establish school networks 
            to improve learning and accountability. The project also 
            helps the Ministry of Education in its efforts to offer 
            technical and vocational education to students and design 
            and implement new curricula that better meets labor market 
            demand.

  --Resource Mobilization Project:

    --This $5.8 million project increases the availability of revenues 
            by improving the efficiency of tax and customs 
            administration. It also supports the efforts of the 
            Government of Guatemala to design and implement public-
            private partnerships to attract private funding for 
            important infrastructure projects and free up public 
            resources for citizens.
    --MCC and the Government of Guatemala together are undertaking 
            reforms to improve tax and customs revenue by reducing the 
            rate of rejected audit cases; using risk management to 
            facilitate clearance of low-risk cargo and compliant 
            traders at ports of entry, focusing on high-risk cargo and 
            traders; implementing a post-clearance audit program for 
            customs; and improving control of the physical movement of 
            people and cargo.
                               conclusion
    While the challenge in Central America is great, there has 
undoubtedly been progress in El Salvador, Guatemala, and Honduras and 
opportunities are at hand to continue that progress. MCC is committed 
to continuing our work with partner agencies to create the conditions 
for greater economic growth by improving the climate for private 
investment, strengthening human capital to create jobs and 
opportunities in the region, and improving public financial management 
and social accountability to advance good governance and reduce 
corruption.
    Thank you very much for your time and attention.

            U.S. STRATEGY FOR ENGAGEMENT IN CENTRAL AMERICA

    Senator Graham. I thank you all.
    Mr. Negroponte, you have been involved in this region, as 
you said, for a very long time. You have some personal 
attachment to Honduras, but the region in general. Do you think 
we are on the right track with the U.S. Strategy for Engagement 
in Central America?
    Mr. Negroponte. Yes, sir, I do. And I do think it is 
important that we have good metrics. I do think it is important 
that we support these accountability initiatives and keep a 
close watch over how this assistance is disposed of, but yes, I 
think we are pushing on a more open door than we were before. I 
think the political convergence at the moment is quite good in 
terms of the governments of those countries wanting to work 
with us, which has not always been the case.
    So I think--and I think the amount of money they are 
willing to put up in support of these programs I think is an 
indication of that. So, yes, in brief, I do think we are on the 
right track, sir.

                                METRICS

    Senator Graham. So Plan Colombia metrics may be something 
we want to look at in terms of how we go forward here?
    Mr. Negroponte. Well, I am not sure I know enough about the 
Plan Colombia metrics, but, yes, metrics, we need to know how 
the money is being spent and we need to satisfy ourselves that 
it is basically doing some good.

                    HUMAN RIGHTS AND THE RULE OF LAW

    Senator Graham. Ms. Beltran, I think you said 19 out of 20 
murders go unsolved.
    Ms. Beltran. Regionally, that is correct. Among the three 
countries, I would estimate that about 95 percent of murders, 
homicides alone, are not adequately resolved.
    Senator Graham. Is there just an outcry from the people for 
better justice?
    Ms. Beltran. Yes. And that is, you know, one of the reasons 
why you see outflows of migration. It is not just the high 
levels of violence, but the fact that people have nowhere to 
turn for protection. In many of these marginalized communities, 
they are often victims of police abuse or they do not have, you 
know, adequate access to justice.
    Senator Graham. Do you think that the political leaders of 
these countries, particularly on the rule of law front, are 
beginning to get it?
    Ms. Beltran. I think there are many factors. I think when 
you talk about the rule of law there has clearly been progress 
on the issue of combating corruption, of strengthening the 
investigative capacity of the Public Prosecutor's Office, 
particularly I would say in the case of Guatemala. However, 
they have faced many issues. One of them is the issue of 
resources.
    In the case of Guatemala, for instance, 90 percent of the 
country, of the municipalities, do not have the presence of 
public prosecutors. And this, you know, it has created a huge 
backlog of cases, but also access to justice for many victims 
of crime. That also hampers the ability to actually invest in 
these institutions.
    Senator Graham. Can you give me an example of a good news 
story, if there is one?
    Ms. Beltran. Yes. There is a good news. I would take the 
case of Guatemala. You know, back in 2007, the Guatemalan 
Government requested the creation of an entity called the 
International Commission Against Impunity in Guatemala, or 
CICIG. This is an innovative model. It is an international 
independent entity that is able to carry out investigations, 
but has to work hand-in-hand with the local public prosecutor's 
office to be able to bring cases of corruption and organized 
crime embedded in the institutions to trial.
    This has been an initiative that has been supported by the 
U.S. Congress, and if you look since then, there has been 
tremendous progress, not only in the cases of high level 
corruption that have been unearthed and have been prosecuted. 
In 2015, the then president and vice president were indicted on 
issues of corruption. But what they have been able to do within 
the Public Prosecutor's Office and equipping it with the tools 
that they need to go after high level organized crime and 
corruption.
    Senator Graham. Well, would you consider this to be one of 
the metrics we look at improvement in this area?
    Ms. Beltran. Yes, definitely.

                             ENERGY ISSUES

    Senator Graham. Mr. Farnsworth, from the economic 
development point of view, energy costs in this area are pretty 
high, is that correct?
    Mr. Farnsworth. Yes, sir, that is correct.
    Senator Graham. Is there a gas pipeline we are looking at 
building that may help these folks?
    Mr. Farnsworth. Well, there has been a lot of work done 
with the Inter-American Development Bank and with the U.S. 
Government that has been looking at ways to lower power 
generation costs, electricity primarily. In terms of specific 
issues along those lines, we would have to take a look in terms 
of what U.S. Government support may have been for pipelines and 
what have you. But the general point, I think, is critically 
important.
    High energy costs across the region in Central America are 
a limiting factor in terms of people's willingness to invest, 
particularly in sectors like manufacturing or mining or what 
have you that require a lot of the use of electricity. So 
anything that raises the cost of production--and that is just 
one factor--but it is an important factor, is going to make the 
economic attractiveness of those particular countries less 
impactful. So, yes, that is something that really needs to be 
taken a look at.
    Senator Graham. Mr. Wingle, is it Wingle?
    Mr. Wingle. Yes, Senator.

               MILLENIUM CHALLENGE CORPORATION SUCCESSES

    Senator Graham. The MCC is kind of a novel approach of 
where you basically do a contract with a country. You focus on 
one or two areas. From your point of view, has this been a good 
investment for the MCC in these three countries?
    Mr. Wingle. Yes. I think we have had several good 
investments in these three countries with MCC and I think part 
of that has been the commitment of these countries, but part of 
it is also the model in which we require a detailed diagnostic 
study jointly with the partners.
    Senator Graham. Are you doing anything in the energy area?
    Mr. Wingle. We are not currently working in energy in these 
particular countries.
    Senator Graham. Is that something you could put on the 
table?
    Mr. Wingle. With a small exception. The small exception to 
that is we are supporting their Supreme Audit Institution to do 
more performance auditing. One of the pilot audits was in the 
energy parastatal and a particular problem they have is high 
non-technical losses like 30 percent of power does not actually 
get paid for. That, of course, piles on an increasing--so 
increasing that environment of accountability is one way.
    But to answer your subsequent question about whether we 
could become more involved, if the countries were able to pass 
the control of corruption indicator in the case of Honduras and 
Guatemala, we would look at the constraints to growth. As Eric 
pointed out, this would be one potential avenue. And if that 
were to occur, then we could assist in that.
    Senator Graham. Thank you. Senator Leahy.
    Senator Leahy. Thank you. You said two or three of the 
programs have been successful. Which ones?
    Mr. Wingle. I would say each of our programs had success in 
each of the three countries. In all fairness, I would say not 
every activity is always successful. And one of the things MCC 
tries to do is to have independent evaluations to look at where 
we are successful and where we are not.
    Senator Leahy. What would you deem as the three most 
successful?
    Mr. Wingle. I would say the three most successful things, 
and I might be a bit biased towards the two countries that I am 
responsible for, so I apologize for that in advance. Within 
Honduras, I would say in the first compact I would only point 
at the kilometers of roads constructor to the farmers trained.
    I would point the highest success was the program 
management unit that we established and trained and built up 
that has now managed over a billion dollars in total 
development assistance from other donors and from the 
Government of Guatemala. That gives them an alternative that 
provides them a transparent effective mechanism. Not only for 
donor projects, but now they are also looking at this 
institution to support other parts of government.
    Senator Leahy. What are some of the projects that worked 
out well?
    Mr. Wingle. I think the projects that worked out well were, 
first of all, the highway I think is very important for linking 
the country----
    Senator Leahy. How many miles?
    Mr. Wingle. This is 110 kilometers of the main highway. 
Then there was a total of 500 kilometers of other farm to 
market roads.

