Perspectives on the Fifth Summit of the Americas: Cooperation on Development, Energy, and the Environment

JULIA SWEIG: Good morning, everybody. Thank you very much for coming.

I feel that it's a bit sacrosanct to have a discussion in the middle of Semana Santa and the middle of Passover. So I want to especially thank all of you for coming. And I think we'll have more than four questions today. I am very, very pleased and honored, as we all are at the Council on Foreign Relations, to have with us some very distinguished practitioners, thinkers, writers, analysts, individuals who know and have worked in and on this region for some time and beyond. You have their bios; Jeffrey Davidow, Luis Alberto Moreno, David Rothkopf are joining us today.

We invited you here today and I'll just mention that we are on the record today. We do have members of the press with us. Some of them have called in. I want to welcome, of course, the distinguished members of diplomatic community that are here as well. And thanks to all of you for joining us.

We had a bit of a technical challenge, and so I will try to run this as a conversation, even though we're sitting in a straight line. And I could just ask all of you to make sure that you speak, since we're taping this, directly into the microphone.

I am Julia Sweig. I run the Latin America program here at the Council on Foreign Relations. And we have next week the Summit of the Americas coming up. And so we decided to invite these individuals here to join us to have a conversation not just about the summit, per se, but about the Americas and about what can we expect next week. The president and a large delegation, including the secretary of State, will go to Trinidad-Tobago.

Summits--I confess, I'm a summit skeptic, myself. Summits can come and go, but, of course, there are opportunities for setting a tone, changing a tone and getting to know one another.

The United States, as in the rest of the world, is experiencing -- and the Americas -- a decline of its influence, its power, its standing; in addition to which, the global financial crisis is having its impact in this region as well.

Unlike the rest of world, though, we in the hemisphere remain quite intimately linked to one another and tied to one another through commerce and trade and people and language and culture and geography. So this is not a summit like any other summit, because it's happening here in the neighborhood, in a part of the world which -- where -- a legacy the United States has faced, of very high expectations that the United States has been, historically, the cause of many problems and perhaps the purveyor of many solutions.

But I think we're liberated now from that expectation, so this is a moment now, in this context of liberation, where policies and discussions can take place perhaps in a new era.

So let me ask Jeff Davidow to start. You have come to Washington from, I don't know, exile or freedom in San Diego -- (laughter) -- to coordinate the summit. I'm not sure what that means, but if you could just talk a bit about the priorities going in, and especially the substance of policies you imagine and relations coming out. And then I'll ask each of you a question, to President Moreno and David Rothkopf. And why don't you kick it off for us, Jeffrey.

JEFFREY DAVIDOW: Thank you, Julia. It is freedom, to answer your question. And I thought I was being pretty good; I went out and bought a tie to come to Washington -- (laughter) --

SWEIG: You honor us.

DAVIDOW: -- from California, so -- not quite true.

I think you set this up very well, in terms of the context. Let me add one other point. I think you're absolutely right that the current economic crisis will be a principal topic at the summit. And it also forms the backdrop in -- to discussions and to concerns.

And Luis Alberto Moreno will certainly talk about this, but those of you who follow the hemisphere closely know that we have seen, over the last five to six years, a remarkable -- for this hemisphere -- economic advance in terms of gross domestic product, in terms of number of people living in poverty that has actually declined.

And I think there is a very widespread concern in the hemisphere, now, that all of this may get lost and, indeed, the hemisphere may go back to something it has experienced all too frequently, which is a lost decade -- that is, of no economic growth, of increasing poverty. And that will form both a topic of conversation and a backdrop.

The other major element of context is something that you related to, which is, we have a new president, in case you haven't noticed, and there is a great expectation within the hemisphere about President Obama, a great desire on the part of leaders to meet him. Keep in mind that there has been an intensive period of diplomatic activity related to this hemisphere in this very new administration. And I'll probably forget some things, but as you know, the president met -- the president-elect met with President Calderon. He then traveled to Canada. He met and invited here President Lula of Brazil.

The vice president traveled to Chile, where he met with the presidents of Chile and Argentina and Brazil, Uruguay. The vice president then traveled to Central America, where he met with the presidents of Central America. At the G-20 summit, the president of course interacted with the four other hemispheric countries, Canada, Mexico, Brazil and Argentina. And of course, the secretary of State maintains a strong interest, and visited Mexico in a very, very well received and important visit just a few days ago; as has Attorney General Holder and Secretary Napolitano. So I do think there has been a real effort at consultation and pre-summit diplomacy.

He has -- the president, of course, has not met all of the leaders of the hemisphere as yet, and this will be a good opportunity. I think coming so early in the administration, this is legitimately -- can been seen as a new beginning. And I do think that what you mentioned about expectations, Julia, is true. The expectation is to establish contacts, establish an understanding and move from here. It's different when a president has been in office for two months, as opposed to when a president has been in office for three years, six years, or longer.

Another important context here that I want to mention is the locale, the venue of the summit. This is the fifth summit. Previous ones have been in much larger countries -- obviously, the United States, Canada, Argentina. There is a -- was, I think, a very real desire on the part of the hemisphere to do this summit in the Caribbean. The Caribbean is an area that is, unfortunately, forgotten much of the time.

And I do think that the fact that this will be happening in Trinidad will give a greater Caribbean focus than other meetings do. And I think that's very important. It is, as has been called at some -- on some occasions -- the third border for the United States. And that's very true.

