U.S. Department of State 
Dispatch Volume 7, Number 21, May 20, 1996 
Bureau of Public Affairs 
 
 
 
ARTICLES IN THIS ISSUE: 
 
1. The International Affairs Budget: Large Returns From a Small 
Investment--Secretary Christopher 
2. The Federation Forum: Progress Continues--Secretary Christopher 
3. U.S. Priorities in the Americas--Anne W. Patterson  
4. Fact Sheet: Cooperation With Mexico--In Our National Interest  
 
 
 
ARTICLE 1: 
 
The International Affairs Budget: Large Returns From a Small Investment 
Secretary Christopher 
Statement before the Subcommittee on Commerce, Justice, State, the 
Judiciary, and Related Agencies of the House Appropriations Committee, 
Washington, DC, May 15, 1996 
 
Good morning. Mr. Chairman, members of the committee:I am here today to 
ask your support for the President's request for the State Department 
portion of the CJS account. I am grateful for our close consultations in 
recent months, and I appreciate your understanding of our compelling 
needs in a difficult budgetary climate. 
 
Let me begin with some facts about what is a remarkably austere budget. 
Our request to this subcommittee for the State Department and related 
agencies and accounts is $5.45 billion, almost $170 million less than 
last year's request. It is the bare minimum we need to protect our 
nation's interests while balancing the federal budget in six years. 
 
The entire International Affairs Budget has fallen 51% in real terms 
since 1984. Constituting just 1.2% of the federal budget, it represents 
a tiny fraction of the amount our nation earns from exports or of the 
amount our nation is forced to spend when foreign crises erupt into war. 
This small investment protects the interests of the American people and 
allows the United States to maintain its position of leadership. 
 
I come from a generation that clearly recognizes the imperative of 
American leadership. Those of us who served in World War II understand 
that it was our global engagement during and after the war that 
safeguarded our freedom and carried us to victory in the Cold War. We 
know that without our continued leadership, we cannot hope to protect 
future generations of Americans from the perils of a still-dangerous 
post-Cold War world. This is a central lesson of our century that must 
continue to guide us. 
 
The Returns
 
Consider what our diplomacy has accomplished in the last three years--in 
many cases with bipartisan support. We ended the fighting in Bosnia and 
eliminated the threat it posed to European security. We are bringing 
together former adversaries in the Partnership for Peace, and we are 
moving ahead with the historic process of NATO enlargement. We stopped 
the flight of Haitian refugees to our shores and gave that nation a 
chance to build democracy. We achieved the indefinite and unconditional 
extension of the nuclear Non-Proliferation Treaty. We froze North 
Korea's nuclear program and put it on the road to the scrap heap. We 
stemmed a destabilizing financial crisis in Mexico. Our economic 
diplomacy has fueled an export boom, creating more than 1 million high-
paying American jobs. 
 
Three weeks ago, the President sent me on a mission to end the 
confrontation that drove so many thousands from their homes in northern 
Israel and southern Lebanon. After difficult negotiations, we succeeded 
in producing an understanding that ended the intensive fighting and that 
is designed to prevent renewed violence and harm to civilians on both 
sides of the border. Prime Minister Peres said early on during our 
mediation effort that "only the United States can do this." He was 
right. 
 
Now we will work to move Arab-Israeli negotiations further forward. 
There remains a real opportunity to use our leadership to complete a 
circle of peace which will necessarily include agreements between Israel 
and Syria and Israel and Lebanon. Our goal, as always, is to bring 
greater security and stability to all the people of that long-troubled 
region. 
 
Some of our achievements came about because we were prepared and willing 
to use our military strength. But none could have been achieved without 
our diplomatic leadership. Indeed, diplomacy is essential and cost-
effective because it gives us options short of force to protect our 
interests. But we cannot sustain our diplomacy on the cheap--unless we 
want to shortchange the American people. That is why the choices before 
this committee are so critical. 
 
Mr. Chairman, one of the most dramatic changes I have seen over the 
years is the erasure of the line between domestic and foreign policy. 
The Clinton Administration recognizes that our strength at home is 
inseparable from our strength abroad. 
 
Facing New Challenges
 
The convergence of foreign and domestic interests is clear in our 
response to the transnational security challenges we face, including 
proliferation, terrorism, international crime and narcotics, and damage 
to the environment. These threats respect no border, ocean--or committee 
jurisdiction. They must be fought both at home and abroad and at every 
level of government. As the flagship institution of American foreign 
policy, the State Department is responsible for leading and coordinating 
all U.S. Government efforts to counter these threats beyond our shores. 
We cannot fulfill that responsibility without adequate resources. 
 
 
Stopping the Spread of Weapons of Mass Destruction. We must continue 
working to stop the spread of weapons of mass destruction, the gravest 
potential threat to the United States and our allies. We must remember 
that we could not have achieved the unconditional and indefinite 
extension of the NPT without the involvement of our embassies in every 
region of the world, in countries large and small. That is one reason 
why I believe that the United States still needs to maintain a 
diplomatic presence in virtually every country--what I call the 
principle of universality. 
 
This year, one of our priorities is to conclude a treaty to ban nuclear 
testing--a goal first set by President Kennedy 35 years ago. Our efforts 
received a significant boost from last month's meeting of industrialized 
nations in Moscow, where we forged a commitment with Russia and our G-7 
partners to negotiate a comprehensive test ban treaty by September. We 
are making real progress toward that goal. The difficult negotiations in 
Geneva are coming along well.   
 
At the Moscow Summit, we also adopted a concrete program to prevent 
illicit trafficking in nuclear materials and a process of cooperation to 
dispose of plutonium no longer needed for defense purposes. Russia 
agreed to join a treaty that bans the dumping of nuclear waste in the 
ocean and to improve safety at aging nuclear reactors. Already, U.S. 
assistance is helping to convert Russian plutonium production reactors 
and procure highly enriched uranium from Kazakstan. These urgent threats 
make our continued engagement with Russia and its neighbors critical 
despite the difficult transitions they are undergoing. We simply cannot 
afford the luxury of walking away from these relationships where U.S. 
security is at stake. 
 
We can combat another proliferation threat by ratifying the Chemical 
Weapons Convention and working with allies and friends to bring it into 
force--an effort that will require sustained work at posts from Tokyo to 
New Delhi and from London to Pretoria. 
 
Our regional non-proliferation efforts are also vital. Since this 
Administration concluded the U.S.-D.P.R.K. Agreed Framework in October 
1994, North Korea's dangerous nuclear program has been frozen in its 
tracks. The Korean Peninsula Energy Development Organization--KEDO--that 
we helped establish to implement the framework has made significant 
progress. Our KEDO contribution--funded elsewhere in our International 
Affairs request--is a small investment compared to the billions of 
dollars in contributions that South Korea and Japan are making or the 
immeasurable costs of a conflict in Korea. 
 
Last week, we reached an understanding with China that it will no longer 
provide assistance to unsafeguarded nuclear programs--another 
significant step forward in our non-proliferation efforts. The threat of 
sanctions authorized by Congress played an important role in this 
achievement--and helped us reach the result that sanctions would have 
been designed to bring about. China also agreed on the importance of 
continuing consultations on export control policies and related issues. 
 
