From: The Leadership Council for Inter-American Summitry
March 1998

Executive Summary

The first Summit of the Americas provided us with a cogent vision of a community of democracies united by the dream of economic integration with social justice. The Leadership Council for Inter-American Summitry affirms that the Miami vision remains valid today. The challenge is to fulfill its promise by correcting the shortcomings of the Miami process.

The Leadership Council for Inter-American Summitry strongly believes that summits can make a difference in the lives of the peoples of the Americas. As the Summit of the Americas in Miami in December 1994 demonstrated, summits can create a political process whereby the hemisphere can agree upon shared values and a common agenda; summits can codify norms and rules to guide the behavior of governments and civil society; and summits can place new issues on the international agenda and catalyze collective action behind consensus goals.

Evaluation of the Miami Process

Based upon its own independent survey in late 1997, the Leadership Council found that progress on key initiatives agreed upon in Miami was on average modest. More has been accomplished than the public is aware of, but progress has fallen short of the promise of Miami.

The Leadership Council found a number of flaws in the Miami process. There were far too many initiatives and action items. Some initiatives lacked the essential elements of good public policy -- measurable goals, timetables, priorities, and accountability. Leaders failed to allocate sufficient technical and financial resources for some initiatives. Many governments did not have the requisite institutional and financial capacities to carry out some of the action items. The regional organizations, notably the Organization of American States (OAS) and the Inter-American Development Bank (IDB), sought to implement some initiatives but allowed other mandates to slip. Monitoring mechanisms were weak to nonexistent.

The Substantive Agenda

The Leadership Council underscored seven challenges facing the region that summitry, to be credible and effective, must confront:

• the shallowness of democratic institutions (notably in the areas of corruption and narcotics trafficking),

• the weaknesses of civil society,

• persistent poverty and worsening inequality,

• failing schools,

• environmental degradation,

• sluggish export performance and low savings rates, and

• the insufficiency of inter-American institutions.

Recommendations for the April 1998 Santiago Summit of the Americas

The Council offers recommendations for inclusion in the Santiago Summit Plan of Action, as worthy responses to each of these seven challenges. These recommendations are intended to underscore the importance of taming the summit process, that is, regarding realism, focus, selectivity, timetables, tangible targets, and accountability.

Democracy, Education, Environment, and Poverty

To strengthen democratic institutions, the Leadership Council finds that the Inter-American Convention Against Corruption represents a major accomplishment of hemispheric diplomacy. The Santiago Summit should transform the Convention into a realistic work plan and mandate the OAS to establish an independent, expert Inter-American Commission on Corruption to promote implementation of priority goals.

The Leadership Council recommends that the Santiago Summit regularize the participation of non-governmental expertise and the private sector throughout the summitry process. The proposed summit secretariat should issue an annual report tracking transparency-related initiatives.

To yield a more equitable distribution of the fruits of government, the Santiago Summit should accelerate educational reform, seek reduction in diseases that disproportionately attack the poor and weak, strengthen labor ministries to enhance their capacity to enforce code labor standards, and seek to assure an enabling environment that provides equal opportunity for entrepreneurial talent. Priorities for educational reform include reaffirming the Miami commitment to ensure universal completion of quality primary education by the year 2010, establishing standards and quantifiable indicators for basic skills, and promoting early access to new technologies, such as the worldwide web and distance learning through such media as television.

To address environmental degradation, leaders should select a manageable number of items from the Miami and Santa Cruz, Bolivia, Summits for priority attention. Good candidates include sustainable water management, especially in urban areas; sustainable forest management; and the reduction of air pollution.

Trade Integration and Financial Stability

The Leadership Council is concerned that the Miami Summit's 2005 date for completion of negotiations for the Free Trade Area of the Americas (FTAA), rather than serving to spur negotiations, has become an excuse for delay. To reignite the sense of urgency, the Council proposes that the Santiago Summit accelerate the target date for completion of negotiations to 2002. As the leaders agreed in Miami, trade negotiators should still seek concrete progress by the end of the century.

