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Latin America and the Caribbean
Please note: All linked documents are in PDF format
| Accounts |
FY 2003 |
FY 2004 |
FY 2005 |
FY 2006 |
| Andean Counterdrug Initiative |
248,375 |
227,836 |
235,104 |
216,297 |
| Child Survival and Health Programs Fund |
163,317 |
150,385 |
143,471 |
125,346 |
| Development Assistance |
260,578 |
260,760 |
255,480 |
223,847 |
| Development Credit Authority |
[1,859] |
0 |
0 |
0 |
| Economic Support Fund |
79,620 |
148,908 |
145,824 |
143,675 |
| ESF - Wartime Supplemental |
4,500 |
0 |
0 |
0 |
| International Disaster Assistance |
0 |
0 |
94,368 |
0 |
| PL 480 Title II |
139,966 |
106,463 |
108,462 |
113,159 |
| Transition Initiatives |
0 |
0 |
0 |
30,000 |
| Total Program Funds (in $000) |
896,358 |
894,352 |
982,709 |
852,324 |
|
The Development Challenge
The Latin America and Caribbean (LAC) Bureau has bilateral programs in 16 countries in Central America, Mexico, South America, and the Caribbean, regional programs located in each of the three sub-regions, and a regional program located in Washington, DC. The strong economic, cultural, and geographic ties between the United States and the countries of the Western Hemisphere make their political and economic stability of vital interest to the United States. Approximately 40% of imports for LAC countries come from the United States (amounting to about one fifth of the value U.S. exports in 2003), 50% of the region's exports are shipped to the United States, and Latin America supplies more than one third of U.S. energy imports. Mexico is the largest source country for unauthorized immigration to the United States (amounting to 69% of the total unauthorized resident population in 2000), and of the six other countries with more than 100,000 unauthorized residents in the United States, five are in Latin America. As stated by President Bush in November 2004, "In this century, countries benefit from healthy, prosperous, confident partners. Weak and troubled nations export their ills - problems like economic instability and illegal immigration and crime and terrorism…. Healthy and prosperous nations export and import goods and services that help to stabilize regions." By promoting prosperity in the LAC region, the United States can provide expanded opportunities that promote a peaceful and democratic hemisphere.
There is growing consensus that corruption is leading to a crisis for democracy in this region. Corruption is seen not only as a consequence of weak governance, but as a barrier to economic development and the growth of democratic and strong societies. A 2003 study by the Center for Strategic and International Studies reports that a corrupt or inefficient justice sector can slow economic development, undermine the strength and credibility of democratic institutions, and erode the social capital necessary for development. Research by the World Bank Institute shows that countries that tackle corruption and improve the rule of law can increase their national incomes by as much as four times in the long term, and child mortality can fall as much as 75%.
Surveys show that awareness of corruption has significantly increased, both among policymakers and the public. A 2003 survey by the World Economic Forum of business leaders in 102 countries found that seven of the 10 countries with consistently high measures of political corruption are in Latin America. Growing awareness of corruption has influenced the rhetoric of politicians, and some officials have won elections by promising to battle corruption. Similarly, civil society organizations and the media have been increasingly active in promoting transparency, lobbying for reforms, and informing citizens.
LAC countries have adopted a range of legal, accounting, and auditing procedures to combat corruption, and some are prosecuting corrupt public officials. While these are positive steps, the pervasive nature of high-level corruption across the region makes this a priority issue. In December 2003, former Nicaraguan President Arnoldo Alemán was sentenced to 20 years in prison for corruption. Although he was found guilty of money laundering, fraud, embezzlement, and electoral crimes, and accused of helping to divert nearly $100 million of state funds into his party's election campaign, Alemán has been released from prison to serve his sentence in his home, where he continues to negotiate political deals that could result in reversing his conviction. In January 2004, prosecutors in Guatemala opened a formal investigation of embezzlement charges against former President Alfonso Portillo, as well as his vice president, finance minister, and three other top officials, who are now in jail. Former Costa Rican President Miguel Angel Rodriguez resigned as secretary general of the Organization of American States in October under allegations of corruption, and is under house arrest. And in Paraguay, six Supreme Court justices charged with corruption were impeached and replaced in 2004 with judges selected in an open and transparent process for the first time in Paraguayan history.
