Fact Sheet: U.S. Policy Toward the Andean Region

17 May 2001

Fact Sheet: U.S. Policy Toward the Andean Region

Focus on democracy, poverty reduction, counter-drug efforts

Strengthening fragile democracies, fighting poverty, and enhancing regional cooperation against drug trafficking are the overriding goals of the Bush Administration's proposed aid package for the Andean countries, says the U.S. State Department.

Known as the Andean Regional Initiative (ARI), the proposal was introduced to reporters at a State Department briefing on May 16. President Bush's approach to the Andes' most urgent social and economic difficulties is based on a recognition that "all of these persistent problems are inter-related" and "none ... can be addressed in isolation," the Department said in a fact sheet issued the same day.

Officials argued that unless governments are able to ensure greater prosperity in a region where the vast majority of citizens remain impoverished, the potential for political instability will continue to discourage investment. The ARI, they added, would promote long-term growth by shoring up democratic institutions and supporting host-country measures to combat corruption, reform the judiciary, and adopt sound fiscal policies. In addition, the ARI emphasizes the role of liberalized trade as an economic stimulus and advocates renewal of such legislation as the Andean Trade Preference Act.

The State Department also cited "a pressing need for continued technical assistance and development assistance, building on existing programs, to enable these countries to better balance their legitimate needs for economic development with the imperative of protecting their natural resources and preserving their unique ecological diversity." According to the Department's fact sheet on U.S. policy toward the Andean region, Bush's proposal calls for a strategy "which will permit sustainable economic growth without doing irrevocable harm to the environment."

Counter-drug and law enforcement assistance is another crucial aspect of the ARI, said the State Department, particularly since "the Andean countries produce virtually all of the world's cocaine, and in recent years have become the major supplier of heroin to the East Coast of the United States." The ARI would support programs to spur legitimate crop cultivation as an alternative to coca and opium poppy, as well as intensified efforts to eradicate illicit crops and increased cooperation on narcotics interdiction and prosecution of drug traffickers. These measures, complementing U.S. initiatives to curb domestic demand for illegal drugs, reflect the president's concern with preventing Colombian drug trafficking operations from "spilling over" onto the border areas of neighboring countries.

U.S. counter-drug assistance to the Andes must be "carefully targeted in each country to meet individual needs," the State Department said, adding that "consultations in the region will be essential" to ensure the success of these shared goals.

Following is the text of the State Department fact sheet, outlining the president's policy priorities for the Andean region:

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U.S. POLICY TOWARD THE ANDEAN REGION

The Andean region represents a significant challenge and opportunity for U.S. foreign policy in the next few years. Important U.S. national interests are at stake in the region. Democracy is under pressure in all of the countries of the Andes, as there are growing doubts about the ability of democratic governments to deliver essential services and wider prosperity. Economic development is slow and progress towards liberalization is inconsistent. The Andes continues to produce virtually all of the world's cocaine, and an increasing amount of heroin -- thus representing a direct threat to our public health and national security. All of these persistent problems are inter-related. Sluggish economies produce political unrest that threatens democracy and provides ready manpower for narcotics production and trafficking and illegal armed groups. Weak democratic institutions, corruption and political instability discourage investment, contribute to slow economic growth and provide fertile ground for drug traffickers and other outlaw groups to flourish. The illicit drug trade also has the effect of distorting the economy and discouraging legitimate investment. None of the region's problems can be addressed in isolation. Rather, all need to be addressed comprehensively and accompanied by appropriate public diplomacy initiatives to advance our goals in the region. For that reason, the State Department proposes to allocate approximately $880 million in FY02 funds for the Administration's Andean Regional Initiative.

Overarching U.S. Government Goals in the Andes

1. Promote and support democracy and democratic institutions
2. Foster sustainable economic development and trade liberalization
3. Significantly reduce the supply of illegal drugs to the United States at the source, while simultaneously reducing U.S. demand

1. Democracy

Democracy in the region is under pressure from a wide variety of sources. Fledgling institutions, political infighting and corruption throughout the region lessen popular support for democracy at a time when most economies are underperforming. Respect for human rights is improving, but remains inconsistent throughout the region. The nexus of a violent insurgency in Colombia fueled by hundreds of millions of narco-dollars is destabilizing that long-standing democracy. There is also concern that the drug trade will spill over into neighboring countries.

