U.S. DEPARTMENT OF STATE
95/04/28 SPEECH: A. WATSON ON WESTERN HEMISPHERE DEMOCRACIES
BUREAU OF INTER-AMERICAN AFFAIRS

President Rudenstine, Mr. Rockefeller, Professor Coatsworth, distinguished members of the Advisory Committee of the David Rockefeller Center for Latin American Studies, faculty and students, I am very honored to join you this evening for the inaugural meeting of the Center's Advisory Committee. As a Harvard alumnus, I am doubly proud that this great university has signalled its commitment to expand its contributions to basic knowledge and teaching about the hemisphere through the perspective of differing disciplines. I trust that this will also signal a renewed commitment to strengthening the critical dialogue between academia and the foreign policy community.

Let me begin by giving you a brief overview of the Clinton administration's perspective on the current state of Inter-American Affairs. I can't emphasize strongly enough that we are experiencing an extraordinary moment in hemispheric relations, the most promising in my thirty years of diplomatic service. Old assumptions are being dramatically challenged as unexpected developments have contributed to redrawing our understanding of the Americas.

-- Who would have imagined only twenty five years ago that all of the countries of the hemisphere save Cuba would be governed today by leaders chosen in generally open and transparent electoral processes?

-- Or who would have envisioned that Latin America would be at the forefront of economic liberalization, lowering protective tariff barriers in order to pursue export-oriented economic development strategies -- that Chile, a country that pioneered inflation and stagflation-- would be considered in the same category as the Asian tigers? That Brazil which seemed addicted to unbridled inflation would have slashed the rate of inflation to 2% a month?

-- Who would have thought that Argentina -- with whom relations with the U.S. have often been prickly -- would collaborate with the United States and other countries in overseas peacekeeping missions in places such as Croatia and Cyprus, while providing leadership in the search for confidence building measures to reduce the potential for military conflict?

-- Who could have predicted that Mexico would pursue policies aimed at strengthening economic integration with the United States, while abandoning the Group of 77 and joining the OECD?

-- Or, finally, who could have foreseen that the Organization of American States, acting unanimously, would call for the restoration of a president overthrown by its military and call for an economic embargo to signal its commitment to that end?

These extraordinary shifts are closely tied to remarkable transformations in the political economy of the world at the close of the twentieth century, the import of which we don't as yet fully understand. The growing internationalization of production and the failure of socialist experiments has contributed to making obsolete the import-substitution industrialization and statist development strategies of the past.

These factors, combined with the failure of the authoritarian experiments of the 60s and 70s to resolve fundamental economic and political problems helped usher in democratic regimes oriented toward free market solutions.

But changes in the international environment also affected the United States and our policies toward the region. The end of the Cold War led to the removal of some of the most divisive issues in our relationship. The U.S. is now able to engage Latin America on a broad basis, not limited by the controlling imperatives of the East West struggle or the requirements of containment.

At the same time the dramatic shifts in the world economy have seen the dominant position of the U.S. economy recede in the face of global competition. Where Latin America served as a convenient source of raw materials for a giant U.S. domestic economy, today the hemisphere has become more broadly crucial to our ability to remain competitive in the changing world economy.

Indeed, the Americas have become our most important export market, more than one-third of our world-wide total, a market that exceeds that of Europe (Western, Eastern and Russia combined) and that of Asia (Japan, China, East Asia and South Asia combined). Mexico is our third largest trading partner and Latin America is currently the largest developing country destination for U.S. private direct investment, accounting for almost 70% of that investment in recent years.

By any standard, Latin America and the Caribbean will become an increasingly important block of nations in the world economy. With a population approaching half-a-billion, a growing and sophisticated entrepreneurial class oriented towards international markets, and relatively high standards of living by developing country standards, our neighbors have captured the imagination of investors world-wide seeking opportunities for the twenty first century.

Thus, for the first time in history the U.S. has turned South, not in search of raw materials for an expanding industrial power, or the support of docile allies in the historic quest to defeat fascism or contain communism, but as full-fledged trading partners and associates on a wide range of issues.