                          COMBATING CORRUPTION

    Senator Leahy. Thank you. For fiscal year 2017, we 
appropriated $655 million for the Northern Triangle countries. 
Fifty percent of the funds as conditioned on efforts like 
reducing corruption and impunity, building a professional 
police force, protecting freedom of expression. Now if a 
government is not fully committed to fighting corruption and 
impunity, how do we respond?
    Mr. Wingle. Okay. So while MCC is not directly in the U.S. 
engagement for Central America, I agree with all of the 
conditions that have been put in there, and particularly in 
control of corruption. So what our----
    Senator Leahy. If they do not do it, let me ask Ambassador 
Negroponte, what should we do?
    Mr. Negroponte. Well, of course, I am no longer running 
these kinds of programs, chairman. I am no longer directly 
involved in the operational side of these things, but I would 
point out that the members of our Atlantic Council Task Force, 
the Guatemalan member who is a former Vice President of 
Guatemala, the Salvadoran member who is a former foreign 
minister, and so forth, and the Honduran member all spoke 
emphatically about the importance and the utility of 
conditionality in the execution of these programs.
    So they, themselves, even though as you know sometimes the 
conditionality can create resentments in recipient countries, 
they themselves felt----
    Senator Leahy. I have been told.
    Mr. Negroponte. I imagine. They, themselves, have expressed 
strong support for that concept in the context of these 
programs.
    Senator Leahy. But do we cut the aid if they do not come 
through?
    Mr. Negroponte. Well, you know, I hate to--I hate for it to 
get to that point because we do not want to lose the 
interaction and the engagement that these programs imply, so if 
I were involved in implementation I would just try to make as 
sure as I could that they are working.

                     SUPPORT FOR ATTORNEYS GENERAL

    Senator Leahy. Ms. Beltran, you said in your testimony that 
in each of the countries involved there are competent, 
courageous Attorneys General. That makes us all very happy, but 
they face threats and intimidation sometimes from within their 
own government. We have seen the same with the Commissions 
Against Impunity in Guatemala and Honduras, and the UN High 
Commissioner for Human Rights. Is there anything we can do 
about that?
    Ms. Beltran. Thank you, Senator, for your question. Yes, 
you know, we see the courageous efforts of the Attorney 
Generals, other prosecutors, members of the courts, but yes, 
both the Commission and the attorney generals have had serious 
setbacks. In Guatemala right now, there is a massive campaign 
to discredit the work of the attorney general and the 
International Commission Against Impunity, or CICIG.
    I think very direct statements of support from the U.S. 
Congress to these efforts must continue. I think direct 
messages that the Government of Guatemala needs to fully 
cooperate with the Commission, with the attorney generals, is 
vital to the success of their efforts.
    Senator Leahy. I remember going to one country in Central 
America and the President telling me proudly that he was not 
put there by the bullet or the ballot, but directly by the hand 
of God. That was the first time I had met somebody so 
designated. I have not seen him since he went to prison, but I 
was just thinking of that.
    Senator Lankford. He was also put there by the hand of God.

                   RESOLUTION OF COMMERCIAL DISPUTES

    Senator Leahy. We said in the omnibus that a portion of the 
aid to the Central American governments be withheld pending the 
Secretary of State's certification that they are taking 
effective steps in resolving commercial disputes. There is one 
with the Government of Honduras and CEMAR. That is a company 
owned by a U.S. citizen that has been languishing for a decade 
or so. Is this ever going to be resolved if we do not apply 
some pressure, either by withholding money or otherwise? I will 
ask that of each of you.
    Mr. Negroponte. It gets their attention, Senator.
    Senator Leahy. Well, it is one thing to get their 
attention. We can give a speech, it will get their attention. I 
want to get some results. The case has been sitting there for a 
decade. How do we get it resolved? Anybody want to respond?
    Mr. Farnsworth. Mr. Senator, if I could use an example from 
a country that is not in Central America, but it is in South 
America, Peru. Before the U.S. confirmed a Free Trade Agreement 
with Peru there were a number of outstanding investment 
disputes that had languished in that particular country for a 
long time. And it was made clear--in fact, I testified before 
Congress a couple of times in that--under those circumstances 
that the leverage of a trade agreement was a real action 
forcing event in the context of Peru.
    Senator Leahy. Are you saying we should hold back our aid?
    Mr. Farnsworth. I am saying that leverage matters and money 
matters and people--like Ambassador Negroponte said, it does 
get their attention and once you have their attention the 
political will tends to follow.
    Senator Leahy. Thank you. Thank you, Mr. Chairman.
    Senator Graham. Senator Lankford.
    Senator Lankford. Thank you.

