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[H.A.S.C. No. 106–56]








JUNE 29, 2000

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JIM SAXTON, New Jersey, Chairman
CURT WELDON, Pennsylvania
ROBIN HAYES, North Carolina
JOSEPH R. PITTS, Pennsylvania
FLOYD D. SPENCE, ex officio, South Carolina

VIC SNYDER, Arkansas
GENE TAYLOR, Mississippi
JAMES H. MALONEY, Connecticut
MIKE McINTYRE, North Carolina
BARON P. HILL, Indiana
IKE SKELTON, ex officio, Missouri
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Robert S. Rangel, Director
David Trachtenberg, Professional Staff Member
Lisa Wetzel, Staff Assistant






    Thursday, June 29, 2000, Terrorism and Threats to U.S. Interests in Latin America


    Thursday, June 29, 2000


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    Saxton, Hon. Jim, a Representative from New Jersey, Chairman, Special Oversight Panel on Terrorism

    Snyder, Hon. Vic, a Representative from Arkansas, Ranking Member, Special Oversight Panel on Terrorism


    Abrams, Elliot, President, Ethics and Public Policy Center, and Former Assistant Secretary for Inter-American Affairs, U.S. Department of State

    Bailey, Dr. John, Professor, Center for Latin American Studies, Georgetown University

    Ehrenfeld, Dr. Rachel, Director, Center for the Study of Corruption

    Schulz, Dr. Donald, Chairman, Political Science Department, Cleveland State University

    Shifter, Michael, Senior Fellow, Inter-American Dialogue

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Schulz, Dr. Donald E.

Shifter, Michael

Ehrenfeld, Dr. Rachel

Saxton, Hon. Jim

[The Documents submitted for the Record can be viewed in the hard copy.]
The United States and Latin America: Shaping an Elusive Future submitted by Donald E. Schulz

[There were no Questions and Answers submitted for the Record.]


House of Representatives,
Committee on Armed Services,
Special Oversight Panel on Terrorism,
Washington, DC, Thursday, June 29, 2000.

    The Panel met, pursuant to call, at 2 p.m., in room 2216, Rayburn House Office Building, Hon. Jim Saxton (Chairman of the Panel) presiding.
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    Mr. SAXTON. We want to welcome all of you here today—members, panelists and members of the public. Just by way of introduction, this is a newly created panel. We were created to study and deal with and provide oversight to the United States' effort to deal with emerging threats, specifically terrorism.

    This is the third or fourth hearing that we have had. We are, in essence, going around the world looking at threats in various regions. Thus far, we have dealt with the India-Pakistan-Afghanistan area.

    We have moved to South America—we had a closed hearing earlier this week and this hearing today—and we will be moving to other regions of the world in the weeks ahead.

    So this Special Oversight Panel on Terrorism will come to order. Earlier this week we received a classified briefing on threats to Latin America. This afternoon, as a follow-up to that briefing, the Panel is holding an open hearing to take testimony from independent experts on this topic.

    I would also like to note that the hearing today is part of the continuing effort of our Panel to examine regional terrorism and the implications for United States national security. We are fortunate to have a very distinguished slate of witnesses. Elliot Abrams is President of the Ethics and Public Policy Center and, of course, is former Assistant Secretary of State for Inter-American Affairs.
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    Many of us know Mr. Abrams, and we are very pleased to have you here, sir.

    Donald Schulz is Chairman of the Political Science Department, Cleveland State University.

    Mr. Michael Shifter, Senior Fellow of Inter-American Dialogue.

    Mr. John Bailey, Professor, Center for Latin America Studies, Georgetown University.

    And Dr. Rachel Ehrenfeld, Director, Center for the Study of Corruption.

    We welcome you all and look forward to your statements.

    Because of the number of witnesses we have today, we would like to ask that you limit your statements to ten minutes, and of course we are looking forward to asking questions at the conclusion of your statements.

    Before we begin, I would like to recognize the ranking member, Mr. Snyder, for any remarks he may have.

    [The prepared statement of Mr. Saxton can be found in the Appendix.]

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    Mr. SNYDER. Thank you, Mr. Chairman. Thank you for your long-term interest in this topic.

    One specific interest that I have in the region—and feel free to comment on it—is the source of funding for the different groups we are talking about, where they get the money from.

    Thank you for holding this hearing, Mr. Chairman.

    Mr. SAXTON. Mr. Abrams, we are anxious to hear your testimony.


    Mr. ABRAMS. Thank you, Mr. Chairman.

    The first question I would like to ask, while the threat exists and may be growing, are our capabilities keeping up?

    In a sense, the U.S. presence in the region reflects the end of the Cold War, the departure from Panama, the reduction in military assistance to some countries, the annual strategic assessment. Two years ago, in 1997—well, the United States has been reducing its presence in the region, relocating from Panama, removing the Navy training system from Guantanamo and consolidating its diplomatic presence throughout the region. So I think the danger is that we reduce our ability to gather information and to act on it.
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    I want to talk for just a couple of minutes about the region that we don't think about in terms of terrorism, and that is the Caribbean. We think of it as beaches and palm trees; but it is a border region for us, and it is one of enormous vulnerability to terrorism. There is drug trafficking, money laundering and arms trafficking.

    The Economist magazine, in this week's issue said, once again, as it was a decade ago, the Caribbean has become the favored route of Caribbean drug traffickers. We know that with drugs comes crime and arms trafficking because weapons are vital for drug traffickers. There is good evidence recently, for example, of links between the drug traffickers and Russia's organized crime mobs where what they are trading in drugs for arms.

    There are a couple of issues here in the Caribbean, and one is the extreme vulnerability of many of the small island countries. A small group of people can bring down a government. You may remember in 1990, a small group seized the government building, the parliament building in Trinidad and captured the prime minister and later shot him, 40 hostages were taken and 27 people died and the government fell.

    What kind of protection do the islands have against such activity? The total security forces for Antigua is 100 people. In the case of Barbados, it is 610 people. That's it, police, army, all together. So we are not talking about places that can bring very much to bear in terms of protection against terrorist activity.

    With drug trafficking, there is always a large flow of money and guns, and it is uncontrolled and the opportunities for terrorists are very clear. Narco-corruption provides an excellent opportunity for terrorists because, by definition, it means that there is a lot of smuggling of people and material. That is true for South America and it is true for the Caribbean. It is a perfect environment for terrorists, and it is one that is right on our border. Are we keeping our guard up?
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    One of the questions that I think the Panel should look at at some point is the Coast Guard. Are we maintaining the abilities of the Coast Guard to defend us, not just from smuggling and drugs, but from terrorists as well? Do they get the necessary resources? Have we replaced assets that we have lost in recent years, for example, in Panama? How important was having Panama for counterterrorism information and action?

    And then there is the question of the vulnerability of Americans in the Caribbean area. Embassies, tourist hotels, student groups, it is a feast for terrorists. Are our official targets safe? Are the unofficial targets safe?

    In general, in the Latin region, as we know, there are Islamic terrorists. I am sure others will mention the destruction of the Israeli embassy in Argentina, followed two years later by the destruction of the AMAI Jewish Community Center building there. These are not really crimes that have been solved. People who did them have not been punished. I don't think that there is much doubt that Middle Eastern terrorist groups were involved.

    In 1999, we saw some arrests in Ecuador of some alleged Egyptian terrorists who are wanted in Egypt as senior members of a radical group that tried to assassinate President Mubarak in 1995, and this group is claiming attack on tourists and belongs to an umbrella group that Osama bin Laden created in 1988.

    In the interest of time, I want to mention a few issues that perhaps we can go into later. One of them is the move-up of trouble from Colombia into southern Panama. Some people will tell you that southern Panama is really a guerrilla playland, and without our presence in the former Canal Zone, our ability to help is limited and the deterrence of our presence in Panama is missing.
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    I think another issue is, does the turn-away from democracy in Ecuador, Venezuela, Peru, does that not likely lead to instability and violence?

    There is the old chestnut of Cuba. Cuba was a haven for terrorists which, according to the State Department's report, Pattern of Global Terrorists, it still is. A number of terrorists, Basque terrorists, others live there, close connections with the Revolutionary Armed Forces of Colombia (FARC) and National Liberation Army (ELN) terrorists from Colombia. Cuba continues to play a role there.

    Let me just sum up with some questions: Have we hardened U.S. official targets in the region? There was a time when our embassies down there were practically vacation posts for ambassadors. Are they safe? Can we use the regional security system in the Caribbean to support the smaller islands in resisting terrorism, because they sure can't do it on their own.

    Are our military systems and International Military Education and Training (IMET) numbers good enough? They are steady, but steady at low levels for many of the countries. Are they sufficient or does the counterterrorism program require more?

    Can we collect the information about terrorism that we need? And do we coordinate well enough with the British and with other Europeans who have interests in the Caribbean? Did we lose important locations and assets when we gave up the bases in Panama, and if we did, have we replaced them?

    What is the shape of the Latin branch now of the Directorate of Operations of CIA, which has to do a lot of counterterrorism work? What is the morale like? What are the capabilities like?
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    And finally, U.S. Southern Command (SOUTHCOM) took over areas of the Caribbean from the Atlantic Fleet recently. Has that worked? Has that switch been smooth, and does SOUTHCOM have the capabilities it needs not only in Latin America, but in the Caribbean, which is a new area of responsibility for it?

    In the interest of time, I will stop there, Mr. Chairman. Thank you again for inviting me.

    Mr. SAXTON. Thank you very much.

    Mr. Schulz.


    Dr. SCHULZ. Thank you, Mr. Chairman.

    I have been asked to address current and future challenges to security interests in Latin America. I have recently written a number of studies on that subject, which I have brought here today. One is a study that I wrote at the U.S. Army War College on the United States and Latin America, Shaping an Elusive Future, in which I looked at the challenges to U.S. Military and strategic policy.

    Another is an essay on Plan Colombia, asking the hard questions, which looks at the current U.S. strategy towards Colombia and tries to ask, what are the pitfalls and the probabilities of success of that strategy.
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    Then third, for my formal testimony today, I also submitted a short statement regarding the growing threat to democracy, which Elliot Abrams mentioned.

    There are a number of countries today in which democracy is very shaky at best. Indeed, I would suggest that in terms of the overall trends in this hemisphere, democracy has reached a high tide and is beginning to ebb. The question is how far the ebb will go and what can be done about it.

    I simply ask these three documents be entered into the congressional record with your permission.

    Mr. SAXTON. Without objection, so ordered.

    [The information, The United States and Latin America: Shaping an Elusive Future, can be found in the Appendix.]

    Dr. SCHULZ. Let me touch on a few countries in which I think there are particular problems from the threat of terrorism, and I think Michael Shifter and John Bailey will follow up in more detail. Let me begin.

