To be effective, the Administration's new policies must encourage America's southern neighbors to become the authors of their own success. These policies should be guided by three broad principles:

1. The region will be more stable under democratic governments that have free and fair elections and are committed to the rule of law;

2. The Western Hemisphere will be more secure under cooperative partnerships that focus on combating transnational crime and modernizing outdated security mechanisms; and

3. The people of Latin America will prosper by expanding trade and implementing sound economic reforms.

With these overarching principles in mind, the new U.S.-Latin America policy agenda should seek to:

• Strengthen democracies
  To do this, the Bush Administration should promote free and fair elections in Latin America through election monitoring, party-building programs and activities, and public diplomacy. Public diplomacy and information programs should be aimed at political leaders and general audiences to increase understanding of how democratic governance works best.² Civic education programs need continued U.S. support to help build understanding of concepts like the separation of powers, decentralization of government, and core administrative competencies. Only with such an understanding can Latin Americans develop strong democratic institutions as a counterbalance to authoritarian traditions.

In addition, the Bush Administration should help foster judicial reforms and the rule of law in Latin American neighbors. U.S. Administration of Justice programs already provide assistance to Latin America to help states reform their outdated civil codes, strengthen inadequate court systems, and professionalize police forces. These efforts need to be enhanced and extended to include more countries. The Administration should also focus efforts in Latin America on facilitating the growth of democratic cultures by broadening public understanding of citizens' rights and responsibilities. Education programs and projects that use non-governmental organizations (NGOs) to improve primary and secondary education can help bolster literacy and citizenship skills in countries where most people have less than a fifth grade education.

• Build working partnerships for defense
  The United States should help its neighbors to the south modernize their military capabilities and work to improve multilateral security mechanisms to defend against traditional threats and provide a basis for bilateral and multilateral cooperation. The United States should encourage its regional allies to update the 1947 American Treaty of Reciprocal Assistance (Rio Treaty) and to establish a high-level forum in which to plan strategies to address problems like transnational crime.

The Bush Administration should promote cooperative arrangements among its hemispheric neighbors to counter such emerging threats as arms and drug smuggling, terrorism, and money laundering. It also should encourage the development of protocols with and among Latin American states to enhance the level of coordination between military and civilian institutions to deal with these threats internally and regionally.

• Promote regional prosperity through free trade and economic reform
  Congress can greatly enhance this effort by granting fast-track negotiating authority to the U.S. President. The Administration should cement the recently announced free trade agreement with Chile and use its signing to introduce the establishment of a global free trade association (GFTA) of countries committed to open markets and the rule of law. The establishment of the GFTA should encourage other countries that do not automatically fit the criteria for free trade to qualify for membership by pursuing measurable reforms, including stronger property rights, fewer restrictions on the creation of small businesses, and tougher anti-corruption laws.

Only such a broad approach will enable the Administration to develop country- and problem-specific policies that effectively address, for example, Colombia's illegal narcotics trade, which is levying huge costs on American society, or help Haiti overcome its rampant illiteracy and encourage Cuba to one day respect human rights.

The Clinton Failure to Build on Success

President Clinton inherited relations with a Latin America that had begun to flourish with peace, free elections, and more open markets. Unfortunately, he made little progress in helping to shore up democracies in the region, address new emerging threats to hemispheric security, and promote economic reform. The positive outlook that existed in 1992 has evaporated, and the opportunity to build a strong hemispheric neighborhood based on free markets and democracy is closing.

Latin America is too important to allow the policies of the last Administration to continue. Rebuilding relations and reversing recent dangerous trends will require President Bush to exercise leadership and vision that are firmly rooted in a keen understanding of the region's past and current problems.

In 1980, fewer than six out of the 23 Latin American nations could be described as democratic. Dictatorships and authoritarian regimes continued to spawn civil conflicts, Marxist revolution, mass migrations, and economic turmoil. President Jimmy Carter had tried unsuccessfully to fight these ills with a policy promoting human rights.³ The Reagan and senior Bush Administrations sought instead to eliminate Soviet-sponsored subversion, encourage democratic reforms, and urge the countries to open their economies to trade. Their influence proved remarkably successful, and by 1992, 21 out of 23 countries had elected new leaders in competitive contests, free markets had begun to replace import substitution models, economies were growing, and intraregional trade had begun to provide a practical basis for multilateral cooperation on many issues.

