Order Code RL32733
CRS Report for Congress
Received through the CRS Web
Latin America and the Caribbean:
Issues for the 109th Congress
Updated March 29, 2006
Mark P. Sullivan, Coordinator,
Colleen W. Cook, J.F. Hornbeck,
Clare Ribando, Maureen Taft-Morales,
Connie Veillette, and M. Angeles Villarreal
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress
Latin America and the Caribbean:
Issues for the 109th Congress
Summary
The Latin America and Caribbean region has made enormous strides over the
past two decades in terms of political and economic development. While the region
overall experienced an economic setback in 2002-2003, it rebounded in 2004, with
a growth rate of 5.9%. Estimates for 2005 show a growth rate of 4.3%. Nevertheless,
several nations face considerable challenges that could threaten political stability,
including persistent poverty, violent guerrilla conflicts, autocratic leaders, drug
trafficking, increasing crime, and the rise of radical populism in several countries.
Legislative and oversight attention to Latin America and the Caribbean in the
second session of the 109th Congress are focusing on continued counter-narcotics
efforts in the region; trade issues, including the possible consideration of
implementing legislation for one or more free trade agreements; potential challenges
to democracy in Venezuela and Bolivia; ongoing efforts to bring political stability
and ameliorate poverty in Haiti; efforts to foster change in Cuba; and cooperation on
border security, migration, and anti-terrorism measures, especially with Mexico.
Since 2000, the Andean Counterdrug Initiative (ACI) has been the primary U.S.
program supporting the Colombian government’s efforts to combat drug trafficking
and terrorist activity perpetrated by guerrilla and paramilitary groups. In the first
session, the 109th Congress approved the Administration’s request to continue ACI
funding in FY2006 at approximately the same levels as in previous years, and the
second session will be considering the FY2007 request for ACI funding.
In the trade arena, Congress approved legislation in 2005 (P.L. 109-53)
implementing the Dominican Republic-Central America-United States Free Trade
Agreement (DR-CAFTA) that had been completed in 2004. The second session of
the 109th Congress may also consider additional free trade agreements, including ones
completed recently with Peru and Colombia, and others currently being negotiated
with Ecuador and Panama.
With regard to democracy, Congress will likely focus on continued support to
Haiti, the hemisphere’s poorest nation that elected a new government in February
2006. Venezuela will remain a congressional concern because of fears that President
Hugo Chávez may be using his political power to push toward authoritarian rule. In
Bolivia, the new government of President Evo Morales could complicate U.S.
relations in part because of his criticism of U.S. counternarcotics policy. In Peru, a
retired army officer who espouses a populist platform is leading polls for the April
2006 presidential election. With regard to U.S. policy toward Cuba, Congress will
likely continue to debate whether loosening or tightening the U.S. embargo will
encourage political change.
This report, updated bimonthly, provides an overview of U.S. relations with
Latin America and the Caribbean, focusing especially on the role of Congress and
congressional concerns. For further information, see the CRS products listed after
each topic.
Contents
Conditions in the Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
U.S. Policy Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Regional Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
U.S. Foreign Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Colombia and the Andean Counterdrug Initiative . . . . . . . . . . . . . . . . . . . . . 6
Free Trade Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Dominican Republic-Central America-United States
Free Trade Agreement (DR-CAFTA) . . . . . . . . . . . . . . . . . . . . . . 8
U.S.-Panama Free Trade Agreement (FTA) . . . . . . . . . . . . . . . . . . . . . 9
U.S. FTAs in the Andean Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Free Trade Area of the Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Terrorism Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Gangs in Central America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
AIDS in the Caribbean and Central America . . . . . . . . . . . . . . . . . . . . . . . . 15
Afro-Latinos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Trafficking in Persons in Latin America and the Caribbean . . . . . . . . . . . . 17
Country Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Bolivia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Cuba . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Dominican Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Ecuador . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
El Salvador . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Guatemala . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Haiti . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Honduras . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Nicaragua . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Panama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Peru . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Latin America and the Caribbean:
Issues for the 109th Congress
Conditions in the Region
The Latin America and Caribbean region has made enormous strides over the
past two decades in political development, with all countries but Cuba having regular
free and fair elections for head of state. Despite this democratic progress, several
nations face considerable challenges that could threaten political stability, including
persistent poverty, violent guerrilla conflicts, autocratic leaders, drug trafficking,
increasing crime, and the rise of radical populism in several Latin American
countries. Already in 2006, presidential elections have been held in Chile, Costa
Rica, and Haiti, and additional elections are scheduled for Peru in April, Colombia
in May, Mexico in July, Guyana in August, Brazil and Ecuador in October,
Nicaragua in November, and Venezuela in December. St. Lucia is also due to hold
parliamentary elections by the end of the year, and the new Jamaican government of
Portia Simpson Miller, the country’s first woman prime minister, might call elections
this year.
While the region overall experienced a gross domestic product (GDP) decline
of 0.6% in 2002 and only a modest growth rate of 1.5% in 2003, by the end of 2004,
the region had rebounded with an estimated growth rate of nearly 6% for the year,
surpassing even the most optimistic predictions. Every country in the region, with
the exception of Haiti, experienced positive economic growth, and even per capita
income for the region as a whole increased by more than 4% for the year. Countries
that had suffered the deepest recessions in recent years — Argentina, Uruguay, and
Venezuela — all experienced significant economic growth in 2004. Estimates for
2005 show the region having a growth rate of 4.3%, with Argentina and Venezuela
registering the strongest growth rates.1
The Andean region still faces considerable challenges, including the rise of a
radical form of populism in several countries. Colombia continues to be threatened
by drug trafficking organizations and by two left-wing guerrilla groups and a rightist
paramilitary group, all of which, combined, have been responsible for thousands of
deaths each year. Bolivia has experienced political unrest over the last few years,
including the resignation of its president in 2003, and its interim president in June
2005. The election of indigenous leader Evo Morales as president in December 2005
could complicate U.S. relations given his vow to decriminalize coca growing.
Ecuadorian President Lucio Gutierrez was removed from office in April 2005
following weeks of popular protests related to his replacement of judges. Current
1 U.N. Economic Commission for Latin America and the Caribbean (ECLAC), “Preliminary
Overview of the Economies of Latin America and the Caribbean 2005,” December 2005.
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President Alfredo Palacio, a political independent, will also face significant
challenges in governing within Ecuador’s politically fragmented and unstable
political environment. In Peru, President Alejandro Toledo remains extremely
unpopular, but the economy has continued to grow at high levels. Presidential
elections are scheduled for April 2006 with a retired army officer who espouses a
populist platform leading the polls. Venezuela under President Hugo Chávez has
been plagued by several years of political polarization, although Chávez’s rule was
strengthened after he survived a recall referendum in August 2004 and after his
supporters swept legislative elections in December 2005 after the opposition
withdrew from the race. Windfall oil profits have bolstered his government’s revenue
and economic growth.
In Central America, countries such as El Salvador, Honduras, and Nicaragua
emerged from the turbulent 1980s and 1990s with democratic institutions more
firmly entrenched, yet violent crime is a major problem in all countries. Honduras
and Nicaragua are among the poorest countries in the hemisphere. While Guatemala
has made significant progress in improving the government’s human rights policy,
significant problems remain. In Nicaragua, tensions among current President
Enrique Bolaños, the Sandinista party, and allies of former President Arnoldo
Aleman were threatening the country’s political stability in 2005, but were eased by
October. It is expected that Bolaños will fill out the remainder of his term until
January 2007.
In the Caribbean, Haiti — the hemisphere’s poorest nation — continues to be
plagued by political challenges. In the aftermath of President Aristide’s departure in
February 2004, Haiti’s interim government was being supported by a U.N.
Stabilization Mission with the goal of ensuring a secure and stable environment and
to restore the rule of law. After being postponed several times because of political
instability and technical problems, new elections were ultimately held February 7,
2006. Former president Rene Preval was declared the winner after several days of
protests by his supporters when it appeared that a run-off election would be
necessary. Preval is not scheduled to take office until May 12, 2006. Cuba remains
a hardline communist state under Fidel Castro with a human rights situation that has
deteriorated significantly since 2003. Several Caribbean nations, especially Grenada,
Haiti, and Jamaica, were hard hit by several devastating storms in 2004, and in 2005
hurricanes again caused significant damage in several island nations, especially Cuba
and Haiti. The AIDS epidemic in the Caribbean, where infection rates are among the
highest outside of sub-Saharan Africa, has also been a major challenge for the region.
U.S. Policy Overview
Legislative and oversight attention to Latin America and the Caribbean in the
second session of the 109th Congress are continuing to focus on continued
counter-narcotics efforts in the region; trade issues, including the possible
consideration of implementing legislation for one or more free trade agreements
(FTAs) in the region; potential challenges to democracy in Venezuela and Bolivia;
ongoing efforts to bring political stability and ameliorate poverty in Haiti; efforts to
foster political change in Cuba; and cooperation on border security, migration and
anti-terrorism measures, especially with Mexico.
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Since 2000, the United States has provided more than $4 billion for the Andean
Counterdrug Initiative (ACI), the primary U.S. program supporting the Colombian
government’s efforts to combat drug trafficking and terrorist activity perpetrated by
guerrilla and paramilitary groups. The ACI has also provided interdiction and
development support to six of Colombia’s neighbors: Bolivia, Peru, Ecuador,
Venezuela, Brazil, and Panama. The 109th Congress approved the Administration’s
request to continue ACI funding in FY2006 at approximately the same levels as in
previous years, and in the second session will consider FY2007 ACI funding.
Human rights and the environmental consequences of aerial fumigation remain issues
in the congressional debate. The future of continued assistance to Bolivia could
become an issue with the election of a president who has strongly criticized U.S.
counternarcotics policy toward the region.
In the trade arena, Congress approved legislation in July 2005 (P.L. 109-53,
signed into law August 2, 2005) implementing the Dominican Republic-Central
America-United States Free Trade Agreement (DR-CAFTA) that had been completed
in 2004. The Bush Administration views the agreement as a way for the region to
help create jobs, attract foreign investment, and advance good governance. As
reflected in the narrow passage in the House, congressional consideration of the DR-
CAFTA was controversial, with opposition from labor advocates and some industry
groups. The second session of the 109th Congress may also consider implementing
legislation for additional free trade agreements (FTAs) in the region. In January
2006, President Bush notified Congress of his intention to enter into an FTA with
Peru (negotiations were completed in December 2005), and in late February 2006,
Colombia and the United States completed FTA negotiations. U.S. negotiations with
Ecuador are continuing as are negotiations for a U.S.-Panama FTA.
With regard to democracy and political stability, Congress will likely focus on
continued support to Haiti, the hemisphere’s poorest nation that has hopes of electing
a new government in early 2006. Venezuela — a major supplier of oil to the United
States — will also remain a congressional concern because of fears that President
Hugo Chávez may be using his political power to push toward authoritarian rule and
to support leftist groups in other Latin American countries. In Bolivia, the future
government of newly elected president Evo Morales, a former leader of the coca
growers union, could complicate U.S. relations not only because of his criticism of
U.S. counternarcotics policy but also because of his leftist orientation and close
relations with Venezuela’s Hugo Chávez and Cuba’s Fidel Castro. With regard to
U.S. policy toward Communist Cuba, Congress will likely continue to focus on the
poor human rights situation and to debate whether loosening or tightening the U.S.
embargo will encourage political change.
