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 You are in: Secretary of State Condoleezza Rice > What the Secretary Has Been Saying > 2005 Secretary Rice's Remarks > June 2005: Secretary Rice's Remarks

Remarks with Honduran President Joest, U.S. Trade Representative Portman, Representative Kolbe and Chief Executive Officer Applegarth at the Signing Ceremony for the Millennium Challenge Corporation's Compact with Honduras

Secretary Condoleezza Rice
Benjamin Franklin Room
Washington, DC
June 13, 2005

(4:05 p.m. EDT)

Secretary Rice witnesses Millennium Challenge Corporation Compact With Honduras. AP/Wide World photoMR. APPLEGARTH: Good afternoon and bienvenidos. Thank you for joining us today to celebrate the signing of the Millennium Challenge Corporation's second compact, a $215 million compact with the Republic of Honduras.

We are honored to have with us the President of Honduras, His Excellency Ricardo Maduro, and his distinguished delegation and our Ambassador to Honduras, Ambassador Larry Palmer. And I would like to extend a warm welcome to our MCC Board members, Ambassador Portman and Mr. Kenneth Hackett, and our other distinguished guests and friends.

We are especially honored that Secretary Rice is here to officiate the ceremony. Not only is the Secretary the Chair of MCC's Board, but she played a key role in formulating the vision for the Millennium Challenge Account together with President Bush and Secretary Powell.

We are pleased also to have Ambassador Portman with us today. As a member of MCC's Board and as the leading advocate of the Dominican Republic-Central American Free Trade Agreement, he is promoting poverty reduction and sustainable growth in the countries of the region.

I would like to extend a special welcome to Chairman Jim Kolbe, who has worked tirelessly on behalf of the MCA. Mr. Chairman, we extend our deep appreciation for your continuing support of MCC and the Millennium Challenge Account.

Today we are signing our second compact and, like our first compact with Madagascar, Honduras' compact program represents a real opportunity to reduce poverty by fostering sustainable economic growth. We expect several more compacts to be completed in the coming months and have already approved, in addition to these compacts, funding for five countries to accelerate their development and implementation of compacts.

And now I yield the podium to our Chair, Secretary Rice.


SECRETARY RICE: Thank you very much. Thank you very much. I thank you very much, Paul.

I wish to congratulate the people and Government of the Republic of Honduras for this great achievement. This $250 million Millennium Challenge Corporation compact is a reflection of the commitment of the entire Honduran nation to reduce poverty and improve the lives of the poor. It was first and foremost the Hondurans themselves who shaped the results-oriented program on which this compact is based.

President Maduro, we want to recognize you personally for the instrumental role that you have played in bringing all of us to this historic day for Honduras and for the United States because it is your leadership and your good governance of Honduras that is being celebrated here today.

I want to thank Chairman Kolbe for your tireless efforts on behalf of this fine program, the members of the Board who are here — Ken Hackett and of course Rob Portman. This is a program of which we are tremendously proud because this MCC initiative which Chairman Kolbe and others in the Congress have supported is the key, we believe, to development.

Ambassador Portman is going to talk a little bit, in a little bit, about the Central American Free Trade Agreement. We are in the midst of those deliberations. That, too, is an important element of our strong commitment to Honduras' prosperity but the prosperity also of that entire region.

I want to thank the professional staff of the Corporation that worked hand in hand with Hondurans in helping them to turn this into a very and fully developed proposal.

Lifting suffering humanity out of poverty is one of the greatest moral challenges of the 21st century, and how the world's democracies rise to that challenge carries profound implications for freedom, growth and security across the globe. President Bush's Millennium Challenge Account initiative is a powerful way to "draw whole nations into an expanding circle of opportunity and enterprise." The Honduras compact is a wonderful example of how the President's bold vision is being transformed into a brighter future for men, women and children in developing nations across the globe. The compact embodies the new approach to development embraced by the world's nations at the summit in Monterrey, Mexico in 2002. At Monterrey, all nations agreed that development aid works best when it goes to countries that put in place policies that promote poverty reduction and growth. That is exactly what Honduras is doing by taking responsibility for their own development. Hondurans are building a long-lasting capacity within their own country to spur growth, create economic opportunities and build a future of hope for themselves and for their children.

