US DEPARTMENT OF STATE DISPATCH
VOLUME 5, NUMBER 3, JANUARY 17, 1994
PUBLISHED BY THE BUREAU OF PUBLIC AFFAIRS
 
 
 
ARTICLES IN THIS ISSUE:
 
1.  Key Issues in Inter-American Relations -- Alexander
F. Watson
2.  The Hemispheric Community of Democracies:  Agenda for
Collective Action -- Richard E. Feinberg
3.  What's in Print:  Foreign Relations of the United
States
 
 
 
ARTICLE 1:
 
Key Issues in Inter-American Relations
Alexander F. Watson, Assistant Secretary For Inter-
American Affairs
Address to the 1994 Miami Congressional Workshop on
Hemispheric Political, Economic, and Security Affairs,
Miami, Florida, January 7, 1994
 
I would like to thank the organizers of this annual
congressional workshop for inviting me to share my
thoughts with you on U.S.-Latin American and Caribbean
policy.  From this beautiful city in south Florida, we
look out today at a region that is undergoing change at
an incredible pace.  The ideas of a generation that
sought to protect markets and erect tariffs have been
largely swept away.  Authoritarian governments, with few
exceptions, have given way to democratically elected
leaders, some of whom have succeeded dramatically in
providing greater freedom and prosperity to their people.
Traditional suspicion of the United States has been
replaced by insistent calls for expanded ties of trade
and investment.
 
With strong bipartisan support in the Congress, President
Clinton obtained an important victory for U.S. relations
with the Latin American and Caribbean region by winning
the NAFTA vote.  That victory affirms that we will
practice what we preach and maintain our commitment to
free trade and open markets.  Throughout the hemisphere,
countries share the common values of market economies
governed by democratic principles.  In addition, with the
collapse of the Soviet empire, the hemisphere has
achieved the goal expressed in the Monroe Doctrine:  to
make our region safe from external threats.
 
All is not so positive, of course.  Ninety miles from our
shores, the Cuban revolution is dead but staggers forward
zombie-like, threatening the Cuban people with new
suffering.  The Cuban Government clings to the
discredited and bankrupt policies of socialism,
apparently willing to risk economic collapse rather than
to end totalitarian control of society.  Human rights are
not respected, and pleas for a say in government are
ignored.  In Haiti, the old patterns of military and
elite domination still seek to defy the will of the
Haitian people and of the international community.  In
too many countries of the region, the rapidity of change
has placed great burdens on social systems already hit
hard by the economic hardships of the 1980s.  Demagogic
slogans resonate among some citizens abused by corrupt
and inefficient governments and left out of the new
prosperity.  But because we have so much in common now,
we have greater prospects than ever to address these
urgent problems through cooperation and by peaceful
means.
 
Democracy and Economic Reform
Almost all governments in the hemisphere are now
committed to macroeconomic reform and restructuring.
They are implementing policies to achieve financial
balance through tax reform, monetary and fiscal
discipline, and privatization.  They are gaining real
international competitiveness as they open up their
economies to international trade and to free up internal
markets.
 
The region's economies are responding to the following
reforms.
 
--  Capital inflows are continuing at record levels.
Particularly heartening is the steady increase in direct
foreign equity investment--the best indicator of the
business community's long-term confidence.  For 1992 and
1993, preliminary estimates indicate that the level of
investment is almost three times the average level of the
1980s.
 
--  Inflation is receding in most countries and is near
or below single-digit levels in a number of countries
which, not so long ago, were struggling with three-digit
rates--for example, Argentina, Bolivia, Chile, and
Mexico.
 
--  Latin America is experiencing its third year of solid
growth.  The Economic Commission for Latin America and
the Caribbean (ECLAC) anticipated that growth in 1993
would be around 3.6%.
 
This combination of market reform and renewed growth is
clearly positive for the U.S. economy.  Although our
exports to Latin America this year are growing more
slowly than last, the region has become one of our
largest and most dynamic markets.  U.S. exports to Latin
America have more than doubled in six years to about $76
billion in 1992. That is considerably more than we sell
to Japan and about what we sell to all of the developing
countries of East Asia.  Simultaneously, with the wave of
economic reform sweeping the hemisphere, there is a
burgeoning commitment to democratic political
institutions and processes, which are both responsive and
flexible in addressing the demands of citizens.
 