    Colombia obviously is, I think, the ''basket case,'' if you will excuse the expression, in the hemisphere. You have got the combination of a very complex situation, a combination of terrorist threats coming from different directions, which are interrelated in many ways. You have FARC guerrillas, ELN guerrillas and other small guerrilla terrorist groups.
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    You have paramilitaries which have been created largely as a consequence of the abuses of power of the Marxist guerrillas. You have narcotraffickers who have now become interlinked with the guerrillas and the paramilitaries and also with Colombian governmental institutions, including the military. And all of these are linked together; they are one package.

    The question is, how do you deal with these different facets of the Colombian civil war when a solution to one problem may intensify the difficulties coming from other directions? For instance, one of the dangers I think that we are facing now with Plan Colombia and the move towards supporting that counternarcotics war is that we may end up not eliminating drugs and drug production in Colombia. We may simply spread it around more.

    There is such a thing as the ''balloon effect'' which counternarcotics people like to talk about. In the 1980s and 1990s, we chased narcotraffickers from the Caribbean to Mexico back to the Caribbean, destabilizing both areas in the process.

    More recently we have chased narcotraffickers and growers, farmers, out of Bolivia and Peru towards Colombia with the result that Colombia is now the greatest producer of coca as well as cocaine in the world. The danger also is that in instigating a major push against the growing areas in southern Colombia, we may end up pushing peasants into the arms of guerrillas or narcotraffickers or paramilitaries—or all of them.

    The difficulty also is that there is an interconnection between Colombia and its neighbors. There is a very great danger of spillover. Ecuador is extremely worried about the upcoming campaign. They are anticipating large numbers of refugees over the border, and they are ill-equipped to deal with them.
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    The danger, as happened in the past, you may get a balloon effect from these activities, with growers again retreating into Peru and Bolivia and Ecuador, and even Brazil and Venezuela, with destabilizing consequences for all of these countries. I am not suggesting that there is any easy answer to this issue. I think these are issues that need to be very seriously considered.

    Another area which I think is appropriate to mention, because there is an election on Sunday—Mexico. Nobody knows who is going to win the election this Sunday. But it is entirely possible that you will have an opposition candidate, Vincente Fox, winning. It is possible that Vincente Fox may win the plurality of the votes, but still lose the official tabulations. Most people think that the fraud accompanying these elections will not be great in comparison to what we have seen in the past, but nevertheless in a very close election, it could be decisive. We could potentially see a destabilizing process in Mexico.

    In addition, in recent years you have seen the growth of narcotrafficking cartels, particularly along the border with the United States, in Tijuana. The danger is, of course, that this type—particularly in the midst of chaos in Mexico, this type of activity may grow worse. It may become more difficult to combat the cartels and the violence, narcoviolence in Mexico, could increase again as it did in 1994.

    In addition, you have also got a growth of guerrilla groups in Mexico—not just the Zapatistas, there are other groups as well. And if you are talking about a destabilized situation in Mexico—I am not predicting it—the ability to contain that kind of insurgency is likely to be reduced considerably.
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    Another area which I see as a danger area is Venezuela. They have elections coming up. I think what we are seeing is that President Chavez's honeymoon is coming to an end. He has not solved the problems in Venezuela, and he is losing ground in terms of popularity. At the same time, Chavez has militarized Venezuela's political system to an extent unwitnessed since the restoration of democracy back in 1958.

    I would anticipate that you are going to see a power struggle and an attempt by President Chavez to increase the concentration of power in his own hands. At the same time, we have already seen a fairly considered effort to weaken the political opposition and weaken traditional institutions. I think that the situation in Venezuela is very fragile, very dangerous and could very well get worse.

    Very briefly, a couple of other statements: Peru, we just had very questionable elections, and we are not quite sure what the final outcome is going to be. There is a danger, when you get this kind of fraud traditionally in Latin America, for reaction—a social and political reaction to begin, which undermines the autocratic regime. We saw this in Batista's Cuba and we saw this in Nicaragua. There is a danger here also, particularly if you combine this with the danger of the problems in Colombia spilling over into Peru.

    The other part, however, is that it is a very tricky situation because of what are you transitioning to. We want to uphold democracy, no question. But democracy in Peru has had a very shaky history. You have had a history of corrupt and incompetent presidents and legislators, which is one of the reasons why Fujimori was elected in the first place, because the electorate was fed up with it; and even if you have a restoration of democracy, the net result could be a return to this kind of government, it could be a return to instability, offering opportunities for the resurrection of the Shining Path, et cetera, offering the possibilities of a weakening in the war against drugs. And one of the things that one can say about Fujimori, he has been an ally in that area.
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    So what we are looking for here are democratic restorations. And what are the consequences? It is not clear, and the irony is that you could get destabilization whether you have democratic restoration or Fujimori consolidates his power.

    Ecuador, a country rapidly moving into chaos. They have had two coups in the last four years, one legislative and one military. The economic and social system is in chaos. Where is this going?

    Haiti, you have an election later this year. The winner of that election almost certainly will be Jean-Bertrand Aristide, and there are questions about his commitment and his willingness to tolerate an opposition, meaningful opposition. There are questions about narcotics, about the use of political violence. All of these things are going to face Haiti increasingly as the election approaches and after the new government comes into office also, I suspect.

    Cuba, I don't think a transition is close. I think the regime will last as long as Fidel lasts, and I suspect that he will last for a number of more years, maybe another decade. On the other hand, what are the alternatives? Is it possible, for instance, that we could effect some type of a democratic transition by opening up Cuba to U.S. influence, trade, investment, tourism, all of these things? I have long been a supporter of that theory, but on the other hand, transitions to democracy are slippery slopes, and I think also one has to be aware that there are very real risks involved in that kind of a strategy. You could end up destabilizing Cuba if Castro himself loses control.

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    Finally, I just wanted to make one reference to a policy question, what I would call ''contradictions in U.S. policy towards Latin America,'' which need to be looked at. There are two that stand out. First, the contradiction between the U.S. economic strategy on the one hand and the requirements of regional political stability on the other. And the second is between American counternarcotics policies and the requirements of political stability.

    The rapid movement toward globalization and marketization has and will continue to aggravate problems of poverty and inequality. That means political turmoil, violence, terrorism. At the same time, U.S. counternarcotics policies have chased traffickers from the Caribbean to Mexico and back, Bolivia to Peru, destabilizing all of these countries in the process.

    Sanctions on the Samper administration because of the president's complicity in accepting campaign contributions from narcotraffickers effectively crippled the ability of the Colombian state to deal with the growing disintegration due to paramilitary and guerrilla violence in those countries.

    My point here is that U.S. policies have had unintended side effects that have to be recognized and addressed, and this will require a greater flexibility and imagination than we have shown thus far.

    On that note, let me simply close.

    Mr. SAXTON. Dr. Schulz, thank you very much. I wish I could say that was encouraging. We thank you for your candor.
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    [The prepared statement of Dr. Schulz can be found in the Appendix.]

    Mr. SAXTON. I look forward to the testimony of Michael Shifter.

    Mr. Shifter, will you tell us about Inter-American Dialogue?


    Mr. SHIFTER. Inter-American Dialogue is a nongovernmental nonpartisan think tank and policy forum on Inter-American issues. It was created in the 1980s to try to improve the quality of debate and discussion on Inter-American issues.

    Thank you, Mr. Chairman. I appreciate this opportunity to appear before you this afternoon. I doubt if I am going to be any more encouraging than Don Schulz, but I will see what I can do.

    I have been asked to speak about the policy challenges posed by Colombia, specifically within the context of the very troubled Andean region. The timing for this hearing couldn't be any better. Congress has recently approved a substantial increase in assistance to Colombia. Colombia is already the third largest recipient of security assistance in the world. With this aid package, it will move closer to the two top recipients, Israel and Egypt. The United States now has an opportunity to forge a coherent policy to the worsening problems in the Andean region.
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    The best way, I think, to do that is to give Colombia the support that it needs to begin to reverse the deterioration on all fronts.

    Colombia is suffering from multiple crises. But outside support, especially from the United States, is critical. The Andean neighborhood, as has been mentioned, is in great turmoil. In January, Ecuador had the first successful military overthrow of an elected civilian government in South America in nearly a quarter of a century.

    Venezuela's problems are many and profound, and it faces tremendous uncertainty.

    Peru is in the biggest political crisis in the last decade and faces crises of legitimacy.

    There are grave questions about the capacities of governments in Ecuador, Venezuela and now Peru to govern their populations effectively.

    It is important not to be too alarmist. There is no evidence at all that the regions are about to erupt. In fact, exaggerating conditions in this set of countries has some risk of becoming a self-fulfilling prophecy, but at the same time, it is crucial not to turn away from the region's disturbing realities.

    There is not an Andean virus, as such. Each country is dealing with its own acute problems. In Colombia, the problems are related to continuing insurgencies and paramilitary groups, fueled by the drug economy.
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    In Venezuela, traditional political institutions have been discredited, and there is a deep economic and social crisis.

    Ecuador's problems have to do with corruption and endless political infighting.

    But all of these countries have perilous political and governmental institutions, and citizens of these countries have very little confidence in their institutions to solve problems. That is why we are seeing in country after country the armed forces are playing a more important role.

    Three weeks ago I spoke at two conferences in the Andean region, one in Colombia and the other in Ecuador. Both of those conferences dealt with the security challenges of the Andean region. There is tremendous interest and concern in these countries about the widening crisis, and Colombians and Ecuadorians are acutely aware of their troubles.

    Colombia is the focal point, and it should be. The country is beset by lawlessness and public disorder. Paramilitary forces are well armed and well financed to a significant degree by the drug economy. Drug production and trafficking and, increasingly, consumption as well, continue to go up in Colombia. Kidnapping is rampant, and over half the world's kidnappings take place in Colombia, and today that is their most acute problem.

    Humanitarian crises are the worst in the hemisphere. The currently displaced population in Colombia is the third highest in the world after Sudan and Angola, and the Colombian Government's capacity to assert control is being tested as never before.
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    Colombian people in government are not trying to spread their problems to neighboring countries. On the contrary, they are doing what they can to attempt to manage the problems better and prevent them from spreading, but there is ample evidence, as has been mentioned, that problems are affecting the already vulnerable neighbors in very important ways.

    Of the five countries, I would say Ecuador justifies the most concern and demands the most attention. The border between the two is highly porous. There have been reported kidnappings by the FARC insurgency of Canadians, Spanish, Belgian citizens, as well as Ecuadorian businessmen. The FARC's activities along Colombia's southern border, combined with the fact of growing public anger and social mobilization of Ecuador itself, raises important security questions.

    Ecuadorians are deeply concerned about the prospect of growing violence and refugee flows from Colombia. Many are worried about the possible effects of the increasing involvement of the United States in southern Colombia, but other Ecuadorians are quick to point out that absent such involvement, their country is already a great risk. There are no easy answers.

    Colombia's problems are also affecting Venezuela, and the relations between the two countries are on edge. Especially since the new government of Chavez came in a year-and-a-half ago, kidnappings are very frequent. That border is also porous, and there has been considerable violence, and the ELN, the second insurgency in Colombia, has made repeated incursions into Venezuelan territory.

