MR. REICH: It's always good to come back
to CSIS -- (audio break) -- relationship with CSIS since
then. So I'm always happy to come back. But I also know
that CSIS likes the intellectual exchange, the intellectual
combat that I prefer, rather than just a formal presentation.
I have a formal presentation which I will
share with you, but since the topic of this seminar, breakfast,
is the Southern Cone, what I'd like to do is leave most
of that for the question-and-answer period. There's a couple
of reasons.
There's a bureaucratic reason, and that is
that if I tried to include a lot of stuff on the Southern
Cone in the speech, I would have had to have it cleared,
which means that I wouldn't have gotten here in time.
(Laughter.)
And secondly, it probably would not have
reflected my opinions. The nice thing about Q&A is that
I'll say whatever I want, and then later on I have to explain.
"Why did you say that?" "Oh, well, gee, you
know, it was just a spur-of-the-moment answer to a question."
So there's a method in the madness.
Anyway, I'm happy to be here. And CSIS really
is a catalyst for foreign policy thought and debate in this
town, and I think it adds a good deal to the intellectual
vigor of this city.
Before I get to the Southern Cone, I would
like to share with you a little bit about where we are in
Latin America and where I think we ought to be headed --
be headed. Those are two words. (Laughter.) And then I'll
deal with my impression of Argentina, Brazil, Uruguay. Obviously,
having spent two days in each, I'm an instant expert. I
know almost as much as Ambassador Fernandez Faingold, who
is here.
But, anyway, while on this trip and other
trips to the region, I've encountered a perception which
I think needs to be addressed, that the United States is
not sufficiently engaged with our partners in the
hemisphere. In my view, this perception is
not only untrue, it is impossible and it would be completely
undesirable.
My message is that the United States is engaged
in Latin America perforce of our historical circumstances
and by design. First, we are bound together by shared values.
There is now a consensus in the Americas in favor of democratic
government. This consensus began to emerge more than 20
years ago.
In the late '70s, only about a quarter of
the people of Latin America enjoyed some form of democratic
government. Today all the nations are democracies except
Cuba. We are becoming a community of states based on this
common belief, as was codified in the Inter- American Democratic
Charter that establishes democratic government as the birthright
of all citizens of this hemisphere.
And as you all know, by coincidence, that
charter was signed in Lima, Peru on September 11th of last
year, just as the attack on the United States was taking
place. And Secretary Powell stayed in Lima for another hour
after being called back so that he could personally sign
the democratic charter and illustrate the commitment of
the United States to constitutional rule and democracy in
this hemisphere.
Our shared values are derived from a common
history. The history of the Americas is a history of the
progress of freedom. We struggled for independence here
in the new world. We established democratic governments
here to secure our rights and allow us to explore the opportunities
that this vast and plentiful hemisphere has to offer. No
other region has made such progress and yet has so much
potential.
History tells us that natural and political
geography dictate patterns of trade. Neighbors of like mind
are most likely to be our best trading partners. The U.S.
sells more to Latin America and the Caribbean than to the
European Union. Trade with our NAFTA partners is greater
than our trade with the EU and Japan combined. We sell more
to the Southern Cone, to Mercosur, than to China. You don't
hear that very often in debates about trade with China.
Latin America and the Caribbean comprise
our fastest-growing export market. These commercial relationships
bind the prosperity of the United States with the prosperity
of this hemisphere. President Bush has said that he believes
that the 21st century will be known as the century of the
Americas.
Having been the governor of a border state,
the president sees the nations of this hemisphere as partners
and neighbors. He has been very personally engaged in the
affairs of the region. He believes that emergence of democratic
states in the Americas and the prospects for the growth
of hemispheric trade and development make this a defining
moment.
The United States is engaged with Latin America,
necessarily and happily so. We share values, history and
geography. During the Cold War, American statesmen used
to say of Europe and NATO, "We are there and we are
committed." One might say of the United States and
Latin America today, "We are here and we are committed."
The president believes in the future of the Americas, and
our policy reflects his confidence and his vision.
We have challenges. This is a very exciting
time in the history of the Western Hemisphere. Miguel was
telling me earlier -- he said, "Where did that saying
come from, 'May you live in interesting times?'" And
Ambassador Terry Todman correctly said, "It's an old
Chinese curse." (Laughter.)
Well, we're living in interesting times.
But there are also many opportunities. There are many challenges.
While we're optimistic, we're not naive. The enormous progress
we have made in the past century, in the past 20 years that
I mentioned, has not severed the region from its past.
The ideas of freedom and equality are being
put into the practice of democracy and markets throughout
the hemisphere. But this historic evolution is not without
difficulties or opposition. These are nations that are still
struggling with the legacy of poverty, statism and authoritarianism.
I am confident that the forces of democracy,
however, and freedom are on the right side of history. But
there have been and will be setbacks. The leadership of
the United States is critical to overcoming these obstacles
to progress.
The Bush administration's agenda for our
hemisphere has four goals:
To strengthen security, promote democracy,
encourage responsible governance and stimulate development.