Now, in terms of topics and issues, there is a declaration which has been laboriously negotiated and is now ready to be published. It's currently with the Style Committee at the OAS. I had hitherto been unaware that there was any style involved in international organization documents, but apparently there is.

And it is, of course, a consensus document. It is something the 34 countries have come together and negotiated. And as a result, it has all of the benefits and disadvantages of a consensus document. But I think it is a good snapshot, and I recommend it to you. The work done by, in particular, our ambassador to the OAS, Hector Morales, has been superb. I think it's a good snapshot of where we are in the hemisphere and what the concerns of the hemisphere are that will be discussed at the summit.

And President Obama is going to the summit with the intention of talking about these issues, trying to find where there are areas that we can cooperate more, where we can do more with the hemisphere. And I use that preposition advisedly, because there is a great emphasis on working, on coming with plans to work "with" rather than plans "for." I think that day has passed.

Now, some of the topics that will be discussed -- let me just briefly touch on these, and then we'll move on. One, as I mentioned, is the global economic crisis and the response. The meeting of the G- 20, I think, was -- I'll leave it to these two experts, but I think it was encouraging. The introduction of new resources into the mix is -- at above the level of $1 trillion -- is important. I do think there's a general view that the two areas of the world that are most likely to be the major recipients -- not the exclusive recipients -- of these new resources are probably Eastern Europe and this hemisphere, and that is a good step.

There will be a lot of interest at the summit about the Inter- American Development Bank as a strong regional institution and what it can do more in terms of lending and assisting in macro issues.

I do know that the president and the secretary of State are very much aware that one of the criticisms -- and a legitimate criticism -- of the advances that we have seen in the hemisphere over the past 10 years and the economic policies followed by many countries which have allowed for these advances -- have still not brought sufficient benefit to the large percentage of the population -- populations that are poor and disadvantaged.

There is a strong emphasis in how this administration looks at this hemisphere on questions of social justice, social inclusion, voice for the voiceless, education, health. And we'll see reflections of that at the summit.

Another major issue that will be discussed and is one of the principal topics of the summit is energy and the environment. And the administration will be proposing an energy partnership for the -- with the Americas, excuse me, and that will be an open framework in which we'll focus largely on issues -- on a green agenda tying energy concerns to climate change concerns.

And finally, another big area for discussion -- and as I said, we can talk more about any of these things -- and particularly of interest given the venue, is the question of public safety, or I think it's called human security. We have had, and continue to have for many years, dialogues and programs with the hemisphere on issues of security, particularly as it relates to narcotics and terrorism. And that will continue, no question.

There is also a growing realization in the hemisphere and here that other elements of public safety are also of principal concern. For any of you who travel in the region, particularly in the Caribbean, particularly in Mexico, Central America, you cannot have a conversation with friends in which the topic of the concern about their family's safety is not item number one: Can the kids go out at night? Can -- can I go to the shopping center without getting mugged? What about kidnappings? What about gangs? What about young men and women with nothing to do who wind up in gangs? What about gang members that come down from the United States?

This whole nexus of issues relating to public safety -- of course, not forgetting the primordial issues that we have focused on -- will be a principal topic. And here again, I think there are opportunities to work with the hemisphere, with individual countries, those that are interested in doing so, on establishing networks, exchange of information, exchange of training, technical knowledge and what-have-you, that will get us all onto the same page as we try to deal with this problem.

Why don't I stop there? I do think this is going to be a very exciting meeting. And of course, there are other issues that you've all read about and maybe we'll talk about as we progress: the question of how, or if, Cuba will come up at the summit; the question of how some of the more, shall we say, flamboyant actors in Latin America will flamboy. (Laughter.)

SWEIG: (Laughs.) Well, let me -- let me stop you right there and --

DAVIDOW: Just stopped. I just stopped.

SWEIG: Thank you -- before you flamboy too much.

But President Luis Alberto Moreno, president of the Inter- American Development Bank, we're -- just let me remind all of you that you will have an opportunity to ask questions. So we're going to try to get through the opening presentation so there's a chance for these very smart people in the room.

What happened in Medellin, and how will the IDB, as Ambassador Davidow suggested, be helping the region endure and get through this crisis?

LUIS ALBERTO MORENO: Well, thank you very much, Julia. It's a pleasure to be here. Nothing spectacular happened in Medellin. Crime was like everybody would imagine. It was the annual meeting of the IDB, which -- some of you who are here were present.

And let me just step back for a minute and, you know, say the following. Certainly this crisis, which we all know began back in July of 2007, really began to affect Latin American economies in September of last year. Prior to that you saw some -- you know, some slowdowns in certain industrial sectors, but all in all, Latin American economies were continuing to accumulate reserves with current-account surpluses. They were in a situation of having, for the most part, good growth in all countries.

Latin American economies also achieved something extremely important, which was basically macroeconomic stability: low inflation and low debt levels and, to a large degree, fiscal balance. And, you know, I would say that's -- that was the case in most countries. Some countries, like Chile, for instance, were running surpluses of about 5 percent.

