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| John Hamilton, Deputy Assistant Secretary
for Inter-American Affairs Statement before the Subcommittee on the Western Hemisphere House International Relations Committee Washington, D.C., June 25, 1997 U.S. Department of State |
Mr. Chairman:
I am delighted to appear before the Western Hemisphere Subcommittee. With the President's visit to San Jose, Costa Rica having taken place only last month, a review of developments in Central America is especially opportune.
My testimony begins with an overview of trends in the region and of elements of continuity and change in our relationship. It touches on emerging patterns and issues in various sectors--trade, immigration, human rights, and law enforcement--discusses recent events in several countries of the region, and highlights the results of the San Jose Summit.
It is momentous and heartening that, with the signing of Guatemalan Peace Accords last December 29, all of Central America was at peace for the first time since the early 1960s. Moreover, all governments have been chosen in elections which domestic and international observers alike judged free and fair. More needs to be done to consolidate democracy fully, but the institutions of democracy such as the press and other non-governmental organizations constituting civil society are vigorous, free, and growing in influence and capability. In every Central American country, respect for human rights has greatly improved and continues to get better. Civilian governments are asserting increasingly effective control over military and police establishments. By and large, the military institutions themselves favor the changes underway. Spending by national governments on education is currently about 4% of GNP; in contrast, spending on the military is now only 1.5% of GNP and trending down.
The economies of Central America are, on the whole, performing well, with solid economic growth. Inflation appears to be largely under control, at about 12% on average. Debt service burdens have been reduced through a combination of outward-looking, market-based economic policies, reschedulings, and occasional forgiveness. Parastatals have been privatized and public sector employment rolls trimmed. The Central Americans have greatly liberalized their financial sectors. This is reducing capital flight and resulting in a more efficient allocation of resources. Central America's average external tariff level has been reduced by about two-thirds since the 1980s. Our exports to the region in 1996 totaled $7.8 billion, double that of 1990. In turn, Central American exports--non-traditional exports especially--continue to show strong growth. In recent years, non-traditional exports from Central America have expanded at an annual rate of 12%.
Regional integration is increasingly a reality. The Central American Common Market (CACM), moribund during the 1970s and 1980s, has acquired new energy and momentum, with an outward-looking focus. Trade within the region and with the rest of Latin America is up sharply. Negotiations between CACM members and Mexico on the formation of the free trade area are underway. Political cooperation is keeping pace with economic integration. The Central American summit process, born of the regional crisis of the 1980s, has been institutionalized in the System of Central American Integration (SICA), with its headquarters in San Salvador. The Central American Democratic Security Treaty of 1995 provides a framework for confidence-building measures among military and security forces. Under its rubric, the Central Americans are pooling resources in a Central American Police Academy in San Salvador. We will support that promising initiative with technical and training assistance.
There are some less positive trends. Crime--much of it violent--is up everywhere in the region. This is particularly the case in Guatemala and El Salvador, but even Costa Rica has not been immune. There are multiple causes: persistent high unemployment; the continued, easy availability of weapons in the aftermath of internal conflicts; and, the growth of organized crime--not only in narcotics but in areas such as alien smuggling, stolen cars, and other contraband. Crime may also be fueled by young returnees or recently deported criminals who acquired "skills" on the streets of our large cities.
Some in Central America claim that economic liberalization has had a cost, with not all citizens gaining materially better lives despite positive economic growth. It is true that life remains precarious in the region, due largely to poverty and all that it entails. Only Costa Rica has a tolerable infant mortality rate at 10.3 per 1,000 live births (the U.S. rate is 7.8). The other countries range from 34.7 in Belize to 52.2 in Guatemala. All except Costa Rica have an average life expectancy of less than 69 years. Illiteracy remains a drag on the region's economies; more than 40% of the populations of Nicaragua and Guatemala are illiterate. But, in general, we believe that the policies that the Central Americans are adopting are producing positive benefits for all their citizens by reducing inflation, freeing up national resources for social investment, stimulating trade, and attracting foreign capital.
