Testimony of Michael Deal, Deputy Asst. Administrator, USAID, June 28, 2001

Testimony of Michael Deal, Deputy Asst. Administrator, USAID, June 28, 2001
Statement of Michael Deal
Deputy Assistant Administrator
Bureau for Latin America and the Caribbean
U.S. Agency for International Development

Before the House International Relations Committee
Subcommittee on the Western Hemisphere
June 28, 2001

Mr. Chairman, Members of the Subcommittee, I am pleased to be here to speak about the U.S. Agency for International Development's (USAID) role in the Administration's proposed Andean Regional Initiative and progress to date in implementing Plan Colombia.

USAID's program directly supports a comprehensive, integrated approach to our Andean counter drug strategy by balancing the interdiction and eradication efforts of other agencies with social and economic development assistance. Our experience demonstrates that no single facet of our counter-drug program can be successful without the other two also being effectively applied.

The Andean Region faces a wide range of challenges. There are growing doubts among significant numbers of the region's populations whether democratic government can deliver essential services and a better life. Sluggish economies produce political unrest that threatens democracy and, in turn, weak democratic institutions; corruption and political instability discourages investment, and contributes to slow economic growth. This vicious cycle provides fertile ground for drug traffickers and other illegal groups to flourish, and forces large segments of the population to rely on crime, insurgency and the drug economy to survive.

The Andean Regional Initiative, like our support for Plan Colombia, maintains a belief that the problems of drugs and violence in the Andean region will not be solved in any sustained way unless the fundamental causes of these problems are also addressed. Democratic institutions in the region must become stronger, more responsive, more inclusive and more transparent. The presence of governments (both national and local) in rural areas must increase and provide better services to the rural poor, and give them a stake in the future, and improve the quality of life. The justice system must be more accessible and efficient, must reduce impunity, and the human rights environment must improve. Unless the problem of widespread corruption is solved, and legal employment opportunities are created to absorb the high number of unemployed, these fundamental causes and their effects on the region and on America's national interests will be with us for a long time to come.

Helping address these tough social and economic issues is going to take time. They will require a sustained commitment and interest on the part of the U.S. Government. The Andean Regional Initiative, which builds upon the FY 2000 supplemental funding for Plan Colombia, proposes that USAID manage $390 million in FY 2002 funds. This initiative expands many of our existing programs in response to the changing circumstances in the region. USAID assistance will be directed in three main areas: first, strengthening democracy; second, economic growth through trade enhancement and poverty reduction; and third, alternative development.

Strengthening Democracy

In order to strengthen democracy in the region, we propose to commit $59.3 million in FY 2002. This assistance will help address the problems of fledgling institutions, political instability and corruption which lessen popular support for democracy at a time when most economies are under-performing.

USAID will assist in improving the administration of justice by helping to make justice systems work, make them more modern and efficient, more transparent, and more accessible. An independent and vigorous judicial system is vital to the observance of human rights, the defeat of narcotics trafficking, and the decrease of white collar and street crime. Working with the U.S. Department of Justice in Colombia, for example, we are helping move from an inquisitorial to a more open, accusatorial judicial process. We are strengthening court administration and training of judges, institutionalizing the public defender system, and working with NGOs and other interested groups to provide greater oversight and participation in judicial reform. Part of that program provides access to justice for the poor through one stop legal offices called "Casas de Justicia" (Houses of Justice), in the poorer neighborhoods of major cities. We are doing this now in Colombia and Peru with very good results. In Colombia, 18 "Casas de Justicia" have been established thus far, each hearing 150 cases per day and using alternative dispute resolution techniques to resolve problems.

We also have a program that is designed to help improve the observance of human rights which will continue. We are strengthening human rights institutions and groups, increasing their capacity to document human rights abuses and monitor individual cases. In Colombia, our activities are designed to help prevent killings with the development of an early warning system that works with the human rights ombudsman and channels information up the line to law enforcement and the military. We also have programs directly aimed at the protection of human rights workers and union leaders. In Peru, we will continue to promote increased observance of human rights through informal mechanisms for the resolution of disputes, with support to legal clinics and conciliation centers, which provided assistance for 145,000 cases in 2000.