At first, the Clinton Administration seemed eager to add to this progress. During his first year in office, President Clinton spent considerable political capital to achieve an initiative he had inherited from the Bush Administration--the North American Free Trade Agreement (NAFTA)--and successfully pushed it through a skeptical Democratic Congress. Late the following year, he hosted the first summit of American states in 27 years and the first ever in the United States. At the Miami summit, he made an extraordinary commitment to create a hemispheric free trade area (the Free Trade Area of the Americas, or FTAA), to help strengthen Latin American democracies, and to support regional development.⁴

Then, just a few days after Clinton's summit speech, the Mexican government devalued the peso amidst a financial crisis that cast doubt on the President's hard work. Though NAFTA had nothing to do with the crisis and played a major role in Mexico's subsequent recovery, the Administration was unable to combat the perception that it had misjudged one of its new NAFTA trading partners.⁵ Pressured by special interests, the Administration backed away from its hemispheric engagement strategy.

Even before the peso crisis, the White House and Congress had been shifting money for democracy programs away from Latin America in favor of the former Soviet republics. Congressional budget cuts led to reductions in U.S. Information Agency (USIA) exchange programs, foreign broadcasting operations, and the U.S.-supported library programs in countries with limited information resources.⁶ Even though an educated population is essential to both democratic governance and a prosperous economy, assistance to expand education remained a low priority of the Administration, with funding pegged at about 5 percent of the Latin American budgets at the Agency for International Development (USAID).⁷

In 1997, the White House finally dropped its wavering bid to obtain fast-track negotiating authority from Congress. The President needs fast-track authority to cement agreements with nations in a timely fashion, providing potential trade partners with the assurance that the agreements they sign will be given a quick up-or-down vote in Congress without the likelihood of amendments that would effectively reopen the negotiations. Without such assurances, few countries are willing to invest their efforts in hammering out agreements with the President and his Administration that might later be changed by Congress.

In 1998, the Clinton Administration quietly agreed to share leadership of the FTAA with Brazil at the Summit of the Americas in Santiago, Chile. Had the United States maintained its influential leadership position, the hemispheric trade model for the FTAA would be NAFTA, and Chile would have been invited to join immediately. Instead, the FTAA proceeds slowly along the lines of a protectionist customs union, the Southern Cone Common Market (Mercosur), which primarily serves the interests of its largest member, Brazil.⁸

Development assistance also lost its focus under the Clinton Administration. Few Latin American recipients have economies that are any more sustainable today than they were 20 years ago. This is because programs that primarily provide funds, tools, and information are not always accompanied by the political and economic reforms needed to sustain any gains. Ecuador is a case in point: Even as U.S. development assistance attempted to confront the problems of public health, environmental degradation, and corrupt government, access to international credit allowed Ecuador to continue corrupt practices, maintain unsupportable subsidies, and oust three presidents and one vice president who dared to propose even modest measures of fiscal responsibility.

Even where President Clinton acted to preserve the status quo in Latin America, success was at best temporary. His disinterest and unwillingness to delegate responsibility to appropriate U.S. agencies weakened efforts on the two issues that did make it to his radar screen: Haiti and Colombia.

• For example, the White House generally ignored the institutional expertise of the State Department on Haiti and directed the $3 billion, 20,000-soldier intervention effort out of the National Security Council. Focusing on a quick-exit strategy instead of a long-term remedy, the intervention returned a non-democrat to power and effectively propped up a kleptocracy that was little better than the previous regimes.⁹

• When piecemeal efforts in Colombia failed to contain the activity of narco-guerrillas, the Administration helped the Colombian government develop a comprehensive plan but failed to draft the emergency aid request to Congress in a timely fashion. When the package arrived on Capitol Hill, six months late and with few supporting details, legislators had to fill in the blanks, delaying the arrival of assistance and substituting compromise for a clear vision of what needed to be done.

The Bush Administration should learn from these missteps and develop a comprehensive strategy for improving relations with Latin American states that benefits all concerned. Even if the tactical approach employed under President Clinton were "better managed," it would not gain the region's confidence or solve any problems.

Latin America faces more complicated challenges than it did six years ago at the Summit of the Americas in Miami; many political institutions have weakened, and economies have stagnated. As the late Senator Paul Coverdell (R-GA) observed in a speech before the Council on Foreign Relations in April 2000,¹⁰ three general problems affect most of the countries in the region: fragile democracies, inadequate defenses against emerging threats, and failure to develop broad-based economic growth. Many governments tread a delicate balance between survival and disaster, unable to translate free elections into democratic institutions. Drug trafficking, money laundering, and terrorism threaten the stability of the northern Andean states, with tentacles that stretch from Argentina to the United States. At the same time, the slow pace of economic reform has not improved the lives of most Latin Americans.