Leads to an Evolving U.S.-Central American Agenda
As Central America moves beyond the crisis of the 1980s, our foreign policy agenda has elements of both continuity and change. High-level engagement continues and, indeed, is intensifying. When the President met in May with his Central American colleagues, he did so for the third time. The Vice President has visited the region twice; Secretary Christopher met with the region's leaders last year in El Salvador. Secretary Albright met with all her Central American colleagues here on April 1 and visited Guatemala on May 4.
Increased engagement is complemented by one of the most positive legacies of the nearly two decades of crisis: the intensive, continuing involvement in Central America of our academic, religious, philanthropic, human rights, and other nongovernmental organizations. From a United States foreign policy perspective, this is all to the good.
Aid is still important to buttress democracy and promote sustainable development--especially in Guatemala, Nicaragua, and El Salvador. Honduras, too, needs our assistance. (We have closed our bilateral USAID missions in Costa Rica and Belize but we continue cooperation with them through regional programs.) The highest current priority in our aid programs--with good reason, we believe--goes to implementation of the Guatemalan Peace Accords. Economic aid overall is way down from the peak years of the past decade. During the three-year period from 1985 to 1987, our economic assistance (Development Assistance and Economic Support Funds) to the region totaled $1.9 billion; from 1995 to 1997 our economic aid amounted to $360 million. We continue modest international military education and training programs (largely "expanded" IMET), but we have provided no foreign military financing to any country in Central America since FY 1993.
It is noteworthy, however, that the amount of economic aid we provide to the region is not at the forefront of the Central Americans' agenda with us. The Central Americans are moving beyond a focus on aid to seek a forward-looking, more mature political relationship with the United States. They are more concerned with the quality of our dialogue and the depth of our relationship than with securing increased amounts of aid; that is why they were delighted by the President's meeting with them May 8. They have become believers in the benefits to their societies of restructured economies and open markets. They are participating aggressively--indeed, showing real leadership--in the process underway to achieve a Free Trade Area of the Americas (FTAA) by 2005. They are active members of all eleven working groups and chair three of them: Intellectual Property (Honduras); Investment (Costa Rica); and Market Access (El Salvador). All are members of the WTO (except Panama, which is joining); they are committed to implementing their Uruguay Round obligations and, while we do have significant problems in certain areas (expropriations and protection of intellectual property), there has been progress there, too.
Let me now turn to recent events in several of the countries of the region which illustrate some important recent trends--the end to armed conflict, the strengthening of democratic processes, and maturing bilateral relationships with the U.S.
The Peace Process in Guatemala
It has been a little less than six months since the Government and the URNG (Guatemalan National Revolutionary Unity) guerrillas signed the final peace accords to end the country's 36-year internal conflict. We are very pleased with the progress made by the government, the URNG, and the Guatemalan people toward the implementation of the multifaceted political, economic, and social reforms mandated by the accords. Much has taken place since December 29.
Three thousand former URNG combatants turned in their arms. The presence of 145 UN military observers, including 5 U.S. observers, helped establish the atmosphere of confidence which permitted a successful operation. But the real credit goes to the Guatemalans. Government officials, URNG leaders and soldiers, and the people living in the formerly conflictive zones worked together to carry out a quick, peaceful and well-organized demobilization. With significant assistance from USAID and other donors, demobilized guerrillas are now receiving vocational and academic training to prepare them for reincorporation into productive civilian life.
At the same time, the Guatemalan military is carrying out profound changes to comply with the accords. The military's goal of a one-third reduction in personnel by the end of 1997 is being met through phased monthly drawdowns. One military zone command has been disbanded; three more will be deactivated by the end of June. The military's responsibility for internal security has formally ended. For the first time in 36 years, Guatemalans and visitors can travel freely throughout the country without encountering military or guerrilla roadblocks.
