Address at the World Trade Center of New Orleans

My objective here today is to describe for you United States policy towards Central America in the wake of Hurricane Mitch, highlight some of the challenges we face, and respond to any concerns you might have about these policies and our future relations.

U.S. foreign policy goals in Central America are to promote democracy and to empower all citizens, encourage rule of law and transparent judicial systems, foster broadly based economic growth that benefits everybody, promote open trade and investment, stimulate environmentally compatible development, and prevent transnational crimes such as narcotics trafficking and money laundering.

While these goals are desirable to achieve throughout the world, achieving them in Central America is particularly important to us in the United States. Let me explain why.

The countries of Central America and the United States are bound together geographically, politically, economically, and socially.

Our extensive trade and investment relations directly benefit United States companies who hold the lion's share of these fast growing markets. U.S. exports to the Central American region exceed our exports to all of the countries of the former Soviet Union and Eastern Europe combined. This hits close to home when you think that one in every eleven jobs in the United States depend on exports to other countries.

Even imports from these countries benefit United States firms. For example, approximately 80-85% of apparel exported to the United States from Central America uses high quality United States fabric and thread.

For these reasons, promoting stronger trade and investment ties between the United States and Central America is very important. I'll mention shortly some of the initiatives we are taking to do so.

In addition to our increasing economic interdependency, the United States and countries of Central America share strong cultural and people-to-people ties. over two million Central Americans now live in the United States

Before the hurricane, more and more Americans were travelling to, and sometimes retiring in, Central America. It is a point of interest and great satisfaction to me to see that since the hurricane, the number of Americans travelling to the region appears to be increasing. Our country desk officers in the State Department report that they receive inquiries every day from church groups, medical volunteers and other private American citizens, many of whom have never been to the region before, who are now traveling to Central America to help with grassroots reconstruction projects.

Given the importance of Central America’s well-being to us, we have worked intensively with countries-to bring peace and prosperity to the region which was wracked by civil wars and dictatorships in the 1970s and 1980s. Through our political support, economic assistance and technical expertise, we have worked together with our friends in Central America to end conflict, to create political stability and democracy, and to jump start economic regeneration in a once-troubled region.

The countries of the region, particularly El Salvador, Guatemala, and Nicaragua, were making impressive progress in the 1990s to consolidate peace and national reconciliation, and to establish healthy democracies and rule of law. At the same time, these countries were restructuring their economies to make them more responsive to market forces and open them up to trade and investment.

The devastation caused by Hurricane Mitch last October abruptly interrupted this process.

As the death toll and reports of damages mounted, President Clinton set the tone for the United States response when he said "These countries are our close neighbors and friends and we will do all we can to help."

In the immediate aftermath of the Hurricane, the United States provided over $300 million of relief supplies. Over 5,000 U.S. military personnel, along with numerous civilians, repaired roads, bridges, and other infrastructure and provided medical services. The response from private Americans, whether individuals or groups, was also overwhelming. More than $28 million of privately donated relief supplies were collected and transported down to Central America. Many Americans volunteered their services as well.

The U.S. response was not limited to providing relief supplies and services. Recognizing that the Hurricane's devastating impact on Honduras and Nicaragua made it even more difficult for these countries to service their huge international debts, the United States in mid-November announced that it would relieve Honduras and Nicaragua of their bilateral debt service obligations over the next two to three years. We mobilized other bilateral creditors belonging to the Paris Club to follow suit.

In response to the Hurricane, the United States also suspended deportation of undocumented aliens from Guatemala, El Salvador, Honduras, and Nicaragua. This suspension was lifted on March 7 for aliens from El Salvador and Guatemala, given our assessment that these countries were again able to absorb returning migrants. Given the relatively greater damage suffered by Honduras and Nicaragua, we gave these countries Temporary Protected Status - allowing their nationals who were in the United States by December 30, 1998 to remain for 18 months.

The U.S. commitment to assist Central America’s recovery was highlighted by the trips to the region by the President, the First Lady, Mrs. Gore, and a dozen Congressional delegations. During his Visit to the region in March, the President met in Antigua, Guatemala with the Presidents of all of the Central American countries except Panama and the President of the Dominican Republic.

The United States remains strongly committed to assuring Central America’s recovery. We share the desire of Central Americans to turn the tragedy caused by the Hurricane into an opportunity for the Central Americans to transform their countries. The objectives of this transformation would be to promote greater participation by all citizens in their governments at all levels, to establish transparency in governmental decision-making, to promote environmentally sound development, and achieve greater opportunity for all citizens.

To this end, we have worked to implement numerous initiatives. First and foremost, Congress approved and the President signed on May 21 a $962 million supplemental budget package for Central America. Major components include funding for rebuilding homes, schools, and health facilities; promoting economic activity, including food production; and protecting the environment. My AID colleague will be discussing this assistance program in greater detail.

We are urging Congress to enact promptly legislation enhancing benefits under the Caribbean Basin Initiative. The major benefit would be to expand access for Caribbean textile ,products, especially those made from U.S. produced yarn or cloth, in the U.S. market.

Besides promoting U.S.-Central American trade, we also wish to strengthen investment ties between the United States and Central America. OPIC and Citibank launched earlier this year a $200 million lending facility to stimulate private sector investment projects in the Central American and Caribbean region. President Clinton also declared his intent to send the Bilateral Investment Treaties with Honduras, Nicaragua, and El Salvador to the U.S. Senate for ratification.

We have worked with other Paris Club creditors to increase debt reduction for Honduras and Nicaragua. The Paris Club has agreed to reduce up to 90 percent of Nicaragua’s outstanding bilateral debt when it becomes eligible for the Highly Indebted Poor Countries (HIPC) initiative, which is expected to happen this year. The Paris Club has agreed to reduce 67 percent of Honduras' bilateral debt when it becomes eligible for HIPC, a development that will probably occur sometime in the future.

The U.S. is making a $25 million contribution to the Central American Emergency Trust Fund. This money will allow the countries most affected by the hurricane to continue to service their debt obligations to international financial institutions, and to ensure a strong flow of new multilateral funds to the region.

We have also met many Central Americans' demands for more generous treatment of their nationals who immigrated to the United States during the 1980s. The regulations implementing the Nicaraguan Adjustment and Central American Relief Act (NACARA) passed by Congress in 1997 reduced the disparities in treatments between certain categories of Guatemalan and Salvadoran immigrants, on the one hand, and Nicaraguans on the other. We estimate that 290,000 Guatemalans and Salvadoran will gain residency as a result. We are developing a legislative proposal to further eliminate disparities in treatment of Central American immigrants.

Finally, we have mobilized a vigorous international response. At the Consultative Group Meeting on Central American Reconstruction and Transformation two weeks ago in Stockholm, developed countries and the multilateral financial institutions pledged over $9 billion to help Central America recover. This total exceeded by almost 50% the amount initially committed last December at the first Consultative Group meeting in Washington.

These are some of the initiatives we have launched to assist Central America’s recovery. We will be helping the Central American countries implement the reconstruction plans to ensure that the region really is transformed.

At the same time as we are helping Central America rebuild, we wish to strengthen cooperation in other areas, such as law enforcement. We want to work more closely with Central American countries to combat narcotics trafficking, smuggling of undocumented aliens, and other transnational crimes. Some of the initiatives we are working on are to negotiate maritime counter-narcotics cooperation agreements, updating our extradition treaties with Central American countries to include extradition of nationals, and providing training to Central American law enforcement officials.

I am happy to turn the floor over to my colleagues in AID and the Commerce Department who will discuss in greater detail our reconstruct ion programs in Central America and business opportunities.