Incomplete Democracies

Although a democratic government may not be an absolute requirement for achieving prosperity or developing a more secure society, authoritarian regimes in Latin America not only failed to achieve these goals, but also blocked their development. Democratic nations certainly make better neighbors, allies, and trade partners; and leaders who must compete in regular elections under public scrutiny do not normally tend to lean on other governments to bail them out for corrupt activities or frivolous decisions. Nor do they usually allow problems to develop that threaten their neighbors. Furthermore, governments that respect democratic freedoms create a solid basis for the growth of free markets, enabling private enterprise, employment, and prosperity to flourish.

Most Southern Cone countries have held democratic elections, yet many elected governments in the northern Andean tier¹¹ and parts of Central America are now in crisis. Mexico has made steady gains, electing President Vicente Fox, an opposition party candidate, after 71 years of single-party rule; but the rest of the region presents a mixed bag, with some successes and many failures. Polls show that, although most Latin American citizens prefer a democracy over an authoritarian government, 60 percent are not satisfied with the performance of their democratic governments and respect the armed forces more than any other public institution.¹²

The reasons are many. For one thing, even though competitive elections are more or less a feature of all Latin American governments except Cuba's, unfair electoral practices still plague the region. In Haiti, violence against the opposition candidates and manipulated vote totals resulted in a dubious victory for the Fanmi Lavalas party of former President Jean-Bertrand Aristide in parliamentary elections last May. In the November presidential election, Aristide ran unopposed; but only an estimated 10 percent of the electorate voted, and opposition candidates sat out the election in protest. In Peru, the legacy of President Alberto Fujimori's authoritarian rule includes candidate intimidation, electoral council manipulation, and media coercion, which must be neutralized before new elections take place in April. In Colombia, candidates--especially in the rural areas--are often threatened by criminals and illegal armed groups.

Weak political institutions both fail to check the arbitrary acts of paternalistic leaders and impair the effective delivery of services to the public. In Argentina, Guatemala, Haiti, Nicaragua, and Venezuela, powerful executives exercise heavy influence over the judiciary. In Haiti, Nicaragua, and Venezuela, they control the legislative branches and other independent bodies, such as electoral councils. President Hugo Chávez of Venezuela has used referenda to rewrite the national constitution, remake the legislature into a unicameral body, and restrict other institutions that could oppose his administration. A December 5, 2000, referendum put free trade unions under government control, and proposed measures reportedly include nationalizing non-governmental organizations as well as private schools. In almost all countries of the region, weak municipal and state governments are only a minor counterpart to the strong, centralized national administrations that collect the bulk of all taxes and distribute most of the services (though often poorly).

The rule of law--essential to fair play, democratic governance, a competitive market, and a healthy investment climate--is weak in more than a third of the region. At one end of the spectrum, Cuba's Fidel Castro jails people simply for "looking dangerous."¹³ Elsewhere, vague, Napoleonic-era civil codes invite interpretation, enabling major and minor officials to solicit bribes for favorable decisions. Judiciaries lacking resources and competence limit public access to justice with high court costs, a lack of public defenders, and long waits for cases to be heard. In Haiti, 80 percent of all prisoners are simply awaiting trial.

At the governing level, public officials either refuse to follow laws or manipulate them for personal gain. In December 1999, Nicaraguan President Arnoldo Alemán jailed the Comptroller General for inquiring into an extraordinary and unexplained increase in Alemán's personal assets as required by law. As Alemán and his party began losing support, he colluded with Sandinista legislators to modify the constitution to eliminate smaller opposition parties and grant him an unelected seat and voice in the national assembly.

Finally, social factors also serve to inhibit the development of cultures that support democracy. In Brazil, the northern Andes, parts of Central America, and Mexico, economic and ethnic divisions result in fragmented political interests. Participation is further limited by low average education levels and inadequate access to schooling outside of the capital cities. In Haiti, Mexico, Peru, Venezuela, and (in the extreme case) Cuba, competitive practices are simply not tolerated in cultures where the traditions of monopoly prevail. In such places, public diplomacy and civic education programs funded by USAID are key to introducing people to new values that favor self-determination, human rights, the rule of law, and open markets.

New Threats and Outdated Security Paradigms

Strong nations united against external aggression and safeguarding the well-being of their own people are the best defense against a broad range of threats, whether war, natural disaster, or transnational crime. Yet the United States and its allies in Latin America have never shared a common focus on hemispheric defense beyond their Cold War determination to repel Marxist insurgencies. Worse, they are unprepared to deal with the new threats to security that loom on the horizon.

