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The Center for Preventive Action Andes 2020 Commission: A New Strategy for the Challenges of Colombia and the Region

Speakers: Julia E. Sweig, senior fellow, Council on Foreign Relations; Deputy Director, Latin America Studies, Daniel William Christman, commission chair, and John G. Heimann, Warburg Pincus; Co-Chair, Andes 2020 Commission
January 8, 2004
Council on Foreign Relations


The January 8 roll-out of "Andes 2020: A New Strategy for the Challenges of Colombia and the Region"

Washington, D.C.

JULIA SWEIG: (In progress)—our illustrious chairmen, whom I'm very happy to have worked with so closely over the last year, Lieutenant General Dan Christman and John Heimann, who is here seated to my right.

I want to—before we get started, I have some housekeeping remarks to make as presider of this event. But before I even do that, I really want to take a moment to ask Michael McCarthy and Katie Jennings to just stand up and thank them publicly, because they've done an extraordinary job—(applause)—in staffing what has been a truly prodigious effort. And I'm very proud of them and grateful, and they're the best that the Council has to offer. Also Alex Sarley, Amanda Raymond and Jeremy Weinstein are here as well. I want to thank them, too. And I say that, I know, on behalf of the co-chairs.

The obligatory remarks: Please turn off your cell phones. The meeting is on the record, unlike most Council meetings. We have a number of members of the press here as well. Our speakers will speak for about 25 minutes, which is a bit longer. They have a lot to cover. And so I'd ask that you bear with us. So we will go at a fairly clipped pace and have plenty of time for questions and answers.

We'll end promptly at 10:00, so I ask that please, as a courtesy to the speakers, you not leave the meeting early.

Let me say here that what you have in your packets are the executive summary of the report as well as a long list of the report's rather extensive recommendations. On our web site, you can download and find the entire report as of early this morning. The embargo has been lifted. And we've got a nice piece in the Financial Times and on the AP wire that's also introducing it. So I encourage you to get the full 120-odd-page report when you go back to your offices.

We had, when we launched this project about a year ago, and still have a dual mandate, as we're doing this project under the rubric of the Center for Preventive Action, which is directed by General Bill Nash, who's sitting here in the front row, two ideas: To really try to rethink the drugs-and-thugs focus of U.S. policy toward the Andes, and also to help prevent the outbreak of major conflict.

We take a long view. That is to say, the recommendations in this report are really geared to getting to the year 2020 with a far more democratic, stable and peaceful Andean region. So there are long-, medium- and short-term recommendations. But Andes 2020 obviously has the dual meaning of clear vision, but to the year 2020. And so the recommendations are both practical but also visionary, if I can say.

And we have also some of the members of the commission here representing a variety of institutions. Arturo Valenzuela is here. Mark Schneider is here. Alan Holmes is here, a number of others who served as observers; George Folsom. And I'm sorry if I don't see others. Fulton Armstrong there as well. I thank all of them for participating in this process.

And, with that, I will turn the chair over to John Heimann, our co-chair.

JOHN HEIMANN: Thank you very much, Julia. And Dan and I would like to also thank Julia, Michael, Kate and others for the extraordinary work that's been done on this report.

There is serious political instability in the Andean region. In the last four years, the governments of the presidents of Ecuador, Bolivia and Peru have been ousted by political pressure. And, of course, you're all aware of what has happened in Venezuela, the attempted coup, and then the very long general strike that took place.

This probably is—in our opinion it is—the most significant security crisis of the Western Hemisphere due to the porous borders, a lack of effective state sovereignty, ongoing conflict in Colombia, across the borders to Ecuador and Venezuela, and some evidence of a resurgence of the Shining Path in Peru.

As you're all aware, the net export of cocaine from the region has been essentially unchanged since the year 2000. The economic reforms of the 1990s have not paid off. In the past two decades in these countries, per capita real income has not increased one bit; certainly not much of an advertisement for globalization, economic globalization.

There are some 67.2 million people out of 116 million who live below their nation's poverty line; 67.2 million people. That's the equivalent of all the people in New York, California and Florida. The average income of the region is $3,200 per person, but that swings widely from a low of $691 to $3,300.

Venezuela is the highest of all of the countries on a per capita basis, and it still has over 50 percent of its people living below the poverty line. Income disparity continues to grow between the richest and the poorest. In Bolivia, the richest 10 percent of the population make 42 percent of the national income. The poorest 10 percent is .30. And it's likewise in the other countries; I won't go through them all. But the disparity continues to grow.

So that's the background, really, of what we have looked at in this report. And what is needed is a new U.S. strategy.

DANIEL CHRISTMAN: What's the core of the strategy? I think all of us have been familiar from our Economics 101 days on the macro trade- off between guns and butter. And that's a useful beginning point, I think, in discussing how the commission has viewed U.S. strategy to the region in that context.

With respect to Colombia, since the year 2000, the ratio of guns- to-butter assistance—defense and police on the one hand; economic and other development assistance on the other—is in the ratio of four to one. And for the region as a whole, it's nearly two to one during that same period. It's predominantly a guns approach. We need to recalibrate.

The issue is not—as we said in the report, it's not ignoring the region. The issue is really myopia. We presumably spell that correctly in our advanced distribution here. It's a question of focus—focus from the issue of guns to a more balanced guns-butter approach.

And just so we get this clear up front, I'm not talking about abnegating security or counterterrorist responsibility. We're not saying that. Indeed, many of the recommendations here focus us on how to improve the efficiency of that particular output.