It is often said that security is the first
function of a state.
Since September 11th, no issue has captured
the attention of the public as security.
The attacks on that day were brutal reminders
to all of us of the danger that evil men pose to open and
democratic society, the value of our way of life, and the
necessity of our leadership in the world.
We were very hearkened by the expressions
of sympathy and condolences offered by the people throughout
the Americas. Led by Brazil, our friends in the OAS invoked
the clause in the Rio treaty recognizing the attack on the
United States as an attack on all. We are deeply grateful
for the support of our neighbors in the war against terror.
Our first war of the 21st century is peculiar
to our time. Our enemy is a lethal combination of transnational
criminal networks and terror organizations. Today many challenges
to our values and our interests arise from such combinations,
even here in our hemisphere. Terrorist organizations are
operating in Peru and the tri-border region of Argentina,
Paraguay and Brazil.
In Colombia, narcotics traffickers and terrorists
are waging a vicious campaign of political violence that
kills 3,000 people every year. Colombia can defeat the terrorists,
but it needs help from its friends to do it. They need training,
arms, equipment and intelligence to implement a successful
military strategy.
The United States has a national interest
in the success of democracy in Colombia and the region.
Our values and the future of our hemisphere are at stake.
As President Bush said, quote, "Our first commitment
is to democracy and political freedom. Freedom -- the freedom
to vote, speak, worship and own -- is the great idea of
our time and of all times," unquote.
Terror is not the only threat to democracy
and freedom in the region, nevertheless. Democracy ultimately
rests on the confidence of the people it serves. It is the
responsibility of leaders, not merely political leaders
but all civic leaders, to maintain the trust of the public.
Corruption in the leadership class, motivated by greed for
money and for power, is poison to democracy and inimical
to freedom.
In Latin America, there are countries that
are suffering leadership crises. I do not say that corruption
is unique to Latin America. In my view, moral failings are
evenly distributed throughout the human population. One
only has to examine the front page of the Wall Street Journal
to find evidence of corruption in the United States.
It is incumbent upon leaders to create an
environment in which the darker side of human nature is
held in check and incentives are provided for good behavior.
Absent those restraints and incentives, corruption may run
rampant. As Alan Greenspan observed in his testimony before
Congress only two days ago, the corruption in the corporate
boardroom resulted from a failure of checks on corporate
leaders and frenzied capital markets that offered perverse
incentives to express greed.
Some have suggested that the democratic and
free-market model has failed in certain Latin American states.
That is a misinterpretation of events. The model has no
more failed in Latin America than in North America, Europe
or Asia. The failures that have occurred are the result
of the imperfect and incomplete implementation of democracy
and markets.
The challenge in Latin America is for the
leadership class to overcome the legacy of poverty and statist
governments and eliminate the perverse incentives that the
remaining elements of the old regime still offer.
On my visit to Argentina -- and I'm not singling
out Argentina here; it's just that it was my most recent
visit -- I expressed our sincere desire for economic recovery.
Argentina has been a stalwart ally of the United States
and a champion of democracy in many international fora.
We stand ready to aid Argentina directly and through international
institutions.
But it is incumbent on Argentines to put
forward a sustainable economic program. I am sure they will
do so. Despite their real suffering, the Argentines remain
committed to democracy. That commitment is evidence of their
faith in themselves and their confidence in their country's
future.
Democracy is always a work in progress. It
requires the constant effort of leaders and citizens to
make sure that its institutions are honest and work as they
were intended. That is its great strength and weakness.
There is no perfect democracy, as there are
no perfect people. But democracy is endlessly perfectible.
The challenge is to work continuously toward that end.
To help meet that challenge, the Bush administration
has undertaken to provide incentives for good governance
with a new approach to foreign aid. President Bush announced
the Millennium Challenge Account initiative last March in
Monterrey, Mexico.
We will increase our core development assistance
by over 50 percent over the next three years, $5 billion
added to the $10 billion already existing, resulting in
a $5 billion annual increase over current levels by Fiscal
Year 2006 and beyond. These monies will be directed to those
countries that govern justly and honestly, uphold the rule
of law, fight corruption, invest in their people, and promote
economic freedom.
This is a change from our traditional posture.
We are not just going to provide aid to countries based
on their per capita incomes and their very real needs. We're
going to provide aid to countries to help them get out of
the poverty by promoting social, economic and political
reforms. Governments that protect human rights, that fight
corruption, that institute the right economic policies,
are the ones that will receive U.S. aid. If they don't,
they won't.
Democracy is more than an election. It is
a civic culture. Public integrity, equality before the law,
respect for individual rights, economic opportunity and
healthy political institutions are essential to freedom.
In the absence of any of these, the people suffer and lose
confidence. The practice of liberal government and market
economics is the surest way to a truly civil society.