This is a very different Latin America from the time the first summit took place in 1994. So when the crisis began, certainly the first impacts of the crisis have begun to be felt really in the past few months. And the transmission mechanisms of the crisis to Latin America, I would say, are the combination of remittances, which are extremely important to the smaller countries, namely the Caribbean countries, Central American countries, some of the northern South American countries -- they basically have stopped growing. And secondly, if you look at this month, these past few months, they have actually dropped about 13 percent.

The other is, of course, the fact that the main engines of the world, but more importantly the U.S., is not buying as many goods because of the recession. And so manufacturing and exports, which have a huge impact on employment, are starting to be hurt in a big way.

And finally -- and, by the way, here you started seeing numbers, even in the last quarter of last year, of industrial production coming down by numbers of 4 (percent), 5 percent, depending on the countries. And I'm talking in this case on the larger Latin American economies.

And then, of course, prices of commodities, combined with the fact that access to finance has become extremely difficult -- part of it because of all this fiscal stimulus and the U.S. going out and lending $2 trillion, and Europe doing a similar amount, is creating a crowding-out effect of financing for Latin American countries.

So a lot of how the U.S. does this recovery is going to have a huge bearing on what happens in Latin America, and takes me to the point of Jeff here, and that (being/means ?) certainly that it is multilateral development banks that are really doing the two counter- cyclical efforts, and this is extremely important.

At the IADB, with -- through a number of changes that we did in the past few years, we were lending, on average, about $6 billion. But it was in the last two years prior to the crisis that we went up to about $10 billion, largely because we began to do much more lending to sub-sovereign governments and to private sector. And that put us, on an average in the last two years, of $10 billion. This year we will be lending up to $18 billion. But the main issue here is that we cannot remain at this speed without a capital increase for the bank.

And you started your question with what happened in Medellin. In Medellin, in our annual meeting, our governors agreed to immediately advance the process of a capital increase and at the same time look at other ways where we could get more resources, either through co- financings or by changing some of our gearing ratios if we can, you know, as long as we can without getting into all the technical stuff, but really preserving our triple-A status, which is extremely important.

Having said that, as Ambassador Davidow said, I think the economic issues are at the heart of what's going to happen in the summit. I think the tone is going to be very important. If one judges by what the president has done in the last 10 days, I think you could say that, on that account, the summit is already a success.

SWEIG: (Laughs.)

MORENO: Having said that, what matters is what -- the day after. Because if the U.S. is in this tone of saying that they're willing to listen and to learn, which is great, you have to walk the walk. And in this regard, there's a number of issues that should not be removed from the agenda, things like Cuba, things like immigration, the whole question of security.

You know, this crisis in the U.S. is a financial crisis. In Latin America and the Caribbean, it really started in the real sector of the economy, which has huge impacts on employment, which we're seeing already, which will translate into problems of security and social impacts.

A 1-percent drop in GDP on average in Latin America will represent that about 15 million people will go back to extreme poverty. And this is a very serious issue. I mean, it took Latin American countries five years at averages of 5 percent growth to move about 40 million people out of extreme poverty. And so these are the kinds of challenges we have in front of us.

In terms of the things that can be done, certainly on sustainable energy, on what everybody calls green recovery, I think there's a lot to be said there. I think there's a lot of possibilities of things that can be done in the Americas.

And, you know, I'm sure David will speak to that a lot. But certainly, I think this is a very important component.

A lot of that will also depend on education, which is part of the stimulus that the U.S. government is doing. I think there's a lot of ways that we could do more things in the way of education and in technology and in really creating a much more fluid dialogue within the Americas. And if we are able to do that, we will enter, really, into a new period.

But this is -- with Latin America, it is very different from before. These are countries that are much more assertive of themselves. They're -- they have been able to grow largely because the domestic markets in Latin America grew. Unlike U.S. consumers, which -- their average debt levels are close to 100 percent, in Latin America it's more like -- more like 25 percent. And so it will -- unlike the previous crisis, we won't grow by exporting our way out of this crisis. This probably will depend on other things. Part of that will be domestic consumption.

In terms of what countries can do, the fiscal space is reduced, and we can't see many countries doing fiscal stimulus for a long time without getting back into the trap that we have in the past. And I -- this is where the biggest question is.

And I will close with this: We did a study that we presented -- our research department presented in the annual meeting. And like with all economies, you always plan for the worst, then hope for the better. But it basically said that if you had a recovery at the end of a quarter of this year -- last quarter of this year, the seven largest Latin American economies would probably grow over the next five years at about 1-1/2 percent.

If there is no recovery this year, they will not grow, and so you have zero growth. And we know what that means, from the history of Latin America in the past, which is basically the lost decade that Ambassador Davidow was mentioning. This will bring with it a tremendous amount of challenges for the U.S., and I think this is why this is so important at this moment and at this time.

SWEIG: Thank you very, very much.

I neglected to ask you to turn off your cell phones. Don't just put them on vibrate. Turn them off. Thank you. David Rothkopf is a good friend and somebody whose thinking I admire on lots of things. Don't miss his blog. But he's going to talk today about one piece of an area -- part of the world that he covers and follows. I want to encourage you to look at the study on the energy picture that his company, Garten Rothkopf, has just produced. But I know that you want to speak about the energy picture and many other dimensions of where we stand and where we're going in the Americas. David?

DAVID ROTHKOPF: Thanks. You know, I'm a little intimidated, of course, because here you have one of the great U.S. emissaries to the region ever, Jeff; you one of the region's great emissaries to Washington ever; and then you have me. And you have to ask, why am I here? And the reason is I'm from a town in New Jersey called Summit. (Laughter.) This is my principal qualification -- a terrific place, by the way.

