Transitional leadership in the Western Hemisphere.

[The following are excerpts of the remarks presented at the Center for U.S. and Mexican Studies, University of California at San Diego, July 30, 2004.]

In my capacity as Assistant Secretary of State for the Western Hemisphere, I am a strong proponent of public diplomacy that is, reaching out to promote dialogue between government and civil society both at home and abroad to foster mutual understanding and respect. I must admit that I have it a bit easier than some of my colleagues who head other regional bureaus. In this Hemisphere, we are all heirs to a millennium of Western thought promoting freedom and the dignity of the individual. Our shared values and common traditions provide a crucial foundation for closer political and economic integration.

Promoting that integration in a positive way is what U.S. policy is

about especially since the first President Bush launched the far-sighted Enterprise for the Americas Initiative in 1990. In this quest, we recognize the imperative of having strong, democratic, stable partners working with us to defend our common interests and shared values in this Hemisphere and around the world. That is why we are working hard to help the region s elected leaders confront the challenge of making democracy work for the general welfare of all of their people.

In recent months, as I have attended sessions such as these, read op-eds, and listened to speeches, I have seen rise in some circles the perception that Latin America is suffering from "reform fatigue," that market-based economic policies are not delivering the goods, and that people in the region are losing faith in democracy. Regrettably, these assertions are dominating the debate without sufficient challenge. Well, I am here to contest them because such criticisms are, at best, an unbalanced and very partial caricature of what is actually happening in the region.

Assertion 1: Democracy and Economic Liberalization have failed in Latin America.

One only has to recognize where Latin America was just twenty years ago versus today's reality to be able to successfully challenge that assertion. The sometimes violent conflicts of those turbulent days have today become a mutual effort to deliver the benefits of freedom and economic opportunity to every individual, from every walk of life, in every country. After great sacrifices, the vast majority of Latin Americans live today under leaders of their own choosing. The repressive dictatorship of Cuba is the most notable, and tragic, exception. Beyond Cuba, we see an active commitment to building societies based on the rule of law. The region's human rights record is improving daily. Freedom of the press is respected widely and practiced vigorously. Military institutions have downsized and largely withdrawn from the political arena.

Political progress in the region has gone hand in hand with economic reforms. From 1980 to 2000, the value of Latin America s exports to the world increased six-fold. From 1992 to 2003 alone, the value of the region's exports to the U.S. grew 215 percent. The National Union for Democracy and Progress (UNDP's) Human Development Index suggests that since 1980 quality of life has improved in nearly every country in the region and in some cases dramatically.

In Bolivia one of our poorest neighbors, where democracy and the free market model are being tested life expectancy, literacy, infant mortality and gross domestic product per capita all have improved dramatically in this period. Although many countries face difficult economic situations, old demons such as hyper-inflation have been largely tamed; countries are increasingly open to foreign trade and investment. Economic setbacks occur, but are no longer leading inevitably to crises that affect the whole Hemisphere.

There can be no doubt that democracy and economic liberalization have altered the landscape for the better especially over the longer term. Now, one can argue whether progress toward the reduction of poverty and inequality in the Hemisphere has been fast enough (in this relatively brief period of time). I, myself, am far from satisfied and fully understand how much more remains to be done.

At the same time, there is no proven alternative to democracy and sound economic policy certainly not the authoritarianism and populism we have seen fail so many times in Latin America. The only viable course to the real answer to dealing with the scourge of poverty lies in sticking with and deepening democracy and reform not scuttling the progress of the past two decades. And I believe this will clearly be shown as the world economy returns to growth, as it is doing at present.

Assertion 2 : Latin Americans have lost faith in democracy.

This assertion gained some credence after a recent United Nations study suggested that the majority of Latin Americans would prefer dictatorship to democracy should that dictatorship provide to them some personal economic benefits. But most of the air left that bubble after the U.N. admitted to a typographical error in the reporting of the survey results, and others questioned whether the study had drawn some unwarranted conclusions from the original polling data. People in Latin America understand as well as anyone that only democracy, with its combination of political and economic freedoms, can create the right conditions on a scale large enough to lift millions out of poverty. Voter participation rates in two recent Presidential elections in El Salvador in March and Panama in May averaged more than 70 percent. It appears to me that those citizens clearly believe democracy matters.