The termination of the military's responsibility for internal security highlights one of the most serious problems in Guatemala today--the lack of a trained, reliable civilian police force capable of ensuring a reasonable level of public security. The weakness of the police as an institution, together with an antiquated, legalistic and overburdened judicial system, created a situation of de facto impunity that is only now--under the Arzu government--beginning to yield to the rule of law. Restoring public confidence in the criminal justice system is a major challenge. As part of the peace accords, legislation was passed in February creating a new, unified National Civilian Police, incorporating elements of the former national and treasury police. Training of new recruits and retraining of officers is now underway; the first class of 1,200 cadets will graduate in July. Rebuilding a strong civilian police force is a difficult and long-term task. Guatemala is off to a good start.
A crucial issue in peace accords implementation is, of course, human rights. There has been progress here--indeed, the signing of the final peace accords would not have been possible without the significant improvement in respect for human rights achieved in the first year of the Arzu government. The dismissal of corrupt and abusive military and police officials, the disbanding of paramilitary patrols (PACs), and the passage of legislation requiring military personnel to be tried in civilian courts for non-military offenses were important steps.
Serious human rights problems remain, however. Threats, unlawful detention, and mistreatment of detainees still occur. Widespread violent crime often makes it difficult to determine whether there is a political motive behind individual incidents. But fortunately, threats and politically motivated crime are now the exception rather than the rule, and the government is committed to investigating abuse cases and prosecuting those responsible. The support of the international community is crucial to the government's efforts. MINUGUA--the UN Verification Mission--has worked in Guatemala since 1994 to investigate alleged human rights abuses and to strengthen organizations in Guatemala dealing with human rights.
One of the most significant aspects of the peace accords is the commitment of the government to fully integrate into national life Guatemala's indigenous peoples--about 55% of the population. Three commissions established by the peace accords are now working on Officialization of Indigenous Languages, Educational Reforms, and Identification and Preservation of Sacred Sites. Indigenous representatives serve on all the other commissions working on peace accords implementation. One of the three commissioners on the Historical Clarification Commission, mandated by the peace accords to investigate and report on abuses committed during the 36-year war, is a respected indigenous woman educator. The recognition that indigenous peoples should be represented in all government bodies dealing with political, economic, and social issues is a major step forward that will help bring about a more equal treatment of the indigenous population.
The peace accords also call for significant economic reforms, including the doubling of government spending on health and education and a more equitable distribution of government services. The international community is strongly supporting peace accords implementation, but a significant portion of the funding for reforms has to come from within Guatemala. With one of the lowest tax payment rates in the hemisphere--tax revenues are equivalent to only about 8% of GDP, while the hemispheric average is closer to 20%--the Guatemalan Government needs to move quickly to increase tax collection within the context of a broader economic reform effort to provide the resources necessary for implementation of all aspects of the accords.
The challenges facing Guatemala are daunting, but it is clear that peace accords implementation is off to a good start. We are optimistic that, with the support of the international community and with the political will to move ahead on human rights, police professionalization, and tax reform, Guatemala will be able to fully implement the agreements and to play an increasingly larger role in hemispheric economic and political affairs.
Democratic Transition in Nicaragua
We agree with the conclusion reached by virtually all international and domestic observers that the Nicaraguan general elections of October 1996 were free, fair, and reflected the will of the Nicaraguan people. Dr. Arnoldo Aleman won the Presidential election in the first round with 51% of the vote. He took office in a historic transfer of power from one democratically elected government to another on January 10, 1997. Voters also chose the Vice President, all members of the unicameral National Assembly, mayors, and Central American Parliament representatives. President Aleman's Liberal Alliance won a plurality with 42 of the 93 National Assembly seats (two deputies have since broken ranks with the Liberals), while the Sandinista FSLN won 36 seats. Nine smaller parties won the remaining 15 seats.