Since Miami, some governmental and private-sector leaders have failed to build public support for free trade and the FTAA. We urge leaders, particularly in the big markets of the United States and Brazil, to engage in concerted efforts to build the public case for the FTAA. Specifically, the U.S. administration must mobilize sufficient political support to gain fast track authority that encompasses regional trade agreements. The government of Brazil should explain to its citizens that the FTAA is in the national interest and is compatible with MERCOSUR's basic objectives.

In the Miami Summit, free trade was implicitly linked with democratic freedoms. At Santiago, the Leadership Council believes that the time has come for the Western Hemisphere to announce clearly that only democratic nations will be welcome to participate in the formation of the Free Trade Area of the Americas.

The recent turmoil in Asian financial markets has illuminated the importance of financial market reform in developing countries. The Leadership Council urges finance ministers to meet at least annually to exercise self-surveillance of national macroeconomic policies and of international economic trends as they affect the region. This new regional forum -- which might be labeled the Inter-American Financial Council -- could assess steps being taken at the national and international levels to build market confidence and to avoid contagion from the current financial volatility in East Asia.

Seven Steps Toward More Effective Summitry

At this stage in the development of inter-American relations, priority must be given to institutional mechanisms that can insure compliance with Summit accords. The Leadership Council proposes seven steps to improve the process of summitry in the Americas.

• Initiatives should be responsibly crafted to contain practical goals, quantifiable targets, and realistic timetables.

• Initiatives should be assigned to mechanisms with adequate technical and financial resources, and leaders should mandate that existing regional institutions, notably the OAS and IDB, be fully integrated into the summitry process.

• Governments should appoint a senior official to coordinate summit planning and implementation.

• Networks of functional ministries should be solidified.

• The participation of the private sector and other non-governmental organizations should be regularized.

• Monitoring responsibilities should be assigned for each initiative to an official regional mechanism with adequate capacity.

• Most important, Summits should be institutionalized. Inter-American Summits should be held every two years. In interim years, ministers of foreign and economic affairs should meet to monitor the transformation of talk into action. Leaders in Santiago should establish a small, permanent Summit Secretariat to better coordinate, monitor, and assess the implementation of summit agreements.

Centerpieces for Santiago

The Leadership Council proposes that at Santiago the heads of state and government focus on four of the initiatives we have proposed as summit centerpieces whose implementation would improve the well-being of millions of our citizens:

• acceleration to 2002 for completion of negotiations for the Free Trade Area of the Americas -- with participation open to democratic nations only;

• formation of an Inter-American Financial Council to improve regional economic cooperation and enhance market confidence;

• creation of an Inter-American Commission on Corruption to spur implementation of the Convention Against Corruption; and

• institutionalization of summitry through biannual summits and a summit secretariat. Together, these centerpiece initiatives would assure the success of the Santiago Summit and revitalize summitry in the Western Hemisphere.

Policy Report

I. The Mission of the Leadership Council on Inter-American Summitry

Never before in the history of the Western Hemisphere have its peoples enjoyed better opportunities to realize the cherished ideals of democratic values, market-driven economic prosperity, environmentally sustainable development, and social justice; and to work together toward these common goals. Never before have these values been so widely shared, nor have conflicting perspectives been so diminished. Never before have the institutions and processes that could cement hemispheric cooperation shown so much promise. Rarely has the global environment been more conducive to the fulfillment of these hemispheric ideals.

The Western Hemisphere has drawn the correct lessons from its tortured history. Our peoples have learned that military authoritarianism does not guarantee good government and that fiscal profligacy will not lead to sustainable prosperity. Leaders in the United States have recognized publicly that the Cold War sometimes blinded their government to the worthy aspirations of oppressed or exploited peoples. Throughout the hemisphere, there is a growing appreciation for the democratic virtues of tolerance, diversity, pragmatism, and compromise and for the economic virtues of sound fiscal and monetary policies and market-driven, open economies. In inter-American affairs, leaders are replacing suspicion and distrust with realism and cooperation.

