American Enterprise Institute

November 8, 2007

[Edited transcript from audio tapes]

9:45 a.m.	Registration
10:00	Speaker:	Robert "Bobby" Charles, The Charles Group
10:30	Panelists:	Ted Brennan, Tew Cardenas
		Roberta Jacobson, U.S. Department of State
		Armand Peschard-Sverdrup, Peschard-Sverdrup & Associates and Center for Strategic and International Studies
	Moderator:	Roger F. Noriega, AEI
12:00 p.m.	Luncheon and Keynote Address
	Speaker:	U.S. Representative Henry Cuellar (D-Texas)
1:00	Adjournment

Proceedings:

Roger Noriega:  Okay, thank you very much for coming, ladies and gentlemen.  We appreciate your being here to talk about an extraordinarily sensitive and important issue.  We’ve assembled a good panel to tease out some of the challenges and opportunities of our program of cooperation with Mexico in support of the rule of law.  Any good fifth grade social studies teacher will tell his or her students that one of the essential ingredients in our rise to power as a nation is our relatively stable neighbors. 

That has never been particularly true about Mexico and some of that stability in recent decades was a one party imposing order.  Occasionally these teachers even characterize our neighbors as – quote – friendly.  Again, the fact that we invaded both countries at various points in our history might cast some doubt on that proposition, but one does not argue with your fifth grade teacher, particularly when she is a nun and your eternal life is hanging in the balance. 

But suffice it to say that stability in both nations has never been more important than it is today in this post-9/11 world.  And in many ways, relations have never been as good as they are today with both countries.  The anti-American card, after all, was played in losing campaigns in both countries’ national elections recently.  And the level of economic integration among the three countries, frankly, is staggering.

The immigration debate has the potential of dividing two important neighbors.  It’s even divided us within our borders here.  Some U.S. commentators believe Mexico is simply not doing enough to control its border, and Mexicans believe the debate here has taken an ugly tone aimed at compatriots who are here, after all, making a significant contribution to the U.S. economy through honest hard work. 

The good news is that last year, Mexicans chose a leader, Felipe Calderón, who recognizes his own responsibility for generating economic opportunity for all of his citizens.  After all, illegal immigration begins with an honest, earnest person that decides that he or she has to abandon his country to survive, and that is really tragic.  President Calderón’s remedy is building a modern Mexican economy based on strong institutions that guarantee fair opportunity to every citizen without discrimination or favoritism. 

At the heart of his national development plan, for example, is rooting out corruption by applying the rule of law.  Part of that plan for renovating Mexico’s institutions and something that should come as far good news to U.S. is that President Calderón has made it a priority to rescue his country from well-heeled and deadly criminal syndicates who, among other things, traffic in drugs and terrorize law-abiding Mexicans to an alarming degree. 

To that end, he welcomes increased U.S. cooperation with these urgent efforts.  President Bush, to his credit, has seized this opportunity and is seeking Congressional approval of a package of support for Mexico’s efforts.  I believe it would be wise not to consider this initiate merely as an aid package, but rather as a cooperative pact to assume our shared responsibility on both sides of the border for confronting this threat to our institutions and the quality of life for all of our citizens.

If we fail in our effort to challenge these criminal syndicates, then the challenge of illegal immigration that we see today will pale in comparison to the mess we will confront in an unstable Mexico and unfettered criminal syndicates that are allowed to operate on both sides of the border as if that border and the law did not exist. 

This morning our panel will review the stakes involved for the United States and for Mexico, the sensitivities on both sides of the border in debating this unprecedented plan and the opportunities and problems that we can expect to encounter in implementing this cooperative pact.  Bobby Charles will kick off our discussion and our panelists then will offer various perspectives to help us understand this initiate.  Congressman Cuellar will join us to wrap up our program by offering an all-important view from Capitol Hill.  And as always, your questions are an essential part of our discussion. 

I admit a certain bias in our selection of speakers.  These are people who want this relationship to work.  These are people who start from a realistic but positive point of view in reviewing our bilateral relations between two great countries.  And hopefully they will make believers out of all of you.

Starting with Robert “Bobby” Charles –- I was at a meeting when Bobby just started at the State Department and it was a Mexico meeting, appropriately enough.  And our very intelligent, bright, well-connected Ambassador to Mexico, Antonio Garza Junior convinced – he’s kind of an ornery guy as Texans sometimes are – and he convinced Colin Powell, Secretary Powell that your name had to be Bobby Ray, because I never met a Bobby who was not a Bobby Ray.  So Powell said to me, “His name is Bobby Charles, it’s not Bobby Ray Charles.”  And I spent about a year trying to get that out of the Secretary’s head.  Bobby Charles joined the Charles Group as a president in April of 2005 and after serving from 2003 until 2005 as Assistant Secretary of State for International Narcotics and Law Enforcement Affairs.  He is currently in that capacity. 

His tenure in the Bush Administration helped him develop an intense understanding of the challenges involved in building international cooperation to confront drugs and lawlessness from Colombia to Afghanistan to Iraq.  And while his intimate contacts with and understanding of the U.S. Congress served him well in taking on difficult tasks and managing immense, complicated issues around the globe. 

Mr. Charles formed Charles Group in 1999 after serving as Staff Director and Chief Counsel for the National Security International Affairs and Criminal Justice Subcommittee in the House of Representatives from 1995 to 1999.  He also served then as Sub-Committee Chairman, Jay Dennis Hastert as chief staffer on the Speakers’ Task Force on A Drug Free America from 1997 to 1999.  He currently pens a column for The Washington Times and authored Narcotics and Terrorism, Links, Logic and Looking Forward.  He has also authored a number of academic studies and law review pieces.  We welcome him here this morning.

 Robert Charles:  Thank you, Roger and I want to thank AEI for having done this and really, I know, that inspiration belongs to Roger.  By the way, when I e-mail with the Secretary, I’m still Bobby Ray, so you’ve got to keep working on that.  I want to be brief and I want to be candid.  What I would like to do is reinforce the fundamentals associated with this.  I’m sure we’ll have a lot of good back and forth in the Q and A, which his probably the most exciting part of this.  I see us at the front end of something very exciting. 

Having lived through a lot of relationships, bilateral relationships that sort of ebb and flow and some don’t take off, I think one is not only there, but we’re at the front end of something pretty exciting.  What I want to do is touch on three or four basic fundamental aspects of the relationship, and in particular why this package is needed now. 

A great conservative of yesteryear in his reflections on the French Revolution, Edmund Burke, made the point that I think resonates down through the ages that all it takes for evil to prevail is for good people to do nothing.  And when friends, and I think Mexico and the United States are and will be perennially friends facing mutual threat that is patently evil. 

I think that the only right thing to do is to stand up and confront it.  We have done that intermittently – consistently at some level, but often in surges and retrenchments and it is time to do that more collectively, aggressively together.  Why?  Well, you know, and why does this package, in a sense, is this the tip of the spear? 

