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at the Hispanic Council on International Relations
Washington, DC
November 20, 2002
Good Morning. I would like to thank the Hispanic Council on International Relations for the invitation to speak with you today. I am pleased to have the opportunity to tell you about President Bush's milestone Millennium Challenge Account initiative to make foreign assistance more effective and results-oriented. I will discuss the important initiatives taken by the United States Agency for International Development (USAID) to improve the way we do business to respond more effectively to the urgent needs of our closest neighbors. I will tell you something about our achievements and goals and the ways you, as people interested in foreign policy, and development policy more specifically, can help USAID to help our neighbors accelerate economic development and solidify democracy.
President Bush's National Security Strategy reflects the urgent needs of our country following the September 11 terrorist attacks. It clearly states that the U.S. Government's aim is to help make the world not just a safer place but a better place. To achieve this goal, the U.S. government is helping to promote political and economic freedom among all nations and especially among our neighbors in this hemisphere with whom we have such strong social and cultural ties. The U.S Government wants our allies in Latin America to have strong economies for their own sake, for the sake of the global economy, and for the sake of global security.
Countries in Latin America and the Caribbean have already made important strides towards improving their economies. During the 1990s we saw higher standards of living, a return to positive economic growth rates and a consolidation of macro-economic reforms. In addition, leaders throughout the Americas are preparing their countries to negotiate free trade agreements including a Central American Free Trade Agreement (CAFTA) and a Free Trade Areas of the Americas (FTAA) Agreement for the hemisphere as a whole. President Bush has made conclusion of these agreements his Administration's highest priority for our region, and I share his goal and vision of a prosperous hemisphere united by trade and commerce.
In addition to advances in the economic sphere, during the 1990s we witnessed progress in democratic governance in the Hemisphere including credible and successful elections that brought transitions of power from one democratically elected government to another. In 2001, leaders throughout the Americas reiterated their support for democracy through the Organization of American States's Inter-American Democratic Charter. The 1990s saw reductions in human rights violations, the emergence of democratic institutions and heavy investments in social services throughout the region that yielded significant reductions in fertility and child mortality rates.
Despite these achievements, more work remains to be done. Recent events - the drastic fall in the world's coffee prices and the subsequent economic consequences for Central America, the financial crisis in Argentina, the civil conflict in Colombia, increasing levels of crime and terrorism and border disputes - are having profound effects on people's income levels in the region and lowering the quality of life. These stresses contribute to increased illegal immigration into the United States, increasing rates of HIV infection, as well as to the drug trafficking which so debilitates both our society and those of our neighbors in the region. Clearly, an effective U.S. Government response is urgent.
As part of this response, on March 14, 2002, President Bush made a major statement on foreign assistance and its importance to the national security and foreign policy interests of the United States. He announced that the United States will increase its core assistance to developing countries by 50% over three years. In his speech, the President announced creation of a $5 billion Millennium Challenge Account. This represents the largest planned increase in foreign assistance in the last four decades.
The President stated clearly the new funds would be available to countries, including those in Latin America and the Caribbean, that show progress in ruling justly, which provide their citizens with economic freedom and which invest in their own people. The funds will be used to root out corruption, increase respect for human rights, and strengthen the rule of law. Aid from this account will flow to those countries which invest in their people through education and health care. Aid will be provided to countries that introduce sound economic policies through open markets, individual entrepreneurship and sustainable budgets. The goal of the Millennium Challenge Account is to reward sound policy decisions that support economic growth and reduce poverty.
To date, the administrative details of this account have not yet been decided, but make no mistake--the Millennium Challenge Account will become a reality in the coming years.
Importantly, the Millennium Challenge Account is not a substitute for other development assistance, but rather represents additional funds to add to existing monies provided by USAID and other U.S. Government agencies. The US Government realizes it cannot simply turn its back on countries with continuing chronic need for our assistance, but the Millennium Challenge Account symbolizes commitment by President Bush and the US Government to search for ways to make foreign assistance more effective and ensure recipient countries take ownership of their own development.