The good news is that the demise of the Soviet Union in 1991 reduced the threat of communist-sponsored aggression in Latin America. The United States has taken advantage of a decade of relative peace in the hemisphere to encourage its neighbors to draw down their armies and place them under civilian control. Accordingly, the region's civilian leaders have acted to reduce their once prominent political profile and largely have separated the military and police functions. To occupy the smaller-sized forces, modern defense chiefs have sought out such new missions as disaster response, environmental protection, and international peacekeeping.

The bad news is that the Clinton Administration allowed U.S. strategic objectives for this region to drift. It neglected traditional defense matters, such as the importance of Caribbean sea lanes and the Panama Canal in facilitating global commerce, by turning over the canal to Panama in December 1999 without encouraging the development of territorial defenses or preserving a convenient location for defense operations should they be needed in the future. The Pentagon has largely ignored the fact that Latin American countries have developed important trade relations and military contacts with other parts of the world, including China. Unwilling to go much beyond hosting training exercises or selling used equipment, the Clinton Administration and the Defense Department failed to reform America's traditional paternal relationship with the region's militaries.¹⁴

Cocaine and heroin production in the Andes, augmented by the global economy, is creating an insidious new threat--a billion-dollar multinational crime industry, centered in the Andean ridge, and that extends north through Central America, Mexico, and the Caribbean and south through Brazil and Paraguay. With local roots, profits rivaling the economies of small nations, and a global reach, this activity falls outside the purview of strictly military or police jurisdiction.

In the past five years, narco-corruption has undermined the sovereignty of Colombia, and related violence has displaced more than 1.5 million citizens. In 1999, lost revenue from damage to infrastructure and legitimate businesses caused Colombia's total domestic production (GDP) to decline by 5 percent and unemployment to rise by 20 percent.

In Brazil, a recent congressional investigation implicated more than 800 persons--among them three national legislators and several mayors--in drug-based crime networks stretching from Amazonas State on the Colombian border to the port of Santos in the south.

In Mexico, local cartels have co-opted all but the highest levels of law enforcement, and the transshipment of cocaine is now Haiti's biggest business.¹⁵

All told, Latin America accounts for almost all of the cocaine and the largest portion of the heroin coming into the United States, with an estimated associated cost in 1995 of $110 billion in medical expenses and lost productivity.¹⁶

Crossing borders, this threat requires the cooperation of both the military and the police. Unfortunately, few armies, having already dismantled their police battalions, are now prepared to collaborate with civilians to combat this menace. Where civilian units were created to take over law enforcement from the military, neither numbers nor training has been sufficient to control common crime. Following the end of the civil conflict in El Salvador in 1992, the new civilian police were barely a match for demobilized combatants who kidnapped, stole cars, and attacked travelers. Now drug trafficking has moved in from Colombia to further overwhelm the police. Even in countries with long-standing civilian police forces, like Mexico, poorly paid officers rely on bribes for a living and simply do not present a credible deterrent.

The United States has tried to provide help, but U.S. counternarcotics assistance has been affected by U.S. domestic laws that block cooperation between the military and police. Except as exempted by statute, the 1878 Posse Comitatus Act and the Foreign Assistance Act of 1961 place limits on U.S. military forces, from acting as police domestically to working with foreign security forces performing a police role. As a result, the U.S. military has tried to limit its exposure to counternarcotics missions. Although U.S. justice agencies such as the Federal Bureau of Investigation and the Drug Enforcement Administration train and assist Latin American police forces, there is insufficient coordination between Latin soldiers and civilians and no efficient way to transfer U.S. military assets to foreign civilian use. Furthermore, efforts by the State Department to jury rig a counternarcotics aid program have resulted in bureaucratic delays, bungled deliveries, and the provision of useless equipment--such as outdated ammunition to Colombia and defective helicopters to Mexico.¹⁷

Even though the development of a free trade agenda and the gradual demise of statist, import-substitution economies during the past 20 years encouraged Latin American nations to lower some tariffs and open some markets, free trade remains mostly a concept, and economic reforms are an ideal yet to be achieved. As Table 1 shows, 9 out of 23 countries have economies that could be considered "mostly unfree,"¹⁹ according to the 2001 Index of Economic Freedom published jointly by The Heritage Foundation and The Wall Street Journal. Moreover, 15 out of 19 Latin American states fell in the "more corrupt" range of Transparency International's Perceptions of Corruption and Bribery Index for 1999.²⁰ Little wonder, then, as the World Bank found, that more than a third of Latin America's citizens get by on less than $2 a day.²¹

The idea of boosting hemispheric free trade to expand prosperity has roots in the senior Bush Administration's Enterprise for the Americas Initiative and Ronald Reagan's presidential campaign in 1980. Following the passage of NAFTA in 1993, however, U.S. efforts to expand free trade in the hemisphere lay dormant, denying U.S. consumers access to Latin American goods and costing U.S. firms billions in export opportunities. President Clinton waited until November 29, 2000, to seek a bilateral free trade agreement with Chile--six years after he had suggested it at the Miami Summit of the Americas.