Defeated FSLN Presidential candidate Daniel Ortega, who received 38% of the vote, first alleged electoral fraud, then eventually accepted what he called the "legality but not the legitimacy" of the elections. However, it is unclear if the FSLN is really willing to work within the political system. Mid-April street demonstrations, involving relatively few demonstrators but disruptive to commerce, were a cause for concern; so is the FSLN's threat to renew such coercive tactics if its demands on the Aleman government are not met. While the Aleman government has met these tactics with commendable restraint, it has not allowed itself to be intimidated.
Barely five months after this historic democratic transition, the Aleman Administration is pursuing an ambitious agenda of fostering economic growth, resolving Sandinista-era property disputes, and strengthening the rule of law. Aleman has expanded his predecessor's free market policies with positive results. Nicaragua is now in its fourth consecutive year of economic growth--the GDP could rise by over 6% this year--and an export boom is in full swing. In May, Aleman's supporters in the National Assembly overcame opposition from both the left and the right to approve a landmark tax code. This code is designed to raise revenues by closing traditional tax loopholes and encouraging investment through greater transparency.
President Aleman, like his predecessor, inherited responsibility for the thousands of property disputes that stem from the Sandinista confiscations of the 1980s. As of April 30, 1,475 of the property claims that involve American citizens have been resolved. Another 1,027 U.S. citizen claims, however, are still outstanding. In February, I led a U.S. Government team to Managua to discuss the issue with the new administration and to urge a vigorous effort to resolve remaining claims. President Aleman has assured us that he shares our view that claims resolution is critical to strengthening the rule of law in Nicaragua, as well as to encouraging further growth and investment. I made these points again to the Vice Minister of Finance, the government's main action officer on the property issue, during his visit to Washington last month. The claims resolution process, off to a slow start in the first three months of the Aleman Administration, accelerated in April and May.
Continued professionalization of the security forces, and the subordination of the military to civilian government control is another key component of strengthening the rule of law. President Aleman has taken the historic step of naming Nicaragua's first-ever civilian Defense Minister. The National Police won praise for restraint and professionalism throughout a week of Sandinista demonstrations in April. We plan to support these positive trends through two new assistance programs. A proposed modest E-IMET program is designed to train civilians in the new Defense Ministry staff in resource management and the administration of military justice. A small start-up ICITAP program will train the police, public prosecutors, and judicial branch personnel in criminal investigation. The ICITAP program is to be integrated into an ongoing USAID Administration of Justice project that is already promoting judicial reform.
Nicaragua has come a long way since 1990, when a fragile democratically elected government first took office. While Nicaraguans still have many political disagreements, we believe its democratic institutions are strong enough to handle the stresses and strains of a sometimes still tumultuous democratic process. The mandate of the OAS Commission for Verification and Support expires later this month, after the organization spent seven successful years fostering a stable peace and safeguarding the human rights of ex-combatants. It will be replaced by an OAS technical assistance mission. The Nicaragua of today is ready to build a democratic tradition on the foundations laid earlier in this decade.
The Salvadoran Elections
Despite pre-electoral concerns that the March 16 legislative and municipal elections in El Salvador might have been marred by violence or fraud, the process was conducted in a peaceful and transparent manner, according to the reports of international observers, the U.S. Embassy and the media. The governing ARENA party lost ground to the opposition FMLN and other, smaller parties. This demonstration of the strength and diversity of El Salvador's democratic expression lends confidence to our hope that all parties will work cooperatively both in the new Assembly and at the municipal level. In sum, the March 16 elections both reflected and solidified the progress that has been made since the 1992 Peace Accords.
The governing ARENA party lost its edge in the unicameral 84-seat National Assembly, dropping from 41 seats to 28. The party of the former guerrillas, the Farabundo Marti Front for National Liberation (FMLN), jumped from 14 seats to 27, with the rightist National Conciliation Party (PCN) moving up from 4 to 11 seats. Former President Duarte's internally divided Christian Democrat Party (PDC) holds 7 seats; four smaller parties and coalitions make up the balance, with no one holding more than 3 seats. With the dominant parties fighting to a draw, it is likely that the smaller parties will take on additional importance in the legislature.