Nevertheless, polls do conclude that about 70 percent of the region s citizens are dissatisfied with the functioning of democracy an entirely different issue and roughly two-thirds lack confidence in such national institutions as the executive, judiciary, congress, political parties, armed forces and police. In short, Latin Americans have not lost faith in democracy but what they do question the ability of their politicians and institutions of government to deliver the benefits of a better quality of life.

Assertion 3: To combat poverty and hunger, and any other ill, in the hemisphere what is needed is a giant development fund, subscribed to by all donors, who, according to this line of thought, have not done enough?

The United States is the largest donor to the region. However, we in the United States know from long experience that money alone cannot resolve social problems. But let us look at current reality. The U.S. now imports about $240 billion in products from Latin America and the Caribbean each year. The stock of foreign investment in the region totals $270 billion. Remittances from the U.S. to countries in the region amount to close to $40 billion each year. Those numbers dwarf our assistance programs to Latin America, which this year will total about $1.6 billion. And they are incomparably larger than any conceivable aid the region might be able to receive from all the developed nations on earth.

I am convinced that the proper use of U.S. assistance should be to precisely focus upon helping our neighbors take advantage of the inevitably much larger trade, investment, remittance, and general development opportunities of the future as well as use the funds they already have at hand in a much more effective manner.

That is why we support the following:

* Educating citizens so they can thrive in an ever more competitive world;

* Improving investment and property rights regimes;

* Upgrading infrastructure to take better advantage of the region's natural geographic advantages;

* Providing better security and justice for citizens and foreign investors alike;

* Adopting open, outward looking trade policies through global, regional and bilateral trade negotiations;

* Reducing the cost of sending remittances and channeling remittances to productive uses;

* fighting the scourge of corruption;

* Combatting human immuno-deficiency virus and acquired immune deficiency syndrome and improving healthcare; and

* Allowing small entrepreneurs to flourish. All of these essential measures have two things in common:

* They can not be imposed from the outside and they cannot be replaced by generous foreign donors.

* They are the inescapable responsibilities of national political leaders working cooperatively with civil society.

Assertion 4: Poverty breeds corruption, so Latin America really cannot tackle corruption until the poverty problem is resolved.

This assertion surfaced at a discussion at the OAS General Assembly in Quito in June where we gathered to consider additional anti-corruption measures. Although it certainly is true that high poverty rates and corruption are often linked, the notion that poverty breeds corruption has that formulation exactly wrong. Indeed, I would assert that the poorest people I have met in Latin America are, not coincidentally, the least corrupt. There can be doubt that corruption exacerbates poverty. Corruption undermines democratic governance, fosters criminality, impedes commerce, wastes taxpayer funds, discourages foreign aid donors, repels investors and squanders natural resources that could be used to fuel development. It drains resources from social investment and reallocates resources to the rich and politically powerful who undermine real democratic and economic reform and resist an adequately funded state rather than risk the accountability and competition that comes with it.

In short, poverty should not serve as an excuse for tolerating corruption. Rather, corruption should be more energetically and effectively attacked both as a matter of justice and as a crucial measure to accelerate development.

Trying to Do the Right Thing

I am convinced that most of the region's leaders understand these problems and really are trying to do the right thing governing justly, investing in people, and promoting economic freedom. But as they move into the 21st century, their efforts are often hampered by lingering 19th century political values and institutions that are not always able to effectively promote development, make politicians accountable, and adjudicate the disputes natural to any pluralistic society.

Many formal democratic institutions in Latin America are weak and overly politicized. In some countries, there is not one single official body that can be relied upon to routinely make impartial, apolitical decisions in accordance with the law. Political parties in the region are often bereft of new ideas, too focused on patronage, and too dependent on the skills of one charismatic leader. This is reinforced by electoral systems that are not representative of society and do not encourage accountability of elected officials to the voters. Politicians owe too much allegiance to the party structures or individual leaders and not enough to constituents.

The poverty and the inequality of income and wealth that characterize much of the region make it difficult for democracy to thrive. Under-funded national governments lack the resources to apply the rules of the game fairly even when leaders have the political will to try. Transitional leadership in tough, competitive times. Building democracy is a long-term effort. After years of struggle and sacrifice, many countries in the region have made enormous progress on problems that are centuries old, but there is still a difficult road ahead.

In today's world, it s simply not enough for countries to be making steady progress in strengthening democratic institutions and building prosperous economies; they have to be making faster progress than others elsewhere around the globe or risk being left behind as possible investment sites and exporters of new products. Good free trade agreements bring great benefits to all participants. But, in order to fully exploit the opportunities presented by freer trade and not be caught in the low wage trap, ongoing structural reforms and innovation are crucial.