The biggest challenge we now face is maintaining this
positive momentum and consolidating previous
achievements.  We are building a new relationship between
the United States and Latin America and the Caribbean,
which is remarkably free of confrontation and
characterized by cooperation for mutual benefit.  How do
we extend and solidify this relationship so that it
becomes routine and irreversible--so that it not only
withstands the inevitable disagreements and tensions but
contributes to their resolution?  This is a question we
will be struggling with for years.  But I would like to
share with you some of my general ideas.
 
Strengthening Multilateral Cooperation
A critical part of the answer is international
institutions.  We must strengthen those which already
exist and build new ones to address the new issues which
arise as technology changes, new priorities emerge, and
citizens' needs change.
 
The OAS and the UN are now very effectively fulfilling
specific roles in resolving conflicts in the region.  The
OAS role in the defense of democracy is deeply supported
by Latin American countries, as well as by the United
States.  Examples abound:
 
--  The new OAS Democracy Unit to coordinate such efforts
as election observation in countries as diverse as El
Salvador, Peru, and Antigua/Barbuda;
 
--  The monitoring of the 1990 elections in Nicaragua and
the extra- ordinary efforts to reintegrate former
combatants into civilian life;
 
--  The 1991 agreement to impose a trade embargo in
response to the coup d'etat in Haiti in 1991, upon which
the UN sanctions were later built, aimed to bring about a
political settlement and restore democracy in that
country; and
 
--  The response to and eventual reversal of the threat
to democracy in Guatemala represented by the auto-coup of
former President Serrano.
 
Our recent setbacks in Haiti should not obscure the close
multilateral cooperation which has developed in seeking a
peaceful solution consonant with democratic values.
Examples from the economic arena are the Special OAS
General Assembly which Mexico has offered to host next
month to discuss cooperation for development, and the
restructuring of the OAS Trade Committee, whose new
charter replaces the old pattern of confrontation with a
new emphasis on dialogue aimed at encouraging trade
liberalization throughout the hemisphere.  International
financial institutions, particularly the Inter-American
Development Bank, are playing a greater role in
assistance to the region.  That trend will only
strengthen as levels for bilateral U.S. aid continue to
decline in the face of the need to control the deficit.
 
The region is also developing new forums to address
specific problems, such as the Four Friends Plus One
formula in the peace process in El Salvador; regional
meetings to discuss security- and confidence-building
measures; and efforts to control weapons proliferation in
Brazil, Argentina, and Chile.  We must remain open to new
institutional ideas and new combinations and variations
of institutional arrangements to address the emerging
issues facing us in the 21st century.
 
Closer Bilateral Cooperation
Another critical part of the answer will be stronger,
more comprehensive bilateral arrangements.  Here, our
relationship with Mexico can serve as something of a
model for what we should be working toward with our other
neighbors in the hemisphere.
 
What we are seeking--and have to a significant extent
already achieved with Mexico through the Binational
Commission--are mechanisms for addressing the many
problems which inevitably arise between neighbors.
 
Our frequent meetings provide clear understanding of our
mutual interests and available resources and venues for
dealing with misunderstandings or unanticipated issues.
If we get the rules and the structures for consultation
right, we will enhance understanding, predictability, and
flexibility; problems can be resolved at the level of
experts rather than at the political level where passions
and symbolism can overwhelm knowledge.  Better yet,
future problems can be anticipated and avoided through
consistent and long-term relationships among experts and
representatives of affected citizens as well as
governments.
 
Obviously, our geographic proximity and the resulting
intensity of our interrelationship make Mexico something
of a special case.  But the issues between us are
certainly not unique.  Look at migration.  The level of
legal and illegal Mexican migration, obviously,
significantly affects the prosperity of communities in
Mexico and the U.S.  But migration is also a critical
issue for our relationships with many Caribbean, Central
American, and even Andean countries.
 
The Key Role of NAFTA
If we reflect on the NAFTA debate in the media and in
Congress, I think we would have to recognize that NAFTA
is far more than a trade pact.  First, NAFTA and its side
agreements represent the consolidation in international
law of the commitment the Mexican Government first made
almost a decade ago to market-based policies.  It
consolidates the Mexican commitment to an economy
deriving its prosperity from openness and global
competitiveness.  By opening markets, stimulating growth,
creating jobs, and supporting reforms, NAFTA and its
supplementary agreements should promote democracy and
good government in Mexico.  NAFTA offers the promise of a
more predictable and stable relationship between our two
countries.
 