After consulting all segments of Honduran society, Honduras wisely decided to use this Millennium Challenge grant to improve the productivity of its farmers. The grant will also be used to upgrade roads, thus reducing transportation costs between farms and manufacturing centers and national, regional and global markets. Better roads will also mean that poor people in rural areas will have greater access to medical and social services and that their children can get to school. Honduras is the second nation in the world and the first nation in this hemisphere to sign an MCC compact. We are honored indeed to have the Hondurans as our newest MCC partners and I am pleased to report that we can look forward to many more compact signings before the end of the year. In fact, earlier today, the MCC Board approved compacts for Nicaragua and for Cape Verde.

Now it is my great privilege to introduce a leader of vision and our valued partner in democracy and development, His Excellency President Maduro.


PRESIDENT MADURO: Thank you very much, Secretary Rice, Congressman Kolbe, Mr. Applegarth, ladies and gentlemen. Honduras is grateful and proud to be the second nation in the world to sign an MCC compact. We are aware that this compact recognizes performance in key areas of governance, economic liberty and investment in human capital. This compact comes at a good time for Honduras. It recognizes reforms that we have fought for and achieved. It rewards the sacrifices of a population that accepted short-term belt-tightening for longer-term stability and growth. It will help spur economic growth and reduce poverty at a time when, as President Bush said last week at the OAS Assembly, our citizens must see that democracy delivers more than just promises. And it will be a key motivator for sustainability of good policies in the economic, social and political areas.

In Honduras, in the last three years, we have instituted profound reforms in our democratic institutions, including the judiciary branch. The Supreme Court, for example, magistrates are now for the first time in history elected from candidates presented to Congress by a nominating committee made up of civil society members. They are no longer elected without consultation nor does their term of service coincide with a presidential term. We have strengthened and professionalized our electoral tribunal and the institution in charge of the electoral census. In our last primary election held last February, for the first time in history, we voted individually for congresspersons instead of the prior system of a single ballot per state, where the voter did not know for whom she or he was voting.

Our fight on corruption has targeted those responsible as well as the policies and systems which contributed to its growth. For example, we reformed the constitution to eliminate the immunity which high government officials and congresspersons enjoyed and which had, unfortunately, in many cases, become a synonym for impunity. We delegated to an international institution state purchases in key areas which have traditionally been subject to corruption, such as telecommunications equipment and medicines among others. We also strengthened the anti-corruption committee, made up now entirely of civil society members. And we have brought to justice over 80 people allegedly involved in costly financial crimes, including powerful members of the private business community. We have penalized over 2,000 businesses for tax evasion with temporary closure and, as a result, have increased tax collections significantly. We have initiated historic investigations into contraband and filled sensitive customs positions by public advertisement and competition, without regard to political patronage, as had always been the case in the past.

In the area of fiscal policy, we have attained and maintained fiscal stability and a successful program with the IMF, which culminated in bilateral and multilateral debt reduction of almost 40 percent of our foreign debt. We have supported economic freedom and productivity and, as a result, we grew last year at 5 percent, twice the regional average for Central America.

In spite of this, our populations have not yet felt the individual improvement which has been overdue for so long. Hondurans have bet on democracy but have yet to feel the results. This is where the MCC and CAFTA will support us significantly. The compact that we are signing today will provide important support in the key areas of rural development, where our deepest poverty exists, as well as road development in rural and intra-urban roads, which will help raise economic growth by improving market access and lowering transport costs, especially for small rural producers. This support for the rural producer will help them take full advantage of the access to the U.S. market which CAFTA will provide by making them more productive in their efforts and, where necessary, helping them diversify their production. This will help lift our small farmers out of poverty.

We applaud this groundbreaking aid system which focuses on good performance by the recipient countries. We are especially grateful, Secretary, for the traditional friendship the United States has always shown us with continued aid, with help on immigration issues for our citizens, by defending the world from terrorism and with the recently announced debt condemnation system at the G-8 summit with the Ministers of Finance.

Secretary, Congressman, Mr. Applegarth, the MCC is the best kind of support of very significant amounts for the right reasons at the best time. Thank you very much for helping us build a better future for our people and for democracy in Honduras.


PRESIDENT MADURO: It is now my distinct pleasure to introduce our good friend, Ambassador Robert Portman, U.S. Trade Representative. Ambassador.