I think this is the tip of the spear because the United States is confronting ourselves, something that is – and I’m happy to take the legalization questions, because I know they linger out there, but we will hit them head on.  We are confronting a significant problem right here.  Thirty-five million Americans are addicted to illegal narcotics, most of them coming from outside the United States, many of them through Mexico.  Twenty-four thousand young Americans died last year directly from drug abuse – actually more than 24,000.  That’s more than eight 9/11s, if we want to put it in a different context.  It is a significant national security issue, community security issue, personal, family security issue. 

If there is not a parent worried about this as they think about their kids heading off into the day, if there is one who is not worried, they should be.  Because there is no school system that is not affected, there is no community that is not affected.  It’s not just a border issue.  The economic costs of illegal drugs to the United States today range upwards to $200 billion. 

So what investment is worth it to try to turn that tide backwards?  I think almost any significant investment can be reasonably justified if there is oversight and there is a real plan.  Point number one then, we have a mutual opponent, it is clearly patently evil.  It is something we should be able to go home, any Congressional district should be able to feel good about confronting. 

And I will tell you, one in four families is affected by substance abuse and I think it’s interesting, because we like to talk more about jobs and things that are exciting and positive, and yet we’ve got to talk about the other side.  I want to reinforce something Roger said, and it goes back to another great thinker.  John Locke, in his second treatise, made a point that also resonates down through the ages and fits very directly today.  His point, in essence – in case you haven’t read the volume, you don’t have to – because his point in essence is that where there is security, people will mix their labor with the land and there will be prosperity. 

In short, people will invest themselves in economic development for the betterment of their lives if there is a secure environment.  Roger is absolutely on target, as is the Ambassador, as was Secretary Powell and as are many of the people working on this package in the sense that there are a lot of shared values.  You have to give room for those values to grow, you have to provide the secure environment that allows them to take off. 

We can talk more about that, but there are many ways in which this package is fundamentally a step in a different and new direction.  By way of example, between 2000 and 2006, the bureau that I was a part of during that period provided roughly $28 billion a year to Mexico for a range of collaborative efforts.  Mexico slowly became better at extraditing people to the United States, there were a number of law enforcement initiatives that we collectively on.

This package essentially aims to raise the ante by putting about twenty times that amount of money annually into Mexico for the next, I think the estimate –- I’m not in the loop on this –- but I think the estimate is roughly the next three years.  There are lots of mutual collaborative components to that security creating effort and I think they are all positively redeeming. 

The third thing I want to say is when –- and I think this is a principle of both personal and international relations –- when someone with whom you have a mutual interest takes on a really tough task and is willing to look down the barrel of a tough issue and really face it down.  I think you owe that friend and we owe Mexico our mutual effort to do the same. 

In my own view, we do not do enough here in the United States on drug prevention.  We do not do enough in the area of treatment.  We do not do enough in a lot of areas.  But where the President of Mexico is willing to take on and commit himself and his resources to this effort for greater security in his country, we have an equal and opposite if you will obligation to do that same. 

And people say, “well, look, there’s a spike in violent crime over the last nine months; it’s not going well.”  Well, when you go to smother a hornet’s nest, it makes the hornets unhappy.  When Elliott Ness decided to go after Al Capone and take down organized crime, you had things like the St. Valentine’s Day Massacre and a lot of negative reaction.  In fact, I would tell you that where you see the reaction, it suggests you are making an impact.  It’s hurting. 

When President Uribe went after with a vengeance the FARC and ELN, the impact was immediately felt.  But the long-term, you’ve got to plow a bit before you plain out and get where you’re going, and that’s where we should be supporting, I think, Mexico in their larger commitment.  The last point I want to make is I think as a conservative, and I feel very comfortable, I know exactly why I identify myself that way.

I think any conservative, I would challenge any conservative, even a fiscal conservative, to look at this package and argue that it’s not worthwhile.  Because I think there are a lot of – there are redeeming features to it that let it stand on its own, but I think a lot of what we forget is in the rush to be upset, which we sometimes are, with the illegal immigration issue and a sense that rule of law needs to be abided on both sides of the border and that we both have sovereignty issues that we get very worked up about.  We forget how many of the unspoken common points really bind these two peoples together. 

And what I mean, and I will use a few statistics that reinforce it, is that I think a good, strong, thoughtful conservative should take a deep breath and look at how similar these two populations are.  There is an enormous – having spent a lot of time in Mexico, there is an enormous commitment by the Mexican peoples at large to their families.  The nuclear family extends to the extended family.  The family matters a lot, the roles matter a lot.  There are well-defined roles.  There is a lot of traditional America in Mexico.  There is a lot of Mexican family commitment that you will find in rural America.  There is a strong commitment to family.  Drugs affect the family, okay?  We have a mutual interest that we overlook at our own peril if we forget to emphasize these fundamental levels. 

What about faith?  Well, not to overplay the point, 90 percent –- I looked at the 78 diocese lasts night of the Catholic Church in Mexico and it turns out that in the population centers across Mexico, there is more than a 90 percent Catholic, people self-identify themselves as Christians or Catholics in Mexico.  In the United States, the number is 80 percent.  There are a lot of mutual bonds. 

Specifically, for what it’s worth, in the United States, the population, 37 percent of the U.S. Catholic population is Hispanic and if you look at the individual states, particularly along the border, you find a very high percentage of common values held.  Seventy-eight percent of the Catholics in California are Hispanic, 73 in New Mexico, 80 percent in Arizona, 80 in Texas.  Interestingly enough, in Anita Lowes’ New York State, and she is Chairman of the House of Foreign Operations Subcommittee right now for appropriations, 38 percent of the Catholics in New York are Hispanic.  In Frank Wolf’s Virginia State, 26 percent of Catholics are Hispanic.  There are bonds that we need to remember. 

And finally there is the work ethic.  I won’t give you the percentages on small business in detail region by region, but roughly 85 percent of American business is small business.  And a similar percentage of Mexican business –- I was looking last night –- is between 10 and 99 employees.  There is a very strong individual work ethic, there is a strong commitment to small businesses, family businesses.  I think we need to remember that when we are securing a society, when we are working with each other to secure our mutual future, we overlook these common bonds at our peril. 

And my own view, since I work in counter-narcotics every day and have for the last twenty years almost, I think there is no issue that touches more American lives more directly than the drug issue.  It affects healthcare, it affects education.  Eighty percent of the criminals in the United States’ prisons today are in one of three categories.  Eighty percent of every major metropolitan area’s prisons, the state prison system, which is where you prosecute most crime, fall into one of three categories. 

They are either people who are drug traffickers full stop and have been prosecuted and are sentenced under mandatory minimums or they are people who have committed a crime on drugs because we have the Adam and Duff data that tests the arrestees by sampling, so we know.  Or they are people who have committed a crime by their own admission for purposes of getting money, typically of property crime, for buying drugs.  Eighty percent -– and I have no idea what it is in the system in Mexico, but we have a very strong interest in turning this tide around.  I think I will just end there and again with the notion, Edmund Burke said it -- that all it takes for evil to prevail is for good people to do nothing.  We cannot be held guilty of that, we should not be. 