         CLARIFYING U.S. FOREIGN POLICY TOWARD CENTRAL AMERICA

    Mr. Chairman, thank you again for holding this hearing.
    Can anyone tell me America's long-term foreign policy 
objective that is achieved or even short-term foreign policy 
objective that is achieved by investing more in the Northern 
Triangle? When we explain to the American taxpayer, ``We should 
invest in Central America,'' we should say, ``We should invest 
in these three countries because this is the outcome for 
Americans.'' What would you say that is? And anyone can jump in 
there.
    Mr. Negroponte. Well, I think----
    Senator Lankford. Ambassador.
    Mr. Negroponte. I think, and actually, some of this reason 
pertains to our internal debate 30--almost 30 years ago when we 
talked about NAFTA and what interest we had in negotiating an 
economic integration arrangement with Mexico, that it would 
help improve local economic conditions so that the incentives 
to migrate in an undocumented and an illicit fashion would be 
diminished. I think it could also help some of the other 
measures in the area of rule of law and so forth in reducing 
transnational crime.
    Senator Lankford. Okay.
    Mr. Negroponte. I think it is a question of the geographic 
proximity of Central America gives us an immediate interest in 
what is happening in those countries.
    Senator Lankford. Okay. Anyone want to take a stab at that?
    Ms. Beltran. I would say, you know, particularly after 2014 
there was tremendous attention, you know, here in Washington 
and in the country with regards to the unaccompanied minors 
humanitarian crisis. I think the best way for the United States 
to support the region is to focus on figuring out how do we 
address the conditions that led many people to flee their homes 
and their communities in the first place.
    Senator Lankford. So both of you say illegal immigration, 
we benefit what is happening here, by engaging there. That 
helps us with immigration issues. It helps us with economic 
activity--I have heard that several times--and narcotics or 
human trafficking, those three things in specific. Anyone else 
add to something on that?
    Mr. Farnsworth. If I can briefly add, I think it supports 
our values as Americans as well. And the United States has had 
a long history in Central America. And the idea of us coming 
alongside of Central Americans themselves to try to improve 
their own conditions, their own democracy, their own markets I 
think is an important use of the United States political will.
    Senator Lankford. Right. So then the challenge is how do we 
actually keep the projects narrow enough that we are focused in 
on things and things that have enough metrics that we can 
achieve them. I spoke to General Kelly this week. He was very 
involved in the origination of the Alliance for Prosperity at 
the earliest stages when he was at SOUTHCOM and with what 
happened with State Department at that point. Obviously, he is 
at DHS at this point.
    Mr. Farnsworth, I believe you had mentioned the conference 
that is happening in about 3 weeks in Miami with all these 
nations together with Mexico and with us, how to be able to 
communicate, what can we do on that. Those are all very 
important things, but what was interesting is speaking to 
General Kelly, the concern at the very beginning for this focus 
in Central America was trying to make sure there are achievable 
things that Americans do well. And he gave a quick for 
instance.
    We know on immunizations, for instance, if we engage on 
immunizations in certain regions of the world, we know we watch 
disease drop. We do that well. We do distribution well. We can 
engage and we can achieve that. The focus on this seems to be 
so broad so quickly. There is so many areas of need. It does 
not look like we are engaged. It looks like--I am sorry. It 
looks like we are engaging in everything rather than in narrow 
things to be able to achieve things that we know: (1) we do 
well; and (2) that we can measure and track and know that they 
are staying on focus.
    And I do not want this conversation to be about this topic, 
but I just bring this up as an example. Of the $750 million 
that we did last year, $57 million of that was on climate 
change work in Central America. Now, again, there are many 
people that see a high value in investing in that, but when we 
are talking about the desperate need in Central America at that 
point, 10,000 homes--finding ways to have alternative energy in 
10,000 homes in Central America may not rise to the highest 
level of what we have got to do first to help stabilize a 
community and help engage.
    Now, I am not again arguing it is not something that is 
important, but I am asking is it first priority. Last year it 
was. It was $57 million of the $750 million that was done. I 
want to ask the question how do we get us on focus so that 2 
years from now we look back on it and go, ``These are the 
things we achieved?'' So my general question is, and I would 
love to be able to do a second round if that is possible. My 
general question is what are the things that Americans do well 
that we should partner well with them that has specific metrics 
that we can look back on in the years ahead and go, ``We 
invested this dollar here. We partnered in this way, and here 
is how we achieved it.'' Any quick ideas on that?
    Mr. Wingle. Yes, Senator. I agree completely with your 
emphasis on a narrow focus. We cannot try to do everything. I 
also agree on the importance of stronger metrics and a results-
based framework. I would push just a touch on the part of what 
America does well in the implication that, you know, for 
instance, in vaccines and vaccine delivery, I think we want to 
go a little bit beyond just----
    Senator Lankford. I agree.
    Mr. Wingle [continuing]. Delivering vaccines and I think we 
want to go beyond. What we need to do is make sure that these 
countries are capable of doing that for themselves, which is a 
bigger challenge, frankly.
    Senator Lankford. Right. And I agree completely. I am just 
saying that is one that is a very clear metric to be able to 
look----
    Mr. Wingle. Yes.
    Senator Lankford [continuing]. And go, ``We did this. This 
is what happened in disease in that particular.'' Now, it is 
not even a Central America issue.
    Mr. Wingle. Right.
    Senator Lankford. That is typically an Africa issue for 
that.
    Mr. Wingle. Okay. And so I think, you know, using the 
constraints analysis that we have done at MCC and the analysis 
that the Atlantic Council has done, there is a lot of 
diagnostic out there and I think there is a fairly narrow list 
of problems in terms of security, essentially prosperity that 
is underlined by education, and particularly secondary 
education leads into both problems in security and prosperity.
    Senator Lankford. Right.
    Mr. Wingle. I think that is an important area to focus on. 
And then the underlying governance, which is not just 
controlling corruption. It is also building the capacity in 
these aligned ministries to better deliver these services for 
these countries. And that is an area where we, as the U.S. 
Government, I think need to be a little bit more forward 
leaning.

                            SECURITY ISSUES

    Senator Lankford. So what does that look like when you talk 
about security? I just want to press on that one issue.
    Mr. Wingle. Okay.
    Senator Lankford. What can we do to actually help security 
that we can measure and track and we know we are investing in?
    Mr. Wingle. Okay. So in security, which is an area outside 
of MCC, in which USAID and State Department through INL are 
more engaged. They are engaged on things such as community 
policing. They are working with the prosecutors to improve 
their ability to both investigate and prosecute cases. But that 
is an area that I would turn more towards other members of the 
panel that are more familiar with security because MCC, due to 
our mandate, is focused----
    Senator Lankford. Right.
    Mr. Wingle [continuing]. More on the prosperity aspects and 
the things that underlie that as well as governance.
    Senator Lankford. Okay.
    Mr. Negroponte. So in our report we talk about prison 
reform, targeting high risk neighborhoods for increased social 
and educational programs. We have several specific things--
improving police accountability. I think security and rule of 
law, if I was going to say what are the real priorities for 
this program, our program, this national program towards 
Central America. I think that is where it ought to be.
    Senator Lankford. Mr. Chairman, I know--if there is going 
to be a second round, can----
    Senator Graham. Yes. We will go.
    Senator Lankford. I can hold this back and----
    Senator Graham. Sure.
    Senator Lankford [continuing]. We can move on and get a 
chance and I will come back to that.
    Senator Graham. Just hold that thought and then we will 
take it up.
    Senator Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman, and thank you all 
for being here. And I guess I would follow up a little bit on 
your comment, Senator Lankford, because when I was here and 
voted for the investments in the Northern Triangle in 2014, it 
was in response to the unaccompanied minors crisis because 
there was a convincing argument that people were fleeing the 
Northern Triangle because of conditions at home. And that if 
circumstances were different, if there were rule of law, if 
there were jobs available, if people felt comfortable keeping 
their kids at home, they would not be trying to send them to 
the United States where they could have a better future. So I 
think this is a good investment that is good for us as well.

  IMPACT OF PROPOSED CUTS ON U.S. ASSISTANCE AND PROGRAMS IN CENTRAL 
                                AMERICA

    And I guess that is my question for the panelists, my first 
question anyway. And that is as we look at the proposed budget 
that we received today from the White House. And I think we are 
still going through that. I am sure others are. But it would 
certainly propose--it proposes dramatic cuts to the State 
Department, to USAID, to economic development efforts that we 
have made around the world. And what impact do you think these 
kinds of cuts would have on those underlying conditions that 
drive regional migration northward in the United States, that 
the very efforts that you all are talking about on this panel 
to try and address the conditions in the Northern Triangle? 
Anyone.
    Ms. Beltran. Thank you for the question, Senator, and I 
want to also address the previous question. I think the cuts 
would have a tremendous impact in these countries. You clearly 
see many windows of opportunity in all three. And I would, you 
know, rather than try to support efforts to move reforms 
forward, I think it would have serious setbacks.
    In the case of Guatemala, as I mentioned, there is a 
tremendous effort being driven by the Attorney General's 
office, the CICIG, and others to really improve justice and 
security conditions. I think they are at a key moment. They are 
facing many setbacks, many death threats, and it would be 
tremendously detrimental for the U.S. to not continue that 
support.
    I think, you know, metrics are key, strong metrics. And 
that is the reason why WOLA and our partners developed this 
monitor which establishes very clear indicators of progress. I 
think the investment on security and rule of law is key. The 
U.S. has supported many efforts in Guatemala with the CICIG, 
but also the work that has been done in the public prosecutor's 
office where you can see real success. Also, with the work that 
has been done with the Ministry of Security where you have 
seen, in the case of Guatemala, a steady decline in homicides. 
And much of that work has been supported by the United States.
    Senator Shaheen. Thank you. Yes, Mr. Farnsworth.
    Mr. Farnsworth. If I could add briefly, and I agree with 
what Adriana said. One of the things that I think was really 
important in the context of Colombia--and I understand Central 
America and Colombia, totally different, I understand all 
that--but one of the things that really seemed to help was the 
Colombians understanding that the United States was there for 
the long term, that they could rely on us, that when we 
launched projects with the Colombians, that they could depend 
on us to deliver the training, the equipment, the intelligence, 
et cetera, and that freed them to concentrate on what they 
could do best.
    And one of the things that significant budget cuts could 
potentially do in Central America is question the commitment of 
the United States that will then undermine in some ways some of 
the reformers in Central America who are trying to make those 
steps on their own. So I think that is point number one.
    I think point number two is the idea that more broadly--and 
I know it is not the focus of this hearing--but people outside 
of the United States look at things like U.S. foreign 
assistance budgets in terms of global commitment and these 
sorts of things. There is a huge symbolic issue here that I 
think we need to be aware of as we go forward.
    Senator Shaheen. Thank you very much.