Furthermore, scholarly studies demonstrate
that there is a strong dynamic relationship between good
governance and economic success. Uruguay, a country with
a tradition of good governance, enjoys the most equitable
income distribution in Latin America and public confidence
in its leadership. Chile, ranked as the top country in Latin
America for fighting corruption and other indicators of
good governance, has benefited from the fastest economic
growth over the past decade in this hemisphere.
Our ultimate goal is an American community
of democratic states prospering together. The Free Trade
Area of the Americas would create the largest free market
in the world, stretching from Canada to Chile. We aim to
include every one of the 800 million people in the Western
Hemisphere. We intend to complete negotiations by January
2005 and fully implement the agreement by the end of that
year. We're sticking to our plan.
The FTAA will give a powerful impetus to
investment, innovation, efficiency and growth in Latin America,
as NAFTA did in Mexico and Canada.
More than half of the three and a half million
new jobs created in Mexico since 1995 are connected to trade.
World Bank studies have documented that developing
countries which trade freely grow their GDP and reduce poverty
faster than developing countries that do not -- faster even
than the developed countries such as the United States.
Since 1995, when Mexico entered NAFTA, when
NAFTA went into effect, Mexico has gone from number 36 in
the world in exports to number eight, in seven years. And
they're poised to become number five very soon if they continue
at the same rate, in just seven years. That is a remarkable
achievement.
By 2005, the Americas will be a $13 trillion
market. Even with a very small increase in growth, just
1 percent, this would produce a tremendous amount of new
income -- say, $130 billion for every percentage. Latin
America would benefit disproportionately from that new income.
Opening the hemisphere to free trade will
provide political benefits as well. Mexico's entrance into
NAFTA heralded unprecedented political modernization. The
prospect of increasing capital investment is an enormous
incentive for freedom -- sorry, for reform. Capital goes
where it is welcomed and where it will be protected from
political risk. The competition for capital demands respect
for individual rights and the rule of law. FTAA can be a
transformational force in Latin America.
I'd like to share some of the anecdotes from
my trip to the Southern Cone. Our ambassador to Brasilia,
Donna Hrinak, had been posted in Brazil before. In fact,
she had a child born in Sao Paulo. She said that there's
a sense of confidence in Brazil today that was not present
when she was last posted there 15 years ago.
That confidence was well-expressed by Foreign
Minister Lafer in a recent editorial. He eloquently argued
that Brazil had nothing to fear from trade negotiations
with the United States and everything to gain. The principal
export of Brazil today, if I'm not mistaken -- and there
are colleagues here from USTR and others who will correct
me -- is airplanes.
And we're their largest market. Believe me,
if there's one country that has nothing to fear from entering
and competing in the world market, it is Brazil.
In Argentina, I believe the problem, frankly,
in Argentina is a crisis of confidence not unlike that which
we encountered in this country in the 1930s. I repeated
publicly in some of my press and other appearances in Buenos
Aires the phrase of President Franklin Roosevelt that the
only thing we have to fear is fear itself, because I do
believe that the Argentines have lost confidence in the
political and economic model.
Once they regain that confidence -- and we're
beginning to see a little light at the end of the tunnel
-- I believe that Argentina has all of the natural and human
resources to recover.
Uruguay is a country that has been buffeted
by the economic misfortunes of its two very large neighbors.
I believe 50 percent of Uruguay's exports used to go to
Argentina. And with Argentina's collapse, economic collapse,
which is unprecedented, Uruguay has suffered, not only in
terms of exports, but also tourism is a major industry in
Uruguay.
The Argentines this last summer, the southern
hemisphere summer, did not come to Punta del Este and other
places in Uruguay as they did. They're suffering on a number
of levels in Uruguay. But they do have the political structures
and the commitment to democracy that I think will help them
overcome the temporary financial crisis.
We're also helping, by the way. We're helping
Uruguay. We're helping Argentina bilaterally, multilaterally.
The United States has supported, for example, the loan that
Uruguay received from the International Monetary Fund, which
was significant and helped to stabilize the markets. The
president exempted Argentina from the steel tariff that
he imposed earlier in the year on a number of countries,
as he exempted Mexico and Canada, because Mexico and Canada
are part of a free trade agreement with the United States,
and as trading partners they deserve special treatment.
Well, so does a good friend and ally like Argentina, even
though it is not yet a member of a free trade agreement,
but precisely because they are going through these difficult
problems. But we do believe that the United States does
not have the resources by itself to help all of the countries
of the region in view of the magnitude of the problem. So
we have urged all of the countries to work with the international
financial institutions to develop their own economic plans
that we can support.
I think the future of the hemisphere -- I
am actually confident in the future of the Southern Cone,
and I would look forward to the question-and-answer period.
I know this is probably a funny time to say that, but I
think we are reaching, if we haven't already reached the
bottom of the trough on the economic downturn, and are prepared
for a recovery of the economies of the Southern Cone. There
could still be a little bit of some more turbulence, but
I sense that the confidence that Donna Hrinak said is present
in Brazil is going to extend to the south -- and to the
north, as we have other problems with other countries in
the region as well -- and now we need it to extend also
to the west, and the countries will come out.