Few development programs are successful without dynamic partners. We are working closely with businesses, non-profits, universities, foundations and private voluntary organizations to complement work with host country governments to better achieve our overall goals. Viable partnerships leverage additional resources and generate a higher degree of consensus behind shared goals. That is why last year Secretary of State Colin Powell, with the full support of USAID Administrator Andrew Natsios, launched the Global Development Alliances (GDA), a business model to combine USAID's technical expertise with the capital resources of the private sector.
In keeping with the emphasis on private sector involvement in the development process, USAID Deputy Administrator Fred Schieck in remarks at a conference on sustainable development last July stressed the private sector's role as an engine of economic growth, and I could not agree more. Recent attention has focused on the more than $23 billion annually remitted by private citizens from the United States and other countries to points all over Latin America. Because those making these transfers often do not make use of formal financial institutions, as much as 15% of what is sent is lost to intermediaries in the form of transaction costs. USAID is working to lower these transaction costs, so more money sent as remittances actually reaches beneficiaries. USAID is seeking creative ways to encourage those who receive remittances use that money productively, for savings and investments, and not just for consumption.
Bill Easterly, in his recent book The Elusive Quest for Growth, states development occurs when governments and individuals all have proper incentives for entrepreneurship and investment. President Bush believes, and I agree, the best way improve the enabling environment for expanded trade and investment in Latin America is through agreements on free trade. That is why I am committed to see the Central America Free Trade Area (CAFTA) and the Free Trade Area of the Americas (FTAA) come into effect by the President's deadline in 2005. To assist with this goal, USAID currently focuses our assistance on trade capacity building activities to help governments throughout the region prepare to negotiate, then implement these free trade agreements. In addition, through cash contributions and technical assistance, USAID is helping farmers increase their competitiveness through programs like our Opportunity Alliance in Central America and the Andean Regional Initiative which aims to improve rural infrastructure and agricultural capacity in the Andean region in order convince farmers to engage in licit economic activities rather than in production of coca or opium poppy.
The hemispheric commitment to democracy remains high with the commitment by many leaders to an ambitious democratic reform agenda. So far, democratic systems have persisted even in the face of severe economic crises. However, economic downturns, internal conflicts such as the protracted struggle in Colombia, and high crime levels threaten the success of many of these democratically elected governments. USAID is encouraging judicial reform, support for the rule of law, and programs to give minority ethnic and racial groups and other underrepresented groups such as Afro Latinos more of a voice in their respective societies, all as a means of ensuring these fragile democracies survive. USAID is also working to limit the corruption which debilitates so many institutions and weakens government services in so many of the countries of our region. USAID understands that investments in democratic consolidation require a long-term commitment to help change political cultures, institutions and practices, and we are in for the long haul.
Due to the proximity of our Latin American and Caribbean neighbors and the increasing pace of migration and of travel between the U.S. and Latin countries, infectious diseases, including HIV/AIDS and tuberculosis, are of special concern to the U.S. In response, USAID works in many parts of Latin America and the Caribbean to prevent the spread of HIV/AIDS and tuberculosis through education, detection and more effective treatment. In addition, new USAID programs focus on keeping children in school and on improving their nutritional status. Throughout the region, USAID has helped to provide clean drinking water and sanitary facilities and contributed to changing health care practices.
Race and ethnicity are highly correlated with poverty and inequality throughout Latin America and the Caribbean. As a result, most of USAID's development efforts aim to ensure that resources are targeted to disadvantaged groups, including women, indigenous peoples and Afro Latinos.
Despite many successes, there is still a great deal more work to be done. With funds from the Millennium Challenge Account and other assistance sources, the U.S. Government will continue to promote economic growth in Latin America. USAID will continue expanding trade and private investment that are the primary engines of economic growth. USAID will help to alleviate poverty, improve education, protect the environment, strengthen democracy and improve people's access to quality health care. USAID needs your help with this effort. USAID needs you, as leaders of the Hispanic American community, to build on your past efforts and work with us in our shared goal to promote economic growth and alleviate poverty in Latin America and the Caribbean.
Thank you.
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