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U.S.-Latin America Relations: Report of an Independent Task Force (Rush Transcript; Federal News Service]

Speakers: Charlene Barshefsky, Task Force Co-Chair and Senior International Partner, Wilmer Cutler Pickering Hale and Dorr Llp, Former U.S. Trade Representative, General James T. Hill (Ret.), Task Force Co-Chair, Former Commander, U.S. Southern Command, and President, The Jt Hill Group, Inc., and Shannon K. O'Neil, Task Force Director and Fellow for Latin American Studies, Council on Foreign Relations
Presider: Karen J. DeYoung, Associate Editor and Senior Diplomatic Correspondent, The Washington Post
May 14, 2008
Council on Foreign Relations

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KAREN DEYOUNG: Good morning. Welcome to today's Council on Foreign Relations meeting. Just to take care of the usual preliminary business, I'd ask everyone to please turn off their cell phones, blackberries, any other wireless devices you have. And also to remind you that this meeting is on the record.

We're here today for the release of a new council sponsored independent task force on U.S./Latin American Relations. I think it's a particularly good time to be looking at this issue as we prepare to move into a general election campaign. The report I think does an extremely good job of assessing the current state of affairs in Latin America and of U.S. policy toward the region. But it's title is, "A New Direction for a New Reality" and I think the second part of that, "A New Reality" is what really makes the report the basis for a fresh U.S. approach to the region.

This is not your father's Latin America. As the report describes in depth, it's a region of economic dynamism and political and security independence from the United States that is fully present in the global environment. In the extent to which the United States recognizes that new reality and positions itself as a supportive partner as Latin American countries address the many challenges they still face will determine the extent to which we all move together or separately into this new and very different century.

Members of the task force include some of the most experienced experts in the field of U.S./Latin American relations from a wide spectrum of disciplines including diplomacy in government, academia, nongovernmental institutions, many of the task force members are here today along with a number of representatives from the diplomatic corps and we welcome you all.

Task force director Shannon O'Neil is here with us. She's a fellow for Latin American studies at the Council. Shannon has a comprehensive academic and economic background in the region and you'll find a more complete biography of all the participants in the report itself.

And I now I'd like to introduce the co-chairs of the task force, Charlene Barshefsky and General James Hill.

Charlene Barshefsky is senior international partner at, it's a lot of names, Wilmer Cutler Pickering Hale and Dorr here in Washington. And as you all know, she joined the firm after serving as U.S. trade representative from 1997 to 2001 and acting deputy USTR from '93 to '96.

General Hill retired from the Army as a four-star general in 2004.

GENERAL JAMES T. HILL: Correct.

DEYOUNG: After 36 years of service. From 2002 to 2004, he was commander of the U.S. Southern Command, responsible for all U.S. military operations and relationships in the Caribbean, Central and South America. He's now president of the JT Hill Group, a strategic consulting firm in Miami.

We'd like to ask each of our co-chairs to say a few words about various aspects of the report and then we'll start a conversation about it up here and later open the floor to your questions.

Charlene?

CHARLENE BARSHEFSKY: Yeah, thank you very much. Let me first thank the Council for initiating a study of Latin America. It's been quite some time since the Council has looked at the Latin America so we're very grateful to it and to the Council's sponsors for undertaking this study.

Let me also thank my co-chair Tom Hill who's been just wonderful in every respect. Shannon, for all of your extraordinary work on this project as project director. Of course Julia Sweig as the boss of all of us. (Laughs.) And Karen, thank you very much.

This is an opportune time to have this report come out. The Colombia and Panama free trade agreements are stalled in Congress, the Merida Initiative which is President Bush's proposal to aid Mexico in the fight against drugs, had languished in the Congress for months, it is now being marked up finally. In a speech last week, the president dismissed calls for revised policy towards Cuba, despite leadership change there, and a waive of populous backlash has produced anti-American leaders such as Hugo Chavez and Evo Morales challenging the political landscape of the region.

At the same time, Latin America is strategically, culturally, economically and politically more important than ever to the United States. The region provides 30 percent of U.S. oil, more than the Middle East, it is the leading source of alternative fuel. Eighteen million Latin American migrants, both documented and undocumented now live in the United States. 50 percent of the recent population growth in the U.S. is Latino. Latin America is one of the U.S.'s fastest growing trading regions in the world. It is also the largest source of illegal drugs.

With the hemisphere far more integrated than most appreciate, U.S./Latin American relations demand special attention, and this is why the Council initiated this broad scale review. In that regard, I want to thank on behalf of Tom as well, all of the task force members who put an extraordinary amount of time on this project.

We found that the long standing U.S. focus of U.S. policy towards Latin America, which is trade, democracy, and drugs, no longer maximizes the interest of either partner; rather it's increasingly clear that our domestic and international policy agendas are intertwined and that fundamental challenges for Latin America also pose fundamental challenges for the United States.

So we have recommended refraining foreign policy goals around four critical areas: poverty and economic and equality, public security, migration, and energy security. These are issues of immediate concern to Latin Americans and to the United States. They affect our traditional regional objectives but they also reflect a new policy realty given that societal and economic integration has proceeded the pace.