 Roger Noriega:  Bobby, thank you very much.  I appreciate that.  I think it did lay a very broad foundation focusing on the culture and values that are at stake, as well as the very acute threats to quality of life in both countries driven by the lawlessness fueled by drug trafficking.  Let me ask you a question to start off, and then we will circulate the microphone and ask others for questions of Bobby and then go to the panelists to make their presentations. 

What do you expect, how do you expect this package will be received on Capitol Hill?  This is a Congress where Dennis Hastert is no longer Speaker and that says more than just the control of the Congress and it is no negative statement about Pelosi, necessarily.  But Hastert was an exceptionally committed person when it came to this anti-drug fight. 

You also no longer have Ben Gillman as Chairman of the House International Relations Committee and just as importantly, you no longer have Ted Brennan and you on the Congressional staff up there.  How do you think this will be received and what advice would you give the Administration on consultation and messages and process as this program not only is initiated, but then implemented?

 Robert Charles:  Actually Roger, I can’t tell you how it will be received, but I would say, I can give you a thought about how it should be received.  I think on the Democratic side, there is a very strong reason, multiple reasons –- the Hispanic population in the United States, the strong social component, the importance of building bridges, the importance of looking at trying to empower a neighbor and help them to empower you in some other ways to secure the future is something I think any Democratic member ought to feel good about. 

On the Republican side, I would hope that we would not put conditions on this package.  My sense is there is a great inclination to do that.  Whenever something is going to be passed, which has been less recently a phenomenon, it happens less frequently lately, when something is going to be passed, you want to grab the opportunity and put as much on it as you can.  I think that would be a mistake here because I think that this is a win/win as it stands. 

The $500 million, as I understand it that will work with Mexico to firm up a lot of the existing emphasis or enthusiasm and reinforce what is happening that is good is something that we should be happy about.  As a fiscal conservative, I would still be very happy about it.  I think there is a very strong argument for doing this just as it has been packaged.  In fact, I think it could have been bigger and it would have made more sense because it would have been absorbed properly even at a larger level.  I think oversight is important.  We’ve had errors in the past, including some that came out of my bureau in the 1990s.  I think it’s important to go after it to make sure that when you seek an outcome, you get the outcome. 

But I certainly would hope strongly that people would see this as a win-win and these opportunities don’t come along that often.  I wish that there had been a little more interface with Congress earlier about this, because I think if I’m a member of Congress, anybody who is would say –- well, gosh, why didn’t you tell me more about what you were hoping to do with this earlier.  But that really should be water under the bridge and I think they should look to the future here and say this is really something I can talk favorably about in my district in the future.

 Roger Noriega:  I will ask if there are any questions in the audience, please raise your hand and we will bring the microphone to you.  We will ask that you identify yourself and your organization.  Are there questions?  Don’t be shy, please.  Yes?

 Sam Reid:  I am Sam Reid from the Department of Homeland Security’s Counter-Narcotics Office.  I would like to drill a little deeper into your answer.  One thing that concerns me is that Congress has what I will call investment fatigue in counter-narcotics in foreign countries.  An example is Colombia and as you know, there has been a growing amount of pessimism as to how much more money we need to pour into Colombia.  And my fear is this proposal may be interpreted as just as another plan Colombia, plan Mexico.  Do you have any additional advice as to how we could approach Congress to convince them that this is really a worthwhile investment, we’re not going down the same perceived road that they think we are in Colombia?

 Roger Noriega:  I’m sure that Ted and others will have something to say on this, but let me quickly say that I am an unabashed believer in what we have done in Colombia.  The investment is less than a quarter of a percent of what we have put into Iraq and we have gotten a 50 percent reduction in overall coca, a 50 percent plus reduction in homicides, annually in some cases, in the last three years.  We’ve had dramatic declines, 48, 50 percent, in kidnappings.  We’ve had more than 20,000 desertions from the FARC.  The ELN has been largely squashed.  You’ve had OUC desertions. 

You are now seeing price impurity data that strongly supports having done this, which we said all along would happen.  It would be the worst of all worlds, I think, separately for us to abandon Colombia.  And I just want to say that because Ronald Reagan used to say there is a great tendency by some people to hear someone screaming for help and drowning and to throw them a rope and to make sure they grip hard on their end of the rope and then drop your end so you can go rescue somebody else.  That would be a poor policy for us in Colombia. 

This is a very different kind of package, in my view.  First, this is not a Plan Mexico; this to me is a mutual commitment to the future intended, I think, very much to support the political will that is emerging in Mexico for the first time and that we should be attentive to.  If your neighbors undertake a mission that’s going to help you and it’s going to help them and they ask you and you ask them to undertake mutual commitments, I don’t know if it’s so much –- it’s not a one-side plan, it’s a plan to embrace the future.  If we don’t do that now, the question will later be asked, and it should be later asked, why did you choose not to support this political will.  But others, I’m sure, have other ideas on this.

 Roger Noriega:  We will ask them a little bit later.  Other questions?  There’s a young lady in the back.

 Christina DeMean:  Hi, good morning, I’m Christina Demean from the Washington Office on Latin America.  My question was you began your talk by talking about the importance of prevention and treatment, and then you ended by saying that we should leave this package as is.  So the packages that I’ve seen, which I don’t think anyone has seen very much of it, but doesn’t include any prevention on our side of the border.  So I was wondering what you would recommend to kind of remedy that as our responsibility to deal with that?

 Robert Charles:  Well, I’m an equal opportunity accuser.  I believe that we are not doing enough in prevention on this side of the border.  But this is an emergency supplemental package which is dedicated to foreign assistance.  It falls into that category.  Should we be doing more to support the safe and drug-free schools program, non-profits in this country, more ads, more direct outreach to parents?  More grass-roots effort to reinforce the extraordinary and absolutely incontrovertible danger that is presented to kids by illegal drugs?  You bet we should. 

I often debate the legalizers and find myself at the end asking them –- you know, if you could only put the level of emotion and passion into educating kids about how irreversible and how negative the effects of using drugs are instead of trying to somehow give license to indulgence, I think you’d feel better, I think you would sleep better at night.  I think as a general matter, the United States Congress and the Administration certainly and a future administration should commit considerable effort to rallying the demand side, and that also includes treatment. 

I did a study on the economics of legalization and of treatment, and one of the sad things is treatment is a lot like the liquidity trap, let’s hope we don’t fall into that at a national level economically.  But it is a problem that when you get into it, it’s hard to get out.  Meth and heroine in particular are very difficult.  The damage done is hard to reverse and the addiction is very difficult. 

We have about a million heroin addicts in this country, it is very difficult to reverse that.  So prevention is worth pounds and pounds of cure.  So you are absolutely right, it’s just that this vehicle would not be the right vehicle for putting it in.  I think that we would do it in a different place, but yes.