Just and effective legal systems increase government legitimacy in the eyes of citizens and bolster support for democratic institutions. The 2004 United Nations Development Program Report on Democracy in Latin America draws attention to declining public faith in democracy due to persistent poverty and governments' inability to effectively deliver public services, including security. In addition, countries with more effective and equitable justice systems provide more stable and attractive investment environments by offering legal protections for investors. Although countries across the region have made strides in adopting procedures to make criminal justice more transparent, efficient, and participatory, more work remains to be done to fully implement these reforms and provide access to justice for all citizens. Crime and organized gangs, fueled by a combination of population density, rapid urbanization, and persistent income inequality, present a growing problem that places further stress on democratic institutions. A study by the Inter-American Development Bank notes that Latin America's per capita gross domestic product would be 25% higher today if the region had a crime rate similar to the rest of the world.
Free and fair elections have become the norm in the LAC region; however, in Haiti, fraudulent parliamentary elections in 2000 led to a protracted political impasse characterized by growing arbitrary and authoritarian rule, lawlessness, and violence. The impasse ended in 2004 with the resignation of President Aristide.
Despite bold efforts by Colombia, Bolivia, and Peru to combat narcotrafficking, the lack of state presence in some areas has allowed illegal narcotics production and armed terrorist organizations to continue to flourish. Narcotics wealth gives large trafficking organizations the means to corrupt and undermine legitimate governments, and the lack of effective rule of law threatens business interests and puts citizens and Americans at risk.
Economic growth in LAC reached 5.5% in 2004 (preliminary estimate by the Economic Commission for Latin America and the Caribbean, or ECLAC), outperforming the most optimistic forecasts. With the exception of Haiti (where GDP fell 3.0%), every country in the region posted positive growth. This growth is an exception to the trend in the region where GDP has grown, on average, by just 2.0% annually for the last nine years.
The region's macroeconomic performance is closely tied to the international economy. World economic activity picked up in 2004 and global GDP is expected to grow just under 4.0% (up from 2.6% in 2003), while world trade is expected to grow more than 9.0%. This international environment, especially rising prices for oil and metals, was also decisive in a recovery of the terms of trade in LAC. 2003 marked the region's first balance of payments surplus in 50 years, and the region posted a modest surplus again in 2004 as a result of improved terms of trade and migrant remittances, which rose 16.8% over 2003 levels.
Significant challenges remain, however, to overcome the years of low economic growth, compounded by external shocks, natural disasters, and domestic crises. LAC is the most unequal region in the world in terms of income disparity; inequality is high both in and across countries. Nearly 128 million people (about 25% of the population) earn less than $2 per day and 50 million people earn less than $1 per day. The urban unemployment rate has hovered around 10% for the last several years.
External debt for the region has increased considerably since 1990, from $444.7 billion at the beginning of the decade to $747 billion in 1999. Although external debt started to creep back down in 2000, that reversed in 2002 when debt for nearly every LAC country increased and debt for the region rose $25 billion to $726.5 billion. ECLAC estimates that external debt will fall by $3.5 billion in 2004. External debt as a percentage of GDP averaged 42.8% in 2003 for the region. This indicator was highest for Guyana (202%), Nicaragua (162%), Argentina (130%), and Belize (90%).
Spurred by a growing global demand for timber and paper, illegal and destructive logging remains one of the key threats to the world's oldest forests. Illegal logging destroys forest ecosystems, robs governments and communities of needed revenues, and acts as a disincentive to sustainable forest management. Only 0.5% of all forests are under ecologically sound management, as certified by independent international certification bodies.