What we're saying in essence is that security and counterterror and counternarcotics are necessary conditions, but they're hardly sufficient conditions for a comprehensive strategy long-term. So the issue is recalibrating and refocusing, to ensure that the U.S. political and financial commitments to the region redress some of the weaknesses of the current policy.

And what are those? We've talked initially about the narrow focus on a counternarcotics and security approach—a lack, therefore, of complementary and comprehensive butter programs—no real regional outlook, and also a failure in the region to hold elites accountable. We need to recalibrate, in short. How do we do it?

The commission looked at several approaches to parse the strategy. And we decided ultimately on a three-part paradigm. And we will begin—and John will pick this up in a moment—we'll begin with a focus on perhaps the most important butter component, and that's sustainable rural and border development with strategic land reform, titling and taxation as critical components.

Second, an increased engagement by the U.S. and the international community on the entire range of issues, to include, perhaps most importantly on the drug side, multilateralizing the attack on drugs, not only on the supply side, but on the demand side as well; and finally, a regional approach in U.S. policy and by the Andean countries.

We can no longer treat this critical region—critical for the reasons John mentioned—country by country, stovepipe by stovepipe, one off by one off. It has to be treated regionally. Regional problems require regional solutions by regional actors, as well as by the U.S. and the international community.

So that's the core of the strategy. We'll start to march down this seriatim, with John talking initially now on the land reform and rural development components.

MR. HEIMANN: It is obvious and provable that the vast number of the citizens in these countries are excluded from political and economic participation. And it's obvious for the country as a whole. But it's extraordinary in the rural areas. The rural areas are subject to increasing violence by guerrillas and paras. And, of course, it's in the rural areas where coca grows.

Our key recommendations are as follows. One, there should be property tax with seizure for non-payment. By that we mean landowners should pay taxes. They should be predictable and equitable. And the expansion of property rights to the campesinos, to the peasants, also will carry this obligation. But this requires enforcement. It requires collection, and it requires will.

So, number one, if people don't pay taxes on the land they own, property should be seized. They should, importantly, implement and improving land titling, registering and credit. Land titling—I think you've probably all read the work of Hernan DeSoto, so I won't go through that rationalization, but it's critically correct; and, of course credit.

It's impossible to get credit without collateral. If you don't have title to your land, you have no collateral. So, therefore, these peasants who work the land have no opportunity to improve their lot other than by growing illicit products.

This also needs land reform as a major thrust of United States policy, and also that of the United Nations and the international financial institutions. It has to be made a theme, a critical pillar for success. Sidewise I would say, we, of course, want to end the illegal land grabs by the Colombian guerrillas. That almost goes without saying, though it continues to take place. And to help the forfeiture activities, the U.S. should help to fund and sponsor the forfeiture agency of Colombia so that tax collections can improve.

And finally, the U.S. should sponsor trust funds for rural development at the regional organizations; in other words, through IDB and through CAF. We should take a leadership in that.

The other recommendations, of course, again, are obvious. They're not new: Invest in infrastructure, public and private partnerships, sewer, electricity, schools—you know, the workforce in Latin America has an average of six years of education—water and roads. Roads are critically important, because that's how you get market access. If you live in the countryside, in rural areas, how do you get your products to where they can be sold? You need roads for that.

So even though poverty is endemic in the region, rural poverty overshadows all.

Finally, the next point that was made, and that by Dan, and I think important, is that it's clear that of all the nations of the world, the U.S. is predominant in the area. But we need to multilateralize our activities on all issues in the region. And this is not a panacea. It needs to be coordinated and cohesive, and it has to be undertaken with consultation with local governments.

The other key recommendations under the U.S. and the international community are, one, financial sanctions against paras, guerrillas and their supporters—obvious; target financial infrastructure of the cartels through anti-money laundering campaign. And, of course, the Treasury's Office of Foreign Asset Control, under the Patriot Act, confers considerable powers.

But this is difficult to do. I can speak with my background as a banking regulator. This is not an easy—finding money laundering is very, very difficult. After all, these are pretty sophisticated folks. And I think the U.S. Treasury needs added resources to follow this up.

The Andean Trade Promotion and Drug Enforcement Act, which is temporary, needs to be made permanent. Dan will touch on that in a moment. We should expand the U.N. humanitarian action plan for Colombia. That's called HAP, I believe is the initials for it—HAP.

And why is that important? It came as a shock to me personally to find out that there were over 2 million displaced persons—they call them homeless—displaced persons inside of Colombia who have been run off their land and displaced by the paras and the guerrillas—2 million people sloshing up against the borders of the neighboring countries.

Imagine the problem that that does present. Now, HAP is one of the solutions to that. The United States now pays 52 percent of the cost of HAP. We need other nations to up their contributions substantially.

And finally, we have to adjust the U.S. security assistance. Dan will cover that. And the leverage potential of trade; we'll cover that in a moment.

So I'll turn it back to Dan.

MR. CHRISTMAN: Continuing with the theme of multilateralization, perhaps one of the most important, if not symbolic, is the drug strategy. And one of the areas of the taskforce's emphasis is to try to reorient the current drug strategy, from essentially a solely U.S. supply-side focus, to a more balance more multilateral approach. I think it goes without saying that those who try to assess our counternarcotic strategy in the region understand the flaw in its priorities, in its resource allocation, and with respect to the lack of any demand side emphasis.

