Prepared Remarks for Adolfo A. Franco
Assistant Administrator for Latin America and the Caribbean
Pan American Development Foundation's
Annual Board of Directors Dinner
Washington, DC
January 22, 2003
Good Evening. I would like to thank the Pan American Development Foundation for the invitation to speak with you this evening. 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 would like to 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, our government is helping to promote political and economic freedom among all nations but especially among our neighbors in this hemisphere with whom we have such strong social and cultural ties. We want our allies in Latin America to have strong economies not only for their own sake, but for the sake of the global economy, and for the sake of global security.
The countries of 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. As a consequence, leaders throughout the Americas are now preparing their countries to negotiate free trade agreements including a Central American Free Trade Agreement (CAFTA) by the end of 2003 and a Free Trade Area of the Americas (FTAA) Agreement for the hemisphere as a whole by 2005. President Bush has made the ratification of these agreements our Administration's highest priority for the region, and I fully share the President's goal and vision of a prosperous hemisphere united by free 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 peaceful transitions of power from one democratically elected government to another.
In 2001, leaders throughout the Americas reiterated their support for democracy by adopting the Inter-American Democratic Charter of the Organization of American States. Ambassador Noriega's leadership was instrumental in making this great achievement possible, and I look forward to working with him to strengthen this commitment to democracy.
There is a lot we can be proud of. The 1990s also saw reductions in human rights violations, the emergence of democratic institutions, and increasing investments in social services throughout the region that yielded significant results.
Despite these achievements, however, as everyone in this room knows all too well, more work remains to be done. Recent events such as the drastic decline in the world's coffee prices and its economic consequences for Central America; the financial crisis in Argentina; the civil conflict in Colombia; increasing levels of crime and terrorism and border disputes; -- all of these are having profound effects on income levels in the region and the quality of life in the region.
These stresses contribute to increased illegal immigration into the United States,
lack of confidence in governments, and increased insecurity throughout the region.
Clearly, an effective U.S. Government response to these challenges is urgent, and USAID's work will be instrumental.
As part of this American response, on March 14, 2002, President Bush made a major policy address on foreign assistance and its importance to the national security and foreign policy interests of the United States. The President announced that the United States will increase its core assistance to developing countries by 50% over the next three years. In his speech, the President announced the creation of a Millennium Challenge Account that will make an additional $5 billion available to developing countries beginning in Fiscal Year 2005. To start off the program, the President will also request additional funds for this purpose in Fiscal Year 2004. This Presidential objective represents the largest planned increase in foreign assistance in the past four decades.
The President stated clearly that these newly requested 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 made available to root out corruption, increase respect for human rights, and strengthen the rule of law. Assistance from this account will also flow to those countries that invest in their own people through education and health care initiatives. Aid will be provided to countries that introduce sound economic policies that open markets, promote individual entrepreneurship, and bring about sustainable national budgets.
In simple terms, the goal of the Millennium Challenge Account is to reward countries that develop sound policies that support economic growth and reduce poverty. I can tell you from firsthand experience that the MCA and President Bush's vision for the developing world has sparked great enthusiasm and interest - the likes of which I have not seen in Latin America in the past 20 years.
Importantly, the Millennium Challenge Account is not a substitute for other development assistance, but rather it constitutes a Presidential initiative to provide additional resources to complement the current assistance provided through USAID and other U.S. Government agencies. The President also knows that we cannot turn our backs on countries that have a continuing chronic need for humanitarian assistance. Rather, the Millennium Challenge Account symbolizes a commitment by President Bush and our Government to reward and encourage developing countries that take ownership of their own development.
To that end, USAID will play an important and significant role in the MCA's development and implementation both here in Washington and overseas.
Despite all the important work that our Government can and should undertake, few, if any, development programs are successful without dynamic partners. That is why we are working closely with businesses, non-profits, universities, foundations and private voluntary organizations to complement our work with host country governments to achieve sustainable development. The PADF is a great partner in this endeavor, and we look forward to building on our successes. Unquestionably, viable partnerships leverage additional resources and generate a higher degree of consensus that leads to tangible results.
That is why last year Secretary of State Colin Powell, with the full support of USAID Administrator Andrew Natsios, launched the Global Development Alliances or GDA, a business model that combines USAID's technical expertise with the capital resources of the private sector.
Emphasizing the importance of private sector involvement in the development process cannot be underscored enough. USAID Deputy Administrator Fred Schieck, noted in remarks at a conference on sustainable development last July at the Inter-American Development Bank, the involvement of the private sector is a pre-requisite to ignite the engine of economic growth. I could not agree more.