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    Colombians displaced by the violence, paramilitary forces, have fled into Venezuela, further exacerbating an already tense situation. With the long-standing problems that have been mentioned with Panama, paramilitary and FARC incursions have been common, and there have been kidnappings there as well.

    Panama disbanded its armed forces maybe a decade ago and is reviewing its security arrangements to deal with this problem more effectively.

    Colombia's problems with Brazil and Peru are of less immediate concern. They bear watching, particularly on the expansion of the drug problem and the possibility of increased coca production and trafficking popping up in those countries. They are fertile ground for that, and that needs to be dealt with very carefully.

    For the United States, these problems warrant sustained attention. Colombia should be the focal point. That is where the crises are more severe, but there needs to be a great sensitivity to wider spillover and implications throughout the Andean countries.

    There are five ways that U.S. interests are significantly affected by Colombia. First is that the United States needs a reliable partner in the common effort to deal with the drug problem. Colombia has an authority crisis and a governance crisis that is not good for the United States.

    Second, a stronger Colombia means a stronger Western Hemisphere.

    Third, the deterioration in the humanitarian situation in Colombia, which is a setback for the country's democracy, the oldest democracy in South America, will be a reversal for the region as a whole.
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    Colombia is also the second largest country in South America, the fourth largest economy and the fifth largest export market in Latin America; and so there is an economic interest. And finally, Colombians are coming to the United States. In the last 4 years, 800,000 Colombians have left Colombia; many of them have come to the United States and there is no reason to doubt that as the situation deteriorates, that number will increase substantially.

    The fundamental purpose and strategy of U.S. policy should be to help Colombia regain control and authority of—so that its government can protect its citizens and deal with all of the problems more effectively; but it is important to underscore, to do so requires going beyond the current aid package, whatever its merits or flaws might be. It means devising a longer-term policy and strategy dealing with the situation in Colombia.

    This is not Vietnam; it is not El Salvador or the Balkans. Colombia needs to be understood on its own terms in all of its complexity.

    The elements of such a policy should include the following:

    To back the efforts to help Colombia find a political solution to the conflict;

    To provide security assistance in the Colombia armed forces with greater emphasis on professionalization and training;

    To focus more attention on dealing with the drug problems on both demand and supply side, and a more serious multilateral approach needs to be pursued;
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    Fourth, support efforts and institutional reform in nonsecurity areas with emphasis on judicial reform and strengthening the rule of law; and

    Pursue every measure to assist Colombia economically to ensure that Colombian products have greater access to U.S. markets.

    The United States cannot and should not pursue such a policy alone. It will need to work cooperatively through multilateral institutions, and with our European friends, Japan and, of course, our partners in the hemisphere. Our policy must be clear, consistent and well coordinated; otherwise, as I perceived on my recent visit to the region, to Colombia and Ecuador, the issue could well become what U.S. ulterior motives might be, and not the fundamental policy challenges facing these countries—indeed facing all of us.

    The recently approved aid package to Colombia should be seen as a first step toward a more constructive policy, and we should have no illusions that this support will take care of the country's problems. To make progress in dealing with the problems, much more is required on the part of all concerned—our partners in the hemisphere, the Colombians themselves, the American public and the political leadership in Washington.

    Thank you very much, Mr. Chairman.

    Mr. SAXTON. Thank you very much.

    [The prepared statement of Mr. Shifter can be found in the Appendix.]
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    Mr. SAXTON. Dr. Ehrenfeld.


    Dr. EHRENFELD. Thank you, Mr. Chairman. I am pleased to have an opportunity to speak to you about the threat that I have identified and have written extensively about 16 years ago for the first time. So to discuss it as a future threat I think is wrong, but I am glad I have an opportunity to speak to you.

    I would like to point out, nobody here used the word ''narcoterrorism,'' and that is interesting because that is how terrorist organizations, arms dealers and other criminal organizations are forging alliances in order to work together. That is called ''narcoterrorism,'' and that is the way that it should be identified. And I think, to be fair, the U.S. needs to look at that in its foreign policy regarding this whole issue.

    It has also been recognized as one of the leading killers of Americans. Drug trafficking which comes to this country kills more people than anything else. The economic policy is tremendous, and it is really—what we see is really chemical warfare, if you want, on the United States, and I think that justifies more serious steps taken to control it, if not to stop it.

    Since the Soviet Union has ceased to exist, state-sponsored terrorism is on the decline. And as I said, terrorism and drug trafficking recognizes global threats to society. But the, United States, first and foremost, and other nations are oblivious to much more insidious threats, which is the connection between the criminals and the terrorist organizations.
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    You, Mr. Chairman, I think, asked where is the money coming from. Where is the funding coming from for terrorist organizations? Well, most of them from drugs—not all of them, but most of them. And even those that are secondary, even kidnapping, it is for political reasons in order to intimidate others and to show that they have control. But the major source of income is drugs. Drugs are coming here and drugs are going elsewhere, and it should be recognized as such.

    I would also argue that the Colombians are studying the problem in the region because they have friends. They send over other people. They have groups that they work with in order to distribute the drugs all over the place.

    When I wrote first in a book in 1990, it was more accepted—the idea was more accepted because the Soviet Union was involved. But when they left, when the Soviet Union ceased to exist, the organizations became independent because drug money made it possible for them to continue to arm themselves.

    Today, when the Soviet Union is not there any more, but the arms are coming to Latin America, it is also a marriage of convenience; and the former Soviet Union military personnel and intelligence officers are using their connections in Latin America in order to sell arms. I don't see much ideology among the various groups that are called ''rear groups,'' terrorist organizations.

    I think that the fight is more over money and resources, sources of money and the resources for money. I don't give much credence to the ideological components.
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    I think that narcoterrorism is such that it has been ignored because of other priorities, especially on the state part. When we began the war on drugs, we thought that we are making some—we are really in a bad condition and we are just about standing on the edge of the very big disaster, and it seems all of the progress that we have made since is getting pulled into it.

    John Featherly, a former senior Drug Enforcement Agency (DEA) official, suggested that the United States law enforcement knows who the narcoterrorists are, we know their routes, where they live, where they cultivate and produce their drugs, and who they corrupt; and yet we do little to stop them. If the United States was serious about the war on drugs, it would provide the necessary funds to fight the war on drugs at their sources, using special methods that are available to the government.

    I understand that just recently $20 million has been approved in order to produce special herbicides that will kill cocaine and poppy. And the money—I understand that a special bill was passed to appropriate the money, but the money has not been appropriated by the government. I understand that the Administration is sitting on it. That is one example of how we are not doing enough.

    In the various wars on drugs, which we have seen since we started it many, many years ago, we continue to change strategies and, therefore, there is nothing consistent. It is hard to change your tactics in the middle if you approve one thing now, if you think it is ideologically justified to do what they are doing.

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    Decades after Colombia's leftist guerrillas adopted narcoterrorism as their main path to achieve their agenda, they continue to benefit from a strange case of willful blindness among U.S. foreign policy-makers. Despite the general agreement, articulated by Barry McCaffrey when he testified here, which was that Colombia's problem has reached emergency proportions, and this is why we are appropriating more and more money to fight the problems of Colombia, neither the Administration nor Congress seems to be able to deal with the problem.

    The solutions should be not—the solutions that are being offered and suggested are for political conflict. I don't think that what we are facing, especially in Colombia, is a political conflict. It is a criminal conflict which is going to become a political one because we have done nothing about the criminal aspects of it. These people are criminals, and they should be dealt with as such.

    Colombia's narcoterrorists are threatening to turn South America's oldest democracy into a ''narco-cracy,'' and that is the right usage of the word. There is no narco-democracy; it is a contradiction in terms. There is an ''narco-cracy,'' and that is what Colombia will turn into very soon if nothing will happen.

    There are recurring threats to the region. They are ruining the economy, and instead of staging an unconditional war to rid Colombia of this menace, we have peace talks in order to try to resolve a criminal conflict situation and to appease the dangerous criminals under the guise of a political agenda. But if we look closely, we will see ruthless murderers on their way to the presidential palace. Not surprisingly, previous U.S. attempts to help with the negotiations have failed, and there is little expectation that either the forthcoming U.S. aid or diplomatic intervention would change the situation.
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    Last month, in a little noticed but truly revealing statement, the FARC announced that it was going to enforce its General Law No. 2 to tax the rich. However, the FARC refused to disclose its Law No. 1, which they promise to reveal only when they are in power. Clearly, being in power is not beyond their reach, considering that they control about 50 percent of the country and they have a distinct presence in the outskirts of Bogota.

    From what we know about the FARC by now, it is reasonable to assume that when or if they do, their system of government will be totalitarian, and they really don't care to advertise either program plan for fear of losing popular support. Perhaps as a condition for Pastrana's next negotiation with them, he should demand that they make public their Law No. 1.

    Illegal revenue from drugs provides $1 billion in Colombia alone. Not surprisingly, they deny their involvement in the drug trade. But it is surprising that even the Colombian President supports their claim, stating that there is no evidence that the FARC are drug traffickers. He said in an interview to the Argentine newspaper, Clarin, recently that the FARC have always said that they are interested in eradicating illegal crops.

    In negotiations with them, this is one of the issues that has been negotiated. Even General McCaffrey agreed that they are partially benefiting from it.

    Why are we keeping alive the myth that there is a distinction between terrorists and drug traffickers in Colombia? Why provide them with respectability and legitimacy by maintaining the fiction that these criminals have a social and political agenda? Does anyone really think that by turning a blind eye to their narcotics involvement, we will socialize them and bring them into a democratic political arena?
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    Many acknowledge the U.S. foreign policy in Latin America has often failed. I think Ambassador Abrams would not object to that.

    The post-Cold War era dictates Washington must, above all else, maintain the appearance of not meddling in other countries' internal affairs, domestic terrorism included. At least that will be the policy until some unpredictable crisis forces Washington to grapple with the ongoing destruction of civil society by criminal organizations in a country as important as Colombia.

    The amalgamation of drug trafficking and terrorism started back early in the 1980s, and the economic incentives have grown since. The Marxist rebels had long since replaced their social agenda with the lucrative drug business. Denial of the changes that have up taken place has helped the narcoterrorists to take control of more than 50 percent of Colombia's territory. But this loss, we are told, was a gesture of goodwill by Pastrana to the rebels. And according to Secretary Albright, the extensive growth in the supply of drugs is caused not by the narcoterrorists but by our demands, American demands for drugs.

    Coming to America from a foreign country and living here and realizing how you buy everything you don't need because there is good advertisement, drugs are being pushed on American citizens as well. Also the fact that we are failing to prevent drugs from being used and coming to this country to begin with helps other elements in our society invest a lot of money in the propaganda of drug utilization; and it is hard for me to think that there is a better way to end democracy in America than by doping it.

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    The geopolitical reality is that the Colombian guerrillas threaten regular retaliation in neighboring countries that are willing to help us, the United States, to fight drug trafficking. It is a war that the United States has spent many billions on, fighting all over the world inefficiently, with a constantly changing strategy.

