Threats to Democratic Stability in the Dominican Republic and GuatemalaAmbassador Otto J. Reich, Assistant Secretary of State for Western Hemisphere Affairs
Testimony to House International Relations Committee, Subcommittee on the Western Hemisphere
October 10, 2002
Mr. Chairman, members of the Committee, thank you for the opportunity to appear before you today to discuss corruption and other threats to democratic stability in the Dominican Republic and Guatemala.
Now that all but one of the nations in our hemisphere have embraced democracy and free trade, they must address the single greatest factor limiting their development. The World Bank has identified corruption as "the single greatest obstacle to economic and social development." Transparency International has calculated the cost of corruption in some countries to be as much as six thousand dollars per person each year. One third of the population of this hemisphere still lives on less than two dollars a day, despite the natural wealth of this region. Eighty percent of Latin Americans, according to the 2002 Latinobarometro survey, believe corruption has increased.
Corruption directly harms the people of the Americas, most dramatically the poor. Studies by the World Bank show that increased corruption and an absence of the rule of law have a negative impact in areas beyond the economic, harming a country’s social and human development as well. If the countries of the Americas are to grow and develop in accord with their potential, corruption must be reduced.
The citizens of those nations suffering from widespread corruption will not have the chance to reap the benefits from the Free Trade Area of the Americas. Moreover, we should not allow the benefits of free trade to accrue to criminals rather than to the people. We must send a clear message – clean up your act or we will take our business elsewhere.
But corruption harms more than just the economy, more than just the poor. Corruption tears at the fabric of democracy itself. As recognized in the Inter-American Democratic Charter, adopted by all thirty-four member states of the Organization of American States on September 11, 2001, transparency in government activities, probity, and responsible public administration on the part of governments are essential components of the exercise of democracy. Yet Latin American citizens have expressed dissatisfaction with democracy in their countries because they have not felt its greatest benefit – an accountable government that represents the people. We cannot expect people to have faith in or support a regime that steals from them, hurts their quality of life, and hides the truth.
There are those in the hemisphere who are making great strides, such as President Bolanos of Nicaragua. Over 900,000 Nicaraguans have signed petitions to urge the prosecution of former President Aleman for his theft of public funds. In Mexico, President Fox is leading a charge against the decades of corruption that have corroded Mexicans’ faith in their government. The new government of Bolivia has pledged that it will fight corruption across the board. Uruguay arrested banking magnate Jose Periano on fraud charges. Ecuador is investigating corruption in the Finance Ministry that went all the way to the Minister himself. Twenty-eight out of thirty-four OAS member states have ratified the Inter-American Convention Against Corruption, promising to clean up their systems. We must support them in their efforts to fight their own political and economic elites, but we must also hold them absolutely to the promise embodied in the Inter-American convention that the theft of the people’s funds and abuse of their trust will stop.
We are encouraging those governments that combat corruption and pressuring those that do not. This includes, but is not limited to, implementing the Inter-American convention, supporting development of international anti-corruption norms, and providing assistance to hemisphere nations to increase transparency of government processes and build their prosecutorial capacity. We are carrying out a range of activities to strengthen the free press and civil society throughout the hemisphere and engaging in aggressive public campaigns to get the word out about the cost of corruption and the benefits of good governance.
In coordination with the other agencies of the U.S. Government, and with the input and support of the International Financial Institutions and other donor nations, we are addressing the poison of corruption in its myriad forms. By sending a clear and consistent message that corruption is intolerable in a healthy democracy, we will entrench democratic reform, encourage development, and return the power of a free political and economic system to the people.
The U.S. Government is concerned about corruption in the Governments of the Dominican Republic and Guatemala. Corruption is a major problem in the Dominican Republic but government efforts to combat it are improving. Cooperation with the United States is good in the law enforcement arena. In Guatemala, government corruption appears to be worsening and activities to combat it appear to be little more than lip service.
The U.S.-Dominican relationship is more robust than ever. An estimated one million Dominicans (1 in 9) live in the United States (centered in and around New York) and are estimated to contribute over $1.8 billion annually to the Dominican economy through remittances. The Dominican Republic is four-square behind the U.S. counter-terrorism agenda and can be expected to be supportive in international fora.
The U.S. has a strong interest in a democratic, stable, and economically healthy Dominican Republic. The DR has the largest economy in the Caribbean and the fastest growing economy in the Western Hemisphere – 6% in the first six months of 2002. It has the second largest population and land mass in the Caribbean, sharing the island of Hispaniola with Haiti. The U.S. Government has been an outspoken proponent of the Dominican Republic’s democratic and economic development. Despite rough patches over the first two years of his term, President Hipolito Mejía dominates the Dominican political scene. Mejía’s governing Dominican Revolutionary Party (PRD) won a resounding victory in May 16, 2002 congressional and municipal elections, winning 29 of 32 Senate seats, 73 of 149 seats in the Chamber of Deputies, and control of 104 of 125 city administrations. Disappointed with their poor showing, the Dominican Liberation Party (PLD) and Social Christian Reformist Party (PRSC) complained that the elections were riddled with fraud and government largesse. International election observers, including the OAS, however, certified the elections were free and fair.