Spraying, for example, is simply out of touch with rural realities. There is no state-control or law enforcement where spraying takes place or a very little to prevent therefore replanting. There's no stick, as we've said in the report. Poor farmers as a consequence instead of high-end cartel pushers bear the brunt, the lack of real economic alternatives are endemic. And it's a strategy that continues to be bilateral and not regional. The balloon effect has been well publicized. The same 200,000 hectare of coca continue to planted. And success in one country, Colombia, significantly of late, sadly results in failures in others as the balloon effect spills across borders. That's the challenge. How might we go about addressing those?

One way is, as John has outlined, implement serious rural development strategies. John has talked about areas—the report talks about areas like microfinance initiatives, public-private partnership and land reform.

Second, we need to target the higher end of the drug industry by OFAC, as John has mentioned. Success here against al Qaeda and against Slobodan Milosevic I think shows that it can bear fruit if energized and resourced.

Third, on the issue of the balance between supply and demand, this council said in its 1997 report that we need, as a U.S. country, we need public education and media focus. As one of our task force members said, if on the streets drugs are perceived as cool, then we need to say in the schools, with our media, with our actors and our sports figures, that it's not. The council said in 1997 we need to emphasize treatment and rehabilitation, community law enforcement—alongside the supply side. And what this report says, it's long overdue to rebalance, it's long overdue to multilateralize this. The growth in drug consumption in Brazil is geometric—in Europe equally. This requires a multilateral approach on both sides, and we urge its engagement promptly.

One of the ways that we can, it seems to me, signal that we are serious about multilateralizing this attack is to create an approach, outlined in the report, whereby the U.N. Office of Drugs and Crimes monitors production and consumption, provides statistics that can be relied upon. And then we initiate a policy that says the top 20 drug- consuming countries allocate 10 percent of their counternarcotic budget to a World Bank development fund that is in turn allocated to producing countries as they reach eradication targets, particularly as they are launching development projects in areas where eradication is under way. We think this makes enormous sense.

These four elements of a reoriented counternarcotics strategy it seems to me not only multilateralize but, as a consequence of that, they help lessen the polarizing effect of a U.S. go-it-alone approach with respect to drugs.

The next area on the multilateral approach—in this case though we're turning increasingly now to a regional focus—is security assistance, and let me just say a few words about this important piece, because I've said security remains necessary. But one of the areas that we think needs to be quickly reexamined—and I trust that it is in the Defense Department, is the extremely constraining 800 personnel U.S. cap—400 military and 400 civilian. This in many respects is outrageous, given the security dilemma that this region faces. Right now we have 135,000 U.S. personnel in Iraq—400 in the Andean region, in Colombia—400 in Colombia alone. And one of the constraints that we saw as we traveled to the region was, for example, the three U.S. hostages, civilian hostages, count against the cap. (Laughter.) When we send replacement personnel to train the Colombians, they stay on the ramp of the C-130 until those that they are replacing enter the aircraft—before their jungle boots hit the tarmac. So it would count against the cap, they must stay on the plane. Now, is that a consistent, rational policy? It seems to me it's long overdue that we revisit the cap. We're not saying send battalions of U.S. troops to engage in the drug war. We're not saying that. We are saying, first of all, liberalize to a greater extent than currently exists for the SOUTHCOM commander, the split between the 400 civilian and 400 military—and also revisit the cap. It seems to me a modest increase in that is long overdue, given the priority of the security dilemma that we face in the region.

At the same time, we will continue, as the report emphasizes, to stress the criticality, the necessity of human rights training and vetting for the militaries in the region—Colombia's in particular. There was some discussion in our report about whether we need to loosen that. We don't. The success of vetting for those units is extraordinary. The battalions and brigades that have been vetted and trained are doing extraordinarily well. That needs to be continued—not only because it produces excellent results, but because of the political realities that attend that.

It seems to me it's also long overdue that we apply a flag officer presence to the region. We have a colonel now in charge of the Office of Defense Cooperation. Outside of Iraq, Colombia is the third largest recipient of U.S. assistance, aid and security in the globe. Assigning a brigadier general there to head the Office of Defense Cooperation not only would improve, it seems to us, the efficiency of that operation, but allows that flag officer to help, regionally if necessary, to be assigned to the ambassador's staff, reporting to the SOUTHCOM commander, heading the Office of Defense Cooperation in the region. It seems to me long overdue.

Also a suggestion the task force came up with, which I think makes a great deal of sense, and that is to offer a U.S. senior defense review team to Colombia initially, and to the region if they would like it, on the model of Goldwater-Nichols. It's very clear to us that while Colombia in particular is extremely serious about their efforts against counter terror and narcotics, the split between police and military, the necessity of establishing a true jointness ethic, the importance of establishing professional military education on human rights, rule of law, as well as simple operational military planning, demands a Goldwater-Nichols kind of review for the Colombian military. We think it's long overdue and can be applied as well to the region.

We also would urge a task force in the U.S. government to address the issue of black market trafficking in small arms. We need to ratify CITFA, the Convention against Illicit Trafficking in Firearms, submitted to our Senate in 1998, as yet unratified. But the trafficking of small arms in this region eventually winds up in the hands of the terrorists is enormous. The example we cite here was 3,000 AK-47s that came from Nicaragua, laundered through a Panamanian middle man, winding up in the hands of the AUC in Colombia. This is the kind of undermining of security in the region that it seems to me an approach on illicit black marketing can help address.