AMBASSADOR PORTMAN: Mr. President, thank you very much. Congratulations, and it's an honor to be here today with you, with Minister Cosenza, with my good friend and former colleague Jim Kolbe, an important chairman of an appropriations subcommittee that provides critical assistance not just to Central American countries but around the globe through the Millennium Challenge Corporation. Jim, great to have you here. And of course, to be here with Secretary Rice, who has been a leader as Chairman of the Board of MCC and has done a terrific job, and being sure that these funds are being expended in ways that expands democracy and economic prosperity, and with Paul Applegarth, our CEO.

I am particularly honored to welcome President Maduro back to Washington. He was just here a few weeks ago and on that trip he was asked to go to the United States Congress, where I had just left, to talk about the benefits of the Central American Free Trade Agreement. And he did so, and he did so, as he did today, as an articulate spokesperson for the people of Central America. He did so, as he did today, by talking about the importance of both this kind of aid, but also trade, and how those two complement one another.

I am honored to serve on the Board of MCC, which Paul had mentioned earlier, and therefore to participate in some of these connections between trade and aid which are so critical. This $215 million compact signed today will benefit from the opportunities that the Central American-Dominican Republic Free Trade Agreement will offer in a very direct way because both are powerful tools to combat poverty in Central America. We're combining trade with aid to generate economic growth and reduce poverty. The Honduran compact provides fertile soil that will allow the CAFTA opportunities to take root and to flourish.

Helping partners like Honduras makes the most of the opportunities presented by free trade. An economically sound and democratically secure Central America is, of course, in our country's national interest. The Honduran compact will help Honduras to participate in the global trading system and to improve the lives of rural farmers and workers. My understanding is we also have announced today the $175 million Nicaraguan compact, which is approved by our Board, which will also help poor people in Central America to be able to participate in the global economy. When you add this to our approximately $80 million we now spend in trade capacity building and assistance to the Central American region — and that was the number from last year alone — the message is very clear: The United States is committed to finding solutions to the challenges that come with opening markets, reforming government and improving laws. We are in it for the long term, which is illustrated by the fact that the CAFTA agreement is the first agreement to include a committee on trade capacity building that will coordinate the assistance so that the countries will have help implementing their commitments and benefiting broadly from free trade.

I mentioned Chairman Kolbe earlier. Chairman Kolbe has been responsible, taking a leadership role in Congress in providing funding specifically for the kind of capacity building that goes along with the CAFTA agreement.

It is indisputable that trade must be at the center of any development strategy. This compact shows how the MCA maximizes the link between trade on the one hand and development on the other. What makes MCA so innovative is that it captures the notion that all the assistance in the world cannot help a developing country if that country does not adopt sound economic and trade policies, as Honduras has done and is committed to do in the future. U.S. trade policy, seeking open markets and transparency, predictable rules and agreements like CAFTA — these all complement the MCC's efforts to help developing countries grow economically. This is, of course, particularly true in the case of CAFTA. There's a recent World Bank report that finds that the vast majority of the population in Central America is likely to experience welfare gains from the positive effects on trade and investment in the region resulting from the implementation of CAFTA even in the short run, that even in the short run we will see gains in these rural communities that we all care so much about. Trade and investment liberalization under CAFTA and the accompanying broader economic reforms in the region will help fight poverty and promote economic development as productivity, economic growth rates and incomes rise. As a result of the CAFTA, the cost of basic necessities will decrease, with lower tariffs for food and consumer products. The standard of living will increase as people have greater access to a wide variety of goods and services at more competitive prices.

Through this compact and its participation in CAFTA, Honduras has chosen a path that can break the cycle of poverty and has entrapped its rural poor. It's a course that move beyond the paths of economic isolation and closed markets, allowing a gradual transition that safeguards the poor today while facilitating the adjustment to a more advanced future of greater productivity and integration. Again, I congratulate President Maduro and the people of Honduras today and I commend him for his leadership in promoting economic development and trade. Thank you for allowing me to participate today.


MR. APPLEGARTH: I would now like to introduce Chairman Kolbe.


REPRESENTATIVE KOLBE: Thank you. President Maduro, Secretary Rice, my former colleague and now Ambassador Rob Portman — you've proved that there is life after Congress, thank you very much — (laughter) — CEO and President Paul Applegarth. And let me also acknowledge the presence of one of my colleagues from the Subcommittee of Foreign Operations, Judge and Representative John Carter, who traveled with me to Honduras not long ago. So we appreciate his presence here also today.