                      COMBATING ILLICIT NARCOTICS

    In the United States and in my State of New Hampshire, in 
particular, we have a raging heroin and opioid epidemic. And 
one of the things we watch very closely is the amount of 
illegal drugs that come across our southern border and come up 
to Northern New England, go to other states in the country. How 
much is happening in the Northern Triangle governments in terms 
of trying to address this kind of drug trafficking and is there 
more that we should be doing to support them? If you are not--I 
am going to have to call on somebody. Mr. Farnsworth, you want 
to?
    Mr. Farnsworth. There could be more that is done, no 
question about it. And it is not just transiting, but also now 
production in Central America. But I think one of the things we 
have to recognize is that Central America is a victim of 
geography.
    Senator Shaheen. Right.
    Mr. Farnsworth. And that is not their fault. And the drug 
trade has also undermined some of the institutions that are 
required to actually address these very issues. And one of the 
things that is not a country in Central America that would help 
a great deal is if democracy returned to Venezuela because much 
of what we see in terms of the unclassified tracks of drug 
transit go from the Andean region through Venezuela and then to 
Central America or Hispaniola.
    That is a real factor because those drug flights or ships 
tend to then land in parts of Central America where there is no 
real government presence--for example, the north coast of 
Honduras. And because of that then the trade flourishes 
throughout the region.
    Yes, these countries in the Northern Triangle could do 
more, but I think that is a real area where the United States 
can be helpful. It is also an area that is fraught with 
complications--human rights issues, the need to vet police 
forces, police training, not just police themselves, but also 
the whole rule of law system so that there are prosecutors in 
place, so that there are courts that are able to actually 
render justice, so that impunity goes down from 98 percent or 
whatever it is to much lower than that.
    This is a huge problem. I think additional attention would 
be appropriate.

                             GENDER ISSUES

    Senator Shaheen. Thank you. Ms. Beltran, I am going to ask 
you this question, though I think it is a question for each of 
you. And as I am sure you are aware, the Northern Triangle is 
some of the most dangerous places, one of the most dangerous 
places in the world for women. Women are more likely to be 
victims of domestic violence there, to be murdered. It has a 
very high murder rate for women. Many other challenges that 
women, even more than men, in these countries face. And I 
wonder if you could talk about why it is in our interests to 
invest in women in these countries and to empower women.
    Ms. Beltran. I think--thank you, Senator, for the question. 
There has been--you know, violence against women is a huge 
problem in these countries. The three of them have extremely 
high rates of femicides. And in some areas they do not have 
access to justice. Many of the unaccompanied minors were in 
fact women that suffered great violence through the trek.
    I think greater efforts are needed to address the issue of 
violence. From access to justice to how the government has 
responded, oftentimes they are victimized by their own 
governments. There have been some efforts in the case of 
Guatemala to try to improve that access. It also deals with 
education and providing greater opportunity.
    There have been some efforts by civil society and 
organizations to try to empower women and get them to be more 
active participants in their communities.
    Senator Shaheen. And do you think it is important for us to 
have an office in the State Department that is focused on women 
so that we can make sure that that is a priority?
    Ms. Beltran. Yes. And I would hope that, you know, there is 
a continued focus on the issue of violence against women 
because of the rates of violence.
    Senator Shaheen. Thank you. Thank you, Mr. Chairman.
    Senator Graham. Thank you.
    Senator Lankford. Mr. Chairman, could I make a quick 
comment?
    Senator Graham. Sure.

                      COMBATING ILLICIT NARCOTICS

    Senator Lankford. Just a quick comment, Senator Shaheen as 
well. I went through last year's dollars for this money and 
what was targeted towards the narcotics trafficking itself. And 
I do agree with Mr. Farnsworth. Central America is a victim of 
geography in that there was a tiny fraction that was committed 
to interdiction in that area. And I think that is an area that 
we could make a significant difference and it is not a large 
amount of money. And a relatively small amount of money could 
make an enormous difference on government corruption and 
impunity in those countries and then make a huge difference in 
our communities that are facing an epidemic in those areas.
    Senator Shaheen. And, Mr. Chairman, if I could follow up. 
We certainly have heard from General Kelly when he was head of 
SOUTHCOM that that was an area where a little bit of money 
would have helped tremendously to deal with interdiction 
efforts.
    Senator Graham. Senator Daines.
    Senator Daines. Thank you, Mr. Chairman. And I want to 
thank you all for coming forward to this committee. Illicit 
drugs ranging from meth to heroin as well as other opioids are 
having a significant impact in places like Montana as well as 
across the country. We hear, I know, a lot from Senator Shaheen 
and what is going on in the northeast, from Senator Portman in 
Ohio, and of course this scourge continues to move west.
    For example, over 90 percent of the drug offenses in 
Montana are meth related. And drug testing for heroin related 
criminal offenses by 475 percent from 2013 to 2016. This is an 
issue I am engaged as we speak with our Attorney General, Tim 
Fox, in Montana as we are not able to keep up right now with 
what is going on with this drug epidemic.
    It is having a dramatic impact in our communities. It is 
imperative we work to address both the supply and the demand 
side of illicit drugs, whether it is in the U.S., the Northern 
Triangle, or elsewhere.
    Mr. Negroponte, earlier this month Secretary of Homeland 
Security John Kelly stated that U.S. demand for illicit drugs 
including meth is a key contributor to violence in Central 
America. And I can tell you, I think I speak for many of the 
U.S. Senators, that we are so grateful that we have Secretary 
Kelly in that position bringing in experience from SOUTHCOM to 
this job.

                 DECREASE U.S. DEMAND FOR ILLICIT DRUGS

    What suggestions might you have to decrease U.S. demand for 
such drugs in a way that might also help decrease violence in 
that region?
    Mr. Negroponte. Well, I am really not the expert on demand 
reduction, Senator, although perhaps--and I have not looked at 
the resources that we dedicate domestically to that. That used 
to be a debate in the days when I worked more actively on this 
subject as to what is the division of resources between 
interdiction and enforcement on the one hand and demand 
reduction on the other. So it seems to me a hard look at that 
might be in order.
    The other point I would make on the question of violence 
and dealing with this problem in Central America and as it 
comes up through Mexico, and we have not mentioned it yet in 
this hearing is that there is an opportunity, I think, for 
greater cooperation between ourselves, Central America, and 
Mexico on these issues. I think we need to promote more active 
role on the part of Mexico in helping confront these problems. 
They have worked with us very hard dealing with the norther 
border and I think there have been some improvements over the 
last, say, generation, if you will.
    Well, we are going to have this meeting that Secretary 
Kelly and others have organized now in Miami in the middle of 
next month, it seems to me that is one of the issues that ought 
to be on the table. How do we get Mexico more involved in 
helping us on these questions? And I think they can.

        INTEGRATION OF CRIMINAL DEPORTED FROM THE UNITED STATES

    Senator Daines. You know, to follow up on this thought 
about cooperation and violence, in your testimony you 
highlighted this vicious cycle where deported criminals 
exacerbate instability and violence in the communities that 
they return to. What programs are Northern Triangle countries 
implementing to help better integrate, reintegrate, these 
deportees back into society?
    Mr. Negroponte. Well, I think some of the programs of this 
assistance program are devoted to try to help integrate these 
people better. Possibly other panelists have a better insight 
into that than I do, but I thought that was one of the intents 
of the program.
    And the other point I would make in that regard is there 
have been complaints, and I have heard them directly from our 
Central American friends, that sometimes we deport people, but 
we do not give them enough of a heads up or enough information 
on the backgrounds of the people that we are sending back. And 
so they are not necessarily fully equipped or adequately 
equipped to deal with these people when they are trying to 
reintegrate them into their own societies. And I think that 
over time is something that can be adequately worked on.
    Senator Daines. That, just on the surface, looks like a 
very solvable problem.
    Mr. Negroponte. Yes, I think so.