The Clinton Administration also has led the international effort to 
prevent pariah states such as Iraq, Iran, and Libya from acquiring 
weapons of mass destruction. Our funding for the International Atomic 
Energy Agency--IAEA--supports its vital work of detection and monitoring 
in North Korea, Iraq, and around the world. 
 
Fighting International Crime, Terrorism, and Drug Trafficking. We also 
have put new emphasis on the fight against international criminals, 
terrorists, and drug traffickers. The President's appointment of Gen. 
Barry McCaffrey to spearhead our counternarcotics campaign will 
intensify our efforts at home and abroad. The State Department is 
advancing the President's ambitious strategy to put international 
criminals out of business.  
 
Last week at the U.S.-Mexico Binational Commission meeting, we took 
important steps to strengthen our united stand with Mexico against 
criminals and drug traffickers. We will help Mexico implement its new 
law making money laundering a crime. This is an important step forward 
in our dealings with Mexico. We will strengthen our Border Crime Task 
Force. We will move to control the precursor chemicals used to produce 
illegal drugs. We have made great progress toward fully implementing 
commitments for the extradition of criminal suspects, including the 
recent extradition of three Mexicans to the United States.  
 
Protecting Ourselves by Protecting the Environment. Our Administration 
also is working to protect the security and well-being of American 
citizens by putting environmental issues where they belong--in the 
mainstream of American diplomacy. Last month, I set out our global 
environmental priorities in a speech at Stanford University. As I said 
then, the environment has a profound impact on our national interests in 
two ways. First, environmental threats transcend borders and oceans to 
affect directly the health, prosperity, and jobs of American citizens. 
Second, addressing natural resource issues is critical to achieving 
political and economic stability and to pursuing our strategic goals 
around the world.  
 
Working with other government agencies, the State Department is fully 
integrating environmental goals into our diplomacy and making greater 
use of environmental initiatives to help promote peace in the Middle 
East and democracy in central Europe. We are using our Common Agenda 
with Japan and new partnerships with Brazil, India, the European Union, 
and other nations to leverage our resources. We are helping American 
companies expand their already commanding share of a $400-billion market 
for environmental technology. The funds that we are requesting elsewhere 
for sustainable development also help protect the ozone layer, combat 
climate change, and preserve the biodiversity which holds important 
benefits for American agriculture and business.  
 
The Investment
 
Mr. Chairman, let me now turn to the two main elements of our request to 
this committee--our funding for international organizations and 
peacekeeping and our funding for State Department Operations. 
 
International Organizations and Peacekeeping. This year, we are 
requesting just under $1.5 billion for international organizations and 
peacekeeping. Among other things, this part of the budget funds our 
obligations to organizations such as NATO, the OECD, the IAEA, the WTO, 
and the OAS. For up to half a century, we have worked effectively on a 
bipartisan basis through these institutions to advance American 
interests in key regions and around the world. Today, a hallmark of this 
Administration's foreign policy is to ensure that each adapts to the 
challenges of a new era. 
 
This part of the budget also begins to fund a plan to pay off, over 5 
years, our arrears to the United Nations as that institution undertakes 
necessary reforms. In this respect, the request poses another basic 
question: Will we abandon the institutions we created after World War 
II, leaving ourselves with little option but to face future crises 
alone? 
 
The United States has led in the UN for 50 years because we believe it 
is a valuable tool for advancing our interests and our values. The UN 
helped us mobilize the Gulf war coalition and deploy a force to support 
democracy in Haiti. It helped us impose sanctions against rogue states. 
Its many programs and agencies care for millions of refugees, inoculate 
children, and fight epidemics such as AIDS and Ebola. The UN Special 
Commission has helped expose Iraq's development of weapons of mass 
destruction. The IAEA helps us prevent countries such as North Korea and 
Iraq from developing nuclear weapons. The Security Council has 
reinforced our condemnation of terrorism in the Middle East and Cuba's 
shootdown of civilian aircraft. The UN War Crimes Tribunals are 
overcoming great obstacles to hold perpetrators of atrocities 
accountable for their actions.  
 
UN peacekeepers are helping us resolve the costly civil war in Angola 
and implement peace in eastern Slavonia without having to put our own 
troops at risk. Peacekeeping, a source of considerable controversy, can 
and should be a cost-effective investment. In Mozambique, for example, 
the United States spent over $700 million helping victims of war and 
hunger in the 10 years prior to 1992. After a successful UN peacekeeping 
mission, our humanitarian aid is down to $18 million this year, and U.S. 
companies have already signed contracts worth hundreds of millions of 
dollars. 
 
At the same time, I think we agree that the UN has serious problems and 
that it is seriously in need of reform. Last fall, I proposed a concrete 
agenda to the General Assembly. I called for consolidating related 
agencies, eliminating or downsizing low-priority activities, expanding 
the inspector general concept, and implementing more efficient 
management practices. The President and I have made it clear that 
tangible progress is essential to sustain the support of the Congress 
and the American people for the UN.  
 
The UN has taken important steps in the right direction. An office with 
the functions of an inspector general is up and running. Just this week, 
I met with the Secretary General and Joe Connor, the former CEO of Price 
Waterhouse and now the Under Secretary General for Management, who is 
doing such a good job shaking up the UN's management culture. In 
December, the UN approved the first genuinely no-growth budget in its 
history and established a spending cap. It has since announced plans to 
eliminate 1,000 staff positions. The Security Council has established 
rigorous guidelines for the approval of new peace- keeping missions. 
Finally, the General Assembly has established high-level working groups 
to recommend management, structural, and financing reforms. 
 
Much more needs to be done. But Mr. Chairman, our efforts to advance the 
cause of reform will not succeed without our continued leadership at the 
UN. We cannot reform and retreat at the same time. 
 
Those who cavalierly say that we can walk away from our half-century 
commitment to the UN are wrong. I want to tell you candidly that these 
large arrears are doing great harm to our national interests across the 
board.  
 
Nor can we continue to pass our financial obligations to future 
generations by building up massive arrears, especially for peacekeeping. 
When we do, we are not just shortchanging a bureaucracy in New York. We 
are shortchanging our closest allies and friends--nations such as 
Britain and Canada--who contribute the bulk of troops to peacekeeping 
missions and who have had to wait months and even years to be fully 
reimbursed by the UN. These nations place their soldiers in dangerous 
situations, often at our request, on behalf of goals we support--and 
they put up 75% of the cost. When we do not pay our promised share, it 
diminishes our influence and our reputation as a nation that keeps its 
word. 
 
State Department Operations. Mr. Chairman, I also look forward to 
working with you on our request for State Department Operations. I 
carefully reviewed the testimony that Under Secretary Moose gave to this 
committee, and I endorse his evaluation of the dire needs of our 
Department--as well as his expression of appreciation for the support we 
have had from this committee.  
 
Our embassies and consulates provide platforms not only for our 
operations but for other federal agencies around the world. Without 
them, we could not track down terrorists or counterfeiters wherever they 
hide. We could not follow the situation of religious minorities or human 
rights issues or Americans held captive anywhere in the world. We could 
not help build new opportunities for American business. We could not 
prevent narcotics shipments or environmental crises. The additional cuts 
to our budget that some in Congress propose are not a strategy for 
streamlining the Department, but for sidelining it as a force on behalf 
of American citizens and American leadership around the world.  
 