We are looking for confident partners with
which to build a better future. We believe they are there.
I look forward, for example, to Brazil and the United States,
assuming the co-chairmanship of the Free Trade Area of the
Americas negotiations in November. Brazil and the U.S. will
be the co-chairs. Working together with our partners in
the region, I believe we can fulfill the promise and potential
of the Americas. By the way, I don't want to leave out Paraguay.
It's part of the Southern Cone. I did not have
an opportunity on this trip to visit Paraguay.
I did call the foreign minister ahead of time to explain
that because of time limitations I would visit Paraguay
on a very near-term trip to the region. As you know, Paraguay
has been having also economic and political problems. The
government has our political support. The government has
lifted the state of exception. They did not establish a
state of emergency because of some of the riots that were
taking place in the last few days. So we are confident that
they will overcome this particular short-term crisis. But
they have the same -- a lot of the same systemic economic
problems as the rest of the region. But we are not ignoring
Paraguay by any means.
Let me stop there. I appreciate your attention,
and I'd be happy to take any questions that you might have.
Thank you.
MR. DIAZ: Thank you. We've got about 40 minutes
of question and answers. I'd ask that you identify yourself
when making the questions. We'll start with Paolo.
Q Mr. Secretary, Paolo Sotero from O Estado
de Sao Paolo, Brazil.
Majority Leader Armey of the House of Representatives
conveyed yesterday his pessimism about the approval of TPA,
answering a question about the possibility of the TPA bill
being conferenced out of Congress before the August recess,
as President Bush asked for. He said, "I don't believe
in miracles like that since the tooth fairy" -- or
something to that sort.
Assuming that his pessimism is well found,
and we know that it's not conferenced out now -- it will
become increasingly difficult as the elections here approach
-- how do you see the challenge of trade integration in
the case that the Congress continues to refuse giving President
Bush fast-track authority?
MR. REICH: Well, I do believe in miracles
-- and the tooth fairy is not a miracle, it's a myth. There
are differences. (Laughter.) So I -- obviously Majority
Leader Armey knows the situation on Capitol Hill better
than I do. But I work for the president, and the president
insists that we need to have this negotiating tool, the
TPA, as soon as possible. We should have had it by now,
and especially when you go on a trip such as the one that
I just went to, and people look -- you see people look to
the United States for the leadership that we should exert
and that is very much in our interests to exert. And you
come back and realize that some parts of our Congress or
some members of our Congress are still engaged in utilizing
very important foreign policy instruments, such as TPA,
for frankly very partisan or parochial political interests,
it is very frustrating.
I -- you know, this country used to take
pride in the fact that politics stopped at the waters edge,
and I think we need to go back to that principle. We need
trade promotion authority. We need a Free Trade Area of
the Americas. It is in our national interests. Even if we
weren't interested in Latin America for political, or strategic
or security reasons, which we are -- we couldn't ignore
Latin America for commercial reasons. As I mentioned in
my speech, they're some of our biggest trading partners
-- literally hundreds of thousands, if not millions, of
American jobs depend on our trade with Latin America. And
it is in our interests to help them develop. If we are worried
about immigration, for example, or if we are worried about
the problems that poverty brings with it -- such as narcotrafficking
and terrorism and unstable governments -- we have to have
trade. And what the executive branch needs is the negotiating
authority to be able to conclude treaties with other countries
that are not subject to congressional modification. They
are subject to congressional, as it should be, but on an
up-and-down vote. And that's the only thing that TPA does.
It's the old fast track. It just removes
the ability of the Congress, or any one member of Congress,
to put a number of amendments on a bill, and thereby destroy
a process of negotiations that may have taken years. We're
negotiating a free trade area, a free trade agreement with
Chile, where we have made a lot of progress -- are very
close I think to having one. But we have to have that TPA
to have it approved by the Congress.
We are beginning negotiations or conversations
with Central American countries towards a free trade area
for Central America, which is also very much in our interests.
We have hundreds of thousands of immigrants from Central
America who have come here looking for jobs, because their
countries have been hit not only by the traditional problems
they have faced, but by hurricanes and earthquakes and problems
that have affected them. In El Salvador I understand 25
percent of the housing stock was damaged by the earthquakes
that they had. Hurricane Mitch destroyed not only entire
villages but agricultural production in Honduras and Nicaragua.
And that was followed by a drought.
I mean, I think the only thing they haven't
had in Central America is locusts, and I always knock on
wood when I say that, because you know the next thing you
know you see this massive wave or whatever -- however locusts
travel, I don't -- I've never seen a movement of locusts
personally --(laughter) -- except in the movies. But we
do need -- we do need the TPA.
I know that my voice doesn't carry quite
as loudly as that of the president's and others', but I
really urge the Congress to try to deal with that. And I
know there's very few days left before the August recess.
But if they don't for some reason, then certainly we have
to have it in September.