Congress has maintained an active interest in neighboring Mexico, focusing
especially on border security and migration issues. In May 2005, Congress approved
legislation (as part of P.L. 109-13, the FY2005 Emergency Supplemental
Appropriations Act) that established identity card standards for the issuance of
drivers’ licenses, waived laws to facilitate the construction of a border fence, and
required a pilot test of ground surveillance technologies at the border. Congress is
currently considering a number of immigration reform initiatives, ranging from
measures to tighten immigration controls to broad reform including border security,
earned residency for undocumented aliens, and a guest worker program. Congress
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also will likely maintain an active interest in Mexico as it approaches presidential and
legislative elections in 2006.
Congressional consideration of the annual foreign operations appropriations
legislation that funds foreign aid is an important way for Congress to influence U.S.
policy toward the region. U.S. foreign aid is largely administered by the U.S. Agency
for International Development (USAID). The agency supports such activities as
education, poverty reduction, health care, conservation, natural disaster mitigation
and reconstruction, counter-narcotics and alternative development, and HIV/AIDS
prevention and education. In addition, the United States provides food assistance,
anti-terrorism assistance, and security assistance. In the aftermath of several
devastating storms in 2004, the United States provided disaster and reconstruction
assistance to several Caribbean nations. Overall U.S. foreign aid to the Latin America
and Caribbean region amounted to about $1.82 billion in FY2005, and an estimated
$1.68 billion in FY2006. The FY2007 request for the region is for $1.63 billion. The
Millennium Challenge Account (MCA), could also significantly increase U.S. aid to
several Latin American nations. In May 2005, the Millennium Challenge Corporation
approved a five-year $215 million compact for Honduras, and in July 2005 it
approved a $175 million five-year compact with Nicaragua.
CRS Products:
CRS Report RL32160, Caribbean Region: Issues in U.S. Relations, by Mark P.
Sullivan.
CRS Report RS22119, China’s Growing Interest in Latin America, by Kerry
Dumbaugh and Mark P. Sullivan.
CRS Report 98-684, Latin America and the Caribbean: Fact Sheet on Leaders and
Elections, by Mark P. Sullivan and Barbara Salazar Torreon.
CRS Report RL32427, Millennium Challenge Account: Implementation of a New U.S.
Foreign Aid Initiative, by Larry Nowels.
CRS Report RS22095, Organization of American States: A Primer, by Clare Ribando.
CRS Report RS21700, Special Summit of the Americas — Monterrey, Mexico,
January 2004: Background, Objectives, and Results, by Clare Ribando.
CRS Report RL32487, U.S. Foreign Assistance to Latin America and the Caribbean,
coordinated by Connie Veillette.
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Regional Issues
U.S. Foreign Assistance
The United States maintains a variety of foreign assistance programs in Latin
America and the Caribbean, including security assistance, counternarcotics,
economic development, and trade capacity building programs. Aid to the region
increased during the 1960s with the Alliance for Progress and during the 1980s with
aid to Central America. Since 2000, U.S. assistance has focused on counternarcotics
especially in the Andean region. Current aid levels to Latin America and the
Caribbean comprise about 11.8% of the worldwide FY2006 bilateral aid budget.
Amounts requested for FY2007 would reduce this ratio to 10.6%. Current aid levels
to the region could increase further as more countries are deemed eligible for
Millennium Challenge Account grants.
The annual Foreign Operations Appropriations bills have been the vehicles by
which Congress provides funding for, and sets conditions on foreign assistance
programs. On November 14, 2005, the President signed into law the FY2006
Foreign Operations Appropriations Act (H.R. 3057, P.L. 109-102), fully funding
several accounts from which Latin American and Caribbean countries benefit. For
FY2006, U.S. assistance to Latin America and the Caribbean amounted to an
estimated $1.68 billion, the largest portion of which, $919 million, was allocated to
the Andean region. Mexico and Central America received $292 million, while the
Caribbean received $307 million. Brazil and the Southern Cone of South America
received an estimated $36 million. The United States also maintains programs of a
regional nature that totaled an estimated $133 million in FY2006.
The FY2007 request of $1.6 billion represents the lowest levels of U.S. foreign
assistance to the region in more than four decades, measured in constant dollars. The
FY2007 request is 3% lower than FY2006. The largest decrease occurs in the
Development Assistance Account, which sustains a 28% reduction. The largest
increase is for Economic Support Funds (up 26%) and the Global HIV/AIDS
Initiative (up 35%). The increase in Economic Support Funds includes trade
assistance for DR-CAFTA countries. The Child Survival and Health Account would
be cut by 9%. These figures do not include Millennium Challenge Compacts signed
with Honduras ($215 million over five years) and Nicaragua ($175 million over five
years).
Aid programs are designed to achieve a variety of goals, from poverty reduction
to economic growth. Child Survival and Health (CSH) funds focus on combating
infectious diseases and promoting child and maternal health. Development
Assistance (DA) funds improvements in key areas — such as trade, agriculture,
education, the environment, and democracy — in order to foster sustainable
economic growth. Economic Support Funds (ESF) assist countries of strategic
importance to the United States and fund programs relating to justice sector reforms,
local governance, anti-corruption, and respect for human rights. P.L. 480 food
assistance is provided to countries facing emergency situations, such as natural
disasters. Counternarcotics programs seek to assist countries to reduce drug
production, to interdict trafficking, and to promote alternative crop development.
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Foreign Military Financing (FMF) provides grants to nations for the purchase of U.S.
defense equipment, services, and training.
Some Latin American countries will be affected by a cutoff of U.S. assistance
as a result of not signing Article 98 agreements that exempt U.S. citizens from the
jurisdiction of the International Criminal Court. The American Service Members
Protection Act (Title II of P.L. 107-206) applies the aid cutoff to FMF and
International Military Education and Training (IMET) funds. The FY2005 and
FY2006 Foreign Operations Appropriations acts extends the prohibition to ESF.
Colombia, the major recipient of U.S. assistance in Latin America, has signed an
agreement. Others that have not, such as Bolivia, Brazil, Ecuador, Mexico,
Paraguay, Peru, and Venezuela, could see their assistance withheld.
The Millennium Challenge Account (MCA) is a new initiative that provides
sizable aid grants to a few low-income nations that have been determined, through
a competitive process, to have the strongest policy reform records and where new
investments are most likely to achieve their intended development results. In Latin
America, Bolivia, Honduras, and Nicaragua were deemed eligible to participate in
the first round; El Salvador became eligible for FY2006. In 2005, the Millennium
Challenge Corporation (MCC) approved five-year compacts with Honduras and
Nicaragua. In 2006, the MCC announced threshold assistance of $37 million for
Paraguay to assist the country to become eligible for an MCC compact. Other Latin
American or Caribbean nations could be eligible to receive assistance in future years.
U.S. support to counter the HIV/AIDS epidemic in the region is provided through
programs administered by several U.S. agencies, although the U.S. Agency for
International Development (USAID) is the lead agency in the international fight
against AIDS. The United States also provides contributions to multilateral efforts,
such as the Global Fund to Fight AIDS, Tuberculosis, and Malaria.
CRS Products:
CRS Report RL32487, U.S. Foreign Assistance to Latin America and the Caribbean,
coordinated by Connie Veillette.
Colombia and the Andean Counterdrug Initiative
The Andean Counterdrug Initiative (ACI) is the primary U.S. program that
supports Plan Colombia, a six-year plan developed by the Colombian government in
1999 to combat drug trafficking and related guerrilla activity. Because Plan
Colombia was developed as a six-year plan, the 109th Congress has been reviewing
its progress in response to an Administration request to continue U.S. assistance in
FY2006. U.S. support for Plan Colombia began in 2000, when Congress passed
legislation providing $1.3 billion in interdiction and development assistance (P.L.
106-246) for Colombia and six regional neighbors: Bolivia, Peru, Ecuador,
Venezuela, Brazil, and Panama. Funding for ACI from FY2000 through FY2005
totals approximately $4.2 billion. For FY2006, the Administration requested $734.5
million, of which $40 million was proposed for a new Critical Flight Safety Program,
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to upgrade aging aircraft. Another $21 million was proposed for the Air Bridge
Denial program, an air interdiction program in operation over Colombia. In the
FY2006 Foreign Operations Appropriations Act (H.R. 3057, P.L. 109-102) Congress
provided the Administration’s request for $734.5 million, but reduced the amounts
for some of its components. The Critical Flight Safety Program would receive $30
million instead of $40 million, and the Air Bridge denial program would receive $14
million rather than $21 million. FY2006 funding for ACI is estimated at $727.2
million (reflecting a 1% across-the-board rescission), and the Administration
requested $721.5 million for FY2007.
It is estimated that Colombia produces between 56% and 80% of the world’s
supply of cocaine and increasing amounts of high-quality heroin. Illegally armed
groups of both the left and right are believed to participate in the drug trade. In
March 2006, the United States indicted fifty commanders of the Revolutionary
Armed Forces of Colombia (FARC) for drug trafficking.2 In addition to the basic
debate over what role the United States should play in Colombia’s struggle against
drug trafficking and illegally armed groups, Congress has repeatedly expressed
concern with a number of related issues. These include continuing allegations of
human rights abuses; the expansion of U.S. assistance for counterterrorism and
infrastructure protection; the health and environmental consequences of aerial
fumigation of drug crops; the progress of alternative development to replace drug
crops; the level of risk to U.S. personnel in Colombia, including the continued
captivity of three American hostages by the Revolutionary Armed Forces of
Colombia (FARC); and the current demobilization talks between the Colombian
government and paramilitaries. In 2004, Congress raised the cap on military
personnel allowed to be deployed in Colombia in support of Plan Colombia from 400
to 800 for military personnel, and from 400 to 600 for civilian contractors (FY2005
Ronald W. Reagan National Defense Authorization Act, P.L. 108-375). Since
FY2002, the Congress has authorized support for a unified campaign against
narcotics trafficking and activities of organizations designated as terrorist
organizations by the Department of State.
According to U.S. and Colombian officials, coca cultivation dropped 15% in
Colombia during 2002 and 21% in 2003. This marked the first reduction in acreage
devoted to coca cultivation in Colombia. Poppy cultivation was reduced by 24% in
2002 and 10% in 2003. It is believed that the Plan Colombia spraying goals are
ahead of schedule. The spraying does not prevent, although it may discourage, the
replanting of illicit crops. The Office of National Drug Control Policy (ONDCP)
reported that there was no net reduction in coca cultivation in Colombia in 2004,
while the U.N. Office on Drugs and Crime reported a small decrease in Colombia but
modest increases in both Bolivia and Peru. In November 2005, ONDCP announced
that prices for cocaine and heroin had increased during 2005, indicating a decline in
supplies.
Critics of U.S. policy contend that winning the war against drugs is a losing
proposition as long as demand continues. They argue that despite the successes in
2 Juan Forero, “U.S. Indicts 50 Leaders of Colombian Rebels in Cocaine Trafficking,” The
New York Times, March 23, 2006.
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eradicating illicit crops, the amount of drugs entering the United States has not
declined, and prices have largely remained stable. Critics contend that U.S. policy
should focus on the “demand side” in the United States. The Bush Administration
has, however, recast the debate, arguing that the United States faces not only a threat
from drug trafficking, but also from the increasing instability brought on by insurgent
guerrilla organizations that are fueled by the drug trade. Supporters of U.S. policy
argue that assistance to Colombia is necessary to help a democratic government
besieged by drug-supported leftist and rightist armed groups. Assistance to
Colombia’s neighbors, according to supporters, is merited because of an increasing
threat from the spillover of violence and drug production from Colombia.
While some critics agree with this assessment, they argue that U.S. assistance
overemphasizes military and counter-drug assistance and provides inadequate
support for protecting human rights and encouraging a peace process in Colombia.