Secretary Perry likes to say that in protecting our vital interests, our 
first recourse is diplomacy. I certainly agree. But if our diplomacy is 
to be an effective first line of defense, we must revitalize our 
platforms and our presence. Just as our armed forces can be smaller in 
the 1990s because they are also smarter, the State Department can only 
function with fewer people and fewer posts if those people are better 
trained and those posts are better equipped.  
 
In this era of diminishing resources, we have worked to strengthen our 
diplomacy by making it more efficient and effective. Restructuring has 
made the State Department leaner across the board. Middle management 
positions have been reduced significantly at the State Department--by as 
much as 25% for Deputy Assistant Secretary slots. We are implementing 
new management tools, including the Overseas Staffing Model and our new 
interagency cost-sharing system, to rationalize our overseas staffing--
and I want to thank you, Mr. Chairman, for your real contribution in 
helping us make these important changes. We have also cut over 2,000 
full-time employees since 1993, and the total cuts will rise to 2,500 by 
the end of FY 1997. In order to increase efficiency and lower personnel 
costs, we also  have downsized bureaus and embassies. At the same time, 
we have decreased our administrative expenses by $139 million.  
 
I will tell you quite candidly that these reductions have been painful 
for those leaving the Service and for those of us remaining, who have 
lost the benefit of their enormous talent and expertise. But we have no 
choice given the budgetary constraints we all face.  
 
As you know, Vice President Gore has led a major effort to reinvent 
government. For our part, a Strategic Management team helped me come up 
last May with some 46 recommendations to maintain or increase our 
services to the American people at a lower cost. For example, we are 
improving our services to the American people by setting up an 800 
number for consular crises and making travel information available by 
fax-on-demand and through the Internet. We have built inter-agency teams 
here and abroad to pursue priorities such as expanding trade and 
combating crime more aggressively. We are eliminating redundancy by 
combining administrative services like warehousing and printing with 
other foreign affairs agencies. We are opening a child-care center and 
broadening our job-sharing programs to make sure that we retain the most 
skilled and diverse work force possible. 
 
For these reforms to produce better diplomacy and faster services, 
however, we must upgrade our obsolete information systems and aging 
physical plants. Four years of flat budgets have taken their toll. The 
increase of $37 million that we are requesting for State Department 
programs this year will allow a critical investment in information 
systems to go forward. Better computer technology is essential for a 
more efficient State Department and more effective diplomacy in the 
information age.  
 
As you know, USIA and ACDA also have undertaken rigorous management 
reviews and extensive stream- lining. You have heard from them directly 
during this budget process. But let me say a few words about the USIA 
and ACDA budgets this subcommittee covers. 
 
Over the past two years, USIA proposed and implemented a downsizing plan 
nothing less than draconian--1,200 positions--almost one-fourth of its 
staff--were eliminated in two years. In addition, Radio Free 
Europe/Radio Liberty has cut some 900 positions as part of its 
consolidation process. USIA continues to play an important role in 
fostering American ideals and international understanding--missions that 
remain crucial to our foreign policy and are increasingly important to 
American citizens in an interdependent world. USIA also contributes to 
the National Endowment for Democracy, which continues to play a critical 
role in supporting democracy and free elections around the world. 
 
ACDA's mission to negotiate and monitor compliance with arms control 
agreements remains crucial to safeguarding our national security. ACDA 
has played a pivotal role in securing the indefinite extension of the 
nuclear Non-Proliferation Treaty, completing the Chemical Weapons 
Convention, and conducting the negotiations underway on a comprehensive 
test ban treaty. As the result of recent downsizing, ACDA is now 
smaller, with a more tightly focused mission and a budget of just $48 
million to carry out its essential work. 
 
Mr. Chairman, the shutdowns and budget uncertainty of the last year 
have, in my judgment, damaged our international reputation for 
reliability and credibility. Leaders and ordinary citizens in many parts 
of the world couldn't quite believe that the most powerful nation in the 
world was closing for a few days of furlough. The shutdown was 
especially unsettling in the wake of our decision to close a number of 
posts that had served American interests for decades. 
 
As we face increasing global economic competition and an array of 
threats that respect no borders, we cannot advance American interests by 
lowering the American flag. Indeed, our global presence should be 
expanding, not contracting. More Americans than ever are looking to us 
to facilitate their global plans--from investment incentives to vacation 
visas.  
 
Because of the budgetary pressures we face, I proposed to close 19 
embassies and consulates during 1995 and 1996. And I must say that I was 
not happy about being forced to do so. I know that Senator Hollings and 
others of you have also heard from constituents opposing our planned 
closures of consulates in places such as Hermosillo and Matamoros, 
Mexico. As you know, Congress asked us to keep six of these posts open--
and they will remain open. After some 30 closings since 1993, I strongly 
doubt that wholesale additional closings are in the interest of the 
world's greatest power. But with further cuts to our budget, I may have 
no other alternative. 
 
Last year, I warned that our diplomatic readiness was deteriorating. I 
must report that many of our posts remain under critical strain. Our 
Beijing embassy, for example, has scarcely been repaired since 1979. 
There is simply not room for other agencies to expand their offices. 
Dust and sewer gas come in through cracks and waft along the halls. In 
Tajikistan, our staff have operated out of a hotel for four years, 
through a civil war and its aftermath. 
 
In Sarajevo, our officers were sleeping beside their desks until just 
last month. Menaced by nearby snipers and falling shells, they also 
struggled with a budget so limited that one officer bought his own 
computer and we had to ask visiting CODELS to bring in copier paper. 
Until very recently, the post's communications system was a Rube 
Goldberg model. When I visited in February, I was amazed to see a 
barbecue grill used to rig a satellite dish to the roof of the embassy. 
Mr. Chairman, the dedicated men and women of our armed forces have the 
state-of-the-art communications technology they deserve. The men and 
women of our foreign service deserve no less, especially in a country 
such as Bosnia where some 30 American civilians have given their lives 
in the cause of peace. 
 
Our people put themselves on the line for their country every day--
people like John Frese, one of our Diplomatic Security agents in 
Monrovia, Liberia, who made repeated dashes through gunfire to rescue 
over 100 American citizens during the evacuation last month. Our 
consular and passport officers in Chicago, Washington, and Amsterdam 
worked late on Christmas Eve, while the government was shut down, to 
help return two American children who had been taken from their mother 
and put on a plane to the Middle East. And five members of our Consular 
Flyaway Team gave up holidays with their families to assist and comfort 
the relatives of those killed in the American Airlines crash in Colombia 
last December. 
 
The courage, ingenuity, and dedication of our employees have allowed us 
to do more with less through the last four years of flat budgets and 
increasing demands. But there comes a time, Mr. Chairman, when less 
really is just less. We have reached that time. We cannot safeguard our 
security and promote American interests without the full $5.45 billion 
in funding we request.  
 
As I have said before, those who say they are for a strong America have 
a responsibility to help keep America strong. That means keeping our 
institutions effective and our presence around the world robust. Any- 
thing less would shortchange our citizens--the travelers and workers, 
students and business people who look to us to protect their security, 
promote their well-being, and provide assistance wherever the American 
flag flies. 
 