We also in the report focus, but only briefly, on four key bilateral relationships: Brazil, Mexico, Cuba, and Venezuela. Each is important to the U.S. for various reasons and the report as I said briefly discusses those.

Let me turn to the first of our areas and then Tom will pick up.

Poverty and economic inequality, this is the first major area the task force looked at. We found that even though there are positive trends in the last two year in particular in the hemisphere, Latin America still lags behind other developing regions in combating poverty and economic inequality. Nearly 200 million people in the region are poor, that's 37 percent of the population of the region. And according to the U.N., 22 percent still live on less than a dollar a day, that is what the World Bank calls extreme poverty. Furthermore, Latin America remains one of the most income unequal regions of the world with severe structural inequality in terms of access to services and economic opportunity.

In Brazil, Latin America's largest country, the poorest 40 percent of the population accounts for 8 percent of GDP. The wealthiest 20 percent of the population hold 70 percent of the GDP of the country. Fifty percent of the labor force in Latin America hold informal sector jobs. That is to say, self-employed under the radar screen. While that may help alleviate poverty, it also means vastly reduced tax revenue for the states, weakening already weak state institutions and their effectiveness.

While trade agreements successfully enhance macro economic growth overall, trade agreements cannot redistribute income in these countries, trade agreements cannot by themselves alleviate poverty in these countries. U.S. targeted poverty reduction assistance has stagnated at about $600 million a year in real terms it represents a third of what it was in the 1980's.

So with that as the chief conclusion recommendations or the key recommendations are that the U.S. should support and assist these governments in restructuring their tax regime. The U.S. has very substantial expertise in this area, quite practical expertise. Latin American tax systems rely on regressive value added taxes, governments on average collect a 17 percent of GDP in taxes. Governments in OECB countries collect 35 or 36 percent of GDP in taxes, building the capacity to enhance tax collection is vitally important in the region.

Second, the U.S. must fully fund the Millennium Challenge Account and compliment its program with new initiatives that reach the poorer regions of middle income countries that do not qualify for Millennium Challenge money, for example, Brazil and Mexico.

Third, the U.S. should assist again, the U.S. has substantial expertise in this, in expanding micro enterprise and small business financing through multilateral institutions in particular but also through calibrated assistance. Only 3 percent of households in Latin America and the Caribbean have access to credit from formal or semi-formal financial institutions, just three percent. Financial inclusions would go a long way in helping Latin Americans leverage their own resources and their entrepreneurial spirit.

Fourth, promote more open trade in areas of Latin America's comparative advantage that means liberalizing textile and agricultural policies in the United States.

And last, approve the pending Free Trade Agreements with Colombia and Panama, and we believe trade preferences to Bolivia and Ecuador should also be extended as we continue to consult with those countries on practices of concern.

Tom?

HILL: First off I'd like to -- excuse me -- say that it was a privilege to, when Richard Haass called me and asked me to co-chair this with Charlene, and I've enjoyed the collaboration greatly and it was really terrific to work with the members of the task force. Shannon has been particularly terrific. She's done a lot of hard work and in the middle of it decided to have a baby -- (laughter) --

SHANNON O'NEIL: Can't you tell? (Laughter.)

HILL: In fact, she left her baby at home last night for the first time, so, but she has been absolutely terrific.

The sessions that we had were candid, they were open. There was a lot of give and take and as it was mentioned earlier by Karen, there is in fact a wide range of both personalities and opinions on that task force. And so all didn't always agree, but one of the things we agreed in the very beginning was that we wanted to somehow write a report that was different from other reports going over, glossing over all the old issues. So we tried to be very pointed in those four areas that Charlene talked about. And I'll talk to one of those now which is the public security piece.

Latin America remains probably the most violent region of the world, notwithstanding the fact that there aren't major wars going on between nations. The issues of transnational gang, the issues of drug trafficking and how that increases the violence have all got to be met by the nations involved in the region and by the United States. And in that regard we tried to work towards all of those different areas. Let me just talk to a couple of points in the findings.

Because of the importance that militaries play in Latin America in combating drugs and other illegal trafficking, the United States must continue to work with those militaries, but over time, it must in fact involve into a greater police issue. This is a police issue and we've got to get move from military to police. One of these days, constituencies in different governments are going to look to their budgets and say why do I need an army when I don't have a threat on my border? The issue is they have internal threats and they've got to create greater security forces in order to meet those, and we can help in that regard and we can help move them in that direction.

We should continue to work with and fund Plan Colombia in the same way that we have been doing it. The success of Plan Colombia in Colombia has been absolutely startling for anyone who has been in that region over the last six years.

We should work with transnational gangs. We're very clear here that the transnational gangs, especially those in Central America, while not an absolute today direct threat to their government, the reality of life is if left unchecked, they will become very dysfunctional in that region and that will not serve Central America and it certainly would not serve U.S. interests.