Inequalities in access to quality health services, especially for maternal and child health, present major obstacles to achieving overall health improvements as well as economic and social development in LAC. The adult HIV/AIDS prevalence rate in the Caribbean is surpassed only by Sub-Saharan Africa, and AIDS has become the leading cause of death in the Caribbean for both men and women aged 15-24. Social patterns of early sexual initiation and multiple partners, particularly in the Caribbean and the Central American Basin, as well as stigma and discrimination, which keep the disease underground and discourage people from seeking testing and treatment, increase risk of transmission. More than 140,000 people died of AIDS in 2004 and more than twice that number were newly infected with HIV. Given the significant mobility of populations for employment, education, and tourism, USAID's health-related assistance in the region is critical to the security and health of the United States.
The quality of primary and secondary schooling in LAC is poor. In a recent study by the Organization for Economic Cooperation and Development of math and science skills among 15-year olds in 43 countries, the five participating LAC countries ranked among the lowest. The majority of students attend weak and under-funded schools, and fail to acquire basic skills in mathematics, language, and science. Educational systems lack adequate financing, which translates into poorly trained and motivated teachers and a dearth of materials. Rural and poor populations, the majority in most LAC countries, face many obstacles - language barriers, long distances to schools, and poorly trained teachers - resulting in very high dropout rates. Fewer than 30% of students in the region complete secondary school, and many who do finish lack the skills to compete in the workplace, let alone in an increasingly competitive global economy.
U.S. National Interests
As outlined in the U.S. National Security Strategy and joint State-USAID 2004-2009 Strategic Plan, USAID's overarching goals are to advance sustainable development and global interests. In LAC, the top strategic priorities seek to: 1) advance democracy and human rights; 2) increase economic prosperity and security; 3) combat narcotics trafficking; and 4) address social and environmental issues. These strategic priorities give paramount importance to the implementation of policies that address the key constraints to development.
USAID Operational Goals. The LAC Bureau determines strategic priorities for transformational development countries (all of the USAID presence countries except Haiti and Colombia) according to performance against Millennium Challenge Account (MCA) indicators, which reflect governance, economic growth, and investment in people. In low income (MCA eligible) countries where there is political will to address the performance gaps, USAID's programs are designed to improve country performance to meet the MCA assistance criteria. In both the low and middle income countries, USAID is strengthening the capacity of host country government institutions and local organizations to address performance gaps and ensure sustainability of development progress, as well as addressing global and transnational issues such as HIV/AIDS, global climate change, trafficking in people, direct support for trade agreements, and counternarcotics.
In Haiti, a top Presidential priority country, USAID's core program focuses on humanitarian assistance and support to the interim government in its efforts to re-establish political stability and improve economic performance, implement justice and police reform, and hold free and fair elections. The USAID program in Colombia is designed to address narcotics trafficking. Other strategic goals in the region include implementation of the Peru/Ecuador Peace Accords, and security in the Caribbean. USAID's Cuba program is designed to hasten the transition to democracy in Cuba and plan assistance to a post-Castro transition government.
In the Caribbean, LAC is providing significant humanitarian assistance to countries recovering from several hurricanes and tropical storms which caused significant human suffering and economic loss in September 2004. Grenada, Haiti, and Jamaica were particularly hard hit. Following the disaster relief phase, the recovery program has been drawing on lessons learned from post-Hurricane Mitch reconstruction in Central America to implement community rehabilitation and economic revitalization, including targeted assistance to particularly damaged business sectors such as the tourism, agriculture, and fishing industries, to spark employment and economic growth.
Democracy and Governance
Justice sector modernization remains the largest focus of USAID governance programs in the LAC region. USAID is advancing criminal justice reforms, strengthening judicial independence, expanding access to justice, and improving administration of justice. Criminal justice system reforms developed and enacted over the last decade are making an impact through improved access to courts; more transparent, efficient, and participatory processes; faster resolution of cases; and increased citizen confidence in the integrity of the process. USAID has also made headway in providing alternative case resolution mechanisms, including the establishment of 61 mediation centers in eight countries. In addition, 61 community justice centers bring together a variety of justice-related institutions and services in a single location, often in areas where there was no access to justice before. USAID plans to make operational 15 additional mediation centers and 15 additional justice centers by the end of FY 2006. These and other justice reform efforts will reduce the time it takes to process a case in eight target countries by an additional 20% by the end of 2006 (cumulative target for Bolivia, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, and Peru). New efforts in justice reform will target crime prevention and commercial codes.