Thank you, Mr. Chairman. Once again, I appreciate very much your 
cooperation and look forward to consulting with you and with the 
committee in the days and weeks ahead. 

(###) 
 
 
 
ARTICLE 2: 
 
The Federation Forum: Progress Continues 
Secretary Christopher 
Remarks following Final Plenary Session of the Federation Forum, 
Washington, DC, May 14, 1996 
 
I want to thank President Zubak, Vice President Ganic, and Foreign 
Minister Granic once again for their efforts to make today's meeting 
such a success. Let me also recognize a number of other people who have 
made important contributions to the progress we have made. I want to 
thank Christian Schwartz Schilling, the Federation mediator; Deputy High 
Representative Steiner; as well as the representatives of the Contact 
Group, the UN, the UNHCR, and the OSCE. Assistant Secretary Kornblum 
deserves immense credit for getting the Federation Forum off the ground. 
Let me say a special word of thanks to my good friend Roberts Owen, 
whose personal involvement has been so indispensable to this whole 
process. 
 
Our success today builds on the progress we have all made since the 
first meeting of the Federation Forum in Sarajevo. It reflects our 
determination to see the Federation thrive as a cornerstone of a 
peaceful and democratic Bosnia. 
 
The Federation leaders have agreed on a Federation defense law that will 
unite all their military forces under a single Ministry of Defense and a 
joint command structure. They have agreed on the need to establish, by   
May 31, the financial structures that are essential to economic recovery 
in Bosnia. They also agreed to conditions that will allow goods to move 
freely throughout the Federation. I am very pleased to announce that, at 
the President's direction, Commerce Secretary Kantor will lead a 
delegation of business leaders to Bosnia and Croatia to continue 
Secretary Brown's vital work. The delegation will include executives 
from some of the very companies whose leaders lost their lives with 
Secretary Brown. 
 
So that free and fair elections can be held, the Federation officials 
have also agreed to specific steps to ensure equal access to the media 
as well as freedom of movement to candidates, to journalists, and most 
important, to voters. They agreed to implement fully the UNHCR's 
guidelines for the return of refugees and displaced persons. They 
reached final agreement on the structure of the Federation's 
institutions. 
 
In short, the parties have resolved many of the most vexing issues on 
their agenda. That is a significant achievement--in principle. The 
confidence of the United States and the international community, and our 
ability to support the Federation, will depend on the implementation of 
these commitments. Our work today will not truly be complete until it is 
seen and felt on the ground by the people of Bosnia. 
 
We understand that the progress the Federation has made has not come 
easily. We know that the agreements we have reached--from Dayton six 
months ago to Blair House today--are not self-implementing. That is why 
the Federation Forum will be a continuing process. That is why we are 
determined to stick with this process day-in and day-out, until we 
finish what we have started. 
 
Once again, I want to thank you   for your commitment thus far. I look 
forward to working with you in the  weeks and months to come, as we   
build steadily to our goal of lasting peace, with justice, for the 
people of Bosnia.  
 
[BOX ITEM:] 
For other Federation Forum documents and updates on Bosnia, see the 
Department of State's Internet Web Page on "U.S. Policy on Bosnia" at 
http://www.state.gov/www/current/bosnia/boshome.html. The site includes 
the latest speeches, testimonies, and fact sheets on Bosnia as well as 
the official full text of the Dayton Peace Accords. Other U.S. foreign 
policy information is available at http://www.state.gov.  [BOX END] 

(###) 
 
 
 
ARTICLE 3: 
 
U.S. Priorities in the Americas  
Anne W. Patterson, Deputy Assistant Secretary, Bureau of Inter-American 
Affairs 
Remarks at the Council of the Americas Conference, Washington, DC, May 
6, 1996 
 
It is a pleasure to be here with you at your 26th annual conference. 
This is always an important event for the Department and the bureau, and 
we value this opportunity to exchange views with such an informed and 
engaged audience. 
 
It is traditional during these remarks to review the progress of Latin 
American economies over the past year and discuss some of the policy 
challenges of the future. 
 
1995-96: A Record of Continued Progress
 
As I look at what is happening in the region today, I see the impressive 
breadth and depth of reforms as enunciated by our leaders at the Miami 
Summit: democracy, open markets, respect for the environment, and broad-
based growth. Many of these reforms are areas which would not usually be 
called "market-oriented," but they are crucial to the success of growth. 
 
Looking back over the past year, I would make three points. 
First, 1995 was a year in which Latin America's commitment to market  
reform was tested and proved its strength. Even in the face of recession 
and balance-of-payments pressures, Mexico, Argentina, Brazil, and other 
countries continued on the path of reform. 
 
The steadfastness of the region's commitment to the market has shown its 
wisdom. Countries that have taken the hard steps necessary to get on the 
path of self-sustaining growth are now getting good results. 
 
-- Last year's inflation of 25% was the lowest in a quarter-century. The  
regional average, moreover, obscures some remarkable individual 
successes. 
 
As Mr. Shafer mentioned, Argentina achieved an annual inflation rate of 
2%. Not too long ago, monthly inflation of 2% was considered positive. 
In Brazil, last year's inflation was 22%, the lowest in 30 years. 
 
-- Despite last year's recessions in two of the region's key countries, 
cumulative growth of 15% for the five years of 1991-95 exceeded the 13% 
rate growth for the entire decade of the 1980s. Once again, regional 
averages obscure some remarkable individual successes: This decade, 
Peru, Chile,  and El Salvador have annual average growth rates exceeding 
6%. Note that these three countries, not long ago, were experiencing 
protracted and severe political and economic stresses. 
 
-- With President Caldera's courageous reform package announced on April 
15, Venezuela has now joined the ranks of reformers. The initial 
adjustment no doubt will be tough, since the economic distortions have 
taken a toll. But the reintroduction of market forces on interest, 
exchange rates, and consumer prices should soon restore investor 
confidence and reinvigorate Venezuela's growth. The International 
Monetary Fund, World Bank, and Inter-American Development Bank have 
responded with substantial financial pledges, and we fully support those 
efforts. 
 
Second, as in the case of market reform this past year, the region's 
commitment to democracy and peace was tested and proved itself strong. 
Let me give you four specific examples of progress on the political 
front. 
 
-- Early last year, armed clashes erupted between Ecuador and Peru over 
a 19th-century border dispute.  The conflict threatened our common  
vision of hemispheric integration and peaceful settlement of disputes. 
 
The "guarantors" of the Rio Protocol--Argentina, Brazil, Chile, and the 
United States--first brought an end to the fighting and then facilitated 
talks between Ecuador and Peru to achieve a lasting solution. Our 
coordinated military and diplomatic actions demonstrated that a regional 
approach can   be effective even on sensitive issues of national 
security. 
 
-- As the Secretary mentioned this morning, the U.S.-Mexican Binational 
Commission meeting, now taking place in Mexico City, is another example 
of political progress. Ten cabinet-level officers are participating in 
these talks, which, in their 14 working groups, range from education and 
culture, to law enforcement. The commission serves as the anchor to the 
fruitful and mature bilateral relationship that the United States and 
Mexico have fostered over the past several years. 
 