And the final point I would make is that we do a very good job in this country of controlling illegal arms dealers into Latin America, we do a very poor job of illegal gun control and we've got to work with our neighbors in order to get a handle on that.

BARSHEFSKY: Let me just turn to migration briefly. The U.S. and Latin America are integrated, integrated by population flows, and these population flows are of extraordinary size. Eighteen million Latin Americans live in the U.S. both documented and undocumented. Latinos are 15 percent now of the U.S. population, 45 million people and as I said earlier, the fastest growing segment of our population.

The U.S. work force is increasingly dependant on these workers. They are 41 percent of the total employment in farming, in fishing, in forestry, 25 percent of total employment in construction, 28 percent of total employment in cleaning and maintenance. They send $50 billion sometimes as high as $60 or $65 billion a year back to their home countries. Remittances are critical to economic survivability for many families in these home countries. Migration we believe will continue essentially unabated because of demand pull in the U.S. for these workers and because of the desire and in many cases necessity of these workers to seek additional economic opportunities.

We believe that the administration and the Congress in 2009 should negotiate and approve a comprehensive immigration reform package. This issue is lingering too long, creating far too much uncertainty and disruption. The reform of course should improve boarder security and management, it should regularize the status of unauthorized work force already here, it should ensure employer security and verification and responsibility, and expand flexible worker program to meet changing U.S. economic demands. Notions that one would deport 12 million people currently here is as Tom is found of saying about the same as saying the U.S. handled the movement of personnel during Katrina in an effective way.

The U.S. should also pursue bilateral and multilateral immigration agreements with key sending nations, particularly cooperation with Mexico and Mexican law enforcement for the interdiction of illegal criminal crime, gangs and human smuggling networks that operate along the border.

Tom?

HILL: On the question of energy, energy diversification is a key U.S. and Latin America concern. Latin America presents abundant opportunities, both for themselves and for us, but they also face significant challenges. As Charlene mentioned earlier, Latin America provides 30 percent of U.S. oil, more than any other region of the world. It has the potential to become a huge source of natural gas for us and also alternative energies.

The three findings that the task force came up with was to support investment in energy infrastructure to foreign direct investment financing incentives, the International Energy Agency predicts that between 2001 and 2030, $1.3 trillion is needed in the region. We need to create technical and sub-regional and regional energy working groups to facilitate information and best practice sharings, and finally encourage an umbrella agreement to work collaboratively in the development of alternative fuels or as someone said to me the other day, more than alternative fuels, they're additive fuels.

Okay.

BARSHEFSKY: As I said earlier, we also looked briefly at four key countries and you will see those in the report. The bulk of our recommendations center on Mexico, with this regard; Venezuela, and the importance of working multilaterally on issues presented by Venezuela; and Cuba and of course with respect to Cuba the task force felt very strongly that the U.S. should initiate a series of steps enhancing trade and travel with the ultimate aim of lifting the embargo on Cuba.

These are the general key points I should say made in the report. As Tom said, we focused on the four areas that we did and the four bilateral relationships that we did. First off because these are issues on the front burner, but also because we wanted to craft a series of very specific, tight policy recommendations that could actually be implemented and followed through on.

So we tried to stay away from too grandiose rhetoric, we recognized the limits of U.S. power and influence in the region, we recognized that most of the issues we have raised here are within the province of Latin American governments themselves, but we also believe that the U.S can be a more effective partner with Latin American government by targeting its efforts in ways that actually can make a difference on the ground.

And with that, Karen, I think we have completed our review.

DEYOUNG: Thank you. Thanks very much.

I was stuck listening to President Bush's speech last week to the Council of the Americas which you mentioned Charlene, that U.S. policy seems to be, at the moment at least and actually for a long time, stuck in kind of a rut, not only the kind of perennial subject of Cuba and its new subset of Venezuela, but as you pointed out the subject of trade, democracy and drugs, which are usually looked at solely from a U.S. perspective and not from the Latin American perspective.

Immigration reform seems to have gotten completely lost as a major focus by the administration which has now paid a lot of attention as we saw with remarks that Tom Shannon made last week to inroads that Iran is allegedly making into the hemisphere. Obviously we're about to move on. But I wonder if you've been encouraged by the policy initiative, such as they are, that have been outlined for Latin America by either of the two leading presidential candidates or the three candidates, however you'd like to look at it. To the extent they've talked about the region at all, it's almost totally been in a domestic context with some vague words on immigration, some basically Democratic non-enthusiasm for free trade agreements, nobody's wild about big moves on Cuba, everybody's against Hugo Chavez, and that's about it to the extent Latin America's been discussed as a campaign issue, as a key foreign policy issue for this country. And I wonder if you're at all optimistic that a new administration will devote the kind of attention that you advocate in the report. And what you think will be the extent of Congressional support for real change in the future.

Either one of you or any?

BARSHEFSKY: Well I would say this, I don't take policy for the next president from debates. If you look at the debates, 40 plus by now, the word education has almost never come up, even though policy makers agree that the U.S. education system specifically K-12 is dysfunctional and threatens our longer term competitiveness. But education doesn't even come up as an issue in these debates.