 Roger Noriega:  Any other questions?  I have one more and then we will go to the panel with Roberta Jacobson kicking this off.  I wrote an op-ed piece in The Washington Post and against my better judgment, read the comments that are online.  It makes me glad that I don’t really care very much about what bloggers say about things and I would be worried about being led around by them.  But one of the things, it was pretty fiercely postulated was that this drug war, war on drugs is not working and we just need to legalize.  So I’m going to put it out there, because that’s an essential part of this argument, quite frankly.  What is your two minute answer to that?

 Robert Charles:  Well, the two second answer is no.  The two minute answer is that, if you will indulge me for a moment, there is something called the price elasticity of demand and that is the bounciness of a consumer product to changes in price.  That is really the centerpiece of why legalization will never work. 

It will ultimately bankrupt any state that tries to do it, any state as in any government that tries to do it.  The reason is that all consumer products of any kind start out somewhere on the price elasticity curve, by which I mean that they have a certain number attached to them that reflects the consumer reaction to how much we need that.  They are either at the luxury end, Caribbean cruises and candy and desserts, or they are at the necessity end.  And the necessity end is things you just can’t live without, the food, the toilet paper, the things that you have got to have. 

Addictive substances based on their addictive potency actually have a unique attribute as it relates to price elasticity.  They start out up here as luxuries, very bouncy, very high price elasticity of demand.  You change the price for Caribbean cruises or the price of gas, I decide to stay home.  They are bouncy, they are very responsive to price.  Down here at the other end are necessities. 

You can change the price all you want; it doesn’t move your consumption rate.  The rare and actually unique aspect of addictive substances is they start as a luxury, they are often given away, the choice is a free one at the outset and then they slide very rapidly down the curve to being a necessity.  Depending on the addictive potency, the curve gets sharper or less sharp. 

You can have a 40-year curve with cigarettes; you can have a three-day curve for acute use of heroin.  Legalization essentially opens the door to greater and greater consumption, even the legalizers will admit at a minimum of five percent increase.  Well, five percent of the U.S. population is a considerable number and that is probably very conservative.  It probably, once you put the complementary [sounds like] legitimacy out there and you have the ability for the drug to be consumed on a regular basis out there, it’s out there. 

Casa, actually the big Columbia University, Herb Kleber and a lot of the folks who have done research indicate that at a minimum, you will have one addict for every eight new consumers of anything from marijuana to heroin.  It depends on the addictive potency of the drug.  Even that is a conservative number.  Many people think that the addictive potencies have risen so dramatically, heroin’s purity has gone from 7 percent ten years ago to about 90 percent in every major metropolitan area today –- between 60 and 90 percent, depending on your geographic, but very often closer to 90. 

So what does that mean?  It means that if you are a first-time user, you’ve got a real chance second and third time of being addicted.  That is especially true with heroin, high purity cocaine and methamphetamine and oxycontin, some of the prescription drugs.  So what does that mean?  It means that more consumption, looks at it as luxury, impromentary legitimacy, more consumption leads to greater addiction.  People get stuck down here.  That is extremely expensive. 

Putting aside the crime and everything else that is associated with the criminal aspect of it, it makes it almost impossible for a municipality or a state to afford it.  And anybody who is –- Sweden, between 1966 and 1968 flirted with this idea.  They recoiled as if they had touched hot fire.  Across Europe, we are doing a study right now on the European reactions to their own sort of permissive environments and what you are finding is they are retrenching now. 

Country by country, there are new laws going on, even in places like Amsterdam, to try to back out of this.  Switzerland walked down the path of giving away needles because they thought that might somehow help.  It turns out that there is almost no reduction in drug use, but there is a real negative impact on the society in terms of healthcare costs.  So it is a very, very costly enterprise.  All of that assumes that by legalizing it, you’re somehow controlling it. 

The reality is, and this is a fact worth burning into our consciousness, until a government gives away 100 percent pure, 100 percent free heroin, say, any drug, there will always be a black market.  There will always be a black market for the drug.  So you will not eliminate the criminal aspect; it will continue to exist until I can get all of the drugs I want for nothing until I OD.  And that’s the reality.  Heroin addiction is extremely impulsive.  I won’t get into methadone maintenance and all of that, but the sad thing is you do not eliminate it. 

In all of these countries, there is still a thriving black market.  And we didn’t touch on another aspect that I think is very important for Mexico, is also very important for the United States and frankly for any country today.  There are two circles historically of criminal, let’s call it, activity.  We have INL and the State Department has historically identified, for example, not only foreign criminal organizations who are transnational criminal organizations, but foreign terrorist organizations. 

And we have 25 or 26, maybe 27 this year, that we know, we think of as identifiable terrorist organizations.  On this other circle over here, we’ve had criminal drug trafficking organizations.  There is a convergence of those two groups because of operational security, smuggling routes, money laundering, recruiting pools.  I think if we ignore that aspect, we are also really ignoring something that is going to come back and bite us.  So it’s only tangentially related to legalization, but legalization is an absolute dead end street. 

And if you want the study, call the National Alliance for Model State Drug Laws, they are over here in Alexandria.  It’s full of formulas and numbers and page 29 has the great graph that is going to show you the whole thing.  They will give it to you free and it’s about 70 or 80 pages in length and it’s pure economics.  No moral, no politics, no policy, just economics.

 Roger Noriega:  That’s great.  Thank you very much and I want to ask us all to thank Bobby for his contribution.  He certainly has laid a great foundation for our conversation.  There may be a few people in this audience who think that bureaucrat is a bad word.  I would have to tell you that anyone who thinks that has never worked in government and has never worked with Roberta Jacobson. 

As a career civil servant, not a Foreign Service officer, she is perhaps the best example of an experienced public servant who keeps things running while people like Bobby Charles and I come and go.  We depend on people like her to make the bureaucracy move, which requires extraordinary skill, tenacity and sort of weird determination, an act of faith.  Roberta became Deputy Assistant Secretary of State for Canada, Mexico and NAFTA issues in the Bureau of Western Hemisphere Affairs, the Department of State on June 4th, 2007. 

There is, perhaps, no one in our government who has taken a more direct a central role in hammering out this cooperative pact with Mexico.  She previously served as Director of the Office of Mexican Affairs.  From 2000 to 2002, Ms. Jacobson was Deputy Chief of Mission at the U.S. Embassy in Lima.  And between 1996 and 2000, she was Director of the Office of Policy Planning and Coordination in the Bureau of Western Hemisphere Affairs covering issues such as civil military relations, human rights, foreign assistance, presidential travel and counter-narcotics throughout the hemisphere. 

Ms. Jacobson also served as Coordinator for Cuban Affairs and lived to tell about it.  In the Bureau of Western Hemisphere Affairs, she has been Executive Assistant to the Assistant Secretary from 1993 to 1994 – who was your Assistant Secretary?  Alex Watson, who is almost the last good one we’ve had.  And she was also Special Assistant in ’89 to ’92 and worked for the National Security Council in 1988.  My gosh –- and she’s a mother to boot.  We welcome Roberta and you can speak from the podium or from where you are.