Predictably, such flagging leadership strengthened the grip of such sub-regional trade blocs as Mercosur, Caricom,²² and the Andean Community,²³ all of them protectionist customs unions that restrict trade beyond their member markets. To reinforce its hold, Mercosur reportedly will now require its member nations to negotiate all of their bilateral agreements through the bloc--a move that could weaken their trade prospects.24 This could also affect the implementation of new bilateral ties beyond the agreement currently under negotiation with Chile.²⁵

Even with lower tariffs, broad-based prosperity would continue to be elusive because of the lack of sound fiscal management. Although there are stellar performers like Chile and El Salvador, most countries have taken only half-steps toward reform.

• In the 1990s, Argentina tamed hyperinflation by pegging the peso to the U.S. dollar. It still managed to sink into deep recession, thanks to excessive public spending sustained by high taxes that suffocated private-sector activity.

• In 1998, Brazil obtained a $41.5 billion "precautionary" bailout from the International Monetary Fund to stabilize its currency. But when it failed to cut spending, its currency lost 40 percent of its value against the dollar.²⁶

• Neighboring Ecuador and Venezuela traditionally have restricted trade and competition while siphoning revenue from their nationalized petroleum industries to pay for subsidies and entitlements. As a result, Ecuador's economy collapsed in January 2000, and Venezuela has experienced an average per capita GDP growth rate of zero since 1990, despite a dramatic rise in oil prices from $9 to nearly $30 a barrel.

Prosperity is blocked at the local level when businesses and markets are restricted. Moderate or greater regulatory burdens have taken their toll in 20 out of 23 states. In Mexico, liberalized trade under NAFTA and fiscal restraint have produced an impressive 15 percent increase in GDP over the past five years; yet living standards remain at 1970s levels.²⁷ In his campaign for president, Vicente Fox blamed restrictions on foreign and domestic investment, overregulation of small businesses, and the practice of granting monopoly licenses. Throughout the region, prohibitive collateral requirements, 20 percent to 30 percent annual interest rates on loans, and steep down payment requirements commonly restrict access to commercial loans. Inadequate protection of property rights also makes it difficult for small entrepreneurs to use their property for collateral or to sell it to raise capital.²⁸

Unreasonable regulations merely encourage people to circumvent the law or buy off the authorities. To date, there have been some outside efforts to curb such practices. In 1999, the Organisation for Economic Co-operation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions entered into force. Three countries in the Americas--Canada, Mexico, and the United States--have ratified it. For its part, the Organization of American States has negotiated a well-intentioned but non-enforceable Inter-American Convention Against Corruption. Though ratifying such conventions signals reform-minded goals, real progress will be made when commercial and criminal codes are modernized. The United States should encourage such reforms while reinvigorating efforts to expand free trade.

Promote more effective civic education programs as a public diplomacy effort to inform citizens of their rights and responsibilities in democratic societies where such concepts are poorly understood or at risk. These people-to-people exchanges should bring subject experts together with teachers, community leaders, and journalists, as well as general audiences, to increase understanding of the principles underlying democratic governance.⁴⁵ The State Department should provide strong senior-level support and reallocate resources as necessary to its public diplomacy bureau to ensure that these programs are successful.

In addition, because citizens cannot make informed judgments and take control of government without the ability to read, write, and understand basic political concepts, efforts to improve levels of education also should be a goal, especially in regions where citizens have less than five years of primary schooling, on average (see Table 1). To that end, USAID should reallocate some of the money it spends on other projects to address the more basic need of helping populations become educated enough to help themselves.⁴⁶ Rather than sending aid to bureaucratized education
ministries, USAID should channel assistance through NGOs to provide educational materials, improve literacy, and promote the decentralization of inefficient bureaucracies.

Building Cooperative Defense Partnerships

Continue Defense Department training assistance and grant aid to modernize the military capabilities of democratic allies in the region to protect trade and shipping routes, counter terrorist threats, conduct search and rescue operations, and respond to natural disasters, such as the recent earthquake in El Salvador. The Panama Canal remains an important link for commercial cargo and U.S. and allied naval vessels. The Administration and Congress also should consider helping Panama develop and train a security force to protect the canal against terrorist attacks. And they should offer to help Panama bolster its border defenses to deny safe haven to Colombian bandits who traffic in drugs and arms in the eastern Darien province.