NAFTA is also a model for our relationship with Latin
America and the Caribbean.  It advances a vision for the
U.S.-Latin American relationship as a community of
nations committed to democracy, bound together by open
markets and rising standards of living, and dedicated to
the peaceful resolution of disputes.  This vision has
been a powerful stimulus to reformist Latin American
leaders to intensify their efforts to restructure their
economies and societies.
 
Latin American leaders have been telling the United
States for a decade that "trade, not aid", is the key to
mutually advantageous relationships and real economic
progress.  NAFTA and succeeding agreements will open
demands for investment as well as trade, thus attracting
resources from the private sector of our economies that
far surpass what can be provided by traditional foreign
assistance from governments.
 
NAFTA also promotes a pattern of cooperation between the
United States, Mexico, and Canada that will be essential
to dealing effectively with increasingly important
transnational issues such as labor standards,
environmental degradation, narcotics trafficking, law
enforcement, migration, and health.  The other response
to Latin America's interest in "trade, not aid" is our
leadership in the Uruguay Round.  The Uruguay Round and
NAFTA both signal that the U.S. will continue to lead the
world toward a more open trading system as we have for a
half century, and that we, as a nation, have the long-
range vision and confidence to compete effectively in the
world economy.  Not only is NAFTA consistent with GATT,
but we see it as a model for greater global
liberalization, because some of the discipline achieved
and trade liberalization agreed to in NAFTA go well
beyond what was achieved in the Uruguay Round.
 
The U.S. will take another step toward regional
cooperation through the hemispheric summit of the
democratically elected heads of state that was announced
by Vice President Gore on his trip to Mexico.  We are
actively engaged in preparing for the summit both
substantively and logistically.  We expect to have strong
participation from Congress and non-governmental
organizations in the planning of the meeting and will be
in direct contact with you soon to hear your ideas about
the best way to take advantage of this unique
opportunity.
 
Subregional Economic Integration
I have talked about multilateral institutions and
bilateral arrangements as tools for consolidating the new
cooperative relationship between the U.S. and Latin
America.  Another important aspect of that relationship
in the future will be the subregional integration, which
is underway in Latin America and the Caribbean. Latin
America, of course, has a long history of inward-looking
and protectionist integration.  However, the old groups
are being completely revamped to be outward-looking and
export oriented.  All the integration groups are
committed to implement common external tariffs, which are
generally no higher than 20%.  As barriers drop, both
within these groups and with the outside world, trade
among Latin American countries is booming, with the
corollary benefit of increased opportunities for U.S.
exporters as well.  The list includes bilateral
arrangements such as those between Chile and several
other countries--the Central American Common Market, the
Andean Pact, MERCOSUR, and CARICOM.
 
The U.S. welcomes these trends.  We want to see a region
of countries open to each other and to the world--with
increased trade, investment, and other exchanges
throughout the hemisphere and the globe.  We see the
growth of subregional free trade and integration as a
sound base for further progress toward hemispheric free
trade.
 
The Growing Role of Non-Governmental Organizations
I have spoken so far only of intergovernmental
relationships.  But increasingly, as our societies and
economies mature, and as technology shrinks the distances
between us, most of the threads in the fabric of
relations among nations will be made up of private
relationships among citizens and non-governmental groups
of different nations.
 
The participation of non-governmental organizations in
the political process is growing everywhere in Latin
America, the Caribbean, and the United States.  This is a
development which is not only inevitable but healthy for
democratic societies.  In open societies, people express
their views through a variety of forms, not only through
traditional political parties and the ballot box, but
also through various groups which represent their
specific interests and concerns.  This is vital to keep
governments responsive, to identify and articulate new
issues, and to keep policy moving in response to new
needs and changed circumstances.
 
We are just beginning to see the development of a network
of private relationships in the hemisphere.  Labor has a
long history of transnational organization, which is now
in the throes of change and modernization to respond to
the new economic and political realities on the
continent.  Business is forming transnational groups.
But in addition, there is a need and opportunity for many
other groupings across the spectrum--indigenous people;
women; professional groups such as journalists,
scientists, lawyers, and health specialists; special
interest groups of citizens interested in environmental
protection, children's welfare, protection of historical
sites, and safeguarding of human rights; and many more.
 