The United States strongly supports the Dominican Republic’s successful efforts to strengthen its democracy. Over the next five years, USAID will provide approximately $20 million in assistance under its democracy building program. The funds will be used to develop a more representative and effective electoral system with increased civil society participation. The Embassy, through USAID programs, is working to develop programs to strengthen the rule of law, improve administration of justice, and to combat corruption. We also work closely with Dominican authorities to reduce illegal immigration from the Dominican Republic to the United States.
Law Enforcement, Narcotics Trafficking, Extradition, Money Laundering, Corruption: Law enforcement issues have been very important in the bilateral agenda in recent years. Our two governments cooperate closely in the fight against narcotics trafficking. The Dominican Republic serves as a major transit country for cocaine. Interdiction of this flow has been hampered by a lack of training and funding for security forces, as well as corruption. The same is true for illegal immigration from the DR to the United States, both of Dominicans and of third-country nationals, such as Haitians, Chinese, and Pakistanis. The U.S. provides training and equipment assistance to Dominican law enforcement agencies in an effort to improve performance.
Following years of frustration, we have established a cooperative and productive relationship with the Dominican Republic on the issue of the extradition to the U.S. of Dominican nationals. The DR has made great strides in ensuring that criminals wanted to stand trial in the U.S. are captured and extradited. The initiation of the extradition process has been one of the recent successes in the relationship. Former President Fernandez began the process in 1997 when he interpreted his Constitutional authority and his powers under the bilateral extradition treaty and ordered the extradition of two Dominican nationals. In 1998, the Dominican Congress effectively endorsed his position by removing all legislative bars to the extradition of Dominican nationals. About thirty Dominicans have been extradited to the U.S. since President Hipolito Mejía’s inauguration in August 2000. The U.S. has extradited two Dominican nationals to the Dominican Republic and several other Dominican requests are pending.
New police leadership in the Dominican Republic has surrendered police officials accused of human rights abuses including government-conducted murder, rape, torture, and civilian authorities for trial in as many as a dozen cases. Extra-judicial killings have also dropped.
In May 2002, with our strong encouragement, President Mejía promulgated new money laundering legislation. Implementing regulations for the new law are currently being drafted by the head of the newly formed GODR Committee Against Laundering of Assets. Dominican banks are supposed to report suspicious transactions and deposits of amounts greater than $10,000. The U.S. recently provided laptop computers for use by the Financial Investigations Unit (FIU). How well these efforts will pan out remains to be seen and we continue to monitor them.
Weak institutions and an "every man for himself" culture combine to make corruption a problem in the Dominican Republic, both in the government and private sectors.
Illegal migration, alien smuggling: As noted earlier, the Dominican Republic government has manifested its concern in these areas, but efforts to curb narcotics trafficking, control alien and other types of smuggling and foster democratic institutions are hamstrung by persistent corruption in multiple levels of government and society. Corruption at the Dominican-Haitian border is particularly endemic, permitting drugs and third-country nationals (such as Chinese and some Pakistanis) entry into the Dominican Republic.
The numbers of aliens transiting illegally through Haiti and the Dominican Republic appears to be on the rise. Dominican authorities have detained Dominican government officials, including several Dominican consular officials assigned to Haiti, involved in facilitating the illegal entry of third-country nationals. A former Dominican Consul suspected of participating in an alien smuggling operation while in Haiti, and issuing Dominican Republic passports to Haitians and third-country nationals, was arrested several months ago. One month ago, Dominican authorities arrested a Dominican Vice Consul assigned to Haiti for transporting firearms and nearly 90 pounds of illegal drugs from Haiti into the DR. These are important steps in securing the porous border with Haiti as well as a test of whether the Dominican Republic is serious about cracking down on official corruption.
Haiti remains a key concern of the Dominicans. An estimated one million Haitians live in the DR, mostly illegally, and the government fears that continued deterioration in the situation in Haiti will cause many more Haitians to flee across the border. Dominicans of every stripe complain that the Dominican Republic is being forced by the international community to bear the brunt of Haiti’s political and economic problems. Although some Haitian immigrants fill a void in the Dominican labor force, unchecked Haitian migration imposes high social and economic costs on the Dominican Republic. Environmental degradation, accelerated by Haiti’s difficult economic situation, is an area of concern along the Dominican-Haitian border.