SWEIG: That's exactly why you're here, in fact.

ROTHKOPF: (Laughs.) The -- you know, I do think that when one looks at a summit, there's kind of three ways to look at it.

One is what's practically actually going to happen during the meeting. And almost inevitably, this is the least important way to look at it. These are short, ephemeral, hurried, formal bits of Kabuki theater, for the most part.

And then you have what's practically going to come out of the meeting. And this tends to be also rather limited, as we've seen last week with the G-20 and the NATO meeting. Hopefully you get something concrete. You know, this meeting would be a success if there aren't fist fights in the street and if they decide to do a replenishment or move closer towards a replenishment for the IDB, which I think is critical to say we are committed to doing in this hemisphere what needs to be done economically.

And if there are a couple of other things like progress perhaps on energy cooperation -- we did do an 800-page study for the IDB on energy. There are lots of things that can be done. Otherwise it would have been a much shorter study. And it's available here. And so I'm not going to actually go into it in great detail. I encourage you to take it. It's available at a very low price -- free. It's also available online at the IDB site, if you want to -- if you want to get it.

But the more important things are the longer-term outcomes, and they come out of how the meeting is perceived and what processes it leads to. And clearly, we are at a turning point in U.S. relations with the world. We saw that at the G-20 meeting, in the NATO meeting.

The Obama administration has an approach towards foreign policy which is very different from the Bush administration, very oriented towards engagement, very much offering the United States up in a stance that's that of a legitimate partner, certainly, as we know, in the Americas, although we've had partnerships for -- you know -- you know -- you know, each administration has offered a partnership for something. Typically, a partnership in the past has meant the United States writes a check and tells a country what it wants it to do, and the country accepts the check. It hasn't exactly been an equal partnership, and it often leads to resentment.

I think for reasons of real constraints on the United States and changes in the world, we have to figure out what a real partnership looks like, where people in the region are leading, assuming responsibility, not expecting the United States to step in and pick up -- pick up the slack on everything.

And, you know, for the United States going into the next several years, it's clear that the agenda in the hemisphere is going to be driven first by addressing the economic crisis; next by addressing issues that are close to home that have domestic consequences -- and by that I mean Mexico, and so you see the president of the United States going to Mexico first on his way to this meeting; third, by dealing with geopolitical shifts, the most significant of which is the rise of Brazil as a global power, not a regional power -- and this is part of the reordering of sort of the head table of the planet Earth, where the big emerging powers are our new, you know, critical partners in everything that goes forward in these things; and then thirdly, dealing with the separate and somewhat smaller, I think, issues of changing attitude towards Cuba, on which I believe the worm has turned.

Even though the next steps that will take place regarding travel and remittances seem small, this is the beginning of the end of one of the worst -- least successful foreign policy experiments in the history of the United States. Hopefully that end will come sooner rather than later, but it's the beginning of the end.

And then that whole panoply of dissident voices: Hugo Chavez is having his own private party before this. That's going to, you know, try to, you know, get some attention. I think the Obama administration will surprise with its stance towards Venezuela. It can't very well be open to Iran and not be open to a democratically elected country in this hemisphere, even if we don't like a lot of the policies of that country. And so I think we're going to see a fairly significant shift in that regard.

Final point I'd like to make is that, as we go forward, this new stance, which might involve humility, culpability -- how striking was it that Secretary Clinton went to Mexico and said, "We are responsible for this crisis to a large extent"? The solutions to this crisis are going to start in the United States. They're not just border solutions -- openness, restraint, and constraint because of economic situations -- this new kind of partnership.

But another way to look at it, and I'd just offer this out, is we talk a lot about the hemisphere, but given the constraints in the United States, my guess is that their focus is really going to be, for all these reasons, on the quartersphere. And by the quartersphere I mean sort of a semicircle that begins at Colombia and continues up through the Caribbean and around Mexico. Because it's within this that you have the dissident voices, the security issues and the problems that are most likely to be problems delivered to our own border.

And, you know, the notion of a border in today's world is antiquated. It's not a line on a map. All these things happen deep into these countries. And so you can't solve the Mexico problem without addressing the Colombia problem, without addressing the spill into Guatemala, without addressing the spill into the Caribbean. These security issues, producing economic stability in these places to mitigate these issues, controlling those circumstances, are going to dominate the attention. And I think the rest of the hemisphere, with a new kind of leadership from Brazil, is going to take care of itself, and we are going to be less involved, simply because we can't be as involved as we have been in the past.

SWEIG: Thank you very much. I -- the -- it's for another discussion or a further discussion, but what you say at the very end about a new kind of leadership from Brazil, I've had lots of calls from journalists recently calling to say, "Well, you know, do you think the -- do you think that Brazil is going to replace the United States or compete with the United States or rival the United States for leadership in the region, let alone globally?"

And of course that raises for me what we mean by leadership, because the United States had a certain kind of leadership, if you want to use that word, for the last century and a half, but that has changed. It is not clear at all to me that we should expect Brazil to mimic that but rather to sort of craft its own approach. And that will all unfold. It is an incredibly interesting time that we are embarking upon.

Let me open this up now for questions. Please state your name, who you are. Any other instructions? Oh, you're supposed to stand up, state your name and your affiliation.