Recent financial crises in Asia highlight the progress made in Latin America and the Caribbean, both in macroeconomic stabilization and political democratization. Latin America has also made progress in building institutional infrastructures for sustainable development; for budget controls, regulatory regimes, and open financial systems; for parliaments, political parties, and labor unions; and for independent media -- even if much remains to be done in these and other areas. The Western Hemisphere can take pride in the accomplishments of the last decade.

Indeed, the turbulence in the economies of East Asia underscores the logic behind cooperation in the Western Hemisphere. Today, both the United States and Latin America are enjoying sustained economic expansion with price stability, and their interdependent markets offer bright prospects for growing exchange. In the political realm, the entire Western Hemisphere (save Cuba) shares the common denominator of democratic values.

Yet, in the Western Hemisphere there is a real danger of backsliding and missed opportunities. In too many countries, the people feel betrayed by elected governments that fail to reform corrupt institutions. In too many cities, prosperity is not shared, and the gap between rich and poor, already glaring, has widened further. Inter-American cooperation has too often been stymied by demagogues or narrow interests that appeal to old prejudices, and official inter-American institutions are not yet strong enough to capitalize on the new dynamism and expertise that characterize the private sector and a diverse civil society.

At the 1994 Summit of the Americas, the leaders declared:

The elected Heads of State and Government of the Americas are committed to advance the prosperity, democratic values and institutions, and security of our Hemisphere. For the first time in history, the Americas are a community of democratic societies. Although faced with differing development challenges, the Americas are united in pursuing prosperity through open markets, hemispheric integration, and sustainable development. We are determined to consolidate and advance closer bonds of cooperation and to transform our aspirations into concrete realities.

The Leadership Council for Inter-American Summitry shares these hopes and objectives. In this Policy Report, we seek to explain the potential contributions of summits for inter-American relations, to analyze the strengths and weaknesses of the Miami Summit and its aftermath, and to propose recommendations for the 1998 Santiago Summit of the Americas and for the process of summitry in general. Based upon the most extensive research undertaken by any non-official group, we evaluate follow-up to the Miami Plan of Action and make the case for a more serious, realistic, and transparent approach to summitry in the Americas.

First, we wish to situate these policy discussions in the context of the opportunities and obstacles facing the men and women of the Americas, within which summits will convene.

II. Opportunities and Challenges

The Foundations for Success

The physicist Marie Curie once said, "One seldom notices what has been done, one can only see what remains to be done." Before we discuss our agenda for future action, we want to review the accomplishments of the last decade or so -- critical transition years for most nations of the hemisphere and for inter-American relations.

Politically, the swing begun in the mid-1970s away from authoritarian rule toward democracy and free elections has by now encompassed all but one country in the hemisphere. Over the past dozen years, every country except Cuba has had at least two consecutive elections to select a head of government, and most have had three or more. Since 1980, only one elected president has been ousted by military force -- Haitian President Jean-Bertrand Aristide, who eventually completed his term in office. The media has become more open and vigorous throughout the region. Civil society is better organized and more effective, ethnic and racial minorities are playing more active roles, and women are more visible in political life in some countries. Public opinion polls indicate that the majority of citizens -- the large majority in many countries -- prefer democracy to any other type of government.

Economically, the robust U.S. economy has become the world's growth dynamo, and the Latin American economies, after a decade of tough structural reforms, have attained growth rates in the 3 percent to 4 percent range with dramatically lower inflation. Whereas the average annual GDP growth rate during the 1980s among Latin American and Caribbean economies stagnated at a little over 1 percent, from 1991 through 1996, output expanded at a respectable 3.2 percent rate. In 1997, the region's economies grew by an estimated average of 5.3 percent, one of the highest growth rates for the region in the last 25 years. Governments have slashed fiscal deficits, disciplined monetary policy, sharply reduced barriers to international trade and investment, and, to varying degrees, have privatized parastatals and taken the state out of counter-productive regulatory activities.