 Roberta Jacobson:  I think I will stay for the safety of my colleagues.  Thank you very much, Roger, for that bio.  It’s always a little bit embarrassing to hear your own bio.  It gets longer and longer each time I hear it.  But I also want to thank you as a former boss with who I really enjoyed working and who really just has it exactly right on this issue and I really appreciate that, as does Bobby Charles in his introductory remarks. 

I think this is an incredibly exciting time to be working on the bilateral relationship and indeed on the North American relationship in general.  We have placed before us really an historic opportunity to build on unprecedented efforts by Mexico and Central America in tackling the increasing levels of violence from trans-national organizations in the region.  Presidents Bush and Calderón really began to talk about these issues as early as November 2006 when President Calderón was President Elect and came to Washington. 

When they met again in Mérida, Mexico in March 2007, President Bush had just come from seeing President Berger in Guatemala and talking about the Central American situation that those presidents were facing.  And that’s really the reason that we’ve called this the Mérida Initiative, because really those conversations in Guatemala and in Mérida with President Calderón were what really brought together the idea of these new efforts in regional cooperation and they really are very much, as has been said, a pact, a cooperation effort, a joint effort - not a traditional foreign assistance program.  We call this historic, we call it unprecedented. 

Those are big words, hyperbole perhaps, but I think that it really is on several counts.  First of all, we have an opportunity to build strategic partnerships with Mexico and the Central American countries in ways that we have not really had before.  We also have the opportunity to bolster homeland security by impeding the flow of trans-national criminal activity and strengthening state institutions in Mexico and in Central America. 

The increases, what that does is it increases the prospect of taking down and breaking down those criminal organizations in building on the government of Mexico’s successes over the past years.  Extraditions from Mexico to the United States continue to break records.  We’re now at about 73, I believe.  President Calderón made the decision to use his military to quickly go after the narcotics cartels soon after he took office. 

But at the same time, is undertaking police restructuring and judicial restructuring because he knows that long-term, those are the kinds of things that really make a difference in going after these organizations.  And we’ve seen, for example, recent seizures in Mexico of cocaine that are truly historical, unprecedented.  We have a 23 and a half-ton seizure in Manzanillo a little over about a week ago and a total of over 48 metric tons of cocaine seized in Mexico this year. 

All of those efforts have come at a very high price for Mexico.  High price in terms of financial resources and an extremely high price in terms of human resources -- over 2,600 deaths this year attributed to narcotics and criminal related violence, over 250 of which are targeted against security officials, military police and others.  I’m going to focus most of my remarks on Mexico, but I want to be sure to mention that the Central America portion is critical as well. 

What the Central America portion does, albeit much smaller than the Mexican portion for reasons of absorbed to capacity, as well as being a little bit further behind in our dialogue with the Central Americans than we were with Mexico, is it capitalizes on those countries’ political will to think regionally and to work together while they work with us.  The dialogue began in July with SICA, the Central American regional integration organization, continued in August when we got from the SICA countries a coordinated strategy to battle organized crime in the isthmus. 

Let me talk a little bit about the Mérida initiative and the pieces of it and what it is and what it’s not.  The Mexico portion of this initiative is envisioned as a multi-year, $1.4 billion package.  In 2008 in the supplemental request that the President sent to Congress on October 22nd, we are asking for $500 million for Mexico and $50 million for Central America.  We think that the package is very balanced.  It provides equipment for security forces, technology to improve information sharing, technical expertise in training in areas like rule of law and institution building for civilian agencies.  It also integrates programs from Panama all the way to the U.S. border, including Central America. 

And if you look at what we’ve been doing in the Andes for about the past seven years and you look at what we’re hoping to do in Central America and in Mexico, you can see that it is a very logical unbroken effort at this point to attack the very directions and stream of the criminal organizations and their work.  The timing on this is that we feel very strongly that we have to both capitalize and expand on President Calderón’s own efforts and respond as previous speakers have said to a neighbor, a friend and an ally who has requested our support.  Those things don’t always come at the best political time in domestic situations. 

People have asked why you mount an initiative like this at the end of an administration, but the answer is that that’s when the opportunity has arisen.  And it’s an opportunity that I think very much as Bobby Charles just said, we would really be remiss in not taking advantage of and moving ahead on.  In terms of the elements of the package, we talk about three general areas.  The first is what we call counter-narcotics, counter-terrorism and border security. 

In that portion of the package, there is equipment in training for interdiction, inspection and analysis.  We’ll be helping the Mexicans to work on securing their southern border by improving enforcement, inspection and data management.  And we also are hoping to support improved communications networks, data architecture and information sharing for the security forces, both police and military. 

In a section that we call public security and law enforcement, which is largely crime prevention and police focused, we would like to support President Calderón’s efforts to create a consolidated and larger national police force through professional training, more effective operations and information sharing.  We would like to also improve, again, the secure communications and data connectivity of those agencies that are working in that effort.  And also to work with improving national databases and knowledge for demand reduction efforts that the government is making. 

In a section that we call institution building and the rule of law or administration of justice, we’re going to work with Mexican institutions to give prosecutors, defense, court personnel, police investigators the tools that they need to prosecute more effectively through the judicial system.  We’d like to help give law enforcement and court institutions mechanisms to ensure a greater due process and oversight and to respond to civilian complaints to ensure full accountability and transparency in those efforts. 

What we’re doing here, what we’re working on is clearly an effort to compliment what Mexico is already doing.  It is also a very strong effort not to reinvent the wheel.  We have taken very seriously the lessons that we’ve learned both within the hemisphere and elsewhere in the world on these kinds of programs.  We need to address the urgency of the fight and do this as quickly as possible and that’s why we’ve put this package into a supplemental request to Congress. 

But the part of the package that is before Congress, and I think this came out a little bit in one of the earlier questions, is in fact the foreign assistance package.  We don’t consider it a traditional foreign assistance package, but that’s the way our government gets things done and that’s the way the Congress votes on these kinds of appropriations.  But it is only one part of a larger initiative that contains a number of elements. 

The other two pieces of the Mérida initiative, if you will, of this joint initiative are what the Mexican government is doing on its own and what the United States government is doing on its own and on our side of the border.  That may not be part of a foreign assistance package, but it is clearly integrated into what we are trying to do with Mexico jointly.  The United States part, and I’m not going to talk much about that because it’s not my area of expertise or my purview, but the United States part clearly will be focusing on demand reduction, reducing arms flow southward and coordinating the federal efforts along the border, such as in the southwest border counter-narcotics strategy. 

Efforts that we are making to expand tracing of weapons, efforts that we are making to reduce bulk cash transfers, all of those things.  And the initiative is highly respectful of both nations’ sovereignty, as we said in the joint declaration that was put out on October 22nd on this initiative.  Neither country will be giving up sovereignty in this package, neither country will be undertaking any activities that are not fully compatible with their own laws and sovereignty. 

I would like to reiterate also what President Bush said when he was in Canada earlier this year –- we are not talking about armed U.S. soldiers in Mexico.  This is not a program that looks at having a greater number of U.S. advisors in Mexico, military advisors.  I would also like to stress something that I think has come out somehow a little bit wrong in the press in recent days, which is that nearly 60 percent of this part of the package is for civilian agencies. 