Steve, go ahead. Yes, thank you. Make sure that I get your attention, and if I don't --

QUESTIONER: Steve Clemons with the New America Foundation. I'd like to just start with what David Rothkopf said about Cuba, the beginning of the end, and ask Ambassador Davidow if you would agree with David's perspective on that, which I think is -- perhaps assertion.

You know, it's very odd right now, when you look at Richard Lugar and his statements on Cuba that seem to be running left of the president.

Brent Scowcroft has said recently that Cuba makes no sense at all as a foreign policy program. Russia's lack of patronage has made -- you know, shown that we can't starve Cuba.

And so part of the question is, if Barack Obama is the change agent he said, is Cuba more than Cuba? Is it an -- a place that your steps there are so symbolic that they can have echo effect, geostrategically, on other parts of the world? Or are we leaving this in the same arena where Senator Martinez and others would like to have it, which is, essentially, we're going to create opportunities for a class of ethnic Americans but not look at the broader geostrategic equation?

SWEIG: Ambassador Davidow? (Laughter.) It's the four- letter word, not Peru, that you're asked to address now.

DAVIDOW: I'll try to answer that.

SWEIG: And the other panelists can certainly chime in.

DAVIDOW: Yeah, why don't they? (Laughter.)

Look, it's obviously a highly contentious issue. From my perspective, a few points to make. One is that I would think it would be unfortunate, actually, to lose the opportunity for this hemisphere at the beginning of the Obama administration to set down some guidelines and make some progress jointly by getting distracted by the Cuban issue. Cuba is not an issue for discussion at the summit, if one reads the summit declaration and the documents and all this past year of negotiation. However, having said that, and given what we're reading in the press, it's probable that it will come up in some way.

The one point that I would respond to from Steve's question specifically is, is Cuba something larger than itself? And the answer is yes, it is. And I think Cuba -- whatever the reasons might have been, you know, in the 1960s for the initiation of elements of our Cuban policy, the fact is, in today's hemisphere Cuba is the odd man out.

Keep in mind that this meeting in Trinidad is a meeting of 34 democratic states. If we had been talking about a meeting of the hemisphere as little as 20 years ago, it would have been cast in a different light. There has been a remarkable historical transformation in this hemisphere, and a laudable one, toward democratically elected governments. We may have difficulty with some of the governments that have been democratically elected, of course.

But this summit is a reunion of countries and presidents, every one of which has been elected by their populations.

There is not one government represented at this summit whose population would willingly accept the kind of restrictions on their civil and political and human rights that are commonplace in Cuba and remain commonplace.

So I think if -- as we talk about Cuba and talk about how we, as a government, deal with it and so forth, let's keep in mind that it is something larger than itself. It is, in a way, a memory of that which existed in the past and a caution for that which may exist in the future, unless we are totally committed to the question of democracy, human rights, and representation of people.

And lest you think that -- and I'm sure some of you do -- that I'm, you know, some sort of, you know, ideologue on this, take a look at the lead editorial in today's Washington Post. Maybe you think they're a bunch of ideologues as well, but I think they say it much better than I do.

So obviously, we've been struggling with Cuba as a nation for, you know, close to half a century. And I think there is a real focus on what we should be doing.

But to answer the question, it is an important place beyond a small island 90 miles from our shore.

ROTHKOPF: If I may make a couple --

DAVIDOW: I hope you will.

ROTHKOPF: -- a couple of brief comments on this. And I'm unconstrained by affiliation with the United States government right now, so perhaps they will be in a slightly different direction.

The editorial in today's -- well, in The Washington Post was absurd. The position of the Florida contingent on this is Paleolithic. The policy is indefensible on any grounds. The reality is that Cuba may be special, but you have to ask yourself why it's therefore easier to travel to or do business with the Stalinist nuclear-weapon-toting North Koreans or whether it's more comfortable for us to be totally economically integrated with the Saudi royal family and their depredations, or, if we are concerned about human rights, why are we so integrated and why are we the sole supporter of a government in Afghanistan that has just made rape in marriage legal and denies women the right to go outside without the approval of their husbands?

So this is -- you know, this notion that somehow democracy alone is the only criteria that we should use in defining the nature of a relationship doesn't stand up to any scrutiny whatsoever. And the reality is that only one country has successfully been isolated by this 50-year embargo, and that is the United States of America.

The policy dates back to the Edsel; it is the Edsel of American foreign policy. (Laughter.)

SWEIG: I've got Johanna, and then George Dalley. And then I'll get you down as well, and I see as well others. Thank you. Johanna.

QUESTIONER: Thank you. I'm Johanna Mendelson Forman of the Center for Strategic and International Studies and -- can you hear me? Okay.

I want to ask some specifics about deliverables from the summit. I certainly agree that the summit is a moment in time, but there are many things and expectations that may come of it. And with the president visiting Mexico first, I wanted to ask whether all of you, or any of you, have some idea whether the arms control treaty, SIFTA, that the OAS ratified and the U.S. government ratified -- but never the Senate -- was something that we could offer up as a first step in a problem that is shared by both the United States and Mexico, the transfer of weapons. And I wondered if this was going to be on the agenda or, given public safety as a central priority, how we might address this. Thank you.