    We know of the deep involvement of the Colombian cartels in Mexico and the use of their fellow traffickers in Mexico for moving great amounts of their product into the United States This is evidence that the disease of narcoterrorism is international, that it is growing, that its tentacles are spreading throughout the Third World and reaching into our daily lives in the industrial countries, foremost among them the United States

    Stopping massive killings, human rights abuses and other atrocities was good enough reason to go to war in Kosovo. But apparently similar and even worse conditions do not justify putting an end to a prolonged, vicious war that has claimed tens of thousands of lives over the last decade, has already corrupted and subverted democratic institutions throughout the region, and is destroying the free market system, destabilizing and corrupting financial systems, and threatening the stability of the region. This aspect of any society, corruption by means of drugs and ultimately drug money, can take advantage of even the most advanced, democratic capitalistic system. That is a threat the United States cannot afford to ignore.

    A U.S.-led coalition, as suggested by Secretary Albright, should be assembled, but not to negotiate an effort to lend respectability to a hideous criminal effort or promise them foreign investments, as New York Stock Exchange Chair, Richard Grasso, reportedly did last summer.

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    What must be our goal is an all-out effort to stop narcoterrorism from destabilizing the region and the Colombianization of neighboring countries. Thank you.

    [The prepared statement of Dr. Ehrenfeld can be found in the Appendix.]


    Dr. BAILEY. Thank you very much, Mr. Chairman. By way of background, my main interest is Mexico, and about ten years ago I was involved in the study on security relations between the United States and Mexico. And one of the findings of that study was that organized crime is the most serious problems affecting security between the United States and Mexico.

    And since that time, I have done a number of other studies about problems, what I am going to call public insecurity, which I am going to talk about in a second. One of these projects involved putting together Mexican and American senior policymakers and academics in order to think about what kinds of responses would be useful to deal with problems of public security of the U.S.-Mexico relations. We met in Mexico City about ten days ago and discussed these kinds of issues, and hopefully we can produce an interesting report later in the year.

    Let me try to make three quick points. Mexico is of critical importance to the U.S. security. What I am going to call public insecurity has increased very significantly in the 1990s and is continuing into the 21st century. And the third point, this public insecurity has important implications for the Mexican national security organization, its apparatus, and also for United States-Mexico relations.
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    Let me just try to make this first point about Mexico and its importance to U.S. security. You heard earlier the problems in the region more generally. I have always thought of Mexico as being either a cushion and a kind of a mediator or an accelerator and a kind of a multiplier of problems that come out of the region. So if Mexico is on the right course, and if its transition is going well, these kinds of problems that we heard about in the Caribbean and in the rest of the region, we find in the Mexico case a kind of cushion. If Mexico doesn't go well, that is in terms of its transition, then these kinds of problems will tend to get multiplied and affect the United States even more strongly.

    Let me try to tie some numbers to convey why this is an important country. The 2,000-mile shared land border is the busiest border in the world. Also it is one of the more violent borders in the world. Nineteen ninty-eight numbers, let me just try to keep this quick, about 280 million persons cross the border from Mexico into the United States legally; 86 million cars, 4 million trucks and rail cars, enter the United States from Mexico. It takes, by the way, one estimate, about 9 18-wheelers to satisfy the U.S. cocaine consumption for the year. If we consider that four million trucks and rail cars cross from Mexico into the United States, it takes nine of these—I mean, at least to put it into that sense where you have a sense of how complicated and difficult that is.

    Mexico is the second most important trade partner of the United States after Canada. It is a major oil producer. It has the largest of the complements of the Hispanic population in the United States. So I think it is more or less self-evident, but I would come back to Mexico is of critical importance to the United States.

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    In terms of the overall security issue for the United States is Mexican governability, and as was mentioned earlier, the elections will be held this summer, and for the first time in 71 years there is the possibility of the opposition will win the Presidency. And I am a bit more optimistic than I had been about Mexico's transition. I think the transition is toward a market economy and toward a functioning democracy, but it is on the right track. Mexico invested over a billion dollars in its elections in 1994. It was the wisest investment the country could have made to keep that transition on the democratic track.

    My second point is about public insecurity, and in Mexico and as in Central America, even as I am finding out more and more throughout Latin America, public insecurity, which we take to be crime, violence, corruption, and, worst of all, police impunity, judicial impunity worsened significantly in the 1990s. We see the uptake in crime especially after 1994, and then it tends to flatten out. Crimes against property and against persons. In the Mexican case it tends to be geographically located in certain regions of the country. It is not uniformly spread across. It tends to be concentrated in certain strata of the population and among men more than among women.

    But the point I am trying to make about public security, the most serious part of it is not the crime rates themselves, they did show a significant upturn, but Mexico's crime rates aren't that far out of line with other countries in the world. What is really the most important part of it is this problem of police impunity, of failures in law enforcement. In this, drug trafficking is a very serious complicating factor, and Mexico is a producer as well as a transit zone. And what we see from drug trafficking is the very important problem of corruption of the police, and later on I want to get into the problem of the army.

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    My colleague that I am working with in Mexico has said that drug trafficking is like HIV, that it is a kind of corruption; that once it enters into the system, it becomes a very difficult, fatal kind of problem. Drug trafficking, because of the scale of organization, the money, scope of violence, puts it into a category of organized crime different from other categories of organized crime.

    I want to underline the point in my experience, from what I have read and seen, the people I have talked with, there is not an important connection. There is not an important connection between narcotrafficking and twist groups or narcotrafficking and guerrilla groups in the Mexican case. I have not seen it. I have not found people to substantiate that. There is political violence. That was alluded to earlier. There are guerrilla groups. There have been a whole series of problems of high-profile assassinations. Mexico is not a terribly peaceful country politically. Any number of partisan murders or partisan killings take place as well. But there is not this connection between narcotrafficking and guerrilla groups that we see in other countries.

    What is important are problems of corruption at virtually all levels; also very important, very low public esteem for police and law enforcement, which seem to be corrupt and even predatory.

    My third point then is there are implications for all these problems of public insecurity for Mexico's national security apparatus. The police and law enforcement agencies in Mexico are very poorly trained. They are poorly paid, and they are poorly supported throughout the system of government. There are significant problems of corruption and incompetence in the police at various levels.
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    Mexico has made important efforts to respond to that. There are initiatives that have been taken that are important, so we shouldn't be—it seems to me we shouldn't believe that it is beyond help. I would mention an organized crime unit that was introduced in 1996 made important advances in internal intelligence, which is also very critical. In this sense Mexico has made—it is called—they use the term ''investigation and national security.'' It has made important advances since the early 1990s. And there is a new type of police which has been created, the National Preventative Police, which was introduced in 1999, and there is some hope that this can be an important response.

    But what I want to turn to is just as you would expect when a country is going through this kind of a difficult situation, they turn to the institution that works, and in this case the Mexicans have turned to their army, and that has produced some very, I think, serious kinds of implications. Mexico has brought its army into an expanded role in the antidrug program. It has also brought its army into normal police operations. It has done this not as a deliberate policy preference, but because there is no other institution that the country could turn to to do it.

    So throughout the 1990s, Mexican military officers took up police roles at the State and local level and a whole variety of locations throughout the country. The police—the army also took up police roles at the national level in what is called the Judicial Police, but bringing the army into police roles, which has had some serious implications.

    I will mention just a couple of these. One is human rights abuses, because the military isn't very well trained as police officers. Another is the army has not been immune to corruption. So bringing the army into antidrug wars and police roles has resulted in problems of corruption in the army itself. This is terribly significant if the army is one of the few solid institutions that the country can rely on.
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    The third problem is when the army is brought into police roles, there is a difficult chain of command. That is—supposedly the army is brought in under a civilian commander, but in reality the army continues to follow its military commanders. I don't know if I am making sense. But if the army is put into a police role, presumably they are moved out of the military line of command and put into the civilian police command.

    In fact, it doesn't work that way. The army continues to rely on its own military command and virtually ignores its civilian command. One of the problems of that is when the army begins to take on investigative roles, it inevitably runs into political consequences of what it does. So, for example, if there is an antinarcotics operation on, the army then begins to investigate that. Almost inevitably it takes it into governors or mayors or one or another level of political involvement. That then politicizes the army necessarily. That is, the army needs then to make up its mind about what to do about these kinds of things, so it exposes them to political involvement and exposes it to political pressure.

    And then finally, one of the problems of bringing the army in is that it distracts it from its main duties, which is civilian or internal security and the maintenance of internal order. The priority, it seems to me, is, at least in the Mexican case, a great deal of attention needs to be put on institution building, and that attention needs to go over into the police law enforcement courts, judiciary, in order to build those up; also over into the intelligence. So what the priority seems to me is cooperation between the United States and Mexico, but especially cooperation that recognizes sovereignty and takes into account a multilateral kind of involvement in building these kinds of institutions.

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    So what I am trying to emphasize out of this is in the Mexican case, I have always concluded the political situation is much better than it ought to be, but the situation of terrorism is much better than it ought to be if one looks at the difficulties that the country faces. Even so, having said that, the problems of institution building are going to take years in order to generate a police and an intelligence arrangement that works effectively. I would hope this would be an area which the United States could play a constructive role, especially if it is done in a multilateral context.

    Mr. SAXTON. Thank you very much.

    We are going to ask some questions, if you will indulge us in so doing. We are going to limit each Member to five minutes. We call it the five-minute rule. So if you could make your answers just as concise as you can, it would be most helpful.

    One of the things that I learned after coming to Congress inasmuch as I didn't travel a lot before I came to Congress, one of the things that I learned was that we have a view of the world and various parts of the word as Americans that reflects our own background and reflects our own lifestyles and reflects what we think the world is like. When I started to travel to the Balkans, and when I started to travel to the Middle East, and most recently when I travelled to Russia, each time I get to another region of the world, my eyes get as big around as saucers and I say, oh, it is different here. And Mr. Shifter, I believe it was—maybe it was
Mr. Schulz—made the statement that Colombia needs to be understood in its own terms.

    And so with these couple of thoughts as background, would you each take one minute of my five and tell me the single most important thing that we as Americans need to understand about this region in order to more effectively have a policy that deals with problems that have been described so eloquently by all of you.
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    Elliot, would you start?

    Mr. ABRAMS. Take ten seconds back. The single most important thing we need to know about the Latin American region to deal with it effectively as Americans. I would say the single most important thing about it is that it is very unlike the United States in that this has always been and remains the land of opportunity. Latin America as a region has not invested in human capital. It is still very, very divided in this way on class lines. Poverty is enormous. Vast portions of the populations don't really have much of a chance to get an education, to get a decent job, so that undermines democracy in just about every country in the region and makes it in that fundamental sense very different from the United States.

    Mr. SAXTON. Dr. Schulz.