Latin America comes up to the extent they're identified constituencies in states which have a lot of electoral votes and then the position is either vague words because there's a lot of mix in the state on opinions or harsh words as on the who hates NAFTA more debate.

So I'm not overly concerned that any candidate has locked him or herself in any more than George Bush, Sr. read my lips no new taxes, or Bill Clinton I'll never coddle dictators and I mean China, and then of course we did the China WTO deal and got China permanent normal trade relation status.

So I would say what a new president will do is entirely of a matter of that president's policy priorities, not I don't believe what the debates have elicited from these various candidates.

Having said that, we wanted this report to come out in the spring because we do aim it toward policy makers and toward the next administration to try and get early attention on the issues that have been neglected at U.S. peril, at U.S. peril.

MR. HILL: And I'd build on that a little bit. When we first began the task force effort, one of the big discussion points that we had early on was who are we writing this for? Who are we addressing this to? And we knew that we were going to be putting it out in an election year and that was by design.

The reality is we were addressing it to U.S. policy makers who had long ignored this as an issue, and we are addressing it to Latin American governments who must in fact implement and fix their problems, because it is in fact their issues, not our issues to solve.

And that's why, and if you read through the report in terms of why it is an issue, it is in fact about poverty, and that will spread to the United States, that's an issue for the United States. Immigration is an issue for the United States. Energy is an issue for the United States. And in as far as security helps governments move along in a normal manner by an abnormal manner, that's an issue for the United States also.

O'NEIL (?): Let me just add on to what Tom was saying there. One reason why Latin America may come to the floor more in a new administration than it has in the past is so many of these issues are domestic issues, this is not just a foreign policy crowd that's thinking about these, but things like energy, migration, security, all of these are priorities on a domestic front. And so they're important to deal with in both domestic and foreign policy. So we may see the next administration whoever that may be really take on these issues and really bring a spotlight on them.

DEYOUNG: I wanted to ask particularly General Hill about on the security front, the report as you mentioned recommends increased police training. That's an issue where there's a history in Latin America and not a very good history I think that many Latin Americans would say. And I wonder first of all, if you think the population and/or governments are really receptive to that?

But secondarily so much of U.S. security training in the world now revolves around counter terrorism operations. There's been a lot of talk about expanding SOUTHCOM, having it work in different ways in the region, kind of following on to the AFRICOM model, Admiral Stavridis has talked a lot about this, I wonder if you think that this is the kind of security assistance that you're talking about, and if you think it's possible for the United States to engage in a different kind of security assistance that does not have the kind of really what are negative connotations in much of Latin America for the focus on counter terrorism.

MR. HILL: There is no doubt about that. When I was a SOUTHCOM commander and I would have these discussions throughout the region, clearly any time you discuss security in Latin America for all good and sundry reasons, it carries a lot of baggage.

What the report says and what I began saying as SOUTHCOM commander and my two predecessors have echoed that and have moved the discussion much more forward than I was able to do, is that if you're going to have in your nation a large military, and it's to serve what purpose, is it to protect the nation against outside threats, is it to protect the nation against inside threats. What you need is a security force that serves a democratic institution. And what I would say and I think that again General Craddock and Admiral Stavridis have said it far better than I, and moving its discussion along, if you don't like your army doing it, fine, that's really what you shouldn't do, train up a police force. But you have to train it. And the argument has always been well they're not policemen. That's true, they're not. Train them as policemen. We can move ourselves in that direction. SOUTHCOM is moving in ways to facilitate U.S. interests in the region in a non-military manner, just as AFRICOM will do. And I think that's an important transition for both SOUTHCOM and for the new AFRICOM and it's a recognition that we can assist nations, evolve their security needs, and positive not negative manners.

DEYOUNG: And just finally and then we'll open the floor up for questions, one of the things the report recommends on the poverty and equality front is for the United States to convene a conference to discuss these issues and you proposed involving nations outside the region, Europe and in fact China.

Obviously China has made real inroads into the region, and has become quite a prominent presence, and I wonder if you think the United State should view China as a competitor or even an interloper there? Or are you advocating a kind of partnership by outside actors in Latin America in which the United States would acknowledge that its own influence is somewhat diminished in the region?

BARSHEFSKY: I don't think it's for the U.S. particularly to view China as a competitor or interloper. What it demonstrates is that Latin American countries have trade, economic and security interests that go far beyond the United States. You would expect this given the level of economic growth in Latin America overall, and given the sophistication of many of these countries.

These are also countries that are resource rich, and you can on a map plot where China's major investment dollars are going by where the resources are. Completely rational on China's part, and of benefit to Latin American countries. So I would urge care to not lose the value added of the natural resource space.

But our view is that just as looking at Asia one brings in the Europeans as well as the U.S. and others, so too with respect to Latin America, one would want to bring in all of the relevant actors, Latin American associations with Europe, particularly Brazil's, are very prominent, and indeed, in terms of ethos if you will, surpass those with the United States. China's relations with these countries is growing as well. The U.S. is simply not the touchstone for many of these countries that it was, and where we are the touchstone for countries -- I'm thinking particularly Central America -- the relationships are quite fragile.