In particular, they express concern that current military assistance is strengthening
the Colombian military which, they charge, has substantial ties to rightist
paramilitary groups who have committed gross violations of human rights. Critics
also assert that U.S. assistance is disproportionately targeted to eradication of crops
and military training rather than to alternative development projects that could
provide alternative livelihoods for growers who voluntarily give up illicit crops.
CRS Products:
CRS Report RL32774, Plan Colombia: A Progress Report, by Connie Veillette.
CRS Report RL32337, Andean Counterdrug Initiative (ACI) and Related Funding
Programs: FY2005 Assistance, by Connie Veillette.
CRS Report RL32250, Colombia: Issues for Congress, by Connie Veillette.
CRS Report RL33162, Drug Crop Eradication and Alternative Development in the
Andes, by Connie Veillette and Caroline Navarette-Frias.
Free Trade Agreements
Dominican Republic-Central America-United States Free Trade
Agreement (DR-CAFTA). On August 5, 2004, the United States, Costa Rica, El
Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic signed the
DR-CAFTA. Nearly one year later, it faced a contentious debate and close vote in
both houses of the U.S. Congress. The Senate passed implementing legislation by
a vote of 54 to 45 on June 30, 2005. The House did the same on July 28, 2005, by
a vote of 217 to 215. President Bush signed the legislation into law on August 2,
2005 (P.L. 109-53, 119 STAT. 462). In addition to the United States, all countries
except Costa Rica have ratified the agreement. The DR-CAFTA was expected to
take effect on January 1, 2006, but none of the countries were able to make the
necessary legal and regulatory changes in time. All of the five ratifying countries are
expected to do so by summer of 2006, and the agreement will take effect on a rolling
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basis when each country fulfills its obligations. Costa Rica still faces a two-vote
ratification process and vocal opposition to the agreement from certain segments of
the country. The National Assembly vote may take place by this summer, but the
outcome is far from clear.
The DR-CAFTA is a regional agreement to reduce barriers to trade in which all
parties are subject to “the same set of obligations and commitments,” although each
country negotiated a separate market access schedule. It is a comprehensive and
reciprocal trade agreement, which distinguishes it from, and will eventually replace,
U.S. commitments made under unilateral preferential trade arrangements — the
Caribbean Basin Initiative (CBI), the Caribbean Basin Trade Partnership Act
(CBTPA), and the Generalized System of Preferences (GSP). The DR-CAFTA
covers market access of goods, services trade, government procurement, intellectual
property, investment, labor, and environment, among other issues.
The DR-CAFTA was controversial. Supporters saw it as part of a policy
foundation that can enhance intraregional trade, as well as, long-term social, political,
and economic development in an area of strategic importance to the United States.
Opponents were especially concerned over some of the countries’ poor labor
standards, the perception of inadequate labor laws, and lax enforcement, arguing that
DR-CAFTA’s labor provisions should have included suspension of trade benefits
language similar to that found in the CBI and GSP. The investor-state and
pharmaceutical data protection sections were also repeatedly criticized as inadequate.
With added concerns from select import-sensitive industry groups (e.g. sugar and
textiles), the politics of DR-CAFTA led to the very narrow margin of approval.
U.S.-Panama Free Trade Agreement (FTA). On November 16, 2003,
President Bush formally notified Congress of his intention to negotiate a bilateral
FTA with Panama. Negotiations commenced in April 2004, with the ninth and most
recent round occurring in Washington, D.C. January 17-20, 2006. The agreement has
still not been completed, pending resolution of a few remaining contentious
agricultural issues.
Panama is largely a services-based economy, which distinguishes it, and the
trade negotiations with the United States, from those of its Central American
neighbors. After nine rounds, nearly all issues have been resolved, including difficult
ones such as defining government procurement rules for the Panama Canal Authority
and market access for U.S. retailers. Unlike the DR-CAFTA, there is little textile and
apparel trade, and labor issues so far have been less controversial. The treatment of
sensitive agricultural products are the last issues to be concluded. In particular, the
United States and Panama have yet to finalize an agreement on a sanitary and
phytosanitary (SPS) issue. The United States has requested that Panama accept
USDA meat inspection standards as sufficient for immediate entry of U.S. exports.
This became, politically, a very sensitive issue (the Panamanian Agriculture Minister
resigned) because the SPS chapter had already been closed, Panama was concerned
about compromising its high inspection standards, and Panama did not want to look
as if it had suddenly capitulated to U.S. demands. Following a week-long review of
the U.S. meat inspection process in February 2006, a Panamanian delegation found
that it did not pose a threat to Panama’s national standards. Details remain to be
worked out over how this might translate into an immediate certification for entry
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into Panama of U.S. meat products. Reportedly, all other agricultural market access
issues have been finalized with the exception of determining any change to Panama’s
portion of the U.S. sugar quota.
U.S. FTAs in the Andean Region. The U.S.-Andean free trade agreement
(FTA) negotiations began in May 2004, when the United States, Colombia, Peru, and
Ecuador (with Bolivia as an observer) participated in the first round of talks. After
thirteen rounds of talks, however, negotiators failed to reach agreement because of
issues in agriculture and intellectual property rights. Peru decided to continue
negotiating alone with the United States and concluded a bilateral agreement on
December 7, 2005. On January 6, 2006, President Bush notified the Congress of his
intention to enter into a free trade agreement with Peru. Colombia later continued
negotiations with the United States and this agreement was concluded on February
27, 2006. Negotiations with Ecuador are ongoing. A senior U.S. trade official
recently said that the U.S. trade agreements with Colombia and Peru are likely to be
treated as separate agreements by the Congress, thereby diminishing the prospects of
a single U.S.-Andean FTA.3
Under current deadlines in the Trade Promotion Authority Act (TPA),
expedited legislative procedures apply to implementing bills for trade agreements,
if, among other requirements, the agreements are entered into by June 30, 2007.
Given the TPA notification procedures, the FTA with Peru could be voted on by the
Congress sometime this summer, while the FTA with Colombia could be voted on
a few months later. It is not known if or when a U.S.-Ecuador FTA might be
reached. The United States currently extends duty-free treatment to imports from the
four Andean countries under a regional preference program, the Andean Trade
Promotion and Drug Eradication Act (ATPDEA), but that access is scheduled to
expire at the end of December 2006. Over half of all U.S. imports in 2005 from the
Andean countries entered under these preferences. An FTA with the Andean
countries would lock-in those preferences and additional duty-free treatment. There
has been some speculation that the United States will not renew the ATPDEA in the
absence of a free trade agreement with the Andean countries.4
Free Trade Area of the Americas. The proposed Free Trade Area of the
Americas (FTAA) was originally conceived 10 years ago as a regional (presumably
WTO-plus) trade agreement that would include 34 nations of the Western
Hemisphere. Since then, three drafts of an incomplete agreement have been released,
but the original January 2005 date for signing it has passed. At the center of the
delay are deep differences dividing the United States and Brazil, the co-chairs of the
Trade Negotiating Committee, which is charged with defining the framework under
which the FTAA negotiations can continue. In particular, Brazilian insistence on a
reduction of U.S. agricultural subsidies has been central to the debate. The United
States and Brazil agreed at the November 2003 Miami Ministerial to a two-tier
approach that would include a set of “common rights and obligations” to which all
3 Trade Reports International Group, Washington Trade Daily, “U.S. Colombia Reach
FTA,” February 28, 2006.
4 Committee on Ways and Means, U.S. House of Representatives, Report on Trade Mission
to Colombia, Ecuador, and Peru, WMCP: 109-6, September 2005.
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countries would agree, augmented by optional plurilateral arrangements for countries
wishing to make deeper reciprocal commitments. To date, the United States and
Brazil have been unable to define how this two-tier concept would work, and the
United States has rebuffed Brazil’s offer to move ahead with the “4+1” market access
talks with the Mercosur (Southern Common Market) countries (Brazil, Argentina,
Uruguay, and Paraguay).
The breadth of an emerging resistence to the FTAA became clearer at the fourth
Summit of the Americas held on November 4-5, 2005, in Mar del Plata, Argentina.
Amidst dramatic and sometimes violent protests against President George W. Bush
and the FTAA, which was not scheduled as the major topic of this summit, it was
evident that Latin America was divided over how to proceed. A total of 29 countries
supported restarting negotiations, and the United States pushed to set a specific date
in 2006. The Mercosur countries rejected this idea, arguing that the conditions for
a balanced and equitable FTAA did not yet exist. Venezuela lobbied independently
to end any further effort on the FTAA and called for a unified resistence against U.S.
policies and presence in Latin America.
The Summit declaration called for a time to reflect on the problems of the
FTAA process while awaiting the outcome of the upcoming WTO Doha Round
ministerial. At this juncture, there is no unified vision on how to proceed with the
proposed FTAA, but at a minimum, it appears that it will depend on how much
progress, if any, is made on agricultural issues in the WTO, and whether the United
States and Brazil can come to a mutual understanding on how to proceed. In the
meantime, both Brazil and the United States are courting other Latin American
countries to join them in subregional trade pacts, a model of economic integration
that most economists argue is far inferior to a region-wide FTAA.
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CRS Products:
CRS Report RL31870, The Dominican Republic-Central America-United States Free
Trade Agreement (DR-CAFTA), by J. F. Hornbeck.
CRS Report RL32110, Agriculture in the U.S.-Dominican Republic-Central American
Free Trade Agreement, by Remy Jurenas.
CRS Report RL32322, Central America and the Dominican Republic in the Context of
the Free Trade Agreement (DR-CAFTA) with the United States, coordinated by
K. Larry Storrs.
CRS Report RL32540, The Proposed U.S.-Panama Free Trade Agreement, by J. F.
Hornbeck.
CRS Report RL32770, Andean-U.S. Free-Trade Agreement Negotiations, by Angeles
Villarreal.
CRS Report RS22391, U.S.-Peru Trade Promotion Agreement, by Angeles Villarreal
CRS Report RS20864, A Free Trade Area of the Americas: Status of Negotiations and
Major Policy Issues, by J. F. Hornbeck.
CRS Report RL33258, Brazilian Trade Policy and the United States, by J. F.
Hornbeck.
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Terrorism Issues
In the aftermath of the September 2001 terrorist attacks on New York and
Washington, D.C., U.S. attention to terrorism in Latin America intensified, with an
increase in bilateral and regional cooperation. Latin American nations strongly
condemned the attacks, and took action through the Organization of American States
to strengthen hemispheric cooperation. In June 2002, OAS members signed an Inter-
American Convention Against Terrorism in order to improve regional cooperation,
including a commitment by parties to deny safe haven to suspected terrorists.
President Bush submitted the convention to the Senate in mid-November 2002 for
its advice and consent, and it was referred to the Senate Foreign Relations Committee
(Treaty Doc. 107-18). The committee held a hearing on the treaty on June 17, 2004,
and on July 28, 2005, the committee favorably reported the treaty (Senate Exec. Rept.
109-3). On October 7, 2005, the Senate agreed to the resolution of advice and
consent on the convention, and the United States deposited its instruments of
ratification for the convention on November 15, 2005.
In the aftermath of 9/11, the OAS also reinvigorated the Inter-American
Committee on Terrorism (CICTE), which was first established in 1999 to cooperate
in preventing, combating, and eliminating terrorist acts and activities. The CICTE has
programs on cyber security, port security, airport security, legislation against
terrorism, customs and border protection, terrorist financing, and terrorism policy
engagement exercises.