U.S. Assistance to the Dominican Republic: Assistance through the State Department’s Bureau of International Narcotics and Law Enforcement consists mostly of support to Dominican law enforcement agencies, with a small amount to regional anti-money-laundering organizations. U.S. Department of Justice OPDAT support focuses on training for the Public Ministry in the area of corruption investigation. Other U.S. assistance goes to the Judiciary, the Department of Prevention of Corruption in the Public Ministry, the Council of Prevention of Corruption, and to civil society organizations.
U.S. assistance has been allocated to USAID’s anti-corruption program for the past five years. Programs with civil society organizations have raised the profile of corruption, so that government leaders, the press, and citizens are now talking about and advocating against corruption. The new National Plan Against Corruption and its performance monitoring plan, developed with USAID assistance, are important steps in the right direction in the fight against corruption. The creation of new government offices and the expansion of existing units’ roles to fight corruption are also notable. Perhaps the greatest indication of results in this area is the prosecution of corruption cases involving high-level officers of both previous and current administrations.
Assistance is also planned for the Comptroller General as part of a new strategy to support government capacity building and civil society advocacy.
The key U.S. objective in Guatemala is supporting the implementation of the Peace Accords that ended 36 years of internal conflict in 1996. This includes efforts to support democratic institutions and promote respect for human rights and the rule of law. Other important objectives are promoting broad-based, sustainable economic growth, maintaining mutually benefiting commercial ties and cooperating to combat narcotics trafficking and alien smuggling.
Political Overview: Guatemala has had two democratically elected governments since the 1996 Peace Accords that ended 36 years of armed internal conflict. The current government, headed by President Alfonso Portillo of the Guatemalan Republican Front (FRG), has lost much of its popularity since winning 68 percent of the vote in a two-way run off in December 1999. There was great hope for the Portillo Administration, especially for implementation of the Peace Accords and for improvements in the social conditions of Guatemala’s poor. Unfortunately, very little has been done to advance the accords and Guatemala’s poor continue to suffer from malnutrition, lack of education, and limited economic opportunities.
Almost from the beginning, the Portillo-FRG government has been beset by major corruption scandals, a deteriorating public security situation, and a weakened economy. A divided opposition, a lack of leadership in the legislature, and a lack of coordination among civil society groups has resulted in unproductive confrontations with Portillo and his cabinet. We have used visits to Washington by President Portillo, high-level Guatemalan officials, and prominent civil society leaders to convey a message to all parties on the need for constructive dialogue in order to surmount the many challenges Guatemala faces. Our embassy has been engaged on all fronts and with all sectors of the government and civil society.
Peace Accords: Implementation of the 1996 Peace Accords is now virtually at a standstill, due to the lack of political will on the part of the government, military, civil society, and the private sector. In addition to a lack of will, there are not enough resources to properly implement many of the reforms, and many consider the original and subsequent timeframes to have been unrealistic. While there is no immediate risk of a resumed internal conflict, there is growing popular frustration with the government and its lack of progress on issues found in the Accords as evidenced by recent land invasions and demands for payments by members of the Civilian Action Patrols (PACs in Spanish). The Embassy and the rest of the international community continue to believe that the "blueprint" found in the Accords is the best way for Guatemala to make the political, economic, and social reforms so badly needed in Guatemala.
Human Rights: While human rights practices have improved overall since the signing of the 1996 Peace Accords, events in the past year have caused concern that the situation is now worsening. In the last year, many human rights groups and activists have reported being threatened and some have actually been attacked. The United Nations Verification Mission in Guatemala (MINUGUA) reported that the overall human rights situation deteriorated, and there were increased signs of the participation of clandestine groups in illegal activities linked to employees of the public ministry, military intelligence, justice system, and police. These groups appeared to act with relative autonomy, and, while there was no evidence that they were a part of government policy, they did operate with impunity. MINUGUA also found evidence of civilian and military officers linked to these groups operating both officially and unofficially within the executive and judicial branches.
While the Guatemalan government generally respects the human rights of its citizens, some serious problems continue. Some high-level officials have covered up or obstructed efforts to investigate human rights abuses. Members of a coalition of human rights groups demanded that the Portillo administration take measures to ensure the security of human rights workers, investigate and prosecute the material and intellectual authors of the attacks, investigate the existence of clandestine groups and parallel forces linked to state institutions believed to be behind the attacks, and dismantle them. Human rights groups broke off dialogue, saying the government failed to respond adequately to the human rights groups' demands. Some government officials made public comments disparaging human rights workers and international observers.
The Historical Clarification Commission (CEH), created under the 1996 Peace Accords, found that the Army and the paramilitaries it controlled were responsible for the vast majority of human rights violations committed during the armed internal conflict. As a candidate and then as president, President Portillo promised reforms to strengthen civilian control of the military and to address past human rights abuses. While he issued an official apology for any abuses that occurred, and the government has paid compensation to a small number of victims, there is little political will in his government to address the past, and any type of civilian oversight of the military and its growing budget remains completely blocked. President Portillo must overcome influential political players seeking to kill military reform efforts, including his pledge to disband the notorious Presidential Military Staff (EMP).