So the U.S. has to appreciate, number one, as a general matter, a move toward multipolarity among the world's powers, and second, that the U.S. to be maximal effective in assisting Latin America -- this is our neighborhood -- in being maximally effective simply can't do it alone, can't do it only on the basis of what's in the U.S. interest, but has to look much more broadly and bring in parties who have substantial interest in the region as well.

DEYOUNG: Now I'd like to invite council members and other guests to join in the discussion. We have microphones, and they will be brought to you once you're recognized. I'd ask you to stand and state your name and affiliation, and as always, please keep your questions and comments concise to allow as many questions as possible. And we'll end promptly at 9:30.

Bob.

QUESTIONER: Thank you very much, Karen.

Bob Pastor (ph) from American University. I congratulate the council and you for issuing a report on U.S. policy to Latin America.

I think after the last eight years there is no question but that we could see a significant improvement, or we need to see a significant improvement. But I question the premise in the title of the press release. You say the era of American hegemony is over. And I could certainly sympathize and support that as an idea. But the agenda that you put out suggest that it's really not, in the following sense. I think those four issues that you laid out are not issues that I would say the United States has much to teach Latin America.

On poverty and inequality, and on restructuring our tax system to make it less regressive, the last eight years shows that not only we have mounted fiscal deficit and a degree of fiscal irresponsibility that exceeds any country in Latin America today, and indeed, probably exceeds the GDP of all but three countries in Latin America. So I'm not sure there is much for us to be teaching Latin America about how to deal with poverty and inequality. And when you realize the size of that challenge, I'm not sure microfinancing is really a way to deal with it effectively.

If you look at energy for example, we certainly don't have a sparkling record. And we know that the biggest problem in Latin America has to do with energy production, not with investment from the private sector. So I'm not sure there is much to be learned there.

And public security, again, our defense budget exceeds the GDP of all but two countries in Latin America, and having just completed a trial on murder for the D.C. Superior Court, I'm not sure we have a lot to teach Latin America as well about how to deal with crime.

So given these -- given the fact that we are not exactly an exemplar in any of these areas that we've talked about, what is it that we should be teaching?

And more specifically for Charlene, you didn't mention the Free Trade Area of the Americas. Is that something that we should just forget now that it's not possible?

You didn't mention NAFTA. We have two presidential candidates that have said that unless that's renegotiated we should cancel that. Is that a good idea?

And finally for General Hill on anti-terrorism, to follow up Karen's question, which I think is an excellent one, because that to my mind has been the centerpiece of policy for the last eight years, what is it that we should be doing differently with regard to counterterrorism? Is this a significant threat to the United States or these countries that would justify that is the primary pillar of U.S. policy on security?

BARSHEFSKY: Well, let me say this: we didn't view the report as a teaching instrument. The fact that we have Guantanamo Bay on our hands doesn't suggest the U.S. can never talk about human rights. The fact that the U.S. record with respect to freedom for Islamic religion is less than perfect isn't to suggest that the U.S. can't speak about freedom of religion as a basic tenet in the United States.

There may not be consistency. We may not follow through in the ways in which we should. But I would suggest that if that were the test as to whether we could provide ideas to other countries, no nation would talk to any other nation on the face of the planet, because we're all in the same situation.

So we're not teaching. What we tried to do in this report was to be very specific and pointed about the areas in which we think the U.S. can lend a hand. We're not talking about massive pots of money because there are no massive pots of money and we all know that as a budget matter.

We aren't talking about bringing the light of democracy on the region as a whole, because if we couldn't bring democracy to Cuba 90 miles off our border, a country that is the size of a pinprick on a map, we're certainly not going to improve democracy on Latin America, right? This is nonsense.

But what we can do is provide assistance in ways that might make a difference to the lives of people, and help relieve some of the problems. If you look at countries in the Middle East, microfinance has been remarkably effective as a way of bringing families out of poverty. Why would the U.S. not lend assistance with respect to microfinance enterprise, and a reform of banking institutions for -- with respect to lending to small business?

So I would reject the premise that we have nothing to say because we sometimes don't do what we preach. I think we actually have a substantial amount to contribute.

FPAA we do mention in the report. Tom and I just rifled through some of the major recommendations, but this report is very, very dense, and very data and recommendation laden. FPAA we do believe to be reinvigorated. It struck me always as a shame that the administration did not immediately pick up on the FPAA. I thought that was a terrible mistake. There has been too high a level of distraction in foreign policy generally these last eight years, and that has been very much to the U.S. detriment not only with respect to Latin American relations, but with respect to our relations with much of the rest of the world.

And the NAFTA debate, the truth is this world is a very different world from when NAFTA was negotiated. It doesn't look the same as when NAFTA was negotiated. We have a fundamental economic restructuring of the world with the reemergence of China, the integration of the Asian economies around China; with as Fareed Zakaria would say, the wives of the others.