It is not only the changing economic relationship that concerns us. The decisive shift away from authoritarian regimes in the region is critical to the long term development of a prosperous and stable hemisphere. In addition to the goals of protecting the nation's security and promoting its economic strength, President Clinton has pursued a third cardinal dimension of U.S. foreign policy: the encouragement of democracy.

This objective is premised on the notion that democracy responds to a universal yearning, an aspiration for people everywhere to have a fundamental say in the basic decisions that affect their lives. Because of their fundamental legitimacy, democracies are more likely to succeed in achieving a broad consensus for the implementation of far-reaching policies.

Thus, democracies make more reliable partners in trade, in diplomacy and as stewards of the global environment. Furthermore, democracies, based as they are on the rule of law and respect for political, religious and cultural minorities, are more responsive to their own people and to the protection of human rights.

Now I don't want to imply that the far-reaching economic and political tendencies I have described in the region respond exclusively to broad structural change or ubiquitous external forces. Nor, do I want to suggest that we are witnessing an inevitable teleological process, where reversals in these tendencies are impossible. I don't believe that we are at the end of history -- far from it; rather, I believe that we have a unique opportunity to make history. Change is often the result of conscious, even courageous, policy choices, both domestically and internationally, in Latin America as well as in the United States, aimed at forging structural reforms and building democratic institutions. Precisely because progress towards those goals may be tenuous, we must work hard to ensure that democratic institutions and market regimes are consolidated. This is in our fundamental national interest.

Herein lies the importance of both NAFTA and the Summit of the Americas. NAFTA (and the successful conclusion of the Uruguay round) signalled our determination to assert leadership on behalf of open trading regimes that will serve as the building blocks of the competitive world economy of the twenty-first century.

The Summit of the Americas, I believe, will go down in history as a pivotal event, one that provides a concrete framework for the expansion of hemispheric trade but, more broadly, provides a new architecture that can help contribute to the consolidation of democracy while addressing many critical hemispheric issues that fell by the wayside in the Cold War era.

At the Summit, the hemisphere's leaders went beyond mere rhetoric. They approved an action plan of 23 initiatives and more than 100 specific national and international actions designed to articulate the objectives set out in the Summit Declaration of Principles. These relate to three broad themes: democracy and effective government, sustainable development, and economic integration through expanded trade. Or to put it another way -- how to make democracy work; how to make democracy endure, and how to make democracy prosper.

Let's look briefly at each of these.

Government reform is an essential priority throughout the region, as leaders move to identify themselves with cleaner, more effective public administration. The Summit was an opportunity to focus on measures to: (a) institutionalize representative, transparent, and efficient democratic government capable of confronting threats to democracy, including corruption, terrorism and narcotics trafficking; (b) strengthen the Organization of American States in supporting democracy; and (c) encourage the development of vibrant civil societies in all our countries.

Sustainable development encompasses the goals of producing healthier and more educated citizens and of protecting environmental resources for future generations. Agreed upon measures to expand access and improve the quality of schools and health services, to foster micro-enterprises, to prevent pollution, to preserve the region's biodiversity and to more wisely manage our natural resources will enhance our peoples' welfare and strengthen the region's democratic institutions. The nations of the hemisphere will also focus more actively on the long-term implications for the hemisphere of massive international migrations, the flow of drugs, human rights violations, and social and political implications of increased economic integration.

I have referred previously to the third point, the importance of free trade and market reforms as the engine of growth and prosperity.

In order to address the broad issues underlying the Summit agenda, the U.S. has some particular responsibilities. We must embrace a new and more mature relationship with our hemispheric neighbors, shedding the vestiges of the paternalism or dominance of the past, without shrinking from our hemispheric leadership role. The new relationship must be based on cooperation, mutual respect, and common interests rather than on asymmetries of power. Latin America and the Caribbean must also engage the U.S. in a different fashion, neither soliciting intervention for domestic partisan advantage, nor condemning the development of closer ties as a new form of interventionism.