DAVIDOW: I can tell you -- for those of you who haven't followed this, the SIFTA is the Spanish acronym for an inter-American treaty on the shipment of illicit arms from one country to another. It was signed by the United States, oh, what, 10 or 15 -- 1997. Johanna was probably there as a schoolgirl at the event. (Laughter.)

And it is one of several treaties that the United States has signed that has never been ratified. I think the chances are very, very good that it will be submitted with -- for ratification in the very near future, as the focus on illicit arms has increased. Keeping in mind, however, that it's a treaty. And what is more important -- not that it is not important, but what is more important is implementation of our own laws relating to guns. And I think the administration has made it absolutely clear that this is a top priority. It's beefing up the ATF on the border. It's taking other steps.

Mexico, too, is taking steps, some of which are, unfortunately, as I -- are likely to complicate even further life at the border, as more and more searches of cargo on both sides takes place. But this is an important issue, the issue of guns going into Mexico and elsewhere. So I think it will be an important topic. I'm sure it will come up in the conversation in Mexico, and probably be referred to at the summit as well.

SWEIG: George. Just wait for the microphone.

QUESTIONER: Thank you. George Dalley, chief of staff to Charlie Rangel. I can't improve on the initial question on Cuba and David Rothkopf's response. I was going to ask about Cuba initially from that perspective.

I do believe, and I think if Ambassador Davidow would like to address it, the question of whether the credibility of really being a change agent might really be at stake here because the great doubt, I believe, is, does the president have the ability to change policies that have this tremendous domestic overhang?

But I -- my question really is to President Moreno about the impact of our policy on Cuba. What is your assessment of the disagreement that much of the hemisphere has with the United States with regards to excluding Cuba? And what would be the impact -- at the present time, what is those -- what are those attitudes? And what would be the impact of a change, in terms of relationships between the U.S. and the region and attitude towards the credibility of the U.S. being a different partner than in the past?

SWEIG: Just to be efficient with our time, I'm going to invite you to -- the woman in the white turtleneck to also -- please answer Mr. Dalley's questions, but if you could add yours as well. And then we'll go about the rest of the questions as the --

QUESTIONER: (Name inaudible) -- Latin American Journal. My question is to Mr. Moreno. It's about 50 million population of Latin America going to poverty level. And I would like to ask you, in this context, could international organizations or international community do something, at least not to stop this poverty but alleviate it? And what will be the method? Is it cash transfer, some special projects?

SWEIG: Thank you very much. So there's questions to both of you about Cuba and also to you about poverty.

MORENO: Well, first of all, there's no question that to move into 21st-century Latin American-U.S. relations, clearly Cuba has to be a part of that. And clearly for many -- I mean, all countries in Latin America have -- almost all, to my knowledge, have today relations with Cuba.

And yes, this is a bilateral issue between the U.S. and Cuba. And I think the most important thing -- I think David put it in a very good color -- but at the end of the day, it is about how to reestablish it. And that's -- you cannot put just a democracy issue in front without being able to have all the nuances there.

I also agree with Ambassador Davidow that just turning the summit -- just on a summit on Cuba I don't think would serve the hemisphere either. I think it's -- there's so many issues out there and I don't think even Cuba wants that to be the case. But without a doubt, I think it would have a profound effect not only in the hemisphere but throughout the world, I mean, as the U.S. unlocks kind of this promise and begins to really show a different kind of leadership. And it requires a big conversation in this city and in this country at the end of the day.

With regard to the -- to the question of what else can be done at this time, I think something fascinating that's happening in Latin America over the last 20 years is that we experimented tremendously on social policies. You referred to the condition of cash transfer programs. You know, you see programs like Bolsa Familia or -- (inaudible) -- in Mexico. I mean, they have been extended in such a way that today these social networks are not only extremely important, but are a way to create some kind of safety net -- additional safety net during this time of crisis, which also has an impact on aggregate demand.

Because don't forget that these cash transfers that you do are basically for very poor families and is basically directed at, basically, food and basic necessities, which have an effect on aggregate demand. So that has also that positive effect.

And inasmuch as you advance in this moment with low growth, the amount of effort that governments can do in this direction is going to be very important. These programs began for rural areas; increasingly they are moving to urban areas. And don't forget, you know, to a Latin American country, 75 percent of the population lives in major cities. And this has been really a phenomenon that's happened over the last 25, 30 years.

So it -- I believe that it's critical to keep those programs in place. It's going to depend, of course, how countries can, you know, manage to do this. And, you know, financing is going to be a critical part. We as a bank have been supporting many of these programs. I think we saw a number the other day, something like 50 million families that we basically have supported through financing the bank in many countries in Latin America.

DAVIDOW: Can I add a point on that? In looking at the kinds of things that will be discussed, this -- the program that Luis Alberto has just talked about, the conditional cash transfers, I think it's a very exciting one -- not only for what he's described, these new ways of dealing with poverty in the hemisphere, but at least one major city in the United States is now adopting -- at least in a pilot program: New York City has been very much influenced by the -- actually, I think a trip that Mayor Bloomberg took to Mexico.

And one of the things that I think you're going to see the U.S. suggest in the course of the summit is, how can we work together? What kind of networks can we form? There are countries in the hemisphere that have not adopted this program. They either don't have the resources or they don't have the knowledge. There's probably a lot more places in the United States that could learn a great deal. So let's put together the experts. Let's put -- set up the networks. Let's compare best practices. This doesn't require, in itself, a great deal of new resources. It does require a willingness to engage, and I think that's what we will see.