We are and will continue to strengthen local governments in rural areas of Peru, Ecuador, Bolivia, Colombia, and Panama where the lack of basic institutional and social services has marginalized rural populations. Where the state is present, it is in the form of an overly centralized, unresponsive bureaucracy that does not necessarily work or understand the local interests of a community. Thus, we are training mayors and council members in identifying and monitoring projects, setting priorities, and handling financial resources in a more accountable, transparent way. It is a very important part of bringing democracy to rural areas. And it is an indispensable part of any program where local empowerment and ownership of national goals -- such as the war against drug cultivation - will be required to assure the continued enforcement of agreed upon eradication agreements.

With USAID assistance and through policy dialogue, the decentralization process in Bolivia helps targeted municipal governments to develop and carry out action plans in a participatory fashion, engaging civil society at the local and regional level in the process. As a result, citizen participation in government has increased, and municipalities have organized themselves into a nationwide Federation, with departmental associations and an association of women council members.

Corruption is another very serious problem. The ongoing corruption scandal from the Fujimori era in Peru has shaken public confidence in the government institutions of the country. We will work closely with the incoming administration to strengthen democratic institutions and promote good government. Similar problems are being encountered throughout the region, where we are working to strengthen the ability to expose corrupt practices and investigate and prosecute corrupt officials and very importantly, make citizens realize they have the right to demand accountability from their governments.

Social and Economic Development

The second major area of emphasis for USAID assistance will be economic growth, trade enhancement and poverty reduction, for which we propose $123 million in FY 2002 funding. All of the economies in the region have struggled over the last few years, and continue to be vulnerable to setbacks. Each of the Andean countries has a large divide between a small wealthy elite and a large impoverished class, frequently indigenous in origin. Some lack the mix of policies necessary to promote growth. Others have constructive policies, but lack the popular support necessary to sustain them over the long run.

USAID assistance will directly support the poverty reduction strategies of Ecuador and Bolivia, and will also address macroeconomic policy and banking reform in Ecuador. After an intense economic crisis in 1999, recent increases in oil prices have helped Ecuador's economy and contributed to a successful dollarization that has restored confidence in the economy. However, important and necessary structural reforms are still pending, particularly in the banking sector, for a sustainable recovery. In both countries, our assistance will promote employment generation and access to private lending capital through support to microenterprise.

Support for trade capacity development will be strengthened to help these countries develop WTO consistent trade regimes. The Administration has endorsed an extension of the Andean Trade Preference Act and a desire to move aggressively toward creation of a Free Trade Area for the Americas by January 2005. USAID Administrator Natsios has consulted with Trade Representative Zoellick as to how we can advance these trade liberalization measures. Early in June, my staff presented a range of options for promoting free trade to our Andean country Mission Directors. We look forward to helping our cooperating governments analyze their existing trade regimes and prepare themselves for discussion of competition policy and other issues. We will also assist cooperating governments in bringing civil society into the process to ensure, not only that there are economic and social development benefits from globalization, but that there is also a broader understanding of those benefits.

We will also continue health programs in Peru and Bolivia, and we will pay specific attention to education, including an Andean regional Center for Excellence for teacher training as announced by the President in Quebec at the Summit of the Americas.

Protection of their natural resources, preserving their unique ecological diversity, and helping rehabilitate environmental damage from the use of harsh and persistent chemicals for producing illicit drugs will also receive attention. Cultivation of illicit crops has a devastating effect on the environment, both in the high mountains where poppy is grown and in the lower altitudes where coca is produced. In both cases, delicate forests are cleared and their fragile soils degraded by the illegal crop. Even after the coca or poppy is eliminated, the land remains exposed and environmentally sound production systems must be adopted for sustainable conversion to pasture or agriculture. As part of our commitment to the Amazon, we have encouraged the Government of Colombia's decision to support sound livestock production systems within alternative development areas. Our Parks in Peril program extends from Mexico through Colombia, Ecuador, Peru, and Bolivia, providing practical assistance in protected area management. Also, we continue to manage local funds created under the America's Fund and the Tropical Forestry Conservation Act that underwrite the programs of local environmental NGOs.

Alternative Development

Our third and largest area of attention is expanding our work in alternative development for which we are proposing $207.5 million for FY 2002. We know that alternative development works. After a decade of work in Bolivia and in Peru, we have seen conclusively that a three-pronged strategy of eradication, interdiction, and alternative development has dramatically reduced coca cultivation in both of those countries. There is nothing as economically profitable as coca. The incentive to get out of coca on a voluntary basis is not economic. Rather, it is the threat of involuntary eradication or interdiction because drug production is illegal. There has to be a credible threat and a risk of continuing to stay in coca in order for our alternative development approach to work.