               CONDITIONS ON U.S. ASSISTANCE AS LEVERAGE

    Senator Daines. Yes. Mr. Wingle, to what extent have 
conditions on U.S. assistance to the governments, El Salvador, 
Guatemala, Honduras, whether it be through Millennium Challenge 
Corporation or otherwise, help spur policy changes within those 
countries?
    Mr. Wingle. Thank you, Senator. I agree completely with I 
think what the premise of the question is is the importance of 
conditionality both before we provide the assistance and while 
we are providing the assistance in a whole range of areas, both 
for the specific projects and for broader governance.
    So starting with the control of corruption indicator that 
we have that sets up a requirement for countries to improve 
governance before we even engage in them, and then within 
specific programs that we have there are programs or there are 
conditionality that have to do with everything from within if 
we are building a road we want to see increased road 
maintenance funding. We want to see better governance and 
better uses of that funding.
    If we are working in governance programs in public 
financial management such as we are in Honduras, we are focused 
on them taking on greater responsibility for doing performance 
auditing by the Supreme Audit Institution, having open access 
to Transparency International and we are supporting 
Transparency International to do auditing and procurement in 
human resources across major ministries. And then within 
Guatemala, we are looking at how do we not only support 
education, but make sure that the government systems for hiring 
and recruiting teachers are better done. Within customs, there 
is conditions within making sure that they are both doing risk-
based selection of which containers get inspected, making sure 
that there is better vetting of customs officials.
    So there is both big picture conditionality, I think, which 
is important, but I think it is also important that we have 
these small, more specific things----
    Senator Daines. Yes.
    Mr. Wingle [continuing]. That we do in each of those 
programs.

                COMBATING CORRUPTION IN LAW ENFORCEMENT

    Senator Daines. You know, you--bringing up this issue of 
auditing and transparency, accountability, have we seen 
progress in some of the reform efforts related to, let us say, 
the police and judicial systems?
    Mr. Wingle. So, MCC does not work directly in security due 
to our organization and mandate. In terms of broader progress, 
I think within accountability and auditing, I would point to 
two different directions. One is I think supporting the Supreme 
Audit Institutions in those countries, particularly what we are 
doing in Honduras, to make sure that they are looking at 
performance and they are looking at big issues and not going 
after small civil servant violations on their travel filings, 
which is a problem that we see in all three countries at the 
Supreme Audit Institution to occupy their time are focusing on 
these unimportant issues.
    The other part that I think is very important is increased 
access by institutions like Transparency International through 
their local affiliates to be able to go in and have access to 
human resources in the Ministry of Security, in the Ministry of 
Education, Ministry of Health, other large ministries so that 
you bring that light and that transparency to these that keeps 
not just the short-term improvements that have happened in the 
cleansing that De Puracion of the police, but you have that 
permanent presence and social accountability to ensure that 
this is more sustainable.
    Senator Daines. Thank you, Mr. Wingle. Thank you, Mr. 
Chairman.
    Senator Graham. Senator Lankford.

                     ENGAGEMENT WITH LOCAL LEADERS

    Senator Lankford. Thank you, Mr. Chairman. So how are we 
interacting with this point and what role would you place on 
local leaders? Obviously, there are elected officials in each 
of these countries that are great partners for us. They are 
passionate about their country and care for their country. What 
balance should there be between American tax dollars coming to 
be able to invest in key areas and ways that we can partner 
together in those local leaders, elected officials there, 
saying, ``This is where you can help us the most.'' How do we 
marry those two together so that we are not doing projects and 
they are saying, ``That is fine, but that is not our greatest 
area of need?''
    So what do you see already? Where have you seen the success 
in that, in discovering the issues from the local leaders?
    Mr. Farnsworth. Mr. Senator, if I could start with a couple 
of comments. The first is that if we are serious about Central 
America taking the lead in its own development and solving its 
own problems, we have to allow them to do that.
    Senator Lankford. Right.
    Mr. Farnsworth. And so part of that is allowing them to 
actually develop the plan that we can then come alongside and 
choose what part or parts to fund and underwrite based on our 
own interests. So I think----
    Senator Lankford. Do you feel like that is happening now or 
do you feel like once we voted there was a rapid pursuit to be 
able to get dollars out the door to be able to do something or 
was there a strategic working with individual leaders there?
    Mr. Farnsworth. I think that there is a combination of all 
of the above, to be honest.
    Senator Lankford. Okay.
    Mr. Farnsworth. And there was also, in the context of 
Central Americans creating this plan, there was always an eye 
to Washington in terms of what the anticipation might be that 
we would fund anyway. So as that plan was being put together it 
was not done in a vacuum. So I think that is the first part.
    But the second part pertains to our delivery of assistance. 
It is--I think we can use some creativity here. So, for 
example, as I mentioned in my oral testimony, instead of just 
dividing a package by three and saying, ``This is the amount 
that we will provide for you; come up with a way to spend it. 
This is the amount for you, et cetera.'' Why don't we think 
more creatively and say, ``Okay, this is the plan that you are 
committed to. It is not the same plan. It is your national 
plan. That is great. We will fund a certain percentage.''
    And then once you have completed that plan, if you are the 
first mover on this, why not have the ability to compete for a 
greater amount of the overall----
    Senator Lankford. Right. A bonus.
    Mr. Farnsworth. Absolutely.
    Senator Lankford. Right.
    Mr. Farnsworth. And I do not know if it is politically 
correct to use this phrase, but it is really a race to the top.
    Senator Lankford. Right.
    Mr. Farnsworth. In the context of getting the three 
countries, again, with their own national commitment. So we are 
not imposing anything, but we are saying, ``You know, if you 
meet your commitments first, if it is verifiable, if it is 
audited, if it is consistent with what we thought we agreed to 
do, you can get 50 percent of the overall budget or you can get 
40 or whatever it is.'' I am not suggesting that I have the 
wisdom here.
    Senator Lankford. Right.
    Mr. Farnsworth. But that would change the dynamic because 
it would then cause the leaders of those countries to take 
these commitments seriously and to say, ``You know, we have a 
chance to compete for double our funding or whatever it is.'' I 
think that would have an important incentivizing effect.
    Senator Lankford. Ms. Beltran, were you wanting to add to 
that? You look like you were leaning towards the microphone 
there.
    Ms. Beltran. Yes. No. Thanks, Senator. Just to add, I think 
the importance of having a very clear strategy and outcomes is 
key. I think one of the issues, you know, of why past 
assistance has not been as effective as, you know, how are we 
defining outcomes.
    Senator Lankford. Right.
    Ms. Beltran. In the area where I work is how are we 
defining institutional strengthening and what do we mean by 
having an effective justice system and work backwards and 
establish very clear metrics. I think there are opportunities, 
spaces of opportunities, in each of the three countries 
regarding rule of law and it is how we can better support the 
efforts of those that are really seeking lasting reforms in 
these countries.
    Senator Lankford. Yes. I saw some of the outcomes and the 
specific things that you all had articulated and I think those 
are very beneficial.
    Ambassador.
    Mr. Negroponte. Yes. And one point I would like to add just 
because I have served in so many different parts of the world, 
Senator, is that relationships in Latin America between the--
for the United States are very close. These are people whose 
languages we understand. We can speak them. It is not like 
being in Iraq or Vietnam, both of which countries I have served 
in, where the relationship--I am not saying it was not friendly 
or close, but it was a little more arm's length than it would 
be in a situation like Latin America.
    So when you are doing a community policing initiative or 
one of these model precinct programs or you are doing something 
that Ambassador Brownfield is conducting carrying out under his 
International Narcotics and Law Enforcement, these are close 
relationships. We are not just writing a check and walking 
away. We are not just writing a check and walking away.
    Senator Lankford. Right. And I would----
    Mr. Negroponte. I think we have good, close up observation 
of what is going on.
    Senator Lankford. I would agree and it is something you and 
I have spoken about before. I would suggest that as a gain for 
us some of the partner cities that we have had before and 
partner police departments in the United States partnering with 
some of the local law enforcement in each of these countries to 
develop lasting relationships to where when there is an issue 
there and they feel like they cannot call someone locally, they 
do have someone outside the country they can call and say, ``I 
am seeing this. I am experiencing this. What would you 
suggest?'' That only happens with relationships and with 
engaging, and those are things that we can bring to bear.
    We have excellent law enforcement border to border across 
the country. We have a lot of departments that would be a 
tremendous asset. Our FBI, those in the FBI Academy, there is a 
tremendous amount of gain that we could share from insight and 
the things we have tested for a long time that I think would be 
an asset in local law enforcement. So it is not just a matter 
of sending a contractor down to train, but that is--we actually 
send people back and forth and develop those relationships.