Democratic Institution Building

Democracy is under attack in the Andes and faith in essential democratic institutions is eroding. We have observed an increase in the body politic who seek or would accept non-democratic solutions.

In Peru, the government that will be elected in June will face the significant challenge of rebuilding democratic institutions that were deliberately weakened during the Fujimori administration. The eventual government will likely be formed largely of members with little to no experience in government, given Fujimori's ten-year tenure and his policies of concentrating power within the presidency. The ongoing corruption scandal from the Fujimori era has shaken public confidence in the political leadership of the country. We will work closely with the incoming administration, which is likely to lack experience after Fujimori's tenure, to strengthen democratic institutions and promote good government.

Ecuador's democracy is under pressure from increasingly radical populist and indigenous movements fed by an economic crisis. The upheaval in January 2000 that led to the removal of President Mahuad by extra-constitutional means could be repeated again in the near future if there continues to be erosion of structural reform efforts. This environment has produced four presidents in the last five years. Assistance to the Noboa government in support of strengthening institutions, attacking pervasive corruption, and reanimating reform efforts is essential to promoting stability.

Bolivia is also in the middle of a turbulent period, as twice in the last year radical groups have launched violent protests that have badly damaged the economy and challenged the Banzer government. These groups (including cocaleros, indigenous peasants, teachers and urban consumers) have diverse goals and follow no monolithic leadership, but have demonstrated the ability to work together opportunistically in the past. The Banzer government has strenuously and laudably avoided violent confrontations and granted concessions while seeking to reach out to those in the opposition who are willing to dialogue and moderate their views. The prospect of more protests still looms. Bolivia's democratic government is in need of U.S. support to help address inefficiencies in government and fight corruption. There is also a critical need to ensure that the country's impressive record on counter-drug efforts is preserved and advanced.

In Venezuela, our policy is to continue to work with the government on matters of mutual interest, including certain aspects of counter-drug cooperation, judicial reform, trade and the environment, and to channel assistance to private voluntary organizations and other groups that strengthen democracy in Venezuela. Targeted public diplomacy programs to tout the benefits of independent institutions, and checks and balances, will be a key element in this effort.

Judicial branches in the region are weak and ineffective. They suffer from inefficiency, poor training and equipment, low salaries, pervasive corruption, and in the case of Colombia, intimidation. As a consequence, legal cases, both criminal and civil, languish for years in the system, and frequently produce questionable decisions. This phenomenon is at the core of the serious problem of impunity in most countries. Common people have no trust in the judicial system, prompting them to turn to extrajudicial means to resolve disputes or protect their interests. U.S. and other foreign investors have at times experienced uncertain protection under the law, a clear disincentive to investment.

Legislatures throughout the region are badly divided by political infighting and corruption. In Ecuador, a plethora of feuding small parties makes passage of critical legislation very difficult. In the region there has been a breakdown of established political parties which has resulted in inexperienced candidates elected to office and radicalization of populist candidates. Colombia's Congress is influenced by illegal drug interests.

We should be prepared to devote significant resources to strengthening institutions in the Andes. Ongoing judicial reform programs should be reinforced to replace antiquated and inefficient procedures, update legislation, promote a more independent judiciary, provide training to prosecutors, judges and public defenders, modernize judicial facilities and equipment and improve prison security and conditions. Anti-corruption initiatives need to be emphasized so that people's confidence in their institutions can be restored. Private voluntary organizations, including unions, should be strengthened and encouraged to play an active role in political life. Public diplomacy efforts aimed at supporting these policies should be stepped up. Particular emphasis should be given to private voluntary organizations working with the large indigenous populations of Bolivia, Ecuador and Peru, as these groups feel increasingly disenfranchised and alienated from their governments.

Human Rights

Colombia's human rights situation is poor, a result of the long-standing internal violence which grips the country. The vast majority of serious human rights violations are committed by members of illegal armed groups and occur in areas of the country where the government has no meaningful presence. Right-wing paramilitaries are responsible for the majority of the extrajudicial killings, but the FARC and ELN likewise commit numerous violations of human rights and international humanitarian law, such as forced recruitment of minors, kidnapping and indiscriminate use of home-made weapons. Human rights advocates, members of Congress, journalists, judges, investigators, prosecutors, labor leaders and other private citizens are all subject to assassination, kidnapping and threats.