Promote partnerships to counter emerging threats
The United States and Latin America may not be ready for a hemispheric cooperative defense alliance like the North Atlantic Treaty Organization (NATO), but Washington should encourage cooperation to mount a more effective defense against transnational crime and to promote the interoperability of forces. The U.S. Southern Command should use training opportunities to promote common military standards, similar to those used by NATO, and better civil-military relations to build confidence between civilian leaders with little experience working with the armed forces and military institutions that are mistrustful of civilians. Washington should facilitate the development of protocols to enhance coordination between the armed forces and civilians at a sub-national level and between regional allies on threats that require both police and military action. These protocols should address such topics as jurisdiction, intelligence-sharing, and responsibilities during interdiction operations.

U.S. lawmakers should work with the Departments of State, Defense, and Justice to resolve the dilemma of how best to transfer equipment and supplies to this mix of foreign law enforcement agencies and militaries. While the State Department's Bureau of International Narcotics and Law Enforcement Affairs (INL) may be a good place to coordinate policy, State's lack of financial and management expertise has slowed the timely delivery of assistance to the Colombian National Police and at times has jeopardized the crop eradication program. Since the mission of the State Department is diplomacy, not program administration, expert management teams should be detailed from the Pentagon and USAID to ensure prompt delivery of assistance under the INL's overall guidance.

Modernize multilateral security mechanisms
The United States should assess the level of interest among its Latin American allies in updating the Rio Treaty and establish a high-level forum for planning strategies against transnational threats. While the Organization of American States might provide an obvious platform, its members in the past have avoided discussing substantive matters like Plan Colombia. A better approach might be to suggest the integration of civilian law enforcement, international finance, and Inter-American Drug Abuse Control Commission (CICAD) personnel into periodic hemispheric defense ministerial meetings.

Promoting Free Trade and Economic Reform

Grant fast-track negotiating authority to the President
Latin American leaders have expressed frustration that the agreements they sign with a U.S. Administration could get bogged down in Congress.⁴⁷ Without fast track, it would be more difficult for the President to conclude any trade agreements with Latin American countries; few will be inclined to invest their time or effort in working out agreements that may be radically altered by Congress. The Administration's ability to negotiate bilateral free trade accords will be seriously hampered at best. The Bush Administration should move quickly to secure fast track and use it to finalize bilateral trade accords beginning with Chile (see below).

Promote a self-selecting global free trade association (GFTA) model for trade expansion and encourage other countries to commit to reforms that would enable them to join
⁴⁸ While the White House and Congress should move quickly to enact the free trade agreement with Chile that President Clinton proposed last year, they should do so as a steppingstone to establishing a GFTA and avoid any complicated and costly protocols on labor and the environment that would work against true trade liberalization. Once the bilateral agreement has been signed with Chile, the United States should announce the formation of a GFTA and invite Uruguay to join by signing a free trade agreement--provided it takes measurable steps to reduce excessive regulation. The United States should quickly establish new trade incentives for the region and explain why a free trade association makes more sense than does a protectionist model like a customs union.

Support regulatory reform in Latin America that promotes property rights and greater banking competition for small consumer loans to enable small businesses to thrive
The United States should promote this goal by (1) advocating it in forums like the upcoming Summit of the Americas; (2) providing expertise through active public diplomacy programs; (3) persuading the World Bank and Inter-American Development Bank to condition loans on measurable progress in implementing reforms; and (4) assuring elites, through such groups as chambers of commerce, that removing barriers to competition will actually expand markets.

Urge Latin American states to ratify the OECD Convention on Combating Bribery of Foreign Officials in International Business Transactions
The United States, Canada, and Mexico have already ratified it. The Bush Administration should work to persuade countries to enact statutes against bribery and corruption where needed and institute policies that promote transparency in government and business.

Dealing with Specific Concerns

In addition to pursuing these broad strategies, the Bush Administration will need to meet pressing challenges in the region and implement short-term policies. For example, it should:

Urge the Colombian government to place conditions on the peace talks in order to end guerrilla violence and banditry, and reallocate U.S. development assistance under Plan Colombia to increase the resources going to criminal justice and police institutions in order to help the government extend its authority into the countryside to protect citizens from violence. At the same time, U.S. efforts to train and professionalize both Colombia's police and Colombia's armed forces should continue.