The State Department, in its annual report on worldwide terrorism (Country
Reports on Terrorism 2004, April 2005), highlights terrorist threats in Colombia,
Peru, and the tri-border area (TBA) of Argentina, Brazil, and Paraguay, which has
been a regional hub for Hizballah and Hamas fundraising activities. The 2004 report
noted that persons suspected of ties to terrorist groups have been spotted in the TBA,
but that no operational activities of terrorism have been detected. Cuba also has been
listed as a state sponsor of terrorism since 1982.
In the aftermath of 9/11, U.S. attention focused on potential links in the region
to the Al Qaeda terrorist network, but the State Department’s 2002 report on
terrorism maintained that “there was no confirmed credible information” of an Al
Qaeda presence in Latin America. The 2003 State Department report on terrorism
maintained that reports of an Al Qaeda presence in the TBA region remained
“uncorroborated by intelligence and law-enforcement officials.” There were
increased concerns in 2004 by some Central American officials about potential Al
Qaeda threats in the region, although U.S. officials maintained that there was no
evidence supporting such concerns.5 The State Department’s 2004 report on
terrorism maintains that there were “widespread, unfounded media reports alleging
formal links between transnational criminal gangs and Islamic extremists” in Central
America.
5 “U.S. Officials Dispute Al Qaeda Role in Hemisphere,” Homeland Security Monitor
(Intellibridge), September 30, 2004; Jerry Seper, “Al Qaeda Seeks Tie to Local Gangs.”
Washington Times, September 28, 2004.
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Through the State Department, the United States has provided Anti-Terrorism
Assistance (ATA) training and equipment to Latin American countries to help
improve their capabilities in such areas as airport security management, hostage
negotiations, bomb detection and deactivation, and countering terrorism financing.
ATA financing is provided through the annual foreign operations appropriations
measure under the Nonproliferation, Anti-terrorism, Demining, and Related
Programs (NADR) account. For FY2005, $7.9 million in ATA was provided for the
Western Hemisphere, with $5.1 million for training anti-kidnapping units in
Colombia and $0.5 million for the tri-border area of Brazil, Paraguay, and Argentina.
For FY2006, an estimated $12.3 million in ATA will be provided for the Western
Hemisphere, with $5.3 million for Colombia and $1.5 million for the Bahamas. The
FY2007 Western Hemisphere request is $11.9 million, with $3.1 million for
Colombia, $2.8 million for Trinidad and Tobago, and $1.4 million for Jamaica.
CRS Products:
CRS Report RS21049, Latin America: Terrorism Issues, by Mark P. Sullivan.
Gangs in Central America
In the past two years, there has been increasing attention by the press and
policymakers on the effects of crime and gang violence in Central America, and its
spillover effects on the United States. The February 2005 arrest of some 103
members of the violent Mara Salvatrucha (MS-13) gang in several cities across the
United States — including a man charged in connection with a December 2004 bus
massacre in Honduras that killed 28 people — raised concerns about the transnational
activities of Central American gangs. Citizens in several Central American countries
have consistently identified crime and gang violence among the top issues of popular
concern. Governments throughout the region are struggling to find the right
combination of suppressive and preventive policies to effectively deal with the gang
problem as well as more effective ways to solve related issues such as police
corruption, overcrowded prisons, and weak judicial systems. Gang violence may
threaten political stability, inhibit social development, and discourage foreign
investment in Central America.
Many analysts predict that illicit gang activities may accelerate illegal
immigration, drug smuggling, and trafficking in persons and weapons to the United
States. Some analysts maintain that contact between gang members in both regions
is increasing, and that this tendency may serve to increase gang-related violent crime
in the United States. Others assert that unless the root causes of gang violence, which
include poverty, joblessness, and the social exclusion of at-risk youth, are addressed
in a holistic manner, the problem will continue to escalate.
In the 109th Congress, legislation has been introduced — S. 853 (Lugar) and
H.R. 2672 (Harris) the North American Cooperative Security Act — that includes
provisions to increase cooperation among U.S., Mexican, and Central American
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officials in the tracking of gang activity and in the handling of deported gang
members. Similar provisions have been included in broader immigration legislation
that has passed the House and is now under consideration in the Senate, H.R. 4437
(Sensennbrenner) and S. 2454 (Frist). On June 7, 2005, the OAS passed a resolution
to hold conferences and workshops on the gang issue and to urge member states to
support the creation of holistic solutions to the gang problem. Within the U.S.
government, the Department of Justice has created an inter-agency task force to focus
on dealing with international gang activity through diplomacy, law enforcement,
transnational legal mechanisms, justice sector reform, increased information-sharing,
and improved repatriation procedures. Efforts to deal with criminal gang activity on
the international front must also be coordinated with domestic policies aimed at
stiffening penalties for gang-related crime. In the second session of the 109th
Congress, debate is likely to ensue as to what mix of preventive and suppressive
policies can deal with the gangs on both fronts.
CRS Products:
CRS Report RS22141, Gangs in Central America, by Clare Ribando.
AIDS in the Caribbean and Central America
The AIDS epidemic in the Caribbean and Central America has begun to have
negative consequences for economic and social development, and continued
increases in infection rates threaten future development prospects. In contrast to
other parts of Latin America, the mode of transmission in several Caribbean and
Central American countries has been primarily through heterosexual contact, making
the disease difficult to contain because it affects the general population. The
Caribbean countries with the highest prevalence or infection rates are Haiti, with a
rate over 3%; the Bahamas, Guyana, and Trinidad and Tobago, with rates over 2%;
and Barbados, Belize, the Dominican Republic, Jamaica, and Suriname, with rates
over 1%. In Central America, Honduras has the highest prevalence rate of 1.8%,
while Guatemala has a rate over 1%.
The response to the AIDS epidemic in the Caribbean and Central America has
involved a mix of support by governments in the region, bilateral donors (such as the
United States, Canada, and European nations), regional and multilateral
organizations, and nongovernmental organizations (NGOs). Many countries in the
region have national AIDS programs that are supported through these efforts.
USAID has been the lead U.S. agency fighting the epidemic abroad since 1986.
USAID’s funding for HIV/AIDS in Central America and the Caribbean region rose
from $11.2 million in FY2000 to $33.8 million in FY2003. Because of the inclusion
of Guyana and Haiti as focus countries in the President’s Emergency Plan for AIDS
Relief (PEPFAR), funded largely through the Global HIV/AIDS Initiative (GHAI)
account, U.S. assistance to the Caribbean and Central America for HIV/AIDS
increased to $47 million in FY2004, $82 million in FY2005, and an estimated $87.8
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million in FY2006. For FY2007, the Administration requested $88 million in GHAI
funding for Guyana ($25 million) and Haiti ($63 million). Further assistance is
provided for non-focus countries and programs in Central America and the Caribbean
through the Child Survival and Health account. In FY2006, assistance to these non-
focus countries in the Caribbean and Central America amounted to almost $23
million. It is possible that at least this much will be allocated in FY2007, which
could bring the total funding level for these countries to $111 million.
Some Members of Congress want to expand the list of focus countries to include
14 additional Caribbean countries. In the 109th Congress, S. 600, the Foreign Affairs
Authorization Act, FY2006 and FY2007, contains a provision (Section 2516) that
would add14 Caribbean countries to the list of focus countries targeted for increased
HIV/AIDS assistance. In other action, the 109th Congress approved H.R. 1409 (P.L.
109-95), which authorizes assistance for orphans and other vulnerable children in
developing countries, including in the Caribbean. Pending legislative initiatives in
the second session include H.R. 164, which would provide for the establishment of
pediatric centers in developing countries, including Guyana, to provide treatment and
care for children with HIV/AIDS; and S. 350 and H.R. 945, which would provide
assistance to combat infectious diseases in Haiti, including HIV/AIDS.
CRS Products:
CRS Report RL32001, AIDS in the Caribbean and Central America, by Mark P.
Sullivan.
CRS Report RS21181, HIV/AIDS International Programs: Appropriations, FY2003-
FY2006, by Tiaji Salaam-Blyther.
Afro-Latinos
In recent years, people of African descent in the Spanish- and Portuguese-
speaking nations of Latin America — also known as “Afro-Latinos” — have been
pushing for increased rights and representation. Afro-Latinos comprise some 150
million of the region’s 540 million total population, and, along with women and
indigenous populations, are among the poorest, most marginalized groups in the
region. Afro-Latinos have begun forming groups that, with the help of international
organizations, are seeking political representation, human rights protection, land
rights, and greater social and economic rights and benefits.
Improvement in the status of Afro-Latinos could be difficult and contentious,
however, depending on the size and circumstances of the Afro-descendant
populations in each country. Afro-Latinos are, generally, descendants of the millions
of West African slaves brought to the Americas by European traders during the
colonial period. Afro-Latinos tend to reside in coastal areas, although in many
countries they have migrated to large cities in search of employment. Afro-Latinos
comprise a majority of the population in Cuba and the Dominican Republic, while
in Brazil, Colombia, Panama, Venezuela, Ecuador, and Nicaragua, they form a
significant minority.
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Assisting Afro-Latinos has never been a primary U.S. foreign policy objective,
although a number of foreign aid programs exist that benefit Afro-Latino
populations. Those programs are funded through the U.S. Agency for International
Development (USAID), the Inter-American Foundation (IAF), the Peace Corps, and
the National Endowment for Democracy (NED). They include agricultural, micro-
credit, health, grassroots organizing, and bilingual education programs.
Some assert that the United States has an interest in improving the condition of
Afro-Latinos in Latin America. Assisting vulnerable peoples fits into larger U.S.
policy goals for the region: promoting democracy, encouraging economic growth and
poverty reduction, and protecting human rights. Others disagree, however, as to
whether U.S. foreign aid should be specifically targeted toward Afro-Latinos, or be
distributed broadly through efforts to support marginalized populations. Skeptics
question whether increasing assistance to Afro-Latinos is feasible in a time when
limited development assistance is being allocated to Latin America. Still others
caution that the United States should be careful when intervening in the sensitive
racial politics of other countries.
In the first session of the 109th Congress, the House passed H.Con.Res. 175, on
July 18, 2005, recognizing the injustices suffered by African descendants of the
transatlantic slave trade in all of the Americas and recommending that the United
States and the international community work to improve the situation of Afro-
descendant communities in Latin America and the Caribbean. In the second session
of the 109th Congress, legislation has been introduced — H.R. 4886 (McGovern) the
Colombian Temporary Protected Status Act of 2006 — that would make Colombian
nationals, including Afro-Colombians affected by the country’s ongoing conflict,
eligible for Temporary Protected Status (TPS) under Section 244 of the Immigration
and Nationality Act.
CRS Products:
CRS Report RL32713, Afro-Latinos in Latin America and Considerations for U.S.
Policy, by Clare Ribando.
Trafficking in Persons in Latin America and the Caribbean
Trafficking in persons for sexual exploitation or forced labor, both within a
country and across international borders, is a lucrative criminal activity that is of
major concern to the United States and the international community. Trafficking in
persons affects nearly every country and region in the world. While most trafficking
victims still appear to originate from South and Southeast Asia or the former Soviet
Union, human trafficking is a growing problem in Latin America and the Caribbean.
Countries in Latin America serve as source, transit, and destination countries for
trafficking victims. Latin America is also a primary source for the estimated 14,500
to 17,500 people that are trafficked to the United States each year.
In Latin America, trafficking in persons occurs both within countries and across
borders as children and adults are trafficked for prostitution, forced labor, and
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domestic servitude. Traffickers take advantage of poor young people with minimal
education in countries with political instability, high unemployment, and corruption.
Trafficking is increasingly tied to organized criminal groups who exploit
undocumented migrants, especially in the U.S.- Mexico border region.