The development of a network of strong, articulate, and
well-organized citizens groups within countries and
across their borders is one of the strongest guarantors
for democracy and responsive government.  An indicator of
our own faith in this process is the series of agreements
we have signed with seven countries which will use
savings from debt reduction to provide some $20 million
this year to help fund the environmental and child
development activities of non-governmental organizations.
 
Let me turn next to two major challenges the region will
face as we move toward the 21st century.
 
The Challenge of Poverty
The poverty which exists in Latin America and the
Caribbean is a challenge we must address if we hope to
maintain support for both democracy and market economics.
That challenge is enormous.  By ECLAC estimates, about
45% of Latin America's people live in poverty.  Per
capita income in 1992 for the region was still 7% below
the 1981 level.  Income inequality is greater than in any
other region.  Perhaps most importantly, the disparities
between wealth and poverty are increasingly apparent--and
politically volatile--with increasing urbanization and
improved means of communication.
 
Major efforts are underway to increase the economic and
political participation of marginal groups.  There are
indications throughout the hemisphere of greater civic
participation, and growing numbers of non-governmental
organizations are looking for ways to relieve and resolve
some of the problems of the poor.  But the keys to a
sustained expansion of the middle class and diminution of
poverty are continued rapid economic reform and the
institutionalization of responsive, democratic
government.
 
Let me give some examples of policy changes that are part
of economic reform and are also good for social equity.
 
--  Getting rid of artificial protection or subsidies for
inefficient industries lowers the cost of living, which
is of greatest benefit to the middle class and the poor.
 
--  Capital-intensive production all too frequently has
been subsidized or protected, with no more justification
than that machines looked more "modern" than people.
Getting rid of such policies means more opportunities for
labor-intensive industries and jobs for unskilled and
semi-skilled labor.
 
--  The progressive lowering of inflation in the
hemisphere may be the single biggest benefit for the poor
and the middle class, whose incomes tend to be fixed and
quickly eroded by inflation.
 
The growth which such market-based policies foster will
also provide increased resources for social programs.
More effective democratic institutions--governmental and
non-governmental, including free labor unions--build the
political basis for addressing problems of poverty.
 
Past patterns of social spending in many countries tended
to concentrate on programs which benefited the elites
more than the needy.  In the face of budgetary
constraints which preclude financing both kinds of
programs, the decision to restructure social programs and
to focus on the neediest is always politically difficult.
It is a measure of the deepening democracy and social
responsibility in the region that many countries are
beginning to refocus their spending on the most urgent
needs, such as basic education and primary health care
and safety nets for the most vulnerable.
 
Good Governance
As democracy and economic reform flourish, we face
another major challenge:  improving the functioning of
government--its efficiency and honesty--throughout the
hemisphere.  Failure to meet this challenge will threaten
not only specific governments, but the political system
itself.  The commitment to good governance is growing,
and not just in Latin America.  In the United States the
effort to reinvent government led by Vice President Gore
is a major attempt to improve governance here--to make
our government more efficient, responsive, and flexible.
 
In Latin America, there is a growing new perception of
government's role in the economy.  Increasingly,
government is no longer seen as the primary source of
economic growth.  This new concept of the government's
role is a more limited and realistic one, which focuses
on those functions which only government can do and which
government must do.  Such functions include:
 
--  Setting the rules and the framework for private
decision-making and ensuring that the rule of law is
applied to all citizens, rich or poor, powerful or
powerless;
 
--  Investing in basic human and physical infrastructure,
which is highly beneficial to the society as a whole but
which is beyond the individual's ability to finance--such
as basic health and education;
 
--  Providing services to the most vulnerable in society;
and
 
--  Protecting national interests through diplomacy and
the conduct of foreign relations.
 
Largely because of this new perception of government's
role and the self-evident failure of statist models,
government is becoming leaner and more efficient
throughout the region.  It is also becoming cleaner.  In
the past year, presidents in Brazil, Venezuela, and
Guatemala were forced from office for malfeasance and
replaced through constitutional means.  The OAS has
formally recognized the need to improve legal and
administrative structures so as to prevent corruption and
improve effectiveness.  The Inter-American  Development
Bank is adopting "modernization of the state" as one of
the guiding principles of its Eighth Replenishment.  Only
through such modernization can democratic governments
effectively meet the needs of their increasingly
insistent peoples.
 