Recent attention on the potential of non-official development assistance has focused on the estimated $23 billion annually remitted by private individuals residing in the United States to their families and relatives in Latin America and the Caribbean. Unfortunately, many of those individuals who transfer funds to their families in the region do not make use of formal financial institutions. Accordingly, as much as 15% of what is sent is lost to intermediaries in the form of transactional costs. USAID is working to lower these transactional costs, so that a greater percentage of the money being sent as remittances can actually reach beneficiaries. USAID is also seeking creative ways to not only lower the transactional costs of sending remittances but also encouraging those who receive remittances to use these funds productively and to encourage savings and investments.
Bill Easterly, with whom I recently participated on a panel on foreign assistance, wrote in his book The Elusive Quest for Growth, that development occurs when governments and individuals all have proper incentives for entrepreneurship and investment.
To that end, President Bush believes, and I completely agree, the best way to improve the enabling environment for increased investment and job creation is through free trade. That is why we are committed to seeing CAFTA and FTAA become a reality by the President's deadline of 2005. To achieve this goal, USAID is focusing its assistance programs on trade capacity building activities that help governments throughout the region prepare to negotiate and implement free trade agreements. Equally important is the provision of technical assistance to the private sector to ensure competitiveness in a free trade regime.
I recently participated in the launch of negotiations at a CAFTA ministerial meeting here in Washington several weeks ago, and at that session Ambassador Zoellick underscored the importance of USAID's trade capacity building activities as necessary components for both governments and the private sector in the region. Trade is at the forefront of our development agenda.
However, the hemispheric commitment to democracy remains an equally high priority for the Bush administration. We are truly fortunate to have a new generation of leaders committed to freedom, stronger democracies, and macro-economic reforms. Fortunately, the peaceful transition of power is now commonplace in Latin America.
I just returned as a member of President Bush's delegation to the inauguration of President Lucio Gutiérrez of Ecuador where we witnessed Ecuador's most successful free elections ever.
I am also pleased to report that both President Gutierrez and Foreign Minister Pacari ratified Ecuador's commitment to precisely the objectives that USAID promotes -- anti-corruption, education, and poverty reduction. President Gutierrez also expressed his support for the FTAA. His commitment will be important as we work to achieve President Bush's goal of a Free Trade Area of the Americas by 2005.
However, we are mindful that economic challenges in Argentina, Uruguay, Brazil and elsewhere as well as internal conflicts such as the protracted struggle in Colombia, and high crime levels threaten the success of many democratically elected governments. Accordingly, USAID is encouraging judicial reform, support for the rule of law, and programs that give minority ethnic and racial groups more of a voice in their respective societies. USAID is also working to eliminate the corruption that debilitates public and private institutions that weakens democracy in so many of the countries of the hemisphere. USAID understands that investments in democratic consolidation require a long-term commitment to bring about a change in political cultures, institutions, and practices, and I want you to know that we are in it for the long haul. For if we fail to do so, the promises of free enterprise and trade will never be able to achieve their full potential and promise. Democracy and free trade go hand in hand.
We also face other daunting challenges. Due to the proximity of our Latin American and Caribbean neighbors and the increasing pace of migration, and of travel between the United States and Latin American countries, infectious diseases, including HIV/AIDS and tuberculosis, are of special concern to our country. 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 programs. In addition, new USAID programs are focused 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 has contributed to changing health care practices. We look forward to doing more of the same in 2003.
Finally, I would like to say a few words about our programs and policies concerning Cuba. This is a subject of keen interest to me. On May 20 of last year, the President made clear that efforts to bring about a transition to democracy in Cuba would result in substantial United States assistance. The President has called for true change in Cuba by supporting the growing democracy movement in that country. Specifically, the Bush Administration wants to disseminate more information on democracy on the island and to promote efforts to open up Cuban society.
I wish to take this opportunity to applaud the important work the Pan American Development Foundation has undertaken in Cuba to support independent libraries that have sprung up all over the island. With PADF's help, there are now more than 100 independent libraries, all of them established by individual Cuban citizens. These libraries provide Cubans with books and magazines that illustrate life in free societies around the world, and recount how other countries that once suffered under dictatorships similar to Cuba's, have been successful in making a peaceful transition to democracy and free enterprise. With your continued help, I am confident that we will soon begin to see that transition in Cuba.
In closing, I want you to know that despite many successes, a great deal more work needs to be done in Latin America and the Caribbean. With additional funds from the Millennium Challenge Account and other non-official development assistance, including private capital flows, the United States will continue to promote economic growth in Latin America. USAID will do its part by continuing to promote programs and policies that expand trade and private investment. USAID will also continue its efforts to help alleviate poverty, improve education, protect the environment, strengthen democracy, and improve the poor's access to quality health care.
USAID needs your help to achieve our common objectives, and I look forward to working more closely with you in the coming year.
Thank you.
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