-- In Haiti, democracy remains fragile but in place. The new Preval 
government faces enormous problems of poverty and weak institutions. But 
there have been remarkable achievements to date in Haiti. The transfer 
of power from one elected president to another on February 7--
unprecedented in the tragic history of Haiti--is an extraordinary 
achievement. During President Preval's visit to Washington in March, he 
reiterated his commitment to economic reform, including privatization. 
The Government of Haiti is now negotiating with the international 
financial institutions on a new agreement to support such reforms. 
 
-- In Paraguay, only two weeks ago today, constitutional order was 
threatened by the refusal of Gen. Lino Oviedo to accept President 
Wasmosy's order removing him from the post of army commander. For a 
moment, it looked like the return of a discarded anachronism in the 
region--the military strong man. In the end, however, the general lost 
his job because he could not challenge the array of forces that came to 
the rescue of Paraguayan democracy. Popular support for President 
Wasmosy was reinforced by a clear message from the hemisphere that    
extra-constitutional action would not be tolerated. The United States 
spoke out quickly and firmly, immediately followed by a strong OAS 
resolution. 
 
OAS Secretary General Gaviria and the foreign ministers of Paraguay's 
MERCOSUR partners were on the ground in Asuncion less than 24 hours 
after the crisis began. Bolstered by the expressions of solidarity at 
home and abroad, President Wasmosy was able to face down the general. 
 
Third, to develop institutions. In 1995, implementation of the Summit of 
the Americas Action Plan moved forward quickly. Some impressive results 
are already in place. Mack McLarty and the Secretary have mentioned the 
historic corruption convention. There are two other examples drawn from 
areas which are not usually considered to be in the economic sphere but 
which are critical to achieving our economic goals. 
 
-- To strengthen peace and security in the region--an indispensable 
condition for business confidence--countries have taken a series of 
measures to cooperate more closely against terrorism, culminating in 
last month's OAS Terrorism Conference held in Lima. 
 
-- Finally, to improve transparency in civil/military relations, the 
Declaration of Santiago in November 1995 outlined a series of 
confidence-building and security-building measures for the hemisphere. 
We have contributed to that process by becoming the first country in the 
region to notify countries of our significant military exercises, and we 
hope others will do the same. 
 
The speed and comprehensiveness of Summit implementation are due, in 
large part, to the establishment of high-level, follow-up mechanisms. 
Each of the 23 initiatives has a country or international institution 
serving as its "responsible coordinator." A Senior Implementation Review 
Group meets about every four months. Finally, the hemisphere's foreign 
ministers will meet on the margins of the OAS General Assembly to review 
Summit progress next month in Panama City. 
 
The Remaining Challenges
 
In reviewing these substantial achievements since our last meeting, we 
are not declaring victory in our effort for a stable, democratic, and 
prosperous hemisphere. Rather, we now have considerable resources with 
which to face the problems and challenges of the rest of the decade. 
Among those challenges, two are critical to continued economic and 
political progress. 
 
First, we need to fully absorb the lessons of the financial crisis which 
began with the Mexican peso devaluation of December 1994. One of those 
lessons is to address forthrightly the problem of low domestic savings. 
Sebastian Edwards, the World Bank's chief economist for Latin America, 
has noted that: 
 
The low level of domestic savings represents one of the most--if not  
the most--serious weaknesses in the region's macroeconomic position. 
 
Latin America's median savings rate has been around 20% of GDP--about  
10 points below that of East Asia. A large part of that disparity 
consists of capital flight. To quote Dr. Edwards again: 
 
To achieve rapid growth, Latin American countries must raise domestic 
savings and investment to levels closer to those of the successful East 
Asian economies. 
 
Growing successes in the battle against inflation, increasing prospects 
for political and macroeconomic stability, renewed expectations of 
growth-- all bode well for increased savings. 
 
Another critical element is regulatory reform to build financial 
institutions which are efficient, transparent, and accessible. The 
experience of the high-growth countries of East Asia shows that even 
small entrepreneurs and poor families will save if they have reliable 
access to efficient savings institutions. Further, the ability to save 
effectively for a better future is one of the most powerful tools of the 
individual against hard times and of society against political 
instability. 
 
This brings me to the second and longest-standing challenge--the 
region's persistent poverty. Reliable data on poverty are hard to come 
by. But we know that a very large proportion of Latin America's people 
live in poverty--39% in 1990--about 169 million people, according to 
estimates of the UN Economic Commission for Latin America and the 
Caribbean. The poverty rate in 1990 was roughly the same as in 1970, but 
because of population growth, the number of poor people increased by 57 
million in those two decades. 
 
I would guess that the lives of most poor people today are probably 
better than they were at the start of the decade. But disparities 
between rich and poor are very wide in Latin America; historically, the 
poorest 20% of Latin America's population had about 3% of total income, 
compared to 6% in the rest of the world. 
 
Over the long run, the most powerful weapon against poverty is 
education. Enrique Iglesias summarizes years of research and experience 
on this issue across the world as follows: 
 
The experiences of industrialized and developing countries alike 
indicate that education has been the cornerstone of economic and social 
progress attained by people everywhere. 
 
Most Latin American countries already have a commitment to universal 
education. The challenge is to provide practical access to quality 
education-- especially at the basic level in both rural and urban areas-
-to both girls and boys. 
 
Public spending for education in the region fell on a per capita basis 
during the 1980s. Further, the emphasis on university education eats up 
the funds for basic schooling. Administrative costs for education in 
Latin America are inordinately high by world standards. Gross enrollment 
ratios look good, but quality is poor, with extraordinarily high 
repetition rates. According to 1988 data, the average student remains in 
the school system for seven years, yet completes only four grades. This 
means that almost half of those who enter school do not stay long enough 
to acquire full literacy and other basic skills. 
 
The fight against poverty is one of the highest priorities in the Summit 
Plan of Action and in U.S. policies. A host of initiatives are underway 
to increase job opportunities for the poor and to improve health and 
education. 
 
-- Among these, the Inter-American Development Bank, for example, has 
earmarked $500 million for loans and grants to bolster microenterprises 
and small businesses, and $1.5 billion in loans for education 
infrastructure, particularly for primary education. 
 
-- Our First Lady, Hillary Rodham Clinton, recently launched a 
hemispheric Partnership for Education Revitalization, focused 
particularly on improving basic education. 
 
-- The Pan-American Health Organization, last April, initiated a program 
to eliminate measles from the hemisphere. 
 
The problems of poverty are huge and difficult, and their resolution 
will require many years of determined and well-focused efforts by 
governments, international and national institutions, and non-
governmental organizations such as yours, working particularly at the 
local level. 
 
The U.S. Policy Agenda
 
The U.S. agenda toward Latin America and the Caribbean reflects the 
issues I have just reviewed--market-based reforms, democracy, 
strengthening basic economic institutions, and alleviation of poverty. 
Over the next year, our agenda is necessarily focused on the long or 
medium run, both because the issues are inherently resolvable only in 
the long run and because, as you well understand, it is difficult to 
launch major or controversial initiatives during an election period. At 
the same time, the major issues in the U.S.-Latin American relationship, 
in our view at least, transcend partisan concerns, and we will be moving 
steadily forward on them through the end of the year. 
 
Let me close with two specific issues which are of special concern to 
this audience. 
 
First, there is the Free Trade Area of the Americas--FTAA. I believe the 
record from the Denver and Cartagena ministerials shows that the 
commitment to achieving the FTAA remains strong and that there is real 
progress toward meeting the 2005 goal. For that reason, I believe the 
momentum was never really lost. 
 