Market-based economic reform is a major part of the
recipe for improving governance and controlling
corruption.  With privatization of state enterprises and
the elimination or liberalization of controls on prices,
foreign exchange, and trade, economic decisions are
shaped by impersonal market forces rather than
bureaucracies which can become subject to improper
influence.
 
Progress toward honesty and efficiency in Latin America's
governments will also substantially benefit exporters and
investors, including those in the U.S.--and that means
benefits for U.S. workers and communities.  At present,
foreign competitors not subject to U.S. ethical and legal
constraints can sometimes outmatch even the most
efficient U.S. businesses.  Our embassies in the region
will strongly support American commercial interests with
their host governments as necessary to restore a
competitive balance.
 
The Role of Congress
It is not possible to be the Assistant Secretary of State
for Inter-American Affairs without recognizing daily the
important role of the Congress in the formulation and
conduct of our relations with Latin America and the
Caribbean.  At the Bureau of Inter-American Affairs we
have a long and diverse agenda with the Congress.  We are
still working on some old problems such as Nicaragua,
which is, in many ways, an inheritance of the Cold War.
We also have some new problems such as Haiti and Peru,
which present us with challenges to the democratic
convergence in the region that I mentioned at the
beginning of my remarks.  How we deal with these
challenges will affect perceptions of the U.S. and of the
international commitment to protect democracy in the
hemisphere.  There is, in addition, a very important
foreign aid reform going to the Congress this year which
will offer us the opportunity to rethink, fundamentally,
how we provide foreign assistance.  I would like to
conclude with some thoughts on some of these specific
problems.
 
Nicaragua.  The President recently made the decision to
release some $40 million in FY 1993 assistance to
Nicaragua over the objections of a number of Republicans
from the House and Senate.  I frankly regret that we
could not obtain a stronger bipartisan consensus.  There
is no doubt that the high expectations many of us had for
Nicaragua have not been fulfilled.  Although important
progress has been made in some areas, particularly
economic reform, there remain grave concerns about
civilian control of the military, protection of human
rights, and respect for private property.  As U.S. aid
levels decline precipitously, it is clearer than ever
that unless Nicaragua can restore confidence in its
political and economic system, the private investment and
repatriated capital essential to the country's future
will not return.
 
Since taking up my position, I have tried to simplify and
more sharply focus our Nicaragua policy.  Some members of
the UNO coalition, in particular, had come to the
mistaken conclusion that criticism in Washington of Mrs.
Chamorro's Government indicated that U.S. support was
ending.  We have made it clear to all sides that we
support the democratically elected President of Nicaragua
and will oppose any extra-constitutional changes in that
government.  At the same time, we have urged Mrs.
Chamorro to exert greater civilian control over military
and security forces.  We have opened channels of
communication with the Sandinista party to make clear
that we will judge our relations with them not by the
past, but by the extent to which they now play by the
democratic rules of the game.  The release of the aid at
this time is critical to the success of the new messages
we are sending to all the political actors in Nicaragua.
 
Our aim is to increase Mrs. Chamorro's capacity to govern
effectively and then to hold her to high standards of
performance on the key issues of civilian control,
protection of human rights, economic reform, and
enforcement of property rights.  We seek to strengthen
the moderate and democratic sectors of all political
factions with the aim of improving Nicaragua's democratic
practices and the responsiveness of the political system
to citizen demands.  I believe this policy is already
having positive results in encouraging renewed dialogue
among the relevant political factions.  That dialogue
has, in turn, enabled the legislature to function again
and should make possible passage of a series of reform
laws that will address Nicaragua's outstanding problems.
 
When Congress returns later this month, I want to renew
my conversations with the Members to work toward a
Nicaragua policy with stronger bipartisan support.Haiti.
The U.S. has real interests at stake in Haiti which can
be explained clearly to the American people.  It is not a
problem far removed from our shores.  Failure in Haiti
will have strong and proximate impact on the United
States through refugee flows.
 
President Clinton has made it clear that we support the
restoration of the democratically elected government of
President Aristide and the end of military domination of
Haitian politics.  We believe that our commitment to the
democratic process in Haiti will be best served through
negotiation and dialogue with all Haitians, including the
military, to achieve an agreement permitting Aristide's
return and his functioning as president under
constitutional guarantees for the rights of all Haitians.
Imposed solutions will not endure; for in the last
analysis, Haitians must agree to live and work together
to solve their common problems.
 