                  ECONOMIC COOPERATION AND INTEGRATION

    Mr. Farnsworth, you had mentioned before as well about 
CAFTA and about some of the relationships there, that it is 
still easier for many of those countries to do business with 
the United States or with Mexico than it is with one of the 
countries that literally they border to. How does that ever get 
resolved to create an economic zone there?
    Mr. Farnsworth. It is a really important question and one 
of the missed opportunities of Central America over the past 15 
years has been precisely that point where the countries which 
are parties to CAFTA saw this in some ways as guaranteed access 
to the United States rather than the opportunity to really 
develop their own trade relationships with their neighbors.
    The World Bank, for example, has done some really 
interesting work recently about the gains from trade and what 
that means for national incomes if you do more to trade with 
your neighbors. First of all, it starts with an attitude of 
desire to do that. There is still history there. There is still 
politics there between countries. And they are not always the 
best of political allies necessarily. So that is number one. It 
requires a mind shift just to do it.
    Number two, there are some pragmatic realities on the 
ground in Central America. For example, borders. Borders do not 
work in Central America. They are incredibly difficult to 
cross, whether you are a pedestrian, whether you are a trucker, 
whether you are whatever you are. That impedes commerce. It 
also enables corruption. And it makes these countries simply 
less productive. That is not simply a matter of law 
enforcement. It is also a matter of infrastructure, which is a 
really big issue.
    But one of the areas, for example, that the United States 
can contribute to in terms of improving the scenario and would 
be beneficial to address the issue you have raised, Mr. 
Senator, is the idea of trade facilitation in terms of customs 
procedures and in terms of allowing and helping trade actually 
to be done better in the Central American countries.
    What you do not have is the idea yet that is developed 
everywhere else globally, or many other places globally, is the 
idea of supply chains. And that is the next logical area of 
production and it makes a lot of sense, linking to Mexico, 
linking to the United States. So now instead of the hub and 
spoke method, where you produce something in Central America 
and you export it to the United States, now you see each other 
as more integrated economic space and you produce things 
together.
    That breaks down some of these barriers we have been 
talking about, but it requires a political commitment at the 
top to really go in this direction. I think the United States 
can help facilitate that, but ultimately the region has to 
decide that is the direction it wants to go.
    Senator Lankford. All right. Mr. Chairman, I do appreciate 
your indulgence very much in this and to be able to go through 
it and for holding this hearing. I think our relationship with 
these three countries really is very strategic to us. There are 
so many Americans that trace their lineage back to these three 
countries. There is so much commerce that could go back and 
forth between us.
    There is a clear connection in illegal immigration to these 
three countries and what happens there both economically, 
crime, corruption within governments, lack of access to courts 
and such that is very significant in the narcotics trafficking 
that they are caught in the middle of that starts in South 
America and they are only the midpoint. And a lot of that 
government corruption is based on narcotics trafficking through 
them that Americans are the buyers and they are merely the 
waypoint in it and they are affected by what is happening here.
    So there are some significant relationships where I think 
they expect us to step up and to say, ``You are helping create 
this problem in Central America based on the drug purchasing 
happening in the United States,'' and their trafficking point 
that they want to engage. Quite frankly, all three of these 
countries are friends. They are allies of ours that we have a 
lot of common relationships with. And what I have seen, and we 
have just mentioned it several times. Ms. Beltran has mentioned 
it with Guatemala.
    And specifically, what President Morales has done and what 
Thelma Aldana, their Attorney General has done, has been 
remarkable to be able to see their aggressive focus on trying 
to deal with corruption that has been historic there and to be 
able to turn that around. I think we should reward that and I 
think we should lean in and engage in a way that continues to 
support them.
    What I would hope in this is that how we do oversight and 
metrics on these three countries and what we do with our 
foreign aid becomes a model with how we handle foreign aid all 
over the world, that because of our partnership and our 
relationship we start asking the hard questions. What are the 
metrics? What are we good at? Are we putting money towards 
something because there is a problem or are we helping solve 
something so that both countries at the end of it see a 
success? And I think it can be done with this kind of focus on 
it. And so I very much appreciate your engagement in this.
    Senator Graham. Well, thank you. We will wrap it up. 
Senator Lankford has really been all over this issue, as you 
can tell, very informed. The thing I like most about this 
subcommittee is you have some very smart, dedicated people 
trying to get better value for the American dollar realizing 
that we do lead and we are the envy of the world in many ways.
    So what have I learned? We better talk to Mexico. That is a 
good idea. I want to make sure that when we collaborate on the 
Alliance for Progress we have a Mexican representative seeing 
how they can help make it happen, that trying to get better 
trading relationships between the three nations themselves 
would probably strengthen their economy as a whole. Rule of law 
seems to be the center of gravity here and if they do not have 
a plan to improve the rule of law, they need to give us one 
that we can resource based on what we think we do best and make 
sure they buy in. And basically tell people back home, ``Here 
is what you got for your money.''
    I think the governments would welcome some accountability 
and conditionality because they can go to their constituents 
and say, ``We have got a more reliable partner in the United 
States, but they are asking us to change things and it is in 
our interest to change things not only here at home, but to 
have a better relationship with the United States.''
    So this could be a model. I want it to be. The MCC, to me, 
is a great concept. It focuses on a few things with a different 
attitude. So I am very dedicated to the idea that we are going 
to take this money and have more metrics-based spending, that 
we are going to get Mexico more involved, and that we should 
probably try to have somebody ride herd over the idea of 
economic integration. Somebody at the State Department can help 
us do that.
    Thank you, Senator Lankford, and all those who are 
interested in the topic. I have a letter here from the Global 
Leadership Council, 225 businesses who have signed a letter to 
Secretary of State Tillerson urging the Secretary not to have 
draconian cuts to the State Department's budget.
    [The information follows:]
                                                      May 22, 2017.
Secretary Rex Tillerson,
U.S. Department of State,
Washington, DC.

Dear Secretary Tillerson,

    As business leaders, we are writing to voice our strong belief in 
the return on investment from the U.S. International Affairs Budget in 
advancing America's economic interests overseas and supporting jobs at 
home.
    With 95 percent of the world's consumers outside the United States 
and many of the fastest growing economies in the developing world, now 
is the time to double down on America's global economic leadership. 
America's diplomats and development experts help build and open new 
markets for U.S. exports by doing what only government can do: fight 
corruption, strengthen the rule of law, and promote host country 
leadership to create the enabling environment for private investment. 
Our country's investments have generated impressive results: 11 of 
America's top 15 export markets are in countries that have been 
recipients of U.S. foreign assistance.
    Strategic investments in diplomacy and development make America 
safer and more prosperous. American companies depend on robust U.S. 
engagement overseas, especially in the fast growing markets in the 
developing world. Our embassies and consulates around the world are 
essential partners for American businesses to ensure we can compete on 
a level playing field. Trade promotion programs have helped drive 
American exports, which today make up almost 13 percent of America's 
$18 trillion economy and support about one in five American jobs.
    The State Department and USAID are increasingly partnering with 
American businesses to catalyze and leverage private sector expertise 
and resources to create sustainable solutions at scale on a range of 
challenges such as energy, health, and agriculture. And today, host 
countries themselves are driving policy changes to compete for American 
investments. Moreover, America's global economic leadership also 
embodies our country's values--promoting economic freedom, prosperity, 
and entrepreneurship that can mitigate the drivers of violent extremism 
in the world today. In today's global economy, we have a significant 
opportunity to strengthen the State Department, USAID, and our 
development agencies and the capacity to partner with the private 
sector to address global challenges and to expand opportunity.
    We are committed to working with you in your role as Secretary of 
State to share our perspectives on the importance of U.S. international 
affairs programs to boost our exports abroad and our jobs here at home, 
and we urge your support for a strong International Affairs Budget for 
fiscal year 2018.