Congress has taken a leading role in fighting human trafficking by passing the
Victims of Trafficking and Violence Protection Act of 2000 (P.L. 106-386) and the
Trafficking Victims Protection Reauthorization Act of 2003 (P.L. 108-193). As a
result of that legislation, the State Department and other U.S. agencies provided more
than $82 million in anti-trafficking assistance to foreign governments in FY2004.
On June 3, 2005, the State Department released its fifth annual report on human
trafficking, Trafficking in Persons Report (TIP), dividing countries into four groups
according to the efforts they were making to combat trafficking. Tier 3 countries are
those that have not made an adequate effort to combat trafficking and are subject to
sanctions. Latin America had a higher percentage of Tier 3 countries in both the 2004
and 2005 TIP reports than any other region. In 2005, Bolivia, Ecuador, Jamaica,
Venezuela, and Cuba were placed on Tier 3, but only Venezuela and Cuba were
subject to sanctions by the presidential determination announced in September 2005.
In the first session of the 109th Congress, the Senate approved the ratification
of the United Nations Protocol to Prevent, Suppress, and Punish Trafficking in
Persons. The United States became a party to the Protocol on December 3, 2005.
Congress also passed the Trafficking Victims Reauthorization Act of 2005 (P.L. 109-
164). This law will provide some $361 million over the next two years to combat
trafficking in persons. During the second session of the 109th Congress, issues of
concern related to trafficking in persons are likely to include monitoring both U.S.
and international efforts to fight human trafficking, especially in regions such as
Latin America, where it is an emerging problem.
CRS Products:
CRS Report RL33200, Trafficking in Persons in Latin America and the Caribbean, by
Clare Ribando.
CRS Report RL30545, Trafficking in Persons: The U.S. and the International
Response, by Francis Miko.
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Country Issues
Argentina
Argentina’s restructuring of over $100 billion in defaulted bond debt in June
2005 demonstrated the country’s emergence from its economic crisis. Although the
country was under considerable economic stress in 2001 and 2002, the democratic
political system weathered the crisis. President Néstor Kirchner, elected in 2003, has
made bold policy moves in the areas of human rights, institutional reform, and
economic policy that have helped restore Argentines’ faith in democracy. The
October 2005 legislative elections demonstrated strong support for President
Kirchner. Economic growth has rebounded, from a decline of almost 11% in 2002
to 8.8% in 2003, 9% in 2004, and 9/1% in 2005. In January 2006, Argentina paid off
its $9.5 billion debt to the International Monetary Fund (IMF), a popular move, but
one that critics have questioned for its economic wisdom.
Looking ahead, the government faces such challenges as controlling inflation,
reducing poverty, and building the political consensus needed to ensure sustainable
economic growth and financial stability. Issues of concern to Congress will likely
include continued cooperation with Argentina on counter-terrorism issues and
progress in Argentina’s investigation of the 1994 Argentine-Israeli Mutual
Association bombing.
CRS Products:
CRS Report RS21113, Argentina: Political Conditions and U.S. Relations, by Mark P.
Sullivan.
CRS Report RL32637, Argentina’s Sovereign Debt Restructuring, by J. F. Hornbeck.
CRS Report RS21072, The Financial Crisis in Argentina, by J. F. Hornbeck.
CRS Report RL31582, The Argentine Financial Crisis: A Chronology of Events, by J.
F. Hornbeck.
Bolivia
In the past few years, Bolivia has experienced extreme political unrest resulting
in the country having six presidents since 2001. Evo Morales, an indigenous leader
of the leftist Movement Toward Socialism (MAS) party, won a convincing victory
in the December 18, 2005, presidential election with 54% of the votes. He was
inaugurated to a five-year term on January 22, 2006. The MAS won control of the
lower chamber of the Bolivian Congress, 12 of 27 seats in the Senate, and two of the
country’s nine governorships, showing stronger electoral support than any of the
country’s traditional political parties. President Morales is now charged with finding
solutions to a number of pressing issues that other recent Bolivian presidents have
been unable to resolve. Those issues relate to the exploitation of Bolivia’s natural
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resources, coca eradication programs, indigenous rights, and the extent of power
sharing between the central government and the country’s nine departments.
Bolivia is one of the poorest countries in Latin America, with a sizeable and
active indigenous population, a long history of coca cultivation, and weak political
institutions. Despite these challenges, the country has made some social and
economic progress over the past several decades. Coca cultivation has decreased
from its peak production years in the 1990s, but is still a source of conflict between
the government and coca growers.
Since his inauguration, President Morales has secured passage of legislation
establishing elections for a constituent assembly and a simultaneous referendum on
departmental autonomy that will be held in July 2006. The Morales government is
defining a new counternarcotics policy for Bolivia that will seek to decriminalize
coca growing while continuing to work with the United States to combat illicit drug
production and distribution. President Morales is also fulfilling his pledge to
nationalize Bolivia’s oil and gas sector, but has assured investors that his government
will not confiscate foreign assets.
U.S. interest in Bolivia centers on its role as a coca producer and its relationship
to Colombia and Peru, the two other major coca- and cocaine-producing countries
in the Andes. Some observers have criticized this focus for neglecting economic and
social development issues, but the State Department defends it as necessary to
promote licit economic development and democracy. The other potential U.S.
interest in Bolivia involves its natural gas reserves, which are the second-largest in
Latin America, after Venezuela.
CRS Products:
CRS Report RL32580, Bolivia: Political and Economic Developments and
Implications for U.S. Policy, by Clare Ribando and Connie Veillette.
CRS Report RL33162, Drug Crop Eradication and Alternative Development in the
Andes, by Connie Veillette and Caroline Navarette-Frias.
CRS Report RL32770, Andean-U.S. Free Trade Agreement Negotiations, by M.
Angeles Villarreal.
Brazil
In January 2003, President Luis Inácio “Lula” da Silva of the leftist Workers’
Party (PT) was inaugurated for a four-year term as President of Brazil. During three
years in office, President Lula has maintained the restrained economic policies
associated with his predecessor, even surpassing the IMF’s fiscal and monetary
targets. In December 2005, the Lula government repaid its $15.5 billion debt to the
IMF ahead of schedule. Brazil has experienced lower inflation, a lower credit risk
rating, and, buoyed by strong commodity exports, steady rates of economic growth
(4.9% in 2004 and 2.3% in 2005). In 2003, President Lula gained approval of social
security and tax reforms, and in 2004, a new law to allow more private investment
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in public infrastructure projects. Despite these achievements, legislative progress
stalled in 2005, and President Lula has been increasingly criticized for failing to
develop effective social programs to address the persistent problems of land
redistribution, social inequity, and crime.
The next presidential and legislative elections in Brazil are scheduled to occur
in October 2006. A year ago, most observers were predicting that President Lula
would be reelected by a decisive margin. Those reelection chances are more
uncertain now as both President Lula and the PT have lost popular support and
credibility in the wake of a major corruption scandal that erupted in May 2005. The
scandal involved the President’s party paying monthly bribes to congressmen of the
allied parties in the governing coalition to guarantee their support. It has resulted in
the resignation of several senior PT officials, the impeachment of two legislators,
including President Lula’s former Chief of Staff, and, most recently, the resignation
of Brazil’s Finance Minister amidst allegations of corruption. Rather than seeking
President Lula’s impeachment for possible involvement in the scandal, opposition
parties appear to be focusing on which candidates to field in the October elections.
The presidential race is likely to focus on two main candidates, President Lula and
Geraldo Alckmin, governor of the state of Sâo Paulo, of the Brazilian Social
Democratic Party (PSDB).
Relations with the United States and Brazil have been generally positive,
although President Lula has made relations with neighboring countries in the
Southern Common Market (Mercosur) his first priority, and has sought to strengthen
ties with non-traditional partners, including India and China. Trade issues are central
to the bilateral relationship, with both countries being heavily involved in sub-
regional, regional and global trade talks in the Doha Round of the World Trade
Organization (WTO) negotiations. The United States and Brazil have different
approaches to trade liberalization that have put them at odds over how to proceed
with the Free Trade Area of the Americas (FTAA) negotiations.
In addition to trade policy, U.S. interest in Brazil centers on its role as a
stabilizing political and economic force in Latin America, especially with respect to
populist governments in Venezuela and Bolivia. Brazil is also a key U.S. ally whose
cooperation is sought on a number of issues that include counter-narcotics efforts,
human rights concerns, environmental issues, HIV/AIDS prevention, race relations,
and trafficking in persons.
CRS Products:
CRS Report RL32571, U.S..-Brazil WTO Cotton Subsidy Dispute, by Randy Schnepf.
CRS Report RS21905, The Agriculture Framework in the WTO Doha Round, by
Charles Hanrahan.
CRS Report RL33258, Brazilian Trade Policy and the United States, by J.F.
Hornbeck.
CRS-22
Cuba
Cuba under Fidel Castro remains a hard-line communist state with a poor record
on human rights — a record that has worsened since 2003. Since the early 1960s,
U.S. policy toward Cuba has consisted largely of isolating the island nation through
comprehensive economic sanctions. Another component of U.S. policy consists of
support measures for the Cuban people, including private humanitarian donations and
U.S.-sponsored radio and television broadcasting to Cuba. The Bush Administration
has further tightened restrictions on travel, on sending private humanitarian
assistance to Cuba, and on the payment process for U.S. agricultural exports to Cuba.
While there appears to be broad agreement on the overall objective of U.S. policy
toward Cuba — to help bring democracy and respect for human rights to the island
— there are several schools of thought on how to achieve that objective. Some
advocate maximum pressure on the Cuban government until reforms are enacted;
others argue for lifting some U.S. sanctions that they believe are hurting the Cuban
people. Still others call for a swift normalization of U.S.-Cuban relations.
In the second session of the 109th Congress, attention likely will continue to
focus on Cuba’s human rights situation and on Cuba sanctions. To date in the 109th
Congress, legislative initiatives have included four human rights resolutions: House-
passed H.Con.Res. 81, H.Res. 193, and H.Res. 388; Senate-passed S.Res. 140; and
H.Con.Res. 165, which also expresses support for the embargo. In addition, P.L.
109-102 (H.R. 3057) funds democracy projects for Cuba in FY2006; House-passed
H.R. 2601 would authorize $5 million for U.S. government scholarship and exchange
programs; a pending amendment (S.Amdt. 319) to S. 600 would authorize $15
million in democracy and human rights projects.
With regard to Cuba sanctions, the House- and Senate-passed versions of H.R.
3058, the FY2006 Transportation appropriations bill, had identical provisions that
would have prohibited funds from being used to implement tightened restrictions on
financing for U.S. agricultural exports to Cuba, but the provisions were not included
in the conference report (H.Rept. 109-307). Other initiatives include H.Con.Res. 206
(temporary suspension of some sanctions after Hurricane Dennis); H.R. 208 and
H.R. 579 (overall Cuba sanctions); S. 894 and H.R. 1814, (travel) H.R. 2617 (family
visits); H.R. 3064 ( educational travel); H.R. 1339 and S. 634 (cash in advance for
U.S. agricultural sales); and H.R. 719 and S. 328 (facilitation of agricultural sales).
In addition, H.R. 719 and S. 328, as well as H.R. 3372 and S. 1604, would repeal a
provision of law preventing payments from Cuban or foreign nationals for trademark
registration related to confiscated assets in Cuba. In contrast, H.R. 1689 and S. 691
would amend the law regarding Cuban trademarks so that it applies to all parties
regardless of nationality. Other legislative initiative have provisions related to Cuba
broadcasting (P.L. 109-108, S. 600, and H.R. 2601); anti-drug cooperation (H.R.