Finally, we need to stop penalizing countries in the region for failing to adapt an Article 98 exemption for Americans in their country under the International Criminal Courts Treaty. That is simply self-defeating. The countries in the region need the dollars. Withholding it, seems to me us, makes no sense.

MR. HEIMANN: We're throwing a lot of information at you. I'd like to just back up a bit and stress something that Dan has said. We mentioned it before. The U.S. policy seems to have been over the past years to push drug production up and down the Andean ridge. That's the need for the regional approach. I just simply want to stress that. All of these issues are not country by country, but they are regional. Plan Colombia, as Dan has pointed out, as done a very good job thus far in reducing production in Colombia—but not in the region. So as long as the U.S. addresses these issues, including trade, which I will come to in a second, on a country-by-country basis, we are doomed to failure in terms of our goal, our stated goal, which brings me to trade.

Obviously, if we are successful in being able to reduce drug production, what's the substitute for it? I mean, people have to earn a living. Clearly they are earning a living now in the rural areas in particular by producing coca. Trade becomes critically important—trade and economic development.

And the biggest market for these countries is not the EU, it certainly isn't Japan—it's North America, and particularly the United States with the largest market in the world. They are our southern neighbors. So we have to begin to focus much more directly on trade agreements in Latin America as a whole, but certainly in the Andean region. And I don't mean bilateral trade agreements country by country, because that just completely keeps the problem of non- regionalization in the forefront. Country-by-country doesn't solve the issue. It's a bigger-thy-neighbor policy by the countries who adopt or are lucky enough to get bilateral trade with the U.S., and it's hurtful to the neighboring countries, and they are inextricably interlinked.

So, number one, we clearly should deal on a regional basis with respect to trade. And trade also, since we're opening our markets to them, and they should be to some important degree, we should link trade openness, if I can use that phrase, with our other concerns, such as counter-drug efforts, development efforts, putting teeth in labor standards as part of the U.S. approach. And in that respect we will have to provide some assistance to the poorer nations in the region as they adjust over time. And certainly in that respect we have to enact strategic product preferences in our trade agreements. For example, coffee today is one third the price it was in 1960. So the coffee grower is not making a living wage from coffee. What does he turn to? He turns to a product that really, really makes money, and that's coca. And that will continue, whether it's in Colombia or Bolivia or Peru, or anywhere else, until we find ways of increasing the economic life of the people of the country.

And also in that respect we have to make sure our trade agreements are not—look good on a piece of paper, but in reality they are not effective. For example, one of the preferential treatments given to Ecuador is that they can export tuna to the United States. Americans like tuna fish—it's very, very good. Except they are limited to exporting it in sealed pouches—not cans. It would appear that Americans shopping in stores don't like to buy tuna fish in sealed pouches, because they are trained to buy it in cans. And therefore it's open, but it really isn't open. So we have to come up with product preferences that are meaningful, rather than just saying, We have done that, but we have in many ways frustrated the capacity of the countries involved to gain economic independence.


MR. CHRISTMAN: Keeping with the theme that regional problems require regional solutions, let me talk just for a second about an Andean free trade agreement. When we drafted this report, that was one of our highest priority initiatives. We were pleased to hear in November U.S. Ambassador, U.S. Trade Rep Bob Zoellick, announce in Miami, in November, the intent to initiate negotiations with Colombia, Peru, Ecuador and Bolivia in 2004. We think this is exactly right. They can be high standard free trade agreements. This can unify the region. We would like to have it start, if possible, even before these negotiations, as a customs union within the region, by the countries agreeing to reduce tariffs to a common level. But, regardless, we think this particular initiative of the U.S. is spot on, and we support it entirely.

Secondly, with respect to the regional peace, Brazil—Brazil has recently offered to deploy its SIVAM, its radar air surveillance system, the Amazon surveillance system—extremely important, it seems to us, not only for the technical aspect that this SIVAM air surveillance system provides, but also the signal it sends about Brazil's willingness to engage. We need to pick up on that.

Third, obviously the region—the region—needs to move against the FARC and the ELN. They are terrorists. They should be treated as the terrorists that they are. The emphasis upon border security is a regional problem. And until these groups enter into peace negotiations and dismantle, they should be treated as the terrorist organizations that the OAS has proclaimed them. And, speaking about the OAS, the Rio Treaty was signed in 1947. It remains woefully out of date. It's time to update it. This particular commission, this task force, urges, for example, that the OAS consider a stand-by multinational peacekeeping capability for both humanitarian and security issues that may arise. The OAS condemned terror in 2002. It's long past the time when the OAS needs to establish mechanisms to address the terror which they've condemned.

Finally, I would point out that Colombia has established recently—except in the case of Venezuela, where it's longer standing, a series of bi-national and neighborhood commissions for security cooperation. There's great potential there with respect to sharing intelligence, working perhaps downstream joint operations. But, at the very least, leveraging SOUTHCOM's emphasis with respect to border control, these neighborhood and bi-national commissions need to be energized, need to be institutionalized, and the frequency of the meetings improved.


MR. HEIMANN: I'd just like to emphasize a point. My leader, Julia, passed me a note, and said, "You forgot to mention something"—which I did. And that is I just want to put some numbers on the economics of the drug trade and what it means to the producers.

A farmer gets up to about $1,000 a kilo for coca leaf. That, by the way, sells on the streets, in 2003, for $125,000. But the farmer gets four crops a year. He doesn't need fertilizer. It's light. He's easy to transport. There is a global distribution system built in for him. It may be the only true example of free trade in the world at the present time. (Laughter.)