The Bush Administration should reconsider its predecessor's unconditional endorsement of the flawed Colombian peace process. It should urge Colombia to regard both insurgents and paramilitaries as illegal armed groups and establish objectives to disband them. The goal should be to end the violence and find a way to give dissidents a competing voice in a pluralistic system. The Administration should stress the importance of government reforms that bolster the criminal justice system and increase domestic security. In addition, as noted above, the United States should shift resources to increase justice-sector aid in order to help the Colombian government establish an effective presence in the municipalities plagued by violence.

The Administration should support the training of government human rights monitors who scrutinize the activities of all armed groups, as well as the government's forces, to bring a more complete picture of abuses to public attention and institute accountability in the justice system. Some public diplomacy and civil society projects should be targeted at Colombia's economic and political elites to encourage them to support a stronger, more competent government.

Finally, Washington should press European states to contribute their fair share to Plan Colombia.⁴⁹ Europe is third in cocaine consumption behind North and South America, and trafficking there contributes to Colombia's problems.⁵⁰ So far, the European Commission of the European Union has agreed to give only $250 million of $2 billion requested under the plan.⁵¹

Foster cooperative partnerships with Colombia's neighbors to improve interdiction of drug bandits, reduce border violence, and address other festering political and economic problems. Interdiction and development assistance now focused on Colombia should be restructured to send some of it to Colombia's neighbors to strengthen government authority in border areas. Brazil, Ecuador, and Peru should be encouraged to cooperate with Colombia by denying safe haven and supply routes to outlaws.

Increase contacts with Venezuelan democrats through public diplomacy programs, and provide platforms for them to reach new audiences both within and outside of their country. The Administration should refrain from drawing attention to Venezuela's antagonistic president by unnecessarily criticizing him, but it should reinforce economic and security partnerships with the surrounding democracies and build a consensus for condemning his mischief in multilateral settings. The Administration should look for ways to reduce America's reliance on Venezuelan oil, perhaps by purchasing more from allies such as Mexico and Canada, while studying exploration and conservation strategies. As long as demand and prices are up, Chávez can use the revenue from oil sales to finance his increasingly autocratic government and make trouble for his neighbors.

End the policy toward Haiti of personally supporting leaders, deny assistance to corrupt government entities, and help Haitians become more involved in their government. The United States should condition friendly relations with Haiti on the regime's willingness to enact democratic and free-market reforms and to cooperate on bilateral matters such as drug interdiction. At the same time, the Administration should hold Haitian officials accountable for their actions and revoke visas and freeze U.S. bank accounts of anyone involved in criminal or corrupt activities. The Administration should also deny direct U.S. assistance to Haitian government entities and to programs that are unlikely to survive frequent institutional upheavals and pilferage.

Washington should increase institutional contacts with democratic elements of civil society in Haiti through public diplomacy international visitor programs and grassroots party-building initiatives that are currently being funded by the National Endowment for Democracy. For a country in which the average adult has only 1.7 years of primary schooling, Washington should promote the efforts of NGOs to raise the level of basic education and put more citizens on the road to self-determination.

Push the Cuban government to respect human rights, support open U.S. relations with Cuban citizens, and increase the amount U.S. citizens can send to them. The Bush Administration should put the burden of change back on Castro's shoulders and insist that his regime adhere to international human rights principles. The Administration should pursue a Reagan-type public diplomacy strategy that aggressively calls attention to abuses of human rights as well as to the regime's economic failures. It also should help boost outlets for reports from independent Cuban journalists, strengthen Radio and TV Marti's signal, and actively encourage donations of books and periodicals for Cubans who have no access to them in the closed market. Using the bully pulpit, the Administration should make clear that U.S. policy supports targeted contacts between American civil society and ordinary Cubans, such as increased academic, artistic, and research exchanges, as well as contacts between churches, local chambers of commerce, Rotary Clubs, and others. And it should require reciprocity from Havana when Cuban officials seek to visit the United States to lobby for changes in U.S. policy.

The Administration should lift the U.S.-imposed ceiling for remittances to ordinary Cubans from $100 per month to $1,000, which would give them greater buying power relative to state workers and the nomenklatura. It should permit Americans to sell food, medicine, and other soft goods like clothing to the Castro regime on a cash-and-carry basis only, to trigger changes in Castro's policies in order to pay for them. Credit could be earmarked for sales to private Cuban businesses as they are permitted to exist; the government could have access to credit once it enacts political and economic reforms. Washington should allow Americans to enter joint ventures with the Cuban state, provided that the regime allows them to hire whomever they wish and abide by principles that guarantee employees freedom of association on the job and equal access to products and services provided by the venture.⁵² Washington should convince other nations to institute the same policy.