ARENA also suffered losses in the country's 262 mayoral and municipal council races. Prior to March, ARENA held 207 of the 262 town halls. It now has 111. The FMLN jumped from 13 to 52, capturing 6 of the 14 departmental capital cities, including, as part of a coalition, the national capital--San Salvador. Coming just five years after peace accords that put an end to the 12-year civil war, it is truly remarkable that this electoral sea change was accomplished peacefully and through a transparent democratic process. The March elections represent a major achievement for the Salvadoran people.
The overall success of the electoral process notwithstanding, the abstention rate was, at nearly 60%, quite high. The low voter turnout was widely anticipated and resulted, in part, from a complex registration and balloting process. Several reforms, pending since 1994, would address the deficiencies in the Salvadoran electoral system. These include: the creation of a unitary voter/personal identification document; the professionalization of the staff of the Supreme Electoral Tribunal through the incorporation of a non-political, civil service-style managerial corps; opposition representation on municipal councils; and, residential voting to replace the current, complicated alphabetical system used to determine polling venues.
The U.S. has strongly supported these reforms, which emerged from the 1994 elections, and is still conditioning $10 million in Economic Support Funds on progress in these vital areas. We are encouraged that political leaders across the spectrum, including President Calderon Sol, have made renewed calls to move forward on these electoral reforms in light of the high abstention rates. We intend to continue our support for the Government of Salvador's efforts to implement these reforms in advance of the 1999 presidential race.
Coping admirably with the disastrous economic repercussions of its 12-year war, El Salvador's economy has benefited from a firm commitment to free markets and careful fiscal management. Growth rates averaged 6-7% from 1992-1995, due principally to pent-up consumer demand following the war. The economy slowed slightly in 1996 to 4% GDP growth, with inflation hovering at a manageable 9%. Due in part to substantial bilateral U.S. and international assistance, El Salvador's foreign debt burden is moderate and its debt servicing has been exemplary. El Salvador has excellent relations and active programs underway with the World Bank, the IMF and the IDB, and is an active proponent of the FTAA process. Concurrently, direct U.S. bilateral assistance has dropped off significantly.
One result of the FMLN victory in March has been the National Assembly's decision to revisit the privatization of the national telephone monopoly (ANTEL). The U.S. has supported the ANTEL privatization and we will continue to encourage all parties in El Salvador to work through their differences over the privatization law and move forward with a transparent process that should offer excellent investment opportunities for U.S. businesses and increased competition and telecommunications service for El Salvador. We are confident that the privatization of ANTEL, along with part of the national energy distribution system scheduled for later in the year, will add to the expanding exchange of goods and services between the U.S. and El Salvador. One example of this increased trade: Salvadoran exports to the U.S. alone have risen 500% since 1991.
El Salvador has also been a regional leader on the difficult issue of civil-military relations. Since the Peace Accords, the military has been downsized almost 65% and its mission constitutionally refocused away from internal security. In practice the Salvadoran military has demonstrated its commitment to serve the democratically elected civilian leadership, most recently by its strict observance non-political neutrality in the March elections. The discredited, non-military war-era security forces and police were disbanded in 1992 and a new National Civilian Police established and deployed in their place. While crime and public insecurity brought about by criminal enterprises is a serious problem, political violence in El Salvador is virtually non-existent.
An unintended consequence of its 1982 Constitutional revision currently prevents the extradition of Salvadoran nationals from El Salvador. A small percentage of the large Salvadoran emigre community in the United States has been able to take advantage of this, fleeing back to their homeland when suspected of criminal activity in the United States. A major law enforcement priority for the U.S. has been to eliminate this "safe haven" possibility and our efforts are beginning to meet with success. The Salvadoran legislature recently took the first step to amend its constitution to permit extradition of its nationals. We are continuing to work cooperatively with the Calderon Sol government to finish the constitutional modification, negotiate an updated extradition treaty, and ensure that criminals are brought to justice where they commit their crimes.