And so the NAFTA rhetoric, which has been bitter in the U.S. for many years, will always be bitter, because that is just the politics of it frankly, and it is some people's personal experience with respect to plants and so on moving to Mexico.

But I would suggest that if we get too bogged down in the "who-hates-NAFTA-more" war, we are missing much larger and more important lessons for Latin America, and for the United States.

HILL: And as to the counterterrorism piece, it has not been the main thrust of SOUTHCOM's dealings with the military and security forces throughout Latin America. It's certainly not what we did in Colombia, and in the way we have assisted the Colombia military in their substantial gains in Colombia. And in the report itself we quote Admiral Stavridis as saying that in terms of Islamic terrorism, we don't see any -- while there are pockets in the tri-border region and financing going on, we don't see networks of terrorist cells in Latin America. But it has the potential of being there. And all we say in the report is, we need to watch that piece.

DEYOUNG: Janice.

QUESTIONER: Janice O'Connell with Stonebridge International.

First, I would second Bob's comments. I think this is a great report. And speaking to a term that Karen knows, I think the lead is buried in this report. The lead is on page 68 of a 68-page report, and it speaks to the repeal of Helms-Burton and a profound change in policy. And for the Council on Foreign Relations to make that recommendation, it's phenomenal.

A question for General Hill: General, while you were head of SOUTHCOM and your successors have all moved SOUTHCOM from a more -- from a less military relationship to a much broader engagement with the region. I congratulate you for doing that, because I think you have filled a vacuum that the civilian agencies have been unable or unwilling to fill.

But I wonder if you worry about what kind of a message it sends to militaries in the region in terms of what their roles should be in civil society.

HILL: And I appreciate what you just said. All the combatant commanders, not just the SOUTHCOM combatant commander, worry about those issues. Because the reality of life is inside our government -- and this is -- it's too harsh a word to say indictment, but it's close -- inside the United States government, the only person who travels extensively in a region, who sees the interconnectivity of issues inside a large region like Latin America and Central America and the Caribbean, who meets with not only military but political and dissidents, which I did on many occasions in different countries, who tries to see a whole range of issues, is a military officer.

We should not be running our foreign policy like that, it seems to me. We've got to figure out a better way to do business than that. And I think if I had any of my cohorts up here, past or present, who did that kind of relationship as a CINC or combatant commander, they would tell you the same thing. You have got to be careful with that. And we are -- I was, and I can only speak for myself, but I was very careful in how I dealt with that, and I was very blunt with different military leaders that I met. I've had discussions with senior military and say, what happens tomorrow morning when your electorate in this democracy that you now support wakes up and says, what good are you? What are you going to do about that?

And I think it's helped move along the dialogue. And we have to get past what Karen talked about, some of the baggage that I know that's very real, and for very good reasons it's real baggage.

DEYOUNG: Yes, way in the back.

QUESTIONER: I'm Welby Limon (ph) from the Treasury.

Peter Hakim mentioned in his additional view that the report may given insufficient attention to the importance of sustained and significant economic growth in the region to addressing all of the challenges that are mentioned in the report. I'm wondering in particular about poverty and income inequality. Do you see -- did the group see poverty and inequality as sufficiently related that pro-growth policies or other types of policies would affect them in the same manner? And if not, did the group see either poverty or inequality as more important than the other?

BARSHEFSKY: The group looked at the issue in part in tandem. But the point of pro-growth policies, and I think Peter was concerned perhaps that the report didn't delve further into the trade issues, but I think we had felt that trade had been covered so many times before. We really didn't want to reprise what had been said before.

Trade clearly increases GDP, and trade increases growth in GDP on an accelerated basis. But what I think people forget is that domestic policy measures, domestic policy measures, distribute that GDP growth; not trade, domestic policy measures.

So one can have a country that is highly successful in a trade sense, but if it's only the top tier of folks in that country who benefits from that growth leaving the bottom tier at the bottom, there is relatively little progress on the eradication of poverty or income inequality. So trade alone can't do the trick. It is political wills and domestic policy measures. It is altering the tax regime. It is providing health care. It is providing pensions or some form of social safety net. It is providing for education.

Those aren't trade-related, although the growth in GDP can assist in those elements coming about. But it is the sovereign government of these countries as well as of the United States that have the responsibility to spread the wealth in a way that is most conducive to development and other objectives in the country.

HILL: I think in total in the report, it goes back to the question earlier about what do combatant commanders or CINCs do too in that region -- in that area. In my last hearing in front of Congress, I was asked, one of my last questions was, what did I see as the greatest threat to Latin America. I'm sitting there in my uniform, and they're asking a military guy what's the greatest threat to Latin America.

My answer was immediate, and it was poverty, because poverty drives so many of the other issues that come out very clear in the report. If you are -- if your country is growing at 6 or 7 percent economic grown, and you are not concomitantly bringing down the poverty level, you are exacerbating a very real problem. And I think that's what we try to say in the report very clearly.