We get back to maybe in the fundamental analysis is that how do we get investment into these countries? How do we build industry, businesses, small and medium-sized enterprises? How do we finance the farmer, the local merchant, et cetera? We have to improve, substantially improve, the tax or the revenue-generating systems of these countries themselves.

Why would any of you or anybody invest in a country when the people who make money take it out of the country? What would thrill you about the chance to put money in a country if the figures show that the people of that country who made money, the rather thin layer of people who made money, have been taking it out of the country year after year after year? So, number one, the tax revenue systems in the Andean region need drastic reformation. And it's the key, because you have to create domestic savings, you have to have government savings through tax generation. And by taxes we're talking income taxes. At the present time, the bulk of taxes in all of these countries comes from the value-added tax, which as everyone in this room knows is regressive. It taxes the poorest to the same degree that it taxes the richest. So a value-added tax is a regressive tax, and certainly doesn't work in countries that are as poor as the Andean nations generally are.

So we have to find—insist in all of our work with these countries that they impose and enforce property, income and global taxation to start to bring in money back into the country for the development of that country. Obviously that means cracking down on evasion—easier said than done—but it will never happen—never happen—unless you start. And just one step in that direction. But it has just a remarkable effect, tax evasion, if you just jail a couple of rich people. It's really quite amazing, what happened in Mexico.

Again, the obvious: You have got to aggressive combat corruption. Well, we all know that. A survey done by—I think it's called Latin Baratero—Baratero?

MS. SWEIG: Barametro.

MR. HEIMANN: Barametro, sorry—said that 80 percent of the people in Latin America consider corruption the biggest problem, and they're right. And that is a tremendous problem. Much more attention needs to be paid to it by our corporate entities who operate in these countries, as well as by the countries themselves.

And wee should insist that taxes become part of IMF conditionality, that in our discussions at the IMF we should be saying that one of the criteria and a conditionality is improvement and enforcement of the tax collection system in the country. Now, it's amazing the numbers, when you get them—they're horrible. But in most of these countries you can't find out how many people paid income taxes. We have two countries that make that information public. The others say in effect they don't know. The two countries are Bolivia, where 330,000 individuals paid taxes in the last accounting year, which may have been 2001, I am not sure—and that's out of a population of 8.8 million people. And in Colombia, with a population of 42.8 million, only 740,000 individuals paid income tax. I mean, that tells you the story there. I mean, that's just perfectly clear.

So you can't get the information, which means they don't have the information. Therefore tax collection and enforcement is poor, weak or nonexistent. And in the countries that do have it is frightening to somebody like myself and to all of us. So that needs to be step number one, really is, revenue generation—first domestically. I want to put it a different way: governments don't have the money meaning the capital markets of the world have the money; governments have some resources, but not that much. To get the capital markets and private corporations to invest in any country, they have to see stability, end of strategic concerns that Dan was talking about—crime, et cetera—but also has to see that the people of the country, those who are the rich of the country, those who are the entrepreneurs of the country, are reinvesting in their country, rather than taking their money out.


MR. CHRISTMAN: That summarizes the essence of the recommendations.

Let me just conclude by first of all reminding of the paradigm. It's a three-part approach—sustainable rural development, engagement with the international community, particularly multilateralizing the drug campaign supply and demand rebalance, and looking at these issues and fabricating policies from a regional perspective. That's the three-part approach that this task force developed its recommendations against. And we hope going forward that as the administration and Congress wrestle in these coming months with policy to the region, recognizing that Plan Colombia ends in 2005, that this report will be of assistance in trying to help develop a way ahead. The region is clearly at a tipping point. In our judgment, I think Bolivia was merely a foreshadowing of what can happen to the region in the absence of a developed post-Plan Colombia strategy. We have got to get this right.

Further, I have been struck in my travels to Europe by how much Europe has now increasingly begun to focus on this region. The time for cooperation with the Europeans, it seems to me, is here. The potential for that transatlantic cooperation is enormous. In short, we think the time to act is now. Our hope is that these recommendations would provide a sound basis for debating the substance of the policy, as well as relooking at the process, both within the U.S. government, regional actors, and the international community. From this we hope will emerge a comprehensive and balanced regional approach that focuses on the countries of this region as a region, one of the most critical in the world for the U.S. and global security interests to 2020 and beyond. Thanks.

MS. SWEIG: Thank you very much, Dan, John. We now have about 20, 25 minutes for questions. And let me say, please, wait for the microphone to come to you. When I call on you, please stand and state your name and affiliation, and please keep your questions concise, so that—we welcome brief comments, but comments and questions concisely, so that we can get to as many people as possible.

Yes, thank you. Please stand. Please identify yourself.

Audience: My name is Maria Matheus—Universal, Venezuela. I applaud this report made on a multilateral approach. But I think you didn't mention—and maybe it's in the report, but not mentioned here—that the destabilizing forces in the region have also gone multilateral. And that's something that without a stable and safe region, I don't think that any of your recommendations can go ahead. How can the United States give some broader support to a more safe and stable region?

MS. SWEIG: Thank you very much.

MR. HEIMANN: Well, may I ask you a question? Are you being Venezuela specific?

Audience: No, I am regionally specific. (Laughter.)

MR. HEIMANN: Well, what do you mean by "foreign influences"? I mean, I don't want to be difficult, but I'd like to pin it down, because I think I know you're talking about, but I don't want to put words in your mouth.