3057); and U.S. fugitives in Cuba (H.R. 2601, H.R. 332).
CRS-23
CRS Products:
CRS Report RL32730, Cuba: Issues for the 109th Congress, by Mark P. Sullivan.
CRS Report RL31139, Cuba: U.S. Restrictions on Travel and Legislative Initiatives, by
Mark P. Sullivan.
CRS Report RS22228, Cuba after Fidel Castro: Issues for U.S. Policy, by Mark P.
Sullivan.
CRS Report RL32251, Cuba and the State Sponsors of Terrorism List, by Mark P.
Sullivan.
CRS Report RS20468, Cuban Migration Policy and Issues, by Ruth Ellen Wasem.
CRS Issue Brief IB10061, Exempting Food and Agriculture Products from U.S.
Economic Sanctions: Status and Implementation, by Remy Jurenas.
CRS Report RS21764, Restricting Trademark Rights of Cubans: WTO Decision and
Congressional Response, by Margaret Mikyung Lee.
Dominican Republic
President Leonel Fernández of the Dominican Liberation Party (PLD), who
served as president previously (1996-2000), took office on August 16, 2004.
President Fernández continues to enjoy relatively strong popular support and has
restored confidence in the Dominican economy. On February 1, 2005, President
Fernández signed a new $665 million loan agreement with the IMF. In 2005, buoyed
by growth in the tourism and construction sectors, consumer spending, and steady
remittance flows, GDP growth in the Dominican Republic reached 9.3%. Inflation
has declined, interest rates have fallen, and the currency has regained most of its pre-
2003 crisis value. The Fernández administration has struggled, however, to deal
with high crime rates, ongoing public corruption and persistent electricity shortages.
Human rights organizations have criticized the Dominican government for several
massive repatriations of undocumented Haitian migrants in 2005 and for the reported
illegal trafficking of Haitian children into the Dominican Republic. President
Fernández may be able to shore up more support for his legislative proposals in the
second part of his four-year term if his party (the PLD) picks up seats in the
Dominican Congress as expected in the country’s May 2006 legislative elections.
On September 6, 2005, the Dominican Republic approved the U.S.-Dominican
Republic-Central American Free Trade Agreement (DR-CAFTA). The Dominican
government is now striving to build up its export competitiveness, expand its tourism
industry, and develop new tax measures needed to compensate for the loss of tariff
revenue that is expected to result from DR-CAFTA. Dominican officials are
preparing to implement DR-CAFTA in July 2006.
CRS-24
CRS Products:
CRS Report RS21718, Dominican Republic: Political and Economic Conditions and
U.S. Relations, by Clare Ribando.
CRS Report RL31870, The Dominican Republic-Central America-United States Free
Trade Agreement (DR-CAFTA), by J. F. Hornbeck.
CRS Report RL32322, Central America and the Dominican Republic in the Context of
the U.S.-Central America Free Trade Agreement (DR-CAFTA), coordinated by
K. Larry Storrs.
Ecuador
Alfredo Palacio, a physician, political independent, and former vice president,
became president of Ecuador in April 2005 following the removal of elected
President Lucio Gutierrez from office by Ecuador’s Congress after weeks of popular
protests. Ecuadorians rejected Gutierrez’s December 2004 replacement of the
majority of the judges on the country’s three highest courts with his political allies,
a move that had been sharply criticized by the international community. Palacio is the
country’s seventh president in nine years and will attempt to govern the country until
the next presidential elections are held in October 2006. Ecuador’s economy is
currently expanding because of high oil prices, but its political institutions are
extremely fragile. The Palacio Administration has already been weakened by cabinet
resignations, popular protests, allegations of corruption, and a failure to gain
congressional support for a constituent assembly. Protests against Ecuador’s free-
trade negotiations with the United States have paralyzed the country for much of
March 2006.
Ecuador continues to work with the United States on counter-narcotics matters,
and the two countries are in the final stages of negotiating a free trade agreement.
Despite this cooperation, international investors are concerned by Palacio’s lack of
fiscal discipline, including his support of a congressional measure to channel oil
revenue into social spending rather then debt repayment. In June 2005, the U.S. State
Department placed Ecuador on the Tier 3 list of countries not taking adequate
measures to combat trafficking in persons, but the country will not face sanctions this
year as it has been given a U.S. national interest waiver.
CRS Products:
CRS Report RS21687, Ecuador: Political and Economic Situation and U.S. Relations,
by Clare Ribando.
CRS Report RL32770, Andean-U.S. Free Trade Agreement Negotiations, by M.
Angeles Villarreal.
CRS-25
El Salvador
Tony Saca, a businessman from the conservative National Republican Alliance
(ARENA) party, was inaugurated as president for a five-year term in June 2004.
President Saca is seeking to restart the country’s stagnating economy, pass
legislation in a polarized political environment, and combat gang violence. His
legislative agenda should face continuing opposition from the Farabundo Marti
National Liberation Front (FMLN), which in the March 12, 2006, legislative
elections recovered the seats it had lost due to defections in 2005. Although ARENA
also increased its representation in the legislature and is still the largest party in El
Salvador’s National Assembly, it lacks a majority and will continue to have to rely
on support from small parties to enact President Saca’s agenda. In 2005, despite its
tough anti-gang legislation, El Salvador posted a murder rate of 15 people per day,
the highest in the hemisphere. Although a majority of Salvadorans approve of
President Saca’s job performance, especially his handling of Tropical Storm Stan and
a volcanic eruption in October 2005, a majority also disapprove of his decision to
maintain Salvadoran soldiers in Iraq.
The United States is working with President Saca to combat narco-trafficking,
to resolve immigration issues, and to promote free trade, especially through the
Dominican Republic-Central America-United States Free Trade Agreement (DR-
CAFTA). In February 2006, the Bush Administration extended the Temporary
Protected Status (TPS) of eligible Salvadoran migrants living in the United States
until September 9, 2007. On March 1, 2006, El Salvador became the first country
in the region to implement the DR-CAFTA with the United States.
CRS Products:
CRS Report RS21655, El Salvador: Political, Economic, and Social Conditions and
Relations with the United States, by Clare Ribando.
CRS Report RL32322, Central America and the Dominican Republic in the Context of
the Free Trade Agreement (DR-CAFTA) with the United States, coordinated by
K. Larry Storrs.
CRS Report RL31870, The Dominican Republic-Central America-United States Free
Trade Agreement (DR-CAFTA), by J. F. Hornbeck.
Guatemala
Congressional concerns regarding Guatemala in the 109th Congress include how
to support its democratic process, reduction of poverty, respect for human rights,
further military reform, and the debate over prohibitions of U.S. military aid to
Guatemala. Guatemala has been consolidating its transition from mostly autocratic
rule toward democratic government since the 1980s, but its institutions remain
fragile. President Oscar Berger, whose four-year term began in 2004, has made
fulfilling the 1996 Peace Accords a central theme of his administration. The Accords
ended a 36-year civil war and outline a profound restructuring of state institutions.
CRS-26
President Berger has attacked corruption and enacted long-delayed military
reforms. His economic reforms include a temporary tax to fund programs related to
the peace process. In 2005, the Guatemalan legislature passed DR-CAFTA, the
Dominican Republic-Central America-United States Free Trade Agreement.
President Berger has proposed developing compensation programs for sectors that
prove to be hurt by the implementation of DR-CAFTA. The Bush Administration’s
proposal for FY2007 funding includes rural development projects it says will help
in the adjustment to DR-CAFTA.
Extreme poverty and inequality persist in Guatemala. About 56% of the total
population, and 76% of the indigenous population, live in poverty. According to the
World Bank, Guatemala has one of the largest income distribution gaps in the world.
Guatemala’s social indicators continue to be among the worst in the hemisphere. Its
malnutrition rates are among the worst in the world; 44% of children under five years
of age have stunted growth. Guatemala’s illiteracy rate is extremely high: at 31%,
only Nicaragua and Haiti have worse levels in the hemisphere. The average level of
schooling is 4.3 years, and among the poor, it is less than two years.
Regarding respect for human rights, Guatemala has made enormous strides, but
significant problems remain. The U.N., the OAS, and the United States have all
expressed concern that human rights violations have increased over the past several
years and that the Guatemalan government has taken insufficient steps to curb them.
The U.N. Office of the High Commissioner for Human Rights is succeeding the U.N.
Verification Mission in Guatemala, which withdrew in late 2004 after verifying
compliance with the Peace Accords for ten years. According to the State
Department’s human rights report for 2005, the Guatemalan government “generally
respected the human rights of its citizens,” but “serious problems” remained,
including reported extrajudicial killings and kidnaping for ransom by security forces,
and social cleansing.
The Bush Administration proposed in its 2006 budget to provide military aid to
Guatemala that had been prohibited since 1990 because of human rights concerns.
While applauding the reduction in forces and other reforms, some human rights
groups express concern about continued human rights abuses and impunity among
the military. Congress maintained the existing restrictions in 2006 (P.L. 109-102),
allowing only expanded-International Military Education and Training in military
justice reform, respect for human rights, and for civilians in defense matters, and
prohibiting Foreign Military Financing for Guatemala. The Administration says it
will provide Guatemala with non-lethal Excess Defense Articles on a limited case-
by-case basis in 2007.
Immigration will be an area of contention in U.S.-Guatemalan relations in 2006.
In December 2005, the House passed a bill (H.R. 4437) that would make unlawful
presence in the United States a criminal, rather than a civil offense and would
increase border barriers. In January 2006, Guatemala joined the Mexican and other
Central American governments in criticizing U.S. efforts to toughen border
enforcement and demanded guest-worker programs. The countries said they were
seeking integrated solutions, by which they would try to decrease illegal emigration,
and the United States would help create conditions that would lessen the need to
migrate.
CRS-27
CRS Products:
CRS Report RL32124, Guatemala: Political Conditions, Elections, and Human
Rights, by Maureen Taft-Morales.
CRS Report RL32322, Central America and the Dominican Republic in the Context of
the Free Trade Agreement (DR-CAFTA) with the United States, coordinated by
K. Larry Storrs.
CRS Report RL31870, The Dominican Republic-Central America-United States Free
Trade Agreement (DR-CAFTA), by J. F. Hornbeck.
Haiti
The main issue for U.S. policy during the second session of the 109th Congress
will be how to promote greater stability and strengthen democratic processes in Haiti
most effectively. The lack of a fully functioning infrastructure and ongoing violence
make it difficult to pursue other U.S. goals in Haiti, such as promoting democracy —
especially elections — encouraging respect for human rights, alleviating poverty, and
decreasing narcotics trafficking. A further Administration goal, of limiting illegal
immigration, has been challenged by some Members as not affording adequate
protection for Haitian asylum-seekers.
Presidential and legislative elections were held on February 7, 2006, after being
postponed several times since fall 2005 amidst technical and security concerns.
Former President Rene Preval (1996-2000) was declared the winner after a week of
controversy over the tabulation of votes. Preval outlined the two main missions of
his government to be building institutions as provided for in the constitution, and
creating conditions for private investment in order to create jobs. He emphasized that
these must be done through dialogue among all sectors and creating a secure
environment. To that end, he has asked the United Nations Stabilization Mission in
Haiti (MINUSTAH) to stay and has also said he will promote a constitutional change
to formalize the dissolution of the Haitian army. Preval has placed the needs of
Haitian children at the top of his political agenda, and UNICEF has pledged to
mobilize international assistance to support those needs.