DEYOUNG: Yes.

QUESTIONER: Yes, Nigel Sun (ph) from Raytheon.

You mentioned a lot -- this is for Tom -- about the security aspects of it. But isn't there also a judicial breakdown that is happening also? And the panel didn't mention a lot about it right now. I know it's in the report, and I have not read the report, which I will after. But isn't this a cycle? I mean remember in the '80s there was reform in certain countries on the judicial side, and there was political will to do that. There was a movement to do that. But I feel that this has broken down again. Can you elaborate more on that aspect of that experience?

HILL: Clearly, anything to do with security in the security and stability of a nation, you're really talking about three triads. You're talking about your police, you're talking about your courts, and you are talking about your justice system and prison system. All of that is important.

The model in my view is what we did in collaboration with and in alliance with Colombia. Plan Colombia was not only about fighting counter-narcotics. It had to do with judicial reform. It had to do with labor reform. There were monies put against kidnapping, for example, and we brought down through great work by the Colombian military and the Colombian police forces and our monies, we brought down kidnapping to a remarkably low number today. So it isn't only about security and military; it is in fact about all of those other issues. And the report speaks to that also. You have got to help bolster, in a collaborative manner, with our friends and allies in the region, to assist them in that area.

BARSHEFSKY: If I could just add one point, as Tom said, the report talks about further bolstering the issue of judicial reform, particularly judicial training. There are a lot of programs that currently exist, some run in collaboration between for example the State Department and the ABA, the American Bar Association. But there are a number of other programs that exist, at the judicial level, where groups of judges from the United States meet with their Latin American counterparts. And there are training institutes for judges and so on and so forth.

And the report basically says much more funding has to be targeted in these areas, because this goes to basic institutional structuring, and the sustainability of the legal system in these countries.

DEYOUNG: And can I just add to that in the form of a quick question, you mentioned the successes of Plan Colombia, yet in the primary goal of Plan Colombia, which was to decrease the drug trade and the amount of primarily cocaine leaving Colombia, you say in the report it's been a failure. What -- how can that be addressed? Or should that even be the priority anymore?

HILL: The issue of drugs and the cost of drugs in the United States and indeed the world is a very complex issue, and it's a simple supply-and-demand issue.

For example if I'm a coke dealer in Phoenix, and I've had a great market in dealing my coke throughout the last several years, and my share of the market is going down because Charlene is a meth dealer down the street, and she is selling meth at a cheaper price than my coke.

BARSHEFSKY: But not so cheap. (Laughter.)

HILL: We are both making a pretty good profit, and I just say this, because it's the complexity of everything that is involved with drugs. Anyway, my coke that I used to sell for $100 I now sell at $50. Why do I do that? Because I've got to compete with her, one. And secondly, I can afford to do that because the profit margin is so huge. And that is the reality with coke -- with cocaine -- with coca growers and producers in Latin America.

Yes, we haven't stemmed the flow of drugs. But a lot of that is because it goes to a lot of different directions that it didn't used to go to. If the United States stopped doing cocaine tomorrow afternoon, there are still 450 or so metric tons that go somewhere else. And all of the countries involved, and in fact the trafficking countries, those it goes through, have recognized that they have issues.

Brazil has done a wonderful job of combating their drug issues and working with the Colombians on the border to ensure that the FARC aren't free to go in and out of Brazil in the way they do in other places. And they've done a great job of collaboration there.

But to say that Plan Colombia was a failure because it stopped drugs -- or didn't stop drugs is to also say, what if we had not done that, and Colombia continued the free fall that it was in before President Uribe and his administration and Plan Colombia took over. Think of the problem we'd have today if that were the case, in my view.

What we have done is taken a democratic state and allowed it to help strengthen itself in ways that never could have been done without that counternarcotics dollars.

DEYOUNG: Sir.

QUESTIONER: Thank you very much.

While I found much in the report to be very constructive and interesting -- I'm Ambassador of Brazil Antonio Patriota -- but I thought this opportunity would be a good one for me to raise just two I think issues here. One of them is that in the security chapter I saw no reference to Haiti. And of course Haiti is the one item in the whole hemisphere that is part of the agenda of the Security Council, and where the region has come together to work in I think what is a new and very constructive way. So Haiti's success is something that all of us should be very concerned about. And I'm very happy to be sitting next to the ambassador of Haiti, because I think it illustrates our own commitment to success in Haiti.

The other point is that there may be a bit of a paradox here, but be that as it may, in the case of Brazil at least we don't feel like there has been neglect toward Brazil in the past years or so. On the contrary we feel that we have made progress in terms of mutual trust in expanding our political and economic agenda with the United States.

And if we compare that with the 1990s for example, there used to be much more talk of, oh, if you free your market and you deregulate, then social progress will naturally end too, whereas today there is recognition that trade is not an end in itself, and if one looks for example to a statement by Secretary Condoleezza Rice at the Conference of the Americas last week, she made precisely the point that all countries are tackling their social challenges.