Castro may be unwilling to make changes as long as he is in command, but such strategies focus attention on ordinary Cubans and widen space for independent thought and economic activity. Moreover, they provide a guideline for an eventual transition government.

Conclude the free trade agreement with Chile proposed late last year. The Bush Administration should use this agreement to announce a global free trade association and then invite other nations, such as Uruguay, to join once they meet the criteria.⁵³ Adopting this strategy would help America encourage less-free countries that desperately need access to developed markets and foreign investment to liberalize their economies. It also would give President Bush an opportunity to reestablish U.S. leadership in hemispheric free trade and lead the region away from current protectionist models.

Promote reforms in Southern Cone states through more active engagement. The Administration should urge Argentine President Fernando de la Rua, for example, to enact strong anti-corruption measures. Although Argentina has gone some of the distance toward market liberalization, corruption and high taxes undermine public confidence and private investment. The Argentine economy contracted 3.5 percent last year, and unemployment climbed to nearly 15 percent.⁵⁴ In December, de la Rua agreed to cut federal salaries and deregulate the health industry to secure a $39.7 billion loan from the International Monetary Fund. Without deeper reforms, however, such loans are not likely to produce a turnaround.

Washington should quietly support the measures of Brazilian President Fernando Henrique Cardoso to reform the state and open its economy. Factions that favor liberal democracy and open markets are in the minority, and elections in 2002 may turn Brazil's focus decidedly inward and leftward. The United States should suggest the possibility of trade incentives to encourage open markets and, eventually, a bilateral free trade agreement.

The Administration should continue to try to interest Paraguay's democratic leaders in political and economic reform at a time when the country's nascent democracy is vulnerable to transnational crime. Development support should continue for election monitoring, civil society programs, and judicial reform in order to strengthen political institutions and establish the rule of law.

Establish a working relationship with the new Mexican government; focus on improving border relations, applaud political and economic reforms, and challenge Mexico to sever the link between its cartels and Colombian drug suppliers. A more prosperous, democratic Mexico is clearly in the interests of the United States. Fortunately, Mexico under President Vicente Fox is more likely to be engaged as an eager partner in solving common problems and achieving shared goals than as a prickly adversary. President Bush can take advantage of this opportunity by improving U.S. cooperation along the 2,000-mile border and by working closely with the Fox administration to establish a new bilateral agenda.

The Administration should charge the Department of Justice and the U.S. Treasury with fully staffing customs and immigration units along the border, and ask the Treasury to fulfill its commitment to help the North American Development Bank streamline loans to improve border infrastructure. Although cooperation is adequate between the United States and Mexico, better coordination is needed at all levels of the U.S. government to ease congestion for travelers, improve sanitation, and plan for future growth. The Administration should work with Congress to enhance U.S. entry procedures in order to reduce unsafe illegal border crossings, and should explore alternatives policies toward Mexican migrant laborers as the Fox internal reforms take hold.

The Administration should challenge President Fox to improve counternarcotics cooperation by cutting the link between Mexican cartels and Colombian drug suppliers. It should ask Congress to make the annual drug certification exercise a simple reporting requirement devoid of automatic sanctions, rather than a media event. The process was discredited when the Clinton Administration used one standard to decertify Colombia and another to certify a previously uncooperative Mexico. Finally, the White House and Congress should encourage President Fox's willingness to champion democratic and free-market reforms elsewhere in the region, particularly through Mexico's relations with Cuba and Venezuela.

Conclusion

Most of Latin America is better off today than it was 20 years ago, yet the progress made during the 1980s in expanding democracy and opening markets is now at a standstill and could slide backward. The Bush Administration must put active relations with America's southern neighbors back on track. Helping Latin Americans to consolidate democratic reforms and dismantle protectionist barriers to trade will offer an unprecedented opportunity for the people of both the United States and Latin America to broaden hemispheric prosperity.

At the same time, the defense paradigm that assumes a U.S. military security blanket over the region must be replaced. It neither addresses new transnational threats nor recognizes the growing interdependence of some Latin American states with the rest of the world.

Only Latin Americans can be the true authors of their success; but the United States should catalyze and support local efforts to strengthen democratic institutions, reduce corruption and crime, build cooperative security, and advance free trade. President Bush must waste no time in reinvigorating relations with Latin America; indeed, the window of opportunity may be closing. At the third Summit of the Americas to be held in Quebec City, Canada, on April 20-22, he should lay out his vision for a new U.S.-Latin America partnership that will benefit people throughout the hemisphere.

--Stephen Johnson is Policy Analyst for Latin America in the Kathryn and Shelby Cullom Davis Institute for International Studies at The Heritage Foundation.

Endnotes