Peru.  Having had the privilege of serving as U.S.
ambassador to Peru, I must tell you that I have been very
frustrated at not being able to move forward in our
relations with that country.  Obviously, the events of
April 5, 1992, in Peru were a setback  for the entire
hemisphere and have affected congressional attitudes
toward Peru ever since.  The auto-coup was a terrible
mistake which cannot be justified.  But the U.S. and the
international community have worked diligently with Peru
to restore constitutional procedures, and we have seen a
number of positive developments.  Peru's just-completed
October 31 referendum on the new constitution represents
the third consecutive democratic election within a span
of 12 months.
 
I believe that this progress justifies our active and
continuing engagement with Peru as it seeks to
consolidate its democracy and strengthen the legislative
and judicial processes.  We need to keep in mind the full
range of concerns we have in dealing with Peru and not
permit any single issue to dominate our agenda.
 
There remain legitimate concerns about Peru's vigilance
in protecting human rights, but we can better advance our
interests in human rights by being involved and active
rather than by withdrawing.  That is why I have renewed
my consultations with the Congress about the possibility
of releasing some $30 million in Economic Support Funds
(ESF) for Peru. This is part of a multilateral commitment
we made to Peru with other international donors early in
1993, and it would demonstrate to Peru that there is an
ongoing relationship worth fostering.
 
Peru is also responsible for the production of two-thirds
of the world's illicit coca.  Cocaine abuse and
associated violent crime, along with related health care
costs, are major domestic problems in the United States.
Although the United States has put much emphasis on
demand reduction activities, U.S. anti-drug efforts must
necessarily address production as well.  Reducing cocaine
production in Peru and other Andean countries is clearly
in the interests of both the U.S. and the Latin American
and Caribbean nations.  Together, we must move to curb
narcotics trafficking while taking care to provide
alternative lines of employment for small-scale coca
farmers.
 
Conclusion
 
Finally, let me end on an issue which has dominated our
relations with the Congress in the past but promises to
change dramatically in the future--foreign assistance.
This Administration is committed to a fundamental
overhaul of the foreign assistance legislation, rooted in
the Cold War, which has guided our aid relations for the
last 40 years.  That reform of foreign assistance will, I
hope, help to make a better case to the American people
and to the Congress about the reasons for and costs of
our involvement in the world.
 
As I have also noted, our relations with Latin America
and the Caribbean will be more trade and less aid based
in the future.  This is desirable from the perspective of
our foreign policy as well as from our necessary focus on
domestic priorities.
 
But as Congress and the Administration have moved this
year to take on a number of new foreign policy
obligations such as aid to Russia--as well as to maintain
important traditional commitments to areas such as the
Middle East--Latin America and the Caribbean have taken
the greatest hits.  Aid levels, particularly in the most
fungible category of ESF, have declined by 40% to 50% or
more for FY 1994 and FY 1995.  We will be hard-pressed to
fulfill the international commitments we made in
cooperation with a number of other donors for such
important countries as Nicaragua, El Salvador, and Peru.
Our counter-narcotics programs have also been reduced
drastically.
 
As I have indicated, I believe that we have an
opportunity for unparalleled peace and progress in the
Western Hemisphere.  Modest investments in the region
will pay big dividends.  For this reason, we must
carefully evaluate our overall aid priorities.  We must
find a way to channel what resources we have for Latin
America and the Caribbean in ways that will protect the
gains of the last decade and ensure the future.
 
I appreciate this opportunity to speak with you today,
and I look forward to working closely with all of you in
the Congress on the important and challenging issues
facing us in Latin America and the Caribbean. (###)
 
 
 
ARTICLE 2:
 
The Hemispheric Community Of Democracies:  Agenda for
Collective Action
Richard E. Feinberg, Special Assistant to the President
for Inter-American Affairs, National Security Council
Address to the Council of the Americas, Miami, Florida,
December 9, 1993
 
Thank you, George Landau.  It is always a great honor to
be introduced by you and to be hosted by the Council of
the Americas.  We are at a historic turning point in
inter-American relations.  Just within the last week, the
Clinton Administration took three major steps toward the
creation of a genuine Western Hemispheric community of
democracies.
 