Panama: Transition As 1999 Approaches
Preparations for the treaty-mandated transfer of the Panama Canal to the Government of Panama on December 31, 1999 are entering their most intensive phase. The Panamanian National Assembly recently passed the organizational law for the Panamanian successor agency to the Panama Canal Commission (PCC). The vote, which enshrined most of the current successful practices of the PCC in Panamanian law, was unanimous, indicating the Panamanians' desire to keep operations of the Canal out of politics. The Panamanian Government and the PCC will showcase transition activities at the Universal Congress of the Panama Canal this September. There, the international maritime community will be encouraged to comment upon the operation of the canal as it moves into the 21st century.
We are holding informal conversations about the possibility of a continued U.S. military presence with the Government of Panama. In particular, we are reviewing a Panamanian proposal to create a Multinational Counternarcotics Center (MCC). The purpose of the center would be to enhance regional cooperation in combating illicit drug trafficking. Both governments believe such a center would need a U.S. military support element located in Panama to function effectively. The informal discussions have been extremely useful but we have not yet made a decision whether formal negotiations are warranted.
Mr. Chairman, we have had some concerns about the process through which a Hong Kong port operating company, Hutchison Ports Holdings, gained a concession to operate ports at both ends of the Canal. We have looked into this matter carefully. The bidding process conducted by the Government of Panama was, in our view, unorthodox and disadvantaged American companies. We have made those views known to the Panamanian Government on several occasions. However, we do not expect that this commercial transaction will in any way disrupt the free flow of shipping through the canal or pose a threat to U.S. national security.
A Successful San Jose Summit
Mr. Chairman, the positive trends that I have described in this testimony and the overall excellent relations we have with the nations of Central America were given renewed focus and momentum by the May 8 Summit in San Jose, Costa Rica. We consulted extensively with the Central Americans in developing an agenda that met all our interests and Secretary Albright met here with all the foreign ministers from the region April 1 in preparation for the summit.
Several aspects of the Summit merit comment. The meeting first of all underscored the remarkable, positive transformation that has occurred in the region. It demonstrated that our interests in the region today are defined not by the national security concerns of the past, or by the economics and politics of bilateral aid, but by the enduring political, economic, and cultural ties that join our nations in common purpose. The meeting took place not as the response to a building crisis but as the resolution of past crises have created the opportunity for a new, more mature relationship to flourish. The Central Americans came to San Jose not in search of increased aid but in pursuit of a reinvigorated political and commercial relationship. That met our desires precisely and we all left San Jose satisfied that we have achieved it.
The quality of dialogue in San Jose was extremely good--all the presidents afterward spoke of this. Discussions at the summit meeting and a working lunch treated three baskets of issues: democracy and good governance, including subjects such as transnational crime and migration; trade and investment; and sustainable development. Specific outcomes were set forth in the Declaration of San Jose. Let me cite some of its highlights:
Cause For Optimism
The success of the San Jose Summit lends even more credence to the growing sense that there is cause for optimism for the future of Central America. Our bilateral relationships with the nations of the region are as strong as, and perhaps more balanced than, they have ever been. The governments there are committed to further economic liberalization and to the hemispheric economic integration process; they collectively project a growing self-confidence and maturity of outlook. Democratic institutions, from election councils to political parties, are gaining more experience; the militaries are subject to ever more civilian control. Governments have internalized the importance of human rights and the need to root out corruption. The concerns of nongovernmental organizations, ranging from those focusing on indigenous rights to those dealing with the environment, are more frequently being addressed by the public sector. These countries are also genuinely committed to doing more to combat narcotics flows and other transnational crime.
This is not to underestimate the challenges remaining. The roots of democratic tradition in Central America are shallow, economies are not yet expanding rapidly enough to meet the material needs of all citizens, and common crime is on the rise. But when we look how far the region has come in the past decade, the change is startling and extremely positive. There is indeed good cause for optimism. Thank you.
[end of document]
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