Audience: I just want to ask you if you foresee that in the region some multilateral influences are stronger now than one year or two years ago? And if those influences can—

MR. HEIMANN: I understand your question now, and there is one country—which is not unfamiliar to you, I believe—that you might say that a multinational or extraterritorial influence is stronger today than it was a year or two ago, and that country of course is Venezuela. The issue is: Where did the problem come from? And the problem came from Venezuela. Or, I should put it this way: It came from the government of Hugo Chavez, who sought support, which was basically anti-American. Now, I'm not arguing that, but I must say that one of his first acts of president was to go see Saddam Hussein and to see Qadhafi, and of course Mr. Castro. So I think, yes, that's probably true. All reports seem to indicate that there has been increased influenced by Cuba in Venezuela. But the issue is really a Venezuelan issue, and the United States is respective of Venezuelan democracy, and cannot intervene in a direct way, nor should it.

So, Dan, if you would like to add to that?

MR. CHRISTMAN: No. I'd echo that. On the security side it seems to me what is often overlooked is that the military-to-military cooperation with Venezuela has continued at the junior level. And this is all to the better, it seems to me. The so-called PEP program, the Personnel Exchange Program, captains and majors who attend our branch courses in the U.S., and vice versa—those continue. It seems to me they provide the seeds for professional development of a truly responsive Venezuelan army going forward. My understanding as well is that the counternarcotics cooperation with Venezuela has been reasonably good, and notwithstanding the larger challenges that John outlined.

But I didn't want to leave that important point unsaid, that despite the issues here one of the most short-sighted things we could do is to cut off even those limited opportunities to engage the Venezuelans going forward, particularly on the security side, and especially with junior officers.

MR. HEIMANN: Let me just add onto that also. In the report it does mention this issue. I don't remember the exact words. The report does specifically—is specifically concerned with the rising influence of Castro in Venezuela. And it also points out that the referendum which is now entrain, shall we say—I mean, it depends on how the election commission treats the signatures—I think it's February 5th that they have to report on—but that this referendum is very important to the democracy of the country, and that we should pay a great deal of attention, that if that is frustrated by administrative action.

MS. SWEIG: This gentlemen, yes, this gentleman. Could you stand up, please?

Audience: Sure. My name is Roger Runningen. I'm with Bloomberg News. Can both of you gentlemen link this report to President Bush's summit meeting next week? Will he raise it? Have you folks briefed the White House, State Department, NSC? What—should we be looking for pieces of this to appear in Monterrey next week?

MS. SWEIG: Let me jump in briefly. The briefing process has already started on this report. Some people from the administration participated as observers in this process, and the briefings will continue over the next few days. Go ahead.

MR. CHRISTMAN: I hope that they're going forward. Elements of this will appear. I think this is an extremely dynamic time in the region. This particular visit by President Bush is opportune. I think the release of this report, given the dates of his travel here to Monterrey, are significant. Our briefing calendar in the coming days will try to leverage that.

MR. HEIMANN: Yes, I agree. (Laughter.) No point going on. I mean, that's right.


Audience: I have two brief questions. And congratulations on the report.

MS. SWEIG: Can you introduce yourself?

Audience: I'm sorry, Lauri Fitz-Pegado, the Livingston Group. Does the report address any analysis or recommendations regarding the issue of Afro Latinos, given the fact that in those countries of the Andean region you have number that perhaps reach the level of Brazil's 51 percent, particularly in Colombia at 24 percent of the two million of the displaced, the disproportionate number of Afro Colombians? That's one question I have, and what the implications are and what recommendations you might have made in that regard—(audio break)—Does the report address any analysis or recommendations regarding the issue of Afro-Latinos, given the fact that in those countries of the Andean region, you have numbers that perhaps reach the levels of Brazil's 50 per cent, particularly in Colombia, at 24 percent, of the two million of the disproportionate number of Afro-Colombians?

That's one question I have, and what the implications are and what recommendations you might have made in that regard. Congressional Black Caucus, some of the U.S. policies perhaps applied, et cetera. The ethnic and racial is one question. The second is regarding Uribe and the fact that if the polling information is correct, that he has got an 80-percent-plus approval rating, and what impact that might have on his ability to affect change and whether you've dealt with any of the personalities and leadership and what those implications might be. Thank you.

MR. HEIMANN: Let me start out on that and then pass it over to Dan. This report doesn't deal with a lot of important issues. When we started we said we can't do everything. We have to have law; rule of democracy; the security issues, which are overwhelmingly important in the United States; and, of course, trade and economic development. We haven't dealt with health; we haven't dealt with educating; we haven't dealt with, let's call it the "displaced persons" issue. We haven't dealt with a whole host of issues.

So the problem is, and we've all been subject to it—a report that deals with everything effectively deals with nothing. We decided to concentrate, and the problem that you mentioned is a very important one and hopefully that would be a next step in this process of dealing with the Andean region. But you have to understand if we tried to do everything, you know, what you would have gotten would have been a mish-mash of a compilation of everybody's ideas without any punch, any ability to follow it through. So it's not that we overlooked it, because we had meetings on the subject, but it just didn't fit into the broad categories, which we had outlined for ourselves. It does, in the long run, in economic development. (Unintelligible) really clearly stated that.

MS. SWEIG: And also on the conflict. I mean, much of our recommendations regarding the IDPs, the humanitarian impact of the crisis, the rural issues—all of that directly goes to the fact that it is true that indigenous and Afro-Colombians are among the very hardest hit by this war. So while not sort of explicit, it's by inference very much about the plight of the most underserved in that country.