I am very honored to be a part of this very important event. I have been, as has been suggested, involved with the Millennium Challenge Corporation since it was just an idea and was with the President in Monterrey when he proposed this concept. So it's an honor for me to be here to witness the second signing, the signing of the second compact with the MCC, this one with a country so close to us and I think so important for us, Honduras.

The Millennium Challenge authority is an innovative program that can help, I think, reshape foreign assistance. By finalizing this compact, the MCA has provided incentives for Honduras to build a political and economic infrastructure in that country which will lead to long-term development and poverty reduction. The creation of the MCC came about as a result of mounting evidence calling into question the effectiveness of the traditional development assistance and that model of development assistance. Nearly everyone — donors, recipients, academics and well as practitioners — in the development assistance business acknowledged that corruption has been one of the most serious obstacles to development in countries around the world.

In addition to good governance, experience tells us that there are other key ingredients to long-term development success; namely, local accountability, ownership of development projects, a domestic focus on health and education, a respect for private property right and minimum regulatory barriers. The MCC is unique. It's unique in that it takes all of these things, all of these aspects, into account. It elevates good governance as a prerequisite to providing funding for a country receiving an MCC compact. This not only helps countries as they continue their climb to find their way out of poverty but it has a significant impact here at home: It does help us with our own national security.

As Chairman of the Foreign Operations Appropriations Subcommittee, I have made the funding for the Millennium Challenge Corporation at the highest possible level one of my goals. And I want to say here today, Madame Secretary and Mr. Applegarth, that will continue to be my goal as Chairman of this subcommittee. I firmly believe that we cannot diminish poverty through wealth transfers alone. Poverty reduction can come about, can be achieved, only by dramatically increasing the opportunities for wealth creation in the developing world, and that's what the MCC is all about. This second compact with Honduras is the next step toward that goal and I congratulate the Millennium Challenge Corporation and the Republic of Honduras for this great achievement.

Thank you.


MR. APPLEGARTH: Hello again. As I was standing back from the floodlights, I happened to see several members of the diplomatic community here, several ambassadors from some of our other eligible countries, from some of our threshold countries. I want to specifically welcome you all.

I also want to thank President Maduro and all of the distinguished guests from Honduras, Secretary Rice, other members of the Board and their staff, Ambassadors Portman and Canahuati, and Chairman Kolbe for working to fund the MCA because without the efforts of all of these people, no compact today would be possible, and of course, the dedicated MCC team and the dedicated Honduras MCC team members who worked tirelessly to bring us to the signing ceremony today.

Sixty-four percent of Hondurans live in poverty. Many Hondurans suffer from malnutrition and lack basic services such as water, sanitation or electricity. In many areas there are no roads, which means in some cases people must travel for hours to get medical care and medical attention or to go to school. Secretary Rice and President Maduro mentioned the focus on rural integrated development and agricultural development earlier. To put it in perspective, if you're growing grain, traditional grains in Honduras, your average income per hectare is about $500 per hectare. However, if you grow vegetables such as peppers or cucumbers, your income per hectare goes up between $2,000 to $4,000 per hectare. So simply the shift in products that a compact today helps support can increase the incomes of small- to medium-sized farmers in Honduras by four to eight times.

MCC is delighted to have Honduras as our partner. This program epitomizes what MCC is all about, creating conditions and local capacity within a country to help it itself improve the lives of its own people. Of course, this is not a blank check. The MCC is also about making long-term development assistance more effective, and that’s the comment that Chairman Kolbe mentioned.

Mr. President, as you know, Honduras' selection for the MCA is an honor, an opportunity and a responsibility. It's an honor because of the recognition that Honduras is one of only 17 countries out of about 82 — roughly the top 20 percent — that ranked the highest against our criteria that measure a country's commitment to do those things necessary to reduce poverty and to help their own people. It's an opportunity, and together the people of Honduras have met that opportunity well in developing a good proposal. And now it's a responsibility. This is an investment by the American people in Honduras' poverty reduction and growth. Honduras now has the primary responsibility to run its own MCA program and to meet the goals of the compact. With your help, Mr. President, I believe that your country will see that the program is carried out well, so it can achieve its objectives and make real improvements in the lives of Hondurans living in poverty.

So President Maduro, Secretary Rice, Minister Cosenza, members of the Board, Ambassador Palmer, Ambassador Canahuati and our distinguished guests from Honduras, let's now join me in making this official. Thank you all.


(The compact was signed.)



Released on June 13, 2005

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