There is less than –- I’m sorry, 40 percent of this package is destined for Mexican military entities.  And frankly, as we look at the whole package as we move forward into out years, we anticipate that that percentage will actually go down.  As a civilian police force is expanded and stood up consolidated in Mexico and as judicial reform may move ahead, we anticipate there will be ever greater interaction with civilian entities as President Calderón has outlined as he transitions to those institutions. 

We also are keeping in mind very clearly the importance of accountability and efforts to work against corruption with our Mexican colleagues and the efforts that they are making, dramatic efforts, in that area.  They are doing a great deal more in vetting of police and other institutions and we would like to be able to help with that.  Nothing in this package involves cash transfers.  This package is made up of equipment, training, technical assistance that will be carried out with out Mexican counterparts. 

And a lot of what we’re trying to do here is focused on information technology to ensure that agencies of government can talk to each other and secure communications to ensure that operations can proceed, intelligence-based operations, such as the huge seizure in Manzanillo just last week, can proceed with operational security.  We also want to stress that in the rule of law, the administration of justice portion of this package and throughout all of the components of what we’ll be doing together, we will be stressing protection and promotion of human rights. 

We are trying very hard to look at judicial systems and civilian institutions, judicial sector and police personnel and see where we can add value in those efforts that the Mexican government is already undertaking.  I think the Calderón administration has already demonstrated a very clear commitment to a change in the way it handles some of these issues.  The Calderón administration quickly accepted all of the recommendations of the Mexican Commission on Human Rights that were made about the military’s participation in counter-narcotics efforts and human rights allegations that had arisen through those. 

And we will continue to work in areas of human rights, transparency and anti-corruption as we have through our regular USAID programs in the last number of years.  Many of the institutions with which we work and continue to work and hope to expand will be indigenous organizations, watchdog groups and judicial and human rights groups.  We want to engage civil society, both in the United States, which I think is part of what I’m doing today, and in Mexico, as I think John Negroponte did when he was in Mexico last week, in a dialogue about this joint effort and how we can strengthen it. 

So I think that I want to just close by saying that there are a lot of different efforts going on, all of which are integrated and complimentary.  Bilateral efforts, efforts on each side of the border by both governments, and ones that will strengthen the homeland security of the United States, strengthen the ability of our partner to confront these criminal organizations.  This is considerably broader than just counter-narcotics and I think it should be seen in that light.  This is a fight against organized crime in all of its facets. 

We know over time that those criminal organizations, as they strengthen, threaten the institutions of the state because by weakening them, they find their place to operate.  And so we want to work with Mexico to strengthen those institutions and strengthen institutions on both sides of the border to confront the violence and the debilitating effect that the organizations can cause.  Thank you very much.

 Roger Noriega:  Thank you very much, Roberta.  I’ve known Roberta for about twenty years, she worked for me for some of those years.  I never actually heard her say that I had anything exactly right until today – so one of us is getting better at this.  Our next presenter is Armand Peschard.  He is CEO of the Peschard-Sverdrup and Associates, a firm which provides highly specialized and customized consulting that focuses exclusively on the rapidly evolving political, security and business environment in Mexico. 

He brings to the table many, many years of specialized experience having focused exclusively on Mexico at the Center for Strategic and International Studies, which I think is a little outfit here in town. Is that right?  They are still open?  He served as Director of the Mexico project and he remains a senior associate there, so apparently it is still a going concern. 

Mr. Sverdrup focuses on Mexico’s domestic politics, national security and border security, trade and investment and U.S./Mexican bilateral relations.  He comments on these issues frequently in the media.  Books which he authored or contributed to include North American Security 2025, which is forthcoming by CSIS Press.  Mexican Governance, From Single Party Rule to Divided Government (CSIS Press, 2005), and U.S./Mexico Border Security and the Evolving Security Relationship (CSIS Press, 2004). 

We will welcome Armand –- Armand was born in Mexico, was then a naturalized Canadian and he has made the full NAFTA cycle and he is now an American citizen; he got tired of people hassling you at the border, because they thought you were Canadian.  Welcome very much and you are uniquely positioned to give us a lecture on the sensitivities in Mexico. 

 Armand Peschard:  Thank you very much for your introduction and thanks for the invitation to be here.  I thought that what I would do is basically just touch on I think four points and some of them have been raised and some haven’t.  I very much like the question that was posed by the gentleman from DHS in terms of how do you sell it to a Congress that is, I think, somewhat fatigued over counter-narcotics support throughout the world.

As Roberta pointed out, this initiative really is not about –- I don’t look at it as a counter-narcotics initiative.  Unfortunately, it’s been framed that way largely because of the linkage to Plan Colombia, which had some people say obviously a focus on counter-narcotics efforts.  If you look at this initiative, which Roberta mentioned, but if you look at the actual deliverables, it really is about strengthening Mexican institutions to deal with trans-national organized crime.  Everything from drug trafficking, human trafficking, money laundering, arms smuggling –- you name it. 

And I think that that’s important for us to bear in mind and for Congress to bear in mind.  I’m just finishing up a chapter on security in 2025 and if you look at the evolving threat of non-state actors, that looms in the horizon and we’ve already started to see some of the threat of non-state actors today.  It’s in the best interest of the United States to make sure and do what it can to help Mexico strengthen its institutions, to enable it to confront the non-state actors that they are already starting to deal with and that I think are going to threaten countries in the near future. 

So to me, this initiative is far from –- and we can go down the list.  I mean, strengthening the Mexican Migration Institute in dealing with human smuggling.  Document verification to try and help them address some of the problems with falsified documentation that is a prevalent problem in countering human smuggling.  When you can purchase falsified documentations for –- I don’t know, $3,000 or $6,000 to facilitate your transit into the U.S.  It strengthens the Attorney General’s office, it strengthens a wide range of institutions, mostly civilian. 

So to me, this initiative really is about strengthening these institutions.  And I think Bobby mentioned, used the term “the future.”  And to me, this initiative is really about the future.  I think Congress is going to be, I think has the risk of getting it wrong if they think that this initiative is about today and it’s just about counter-narcotics.  This initiative is about the future and it’s about making sure that threats are stopped in Mexico well beyond it reaches U.S. borders or well beyond it reaches U.S. communities.  And if we don’t look at it that way, I think we’re in trouble. 

We have an opportunity, as I think Bobby and Roberta mentioned with this administration.  Quite frankly, the Mexican government’s priority on shoring up security institutions is not something new, it’s not something that the Calderón Administration discovered.  President Cedillo initiated some of the reforms with the creation of a deputy ministry for public security, initiated an initial round of judicial reforms.  President Fox also implemented various reforms. 

The U.S. invested, I think, around $40 million in a supplemental to help with the beefing up of the Federal Investigative Agency, which is an FBI equivalent within the Attorney General’s office.  And so this has been an incremental process for Mexico which, to some extent, gains an incredible momentum with President Calderón in part because of the boldness that he has demonstrated in his ten months in office.  But this is not new. 