SWEIG: You get 15 seconds on this.

ROTHKOPF: My 15 seconds are, the United States cannot be perceived as being serious about addressing these problems, or successfully address the security problems, or make advances towards a new kind of partnership in this hemisphere, without moving forward on replenishing the Inter-American Development Bank. Can't talk about it. Don't talk about studying it. You've got to do it. There has to be real cash available to these things. Rhetoric will not do the job alone.

SWEIG: Yes, please.

MORENO: (Pretty ?) good. Fifteen seconds -- (laughs). (Laughter.)

QUESTIONER: Thank you so much, ma'am. And I wish to congratulate you.

SWEIG: Would you introduce yourself?

QUESTIONER: My name is Anthony Johnson, ambassador from Jamaica.

SWEIG: Thank you.

QUESTIONER: And I want to say this is perhaps the 20th think tank symposium dealing with the summit over the last two weeks, and it's the first time that the word Caribbean has been mentioned.

And I want to congratulate you all and thank you -- (laughter) -- just want to point out that the Caribbean, including the Gulf of Mexico, is as large as the Mediterranean. We have 22 countries bordering us, just the same as the Mediterranean. So we're not completely either invisible or unimportant.

I wanted to ask Ambassador Davidow whether the thinking is that the Caribbean Basin Economic Recovery Act, CBERA, will be the sort of basis upon which you will be thinking of expanding assistance to the region, since I want to thank very much Luis Alberto for his eloquent exposition of the fact that we can't take another lost decade.

CBERA, for those who don't know, is something coming out of 1981, '82, the Caribbean Basin Initiative of President Reagan. It did produce -- as Luis Alberto said, we had grown and we were growing, and now everything has come down, and we're anxious to know whether there will be the kind of movement expanding CBERA, because it is certainly not adequate at this time, neither with resources nor in scope.

Thank you.

SWEIG: Thank you very much.

I'd ask only one of you to attempt to answer that question, please, and then I want to get more from the audience.

DAVIDOW: Certainly there is in -- a real desire to continue and expand our relationship with the Caribbean, and including assistance. I can't give you a specific answer to the question you've asked, however.

SWEIG: I -- yes. Would you --

QUESTIONER: My name's Jerry Johnson with RLJ Equity Partners. I had a question about military involvement in Latin America. Admiral Stavridis, as leader of SOUTHCOM, has done a lot with regard to economic development, but I know there has to be a balance between hard and soft power. I know there has been talk about Hezbollah and Iranian influence in Colombia and throughout Latin America and also through the drug trade. I'd be very interested in your perspective in how the military -- U.S. military's involvement should be in Latin America over the next two to four years.

SWEIG: I've got Jeff and Diana, and if the two of you could add to that question, that would be great. QUESTIONER: You go -- no, no.

QUESTIONER: Go ahead.

QUESTIONER: Diana Negroponte, the Brookings Institution. Previous summit declarations have won high marks for style and for declaration, but they have all failed on implementation. Ambassador Davidow, prior to reaching the style department of the OAS, what have you and your colleagues from the 34 countries reached on institutions to measure implementation? And who has offered to take the leadership of those groups or institutions to measure success and failure?

QUESTIONER: Jeff Pryce, Steptoe & Johnson. Two issues. First, the democratic consensus. Thank you, Ambassador Davidow, for mentioning something which is stunning to anybody who has been involved in Latin America over the last 20, 25 years. The advancement in the rule of law is something that I think we should not take for granted and should not be passed over lightly.

So thank you for that.

My question has to do with the Washington consensus. Flamboyant or not, there's a collection of leaders in South America who have begun denouncing the -- (inaudible) -- convention, denouncing bilateral investment treaties and mounting what is -- at least has purported to be a general challenge to previously accepted international economic arrangements and treaties. And I wonder if the panel could comment on that.

SWEIG: Each of you can comment briefly on the question about the military and how to measure success and the Washington consensus, and then we'll wrap it up.

DAVIDOW: I get to answer everything? (Laughter.)

SWEIG: No -- it's up to you. You can pick from those three and take only one and then we'll have more time for the others.

DAVIDOW: Let me --

SWEIG: That would be my preference, actually.

DAVIDOW: Okay. (Laughter.)

Let me talk about Diana's question, because I think it's a very important one. I think not only with Summit of the Americas but traditionally with summitry there is a tendency to -- lack of follow- up in implementation.

I do believe that there's a real appreciation that I've heard expressed in the limited time that I've been in Washington, the last few weeks, in the need for implementation, need for follow-up, in the need for strengthening of the inter-American system and the inter- American institutions. The discussion about the Inter-American Development Bank is one of -- is a part of that. Discussion of the OAS is a part of it.

I believe that we will see, either in the summit itself or in some of the side meetings, discussions between the -- among delegations, but I know between the American delegation and some of these agencies, some of these organizations that are actually grouped together in a group, a -- what's it called, Luis Alberto? What name do we have for it -- Summit Implementation Group or Summit Follow-Up -- which includes the OAS, the IADB, CAF, which is the Andean finance corporation, the World Bank, and others.

And I do think that it is important that a plan of action be developed. And I don't think we're there yet, okay, to be quite frank.