--  President Clinton met with the seven heads of state
and government of Central America.  It was the first time
all of these nations came to the White House represented
by democratically elected leaders.  Together, we forged a
forward-looking, affirmative agenda for the region for
trade expansion, equitable development, and democratic
governance.
 
--  Yesterday, President Clinton chose to sign the
implementing legislation for NAFTA in the very auditorium
where President Truman signed the North Atlantic Treaty
that created NATO.
 
--  In Mexico City, Vice President Gore announced that
next year the United States will invite the
democratically elected heads of state of North America,
Central America, South America, and the Caribbean to a
Western Hemisphere summit.  To quote the Vice President:
 
At this summit, we will seek to make explicit the
convergence of values that is now rapidly taking place in
a hemispheric community of democracies, a community
increasingly integrated by commercial exchange and shared
political values.  (end quote)
 
As we look forward to the hemispheric summit, we have a
magnificent opportunity to shape the agenda for inter-
American relations for 1994 and beyond.  To prepare for
the summit, the United States will, of course, actively
consult with governments throughout the region.  We also
welcome the input of the business community and other
non-governmental organizations.
 
Trade Expansion and Economic Reform
Passage of NAFTA has generated a palpable excitement
throughout Latin America.  Not since the Alliance for
Progress has there been such intense interest--and
optimism--in the prospects for inter-American
cooperation.  Nations which not long ago feared American
political intervention now actively seek inclusion in
hemispheric free trade.  On the very evening of the NAFTA
vote,President Clinton reaffirmed his intention to reach
out to the other market-oriented democracies of Latin
America to ask them to join in this great American pact
that offers so much hope for our future.  The President
has directed his Trade Representative and other senior
advisers to study the modalities, timetable, and criteria
by which freer trade can be expanded throughout the
hemisphere.
 
NAFTA and its side agreements constitute the first major
trade negotiation to go beyond commodities and capital to
take into account the other factors of production:  land
and labor.  It is clear that to prepare themselves for
freer trade, interested nations will want to improve
their protection of intellectual property rights, enhance
enforcement of environmental regulations, and upgrade--in
law and in practice--the treatment of workers.
 
We welcome the acceleration of national reform through
trade-creating subregional arrangements.  CARICOM, the G-
3, the Central American Common Market, MERCOSUR--all are
valuable building blocks toward hemispheric integration.
It is also in all of our interests to work hard for a
successful conclusion of the Uruguay Round.
 
Addressing the Social Agenda
Most Latin American economies are becoming more open and
more efficient.  But many remain inequitable, and the
lack of social opportunity threatens to undermine the
legitimacy--and endurance--of market reforms.  In
particular, government failure to deliver adequate social
services, particularly in primary health care and
education, has eroded popular support for stabilization
and deregulation.  Future failure to redress poverty and
overcome badly skewed income distribution would risk
undermining faith in democracy.
 
Just as the United States is pursuing reform of its
health care and welfare systems to improve the well-being
of its people, Latin America has an unprecedented
opportunity to raise the quality and efficiency of both
its public and private social services.  With few
exceptions, Latin American nations allocated less than 1%
of GDP to primary education in the last decade.  Having
pressed for fiscal discipline, it may sound contradictory
for the U.S.to advocate increased social spending.  In
fact, what is important is how existing funds are spent.
Improving education and health helps equalize opportunity
and stabilize democracy.  Better human capital formation
will increase the competitiveness of Latin America in
global markets.  This modern truth has motivated the
promising social innovations of recent years in Mexico,
Chile, and elsewhere in the region.
 
Between November 1993 and the end of 1994, 16 Latin
countries are holding elections.  In many of these
elections, the people will be demanding basic political
and economic change.  In implementing their new agendas,
incoming administrations in Latin America must not lose
sight of the fragile and costly gains achieved under
inherited stabilization programs.  Sound fiscal
discipline and prudent monetary policy are sine qua non
for social progress.
 
Market liberalization, however, cannot occur in a void.
It must be accompanied by institution-building to
preclude the emergence of private monopolies and the
abuse of markets.  Efficient regulatory agencies need to
be established with oversight operations in recently
privatized sectors, including telecommunications and
electricity.  The privatization of banks and the rapid
growth of equities markets in the region call for the
urgent development of regulatory institutions and
upgrading accounting standards to preclude market
failures and predictable scandals.  We need leaner, less
intrusive--but still strong--governments.
 