    Dr. SCHULZ. I think that I can answer the question in one word perhaps, and that is engagement in terms of what is important for the United States to do. We need to be engaged in terms of engaging Latin American military officers and organizations and also civilian organizations. You hear a lot of criticism; for instance, the School of the Americas. The School of the Americas is an important institution. It is not the same institution it was 20 years ago in the middle of the Cold War. It helps to communicate human rights training as well as professionalism, democratic civilian-military relations. All of these are critically important for us to communicate with Latin American military officers because of their long history and political culture of authoritarianism.

    It seems to me unless we continue to be engaged, that basically they are not going to get the kind of training and incentives that they need in order to continue to move in the direction of democracy as they have seen.
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    Mr. SAXTON. Mr. Shifter.

    Mr. SHIFTER. Perhaps the word that characterizes Colombia any more than any other is paradox. We need to understand that this is a country that has been the best performer in Latin America over the last three or four decades until the current crisis, yet it had the highest levels of violence, yet very good happenings with very bad things happening. It is the oldest democracy in Latin America, yet there is drugs and violence.

    I think looking into the future you are going to see war. There is going to be a lot of bloodletting. I don't think anybody doubts that. But you are also going to see an intent to try to achieve settlement, political solutions. Colombians like to try to work out deals, and understanding, a sensitivity, comprehension that it is not all one side or the other. It has always been that way historically, and that is the way the country has progressed and will continue to progress.

    Mr. SAXTON. Dr. Ehrenfeld.

    Dr. EHRENFELD. I think in order to try and bring America, now that we are talking about globalization—in order to try and bring other countries in the region a little bit up to what we are expecting other countries to be—like you said, we expect others to be like us, but they are not. I agree that violence is one of the major problems. If we talk about Colombia, I think that the historical note of Latin America had helped to forestall corruption, and a combination between corruption and violence and the drugs, I think, is what is causing the drugs again is a major problem is helping to undermine all the institutions that we would like to see becoming more like in the United States.
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    Dr. BAILEY. Good exercise. The word I would use is ''institutions.'' Institutions don't work. They are only recently being built. Most important difference if we have to say what is it about the region or at least about the Mexican cases, the need to invest in institutions. What is dramatic about Mexico in the last, say, five or ten years is getting an electoral institute that really works in a way that is able to bring about elections that are effective. So institutions—.

    Mr. SAXTON. This sounded more like—a little bit—a foreign policy forum than it does on terrorism, but we are beginning to understand the context in which Latin American terrorism takes place, and that is also very important to us.

    Mr. SNYDER. Thank you, Mr. Chairman.

    Mr. Abrams, in your opening comments, you mentioned embassy security, and also I think I was hearing you that you were implying perhaps not adequately funding our State Department, Foreign Service. That is my opinion. I don't know if that is what you were saying. But I read over what you were saying.

    Mr. ABRAMS. I actually agree with that completely. I think it is quite true. I mentioned Coast Guard as something we were underfunding. If we are interested in terrorism, we want to keep terrorists out of the United States, terrorists coming up, as many of them will, by water, just the way the drugs come up, the Coast Guard is the line of defense there, and as far as I am aware, the Coast Guard budget and Coast Guard readiness are really in quite bad shape because we have been funding the Pentagon, and that is not in the Pentagon budget. You know, it is in the Department of Transportation.
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    Mr. SNYDER. How about the State Department?

    Mr. ABRAMS. There has been some money spent, as you know, over the past 20 years on hardening the targets, but the Department as a whole is in bad shape financially. In many of these places the State Department is just a landlord. You have got a building, and you have got people in it from a lot of different agencies, and just a handful of people are actually from the State Department.

    But if you are talking about political analysis of what is going on in the country, that is going to be done by political officers from the embassy staff and the State Department. If there is one of them to cover a whole country, or two or three for some of the very large countries, it won't work. I really think we are shortchanging—we are not just shortchanging the State Department, we are shortchanging our ability to handle politics with these countries.

    Mr. SNYDER. I think, Mr. Schulz, in your written statement you said the same thing. You also said that we are short-sighted where we don't refer to the American will to give foreign aid.

    Dr. SCHULZ. Yes. I think particularly in a period like this where democracy is undergoing some real problems, and there is growing socioeconomic discontent for a number of reasons, unless you step in and try to help these countries stabilize economically and socially, that you may see continued erosion of democracy and a greater effort on the part of government to maintain order by sheer force, state terrorism, and that is likely to create in turn guerrilla insurgencies and other forms of terrorism.
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    Mr. SNYDER. I was having some discussions before with Mr. Saxton about how we define terrorism, and this, as you know, is a new Panel. But it was interesting to me you all are a panel to talk about terrorist threats in Latin America, and yet, Dr. Schulz, you spent a lot of time talking about nurturing democracy. It was really a like a preventive.

    Dr. SCHULZ. Exactly.

    Mr. SNYDER. I guess what you are saying is if you have good, stable democracies, the sea bed for terrorism is no longer present; is that a fair statement?

    Dr. SCHULZ. I think it makes it a lot more difficult. If you look at the causes of, for instance, the civil wars in Central America in the 1970s and 1980s, perhaps one of the most important causes was state terrorism, the overreaction on the part of state military and police and paramilitary institutions to demand some change from the populace. And that oppression, indiscriminate, massive oppression, in turn was perhaps the single most greatest cause of the guerilla action, the growth of the guerilla groups in the late 1970s and early 1980s.

    Mr. SNYDER. I appreciate what you said about the School of the Americas. I went and saw the School of the Americas. I came back with a sense that it is a really important institution, doing the kinds of things that I think the critics want it to do if they knew what it really did, but it has been pretty discouraging to see some of the public opinion against it.
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    Mr. Shifter, I wanted to ask about the funding and talk about narcoterrorism and drugs being a source of dollars. Now, the source of the actual numbers that you give—you give the $900 million in the Colombia income to the terrorist groups, of which 40 percent of that or 45 percent of that is not directly drug-related, but it is kidnapping and extortion. If the drug supply, if the drug source, the drug hunger in the United States went away, would these organizations go away, or would we see more reliance on other forms of crime, kidnapping, extortion, whatever else they would find?

    Mr. SHIFTER. First of all, there has been a long history of the criminal economy in different arenas, and smuggling in drugs is just the latest manifestation of that. So there has been a long practice, a long history of that, and also these groups have deep roots from the late 1950s, early 1960s. I think that reducing the demand, the consumption, not only in the United States, but Europe and other places that we have to worry about sort of a global phenomenon, would considerably help. But I think there are—there are still other issues that need to be dealt with independent of dealing with our consumption demand problem, and that really involves the law enforcement aspect and much better kind of political work.

    Mr. SNYDER. My guess is if you poll Members of Congress about how much do you think Colombia guerilla terrorists are funded by drugs, percent, I think most of us would have said 99 percent, but you are saying like 55, 60 percent.

    Mr. SHIFTER. That is most of the estimate now. That changes, with flux. But that is the most dependent analysis it has come up with. That—particularly one of the groups, the ELN, really derive a lot of their income from extortion, kidnapping, and particularly in the oil sector of the economy. So that really is not as heavily dependent on the drugs as the larger guerilla group, which is the FARC.
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    Mr. SNYDER. Does that rely on kidnapping and extortion, or are there things we ought to be thinking about in terms of trying to dry up that source of funds? We concentrate a lot here about the drug war and interdicting and dealing with the kidnapping and extortion part. Is that the something that the Colombians will have to worry about?

    Mr. SHIFTER. I believe the head of the Antinarcotics Police, General Serrano, just recently resigned. I think the United States had a very close relationship with, supported the police, and they had been very successful. I think it would be good and productive for the United States to express comparable concern and work closely with the Colombians on particularly the kidnapping issue. There is tremendous fear, and a major factor for the exodus of Colombia is just sheer fear of being kidnapped. That is sometimes related to drugs, sometimes not, but it is a major question. I think if there were a real emphasis on that, that would be very helpful.

    Mr. SNYDER. Thank you Mr. Chairman.

    Mr. SAXTON. Mr. Bateman.

    Mr. BATEMAN. Thank you. I am glad my colleague Mr. Snyder brought up the subject of reducing the demand for the illicit drugs. That is a very, very major contributor to the societal, economic and other problems. Take the money out of the distribution of narcotics, you won't have the arms, you won't have the funding for these standing military groups.

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    I read and I hear about the paramilitary in Colombia. I don't know how in the heck you really distinguish what is really called the paramilitary Colombia from the FARC or the ELN or anybody else. They all seem to be operating beyond the rule of law, doing whatever it is they choose to do for their own empowerment and for their own—is there really a way that you can distinguish between these people, and to whom are any of them subservient?

    Mr. SHIFTER. Well, I think that there is, I think, a political component, an ideological component. How much, how large it is, I think, is open to dispute. But certainly the FARC does have a long tradition on the left. They do have an agenda, a political agenda. The paramilitaries are right-wing militias that are attacking the FARC. I think it is clear, both of them.

    Mr. BATEMAN. Are they financed by the government, supported by the government?

    Mr. SHIFTER. No. A lot of them are financed by the drug economy as well. By their own admission, the leader of the paramilitary group was on TV and said some 70 percent of their resources come from the drug trade. So that comes from that as well.

    I agree that there is a fight for power among these illegal forces, and that is why I underscore the point that the reason that the only way you are going to, I think, reverse the situation is to strengthen the government in the long run. It is a very weak government, and the paramilitaries emerged because the government was not capable of dealing with the guerilla terrorist threat, so they took it into their own hands. It is hard to imagine that they are going to be brought under control unless the government regains some sense of authority and capacity. I think that should be our central objective.
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    Mr. BATEMAN. Do you think we are now presumably getting back on track for a supplemental appropriation to provide at least assets? I don't know who is trained to use those assets and all the rest, but is that a part of what has to be done?

    Mr. SHIFTER. I think that is a piece of it, yes, sir. I think it needs to be broader. I think there needs to be a strategy way beyond the specific assets that were funded. I think that is the first step. But I think that would be a mistake to say this would take care of the problem. It really needs to think in much broader terms and really work closely with the government on all fronts in developing a much broader policy.

    Mr. BATEMAN. If I have a moment longer, I would like to focus on Ecuador. We were looking to Ecuador as a location for a forward-operating location to counter narcotics efforts. It was a major consequence to us that we have that location, especially after losing all resources in Panama. Do you foresee that that is going to be a viable location in view of the reports of the political instability there? That is for any of you who want to address the situation in Ecuador.

    Mr. SHIFTER. I was just in Ecuador and asked that question to a lot of Ecuadorians. I think there is a lot of unease, but there is unease no matter what happened, whether we had that or didn't have that.

    The Colombia situation is a reality. If we didn't have the Manta base and didn't have Plan Colombia in this appropriations, there would still be a great threat on the border. And there have been a lot of instances. So I think there is concern, but I think—on balance I think most Ecuadorians think that if this is managed well, it possibly could be helpful.
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    Mr. BATEMAN. Let me clarify, unease that we would make or have a presence there, a forward-operating location to fight the drug traffic; or unease if we won't settle upon it and go forward?