Preval is trying to keep expectations low and encouraging Haitians to vote for
legislators so that Haiti can have a fully functioning government. Runoff legislative
elections have been postponed until April 21. Results are expected to be announced
April 28. If the next round of elections are deemed free and fair, the U.S. focus will
shift to assisting the new government, which the United States and other international
donors have already pledged to do. President-elect Preval will be inaugurated after
a legislature is elected.
The Bush Administration has expressed its support for Preval. In discussions
with top officials, Preval said he would cooperate fully with counternarcotics efforts;
he asked for U.S. support for public works projects and passage of legislation to give
Haiti trade preferences. Supporters of special trade preferences for Haiti reintroduced
CRS-28
the Haiti Economic Recovery Opportunity Act (H.R. 4211/S. 1937) for consideration
by both houses towards the end of the last session. The bill would expand U.S.
preferential trade for Haiti by amending the Caribbean Basin Economic Recovery
Act. The Bush Administration is providing an estimated $194 million for Haiti for
FY2006 and requested $198 million for FY2007. Child survival and health,
development assistance, and counter narcotics assistance funds would be decreased.
HIV/AIDS Funding would be increased.
Former President Jean-Bertrand Aristide, who had maintained he was still
Haiti’s president since his departure in February 2004, acknowledged Preval as “my
President” and said he wants to return to Haiti from exile. Preval has been estranged
in recent years from Aristide, his former mentor. Publicly, Preval has said that
Aristide has the constitutional right to return but has also suggested that Aristide
might want to consider that he will probably face corruption or other charges if he
were to return. Privately, he is said to agree with foreign diplomats that Aristide’s
return would be destabilizing.6 But Preval must tread carefully, as much of his
support came from Haiti’s poor, Aristide’s strongest supporters, many of whom now
expect Aristide to return.
CRS Products:
CRS Report RL32294, Haiti: Developments and U.S. Policy Since 1991 and Current
Congressional Concerns, by Maureen Taft-Morales.
CRS Report RL33156, Haiti: International Assistance Strategy fro the Interim
Government and Congressional Concerns, by Maureen Taft-Morales.
CRS Report RS21349, U.S. Immigration Policy on Haitian Migrants, by Ruth Ellen
Wasem.
CRS Report RS21839, Haitian Textile Industry: Impact of Proposed Trade
Assistance, by Bernard A. Gelb.
CRS Web Page CA9005, Haiti: Legislation in the 108th Congress, by Andy
Mendelson, available online at [http://www.crs.gov/products/browse/
officialsources/haitileg.shtml].
Honduras
Honduras faces significant challenges in the areas of crime and human rights
and improving overall economic and living conditions in one of the hemisphere’s
poorest countries. In November 2005, Hondurans elected Manuel Zelaya of the
Liberal Party as president in an election that was marred by technical difficulties that
delayed the official count. Zelaya was inaugurated on January 27, 2006 to a four-year
term, succeeding President Ricardo Maduro of the National Party. Zelaya’s Liberal
6 Joe Mozingo, “Haiti’s new Leader Fears Mentor’s Return; Wrong Move Could Plunge
Nation into Anarchy,” Knight Ridder, San Jose Mercury News, March 5, 2006.
CRS-29
Party failed to gain a majority in the National Congress, which could make it more
difficult in passing his legislative agenda. The United States has a close relationship
with Honduras, characterized by significant foreign assistance, an important trade
partnership, a military presence in the country, and cooperation on a range of
transnational issues. Honduras is a party to the Dominican Republic-Central
America-United States Free Trade Agreement (DR-CAFTA), which was approved
by the Honduran Congress in March 2005 and by the U.S. Congress in July 2005
(P.L. 109-53). On February 23, 2006, the Department of Homeland Security
announced the extension of Temporary Protected Status (TPS) for some 75,000
eligible Hondurans in the United States until July 5, 2007. TPS had been scheduled
to expire on July 5, 2006.
CRS Products:
CRS Report RS21103, Honduras: Political and Economic Situation and U.S.
Relations, by Mark P. Sullivan.
CRS Report RL32322, Central America and the Dominican Republic in the Context of
the Free Trade Agreement (DR-CAFTA) with the United States, coordinated by
K. Larry Storrs.
CRS Report RL31870, The Dominican Republic-Central America-United States Free
Trade Agreement (DR-CAFTA), by J. F. Hornbeck.
Mexico
President Vicente Fox is approaching the last year of his six year term (2000-
2006) with many unfulfilled goals, and he is constitutionally prohibited from running
for re-election. In this context, the major parties have selected candidates for the
approaching July 2006 presidential elections: Andres Manuel Lopez Obrador is the
candidate for the Party of the Democratic Revolution (PRD), Felipe Calderon is the
candidate for the National Action Party (PAN), and Roberto Madrazo is the candidate
for the Institutional Revolutionary Party (PRI).
Congressional interest in Mexico generally focuses on migration, border affairs,
trade issues, and drug trafficking concerns. Congress is currently considering a
number of immigration reform initiatives. The scope of these initiatives ranges from
measures to tighten immigration controls to broad reform including border security,
earned residency for undocumented aliens, and a guest worker program similar to
that suggested by President Bush in 2004 and 2005. In December 2005, the House
passed H.R. 4437 (Border Protection, Antiterrorism, and Illegal Immigration Control
Act of 2005) that would strengthen border and immigration controls, including
deployment of a fence and surveillance equipment along the Mexico-U.S. border.
The Senate is soon expected to begin consideration of immigration reform on such
bills as S. 2454 or S. 1033. In May 2005, Congress passed the FY2005 Emergency
Supplemental Appropriations (H.R. 1268/P.L. 109-13), which included the REAL
ID Act of 2005, with provisions that strengthened border control and established
identity card standards for drivers’ licenses.
CRS-30
On March 3, 2006, Homeland Security Secretary Michael Chertoff and
Mexico’s Secretary of Governance Carlos Abascal signed an action plan to combat
border violence that calls for increased cooperation of law enforcement agencies and
the establishment of communication protocols to facilitate such cooperation. A June
2005 report by Security and Prosperity Partnership (SPP) of North America working
groups outlined completed initiatives and proposed new initiatives to ensure common
security and prosperity. Completed initiatives include measures to facilitate trade,
such as the signing of a Framework of Common Principles for Electronic Commerce,
and border security through, among other measures, an agreement between the
United States and Mexico to create an Alien Smuggler Prosecution Program along
the common border. On November 2, 2005, Homeland Security Secretary Chertoff
launched the “Secure Border Initiative” to gain operational control of U.S. borders
and reduce illegal immigration, drawing upon increased funding approved by
Congress in early October 2005.
Mexico is the United States’ second most important trading partner, with two-
way trade tripling since 1994 under the North American Free Trade Agreement
(NAFTA), but there are various disputes between the countries. Mexico has
complained, for example, that the United States is still failing to grant Mexican
trucks access to U.S. highways, in part because of congressionally-imposed safety
requirements. The United States, for example, initiated WTO dispute settlement
proceedings in 2004 to dispute Mexico’s 20% tax on soft drinks made with high
fructose corn syrup (HFCS). The tax has had a devastating impact on HFCS sales.
In November 2005, the Mexican Senate extended the tax on HFCS products. In
March 2006, the WTO Appellate Body upheld the October 2005 decision in favor of
the United States. For FY2006, the United States set a new tariff-rate quota of
250,000 metric tons of raw or refined sugar from Mexico, in keeping with Mexican
claims under NAFTA, and Mexico followed suit by allowing up to 250,000 metric
tons of HFCS from the United States in the same period.
On drug trafficking issues, Bush Administration officials have regularly praised
Mexico’s counter-narcotics efforts under Fox, especially action against major
traffickers and efforts to improve the judicial system. The State Department reported
in March 2006, however, that Mexico remained the leading transit country for
cocaine and the leading foreign supplier of methamphetamine and marijuana.
Several bills (H.R. 3889, H.R. 2601) have been reported by committees to encourage
a reduction of smuggling of methamphetamine from Mexico. In November 2005, the
Mexican Supreme Court ruled that criminals facing life imprisonment may be
extradited to the United States. A January 2006 ruling that U.S. extradition requests
only need to meet the requirements of the 1978 bilateral treaty, not the general law
on international extradition, is likely to speed up the extradition of criminals wanted
by the United States. In 2005, Mexico extradited an all-time high of 41 fugitives to
the United States. The Foreign Operations Appropriations Act (H.R. 3057/P.L. 109-
102) was enacted in November 2005, barring assistance to a country that refuses to
extradite individuals accused of killing U.S. law enforcement officers, unless the
Secretary of State certifies that application of the sanction is contrary to U.S. national
interests.
CRS-31
CRS Products:
CRS Report RL32038, Drug Certification/Designation Procedures for Illicit
Narcotics Producing and Transit Countries, by K. Larry Storrs.
CRS Report RL33125, Immigration Legislation and Issues in the 109th Congress,
coordinated by Andorra Bruno.
CRS Report RL32044, Immigration: Policy Considerations Related to Guest Worker
Programs, by Andorra Bruno.
CRS Report RL32724, Mexico-U.S. Relations: Issues for the 109th Congress, by
Colleen Cook.
CRS Report RS21561, Mexico’s Congress and July 2003 Elections, by K. Larry
Storrs.
CRS Report RL32669, Mexico’s Counter-Narcotics Efforts Under Fox, December
2000 to October 2004, by K. Larry Storrs.
CRS Report RS21737, NAFTA at Ten: Lessons from Recent Studies, by J.F.
Hornbeck.
CRS Report RL32934, U.S.-Mexico Economic Relations: Trends, Issues, and
Implications, by M. Angeles Villarreal.
Nicaragua
Tensions among current President Enrique Bolaños, the leftist Sandinista party
(Sandinista National Liberation Front, FSLN), and allies of rightist former President
Arnoldo Alemán (1997-2002) were threatening Nicaragua’s political stability
throughout much of 2005. Events in October considerably reduced tensions and
provided for President Bolaños to fill out the remainder of his term, which expires
in January 2007. Politics will remain volatile, but for a different reason. Attention
is now shifting to national elections scheduled for November 5, 2006. The top three
presidential candidates include dissidents from both sides — Herty Lewites of the
left and Eduardo Montealegre of the right — whose candidacies may be blocked by
their former parties, and Sandinista leader and former President Daniel Ortega (1985-
1991), who lost the last three elections.
During the height of tensions, Bolaños, isolated by his pursuit of corruption,
invoked the OAS Inter-American Democratic Charter. In response, the OAS sent
several high-level delegations to help negotiate a solution. Former President Alemán,
sentenced to 20 years in prison in 2003 for fraud and money-laundering, remains
under house arrest, and still controls the PLC. Ortega announced he was breaking the
power-sharing pact between his party and the PLC that had defined national politics
since it was negotiated in 1998 and hampered Bolaños’ ability to govern. Reforms
such as the passage of the 2006 budget, the first-ever tax code, local government
transfers, and financial administration reforms then passed. Ortega and Bolaños then
CRS-32
agreed to postpone the implementation of constitutional amendments that have been
at the root of tensions. These amendments will transfer significant executive powers,
including controlling Cabinet appointments, to the legislature in February 2007. The
National Assembly approved DR-CAFTA in October 2005 and passed intellectual
property and other reforms on March 21, 2006, so that it can be implemented in
April.
Nicaragua is the second poorest nation in the hemisphere, rating only above
Haiti. Nicaragua’s poverty is widespread and acute. According to a recent World
Bank report, overall poverty declined in Nicaragua between 1993 and 2001, but more
than two-thirds of the rural population continue to live in poverty. Some social
indicators have shown little or no improvement since 1993. The official
unemployment rate is about 22%, with another 36% underemployed (U.S. Dept. of
State, Background Note: Nicaragua, February 2005).