You have to bear in mind, Mexico is, as Roger pointed out in his introduction, is a country that is undergoing still I think its own democratic consolidation.  Mexico has obviously always enjoyed a very strong executive branch and since 1997 when the Mexican Congress started to become more plural, you began to see the strengthening of the Executive Branch.  The judiciary is still, relatively speaking, the weakest branch of the three. 

This initiative is important from a security standpoint, it’s important from the standpoint of helping Mexico to consolidate its own democratization and by strengthening the judiciary.  So that is kind of how I look at this initiative and somebody mentioned that it’s a win/win.  Clearly, it’s a win/win.  We are very fortunate here in the United States not to have failed states as neighbors, both Canada and Mexico.  Mexico has undergone its democratic transition peacefully and with the exception of obviously cartels and some guerilla presence, it actually is far from a failed state, but it is a country that is still navigating through its democratization process.  We should bear that in mind and realize that it’s in our best interest to make sure that Mexico sees that through successfully. 

I’ll go to point number two, which is Mexican sensitivities.  Obviously, in the bilateral relationship, an encroachment on Mexican sovereignty has always been the Achilles heel of developing any type of bilateral program.  This is far from an encroachment on Mexican sovereignty.  Many academics in Mexico from the left and very nationalistic Mexicans have pointed out to the fact that this initiative is an encroachment on Mexican sovereignty. 

And one of the things that I would like to point out is that this initiative, the Mérida initiative, is fully consistent with the national development plan that President Calderón laid out.  I won’t bother you with the bullet points, but this package will help to bolster President Calderón, implement many of the points that his administration drafted in laying out their national development for 2006 to 2012.  That is number one. 

Number two, this initiative is also consistent with the Congress’ own objectives.  Congress approved a 24 percent increase from FY 2006 to FY 2007 in spending, appropriations for security agencies.  So I’m hoping that Mexico will view this initiative as far from an encroachment, but rather an initiative that actually is consistent with their own objectives.  If we have any chance of working collectively in confronting trans-national organized crime that operates seamlessly across our borders, we’re going to have to do so working collectively. 

And to me, it makes no sense, for example, not to assist Mexico with technology that offers inter-operability with U.S. agencies should it be deemed necessary to have that inter-operability in carrying out certain missions.  It makes no sense to me.  Why would we want Mexico to purchase technologies that don’t have inter-operability if, in fact, we reach a situation where we both need that inter-operability to carry out successful missions? 

That is, I think, something that we have to think about, especially with an eye towards the future and with an eye towards a much closer collaborative relationship between U.S. and Mexican security agencies. 

Point number three, not a silver bullet.  This initiative is not a silver bullet.  If you think that $1.4 billion is going to solve Mexico’s security problems overnight and that we’re going to see the results that are going to be, I’m sure, promised as this makes it through the legislative process, I think we’re mistaken.  There is no civil revolt. 

Yes, we can invest in non-invasive technology, but at the end of the day, there are many factors that contribute to its success, where it is positioned, is there an opportunity to bypass that non-invasive technology?  We can invest in the professionalization of law enforcement, but at the end of the day, if Mexico doesn’t succeed in getting the type of recruit that is interested in a career in law enforcement versus a career in illicit enrichment, all the professionalization in the world will really not render that many results. 

But you have – you can’t just sit on your hands; you have to do something.  You have a president in President Calderón that, I think, has a fairly good diagnosis of what the problem is, has the boldness to actually implement it.  He’s building on what President Fox and President Zedillo implemented, in part. You have to remember, you’re asking a country, you’re asking a government that is undergoing a process of democratization to also reform, strengthen its judiciary and undergo a series of reforms. 

If you look at the history of the United States and you look at some of the mega restructurings that we’ve undergone from the creation of the Department of Defense, which basically you had the compelling event of World War II to the creation of the Department of Homeland Security, in which obviously we had the compelling event of September 11th.  Mexico really hasn’t had a compelling event that would create the type of political consensus to push through a very aggressive restructuring of its judicial structures, its law enforcement structures.  Yet they know that they need to do it and hopefully this initiative will help. 

While it may not be a compelling event, hopefully it will be a good incentive in that they have a partner in the United States that recognizes that these are issues that have to be worked on collectively and together.  Point number four, and this is my final point, as we move forward in the legislative process, it’s perfectly understandable that the U.S. Congress is going to want a certain level of accountability.  It is only normal.  I mean, this is $1.4 billion of U.S. money that Congress is going to have to explain, if they approve it to their constituents, that this is taxpayer money, in a sense. 

And so as we move forward, yes, there is going to be a lot of things said, I think, in Congress that will sound and may even be conditionality.  But I think it’s important to differentiate that this will be part of a relationship or this will be part of a dynamic between the U.S. Congress and the Bush Administration.  And I think the accountability is going to be on the Administration to make sure that these monies are spent in a certain way. 

I’ve been commenting in the Mexican media trying to raise their own awareness that many things that are going to be said in the next few months, which some in Mexico will be very quick to point out as you see, we told you so, here is the gringo telling us what we should be doing, is actually going to be just part of a process whereby the U.S. Congress is going to want to make sure that the $1.4 billion is money well spent and that it is spent on what the administration has proposed that it’s going to be spent. 

Obviously, there has to be checks and balances and I just hope that on the Mexican side, they realize that now that they have a much more mature executive legislative relationship, something that they didn’t have before.  That they will realize that this debate that is going to take place in this country or this discussion whether over to approve this initiative or not, that this type of questioning and voicing of certain conditionalities is part of a healthy give and take between an executive and a legislative branch.  So with that, I think I conclude and I welcome the Q and A, because I have a lot more information in my head.

 Roger Noriega:  Thank you very much, Armand.  Ted Brennan is the Director of Government and Global Affairs at the Washington office of Tew Cardenas.  Mr. Brennan joined Tew Cardenas after more than twelve years of service on Capitol Hill.  Since 1994, he has served in a number of capacities, including Legislative Assistant Press Secretary, Legislative Director and Senior Policy Advisor in the Office of former representative Cass Ballinger of North Carolina, who was a really a leader on these issues.  He also served as a professional staff member of the Subcommittee on Western Hemisphere Affairs of the Committee on International Relations in the House. 

In 2005, he was appointed Staff Director in the Senate International Narcotics Control Caucus.  During his tenure, Mr. Brennan was responsible for advising Congressional leaders on U.S. interests in the Western Hemisphere.  Ted was also an integral part of the Congressional team that helped Colombia before there was a plan Colombia and he helped draft that ambitious plan.  He also traveled throughout Colombia and has traveled throughout the hemisphere as well, but particularly in Colombia, taking an intense personal interest in the effect of implementation and Congressional oversight of our programs there.  Ted?

 Ted Brennan:  Well, thank you, Roger.  One of the disadvantages of going last is a lot of what I need to talk about has already been said, but I will make a few comments on that.  But before I do, I would also like to say that the panel up here, Bobby, Roger and Roberta particularly –- I’m used to seeing them on the other said of the dais and not on the same side with me.  So fortunately for me, so hopefully they will go easy on me for this first time out basically. 