This means, for example, that the U.S. should seek to elevate the level of dialogue with the major Latin American countries on both regional and global issues through bilateral and multilateral channels. This will require shifting from a pattern of diplomacy where Latin American governments are simply informed of U.S. decisions prior to our asking for their active support, to a far more interactive consultative process in which issues are discussed on a regular basis and others' views are included in the decision-making process. The consultative process leading to the Summt of the Americas is a good example of this approach.

Moreover, it is in the interest of the United States to involve the countries of Latin America and the Caribbean more broadly in global affairs. The strong support the U.S. received from its neighbors for its positions in the Uruguay round negotiations is illustrative of the common commitment to free-trade regimes. The strong support from Latin America and the Caribbean for indefinite extension of the Non- Proliferation Treaty is another major example. The U.S. should seek to draw appropriate countries into major multilateral organizations such as the OECD, the Missile Technology Control Regime and APEC. This rewards them for the progress made in economic restructuring and democratic opening. A seat at the table also exposes them to the thinking of the major powers and helps break down the vexing North-South barriers that have marked much of the relationship between developed and developing countries over the last forty years. It would also help preclude reversals in domestic economic policies and discourage authoritarian reversions.

An enhanced dialogue will not always be harmonious. As Latin America emerges as a politically and economically mature region attuned to values and objectives similar to ours, the United States must be prepared to accept the inevitability of its neighbors' adopting domestic and foreign policies that may not always dovetail with US wishes. This mature dialogue in accordance with the principles agreed upon at the Summit of the Americas must be seen as a reasonable and natural outgrowth of democratic politics.

In sum, the sweeping reforms of the past several years have led to an extraordinary convergence of interests between the U.S. and Latin America. What we are pursuing in our hemisphere is more than expanded free trade. We seek a community of nations committed to democracy and human rights, bound together by open markets and rising standards of living, and dedicated to the peaceful resolution of disputes.

In this quest we can clearly benefit from a deeper and more systematic dialogue between the academic and policy communities. The themes that you are considering in your meeting today, in the faculty panel on globalization, contemporary political and economic transitions and public cultures, and the graduate student panel on the environment, political parties and constitutional thought, are all central to the multiple agendas we are pursuing through the Summit and in our bilateral relationships.

Although it may appear that we in the Department of State are dealing exclusively with the day to day crises of diplomacy, behind these headline events are more profound developments that we are trying to understand far better. Let me just give you two examples: We have struggled to comprehend what happened in Mexico, to understand better the implications of alternative exchange rate policies as tools in achieving macro-economic stabilization and structural reforms. The theoretical literature on the implications of these policies is pretty clear, but this did not help some of the most sophisticated techno- politicians in the hemisphere -- or anyone else -- anticipate the depth and scope of the Mexican financial crisis. Clearly, we do not fully understand the degree of change in the international financial system that makes countries like Mexico so vulnerable to dramatic shifts in investor reactions.

Secondly, the fledgling democracies of the hemisphere (like democracies elsewhere for that matter) face a multitude of challenges. They, or rather we, all suffer in varying degrees from crises of representation, responsiveness and accountability. Citizens often do not feel that parties or legislatures interpret their basic concerns. They worry that institutions are incapable of delivering. And increasingly they recoil at corruption and malfeasance. We need to understand better how democratic institutions can be consolidated and how they can be made more responsible. In seeking to reduce the scope of the state, we should not lose sight of the fact, as President Fernando Henrique Cardoso noted during his recent State visit to the United States, that while we need a smaller state, we need one that can address effectively the appropriate legitimate concerns of citizens in rapidly changing societies.

These and many other issues reflected in the Summit agenda, from environment and indigenous rights, to the evolving role of multi- national institutions, to the challenges of diplomatic relations in a more complex and varied world, require first-rate scholarship and a more fluid communication between academic specialists and policy-makers. I welcome the establishment of this distinguished center and look forward to fruitful exchanges and collaboration in the years ahead on many of these issues of mutual concern.

Thank you very much.

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