Perhaps your sense of lost momentum comes from the perception that this 
initial pre-negotiating phase--data collection and analysis and 
development of negotiating procedures--is not all that important or 
difficult. But, in fact, it is indispensable, especially for 
negotiations as complex and technical as the FTAA. Given differences in 
legal systems, government practices, language, and technology, even 
establishing a good database is no easy matter. Further, an accurate, 
comprehensive, up-to-date, and accessible source of data on the trade 
laws and practices of the entire hemisphere will be a real boon to 
private traders and an incentive to trade expansion well before any 
trade agreements can be implemented. 
 
Finally, the real energy in the drive toward the FTAA--indeed, toward  
any major trade liberalization effort-- comes from business. Day-by-day 
deals are cumulatively and rapidly producing economic integration de 
facto, while we in government work on integration de jure. One of the 
greatest successes of the Cartagena meeting is the acknowledgment by all 
the hemisphere's ministers by providing an explicit role for the private 
sector in the FTAA process. 
 
We have received many inquiries from businesses about the Cuban Liberty 
and Democratic Solidarity Act, otherwise known as Helms-Burton, which 
the President signed into law on March 12 in response to the Cuban 
Government's unjustified shootdown of two unarmed U.S. civilian aircraft 
on February 24. The Act increases economic pressure on the Cuban 
Government by discouraging foreign investment in confiscated U.S. 
properties. Title III enables Cuban Americans to file suit in federal 
court against those firms and individuals "trafficking" in confiscated 
property in Cuba. Title IV requires the exclusion of "traffickers" from 
the United States, particularly corporate officers and directors. This 
has been the most publicized portion of the bill, and our allies have 
asked for consultations. The President may suspend the lawsuits for six 
months at a time if he determines that the suspension is necessary to 
the national interests of the United States and will expedite a 
transition to democracy in Cuba. 
 
The Act also mandates the preparation of a plan for assistance to future 
Cuban governments to aid in the island's transition to democracy. We 
hope this plan will make clear to the Cuban people that the United 
States stands ready to help them through this challenging process. 
 
We are now moving expeditiously to implement the Act's provisions. We 
also remain committed to strengthening civil society in Cuba through 
public and private programs of support for the Cuban people. We 
encourage NGOs and private sector firms to explore what opportunities 
might be available for them to support independent organizations on the 
island. Our goals are a peaceful transition to democracy and Cuba's 
reintegration into our hemisphere's democratic community. 
 
Conclusion 
I would like to close my remarks by emphasizing that the region's solid 
economic prospects, combined with the growing strength of democratic 
institutions, make Latin America and the Caribbean an excellent partner 
for the U.S. Our relations with Latin America are based on mutual 
benefits and mutual responsibilities. The past year has shown that we 
are moving together in a joint effort among all the governments of this 
hemisphere and among the public and private sectors. 

(###) 
 
 
 
ARTICLE 4: 
 
Fact Sheet: Cooperation With Mexico--In Our National Interest 
 
The United States and Mexico have a unique and rich relationship, 
perhaps unlike any other bilateral relationship the two countries 
maintain. We share a commitment to economic growth, which benefits the 
people of both nations; a belief that open, democratic governance 
provides for the most legitimate representation of its citizenry; and a 
common border and the stewardship of the shared border environment. Over 
the past decade, U.S. and Mexican political, economic, business, and 
social leaders have accelerated cooperation on a range of issues to find 
the best solutions to benefit the people of both countries. Such 
cooperation was symbolized on January 1, 1994, with the entry into force 
of the North American Free Trade Agreement--NAFTA. NAFTA--together with 
supplemental labor and environment agreements, and the complementary 
Border Environment Cooperation Commission--BECC--and North American 
Development Bank--NADBank--unites the United States, Mexico, and Canada 
in a shared vision for the future of the North American continent. U.S.-
Mexico bilateral cooperative programs further enhance this partnership 
and strengthen the overall relations between the two nations.  
 
Mexico and the North American Economy  
 
The Mexican economy has undergone significant restructuring in the past 
decade. Mexico has gradually reduced its dependence on petroleum exports 
and has liberalized its trade and investment laws. It became a 
contracting party of the General Agreement on Tariffs and Trade in 1986. 
Mexico joined the Asia-Pacific Economic Cooperation forum in 1993 and 
the Organization for Economic Cooperation and Development in 1994. 
 
In 1993, Mexico signed NAFTA, which establishes the first unified 
framework for trade throughout North America. NAFTA also marks the first 
time in the history of U.S. trade policy that environmental concerns 
have been addressed in a comprehensive trade agreement. In addition, the 
parallel labor agreement reflects concerns about protecting workers' 
rights and institutes strong dispute resolution mechanisms. 
 
Economic developments in Mexico directly affect the U.S. economy. 
 
--  It is the third-largest trading partner of the United States. 
--  It has been one of the fastest-growing major export markets for U.S. 
goods and services over the past decade. 
 
U.S. exports to Mexico have grown at an average annual rate of 15% since 
1986, increasing from $12.3 billion in 1986 to $45.5 billion in 1995. 
The recession in Mexico, following the December 1994 peso crisis, led to 
the emergence of a $15.5 billion deficit in U.S. bilateral trade with 
Mexico, as U.S. exports fell 8.9% in 1995. But U.S. exports in 1995 were 
still 11.4% higher than in any pre-NAFTA year. 
 
NAFTA has helped maintain the momentum for economic reform in Mexico, 
despite last year's economic downturn. As the Mexican economy recovers, 
NAFTA will create important new opportunities for U.S. exporters and 
investors. 
 
The instability in Mexican financial markets following the devaluation 
of the peso in December 1994 sparked an economic crisis which threatened 
to spread to other emerging market economies, especially in Latin 
America. The United States responded by leading an international effort 
to assist Mexico in overcoming its economic problems and reestablishing 
a stable macroeconomic environment for future growth. 
 
On February 21, 1995, the United States and Mexico signed agreements 
implementing a $20-billion U.S. support package using funds from the 
Treasury Department's Exchange Stabilization Fund. Mexico drew on $12.5 
billion in U.S. funding in 1995. As of February 1996, Mexico had repaid 
$2 billion in short-term funding--plus an additional $750 million in 
interest--leaving a net balance of $10.5 billion, which is scheduled to 
be repaid in full by 2000. 
 
While the Mexican economy suffered a severe recession in 1995, with real 
GDP falling almost 7%, support from the United States and international 
financial institutions helped ensure that the economic crisis did not 
derail the significant economic reforms undertaken by Mexico. The 
Mexican Government has implemented tough stabilization measures and has 
restated its commitment to trade liberalization and market-based 
structural reforms. Since the peso crisis, Mexico has raised more than 
$6 billion in international financial markets, and there were mounting 
signs that the Mexican economy had begun to turn the corner as it 
entered 1996. 
 