USAID's governance programs promote accountability and transparency in national and local-level government institutions, strengthen civil society organizations to advocate for citizens' rights, and increase the capacity of national and local governments to manage resources and provide services. Anticorruption programs, such as establishment of transparent management and recordkeeping systems or auditing agencies, improve citizen oversight and build local capacity to address weak governance, entrenched political institutions, and poor public sector management. USAID investments since 1990 have led to adoption of national-level integrated financial management systems by all USAID presence countries in LAC, bringing transparency to national budgets for the first time. At the local level, technical assistance and training for municipal leaders improves coverage of basic public services and infrastructure, transparent financial administration, and public participation in decision making.
Economic Prosperity and Security
USAID is assisting LAC countries to enact legal, policy, and regulatory reforms that promote trade liberalization, hemispheric market integration, competitiveness, and investment. USAID was instrumental in providing technical assistance and public outreach in Central America and the Dominican Republic during negotiations for the U.S. - Central America Free Trade Agreement (CAFTA), which was signed by five countries in 2004. USAID continues to help countries comply with the rules of trade, such as customs and rules of origin, sanitary and phytosanitary measures (animal and plant health and food safety), and intellectual property rights. In addition, USAID assistance helps smaller economies benefit from a global trading system by addressing longer-term challenges such as rural economic diversification and small and medium enterprise development and competitiveness. CAFTA implementation will continue to be a major focus in FY 2006, along with increased efforts to negotiate other free trade agreements, including a U.S. - Andean Free Trade Agreement. USAID plans to train an additional 10,000 people across the region in trade-related areas in 2006.
USAID will continue to support development of regulatory frameworks and innovative approaches to widen and deepen financial intermediation in the small and microenterprise sector to give marginalized business people greater access to borrowing capital. USAID is also supporting cutting edge efforts to increase the developmental impact of remittances, which were estimated at $38 billion in 2003 - more than all other development assistance combined.
Counternarcotics
Narcotics trafficking, guerrilla and paramilitary violence, human rights abuses, corruption, crime, and a lack of effective government presence in the coca-growing areas in the Andes pose a threat to democracy in the region. The Andean Counternarcotics Initiative has three goals:
1) disrupt the production and trafficking of illicit drugs in the Andean region; 2) strengthen law enforcement and judicial institutions that combat narcotrafficking; and 3) develop viable alternatives to illegal drug production. Working in partnership with the leadership in the Andean region, USAID's assistance has helped to expand state presence, strengthen democracy, create licit economic opportunities, improve social conditions, and provide assistance to internally displaced people.
Social and Environmental Issues
USAID programs in the health sector improve access to and quality of health services by both private and public sector care providers. USAID assistance has directly contributed to important advances in detection and cure rates for tuberculosis, significantly raised vaccination coverage rates, and helped reduce or eliminate major childhood illnesses such as measles in LAC. While progress is being made to lower maternal mortality and apply proven, cost-effective protocols for combating malaria and other infectious diseases, rates remain unacceptably high.
In the LAC region, the HIV/AIDS epidemic is largely concentrated in high-risk populations. Under President Bush's Emergency Plan for AIDS Relief, USAID is assisting two focus countries (Guyana and Haiti), subregional programs in the Caribbean and Central America, and 10 non-focus countries. Across the LAC region, USAID activities have resulted in a significant decrease in risky behaviors and increase in protective behaviors, a substantial increase in access to treatment and diagnosis, and a great improvement in the quality of care and support available for people living with HIV/AIDS.
USAID education and training programs are developing innovative and more effective service delivery models, many of which are being expanded by host governments and multilateral development banks. USAID programs support: improved testing and student assessment; development of school level report cards; management information systems to help Ministries of Education make targeted investments in low-performing schools; and greater parental and community involvement in education. USAID will train an additional 5,500 teachers and administrators in 2005 and 2006 through the Centers of Excellence for Teacher Training, a presidential initiative to improve the quality of reading instruction in the 1st through 3rd grades. USAID also supports advancements in workforce training and higher education to help young adults and youth prepare to enter the workforce.