In Colombia, we are seeing that the risk of illegal coca production is credible, as evidenced by the fact that over 24,000 farmers have lined up to sign coca crop eradication agreements in just the last two months. But this is not the only ingredient. Once eradicated, production has to cease. It cannot be allowed to grow back and farmers cannot move down the road to replant the same crop. To make elimination sustainable, farmers have to have credible alternatives and local governments and organizations have to apply pressure and provide incentives for the entire community to stay out of illicit production.

Our alternative development approach is basically the same in all of the Andean countries. Groups of small farmers, communities, or farmer associations sign agreements with the government, agreeing to voluntarily reduce their coca crop in exchange for a package of benefits both at the farmer level and at the community level. At the farmer level, the benefits help get them involved in legal income-producing alternatives, and at the community level, the Government agrees to provide basic infrastructure such as schools, health clinics, public water systems, and rural roads.

Last year USAID set a target in Colombia for voluntary eradication of 30,000 hectares of coca and 3,000 hectares of opium poppy within five years. We have started in the Department of Putumayo, which presents a particularly challenging situation. Compared to the coca areas in Peru and Bolivia, the climate is harsher, the soils are poorer, the access to markets is more difficult, the infrastructure is not as good, and of course the security situation presents an additional complication for legitimate agricultural activity. Despite these challenges, the turnout of farmers who are voluntarily agreeing to sign these pacts and eradicate coca has been quite promising. Our pre-Plan Colombia heroin poppy eradication program has already eliminated 675 hectares of poppy and produced 600 hectares of productive, licit crops benefiting 770 families in the highlands of Tolima, Huila and Cauca.

In Peru, where coca production has dropped from a high of 129,000 hectares to just over 38,000, we will concentrate our efforts in the Huallaga valley. Here we intend to put into practice our beliefs that local ownership of the coca eradication goals and local empowerment to make decisions regarding the economic and social life of the region will create the environment to deter a minority from going into, or back into, coca production. In coca producing valleys, more than 27,000 hectares of crops such as coffee, cacao, palm heart and pineapple have generated around 10,000 full time jobs. Niche industries and global link-ups with international groups have been promoted in the chocolate and specialty coffee areas.

In Bolivia, coca cultivation in the once notorious region of the Chapare has all but been eliminated. Where once over 44,000 hectares of coca grew, there are now over 114,000 hectares of licit crops and pastureland. Last year alone the value of licit crops in this region exceeded $49 million. Our agricultural programs have enabled Bolivian products such as bananas, canned palm hearts and dried fruit to enter the highest quality markets, such as Germany, Switzerland and Chile. Last year, Chapare exports represented $5.7 million, an increase of 68 percent over the previous year. We intend to consolidate these successes by providing agricultural services used for coca growers to other farmers who have not yet benefited from the program but who are susceptible to offers from drug networks.

In Ecuador, USAID will continue two key border initiatives begun with Plan Colombia supplemental funding and expand the northern initiative along the Colombian border. Support will be provided to community organizations working on land-titling, social and infrastructure services, income earning activities, integrated farming activities for indigenous populations, irrigation, potable water and sanitation projects. Recognizing that support for local initiatives and institutions can help extend the presence of the state and its accountability to citizens, we will introduce activities to strengthen the capacity of local governments both on the southern border, as well as throughout the country.

Since beginning work in January, Plan Colombia has already begun implementation of 23 projects valued at $5.0 million and benefiting 117,000 people. They include potable water systems, sewers, bridges, roads, land titling, income generation, and human rights. We have special programs with indigenous communities in Carchi province and an innovative approach to assisting the 24,000 Afro-Ecuadorans who live in northwestern Esmereldas province.

Status of Plan Colombia Implementation

Mr. Chairman and Members of the Subcommittee: I would also like to take a moment to review, specifically, some of our progress in Colombia. While the task is complex, and even dangerous, and requires extraordinary coordination among many actors, we are pleased with our start-up activities and the progress we have made to date.

Because of our close collaboration with international organizations and NGOs prior to receiving Plan Colombia funds, we were able to sign over $22 million of our displaced person monies almost immediately upon receiving the funds. By renegotiating certain contracts funded prior to Plan Colombia, we were able to "jump start" the important southern Colombia elements of the program. Because of the size of other aspects of the program and the interest of the U.S. private sector, it took several months to compete and sign our initial contracts. However, all of our funds were obligated with the government by September of 2000, all commitments to contractors and subcontractors for reintegrating and resettling internally displaced persons have been made, and to date, all contractors have mobilized in the field. These efforts have resulted in tangible successes on the ground.