I believe that Latin America has no choice but to add these structural items to its reform agenda decentralization, deregulation, strengthening property rights, reforming labor laws, and investing in basic social services, including education and health. Countries that refuse to adjust to new global realities are going to find it virtually impossible to achieve sustainable growth, let alone prosperity.

Heading Down the Home Stretch

Many of the region's generation of democratic pioneers have passed the torch to current leaders. Those leaders will in turn pass the torch to people much like you. The work of your generation of transformational leadership is not going to be easy. It should concentrate upon the mutually reinforcing tasks of perfecting democracy and placing all countries of the region on a sound and competitive economic footing.

Taken together, trust, transparency, effectiveness, inclusiveness, public security, and political consensus to pursue national well-being are what account for the amazing durability of democratic government. These characteristics are the essence of "governing justly and well." Here in the United States, our democracy, of course, is still far from perfect. In our history, we have had to make substantial social and economic adjustments. But our system of government has repeatedly proved itself effective at heading off confrontations and of riding out crises from civil war to Presidential assassinations to natural disasters to terrorist attacks.

Our System is Nothing if not Resilient

Successful democratic governments obviously have to represent all of the people, including those who did not vote for it, historically disadvantaged minorities, and new elements that are always emerging within dynamic societies. Continuous dialogue is necessary to build trust. And trust is the key element in encouraging real political participation, as well as to keep the political pot from boiling over into conflict. Democratic governments also need to publicize their successes. Citizens need to know when their government is effective when new schools are inaugurated or inoculation programs are undertaken.

Last year, the President of Bolivia, Gonzalo Sanchez de Lozada, resigned under pressure. Yet Bolivia had come a significant way out of poverty because of his policies. The problem is, he did not tell anybody about his successes and his plans for social development and the pot boiled over. A corollary: governments need learn to cultivate, work with, and protect responsible media. They can not publicize their successes, counter critics, or expect people to understand the challenges of governing without them.

What More Must Transformational Leaders do to Succeed in Institutionalizing Democracy?

Vigorously prosecute corruption cases. Institutionalize government procedures that promote transparency. Sunlight and fresh air are natural disinfectants. Promote legal or constitutional reforms that better link elected officials to their constituents. Politicians will never behave if they cannot easily be held accountable by the voters or are officially shielded from prosecution.

Close the gap between politicians and voters by decentralizing political power and revenue collection. People do interact with local politicians. Granting municipal governments real responsibility and revenue can tamp down corruption and give people a greater sense of direct participation in the political system.

Foster an impartial, professional, and apolitical judiciary. Nothing mocks democracy more than a corrupt justice system. Some countries in the region have enjoyed great success in judicial reform by, for example, streamlining civil code procedures, introducing computerized case tracking systems, staggering the appointment of Supreme Court justices, and naming judicial councils that oversee hiring, firing, and disciplining judicial employees.

Increase Economic Opportunities for Individuals

Its impossible to wipe out poverty and inequality overnight. But the path to prosperity is built upon affording individuals the opportunity to pull their own weight and create personal wealth to become stakeholders contributing to the greater good. Reduce excessive bureaucracy in business registration, improving access to bank credit, harnessing remittances for productive purposes, and property titling.

Educate Citizens

Encourage a society in which all citizens enjoy access to primary and secondary education, and public universities offer quality, low-cost, modern higher education.

Encourage your private sectors to practice corporate responsibility.

Professionalize the Police Force

Public security is a crucial function of government, and police officers are often the most visible personification for most citizens of the power of any administration. So they must act with efficiency and respect the rights of the people.

Right-size the Military while Redefining Its Core Missions

Militaries still have an important role to play in serving society, but they should focus on such tasks as support for law enforcement, humanitarian and disaster relief, and search and rescue operations.

That is a very long and very tough "to do" list. A number of nations are beginning to address these challenges, and realizing that these are tough reforms to implement, I applaud their efforts and encourage them to carry on, since ignoring these tasks is to risk the enormous progress that Latin America has achieved by adopting democracy and sounder economic policies over the course of the past two decades.

You are here today because you are high achievers and you have demonstrated an interest in public service, public policy, and government. When you return to your countries, I encourage you to carry on the struggle for a better tomorrow for yourselves, your country, and, above all, better societies that your children can and should inherit from your efforts.

Roger F. Noriega

Assistant Secretary of State for the Bureau of Western

Hemisphere Affairs