We have been waiting for a long time. As
much as I would like to see it implemented or passed before
August, the August recess -- I guess we'll take it in September
if Mr. Armey is correct.
Q (Off mike) -- from Media International.
Going to Argentina, you mentioned that what their main problem
is a crisis of confidence, and you mentioned SDR. Who would
you say might be the Argentine politician most likely to
have the skills to meet that challenge and to restore confidence,
which may have nothing to do with technical economic skills
and more to do with sort of mystique and charisma? It does
look increasingly like former President Menem may wind up
being the next president. He has said that he would immediately
adopt the dollar as the currency, since there is really
no faith in the peso, and it would take years to get it
back. Is the U.S., for all his faults, prepared to work
with him? And how would you see the situation, if perhaps
you see it differently?
MR. REICH: Obviously I can't answer your
question. (Laughter.) It's a good question. It's a good
question. (Laughter.) You know, we don't have a candidate.
And at every stop -- not Uruguay, because they're not having
an election right now -- but certainly in Brazil and Argentina
I was asked that question numerous times. And you know my
answer, as we say in the State Department, had the added
advantage of being true, and that is that we don't have
a candidate. We believe that the people of Argentina and
Brazil and other countries -- democratic countries -- have
not only the right but the capacity to choose their leaders.
I went a little further, however. They asked
me, Well, what kind of a person would you like to see? And
so since we are speaking hypothetically, what I explained
-- and this is nothing revolutionary or any departure from
I think traditional bipartisan U.S. foreign policy -- we
would like to see leaders who really believe in democracy,
in political and economic democracy that give -- that rule
justly as the president said in his speech in Mexico on
the Millennium Challenge Account -- that invest in their
people, that rule honestly, that are good friends with the
United States -- who would like to have good relations with
the United States -- and are good friends with their neighbors,
that don't interfere in the internal affairs of their neighbors,
and don't destabilize the region. Democracies, by the way,
are like that. We prefer democracies, because democracies
by and large don't start wars. They worry about their internal
problems. They are concerned about the growth of their economies
and the well- being of their people, and are usually not
training terrorists to go into neighboring countries.
There are a number of qualifications that
we would in an ideal world like to see in the leadership
of our neighbors in this neighborhood we live in. But I
am certainly not going to get into helping to select the
next president of any country.
Q What about dollarization?
MR. REICH: What about what?
Q He asked about dollarization?
MR. REICH: That's something, frankly, that
once again the next government or the current government
-- the government of Argentina will have to decide. That's
part of -- we hope that's part of a plan. Once again, this
is why the U.S. has insisted that Argentina negotiate --
include negotiations with the IMF, because it shouldn't
just be an individual part of an economic plan. There should
be a comprehensive plan that involves or that attacks all
of the systemic flaws in the system, and not just monetary
policy. There's an awful lot of things that have to be corrected
in a country that is suffering, as the Argentines themselves
have told me, an unprecedented economic crisis.
Yes?
Q Chris Hanstey with AFX News. Secretary
Reich, could you put Treasury Secretary O'Neill's trip to
the region in the context of the lengths that you were talking
about? And is it a sign that perhaps Argentina has made
sufficient progress in its talks with the international
financial institutions to warrant near term U.S.- supported
financial assistance?
MR. REICH: Well, I think it's a sin that
I came back relatively unscathed. No, I see it as a very
positive development that Secretary O'Neill is going, and
it's one more indication of the interest and concern on
the part of the Bush administration in the economic health
of this region. He is the top financial Cabinet official
in the United States, and I know that they are looking forward
to the visit. They see it -- it so happened that we were
able to announce it just on my last afternoon in Buenos
Aires, and the response was very positive. At the same time,
let's not forget that we are not miracle makers. We can
contribute, we can help.
That's what I think the secretary of the
Treasury is going to do.
Interestingly, he is not just going to talk
to the governments and to financial and economic officials;
he wants to see -- he has said that he wants to go and see
how the Brazilians and the Argentines and others live, and
he wants to go see health centers and educational centers.
And I think that's very important, because we shouldn't
just deal at the macroeconomic level when we look at countries.
We should see how the system is working.
And as I -- once again, as I said in my remarks,
we don't want to leave any one of these 800 million people
behind. I realize that this is a very ambitious undertaken,
and it probably will not be accomplished in our lifetime.
But we can contribute to the progress that has been made
in the past. I think Secretary O'Neill's visit will be very
positive, even if he goes by himself without any rock stars.
(Laughter.) Especially if he goes by himself without any
rock stars. I correct my remarks.
Q Hi, Melinda Muniz from Eli Lilly and Company.
I was wondering --you mentioned the FTA, and has there been
any mention in the negotiations of intellectual property
rights or was there any mention in your visits to Brazil
and Argentina about intellectual property rights, especially
as regards pharmaceuticals?
MR. REICH: Yes. I mean, I wouldn't say it
was one of the centerpieces, but it's definitely part --
usually a part of our dialogue with developing countries.
And since it has been one of the irritants in our trade
relationships, it was discussed, and I believe we are making
progress.