    Mr. SHIFTER. There was unease that the United States would have a presence there, and that would drag the war because the United States would be an important actor to get involved in the conflict more deeply, and that would drag Ecuador into the war. But then when you talk to other people or even pursue that conversation with the same people, what emerges is the fact that if the United States wasn't there, they would be dragged in this in any case. That is the way the situation is heading. So there are no good options.

    There is concern, but I think either one of them I think there would be concern. And I think the question is that this be—the Manta base be used in the most constructive way in close consultation to Ecuadorian and so forth to try to make it more effective.

    Mr. ABRAMS. If I could throw in a line on that, my fear is it becomes part of Ecuadoran domestic politics. And a way to run for office in Ecuador is to attack the Americans and say, I will close down the base, and from that point of view we may never hear the end of it.

    Dr. BAILEY. Sounds like Panama.

    Mr. SAXTON. Mr. Taylor.
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    Mr. TAYLOR. I want to thank all of our witnesses for being here. I have got to admit I was a bit disappointed when the question was asked, what is wrong down there that none of you mentioned a system where the political leaders are immune from the laws that they pass. Mr. Abrams, I do want to compliment you on your answer. Quite frankly, I do think a lot of people turn to illegal activity because of the stratification of their society. If you are not one of those handful of families that run each of these countries, you ain't got a prayer.

    Talking about the institutions, where I can't tell you how many Latin American politicians I have met will tell you with great pride that they are immune from prosecution from the laws they pass. Now, if you are an average Joe trying to make a living, trying to do everything right, and you see this guy immune from the law, what incentive do you have to live by the rules? If you are an Ecuadorian, and you see a handful of bankers embezzle almost all of the money and go to Miami, and there is no extradition treaty between us and Ecuador, so they got away scot free, what incentive do you have to care about your country, to put your life on the line for your country, to pay your taxes, do anything right? I was a bit disappointed that that wasn't mentioned.

    Ms. Ehrenfeld, I hope you weren't implying—I was listening with great interest to your comments about Kosovo and drawing the analogy of Colombia. I certainly hope you weren't encouraging the Congress of the United States to send young American men and women to go die in that war.

    Dr. EHRENFELD. No, I was not.

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    Mr. TAYLOR. Glad to see you shaking your head. I wish you all would comment about those things because I really—I was absolutely amazed. I went to Tulane. I studied Latin American studies, quite frankly, I had forgotten about the immunity, and talking to General Cark in January in Germany and saying, what is wrong in Colombia, first word out of his mouth, it all came back.

    And what I am deeply disappointed in is as we are talking about Plan Colombia, and, again, I can't expect you all to follow along with this, we are getting ready to spend anywhere from one to two billion American dollars sending helicopters down there, undoubtedly sending Americans down there, too.

    Ms. Ehrenfeld, I will disagree with you a little bit there that as we speak, there are folks who work for the State Department who are flying crop dusters, who are eradicating the plants, and we have to turn and hire other folks to work for Dynacorps to fly the gun ships, to protect them, because there is a bounty on those people. So it is not quite fair to those folks who are getting shot at to say that nothing is being done.

    Dr. EHRENFELD. I don't think I said nothing is being done. I said what is being done is not enough.

    Mr. TAYLOR. It is a huge place with very few roads. I guess my question would be, having said all that, that if we are going to send American money down there at the same time that they are cutting their defense budget, at the same time that they are changing their laws, so that if you have high school diploma, you are exempt from the draft, why should we get more excited about the civil war than their leaders are? Should we really be addressing this on-demand reduction in this country, including getting tough on the users in this country, which apparently we have not done for a long, long time? Simple things like drug testing for Federal employees— .
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    Mr. ABRAMS. If I can just jump in, Mr. Bateman raised this question before. I agree completely. It is a little bit unfair sometimes the way we attack countries in Latin America or between here and Latin America that are producing countries or trafficking countries when we are the market. If there were no market, this kind of production would not be taking place. But I do share—I do share with you that what I was trying to get in my answer before is the notion that one of the great underlying problems here is the nature of those societies, the inequality, the lack of opportunity that exists in those societies, which is really absolutely fundamental.

    This Colombia—let me say I also think you are right in saying ultimately this is up to the Colombians. I think it is very important that we help them because I think it raises their morale and their belief in themselves and their chance of success very greatly, but ultimately whether they are going to win this war depends on whether they are going to fight this war. That is a decision they have to make. We can't make it for them.

    Dr. EHRENFELD. I think that I agree with you and Mr. Abrams that we should help Colombia and other countries, but I think that there is not enough accountability, there is not enough supervision, monitoring of how the funds are being spent, not enough accountability on the money that is being spent in the countries that are getting the money.

    And I think that that that is very important because foreign aid either from the U.S. Government or from other international organizations that have gone, billions of dollars are spent to show for what? Latin American politicians, those who went to the good schools and are from the famous families, pocketed the money, and the money never went to those educational programs or the other programs to build institutions that we send the money for. So I think that that is part of the problem as well. And we should develop better monitoring systems in order to make sure and condition the laws that we are giving them with better supervision.
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    Mr. SAXTON. Mr. Reyes.

    Mr. TAYLOR. Could I ask one quick question? What percentage of the Colombia Plan package money gets embezzled? Just go across the board. Mr. Bailey, do you have a--.

    Dr. BAILEY. I don't know the answer.

    Mr. TAYLOR. You don't have a guess.

    What percentage ends up in the wrong people's pockets?

    Dr. EHRENFELD. I think that a lot of money that is not being spent by Americans, because a lot of money is being spent in order to support militaries and training facilities, those kind of things. The money which is not being spent here, probably a large part of it is being mismanaged.

    Mr. SHIFTER. I think that is very hard to predict. I think we should do everything to control and make it accountable. I think that is—there has been improvement in Colombian institutions. Police have been corrupt; 11,000 police officers were dismissed by General Serrano because of corruption. I think we have to look to examples where they have made progress.

    I am the first to agree completely with you, Mr. Taylor, but also to point to success stories and to try to do the same with the armed forces that was done with the police. By all accounts there has been progress in the police in terms of corruption, and we should be engaged in a productive way to make sure the same thing happens within the military.
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    Dr. SCHULZ. I think the crucial question or the crucial word is the accountability. You simply can't throw money at the problem, particularly in countries which have a long history of mismanagement and corruption. So that is clear, there clearly needs to be some kind of accountability, oversight, otherwise, you know, a lot of it is going to be mismanaged.

    But I would agree with Michael, though, that there have been success cases. General Serrano's police is a classic one. The question is whether that same kind of progress now could be made with the military.

    Mr. TAYLOR. Mr. Abrams.

    Mr. ABRAMS. I think to keep it way down in the five or ten percent area by eliminating virtually all of the cash parts of it.

    Mr. SAXTON. We are going to move on to Mr. Reyes, but this is a familiar topic to Mr. Bartlett and I, who together went to Russia to try and determine what happened to the International Monetary Fund (IMF) money. We spent one whole afternoon having members of the Russian Communist Party tell us it was the American bankers that stole the money. It was an interesting situation.

    Mr. Reyes.

    Mr. REYES. Thank you, Mr. Chairman. I want to follow up with—kind of along the same lines very briefly in the context of what Mr. Taylor was driving at, because I have had a number of different groups from Colombia that are talking about aid for Colombia and the role of the United States in trying to establish security for them in Colombia, and their opinion has been that only through the intercession of U.S. military men and women could they have that kind of confidence. And it seems to me that when we talk about accountability, the ultimate accountability can only be guaranteed by our men and women in uniform going down there and doing those kinds of things, which, just to be clear, is one of the things that I personally would object to because I think they ought to be able to solve their own problems.
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    So the dilemma then becomes when we are worried about accountability, do we factor in 10 percent, 20 percent, 30 percent right off the top for corruption and then increase the aid proportionately, or what, short of insuring accountability through the presence of U.S. military, do you recommend? Or do you have any recommendations?

    Mr. SHIFTER. I just think there should be close scrutiny and mechanisms for accountability as possible. I think the answer is not, if I can just say, putting American troops there. I don't think that this—if I can just add about the Colombia poll, I think that poll is correct, although in the event that that would happen, I think that number would drop significantly. I think it would be a major political problem in Colombia as well, not to mention the rest of Latin America, if that were to happen. So I think that is not a good idea. I don't think it would work. I just think we should focus on the training part, and making sure that the money is spent, and getting people like the General Serranos who exist, who have the reputation for integrity and honesty and have shown that they can turn around institutions, and that is what we should focus our emphasis on. There are people like that. I think those are the people we should work on.

    Mr. REYES. You know, it is curious because the ones that are making a plea along those lines are the ones that have the ability to come to the United States, that are business people. I was curious when you talked about economic—an economic strategy, but that is not possible without political stability. It almost gets into a chicken-and-egg-type situation because the ones that could create that economic strategy are the ones that have the resources to flee out of the country and are the ones that are saying, the only way we feel comfortable or feel safe is if someone like the United States comes in and offers us that kind of thing. So it gets into a real quandary for us.
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    And the other interesting aspect of your testimony is the old adage that one man's freedom fighter is another man's terrorist. So the stability of that whole Latin American region, I think, comes down to the fact that we have countries that are unique unto themselves that we have to custom tailor a policy for it.

    Every year in Congress we have a very contentious situation in the certification process of those countries that are cooperating with the United States in terms of narcotics trafficking and doing everything they can to help us with our narcotics effort. I would be interested in getting for the record the opinion of each one of you on the certification process.

    Mr. ABRAMS. Well, very briefly, it is a big pain for everybody involved. And the comments, Colombia always says it has no affect on them, but if you look at the last month or two before the certification date, you see a whole bunch of stuff going through the Colombia Legislature every year. So I would still say it has some impact, and I wouldn't toss it out.

    Dr. SCHULZ. It has some impact, but how much of that is real and how much is cosmetic I am not entirely sure. You know, they will certainly tell us what they think we want to hear, and they will take some measures, but how durable, how long-lived those measures are likely to be, I think it is why you see this cyclical process, this great flurry of activity around certification time, and then things go back to normal.

    Mr. SHIFTER. I think it has created a lot of irritation, particularly with Mexico and Colombia and other countries. I do not—I don't think it has been a very productive mechanism. I think a lot more attention should be given to the multilateral mechanisms.
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    There is a process under way in the Organization of American States to really track progress on different aspects of the drug problem, and I think it is really the way to go. I don't think the unilateral punitive instrument has really worked.

    Dr. EHRENFELD. I agree it can work, but the thing that causes maybe somewhat different, the other is a flurry of activities, and, again, there is lack of monitoring of what is really happening. So they pass some laws. Did the laws—have the laws been implemented? Where has the money that we are providing them gone? It seems like here on this side of the United States we also forget to follow up on what it is that we are going to certify them for.