Democracy and Political Reforms in Mexico
 
Mexico is undergoing a profound political transformation as significant 
and far-reaching as the country's recent economic restructuring. 
Beginning in 1989, Mexico embarked on a series of reforms that ushered 
in an unprecedented level of openness to the political system. Although 
the Institutional Revolutionary Party has dominated Mexico since its 
founding in 1929, opposition parties have made significant gains through 
the ballot box in the past several years, including four governorships; 
mayoral posts of major cities, including many of Mexico's largest urban 
centers; 200 of 500 seats in the lower house of the Congress; and 33 of 
128 seats in the Senate. Opposition parties govern some 28% of the 
Mexican population at the state and local government level.
 
President Zedillo entered office on December 1, 1994, pledging to deepen 
the political reform process. He promised to work with the leadership of 
all major political parties in achieving that goal, including enacting 
changes to electoral law affecting campaign and party financing, full 
autonomy for electoral institutions, and unbiased access to the media by 
candidates. In January 1995, the Mexican Government and the leaders of 
the four largest political parties signed a pact pledging cooperation on 
political issues and, in April of that year, established permanent 
working groups to address specific reform proposals. Later in 1995, 
these discussions were broadened to include private citizens with 
expertise on political reform issues. 
 
The U.S. Government supports Mexico's efforts to achieve a fully 
participatory democracy. For the 1994 presidential elections, the United 
States provided about $1.5 million through USAID and the National 
Endowment for Democracy to support election-related activities in 
Mexico. The United States continues to provide funding for democracy-
strengthening projects with Mexican non-governmental organizations--
NGOs. 
 
The Mexican Government has recognized long-standing problems of 
corruption and human rights abuses by government officials. President 
Zedillo initiated a sweeping reform of the Mexican justice system to 
combat the high level of corruption among law enforcement and judicial 
personnel and to ensure that all Mexican citizens benefit from the full 
application of the rule of law. To address human rights abuses, the 
government established, in 1990, the autonomous National Human Rights 
Commission--CNDH. Subsequently, human rights commissions were 
established in all 31 states and the federal district. Since its 
creation, CNDH investigations into allegations of human rights 
violations have resulted in the firing or censuring of more than 2,000 
public servants, most of them members of public security forces. 
Nonetheless, critics of the CNDH contend that the commission's lack of 
authority to bring criminal or civil charges against those accused of 
human rights abuses and an overly bureaucratic structure limit its 
effectiveness. 
 
Mexican and international human rights NGOs have severely criticized the 
Mexican military, holding it responsible for abuses occurring during the 
January 1994 uprising in Chiapas. NGOs remain critical of the Mexican 
Government's failure to bring charges in connection with those and other 
violations. The CNDH reported abuses, including torture, committed by 
police or other law enforcement personnel against suspected rebel 
leaders and supporters taken into custody during operations conducted in 
February 1995. However, the Mexican Government  has not brought charges 
against any officials involved in the arrests. Although the government's 
dialogue with the Zapatista National Liberation Army has not yet 
produced a definitive resolution to the conflict in Chiapas, both 
parties remained committed to a negotiated settlement, and peace talks 
continue. 
 
Several southern Mexican states, most notably Guerrero and Tabasco, in 
addition to Chiapas, suffer politically motivated violence, often caused 
by local political rivalries. The most serious recent example of this 
rural violence happened in June 1995 in Guerrero when state police 
killed 17 peasants who were en route to an anti-government 
demonstration. A CNDH investigation determined that at least one 
deliberate execution occurred and that state investigators had been 
negligent in their conduct of the investigation and had falsified 
forensic test results. Faced with pressures from the CNDH and the 
Mexican press and public, the special prosecutor in the case ordered the 
arrest of 22 former state officials and policemen in conjunction with 
the killings. President Zedillo, to ensure an impartial investigation 
into the killings requested, in March 1996, the Mexican Supreme Court to 
initiate a separate inquiry. The state governor subsequently resigned so 
as not to impede the investigation. 
 
Cooperation Along the U.S.-Mexico Border 
 
The U.S.-Mexico border is one of the most active and vibrant 
international boundaries in the world. In fiscal year 1995, there were 
nearly 290 million legal crossings from Mexico into the United States.  
 
Progress on border issues is one of the most encouraging aspects of 
U.S.-Mexico bilateral relations. Important issues of water, sewage, 
health, the environment, law enforcement, air quality, border 
infrastructure, transportation, trade, and consular services are the 
subject of daily interaction. With the momentum of NAFTA, we have better 
border mechanisms to deal with the issues than in the past. Nonetheless, 
when local issues boil over, the relationship can be put to a severe 
test. Local, state, and federal officials from both nations meet 
frequently to seek common, cooperative solutions to these mutual 
problems. NAFTA also created additional mechanisms through which the 
U.S., Mexico, and Canada do cooperate on border environmental issues. 
Two of these, the BECC and the NADBank, became operational last year and 
have begun to certify and approve financing for needed environmental 
infrastructure projects on both sides of our common border. 
 
Migration. President Zedillo affirmed his commitment to improved 
bilateral cooperation on illegal immigration and alien smuggling during 
his October 1995 state visit to Washington, D.C. To enhance mutual 
efforts to reduce the use of Mexican territory by third-country 
nationals as a springboard for entry into the United States, the Mexican 
Government created a special police group to patrol its southern border 
and increased the number of interior checkpoints. The U.S. Immigration 
and Naturalization Service--INS--and its Mexican counterparts have begun 
sharing sensitive information on alien smugglers, and Mexico is now 
making arrests based on that information. In 1995, Mexico deported more 
than 110,000 third-country migrants. It also assisted with the 
repatriation of Chinese migrants, interdicted off Mexico's west coast, 
who were planning to enter illegally into the United States. 
 
The United States and Mexico also work actively to make the border a 
safer place for citizens of both countries. Mexico created a special 
police force to combat criminality along the U.S.-Mexico border. Mexico 
has effectively addressed the dangerous problem of so-called "port 
runners," persons attempting to avoid U.S. immigration inspectors at 
southern California border crossings by running through southbound 
vehicular lanes of U.S. highways. Mexico and the United States have both 
taken actions to limit access to the infamous cross-border drainage 
tunnels utilized by illegal migrants in Nogales, Arizona. 
 
Mexico hosted a regional migration conference in March 1996, which 
included the Central American countries, the U.S., and Canada. Topics of 
discussion included regional cooperation, extra-regional migratory 
flows, alien smuggling, and the economic and social dimensions of the 
migratory phenomenon. 
 
The Binational Commission Subgroup on Migration and Consular Affairs met 
three times in 1995, most recently on September 26 in Washington, where 
Mexico and INS agreed to begin a pilot program of voluntary interior 
repatriations for those caught multiple times attempting to enter the 
U.S. illegally. The group will meet next during the May 1996 Binational 
Commission Meeting in Mexico City. 
 
According to INS estimates, about 4 million illegal immigrants, about 
half of whom were Mexican, were residing in the United States in June 
1994. Border Patrol apprehensions along the southwest border were up in 
fiscal year 1995 to 1.3 million, due, in large measure, to an enhanced 
southwest border control strategy by INS. 
 
Illegal Drugs. A strong partnership with Mexico is critical to 
controlling the flow of illicit drugs into the United States. President 
Zedillo has declared drug trafficking Mexico's primary security threat, 
has acknowledged that corruption poses one of the most serious obstacles 
to combating it, and has endorsed closer cooperation with the United 
States. 
 