            Respectfully,

Chris Policinski
President and CEO
Land O'Lakes

Andrew Tisch
Co-Chairman
Loews Corporation

David MacLennan
Chairman and CEO
Cargill

Sarah Thorn
Senior Director, Global Government Affairs
Walmart

Caroline Roan
Vice President, Corporate Responsibility
Pfizer, Inc.
President
Pfizer Foundation

Kate Rumbaugh
Vice President, Government Relations
The Coca-Cola Company

John Murphy
Senior Vice President for International Policy
U.S. Chamber of Commerce

Jim Collins
Executive Vice President
DuPont

Brad Figel
Vice President Public Affairs North America
Mars, Inc.

Connie Justice
President
Planson International

Paul Neureiter
Executive Director for International Government Affairs
AMGEN

Kathryn Reilly
Global Director Public Affairs
Aon

Tara Hogan Charles
Associate Director, Global Government Relations
Procter & Gamble

H. C. Shin
Executive Vice President, International Operations
3M

Michael Boyle
CEO
Boyle Energy Services & Technology

Bill Lane
Chair Emeritus
U.S. Global Leadership Coalition

Jeff Rowe
President of Global Seeds and North America
Syngenta

Philip de Leon
Director, Public Affairs & International Business
AGCO Corporation

Hugh Welsh
President
DSM Nutrition

Peter Tichansky
President
Business Council for International Understanding

Doug Galen
CEO
RippleWorks

David Wilhelm
Partner & Chief Strategy Officer
Hecate Energy

Pamela Venzke
Global Government Affairs & Policy
General Electric

Florizelle Liser
President & CEO
Corporate Council on Africa

Kathryn D. Karol
Vice President, Global Government & Corporate Affairs
Caterpillar Inc.

Dan Gaynor
Global Communications
Nike

Kevin Kolevar
Vice President, Global Government Affairs
The Dow Chemical Company

Laura Lane
President, Global Public Affairs
UPS

Melissa Froehlich-Flood
Vice President, Government Affairs
Marriott

Gary M. Cohen
Executive Vice President and President
Global Health and Development BD (Becton, Dickinson and Company)

Lisa Malloy
Senior Director, Global Policy Group
Intel Corporation

Kris Charles
Senior Vice President, Global Corporate Affairs
Kellogg

Ambassador Richard Holwill
Vice President, Public Policy
Amway

Jeffrey N. Simmons
President
Elanco Animal Health

Tom Halverson
CEO
CoBank

Ken Fletcher
CAO
Pike Enterprises

Peter M. Robinson
President & CEO
United States Council for International Business

Karl Jensen
Senior Vice President, National Governments
CH2M

Ward Brehm
Founder, Chairman
The Brehm Group

Chris Keuleman
Vice President, Global Government Relations
International Paper

Frederick S. Humphies, Jr.
Corporate Vice President, U.S. Government Affairs
Microsoft Corporation

Dave Adkisson
President & CEO
Kentucky Chamber of Commerce

Joseph Albert
Owner
Eli H. Albert Agency

Diane Alleva Caceres
Principal
Market Access International, Inc.

Luis Arguello
President & CEO
DemeTECH

Jeremy Arthur
President & CEO
Chamber of Commerce Association of Alabama

Connie Bacon
Commissioner
Port of Tacoma

Doug Badger
Executive Director
Pacific Northwest International Trade Association

Travis Barnes
President & Founder
Hotel Tango Artisan Distillery

Gene Barr
President & CEO
Pennsylvania Chamber of Business and Industry

Kurt R. Bauer
President & CEO
Wisconsin Manufacturers & Commerce

Lane Beattie
President & CEO
Salt Lake Chamber

Jon Bennett
Vice-President of Business Development
Catalyze Dallas

Thomas Bentley
Owner & Chairman of the Board
Bentley World Packaging

John Bernloehr
President
Consolidated Metal Products, Inc.

Carl Blackstone
President & CEO
Greater Columbia Chamber of Commerce

Silvia Bonilla
Director, Small Business Development Center
Illinois Hispanic Chamber of Commerce

Antonio Boyd
President
Think Tank Consulting Group, LLC

Tony Braida
Vice President
Bankers Trust Global Banking

Becky Brooks
President & Executive Director
Ruidoso Valley Chamber of Commerce

Kelly Brough
President & CEO
Denver Metro Chamber of Commerce

Cindy Brown
President
Chippewa Valley Bean

John Bruntz
President & CEO
The Boulder Company

Anne Burkett
Executive Director
North Alabama International Trade Association

Bob Burleson
President
Florida Transportation Builders Association

Jay Byers
President & CEO
Greater Des Moines Partnership

Steve Cain
President
Triangle North Carolina British American Business Council

William Canary
President & CEO
Business Council of Alabama

Ben Cannatti
Executive Director
Main Street Jobs Coalition

John Casper
President & CEO
Oshkosh Chamber of Commerce

Kip Cheroutes
President
Japan-U.S. Network, Inc.

Lalit Chordia
President & Founder
Thar Tech

Gil Cisneros
Chairman & CEO
Chamber of the Americas

Jay Clemens
President & CEO
Associated Oregon Industries

Jonathan Coffin
Vice President
VOX Global

Harvey Cohen
President
KZB, Inc.

Todd Connor
CEO
Bunker Labs

Caralynn Nowinski Collens
CEO
UI LABS

Alfonso Cornejo
President
Hispanic Chamber Cincinnati USA

Bill Cronin
President & CEO
Pasco Economic Development Council, Inc.

Joe Crookham
President
Musco Lighting

Maryann Crush
Manager
South Boston Transit Systems, LLC

Dan Culhane
President & CEO
Ames Chamber of Commerce

Yuri Cunza
President & CEO
Nashville Area Hispanic Chamber of Commerce

Eric Dallimore
Owner
Leon Gallery

Sarah Davasher-Wisdom
COO
Greater Louisville, Inc.

Daniel Davis
President & CEO
Jacksonville Chamber of Commerce

Richard Dayoub
President & CEO
Greater El Paso Chamber of Commerce

Ryan Deckert
President
Oregon Business Association

Connor Deering
President
Cemen Tech, Inc.

Dustin DeVries
Co-Founder, Technology Consultant
Caffeine Interactive Technologies

Brian Dicken
Vice President of Advocacy & Public Policy
Toledo Regional Chamber of Commerce

Billie Dragoo
Founder & CEO
RepuCare

Steve Dust
President & CEO
Greater Cedar Valley Alliance and Chamber

Barry DuVal
CEO
Virginia Chamber of Commerce

Lauri Elliott
Chairman & Executive Director
Afribiz Group, Inc.

Jason Espinoza
President
New Mexico Association of Commerce and Industry

Joe E. Evans
Owner
Evtex Companies

Keith Evans
President
Key Financial Insurance Agency, Inc.

Teresa Faidley
Senior Vice President
Schaumburg Bank & Trust Company N.A.

Terry Fankhauser
Executive Vice President
Colorado Cattlemen's Association

Ronald J. Finlayson
CEO
E-Systems Corporation

Beverly Flaten
Vice President of International & Domestic Marketing
JM Grain

Henry Florsheim
President & CEO
Wichita Falls Chamber of Commerce

Michael Ford
Chairman
Mid-Atlantic District Export Council

Nathan Frampton
President
Fanimation

Stephanie Freeman
President & CEO
Dunwoody Perimeter Chamber

Jenny Fulton
Founder
Miss Jenny's Pickles

David Gessel
Executive Vice President
Utah Hospital Association

Matt Glazer
Executive Director
Austin Young Chamber of Commerce

Howard Glicken
Founder, Chairman & CEO
The Americas Group

Neel Gonuguntla
President
US India Chamber Of Commerce DFW

Dean Gorder
Executive Director
North Dakota Trade Office

Terry Grant
President, Utah Market
KeyBank

Trey Grayson
President & CEO
Northern Kentucky Chamber of Commerce

Keith Guller
CEO
Essex Industries

Dan Haley
President & CEO
Colorado Oil & Gas Association

David Hart
Executive Vice President
Florida Chamber of Commerce

Chris Henney
President
Ohio Agribusiness Association

Aaron Hermsen
Director of Business Development
China Iowa Group

Dave Hofferbert
President
Bond Technologies, Inc.