Exports have become an engine of expansion for important economic sectors. After stagnating for much of the 1980s, total Latin American goods exports soared from $137 billion in 1991 to over $250 billion in 1996. Particularly robust has been the growth of intraregional trade. Latin American exports to the United States more than doubled from $60 billion in 1988 to $130 billion in 1996, and U.S. exports to Latin America grew almost as fast. U.S. exports to Latin America as a percentage of total U.S. exports jumped from 14 percent in 1988 to 18 percent in 1996. Including Canada, the Western Hemisphere accounted for 39 percent of U.S. exports. Even more impressive, Latin American intra-regional trade is exploding, up 113 percent from 1990 to 1995. Booming intra-MERCOSUR trade as a proportion of members' total trade rose from 14 percent in 1992 to 21 percent in 1996.

Contrary to popular perceptions, social conditions for many citizens in Latin America and the Caribbean have gradually improved over the last generation. Primary school enrollment rates progressed markedly, and adult literacy rates rose from 73 percent to over 84 percent between 1970 and 1990. Girls now outnumber boys at both secondary and tertiary levels of education. As an indicator of the availability of health services, under-five-years-of-age mortality rates dropped by two-thirds from 1960 to 1994. Fertility has declined significantly -- dropping 40 percent or more over the past two decades in many countries, and the total fertility rate has fallen from 4.8 to 3.2 percent. In contrast to the 1980s, when fiscally strapped governments cut social expenditures, during the 1990s, the level of public spending allocated to social sectors has risen in most countries in the region.

These trends -- particularly the swings toward democracy, more open markets, and regional integration -- converged with new directions in U.S. foreign policy to create conditions for a renaissance in hemispheric relations in the 1990s. At the Summit of the Americas in Miami in 1994, hemispheric leaders seized this favorable moment to forge a new agenda of cooperation for the Americas.

Seven Critical Challenges

At the Miami Summit, the leaders recognized that there was no shortage of problems remaining before the region. We wish to underscore seven challenges that summitry, to be credible and effective, must confront in the years ahead. Summits cannot and should not pretend to resolve these complex problems in their entirety, but they should tackle issues -- pragmatically and selectively -- that address each challenge.

1. Shallowness of Democratic Institutions. Dissatisfaction with democratic institutions is a worldwide phenomenon. In Latin America in a recent survey of 9 countries, only 25 percent of the people expressed satisfaction with the way that democracy was working in their countries. Overextended and crusty central bureaucracies, inept parliaments, unfair and inaccessible judicial systems, and inefficient regulatory bodies are among the major problems that confront democratic states throughout the region.

   Law enforcement and personal security have also emerged as central concerns. The return of democratic rule has been accompanied by a destructive upsurge in criminal violence. In the aggregate of 11 countries, the murder rate per 100,000 population has jumped from 8 in the late 1970s to over 17 today. In one poll, 75 percent of those surveyed expressed dissatisfaction with their judiciaries, and only one quarter expressed strong confidence in their police. In Rio de Janeiro, nearly 88 percent of residents believe that the police have links to organized crime. Corruption, often linked to drug trafficking, is perceived to be widespread in many countries, undermining faith in democracy and efficiency in economic policy. In one extensive poll, business executives listed corruption as the number-one obstacle to doing business in Latin America -- ahead of tax policy or government regulation.

2. Weaknesses of Civil Society. Beginning in Miami, the process of summitry has opened up unprecedented opportunities for the participation of civil society -- non-governmental organizations (NGOs), private-sector associations, the scientific community, political parties, labor unions -- in hemispheric policy initiatives. The 1996 Santa Cruz, Bolivia, Summit on Sustainable Development opened the Organization of American States (OAS) to civil society input for the first time. Nevertheless, in many countries, civil society organizations face the formidable challenges of weak institutional and legal frameworks for effective and responsible participation. Many governments remain reluctant to provide opportunities for meaningful participation. Official suspicion of the increasingly dynamic civil society organizations is impeding the creation of the public-private partnerships necessary to make the promise of inter-American summitry a reality.

3. Persistent Poverty and Worsening Inequality. During the debt-ridden 1980s, the percentage of Latin Americans living in poverty rose from an average of 35 percent to 41 percent. In the first half of the 1990s, the incidence of poverty declined to 39 percent of households (as growth resumed and inflation fell). In absolute terms, the number of Latin Americans and Caribbeans living in poverty -- 210 million -- is higher now than ever before. The percentage of indigent households -- those unable to meet basic food needs -- stood at 17 percent in 1994, a slight improvement over 1990 but up from 15 percent in 1980.