Although we do believe that President Pastrana and the leadership of the armed forces of Colombia are working to end the latter's collaboration with the paramilitaries, individual members of the Colombian military and police continue to have ties with the paramilitaries, and the Colombian military in some areas appears to turn a blind eye toward paramilitary activities. The Pastrana government, and the military and police high command, have expressed a willingness to break all ties to the paramilitaries and pursue them with the same vigor as they do the guerrillas, and in fact, some progress has been made. The United States intends to hold them to that promise and press for continued progress. We need to urge the Colombian government to successfully prosecute human rights violators, whatever their political persuasion. Above all, the rule of law must be extended into the many geographic areas that suffer disproportionately from human rights violations.

Human rights training for the Colombian security forces requires continued emphasis as well as significant support for strengthening the human rights offices in the Procuraduria and Fiscalia. We also need to achieve a greater commitment from the GOC to prevent attacks on the civilian population and human rights activists, and to better support the work of responsible human rights organizations.

The rest of the region cannot be ignored. Although none of the remaining countries have a human rights situation as problematic as Colombia's, our human rights reports have documented problems in all of them. We need to continue working with the governments and private voluntary organizations in each country to address problem areas. In Peru, this will mean helping to rebuild institutions weakened by persistent undermining during the Fujimori years -- a job begun admirably by the Paniagua government.

Colombian Insurgency and Peace Process

Colombia's insurgency is forty years old -- with greater capability than ever, due to the influx of money from drug trafficking, kidnapping and extortion into the coffers of the guerrillas and paramilitaries. The peace process is stuck, as the willingness of the Revolutionary Armed Forces of Colombia (FARC) to negotiate in good faith is increasingly open to question. A possible understanding with the smaller National Liberation Army (ELN) is contingent upon the local population's acceptance of the creation of a demilitarized "encounter zone" to allow negotiations in an environment the guerrillas would find secure.

All of Colombia's neighbors are affected to one degree or another by the violence in Colombia. The FARC and ELN have crossed international borders for rest, recreation and re-supply for years. They have also periodically engaged in kidnapping, extortion, and illegal drug and arms trafficking in neighboring countries. The increasingly strong AUC has also begun to operate across international borders, raising the possibility of armed conflict spilling over into neighboring countries.

The conflict has thus far generated relatively few refugees in neighboring countries, but clearly there is the potential for more if the conflict intensifies. It has generated significant numbers of internally displaced persons (IDPs), with whom Colombia's government institutions are having difficulty coping.

Support for the Colombian peace process remains a vital element of U.S. policy. Despite the slow progress made to date, the peace process represents Colombia's best chance to escape the forty-year cycle of violence. A military solution is not a viable option, as Colombia's armed forces are not strong enough to defeat these groups of irregular forces with increasing income from drug trafficking. The insurgent groups are not anywhere near developing the capability to overthrow the government. However, some type of negotiated settlement remains the best possible solution, although it could still take years to attain, and may not happen until after Colombia is able to reduce insurgent financing from drug trafficking and further increase the capabilities of its armed forces and police so that they represent a credible threat to the illegal armed groups and provide adequate protection to the Colombian civilian population.

Similarly, we need to work with the neighboring countries and provide them with support for their efforts to contain the violence in Colombia. These efforts should focus on strengthening their capability to confront lawlessness in border areas, preparing them for possible refugee flows, and assisting in alternative development programs. The Colombian government also needs assistance in its efforts to deal with the large number of IDPs within Colombia, resettling them and reintegrating them into the economy. Public diplomacy efforts aimed at explaining and building support for our policies and programs will be very important. With the support of Congress, funding for these efforts should be made available from the Andean Regional Initiative.