In fact -- I don't want to speak for USTR,
but if I am not mistaken, deputy USTR, Peter Allgeier, was
in Buenos Aires only a couple of months ago, and announced
that the U.S. was restoring -- and, Sue, please correct
me if I'm -- was restoring about half of the GSP exports,
no?
REICH'S STAFF: Yes, if people are interested
-- (inaudible) -- Ambassador Allgeier in the context of
the discussions, there was an agreement with Argentina to
resolve eight of the issues that had been part of our complaint
in the WTO, not that of confidentiality, which should be
of interest to Eli Lilly. And as a consequence of that,
the United States agreed to consider on the merits Argentina's
request for GSP benefits when GSP is restored. And in fact
we are working to that end. And we are also monitoring Argentina's
commitment to implement the parts of the agreement that
would address the patent issues. So I hope that answers
that. I'm sorry -- thank you, Ambassador --
MR. REICH: No, that's exactly what I was
going to say. (Laughter.)
Q (Off mike.) Mr. Secretary, David Rogus.
Legitimately, trade and economics dominate the agenda with
the Southern Cone. But I am wondering if in your preparations
for your trip, and now that you have returned, if you have
any views that you would like to share with us on the traditional
security relationship, especially within the military sphere.
MR. REICH: Yes. And in fact I met with the
minister of defense of Argentina, I met with the minister
of national security in Brazil -- as part of our ongoing
-- and, in Uruguay also with the minister of interior, who
has responsibility for, as you know in most Latin American
countries interior has responsibility for domestic security
and intelligence -- because it is a very important part
of the whole of what we are trying to do. As I said earlier,
that's why I mentioned the four elements of our policy,
and I started out with security.
If you don't have security, you're not going
to have economic development, because people are not going
to invest. The domestic entrepreneur and financier is not
going to have confidence enough to put money into his or
her country, and that means that the foreign investor is
not going to have confidence. And that's one of the things
that I -- that I've always emphasized, this is not new --
and I tell people, you want foreign investment, get your
domestic entrepreneur to invest first and then you will
see all kinds of foreign investment coming in. Foreign investment
does not -- does not lead domestic investment by and large,
it's usually the other way around, because the people who
live in those countries know the conditions, and if they
have confidence in those conditions, they will invest.
Our security conversations with all the countries
in the region have certainly increased and improved since
September 11th, because we realized, once again, to use
President Bush's own description that we live in this neighborhood,
that if a house in this neighborhood is not safe, the other
houses aren't safe, whether it be that they're subject to
burglary or fire, or whatever it may be. In the national
level, you know, we have -- we have terrorism, as I mentioned,
a couple of examples, we have narco-traffickers, we have
organized crime, and we have the other problems that are
taken advantage of by demagogues or by terrorists, revolutionaries,
whatever you might want to call them.
So, we are increasing our security cooperation
with the countries of the region, and I think it's appropriate,
as we discuss, for example, economic development, that we
take into consideration the security health of these countries
we're trying to help. We've increased, for example, military
-- military cooperation with several countries. We are supporting
American companies when they sell military equipment to
the region. And I know that this -- in some circles in this
town, this is not very popular, but believe me, I've been
in the military -- I was in the U.S. Army, stationed in
Panama -- and I know that you establish the kind -- I mean,
not only -- not only at that level, you know, the very high
level of a first lieutenant, but at other levels, that the
relationship that develops between the U.S. and these --
and other countries when they use U.S. equipment, or when
they come here to our command and general staff schools,
or when we have exchanges, or we have a large military presence
by and large -- I mean, it could be 10, 20, 30 people in
a country -- most of the time it's not much, much bigger
than that. I think when I was ambassador to Venezuela, we
had, I think, a total of 55 American military officers and
NCOs at Venezuelan military schools in different locations.
And that has helped. Even today, we have communication with
officers who, some of which are active duty, some are retired,
that understand our system, that understand that we are
-- that we don't have any unhealthy desires towards them,
quite the contrary, that we don't covet their national territory.
We want them to be strong, independent, prosperous.
And so, we very much support the military
relationship, the security relationship. We're working,
of course, on anti-terrorism, and -- I can't get ahead of
some of the things that we'll probably be announcing, but
we'll be announcing some additional cooperative -- cooperative
programs with the region along these lines.
MR. DIAZ: Let me take advantage of the chair
and ask you -- to sneak in a question. Since your presentation
was broader than the Southern Cone, let me also ask you
a question about Venezuela. Last week that had a march that
fortunately didn't turn out to be violent. (Inaudible) I
was just wondering you thoughts as to what are -- what is
the outlook for Venezuela, and possibly what will the U.S.
could play to resolve that situation?
MR. REICH: Did everybody hear the question?
The question was about Nicaragua. (Laughter.) We want to
help President Bogdanos.
The question was about Venezuela and what
can the -- what's going on and can the United States do?