In 2005, the Administration signed a five-year, $175 million agreement with
Nicaragua under the Millennium Challenge Account program. The Bush
Administration suspended military assistance to Nicaragua in March 2005, until an
agreement was worked out to destroy an arsenal of anti-aircraft missiles the
Administration says constitutes a possible terrorist threat. In October 2005, the
Pentagon announced that military assistance would resume, and the National
Assembly promised to schedule debate on a law authorizing the missiles’ destruction.
Resolution of property claims by U.S. citizens and immigration will be
contentious areas in U.S.-Nicaraguan relations in 2006. Nicaragua passed a law
creating a new Property Institute that could lead to the dismissal of property claim
lawsuits arising from expropriations carried out by the Sandinista government in the
1980s. In December 2005, the House passed a bill (H.R. 4437) that would make
unlawful presence in the United States a criminal, rather than a civil offense. In
January 2006, Nicaragua joined the Mexican and other Central American
governments in criticizing U.S. efforts to increase border enforcement and demanded
guest-worker programs. In late February 2006, the Department of Homeland Security
extended Temporary Protected Status (TPS) for about 4,000 eligible Nicaraguans
living in the United States until July 5, 2007. Other issues of concern to Congress
include improving respect for human rights, improving civilian control over defense
policy, increasing Nicaragua’s capacity to combat transnational crimes such as
trafficking in people and narcotics, reforming the judicial system and implementing
good governance.
CRS Products:
CRS Report RL32322, Central America and the Dominican Republic in the Context of
the Free Trade Agreement (DR-CAFTA) with the United States, coordinated by
K. Larry Storrs.
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Panama
With four successive elected civilian governments, the Central American nation
of Panama has made notable political and economic progress since the 1989 U.S.
military intervention that ousted the regime of General Manuel Antonio Noriega from
power. The current President, Martín Torrijos of the Democratic Revolutionary Party
(PRD), was elected in May 2004 and inaugurated on September 1, 2004. Torrijos,
the son of former populist leader General Omar Torrijos, won a decisive electoral
victory with almost 48% of the vote in a four-man race. He succeeded President
Mireya Moscoso of the Arnulfist Party (PA), elected in 1999, whose administration
was tainted by several high-profile corruption scandals. Torrijos’ electoral alliance
also won a majority of seats in the unicameral Legislative Assembly.
The most significant challenges facing the Torrijos government have included
dealing with the funding deficits of the country’s social security fund; developing
plans for the expansion of the Panama Canal; and combating unemployment and
poverty. After protests and a protracted strike by construction workers, doctors, and
teachers in 2005, the Torrijos government was forced to modify its plans for
reforming the social security fund. A planned referendum on the Canal’s expansion
has been delayed until late 2006 or early 2007.
The United States has close relations with Panama, stemming in large part from
the extensive linkages developed when the Panama Canal was under U.S. control and
Panama hosted major U.S. military installations. The current bilateral relationship is
characterized by extensive cooperation on counternarcotics efforts, assistance to help
Panama assure the security of the Canal and its border with Colombia, and
negotiations for a bilateral free trade agreement. The United States provided Panama
with $19 million in total foreign aid in FY2005 and an estimated $14.4 million in
FY2006. The FY2007 request is for $11.7 million, with $4 million under the Andean
Counterdrug Initiative and $3.2 million in Development Assistance.
U.S.-Panamanian negotiations for a bilateral free trade agreement began in late
April 2004. A ninth round held in Washington ended in mid- January 2006, with
disagreement on sanitary control systems for U.S. products and animals to enter the
Panamanian market, but there has been progress in resolving this issue. (Also see
“U.S.-Panama Free Trade Agreement (FTA) above.) Panama is seeking an FTA as
a means of increasing U.S. investment in the country, while the Bush Administration
has stressed that an FTA, in addition to enhancing trade, would further U.S. efforts
to strengthen support for democracy and the rule of law. Since Panama has a service-
based economy, it traditionally has imported much more than it exports to the United
States.
In the second session of the 109th Congress, congressional interest will likely
focus on the status of bilateral free trade negotiations. If negotiations are completed
and an agreement is signed this year, Congress could consider implementing
legislation.
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CRS Products:
CRS Report RL30981, Panama: Political and Economic Conditions and U.S.
Relations, by Mark P. Sullivan.
CRS Report RL32540, The Proposed U.S.-Panama Free Trade Agreement, by J.F.
Hornbeck.
Peru7
Peru is preparing for national elections on April 9, 2006. Current President
Alejandro Toledo’s term expires in July 2006. Peru under Toledo has been
characterized by two seemingly contradictory trends: high economic growth and
extremely low popularity of the President. Some analysts believe that Toledo’s
perceived weakness may have contributed to Peruvians’ disillusionment with
traditional political parties and the rise of a populist leftist candidate.
Ollanta Humala, a retired army officer who led an uprising against then-
President Fujimori and who espouses nationalist, anti-globalization policies, has
recently risen to the top of opinion polls. He appeared to be trying to soften his
image as an extremist by naming two moderates as his vice-presidential candidates.
Various polls show him vying with or surpassing Lourdes Flores Nano, a popular
former member of Congress of the center-right coalition Unidad Nacional, for first
place. Alan Garcia’s presidency (1985-1990) was marked by hyper-inflation and a
violent guerrilla insurgency, but his party, Apra, is the most organized; he has
remained in third place. Valentin Paniagua, who as interim President (2000-2001)
steered the country out of a political crisis, stabilizing the economy and organizing
fair elections, represents the well-established Accion Popular party that has moved
toward the political center and has been in fourth place out of 23 candidates.
Analysts say the outcome is far from certain. If no candidate receives 50% or more
of the vote, there will be a run-off vote between the top two candidates on May 7.
Despite being barred from holding office until 2010 and being charged with ordering
murder and torture, former President Alberto Fujimori (1990-2000) tried to return to
Peru to run for president. The Chilean government arrested him in November 2005
and is processing Peru’s request for his extradition. Peru’s courts and elections board
have barred him from running for office.
Toledo has presided over one of the highest economic growth rates in Latin
America throughout his term, with 5% growth expected for 2006, in contrast to four
years of stagnation under his predecessors. Despite his low level of support, Toledo
has pushed through important economic reforms. His administration started a welfare
program that provides monthly subsidies to about 25% of the 6 million Peruvians
living in extreme poverty and said that the benefits of economic growth were filtering
7 Sources include:”Country Report: Peru,” Economist Intelligence Unit, Jan. 2006; and
“Drug Seizures up but Coca Production Excels Too,” Latin American Regional Report,
Andean Group, March 8, 2005.
CRS-35
down to poorer sectors of society. In the first three quarters of 2005, employment
grew 3.5% in Lima and 6.4% in the rest of the country. Toledo cannot run again
because of term limits.
Issues in U.S.-Peruvian relations include drugs, security, democracy, and trade.
Peru is a major illicit drug-producing and transit country. Its anti-narcotics agency
reported that coca planting outstripped eradication in 2004 and that the local drug
industry appears to be producing pure cocaine now rather than sending it to Colombia
to be processed. A cell of the Shining Path, the extreme left guerrilla group active
in the 1980s and early 1990s, rejected the 1992 cease-fire and carried out fatal attacks
in coca growing areas. The Administration requested $499 million in FY2007
Andean Counterdrug funds for Peru, less than one-fourth of the funding Colombia
receives. Democracy and human rights initiatives include the provision of $50
million over five years to support consolidating democratic reform. Peru signed a
free trade agreement with the United States in December 2005; both governments are
expected to push for legislative approval in 2006. Some Members of Congress have
expressed concern over unresolved trade disputes with Peru. It is uncertain whether
the agreement will remain bilateral or will become part of a regional one; Colombia
has concluded talks for a trade agreement, but Ecuador’s are ongoing.
CRS Products:
CRS Report RS22391, U.S.-Peru Trade Promotion Agreement, by M. Angeles
Villarreal
CRS Report RL32770, Andean-U.S. Free-Trade Agreement Negotiations, by M.
Angeles Villarreal
CRS Report RS20536, Peruvian Elections in 2000: Congressional Concerns and
Policy Approaches, by Maureen Taft-Morales.
CRS Report RL32337, Andean Counterdrug Initiative (ACI) and Related Funding
Programs: FY2005 Assistance, by Connie Veillette.
Venezuela
Under the populist rule of President Hugo Chávez, first elected in 1998,
Venezuela has undergone enormous political changes, with a new constitution, a new
unicameral legislature, and even a new name for the country, the Bolivarian Republic
of Venezuela. Although Chávez remained widely popular until mid-2001, his
popularity eroded considerably after that, amid concerns that he was imposing a
leftist agenda. In April 2002, massive opposition protests led to the ouster of Chávez
from power for a brief period, but the military restored him to power after an interim
government resorted to such hardline measures as dismantling the National Assembly
and suspending the Constitution. After months of negotiations, the Chávez
government and the political opposition signed an agreement in May 2003 that
ultimately led to an August 2004 presidential recall referendum. Chávez survived the
vote by a margin of 59% to 41%. In December 2005 legislative elections, pro-
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Chávez parties won all 167 seats in the National Assembly after opposition parties
pulled out of the race just days before the vote. The country’s next presidential
elections are set for December 2006, and there is a strong chance that Chávez could
win another six-year term. The government has benefitted from the rise in world oil
prices, which has sparked an economic boom. As a result, Chávez has been able to
increase government expenditures on anti-poverty and other social programs
associated with the populist agenda of his Bolivarian revolution.
The United States traditionally has had close relations with Venezuela, but there
has been friction in relations with the Chávez government. In 2005, relations
deteriorated markedly, with Venezuela’s cancellation of a bilateral military exchange
program in April and its suspension of cooperation with the Drug Enforcement
Administration in August. On September 15, 2005, President Bush designated
Venezuela as a country that has failed demonstrably to adhere to its obligations under
international narcotics agreements, although he waived economic sanctions that
would have curtailed U.S. assistance for democracy programs in Venezuela. In 2006,
U.S.-Venezuelan relations have continued to be tense, with several incidents and
rhetoric exacerbating the poor state of relations, including a threat by Venezuela to
curtail reduce flights by several U.S. airlines serving Venezuela until Venezuelan
carriers are allowed to expand service to the United States. At the same time,
however, State Department officials have maintained that despite differences with
Venezuela, the United States stands ready to work with the Venezuelan government
on a number of issues, including counter-narcotics cooperation. A dilemma for U.S.
policymakers has been how to press the Chávez government to adhere to democratic
principles without taking sides in Venezuela’s polarized political conflict. Since
Venezuela is the fourth major supplier of foreign oil to the United States, a key U.S.
interest has been ensuring the continued flow of oil exports.
In the first session of the 109th Congress, the FY2006 Foreign Operations
appropriations measure (P.L. 109-102, H.Rept. 109-265) provided $2 million in
FY2006 for democracy programs in Venezuela and $2.252 million in assistance
under the Andean Counterdrug Initiative. Pending legislation includes the House-
passed version of H.R. 2601, which would authorize $9 million for each of FY2006
and FY2007 for democracy programs in Venezuela and authorize funds for U.S.-
government broadcasting to Venezuela; H.Con.Res. 224 (Fortuño), which calls on
the Venezuelan government to uphold the human rights and civil liberties of the
people of Venezuela; and H.Con.Res. 328 (Mack), which condemns President
Chávez’s “anti-democratic actions” and expresses strong U.S. support for democratic
forces in Venezuela.
CRS Products:
CRS Report RL32488, Venezuela: Political Conditions and U.S. Policy, by Mark P.
Sullivan.