    There should be more accountability or better monitoring in both places, I think more seriousness from the United States forcing those countries to comply. If they don't comply with whatever they decide or they said they will do, then whatever the sanctions are, we should consider whether we want to do them, but at least be serious about it and show that we are serious about it.

    Dr. BAILEY. Certification has lost its seriousness and lost its purpose. My thoughts are very close to Michael Shifter. Engage both the United States and these other countries in a mutual understanding or a mutual evaluation mechanism.

    Mr. RODRIGUEZ. Let me indicate and follow up on what Gene Taylor hit on, the line that I was also a little disappointed in terms of the dialogue initially. I think when we look at Latin America, one of the perspectives is that there are seeds for revolution any time you have the disparity that you have, and the fact that you don't have a road here—we talk about the American dream; no matter what, we still have that opportunity if you work hard to pull it off. There, no matter how hard you work, there is no way you are going to be able to pull it off because of the way it is structured. And there is no difference between when you have a racist society or a sexist society or an elitist society, you still don't get the job because you are not in that group.
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    So this dialogue—and I know we heard about our economic strategy, our narcotic policy, strategy, but I think we also need to talk about a democratic strategy in the whole process. You know, in trying—because we can say we have been successful. We made them good capitalists, you know, selling drugs. That is unfortunate. But so we need to look in terms of the democratic strategy in the process.

    When I have gone down there, and I have been to a couple—most of the Central American countries, I have always asked them what political factions do you have here? What most people would tell you, you got the government, civilian, we have got the military, and then we have got the United States. And I talked to businessmen, and they say, I side with whichever the United States sides with, whether it is either the military or the civilian.

    And so we do play a very significant role, and it is very important, and I would pursue it. And I will get you some feedback as to how maybe we can democratically open up and making sure we don't step on some of these, because I really believe there are some freedom fighters out there. Maybe the means to that end might not be appropriate, but I know there are some roads there that need to be opened up so that we can do away with some of those terrorists and some of those guerilla groups, because just like I believe in this Country, we are a reflection of whatever occurs in this Country. Whether that be drugs in our Country, whether there are gangs or whatever in our communities, we are a reflection of it. They are, too. And so that if they had gangs, it is usually for a reason, you know, and they are there for a purpose, and we need to take that purpose out. And I think that I want to get some feedback from each one of you in terms of what we do democratically to enhance that capability in our relationship to them.

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    Mr. ABRAMS. I think I agree with what you have said about the question of social change and economic opportunity, but the democracy point of view, I think that we should be pushing harder. And I would say since about 1992, we haven't. Nineteen ninty-two, I give the date when Fujimori dismissed his Congress, and in essence we, the United States, and some of the other democratic countries let him get away with it.

    There have been a lot of examples. That coup that Michael Shifter mentioned, I think it was Michael mentioned, in Ecuador, it was a military coup that got rid of a President, and we kind of let it go by. There are a number of examples, I think, where we are perhaps giving the message that we don't like it, but we are not going to do much about it. We are not going to react strongly to it. And that message, you know, comes through loud and clear, and it is the wrong message to send.

    Dr. SCHULZ. Earlier I used the word ''engagement'' to describe what seems to me to be the heart of U.S. policy, or at least an element of the—important element. And I put my emphasize on engaging the military, but I should also say I think you need to engage civilians as well. And you need to strengthen civilian institutions, both government institutions and civil society, and you need to give civilians training in national security issues so that they become competent in the management of the national security institutions, including defensive institutions. You can't expect military professionals, for instance, to respect civilian leaders unless those leaders are also competent professionals. Without that there will always be a certain amount of distrust and indeed contempt undermining the relationship, and a temptation, I think, to resist civilian control, ignore official policies, maybe even resort to gold based estada wherever civilian leaders are perceived as endangering national security through their irresponsibility.
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    I think another thing is the follow-up in the direction Michael Shifter was going with regard to his comments with regard to what needs to be done in Colombia. This is getting to your point for needs for reforms, agrarian reforms and others. In Plan Colombia, the military aspect was simply the first step in the right direction, I think. You have got to go way beyond that, and part of it is trying to create reforms that will make the government more responsive to the citizenry and will solve some of the socioeconomic problems that Colombians and other Latin Americans have. And there is a place for it in Colombia particularly.

    One promising possibility, for instance, would be the government seizure of narcoproperties, properties that are used to cultivate some—-- properties that are used to cultivate drugs, particularly coca, cocaine, and maybe using that as part of a land reform.

    Mr. SHIFTER. So Latin America has made advances in lowering inflation, controlling economy, and in having elections. They really continue to have problems. It has the highest inequality of the world and has very bane institutional performance. Those are really the two areas the United States should really emphasize, its engagements and supporting institutions.

    I think Elliot Abrams is right, there needs to be clear reaffirmation of principles, but not only in times of crisis. It has to happen constantly. That is what has been missing. We wait for the coup to happen, then we say, what do we do? I think really a strategy that really is much more continuous, much more engaged will be more productive in the long run.

    Dr. EHRENFELD. I agree with Mr. Shifter and Mr. Abrams, and I think what we have seen in our so-called war on drugs and other related issues is that there is no—the strategy is changing all the time, and there is not really affirmation of the U.S. policy and shifting all the time.
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    I agree that not having other political priorities would be nice in order to emphasize democracy, and to go straight forward with what we say, we do, and to help them on the way, to be more serious about it.

    Mr. SAXTON. Mr. Bartlett.

    Mr. BARTLETT. Thank you very much.

    Dr. Schulz, in your statement you indicated that similar problems plague Ecuador, Peru, Colombia and Haiti. In the committee report they state that despite the significant investment made by the United States in Haiti throughout the mid to late 1990s, Haiti has not built the institutions necessary to maintain a viable democracy. It hasn't happened. We failed. On page 11 you recommend that the United States should not slash economic aid to these countries.

    Is there a fundamental difference between Haiti, where it hasn't helped, and between Ecuador or Colombia, primarily where it might help, that encourages you to encourage us to not slash economic aid?

    Dr. SCHULZ. I think that there is a fundamental problem in that the places that need aid the most are precisely those countries which are the least able to handle aid productively, honestly, and channel into areas where it will do some good. And that is part of the paradox that you are in.

    I think clearly Colombia has a much greater absorptive capacity than Haiti, no question, and it would be a more promising target. I think that Haiti where you—I hate to say it, but there is a certain sinkhole element there.
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    Mr. BARTLETT. So we can have some hope that our economic aid is going to have some effect in Colombia, where it did not in Haiti. Let me move to another question.

    Let me read from Dr. Ehrenfeld's statement. She said, when we began the war on drugs, we viewed ourselves as standing on the edge of a precipice, and in light of what is happening today, it seems that the only progress that we have made is to take a giant leap forward, over the precipice.

    I thought it says it very well.

    The Government Accounting Office (GAO) projects that Colombian heroin, this is page 4 of Dr. Ehrenfeld's report, already the primary source in the Eastern United States, will rise by as much as 50 percent in the next few years; 165 tons of cocaine will be at least 250 tons by the year 2001. I might note what we see on the streets now, the quality is up, and the price is down. As a matter of fact, the quality is up so much, maybe it is the other way around. The prices are so low that they are no lower cutting heroin. And I am reading about overdose deaths because the addict thinks it was the same cut heroin that he was getting yesterday.

    Dr. Schulz, you state that the appetite for drugs has led to the rise of powerful Latin American mafias and narcotics networks and so forth. My question is this: Clearly we are not winning the war on drugs. In spite of all of the money we have spent down there, they are producing more drugs, they are selling more drugs, and the question I am asking, we are here to talk about terrorism today. Wouldn't you conclude that the more money we spend down there are totally nonproductive in decreasing the supply of drugs in this country? The more money we spend down there, the more likely we are to see terrorism from that area because we are visible and we are present down there. Isn't the spending of our money down there counterproductive as far as terrorism is concerned? We are not doing a thing to stop the flow of drugs, but we are a presence and a thorn to them. Why doesn't that increase the probability of terrorism?
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    Dr. EHRENFELD. I think we can use better methods and less people, less Americans, to do that. As I mentioned, there was a bill passed very recently in Congress, I don't have it in front of me, but—to provide $20 million to further develop this special herbicide that will kill only cocaine and only poppy. That will take care of the products. We will be able to rid ourselves in those countries from those problems. You will eliminate a tremendous source of income from the terrorists, and less drugs will flow into the United States.

    Mr. BARTLETT. That has not happened so far.

    Dr. EHRENFELD. The money was appropriated. The Administration is not forwarding the money.

    Mr. BARTLETT. Let me come to a point that Mr. Taylor made. When I think about the narcotics problem in this country, I think about the kid on the street selling drugs, and when he looks around him, the only two kinds of people that make it at all—well, three—somebody in entertainment, and there are darn few with those talents, and somebody in sports. The only other guy who is driving a Mercedes is the guy doing drugs.

    I am not faulting that kid on the street corner. I am faulting that guy who is driving in there to buy those drugs, and I think Mr. Taylor is exactly right. The real criminal is not the kid on the street corner who sees no other out. He can't sing or dance, and he can't run or throw a ball, and the only possibility he sees to escape his environment is drugs.

    Why aren't we focusing on those people that come in and buy drugs? And this does relate to terrorism because we are down there spending money, not doing a thing to impact drugs in our Country. We are increasing the possibility of terrorism, and if we really want to do something about drugs, why don't we attack the real problem in drugs? That is not the guy down in South America who is trying to make a living. It is not the kid who sees no other way to get out of his environment. It is the suburbanite buying those drugs. Why aren't we focusing on that?
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    Dr. EHRENFELD. You have to do both. You have to do something about demand and educate the people not to use drugs, and really be serious about it, and not be forgiving; everybody smokes pot, that is okay, no big deal. You have to do something much more strenuous and much more serious and stop people from using drugs, and test everybody who is using drugs. That will give less money to the people who are using drugs there; and be serious about how you spend the money there.

    Mr. ABRAMS. I would just add, I think maybe the answer to your question why don't we do it that way, it is easier for us. We export the problem. We make believe it is a Latin American problem rather than a U.S. problem.

    Mr. BARTLETT. Thank you.

    Dr. SCHULZ. I am not sure that you can deal with the situation by putting all of the users in jail. You have an awful lot of people in jail right now.

    Mr. BARTLETT. I think there are other programs that might be more appropriate.

    Dr. SCHULZ. Rehabilitation and education help, I would agree.

    Dr. BAILEY. To take your point one step further, wouldn't a useful way to engage in a mutual understanding with the Latin Americans be some effort on the United States to be more consistent with drug reduction, and the point made earlier by Mr. Taylor, and more drug testing and some kind of pact about supply? The United States has a whole area of policy that they can begin to explore on what kind of understanding they should have.
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    Mr. BARTLETT. With a market economy, you have to believe as long as there is a demand here, somebody is going to fill that demand.

    Dr. EHRENFELD. You can create a demand as well.

    Mr. SAXTON. Thank you.