We're still very -- we're very concerned about the continued
polarization of opinion in Venezuela. We were encouraged,
frankly, when President Chavez came back to Miraflores Palace
on the morning of the 14th and gave a speech on national
TV, where he said that he had made a lot of mistakes, that
he apologized for those mistakes. He reached out to his
political opponents, said there was need for national reconciliation,
and that he was going to set up a dialogue, a process of
dialogue with the elements of civil society to try to find
a solution to this crisis that had led to massive demonstrations
on the street, deaths of possibly as many as 80 people,
the removal of the president from his office, the return
of the president to his office.
A couple of things, in answer to the question
-- first, Chavez, President Chavez is the democratically
elected president of Venezuela. He is the legitimate president
of Venezuela. The United States does not support coups.
We did not support that coup, despite what you might have
read, and we don't support coups anywhere. We support constitutional
processes.
At the same time, governments have a greater
responsibility in carrying out the law and enforcing the
constitution than individuals because governments have more
power. So, it's incumbent upon the government of Venezuela
to reach out to the population. We haven't seen that that
has taken place since April 14th, since President Chavez
came back to Miraflores Palace. There's been a lot of rhetoric
on both sides, and we have urged both the government and
the opposition to lower the rhetoric and to try to find
common ground, sit down and talk.
President Jimmy Carter was there last week.
He spoke to a number of groups and individuals. I don't
think he accomplished quite what he wanted to accomplish,
but I don't think he's giving up either.
We have urged that the Organization of American
States be called by the government of Venezuela, under this
Inter-American Democratic Charter, to help them facilitate
this dialogue. And that's perfectly legitimate. It is not
any kind of an invasion of Venezuelan sovereignty any more
than the two consecutive OAS resolutions of April 14 and
18, which supported the constitutional government of Venezuela
or any kind of an infringement upon Venezuelan sovereignty
-- I think quite the contrary. The OAS is the right organization
to be involved. Venezuela is a part of it. Venezuela, in
fact, supported, as did the United States, those resolutions,
as well as a subsequent declaration in Barbados on the 2nd
or 3rd of June at the OAS general assembly, which Secretary
Powell attended, and I attended, and the Venezuelan foreign
minister attended. We had good conversations. But we don't
see the rhetoric supported by action, yet.
We're encouraged, as I said, by some of the
progress made by former President Carter and by others,
but it will take, I think, a recognition on the part of
the Venezuelan government that they have, as I said, a greater
responsibility than we have seen today. But we remaining
very worried about the situation there.
MR. DIAZ: Does anybody have a question about
Nicaragua, by any chance? (Laughter.) Ana? Oh, yes, you're
waiting for a microphone.
Q: I'm Ana Baron from Clarin, Argentina.
Before President Bush came to power, there were a lot of
Republicans criticizing very strongly the IMF because of
it's behavior on the Asian crisis. But now it seems that
all the answers come to the IMF, mainly in the case of Argentina
where the crisis is, that first we have to make a sustainable
program accepted by the IMF in order to receive some help.
I was wondering if there is any kind of dialogue between
State Department and IMF, Treasury and IMF because it is
also said that the Argentinian crisis is not only economic
and financial; it's also political -- there us a crisis
of confidence, as you say. So, I was wondering if there
is any kind of relationship between State Department and
the different agencies and the IMF.
MR. REICH: Well, the U.S. agency, of course,
the department that handles the day-to-day relationship
with the IMF is the Treasury Department and they are in
constant communication. We in turn deal with Treasury. The
State Department does have economics capabilities and economics
experts, and we have an undersecretary for economic affairs,
and a bureau of economic and business affairs, but as far
as dealing with the international financial institutions,
that's Treasury's responsibility. And I know that in the
case of Argentina, there are very close communications.
And I think that some of my Republican colleagues
probably still criticize the IMF for a lot of reasons, but
in the case of Argentina, the kind of solution that I think
will lead to a lasting correction of the -- of the underlying
problems in Argentina can best be resolved at this stage
by some form of an agreement with the IMF. I don't think
this is necessarily an endorsement of IMF for all of the
ills of all of the countries of the world, but in this particular
case, those people who knew a lot more about it than I do
have decided that that's the best next step.
Q Can I follow-up on that question?
MR. DIAZ: Sure. I wish you wouldn't, but
go ahead. (Laughter.)
Q (Inaudible) -- on that same topic. You
mentioned, earlier that the United States is prepared to
help Argentina directly and indirectly.
Assuming Argentina does finalize and agreement
with the IMF, what then would the United States be prepared
to do? Are you talking about bilateral aid, or just moral
support, public expressions of, you know, support, are --
I mean, is there some sort of bilateral aid or other trade
assistance that the United States is prepared to offer?
MR. REICH: Yes, all of the above. And I think
the president -- President Bush has said it. In fact, my
colleague, Aldolfo Franco was here from AID -- I don't know
if he's still here, but the assistant administrator of AID
for Latin America and the Caribbean -- AID sent a commission
to Argentina recently to see what we could do to help Argentina
on a bilateral basis, what more we can do. But, the U.S.