Gregory Hopkins
Partner & President
Solitude Wealth Management

Kevin Hougen
President & CEO
Aurora Chamber of Commerce

Galen Hull
President
Hull International

Thomas Hulseman
Managing Director
Metro Chicago Exports

Mark Ingrao
President & CEO
Greater Reston Chamber of Commerce

Bob Jameson
President & CEO
Fort Worth Convention & Visitors Bureau

Andrea Jett Fletcher
Executive Director
French-American Chamber of Commerce

John Kalaras
CEO
Quality Training Institute

Jeffrey B. Kendall
President
JBK Integrated Solutions, LLC

Robert Kill
President & CEO
Enterprise Minnesota

Joseph Kirk
Executive Director
Mon Valley Progress Council

Wally Kocemba
Chairman & CFO
Calhoun Companies

Katie Kruger
CEO
Denver Metro Commercial Association of REALTORS

Matt Krupp
Co-Owner
Desantis Krupp, LLC

Kitty Kurth
President
Kurth Lampe

Emily Lane
Vice President of Sales
Calendar Islands Maine Lobster

Craig Lang
President
The Prairie Strategy Group

Lloyd Le Page
President & CEO
Heartland Global, Inc.

Kirk Leeds
CEO
Iowa Soybean Association

Donna Lindquist
President
Soleil Global Communications

Lou Ann Lineham
President
Linehan Associates, LLC

Doug Loon
President
Minnesota Chamber of Commerce

Kevin Lutz
President
Armstrong Printery, Inc.

Kevon Makell
Founder & CEO
Seww Energy

Dr. Toby Malichi
Founder, Global Chief Executive, and Ambassador of Trade
Malichi Group Worldwide

Ron Marston
President & CEO
HCCA International

Frances Martinez
Founder & CEO
North Shore Latino Business Association, Inc.

Nick Mastronardi
Founder & CEO
POLCO

Jason Mathis
Executive Director
Downtown Alliance

Robert Mayes
CEO
Keel Point

Eddie McBride
President & CEO
Lubbock Chamber of Commerce

Sandi McDonough
President & CEO
Portland Business Alliance

Candace McGraw
CEO
Cincinnati/Northern Kentucky International Airport

Larry McQueary
COO
Indy Fuel

Daniel McVety
President
Japan China Carolina

J. Patrick Michaels
Founder, Chairman & CEO
CEA Group

David Milton
Chief Supply Chain Officer
Payless ShoeSource

Mortada Mohamed
Executive Director
Texas International Business Council

Aneezal Mohamed
General Counsel, Compliance Officer & Secretary
Commercial Vehicle Group

Beau Morrow
Owner
Left Hand Design

Wilfred Muskens
President & CEO
Stevens & Lee

Ron Ness
President
North Dakota Petroleum Council

Saul Newton
Executive Director
Wisconsin Veterans Chamber of Commerce

Laura Ortega
Executive Director, International Business Council
Illinois Chamber of Commerce

Ersal Ozdemir
President & CEO
Keystone Corporation

Jerry Pacheco
President
Border Industrial Association

Jim Page
President & CEO
Chamber of Commerce of West Alabama

Richard Paullin
Executive Director
The International Trade Association of Greater Chicago

Raymond Pilcher
President
Raven Ridge Resources

Heather Potters
Chief Business Development Officer
PharmaJet, Inc.

Ramiro Prudencio
President & CEO
Burson-Marsteller Latin America

Robert Quick
President & CEO
Commerce Lexington

Laurie Radke
President
Green Bay Area Chamber of Commerce

Rona Rahlf
President & CEO
Utah Valley Chamber of Commerce

Brooks Raiford
President & CEO
North Carolina Technology Association (NCTA)

Michael Ralston
President
Iowa Association of Business and Industry

Bede Ramcharan
President & CEO
Indatatech

Olga Ramundo
President
Express Travel

Josh Rawitch
Senior Vice President, Communications
Arizona Diamondbacks

Joe Reagan
President & CEO
St. Louis Regional Chamber

Jeff Reigle
President & CEO
Regal Ware, Inc.

Gene Reineke
CEO
Hawthorne Strategy Group

John Reinhart
CEO & Executive Director
Port of Virginia

Colin Renk
Executive Director
America China Society of Indiana

Sandra Renner
CEO
FasTrack Global Expansion Solutions, Inc.

Jim Roche
President
Business & Industry Association of New Hampshire

Bob Rohrlack
President & CEO
Greater Tampa Chamber of Commerce

Robert Rotondo
President
Rotondo Enterprises, Inc.

Jack Roy
Owner
Jax Enterprises

David Rudd
Partner
Ballard Spahr, LLP

Rebecca Ryan
Founder
Next Generation Consulting

Mel Sanderson
Vice President of International Affairs
Freeport McMoRan, Inc.

Lydia Sarson
Executive Director
German American Chamber of Commerce of Philadelphia

Joe Savarise
Executive Director
Ohio Hotel & Lodging Association

Chris Saxman
Executive Director
Virginia FREE

David Schaffert
CEO
Olympia Thurston County Chamber of Commerce

Dean Schieve
President
Victus Motion and DMD Consulting

Michael Schmitt
Executive Director
America-Israel Chamber of Commerce Chicago

Bret Scholtes
President & CEO
Omega Protein Corporation

Ralph Schulz
President
Nashville Area Chamber of Commerce

Mike Shanley
Founder & CEO
Konektid International

Stephanie Simpson
Vice President
Texas Association of Manufacturers

Bill Sisson
President & CEO
Mobile Chamber of Commerce

Nathan Slonaker
President
Columbus International Affairs Opportunity

Jim Spadaccini
CEO & Creative Director
Ideum

Bruce Steinberg
President
Relyco

Michael Strange
President
Bassett Ice Cream

Carol Stymiest
President
Canadian Business Association of North Carolina

Greg Summerhays
President & CEO
Sandy Area Chamber of Commerce

David Taylor
President
Pennsylvania Manufacturers Association

Christian Thwaites
Chief Strategist
Brouwer & Janachowski

Jon Troen
President & CEO
Mittera Group

Brett Vassey
President & CEO
Virginia Manufacturers Association

Liane Ventura
Senior Vice President
Greater Miami Chamber of Commerce

Chad Vorthmann
Executive Vice President
Colorado Farm Bureau

Chris Wallace
President
Texas Association of Business

Jeff Wasden
President
Colorado Business Roundtable

Joyce Waugh
President & CEO
Roanoke Chamber of Commerce

Cherod Webber
President & CEO
Innovative Global Supply,LLC

Ed Webb
President & CEO
World Trade Center Kentucky

Deborah Wilkinson
President
Wilkinson Global Connections

Sheryl Wohlford
Owner
Automation-Plus

Richard Yang
President
Carolinas Chinese Chamber of Commerce

Steven Zylstra
President & CEO
Arizona Technology Council

    A 29 percent reduction in the President's budget is way 
beyond what I think the market will bear and it will 
effectively neuter soft power in many areas of the world at a 
time when a little money spent wisely can bring about real 
change. It is 1 percent of the Federal budget, foreign 
assistance. The total package is 1 percent. What Senator 
Lankford is telling us that some money, relatively a small 
amount compared to what we spend overall, can actually affect 
change in a positive way: less illegal immigration, more 
reliable partner, less drugs.
    Thank you all. The subcommittee Members can submit 
questions for the record until Friday, the 19th, by 2:00 p.m. 
and our next hearing is June 13 on the fiscal year 2018 budget 
requests for the 150 account with Secretary Tillerson.

                          SUBCOMMITTEE RECESS

    The subcommittee is adjourned. Thank you all.
    [Whereupon, at 3:54 p.m., Tuesday, May 23, the subcommittee 
was recessed, to reconvene subject to the call of the Chair.]