2. Economic Development and Trade

All of the economies in the region have struggled over the last few years, and continue to be vulnerable to setbacks. Colombia, which suffers from high unemployment and a lack of investor confidence primarily due to political instability and violence, is perhaps the most vulnerable. As planned counter-drug activities go forward, they need to be accompanied by alternative development programs designed to draw former coca and opium poppy growers into the legal economy. Ecuador suffered through an intense economic crisis in 1999, and is still vulnerable. Rising oil prices have helped Ecuador's economy and contributed to a successful dollarization that has helped to restore confidence in the economy. However, important structural reforms are still pending and are necessary, particularly in the banking sector, for a sustainable recovery. After a deep recession in 1999, Venezuela has benefited from high oil prices, but windfall oil revenues have allowed the government to pursue expanded social programs and avoid necessary structural reforms. If oil prices fall and remain low for an extended period, Venezuela's economy will suffer and the Chavez government likely will face a serious political and economic crisis. Bolivia and Peru have underperforming economies despite generally sound macroeconomic policies, but face uncertainty due to upcoming elections and future macro-economic policies.

Sustainable Economic Development

Economically, the Andean region is quite diverse, but the countries do share several characteristics. Each of the Andean countries has a large divide between a small wealthy elite and a large impoverished class, frequently indigenous in origin. Some lack the mix of policies necessary to promote growth. Others have the policies right, but lack the popular support necessary to sustain them over the long run. Development is tied closely to political stability in the region.

Perhaps of most importance to U.S. interests is alternative development, which provides legitimate alternatives to illicit coca and opium poppy cultivation. We have had large alternative development programs in Bolivia and Peru for many years, and they have been quite successful, combining with aggressive eradication and interdiction programs to produce significant declines in the coca crops of those countries. Colombia is trying to replicate that success with Plan Colombia, combining a new alternative development program with aerial eradication and interdiction activities in southern Columbia (currently the largest concentration of coca cultivation in the world). Ecuador needs new alternative development assistance in the northern border region to prevent the spread of cultivation into that area.

Traditional development assistance (DA) and economic support funds (ESF), not directly linked to counter-drug programs, are also important to help jump-start sagging economics and reduce income disparities among classes, groups and regions in the Andes that are contributing to political unrest. Bolivia, in particular, is one of the poorest countries in the region and benefits from the Heavily Indebted Poor Country (HIPC) debt relief initiative, which aims to focus savings from debt relief onto poverty reduction. Ecuador also has qualified for debt relief in the Paris Club. Ecuador, Peru and Colombia also have significant needs for development assistance and economic support. Venezuela, a major oil-producing nation, has less dramatic grounds for economic assistance, but some specifically targeted programs could be useful, if the Venezuelan government were to commit to them.

We need to pay specific attention to education in the development plans for these nations in recognition of the critical role of education in economic development. Educational assistance to the region (scholarships, grants, etc.) should be increased significantly, especially to the indigenous sectors of the population. We would envision establishment of one of the regional educational "Centers for Excellence" announced by the President on April 21 in the Andean region. Public diplomacy efforts funded through the Andean Regional Initiative will support these goals.

Environment

The region includes some of the most unique ecosystems in the world, including the Andes and the Amazon, as well as ecological treasures like the Galapagos Islands. Many of the region's natural wonders are threatened by encroaching development and vulnerable to other shocks. There is a pressing need for continued technical assistance and development assistance, building on existing programs, to enable these countries to better balance their legitimate needs for economic development with the imperative of protecting their natural resources and preserving their unique ecological diversity. Models need to be developed, applied and enforced which will permit sustainable economic growth without doing irrevocable harm to the environment. We also need to develop programs to help rehabilitate environmental damage from illicit drug production.

ATPA Renewal

Perhaps the single largest short-term contribution to economic growth and prosperity in the Andes would be the renewal of the Andean Trade Preference Act (ATPA) and expansion of its benefits. The legislation was originally enacted to provide economic alternatives to drug production and trafficking to Bolivia, Peru, Ecuador and Colombia, and has succeeded in doing so without adverse economic impact for the United States. The original justification for the legislation still stands, but it expires at the end of the year and should clearly be renewed at the earliest possible date. The Administration supports working with the Congress to expand the benefits of the legislation.