Since President Zedillo took office in December 1994, Mexico has taken 
some important steps to combat drug trafficking, including the January 
1996 capture and return to the United States of notorious drug kingpin, 
Juan Garcia Abrego, the introduction of legislation to criminalize money 
laundering and combat organized crime, and the intensification of 
Mexico's illicit crop eradication program. Mexico has also initiated 
reforms of the criminal justice system, reorganized the Attorney 
General's office and enhanced the role of the military in the 
counternarcotics effort. 
 
President Zedillo, as part of his efforts to halt drug-trafficking in 
Mexico, expanded the counternarcotics role of the Mexican military. The 
army coordinated a number of major law-enforcement operations, including 
the 1995 arrest of major Mexican trafficker Hector Luis Palma and the 
replacement of federal judicial police by military officers in key 
locations. The Mexican air force's radar and jet aircraft were directed 
against drug-laden cargo jets. In 1995, Mexico participated with the 
United States and the Central American countries on two regional anti-
drug trafficking and alien smuggling operations resulting in significant 
seizures of narcotics and disruption of alien smuggling rings. 
 
U.S.-Mexico cooperation on counternarcotics issues has continuously 
intensified in recent years. In 1990, the United States and Mexico 
launched a joint air interdiction program wherein U.S. radars detecting 
suspect trafficker aircraft would "hand off" the target to Mexican 
aircraft and ready-response teams at the potential landing site. The 
program is now focusing on the recent shift by traffickers to the use of 
high-speed cargo jets to bring multi-ton loads of cocaine from South 
America to Mexico. 
 
In 1991, the United States helped to develop a centralized drug 
intelligence center--the Mexican National Drug Planning Center--CENDRO. 
CENDRO was later incorporated into the National Counternarcotics 
Institute--INCD--the Mexican Government's umbrella anti-drug program. 
The INCD has become the main interlocutor with U.S. agencies on both 
drug policy and operational matters, with CENDRO as the operational 
control center. 
 
In March 1996, President Clinton asked Gen. (Ret.) Barry McCaffrey, 
Director of the Office of National Drug Control Policy, to lead a "high-
level contact group" to enhance cooperation with the Mexican Government, 
to review policies and priorities, and to develop a plan of action to 
confront the threat of narcotics trafficking. Mexican Attorney General 
Antonio Lozano heads the Mexican counterpart "contact group." 
 
More than half the cocaine entering the United States comes through 
Mexico. Mexican cartels have worked with South American traffickers and 
have developed new transit routes and sophisticated trafficking 
techniques to produce and distribute heroin, marijuana, methamphetamine, 
and other drugs. In 1995, Mexican officials seized 40% more marijuana 
(780 metric tons) and 41% more opium (223 kilos) than in 1994. Cocaine 
(22 metric tons) seizures were up slightly from 1994 levels. Seizures of 
methamphetamine increased significantly to 496 kilos, and nearly 5 
metric tons of its chemical precursor, ephedrine, were also seized. 
 
U.S. experts estimate that the Mexican Government significantly expanded 
drug crop eradication in 1995, cutting marijuana production by 35%, from 
5.5 metric tons in 1994 to 3.6 metric tons, and reducing opium gum 
production by 10% from 60 metric tons in 1994 to 53 metric tons. 
 
U.S. experts believe Mexico has become a major money laundering center 
in the hemisphere. Its financial system remains vulnerable to drug-
related financial transactions, and U.S.-Mexico long-shared border 
facilitates currency smuggling. President Zedillo has introduced 
legislation to criminalize money laundering, and both governments have 
signed agreements to combat money laundering and other financial crimes. 
 
Environment and Natural Resources. The United States and Mexico long 
have worked together to manage natural resources and to resolve 
environmental matters which affect the lives of people along the border. 
In addition to the nascent work of the BECC and NADBank, the following 
cooperative activities highlight continuing and new efforts to address 
environmental challenges. 
 
--  As a result of the environmental agreement negotiated as part of 
NAFTA, the United States, Mexico, and Canada created a North American 
Commission on Environmental Cooperation to strengthen environmental laws 
and address common environmental concerns. 
  
--  The International Boundary and Water Commission--IBWC--under the 
1944 Water Treaty, focuses on border sanitation problems and is 
responsible for flood control, conservation and division of the use of 
border waters, and maintaining the international boundary. The IBWC, 
working with the Environmental Protection Agency and border state and 
local authorities in both countries, completed several border sewage 
projects, including the expansion of a waste-water treatment plant at 
Nogales, and is building wastewater treatment and disposal facilities at 
Nuevo Laredo and Tijuana. 
 
--  The United States and Mexico intensified efforts to protect and 
improve human health conditions and the natural ecosystems along the 
border region, with the signing of the 1983 La Paz Agreement. This 
agreement established a general framework, resulting in six bilateral 
technical working groups and specific problem-solving annexes that deal 
with border environmental issues. Current initiatives include the 
creation in the El Paso/Ciudad Juarez/Dona Ana County region of an Air 
Quality Management Basin and a binational committee to make 
recommendations on strategies for reducing air pollution in the basin. 
Other initiatives include efforts to deal with air pollution from the 
Carbon I/II coal-fired power plants in Mexico which affect visibility in 
the Big Bend National Park.  
 
--  As a follow-up to the Integrated Border Environment Plan of 1992, 
the United States and Mexico are developing the "Border XXI" program 
which will define and implement a shared binational vision to promote 
environmental protection and sustainable development in the border 
region. 
 
--  The Good Neighbor Environmental Board, initiated in 1994 as an 
advisory body to the Congress and the President, strongly emphasizes the 
needs for binational approaches to environmental and infrastructure 
issues and needs within border states. 
 
--  The Department of Health and Human Services--DHHS--and the Mexican 
Ministry of Health--SSA--enjoy a long-term, collaborative relationship 
on health issues. Since 1942, DHHS and SSA, along with their state and 
local colleagues, have addressed health issues along the U.S.-Mexico 
border. Traditionally, these relationships have been conducted under the 
auspices of the El Paso field office of the Pan American Health 
Organization and the U.S.-Mexico Border Health Association--USMBHA. The 
USMBHA will hold its next annual meeting in  June 1996 in Tijuana. 
 
-- In 1995, DHHS and SSA deepened their collaborative relationship as a 
result of three Secretarial-level meetings. A health working group under 
the Binational Commission will be established in 1996 to explore mutual 
interests--smoking prevention in adolescents, migrant health, women's 
health, and immunization. 
 
--  In 1994, the U.S. Department of Energy and the Mexican Petroleum 
Institute--IMP--extended a 1990 memorandum of support for Los Alamos 
Laboratory and IMP studies of modeling and state-of-the-art measurement 
equipment to better categorize the sources and abatement strategies 
related to air pollution in Mexico City. 
 
--  The United States and Mexico have about 100 joint wildlife/park 
projects, ranging from conservation and management of migratory bird 
habitats, to protecting endangered species such as the jaguar, to 
research on tropical birds. The two countries also have cooperated on 
adjacent forests and national parks under a 1985 agreement and a 1987 
memorandum of understanding. Under the 1994 North America Waterfowl 
Management Agreement, the United States and Mexico, with Canada, are 
cooperating on protecting migratory waterfowl habitats.  

(###) 
 
[END DISPATCH VOL 7, NO. 21]

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