Corruption: By all accounts, corruption has increased significantly under the Portillo administration and it is the number one obstacle to increasing the effectiveness of all USG programs in Guatemala. Transparency International’s August rankings listed Guatemala as number 81 out of 102 countries. Impunity exacerbates the problem. Few high-level figures are ever charged or even formally investigated for corruption, and fewer go to trial. The Government of Guatemala’s efforts to fight corruption have been generally ineffective and have contributed to disillusionment with the government. Efforts to pass legislation on corruption and transparency have failed, primarily due to lack of political will by the FRG and disagreements with the opposition parties as to content. President Portillo brought in the World Bank to develop a "National Anti-Corruption Plan", but the effort has been stalled by the inability of the government and civil society to agree on the make-up of the committee to develop this project.
The United States has been very aggressive in trying to convince the Government of Guatemala to deal with the corruption problem. We have revoked the visas of a number of influential people who were involved in narcotics and alien smuggling, money laundering, and other criminal activity. The U.S. facilitated the formation of a diverse group of eleven influential individuals from all sectors, including the vice president, to attend Transparency International’s Anti-Corruption Seminar in Prague in the hopes of raising the level of consciousness and promoting cooperation across sector lines. The U.S. also assisted Guatemala in creating an Anti-Corruption Prosecutor’s Office and an Anti-Corruption Task Force within that office. While these groups have been unable to indict any high-level figures to date, they have had success against municipal officials, including mayors throughout the country who have been involved in government corruption. The Anti-Corruption Prosecutor’s Office and Task Force’s investigations of high-level figures have not yet borne results, however.
Organized Crime: Narcotics trafficking and alien smuggling are on the rise in Guatemala. Some of the leaders of these activities have very close ties to the highest levels of government and regularly influence decisions, especially with respect to personnel nominations in the military and the Ministry of Government.
Seizures of illegal narcotics in Guatemala are down dramatically in the year 2002, even though the amount of illicit drugs transiting through Guatemala has not decreased. Intelligence indicates that large amounts of cocaine are being transshipped through Guatemala with almost complete impunity. Lack of continuity amongst personnel from the police all the way to the ministerial level, a severe lack of resources, and corruption at all levels of the system have contributed to this decrease in seizures. This year the narcotics police were rocked by a number of corruption scandals, including one in which the narcotics police broke into a seized narcotics storeroom and stole about 1600 kilos of cocaine. This event forced the government to completely purge the narcotics police. With U.S. assistance, the Government of Guatemala is in the process of creating a new narcotics police. However, the influence of organized crime leaders and a perceived lack of will call into question whether the new narcotics police will be allowed to really do its job.
An additional negative factor is the severe lack of adequate funding for the police, prosecutors, and judges. Even without corruption, the public forces assigned the task of dealing with organized crime do not have enough resources to tackle the problem. The Government of Guatemala needs to work on bilateral and multilateral issues such as a counternarcotics maritime agreement, a modern extradition treaty, and complete compliance with all of the provisions of the UN Drug Convention.
Alien smuggling is also on the increase in Guatemala. The worsening economy has made Guatemala a bigger source country than ever, and it continues to be a major transit country for illegal aliens of all nationalities. Many of the same factors that make Guatemala attractive for narcotrafficking also make it an attractive country for alien smuggling. These attributes include corruption, a weak judicial system, large unpatrolled coastlines, lack of host country resources, and geographic advantages. Many organized crime organizations mix the two activities quite successfully. While the Government of Guatemala has been cooperative on small substantive issues or individual cases, very little progress has been made.
Money laundering is one of the few anti-organized crime success stories in Guatemala. At the end of 2001, Guatemala passed a very extensive and modern money laundering legislation. It should be noted, however, that despite the enactment of this legislation, Guatemala remains on the Financial Action Task Force’s (FATF) list of "Non-Cooperative Countries and Territories (NCCT). There continues to be an intensified focus on the Government of Guatemala to ensure that it establishes an effective anti-money laundering system and fully complies with the FATF 40 recommendations. It is expected that Guatemala will remain on the NCCT list until the government finalizes its legislative changes to the banking sector and effectively deals with the issue of bearer share corporations.
Our Embassy was instrumental in making this happen and the Treasury Department provided important technical assistance. Training is currently underway for banking officials, prosecutors, police, and judges. While no one has been convicted, the Government of Guatemala has cooperated with the USG in providing information on cases of interest. This legislation is key to the war on terrorism and the efforts to discover and freeze terrorist assets.
The Administration will remain closely engaged with the Dominican Republic and Guatemala as they work to root out and eliminate corruption within their ranks. This is a problem that will not be solved overnight, but which requires long-term commitment from all of us.
Released on October 10, 2002