On the question of the military, I do know that Admiral Stavridis has put a lot of emphasis in -- on questions of the role of the military in addressing issues of social inclusion, poverty, what have you. And I think this is to the good. The United States, of course, is working with militaries in the region on those kinds of issues, plus on issues relating to narcotics in particular.

Your question about the military is a legitimate one and something we always have to be looking at, particularly in this continent, which has an unhappy experience in civil-military relationships. But that is part of the very profound change, I think, which Jeff was referring to. Again, if this conference were being held 25 years ago, a good number of the people at the table would have been wearing uniforms, or at least had them in their dressing room. So that relationship, the civil-military relationship, which is a very important one and one that we all should be concerned about, has less saliency today than it did in the past. But nevertheless, it remains an important one.

SWEIG: Luis Alberto, it was also Gordon Brown just now that declared the Washington consensus dead. So it's not just Hugo Chavez.

How do we -- what do we make of that --

MORENO: Well, I was going to say exactly that. Washington consensus is dead, has been dead a long time. And, of course, Gordon Brown put it to bed completely when he started his conference out of the G-20.

Look, in this crisis, when you hear statements from the IMF, you have to really spend on -- big time in the -- this is the IMF who was telling Latin America, you got to really have fiscal balances; you got to be careful with your debt. I mean, this is a totally new moment that we are in that regard. And of course, Latin America is not going to be immune to that. It seems -- it's probably there's more Latin American consensus that should be followed as opposed to a lot of what's happening around.

ROTHKOPF: Let me take two of the questions very quickly. As far as the Washington consensus, I have a car. Kind of -- it's an absurd car. It goes a little bit too fast. It's kind of like your car, actually. And inside the handbook of the car, it says, "While the engineers who designed this car have done everything possible to ensure that it can handle any condition, we can't suspend the laws of physics."

And I think the same is true with economics. You know, there are certain basic laws of economics that make markets work. What is dead is not that it's better to have open markets, better to have freer trade, better to have the kinds of conditions that promote growth. What's dead is the total deferral to markets and hypercapitalism, the lack of a role for government playing the role that it ought to be playing. So we're rebalancing. We're not throwing out the whole rule book.

As far as the military issue is concerned, the United States is going to spend less and less on defense over the course of the next 10 years, because we don't have the money. We're probably going to spend a lot less than we think we're going to spend.

We are going to be engaged in the region. And one of the things that's going to attract our attention -- and frankly, I was surprised at the kind of shrug that Admiral Mullen gave to the Russian exercises with Venezuela and Cuba -- is the involvement of other major powers in the region. I don't think it's a big threat, but I do think we're going to pay a lot of attention to it.

But the critical military issues in this region are issues that are associated with crime and drug trafficking. And the critical solutions to those issues lie within the borders of the United States, in terms of drug treatment, legalization and a completely different regime for dealing with drugs than we have had thus far. And without that, you can have as many destroyers as you want; you're not going to stop the destabilizing issues that are affecting countries from the Andean region straight up through Central America and the Caribbean and into Mexico and the United States.

DAVIDOW: Julie, can I make a point -- (off mike)?

SWEIG: You can make it, and it will be the last point before I wrap up.

DAVIDOW: Oh, well, no, it's not that important. (Laughter.)

SWEIG: No, it is. Okay.

DAVIDOW: No. Let me just say something about the Washington consensus, which is whether it's been put to sleep or not, let's -- and I'm not defending it, but let's be aware that the ability of the hemisphere today to meet this financial crisis is much improved because so many countries did adopt elements that were considered part of the Washington consensus about transparency of accounts, about open systems, about checks and balances in the expenditures, being -- having independent central banks. Those countries that did not fully adopt that or have subverted them will be the ones that will be worst impacted by the situation.

So it's another element of this change that we're talking about. There is a much more open and transparent system now than existed as little as 10 or 15 years ago. And to the degree that that is challenged, it will be -- redound to the disadvantage of the countries that move away from those very prudent laws of physics.

SWEIG: Ambassador Patriota, did you want to say something about laws of physics?

QUESTIONER: (Off mike.)

SWEIG: Okay.

QUESTIONER: (Off mike.) And I'm very happy that my colleague from Jamaica made his comment and that Ambassador Davidow highlighted the fact tat we're talking about Latin America and the Caribbean and that the summit is taking place in a Caribbean island. But what I'm struck by is the absence of any reference at all to Haiti, which is a country right on the border of the United States -- and I agree with this more open and flexible definition of border that was used here today -- a country that could become a failed state if we hadn't actually worked under a United Nations mandate to try to bring some stability.

There will be a donors conference next week. Nobody mentioned that. While the United States spends $150 million a day in Iraq, it's difficult to get the United States to pledge close to that amount for a year in Haiti. So, just to remind us all that this a very important issue, for Brazil, at least.

SWEIG: I'm very glad you brought that up.

And with that, I want to thank all of you, especially our very thoughtful, brave and smart panelists. (Applause.)

We've got goody bags on the way out. There's some published material from a variety of participants. Thanks so much for coming, to all of you.

(C) COPYRIGHT 2009, FEDERAL NEWS SERVICE, INC., 1000 VERMONT AVE.
NW; 5TH FLOOR; WASHINGTON, DC - 20005, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED.

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL CARINA NYBERG AT 202-347-1400.

THIS IS A RUSH TRANSCRIPT.