   Latin America has the most unequal distribution of income in the world. The richest 20 percent of households appropriate 60 percent of the income, whereas the bottom 40 percent receive only 10 percent. Income distribution worsened in the 1980s, although it appears to have stabilized during the 1990s. The mean national level of unemployment stood at just under 10 percent in 1996. Some 55 million Latin Americans still lack access to health services, and 110 million lack access to safe drinking water. Modest GDP growth, persistent high unemployment in some countries, and inadequate social services all contribute to the perpetuation of widespread poverty.

   In the United States, the gap between the rich and the rest of the population has also widened since the 1970s. By 1994-1996, the gap between families with the highest income (the top 20 percent) and those with the lowest income (the bottom 20 percent) reached nearly 13:1. In New York state, the gap has expanded to nearly 20:1.

   In Latin America and the Caribbean, if the deteriorating trends in poverty and income distribution of the 1980s have been halted, the 1990s have not brought about significant improvements. Not surprisingly, many citizens complain that democracy is not delivering the goods and that they are not benefiting from the fruits of the economic recovery.

4. Failing Schools. Increasingly, quality education is recognized as a key ingredient to greater social equality, democratic participation, and international economic competitiveness. Yet, in Latin America the average citizen receives just five years of formal education. Quality is also generally poor, as a result of outmoded curricula, anachronistic teaching methods, and insufficient instructional materials. Many public universities, once the crown jewels of national culture, have deteriorated under the weight of budget constraints and burgeoning enrollments. Latin America and the Caribbean spend about 8 percent of per capita GNP on pre-primary and primary education, as compared to 13 percent for developing countries in general and nearly 18 percent for developed countries.

5. Environmental Degradation. Air quality in many Latin American cities has become a serious health hazard, causing an estimated 2.3 million cases of chronic respiratory illness every year among children and over 100,000 cases of chronic bronchitis among the elderly. Increasingly, the region's carbon emissions are contributing to global climate change. Deteriorating water quality threatens the well-being of burgeoning urban populations. Due to the expansion of the agricultural frontier, deforestation is stripping some 6 million hectares of dense forests per year. Tropical deforestation accelerated from 5.6 percent in the 1960s to a stunning 7.4 percent in the 1980s. The region's vital biodiversity reserve is threatened in many globally outstanding ecoregions, as is the natural resource base upon which future development depends.

6. Sluggish Export Performance and Low Savings Rates. Latin American merchandise exports grew only 3.4 percent from 1980 to 1993, compared to well over 10 percent for many East Asian nations. Latin America lost significant market shares -- its percentage of world exports fell from about 12.5 percent in the 1950s to about 3.5 percent in 1990, the lowest point in a century. Smaller economies, such as those in the Caribbean, are struggling to diversify their export base in the face of stagnant markets for their traditional crops.

   Loss of competitiveness and slow labor productivity growth are associated with low savings and investment rates. At about 18 percent of GDP, savings rates in many countries are below the levels attained in the 1970s and far short of those reached by East Asian nations.

7. Insufficiency of Inter-American Institutions. The Inter-American Development Bank (IDB), the OAS, and other regional institutions are struggling to take advantage of new opportunities in the post-Cold War world. They are just beginning to explore how to build coalitions with dynamic forces in inter-American relations, such as corporate and financial private sectors, non-governmental organizations, and decentralized intra-ministerial working groups. Despite the election in 1994 of a dynamic new Secretary-General, the OAS has not gained significantly in stature or credibility, according to The Inter-American Dialogue.1 After many years of remaining marginal to the region's needs, the IDB has just begun to grapple with critical development issues and has become a serious player in inter-American affairs. After years of mutual suspicion, the OAS and IDB are starting to cooperate in such areas as trade integration and democracy promotion. Still, these institutions are not yet providing the inter-American system and summitry with adequate administrative structures and resources.

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