-- I don't want to go into detail, because I may be getting
into things that, since, of course, your question is hypothetical,
you say assuming that Argentina reaches the agreement, what
will the United States be prepared to do? We are prepared
to assist on a number of levels. We are very interested
in the rapid and lasting recovery of Argentina, and we will
do whatever is within in our power, and reasonable, and
constructive to achieve that.
Q (Inaudible) --
MR. DIAZ: I think -- let's take two more
questions. The one here, and -- (inaudible).
Q Otto, on Brazil.
MR. DIAZ: Excuse me -- who are you, George?
(Laughter.)
Q I forgot. George Gedda of AP. Do you believe
Brazil's commitment to a hemisphere-wide trade agreement
will be strong regardless of who wins the presidential elections
in October?
MR. REICH: Uh -- that's -- (laughter) --
I think that Brazil realizes, as a -- as a major economic
power in the world, that its future is best guaranteed by
an expansion, a continuation and expansion of the kind of
industrial diversity, for example, that I -- that I was
talking about earlier. I mean, if you ask most people in
the United States, what is Brazil's principal export, they're
probably tell you coffee, but it's very sophisticated aircraft.
And I think that that's indicative, as I said, of their
-- their capacity. I -- I actually think that the answer
to your question is yes.
I think that we can't get too bogged down
on political campaign rhetoric. I mean, even in this country,
sometimes politicians say things in campaigns that somehow
they find unable to do later on -- I'm sure, you know, against
their wishes. Let's face it, people change. Sometimes people
have to change a position based on the circumstances that
they encounter when they come to power. I'm not predicting
anything. I'm just saying -- you asked me a question --
you asked me a hypothetical question, what would happen
if, and I'm giving you a hypothetical answer.
I think the answer is that the Brazil --
the Brazilian -- the Brazilians, most Brazilians realize
that they're better off working towards a free trade area,
for example, like they joined with Mercosur, which was working
until these problems arose, then they are not doing so.
And I think that, once again, Foreign Minister Lafer's excellent
article recently illustrates that. I mean, people say, "Oh,
Brazil is against a free trade agreement," and yet
here is the foreign minister explaining eloquently why Brazil
should participate in this -- in this process.
And this is the way the world is going. The
countries that have benefited the most from economic development
are the ones that have participated in the world economy.
Look at Korea. A few years ago, Korea was in the midst of
a depression. People were losing jobs by the tens of thousands,
and Korea has turned around, in large part because they
frankly took advantage of the devaluated currency. They
allowed enormous amounts of foreign investment. I mean,
you will recall that a lot of foreign banks and companies
were buying Korean industries because they were basically
healthy, they just had a liquidity problem. And now Korea
is competing with the United States on things like cars.
Ten or 15 years ago, who ever heard of a Hyundai, or a Daewoo,
or a Kia, or those. You know, there's Korean microwaves
and appliances, and a lot of other things in American stores.
I think that's another example that countries like Brazil
are aware of.
And I'm -- I'm not really concerned. And,
in fact, as I said, we are looking forward to co-chairing
the FTAA process with Brazil beginning this fall.
MR. DIAZ: Last question.
Q: (Inaudible.)
MR. DIAZ (?): Oh, that's too bad. It's about
Nicaragua?
Q No.
Q: My name is Horico (sp) Reale (sp). I'm
an international consultant in Washington, D.C.. You have
rightly pointed out, Secretary Reich, that the United States
and Brazil will co-chair the FTAA starting on November 1.
There is, however, another movement going
on in South America. It's a process of free trade area between
the (can ?), which is composed of Colombia, Venezuela, Ecuador,
and Peru, and Mercosur, which is Argentina, Paraguay and
Brazil. This movement from substantial now becomes quite
major and the Brazil is pushing the movement quite strongly.
And I wonder if you had heard anything about it while you
were in the Southern Cone, and what your thoughts are about
it. Thank you.
MR. REICH: You know, we're interested in
a free trade area of the Americas. And the way we get to
that may be by different means. I was asked, for example,
if we preferred bilateral negotiations. A number of countries
in the region have asked for bilateral negotiations with
the United States, whereas others are participating -- let's
just say for example, Chile is negotiating a bilateral treaty
-- others are doing it on a regional basis, such as the
Central American countries. I don't -- USTR, frankly, is
the one that should answer the question. But I think from
a political standpoint, I think we're pragmatic. I mean,
we don't care how we get there, as long as the result is
a free, fair market where everybody will benefit and with
the least amount of obstacle and barriers to trade. I don't
think we should read too much into the creation or the position
of sub-regional trading groups.
If some of these groups manage to lower barriers
among themselves and have a common external barrier, I mean,
it would be easier to negotiate with them than with a number
of individual countries.
So, I'm not sure I understood the question
properly, but I gave you the answer that I thought [would
put me] out of the fix. (Laughter.)
MR. DIAZ: Thank you, Otto, for your honest responses. (Applause.)