So I guess I would question a little bit the assumption that the region has been neglected. I think there has been some gain, and in the case of my country for sure, and that whatever administration comes in January, I think it would be important not to try to reinvent the wheel and to look at the progress that has been accomplished.

HILL: Thank you, Mr. Ambassador. Could I build on what you said about Haiti? Because I think it's very instructive in terms of how the region can collaborate in a good positive manner.

When Mr. Aristide asked the United States to take him out of Haiti -- and that's what he did -- and we helped facilitate his departure by providing him an airplane -- we the United States put in 2,000 Marines to help stabilize a deteriorating situation.

Just prior to that as the combatant commander I began calls around the region to see if the region would help out in Haiti because it was a regional issue, not a U.S. issue. And Chile was very quick to be forthcoming, as was Canada and Brazil. And in long discussions with General Albuquerque in Brazil, he was very eager to assist in that under U.N. auspices and to take the leadership in that.

And I think that was an important way of doing business inside the region, not United States led, but Brazilian led, in a U.N. effort, in a problem that is a very significant and real problem. And I spent many many many months in two different roles in Haiti, and have a great regard for the Haitian people.

BARSHEFSKY: If I could just comment on the issue of neglect, I think Brazil stands in a situation different from many countries in Latin America because of Brazil's size, its prominence, and the fact that it has been a country quite complex for the U.S. to deal with in an effective way, leading to much greater effort on the part of the U.S. with respect to Brazil. Of course Brazil is the regional leader, so this becomes important as well.

I think there are a number of other countries in the region that have not garnered that kind of attention. But the issue isn't really so much neglect. The point of the report is to say, how can U.S. policy be more effective than it's been. And in looking at the areas we did, we thought if the U.S. first of all followed through on the commitments it has made in the past -- and the U.S. record in that regard is spotty -- and then secondarily, channeled aid in very specific ways, very targeted ways, that may be a good thing to do, because grandiose pronouncements are not terribly helpful, and the notion that the U.S. will eradicate poverty or bring democracy to the hemisphere are, shall we say, overstated.

So the idea here was to give a new administration some ideas on the way in which it might pursue policies in a more targeted fashion, but coupled with larger initiatives -- FPAA for example, or other initiatives on the security side and elsewhere.

I do think that there has been important progress in U.S.-Latin American relations generally. But the task force felt there could be some significant additional improvement with a little bit more attention to certain key areas.

DEYOUNG: By my watch, we have about 1-1/2 more minutes, so time for one very quick question. Yes, sir.

QUESTIONER: Thank you. I'm Bill Katespear (ph) with NATO's military headquarters.

It's been heartening to see the U.S. government in general take more seriously the notion of strategic communication the last seven years. But I think that there we've made more progress in thinking about the messages we send to places like the Middle East and South Asia than Latin America. So I was just wondering if the task force had an opinion about the general story or message that we are sending to Latin America about its content, and how we perhaps might ought to change it. I should add a corollary just in light of the ambassador's previous remarks that I think the population served by leaders like Chavez and Morales could say, well, one story we're getting out of the U.S. government is that if you are not willing to embrace the Washington consensus when it comes to inflation then we have nothing to say to you for example.

BARSHEFSKY: Well, with respect to Hugo Chavez and Evo Morales, we make very clear in the report that the U.S. must engage with these countries. If you look at the example of Cuba, you would see a Fidel Castro that but for his recent illness outlasted 10 U.S. presidents, and he looked much better at the end of all those years than any of our U.S. presidents. (Laughter.) So one has to say, well, now how effective has this policy actually been.

And so the view of the task force very strongly was, let's not go down this same road again. Because to isolate these countries from the point of view of the U.S. is actually to isolate the U.S. not only from those countries, but from others that are sympathetic with those countries, and in general, from countries in the region that have always rejected the notion of Washington-based sanctions on matters of domestic sovereignty in those countries.

So rather than drive and fuel the rise of the Hugo Chavezes of Latin America, the thought is to engage with these countries, including through multilateral institutions, obviously underscoring areas of grave concern, obviously indicating what it is the U.S. would hope to see, but not going down the road that has failed so miserably these last 50-plus years.

HILL: And I think the tenor of the report, throughout report, stresses what Charlene just said. This is -- the report says very clearly this is not a U.S. teaching exercise as we had over here. This is a U.S. expressing what our interests should be with our friends in the region who have their interests, and a collaboration among the two, in a -- in a -- trying to step back from the idea -- a term that I've always disliked -- that Latin America is our backyard.

That's like saying -- it's very paternalistic. They are not our backyard. They are our neighbor. They are on our front porch. And we've got to move from that in a collaborative manner, and I think that's what the report tries to say.

DEYOUNG: Well, I think that's a good -- that's a good place to wind up, although I think we all have a lot more questions.

I want to remind everyone that this was on the record, and I commend the report to you all. It not only has some very thoughtful advice about the future, it has a whole lot of information that demonstrates how important these two parts of the Western hemisphere are to each other.

And I thank our co-chairs. Thank you, Shannon. And thank you all for coming. (Applause.)

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