Promoting Democracy Through Good Governance
Throughout Latin America, defending human rights was the
great challenge of the 1970s; restoring electoral
processes was the triumph of the 1980s; and, now, the
vital interest is to institutionalize the protection of
human rights and make democracy function--to create a
state that works for all the people.
 
The challenge facing all of us is to build democratic
institutions that endure, that are honest, that are
responsive, that are effective.  In the United States, we
are seeking to reinvent our own government.  The Clinton
Administration--and the international financial
institutions--are prepared to work closely with Latin
America to promote reform in the judiciary and the civil
service, in education and health care.  As President
Clinton said to the Central American leaders, good
governance will advance our mutual objectives:  to
bolster democracy, promote social opportunity, and clear
the path for freer trade.
 
The Role of the Business Community
 Finally, allow me a few words about the role of the
private sector in this economic and political
transformation.  Throughout the hemisphere, there are
firms, excessively dependent upon state subsidies, that
eschew international competition.  The business community
must not let those fearful voices of protectionism steal
the banner of progressive nationalism.  Paradoxically,
today it is free-trade internationalism--more productive,
more competitive--which is the best guarantor of national
security.
 
Emphatically, it is in the interest of the business
community to encourage policies that enhance government
efficiency, honesty, and transparency.  Good governance
contributes to popular confidence in democratic
institutions and assures commercial predictability and
political continuity.
 
Many Latin American business executives now realize that
social equity is also in their interest.  Workers with
better education and health care are more productive.
They are also likely to be better citizens and better
democrats.
 
Trade expansion, social opportunity, and good governance
are central themes for the hemispheric agenda for the
1990s.  I urge the leaders of the business community to
speak out and to participate actively in forging this
hemispheric community of democracies.  (###)
 
 
ARTICLE 3:
 
What's in Print:  Foreign Relations of the United States
 
The Department of State has released a two-part
microfiche supplement to Foreign Relations, 1958-1960,
Volume XV (South and Southeast Asia) and Volume XVI (East
Asia-Pacific Region; Cambodia; Laos), which were
published in 1992.
 
These microfiche supplements are part of the official
record in the Foreign Relations series of U.S. policy
toward the South Asia, Southeast Asia, and East Asia
regions during the years 1958-60, and are available from
the U.S. Government Printing Office, as are the related
volumes.  Volumes documenting the record of U.S. policy
on Indonesia, Japan, Korea, China, and Tibet and their
accompanying microfiche supplements will be published
this year.
 
The material now available in the supplement to Volumes
XV and XVI records the Eisenhower Administration's
efforts to pursue policies fostering the external
security and internal stability of the nations of
Southeast Asia and the East Asia-Pacific region.  Part 1
presents the record of U.S. policy toward Burma,
Singapore, and Malaya, as well as documentation
supplementing the compilations on U.S. regional policy
toward the East Asia-Pacific region and Cambodia printed
in Volume XVI.  Part 2 documents U.S. relations with
Laos, also supplementing the documents printed in Volume
XVI.
 
Each microfiche supplement includes a printed guide
describing the methodology of selecting documents and
evaluating the results of the document declassification
review.  The guides also contain lists of files and other
material consulted, abbreviations used, and persons
cited.  All documents in the volume are also listed,
including title, date, participants (for memoranda of
conversation), from/to information, classification,
source citation, number of pages, and a brief summary of
the document.  Each guide also summarizes the associated
Foreign Relations volume.
 
Part 1 of the microfiche supplement to Foreign Relations,
1958-1960, Volumes XV and XVI (GPO Stock No. 044-000-
02384-9) may be purchased for $8.50.  Part 2 (GPO Stock
No. 044-000-02385-7) may be purchased for $9.00.  Both
are available from:
 
Superintendent of Documents
Government Printing Office
P.O. Box 371954
Pittsburgh, PA 15250-7954
 
To FAX orders, call (202) 512-2250.  Checks payable to
the Superintendent of Documents are accepted, as are VISA
and MasterCard.  For further information, contact Glenn
W. LaFantasie, General Editor of the Foreign Relations
series, at (202) 663-1133 or FAX (202) 663-1289.  (###)
 
END OF DISPATCH VOL. 5, NO. 03.

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