FTAA

Uncertainty makes it even more difficult for the Andean countries to compete for investment, and even more important that they optimize their policies to attract that investment. Unfortunately, trade liberalization has proceeded inconsistently throughout the region. Most of the countries still have barriers to trade and investment that are slowing economic growth. The Free Trade Area of the Americas (FTAA) could help the entire region gain the benefits of increased investment and job generation through free trade. We will also continue to work with all of the Andean countries on trade issues of concern, such as intellectual property rights (IPR).

There are several countries in the region with which we have had periodic negotiations on Bilateral Investment Treaties (BITs), including Colombia, Peru and Venezuela. Colombia has made constitutional changes to its expropriation provisions that pave the way for an eventual BIT. Peru has expressed renewed interest in a BIT recently, and Venezuela remains a possibility given recent ministerial changes. However, on the U.S. side, there are several issues on investment policy that delayed the conclusion of BITs ratified by the Senate last fall. These issues have not yet been resolved.

3. Counter-drug and Law Enforcement Assistance

U.S. support for counter-drug actions in the Andes is designed to reduce illicit coca production by 20% (base year 1999) by the end of 2002 and 40% by the end of 2007. This includes a 30% reduction in Colombian coca production and elimination of illegal coca production in Bolivia by the end of 2002. The National Drug Control Strategy focuses on prevention, treatment, research, law enforcement, shielding our borders, drug-supply reduction and international cooperation. Through a balanced array of demand reduction and supply reduction actions, we strive to reduce drug abuse and availability by half and the consequences of drug abuse by at least 25 percent by 2007. To this end, funding for demand reduction has more than doubled since FY89 and is more than twice what the United States spends on all U.S. international and interdiction programs combined.

The Andean countries produce virtually all of the world's cocaine, and in recent years have become the major supplier of heroin to the Fast Coast of the United States. U.S. assistance to the region to combat drug production and trafficking has been significant, and has achieved some remarkable successes. In the last five years, coca cultivation in Peru and Bolivia have been cut by nearly 70%. These advances have been largely offset, however, by dramatic expansion of coca cultivation in conflict-ridden Colombia, where traffickers have taken advantage of the lack of government presence in rural areas to flourish and expand. Guerrilla organizations and illegal paramilitaries are involved in all aspects of the drug trade in the zones under their control. They set production quotas, tax production, provide seed and supplies, establish themselves as exclusive coca-purchasing agents (with severe penalties for selling to competitors) and control a significant amount of production, which they market to international drug cartels.

Because of the success of supply reduction in Peru and Bolivia, worldwide cocaine production decreased almost 20% between 1995 and 1999. That decrease continued in 2000 for Peru and Bolivia but because of the increase in coca cultivation in Colombia, overall worldwide production remained statistically steady in 2000. Colombian potential cocaine production has increased at over 150% since 1995.

Cocaine consumption patterns have also changed significantly. The number of U.S. cocaine users has dropped 70% from its peak in the 1980s, reflecting a dramatic decline in casual cocaine use in the United States. Consequently, most cocaine is consumed by hard-core addicts. Total U.S. cocaine consumption has remained stable at around 300 metric tons per year since 1997. Cocaine use in Europe and Andean source countries and the surrounding region, however, has increased dramatically in the same period, with those two groups taken together consuming about the same amount as the United States. The price of cocaine in the United States has remained flat or fallen slightly, reflecting continued ready availability. Continued pressure on U.S. demand, combined with appropriate support to the Andean source countries, should create a disincentive for illegal coca production. The uncontrollable market variable is non-U.S. cocaine use.

Plan Colombia

The heavy concentration of the cocaine industry in southern Colombia in the last few years, protected by a lawless environment fostered by heavy FARC and paramilitary presence and participation in the drug trade, presents both a challenge and an opportunity for U.S. and Colombian policy. The response of the Colombian government, with our support, was Plan Colombia, a $7.5 billion, five-year program to which the United States has committed over $1 billion in assistance. This ambitious program has tremendous potential, but will take time to succeed, although eradication and interdiction efforts are already off to a fast start. Maintaining the momentum of this program is central to our goals in the region.