MR. HEIMANN: In that respect, when we put the commission together, the issue was whether we should let people from the individual countries participate. And the problem was that there are so many groups and so many subdivisions of important constituencies we decided not to do that. But if you'll look at the report, you'll see all the people we visited within these countries, and they include virtually all of the various dissident groups as well as the administration of the country—the church, the U.N., the IFIs, the humanitarian organizations. We tried to cover the spectrum of all of these groups of people who have legitimate concerns.

The second question on Uribe—I know he has enormous support, but he lost the referendum. In other words, as you know, he had a referendum for—when was that date exactly—it was not too long ago—it was only the 5th of October—where he proposed a number of concepts which proved the strength he had in dealing with the guerrillas, et cetera, and the people turned it down. Well, I think that Uribe has done a fabulous job, and he has great support, but I don't think he has the kind of total support that many people imagine he does. I don't know, Dan, do you agree with that—or Julia?

MR. CHRISTMAN: I had the chance, personally to talk to President Uribe before we went to Colombia in May. Thanks to Bill Nash and Julia and the council, we met almost the entire cabinet during the period of our stay in Bogota, and I think all of us came away impressed with the Uribe's commitment to a strategy in Colombia. We want to ensure that strategy, going forward, is holistic and comprehensive and balanced and enhance the nature of the recommendations here. We are obviously very, very concerned about what follows President Uribe. We are also concerned, as well, about the business community and their commitment to the regional reforms, the public/private partnership that's going to be so necessary to invest in those regions of Colombia and the Andean region that are at risk as coca and opium production is terminated, and that requires an engaged business community to succeed. We spoke to them and had mixed reviews in terms of their commitment to that important partnership aspect.

But with respect to Uribe, we applaud what he's done and are, indeed, gearing many of the recommendations, to try to improve upon what he has started.

MR. HEIMANN: I just want to second what Dan said—we did get mixed reviews on the business community. They weren't gung-ho for all of the suggestions we were making—just the opposite. Some of them were rather shocked at the suggestions we were making.

And as far as the Uribe administration is concerned, I don't want you to get the idea that—at least I didn't think it was monolithic and that everybody within the administration agreed. I think that President Uribe has done a fantastic job, but I think it's fair to say that some of these ministers did not see the goals that he espoused with the same clarity as the president did.

MR. CHRISTMAN: And we made it clear. Let me just add one more point. We made it clear that sine qua non for continued U.S. security and other assistance, has to be a continued Colombian adherence to the basic principles of human rights—not just in their military but in terms of their engagement, the issue of impunity with the paras, and so on. That must remain highly visible and prioritized for any future strategy for Colombia, going forward.

MS. SWEIG: So we have time a couple of more questions. Yes, Margaret, please.

Audience: Margaret Daly Hayes from the Center for Hemispheric Defense Studies at National Events University. I congratulate you on your report, and I look forward to reading it, but in your presentation, one thing troubled me. You kept saying, "We need to"—impose, insist, et cetera. And yet the real issue is "They" need to—the leaders, the governments of these different countries. And one of the weaknesses of the region seems to me to be government, the—and I notice in your outline you spend about two pages on governance, but I think that is a much more key issue, because if we want to engage in tax reform, they need to pass the law, and then they need to implement those changes. And this brings the question part of my comment.

Helping to strengthen governance in the region requires cooperation between World Bank, the IDB, AID, and 100 other organizations, et cetera. Have you thought how—what has worked best in this area how to better coordinate the efforts of all of these organizations that are individually and independently trying to accomplish this task?

MR. CHRISTMAN: Let me take a quick stab, initially, Margaret. First of all, I agree totally, and I apologize, at least in my case, for the use of the word "we." I was a CNN international correspondent during Iraqi Freedom, and I kept saying, "We have just advanced beyond Najab. We are now on the outskirts of Baghdad," and CNN said, "You need to say 'the coalition has advanced beyond Najab. The coalition has'"—so in this case the international community needs to engage precisely as you've said, and the whole thrust, indeed, of so many of these recommendations was to engage that very community, which you have just outlined—the international financial institutions, OAS, Europe, and the Andean region collectively. Clearly, many of these areas like security, like the 400—400, the 800 cap, the issue of brigadier general, the Goldwater/Nichols team—closer U.S. emphasis and we'll, in all likelihood, continue to be for the coming immediate future. But the longer term piece on this has got to me multi- lateralized for the reasons that I think all of us understand.

In terms of what's work—John, do you want to—

MR. HEIMANN: Well, I'd like a conference, you're absolutely right—we need to encourage—use it that way. I think there is no question about that. That's really the old carrots and sticks philosophy, isn't it? You know, if you do this—if you do something, then we'll do something. If you don't, we'll do something else. And we've always thought in the crisis prevention action and concept of carrots and sticks—what is this that you have to offer or what is this that you have to take away to try to get them to do something. And that's what this report is for them being the local governments that—


MR. HEIMANN: So that's number one. And the need to coordinate goes without speaking, but before we coordinate the international organizations, we ought to coordinate the United States government. I mean, you know, you've got to look at your own house first and presently our policies and activities in these areas are not coordinated. I know there is a condition that's supposed to coordinate, but our experience, though it may be limited, has given us a very real sense that the drug people, the Pentagon people, the State Department people, each have their own set of priorities, and the AID people, and they are not brought together into a philosophy or a policy towards the region. It's their departmental philosophy, which may be perfectly legitimate, I'm not arguing that, but until we coordinate ourselves, it's very hard to argue for coordination from the other folks that are out there. They could just say, "Look, get your act together. We're trying to get our act together." So I think step number one is getting our act together.