I have already mentioned our successes in heroin poppy eradication. In the Plan Colombia phase of our program, I can report that, as of June 11th of this year, 26 of the 31 coca elimination pacts have been signed. Those pacts are pledges to the Colombian Government by small farm families to eradicate coca in exchange for short and long-term assistance in substitute production, and these 26 pacts represent promises to eradicate over 29,000 hectares of illicit coca crops by the end of next year.

Supporting the program has been our local governance strengthening effort in southern Colombia. Memos of Understanding have been signed between USAID and the 13 municipal mayors of Putamayo. These memoranda outline the specific activities that USAID will undertake in each municipality over the next year. To date, social infrastructure fund activities have engaged scores of small farmers in their villages in Southern Colombia, providing many of them with the first tangible evidence of government concern regarding their economic and social development.

In democracy strengthening, 6 of 12 planned pilot courtrooms have been established to demonstrate the efficiency and fairness of oral trials in helping to move Colombia from an inquisitorial to an accusatorial judicial system. USAID has supported institutional development of the national Judicial School, which has trained 3,400 judges in oral advocacy, legal evidence gathering, and courtroom management procedures. USAID has also worked with NGOs and other civil society actors to analyze remaining needed reforms, increase coalition building and support full implementation of the modernization process in the justice sector.

In our highly successful effort to promote justice through alternative dispute resolution, 18 of a targeted 40 casas de justicia or houses of justice have been established. These "casas" are neighborhood judicial centers in underserved communities which bring together a variety of services in one location, giving residents "one stop" access to legal services.

Protection of human rights workers remains a major concern. In addition to having selected a long-term local contractor to help design and implement a management information system for the Ministry of the Interior to monitor abuses and progress, to date 197 individuals have received some sort of protection from the program. We are pleased to say that 38 individuals received needed relocation assistance within Colombia and two were relocated internationally under the program.

We have also made grants to seven human rights NGOs in Colombia totaling over $575,000 to help improve delivery of human rights services.

Concerning our efforts to respond to the needs of displaced persons, we can report that over 176,000 individuals have received or are receiving direct USAID assistance in the areas of housing, employment generation, health-care or education. This figure exceeds by about 70 percent our target of 100,000 individual recipients by this time -- which was considered to be very optimistic during our planning of this vitally important activity.

USAID also supports a $2.5 million program for Ex-Combatant Children which strengthens Colombian initiatives in clarifying the legal status of these children, extend them appropriate treatment and provides concrete and durable reintegration solutions. In preparation for a large-scale release of child soldiers by an illegal armed group, USAID is preparing a network of decentralized organizations to respond to such a release, as well as to assist individual cases where children must be rehabilitated after exposure to combat conditions. The Program aims to benefit directly 800 ex-combatant children through January 2003.

It is important to underscore the enormous commitment that the Colombians have shown in the various efforts we are supporting. Our efforts are complemented by $62 million that the Colombian Government has contributed this year through the sale of government "peace bonds" and an additional "peace tax". Major roads within Putamayo and connecting southern Colombia to national and international markets are already underway, as are smaller social and infrastructure projects, such as the Casas de Justicia, health clinics and schools. There have been problems at times given the need for coordination with the large number of agencies involved, and the Government of Colombia's complex procurement procedures, but these were not unexpected and have not been serious obstacles. When issues have surfaced, we have worked with the Colombians to improve the process.

I should note the special dedication of the people such as the Ombudsman's office representatives in the field, who face serious risks to their own personal safety as well. Their efforts are also supported by other members of the international community. International donors other than the United States have already pledged over $300 million to assist Colombia's effort, and the Colombians with our support have been working hard to press other donors to turn these pledges into real commitments and projects in the field.

Let me conclude by saying that just as in Colombia, the Andean Regional Initiative should be viewed as the national program in each of the affected countries, responding to their priorities and problems. They are the ones that are going to have to make this work. Our role is one of facilitating the process, and we will be working along with them over the next several years in this effort.

Thank you for giving me this opportunity to outline our programs, and I would be pleased to respond to any of your questions.

As of June 29, 2001, this document was also available online at http://usinfo.state.gov/admin/011/lef402.htm