Regional Efforts to Complement Plan Colombia

All of Colombia's neighbors are worried about the possibility of "spillover" -- specifically, that the pressure applied by the Colombian government in southern Colombia will result in the movement of refugees, guerrillas, paramilitaries and/or drug traffickers across porous borders into other countries. While we emphasize to the region our view that the corrosive effects of drug production and trafficking have been "spilling over" Colombia's borders for years, we do not believe Plan Colombia will result in the flight of a significant number of refugees, nor a significant increase in FARC, ELN or AUC cross-border operations. We do believe, however, it will result in major disruption of the cocaine industry. Traffickers will undoubtedly try to relocate as their operations in southern Colombia are disrupted. We believe they will first try to relocate to other attractive areas inside Colombia, then try to return to traditional growing areas in Peru and Bolivia. But if those options are forestalled, they may well seek to move more cultivation, processing and/or trafficking routes into other countries such as Ecuador, Brazil or Venezuela.

To prevent traffickers from simply relocating elsewhere, we need to reinforce our counter-drug efforts in neighboring countries. For that reason, $180 million in the Plan Colombia appropriation was designated for other countries in the region. As Plan Colombia proceeds, it will be necessary to constantly evaluate trafficker reaction and their potential for re-establishing the cocaine industry outside of Colombia. Depending on how the drug threat develops outside of Colombia, we may need to accelerate this assistance, or consider a different type of assistance so that traffickers are prevented from setting up a new coca production zone. This assistance needs to be balanced between interdiction and law enforcement, eradication, alternative development and judicial reform, carefully targeted in each country to meet individual needs. Consultations in the region will be essential. Public diplomacy programs will be needed to explain and support the program with enhanced funding provided through the Andean Regional Initiative.

Demand Reduction

The Andean program is complemented by a significant increase in U.S. domestic demand reduction funding. With hard-core addicts consuming a much greater proportion than casual users of the cocaine in the United States, demand reduction efforts need to include a greater effort to close the public treatment gap. Based on data from the 1998 National Household Survey on Drug Abuse, the estimate of the difference between those in need of treatment and those actually receiving treatment (treatment gap) is approximately 2.9 million persons.

In the last decade, the National Drug Control Budget for demand reduction has increased by over 60 percent to a FY2001 level of $5.8 billion. This increase is mostly the result of efforts to provide additional drug treatment capacity, encourage the use of research-based programs, and target prevention messages to youth. To address the need for additional capacity for effective drug treatment, the Office of National Drug Control Policy (ONDCP) supports programs that make treatment services more widely available and responsive to locally identified service needs.

For example, the Targeted Treatment Capacity Expansion (TTCE) program was established to provide treatment services in areas of emerging or existing treatment need. Under the Drug-Free Communities Act of 1997, a national initiative awards federal grants directly to community coalitions in the United States. Substantial efforts have also been directed toward encouraging the use of research-based treatment and prevention programs. For example, the National Institute on Drug Abuse established the Treatment Clinical Trials Network, which attempts to bridge the gap between research and practice. In addition, the Safe and Drug-Free Schools and Communities National Program supports innovative prevention programs by awarding grants to communities that implement research-based programs in schools. Another major program for reducing the U.S. addict population is through treatment of incarcerated users. Finally, the National Youth Drug Media Campaign, a targeted, high-impact, paid multi-media campaign emphasizing advertising, is a multi-dimensional effort designed to educate and empower youth to reject illicit drugs.

Considering the growing rate of drug abuse and consumption in drug source countries, we need to couple supply reduction efforts with support for host-nation demand reduction programs. International Demand Reduction programs are designed to: build public and political support in producing and transit countries for cooperation with the United States in reducing supply; strengthen will in the international community for comprehensive anti-drug policies; increase understanding in key countries and regions of their own drug consumption problems; improve epidemiological surveys and public awareness initiatives; educate the international community about U.S. policies and programs combating drug abuse; and build effective multilateral alliances to combat drug use. In support of these objectives, we have briefed international visitors, supported international anti-legalization efforts of non-government organizations, served as a coordinating mechanism with the U.N., European Union, and Organization of American States, and shared data sets among various countries to enhance surveillance of drug-related health and social problems.