    We have about 20 minutes until 4:30, and we have another meeting of the Armed Services Committee next door, so if we can have one more very fast round of questions.

    The discussion this afternoon has been a very interesting and productive one. Let me just ask relative to attacks against American interests, from the folks who are in the Latin America area and who have guns and who some refer to as terrorists, some refer to as guerrillas, members of groups, where are our national interests vulnerable? Panama, for example?

    Dr. EHRENFELD. Did you want to go first?

    Dr. BAILEY. Mexico is my main interest, but the United States has tremendous strategic interest along the southern border, getting better dialogue across the border, and what we are seeing is the buildup of two parallel security forces, Mexican and U.S., and they are not talking to each other very much. So it seems to me that one of the areas that is dangerous as we are going into the 21st century, we are seeing a buildup of police and Army, and it would be useful if we could get these two forces to talk across the border more than they are currently talking.
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    Dr. SCHULZ. I agree with that.

    You mentioned Panama, and I think there is some danger in Panama. The whole conflict with the Panamanians would intensify if, for instance, they did try to take some stand against the FARC and paramilitaries and others in the region. It could very well face retaliation and threats towards the Panama Canal, which is basically defenseless.

    Mr. ABRAMS. I would just add we in essence took control of the Caribbean about 125 years ago from the British Navy, and it has been essentially controlled by the U.S. Navy since then, and we have lost control of the Caribbean because we now share it with drug traffickers. I would like to think that we can reassert control from some combination of naval and Coast Guard and Air Force assets and take it back from the traffickers.

    Dr. EHRENFELD. I think that there is also the issue of the money, drug money, which is generally to bear on the corruption that it entails, and how it is affecting not only the political systems in Latin America and the democratic institutions that we are trying to help. I think that the corruption with the national security of the United States should focus on that as well because the corruption is not stopping at the Rio Grande, and tainted money is coming to our banks and financial institutions as well. I think that is a very serious threat that we have to pay a lot of attention to.

    The fact that the Organization of American States (OAS) has had agreements, and everybody signed conventions and agreements to control drug money laundering, identify them, fight money laundering, et cetera, is wonderful. Is anybody looking at are those things being implemented? We don't know that. This is of major interest to the United States because drug money has a lot of influence in the economy. It prevents capitalistic systems. It creates cartels. You cannot have a democracy when drug money is really the major force in the market, and that is a very important issue that we have to pay attention to.
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    Mr. REYES. Remembering that this is a Panel dealing with terrorism, can each one of you give us one recommendation that you want this Panel to take under consideration regarding the issue of terrorism?

    Dr. BAILEY. I would emphasize investing resources in building up domestic intelligence of the Latin American countries. Professional intelligence agencies in the countries are very poorly developed for the most part. It would be a good use of resources, and the timing is appropriate to try to find ways to build up intelligence resources in the other countries.

    Dr. EHRENFELD. I would go back to the money. I think if you follow the money, you will be able to stop the many terrorist organizations in Latin America.

    Mr. SHIFTER. I would agree with John Bailey in the case of Colombia. I think the focus should be on professionalization, improving the intelligence capacity of the Armed Forces. That is the best way to deal with the terrorist threat. We should devote less time to hardware and spraying crops, and we should spend more on building up institutions that the Colombians can use to deal more effectively with the threat that they are faced with.

    Dr. SCHULZ. I would agree with everything that has been said, particularly with Michael, and emphasize not just military institutions, but civilian institutions be strengthened.

    Mr. ABRAMS. I don't disagree with those views, but I would also urge you to take a look at what our own intelligence capability in Latin America is and whether the part of the CIA that works in the region has enough resources, and in terms of morale, where you think that it should be.
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    Mr. REYES. Thank you, Mr. Chairman.

    Mr. SAXTON. Mr. Taylor.

    Mr. TAYLOR. In your estimation how bad was that couple's recent arrest in Colombia for corruption? Does it hurt our ability to appear serious about this problem of corruption in Latin America? Is that widespread throughout Latin America? I have not been down there since February, and I think that occurred since then. It has got to have had some effect. I would like to get your thoughts on that.

    Mr. ABRAMS. I haven't been down there since it happened either.

    Mr. SHIFTER. The comment is made, and I wouldn't overstate it. It does raise questions about the seriousness and the reaction, but I don't think one should see that as an insurmountable obstacle. I think there is some importance to it, but I wouldn't exaggerate it.

    Dr. EHRENFELD. I see the importance in cases like that happening more. I know speaking with people from the military and others that Americans are not immune from this. The fact that we hear less about it is not because these instances don't happen. I am very concerned about the corruption of the Americans.

    Dr. BAILEY. I don't have any other information.

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    Mr. TAYLOR. I believe you said follow the money. I am amazed. I truly can't get over what happened in Ecuador and the fact that they had no FDIC, and their life savings in the bank, it is gone. I was amazed that there weren't riots at some of the banks, how the people just accepted it. With the exception of the President losing his job, heads did not roll. What are the chances that this becomes a common occurrence down in Latin America with copycat crimes in other countries, seeing how easily these guys got off, and would that not lead to social unrest?

    Dr. EHRENFELD. Of course it will. If you look at the economics in Latin America in the 1980s, if you go to Mexico, Brazil, there is social unrest because of these kinds of economic policies. I think that if we are talking about Ecuador or Panama, the globalization of the economy I think will make it easier in order to bring more blood money and illegal money into the system. And further, it will help to corrupt our system. On the other hand, I understand that Treasury says we have to stabilize the economy.

    Mr. ABRAMS. There is one good development here. I think a lot of Latins have lost faith in local banks, and in a lot of countries in Latin America, foreign banks which are much more reliable are taking over. In Argentina, most of the banking system is European or U.S.-owned. This has happened in Mexico, too. A lot of banks that went under, or nearly under, have been bought by Canadian or European—mostly Canadian and European banks. So it helps their economy because the banks are a lot stronger. They are well capitalized, and they are better run. A lot of people in Latin America increasingly say, I would rather have my account with a Spanish bank or an American bank or a French bank. It is safer.

    Mr. TAYLOR. As I am sure you know, Plan Colombia was an appropriations bill, and if you were given the opportunity to put some strings, legislative strings, on that commitment, what strings would you attach to it?
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    Dr. SCHULZ. I would like to see a more explicit emphasis to deal with the paramilitary situation in Colombia. I tend to suspect that the focus and probably the focus of the implementation as well will be on drugs and guerrillas, whereas the paramilitaries are the fastest growing threat to a democracy right now in Colombia, I believe. So that would be one restriction I would put on it.

    Mr. SHIFTER. I would agree with that. I think that is an important consideration. We are helping the Armed Forces. They have to deal with threats from wherever they come from. The paramilitaries are a major violent actor in Colombia. I think there should be benchmarks that are very carefully laid out in terms of the progress of the military's capacity, in terms of law enforcement, in terms of the justice system and a lot of the things that are important. I think that is very, very crucial to really engage and to track it very, very closely.

    Dr. EHRENFELD. I would try to introduce some new conditions for who would be trained, because right now we are training everybody, and I think if we spend a little bit of money—it doesn't cost much money, and it doesn't take a long time to identify the people and ask those who are working with us to identify—to have a system in place in order to train the better people, we will not end up by training crooks to be better crooks. We will actually do something in order to have some progress.

    Dr. BAILEY. I worry about an open-ended commitment, and you can't put dates on when programs are going to end, but it seems to me some kind of mechanism built into the legislation, some very intensive scrutiny and an appraisal of the program.
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    Mr. SAXTON. Thank you.

    Mr. Rodriguez.

    Mr. TAYLOR. Secretary Abrams, would you like to add something?

    Mr. ABRAMS. I would add briefly, I would like to see some kind of effort to make sure that our money doesn't become a substitute for a Colombian effort. It is hard to measure, but something like reforms of their tax system to make sure that they are making themselves participate fully in this program.

    Mr. TAYLOR. Thank you, Mr. Chairman.

    Mr. SAXTON. Mr. Rodriguez.

    Mr. RODRIGUEZ. I will make a comment that, Mr. Bailey, you did a good job in terms of Mexico. Twelve years ago a group of Americans were talking with a gentleman on the ballot, and he explained that they have an executive branch that appoints all of the mayors in the whole country, that appoints thousands of other people, so if he loses, then all of those people are out, and they are not going to be out if somebody else comes in, you will have a revolution even if someone else gets elected. The beauty of it now is the legislative branch has a lot more power, and there is a balance. Those people are elected locally, and they have term limits because they are going to turn over almost at the same time, but now you can legitimately see someone else get elected and take over. And when that business can either survive, if they can survive with a Democrat or a Republican, you can see that there is a possibility that they can survive, which I think is very positive.
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    I just thought that I would make that comment. They have come a long ways. It is positive to have that sharing of power.

    I would reinforce the fact that I think as we get involved, we ask the military for a military response to Colombia, and that is what we got.

    We talk about the importance—and you mentioned it—about intelligence, and I agree with you. I am real disappointed sometimes with the State Department. When I ask them to give me feedback, anyone with any sense—and maybe I take too much credit—a district, they can tell you how many factions are in that district and how many groups in which communities; and we don't seem to have that in our State Department in those areas in terms of that information, which I think is key.

    I am hoping that we move forward with suggestions in terms of how we can establish a little more democratic progress and not—I know that we talked about money going down there. I just got a letter. We wanted 30 helicopters, I don't know how much they cost, but that will pretty much take all of that chunk of money that we are sending down there.

    With that, thank you very much.

    Mr. SAXTON. Mr. Bartlett.

    Mr. BARTLETT. There is an old saying, it is an ill wind that blows no good. Several of you have mentioned how fragile some of the democracies in this area are. If they cease to be democracies and become totalitarian states, is that going to make the job of controlling drug trafficking more difficult or less difficult?
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    Dr. EHRENFELD. More difficult.

    Dr. BAILEY. More difficult.

    Dr. SCHULZ. More difficult.

    Dr. EHRENFELD. It will be more difficult. It will be, state-sponsored.

    Mr. SHIFTER. Also in the case of Peru, we are seeing a troubling situation where an authoritarian government is in place, and it is going to have problems with stability. So I think it is going to be more difficult as well. I don't think that is the answer.

    Mr. BARTLETT. But if it were essentially totally failing now, it can't be that much different.

    Dr. SCHULZ. One can fail more rapidly.

    Mr. SHIFTER. I think we will see some alternatives emerging like in Venezuela, and I am not sure that is encouraging in dealing with the problems more effectively.

    Mr. BARTLETT. Thank you very much, Mr. Chairman.
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    Mr. SAXTON. At this time I would like to thank each of you for sharing this time with us and your viewpoints on what obviously is a very, very serious and important matter for international relations as well as to our national security. Thank you for being with us. We appreciate it very much, and the subcommittee stands adjourned.

    [Whereupon, at 4:26 p.m., the Panel was adjourned.]


June 29, 2000
[This information is pending.]