USAID's environment programs protect the region's natural resource base and biodiversity and reduce environmental hazards. As part of the Global Climate Change Initiative, USAID will continue to improve land use and management of scarce biological resources and promote transfer of clean energy technologies. Through the Initiative Against Illegal Logging, USAID addresses the sale and export of illegally harvested timber products by assisting countries to establish and strengthen enforcement of laws related to forest management, strengthening protected area management, and promoting good business practices, transparent markets, and legal trade. Under the Clean Energy Initiative in Mexico, USAID is strengthening the national enabling environment to support clean energy production, and promoting clean production and energy efficiency concepts to selected municipalities. USAID is also continuing efforts to improve the management of water resources and accelerate access to clean water in support of the Water for the Poor Initiative. A regional strategy for biodiversity conservation in the countries comprising the Amazon Basin will improve the capacity of indigenous communities and local law enforcement agencies to protect the biodiversity of indigenous reserves. As part of the work USAID conducts in this sector, an additional 1.5 million hectares (a total of 19.5 million) will be under improved management for biodiversity conservation and an additional 5.3 million hectares (a total of 23.5 million) under increased protection and sustainable management of forest ecosystems by the end of 2006.
Management Efficiency and Effectiveness
To improve management efficiency and ensure operating expense and staff allocations respond to priorities, the LAC Bureau has undertaken Mission Management Assessments in all 16 missions. These assessments have helped the Bureau streamline management support operations, focus program portfolios, reduce management units, identify efficiencies in procurement, and broaden the functions of regional platforms throughout the region. The LAC Bureau continues to work on finalizing the regional services platforms for Central America and South America. The Bureau is defining core staff requirements (technical and management support) for small, medium, and full-sized missions, and redefining the roles of U.S. direct hire staff, as well as the missions' program delivery models.
Program Assessment Rating Tool (PART)
A component of the President's Management Agenda, PART focuses on assessing whether goals, indicators, and targets are in place and used to determine whether a program is achieving results. The original assessment found that while strategic planning and performance evaluation were effective in operating units, the LAC Bureau could not demonstrate regional progress due to the lack of regional performance measures and targets. To facilitate regional performance monitoring, the LAC Bureau undertook an extensive effort in 2004 to develop a set of contextual and performance indicators, baselines, and targets. The Bureau's long-term goals are now supported by regional performance measures which the Bureau will use to assess progress, and all LAC missions with relevant programs are reporting against these indicators.
Other Donors
Official development assistance to LAC totaled just over $5.2 billion in 2002 (latest available figures compiled by the OECD). Bilateral donors accounted for about 86% of this assistance and multilateral donors the remaining 14%. The largest multilateral donor is the European Commission, followed by the International Development Association and the Inter-American Development Bank. The United States has been the largest bilateral donor since 2001, topping Japan, which was the largest donor for six years prior to 2001. U.S. assistance in 2002 totaled more than $1.2 billion, followed by Japan and Spain. Germany, the Netherlands, and the United Kingdom are also active donors in the region. According to OECD statistics, nearly 60% of the assistance to the LAC region was geared toward social (health, education, water, housing, employment) infrastructure and services; approximately 14% was focused on economic (transportation, energy, and business development) infrastructure and services; and 12% on improved economic production (agriculture, industry, trade, and tourism).
FY 2006 Program
USAID employed a strategic and performance based budgeting tool to estimate its FY 2006 program resources needs. Factors considered were country need and commitment, administration priorities, foreign policy considerations, management requirements, relative sector focus, and USAID operational goals. Total FY 2006 resources requested for the LAC region are $862,521,000. Of this amount, $223,847,000 is Development Assistance (DA); $125,346,000 is Child Survival and Health (CSH), $30,000,000 is Transition Initiatives (TI), $143,675,000 is Economic Support Funds (ESF), $216,297,000 is Andean Counterdrug Initiative (ACI), and $123,356,000 is P.L. 480 Title II.
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