One of the consistent criticisms we face in Latin America as we work in the counter-drug field is that the United States does not do enough to curb domestic demand. While we have had some success in getting beyond the traditional and fruitless supply/demand country dispute, and have spent considerable effort explaining all that we are doing domestically to deal with our drug problem, it remains an issue. Currently, total South American and European cocaine use closely rivals U.S. consumption, blurring the old distinction between drug producing and consuming nations and demonstrating that demand reduction is not just a U.S. issue. By aggressively pursuing our own efforts in demand reduction, we promote foreign government political support for supply reduction and remove a potentially divisive issue.

Security Assistance

The ability of the Andean militaries to perform their essential missions of supporting democratic institutions, controlling international borders and supporting counter-drug efforts has declined significantly in the last decade. Andean militaries in general are limited in their ability to perform their required missions. They are also still influenced to some degree by historical regional rivalries, not reflective of current real threats to national security. Most are saddled with deteriorating or obsolescent equipment that is becoming increasingly difficult and expensive to maintain and operate. They would benefit immensely from a modest infusion of security assistance in the form of Foreign Military Financing (FMF) and International Military Educational and Training (IMET) and from increased contact with the U.S. military across the board. The impact in terms of professionalism, respect for human rights and mission readiness would be appreciable.

We need to continue to work with host-country militaries, the OAS and the Inter-American Defense Board (IADB) to emphasize subordination to legitimate civilian authority, adherence to constitutional norms, and respect for human rights. We need to enhance regional cooperation through the Defense Ministerial of the Americas process and other regional hemispheric defense establishments, and more closely link this process to the overall Summit of the Americas process to reduce the civilian/military divide evident in most Andean countries. We also need to invest heavily in improving the quality and competence of civilians who work in host-nation defense ministries. Currently, there is a lack of knowledge and experience in those civilian communities about defense decision-making and resource management, defense policy and civil-military relations. Appropriate training can address this need.

We need to work with host nations to encourage re-evaluation of their national security missions, de-emphasizing traditional intra-security force rivalries in order to adapt to changing security challenges -- including transnational threats like drugs and illegal migration, disaster relief and humanitarian assistance, peacekeeping and environmental protection. We should encourage the resolution of old border disputes, support military budget transparency, and encourage information and intelligence sharing on transnational threats as confidence-building measures to decrease the importance of old rivalries.

We should be prepared to increase our military-to-military contacts through exercises, professional education and training, personnel exchange, counterpart visits and other programs. Host nations will need assistance to proceed with rational and appropriate modernization of essential equipment to replace obsolete equipment currently in inventories. Use of the Foreign Military Sales (FMS) program will expand our ties with host-nation militaries, promote interoperability with U.S. and allied forces, and improve capability for regional combined action, especially in peacekeeping and disaster relief operations.

4. Host Country and International Contribution

The nations of the region are already heavily committed in all three of the major areas of concern: democratization, economic development and counter-drug efforts. All devote significant percentages of their annual budget to these areas, and all are willing to work with us in the design and integration of successful programs, ensuring that our efforts mesh well with their own. Exact figures are impossible to come by, as host nations divide their budgets in many different ways that do not neatly coincide with the categories of proposed U.S. assistance, but in total are committing billions of dollars to economic development, democratization and counter-drug efforts throughout the region. For example, Ecuador has established a Northern Border Initiative to promote better security and development in the region bordering Colombia. Brazil has launched Operation Cobra, a law enforcement effort concentrated in the Dog's Head region bordering Colombia. In addition, Brazil has offered to share suspect track information derived from its Surveillance System of the Amazon (SIVAM) with Colombia and its other Andean neighbors. Bolivia has been attacking drug production through its Dignity Plan and is developing a comprehensive poverty reduction strategy. Colombia continues to pursue its commitments under Plan Colombia. Panama has taken concrete steps to improve security and development in the Darien region. The new Peruvian government has made reform of democratic institutions a national priority, and has an impressive record of counternarcotics performance. In Venezuela, local authorities have cooperated aggressively on drug interdiction, exemplified by last year's record multi-ton seizure during Operation Orinoco. Our proposed Andean Regional Initiative and strategy builds upon and interrelates with these national strategies.

Similarly, third-country donors and international financial institutions are particularly active in the areas of economic development and democratization, providing grant assistance and targeted lending to the seven countries of concern. We will continue to work with host nations and international contributors to ensure those assistance programs and host-nation programs are adequately supported and well integrated.

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