Audience: My name is Jason Hagen. I understand that not everything could be included in the report, but I would like to know what the commission considers the role of agricultural subsidies in the United States, Europe, and Japan, and the extent to which those subsidies may hinder rural development in the Andes.

MR. CHRISTMAN: Not exclusively.

MR. HEIMANN: No, we didn't look at it exclusively, no. It comes under the rubric of trade. I mean, I'm not speaking for the commission on this, but it's clear to me that that is a major problem and highlighted in Latin America by Brazil, of course, and the position of President Lula, and that is clearly something that has to be dealt with in the United States, I agree with that. But we did not exclusively look at that.

MR. CHRISTMAN: To the extent that we did, I think John had mentioned the issue of strategic product preferences as we negotiate trade agreements here in the future, and it's really clear that selected subsidies with respect to agriculture really harm what we're trying to achieve in terms of rural development. We will make that point clear, as we brief, for the obvious reasons that if the Indian free trade agreement is to be successful, it's got to result in a rising level of national incomes, particularly in those areas where coca is being displaced—subsidies play a role.

Audience: I think that the commission—

MS. SWEIG: Could you introduce yourself?

Audience: Oh,—(inaudible). The commission should be commended for having focused a lot of attention on the Andean region where, obviously, people look a lot to America. You've got Mexico, you've got Brazil, you've got Chile, you've got Argentina, you've got bigger countries with probably that sometimes hit more often. Obviously, the Colombia situation hits pretty often because of the gun element that's being bought, and the size of that contribution. But how does the commission intend to make sure that decision-makers, policymakers in the U.S., both in the administration and in Congress, realize that this is as journal Christman said, the most important crisis in the region and, in other words, what is that takeaway, that one paragraph, that makes people focus on those things, particularly in a moment in which the administration doesn't particularly want another crisis, and they don't want to recognize the fact that there is a crisis, because as soon as you recognize it, you've got to do something about it and focus the right kind of attention and get so involved that politically you could be damaged if you don't solve it in the right way. So what is the commission—from 170-page study, you know, what is that little caption that says, "If you don't deal with this, this is going to happen?"

MR. HEIMANN: Well, let me start, and Dan then. Number one, how do we intend to include the administration and members of the Congress—by what we're doing right now in the series of hearings that we will be attending; have visits on the Hill with members of the administration. There was a long article today in the "Financial Times," and that's how you get attention. I mean, we don't control anything—the force of ideas, perhaps. What is it that we have—our Southern neighbor, a serious political instability and from the Andean region alone, 20 percent of our energy needs come from the Andean region. And that should grab somebody's attention, because I'm not sure exactly what the numbers are to you, but I think 20 percent from the Andes is pretty—equates to what we probably import from Saudi Arabia, et cetera. So it's something to focus upon. We mentioned Venezuela before, but 14 percent of our oil comes from Venezuela. Now, that's important, and it's important to the well being of the people of this country but the people of the region and the people of the world. So we think there is enough here to focus attention. A lot depends on external happenings over which we have no control, but I think we can focus.

MR. CHRISTMAN: Pedro, I think a lot of us have had experience in the security formulation process of our government, and we appreciate how difficult it is to handle multiple security crises in parallel. It's just a fact of how Washington works. But what makes this, it seems to me, manageable, is that we're not arguing for the expenditure of tens of billions of additional dollars in the first instance. This will not be a claimant upon the additional resources, whether USAID defense, counternarcotics or whatever. It's simply a reallocation of what is currently being invested.

Second, what we need to do, it seems to me, is to handle the kinds of issues that this report outlines with respect to where those in Congress and the White House have a particular itch—whether it's displaced persons, whether it's energy, whether it's fighting terror but not going beyond a reasonable limit here. This is a very pluralistic town with respect to how security policy is formulated. In trying, as we will do, in these coming days, both in Washington and elsewhere, is to make the case to the audiences as a function of where that particular itch is with that recipient. John has mentioned several right here—I've added to that. But that's the way policy is formulated in Washington, D.C., and it's also, frankly, the reason why the Center for Preventive Action was formulated—to look at areas into the future. The Balkans, Bill Nash chaired; Indonesia was the second; this is the third—to try to get this Washington community to understand that security crises must not be managed in series.

MR. HEIMANN: I just want to ask about—we all love crisis resolution. Oh, I mean, that really becomes an exciting—"What are we going to do about it?" "How are we going to handle this matter?" But crisis prevention, this second tier interest to everybody, and what the Center is trying to do and what this report is trying to do, I think, is, "Look, there it is. It's a crisis that will happen. We'll guarantee that it will happen." You cannot have that many poor people who have learned to express themselves living in poverty—you just cannot have that in our world without something happening. And, as we mentioned before, we have seen little spouts of it in various countries in different ways. That's just going to continue to grow unless we do something now. So this is to prevent our lust for crisis resolution, which makes great headlines, and trying to do something about crisis prevention in a region of the world that is critically important to the people of that region, of course, their continent and to the United States of America and its people.

MS. SWEIG: I apologize, I'm obliged to stop right at 10 a.m. Let me thank John Heimann and Dan Christman and all of you for coming this morning. Thank you so much.




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