If I had a dollar for every time that someone asked me what does Congress think about a given issue, and I get those questions a lot, particularly from Latin Americans, I would have to always say to them, “well, there are 535 opinions on that, which one are you looking for?”  What people tend not to understand is that Congress is not a monolith.  Congress is a body of legislators who have opinions based not only on personal experience, but also on constituent concerns. 

And with anything, those constituent concerns tend to be a driving force here and sometimes that driving force eliminates or at lest tempers a little bit partisan politics.  And based on my experience working on the Hill is that that is very true when it comes to counter-narcotics.  There is, as Bobby Charles said, there is not a Congressional district in the United States that does not have some kind of drug-related issue. 

Where I come from, where I live in a pretty small town over the last few years, the number of drug related instances, whether they be crimes or actual attempts to traffic narcotics throughout the town has actually risen.  So that brings home the idea that even small towns have a difficult road to hoe when it comes to counter-narcotics.  That’s one of the reasons why myself and my colleagues spent a great deal of our time to try and figure out a way to prevent the narcotics from getting to the United States from an international perspective. 

I’ve been asked today to talk a little bit about a Congressional perspective on this and I can tell you that it’s been very difficult to glean any kind of concrete information.  Part of the reason for that, as some of you may have heard from a subcommittee on the Western Hemisphere hearing last week, is that the people putting together this excellent, excellent, excellent program did not consult necessarily with Congress -- at least that’s what the Congress is claiming. 

And so the hearing last week really wasn’t as enlightening as the full committee hearings that are going to take place next Wednesday and Thursday in the House and on Wednesday the Senate Foreign Relations Committee on Thursday.  But one thing we do have to understand perfectly is that we do not have the Congress of Speaker Hastert, Ben Gillman, Cass Ballinger, Henry Hyde.  We have a new sheriff in town.  I think that new sheriff is still trying to figure out where it needs to go and what it needs to be doing. 

I think later on today at lunch Congressman Cuellar is going to be in to speak about his side of this issue and what he sees Congress doing with this.  And Congressman Cuellar, of course, being from a border state knows full well the implications that drug trafficking is having, not only on the Mexican side of the border where the towns and cities along the border are becoming nearly ungovernable based on the influx of narcotics and narcotics traffickers and the money and corruption that go along with it.  He’s going to tell you that it’s not a Republican or it’s not a Democratic issue, but an American issue that needs to be addressed. 

This recent counter-narcotics package is certainly welcomed and you will see that being said, I think, not only here today, but also next week in the hearings.  But in my opinion, it’s probably come a little bit too late.  Quite frankly, we’ve all heard people talk about the balloon –- you squeeze here and the air goes this way, you squeeze there, the air returns and therefore making it difficult to nail down trafficking. 

There’s no question that drug traffickers will always seek the path of least resistance.  In Plan Colombia, we spend a lot of time addressing the causes of narcotics production, but also address interdiction close to Colombia.  If you look at that package, you see that we spent time with working with the Colombian national police, the Colombian army, the Colombian navy, seeking ways to prevent the drugs from leaving Colombia or at least being interdicted close in to the Colombia shores.  But drug traffickers are pretty smart people and they seek the path of least resistance. 

And honestly, they found it in what we call the transit zone, and that includes Central America and Mexico.  In an interview that I did in Colombia with a trafficker, a former drug trafficker, a prisoner is basically what I called him, he said to us that if we can get our drugs to Mexico, they are as good as in Chicago and he was aiming that right at Congressman Hyde.  And unfortunately, that I believe, is the case. 

So this particular package that we have, that Congress will have before it or has before it will certainly address that.  And instead of a balloon being squeezed, I like to use the term second plan anaconda.  Now unfortunately, that has implications in Mexico that if anyone is a student of history like I am, the anaconda plan was something that President Lincoln adopted from General Winfield Scott during the American Civil War.  And of course Winfield Scott, not a big hero in Mexico, as you might know. 

But the idea is not to squeeze the balloon, but to squeeze everything until the life comes out of it.  And that is essentially what we are looking at here.  As we mentioned before, it’s not a program that is huge certainly in dollars, $1.4 billion.  I mean, to my bank account that would be big, but I think in the grand scheme of things, that’s a very small number.  But it is targeted at some very specific problems.  But right before we started here, Ambassador Noriega gave me a lesson in statesmanship, I think, or at least in diplomacy, I’m not sure which. 

But the way I look at border towns, not only in the northern border of Mexico, but also the southern border of the United States, is they are ungovernable to the point where they are almost not functioning as civil states.  Okay?  I won’t use the term that I used with the ambassador because he will probably throw me out of here.  But the point is Colombia is three hours away by airplane from Miami and that’s something that I think Bobby used to use all of the time.  It’s three hours away –- we have a problem.  Well, you can see the drug traffickers in Mexico standing on U.S. soil.  That’s how close it is, because it is on our border. 

And I think that’s something, getting back to Congress, I think that is something that Congress is acutely aware of.  At the hearing last week, I was surprised to see the members of Congress with whom I usually had to go to their offices after they said something that I didn’t think was right and argue with them for half an hour about why I thought they were wrong.  Actually saying –- well, you know, this package isn’t so bad, I think we can work with this.  We only wish the State Department came and talked to us before. 

Now Roberta knows full well how difficult it is to do anything with Congress beforehand -- it’s easier to apologize than to get permission.  And I think that’s something that I applaud them for, so I appreciate that.  But the fact remains is that we really, looking at Congress as a whole, we really don’t know, without seeing what happens in these hearings next week.  At least I haven’t been able to get a comprehensive understanding of what Congress is going to do. 

I think going back to what some of the previous panelists have said is that we are going to have the usual suspects, as we used to call them.  People that are demanding accountability, not only in terms of where the money is going, who is going to be receiving the money, how that money is going to be used, is there going to be training in human rights issues, is there going to be sufficient law enforcement training for new police officers?  Is there equipment that we will likely send, is it compatible with current use? 

In other words, for example, with Plan Colombia, we sent a number of different types of airframes to Colombia and the Colombians were not necessarily familiar with, so we had to apply training and maintenance packages with that.  I think there has been some, a learning curve that has taken place where you are looking at what Mexico already has and the package reflects that so that you can limit the amount of training.  Because obviously when you say training, that means sending U.S. -– either U.S. military personnel in terms of pilots or contractors in terms of pilots. 

And I think that in itself and throughout the whole Plan Colombia and even to this today created its own set of circumstances and problems that had to be dealt with along the way.  Members of Congress do look at that kind of thing.  They say we see $1.4 billion, but what does it really mean?  Does it mean $1.4 billion or does it mean $10 billion, $20 billion and how long are we talking about?  But again, I think the bottom line is this -– the Administration goes to the Hill next week, is that right, Roberta, as part of the witnesses. 

And they are going to explain to the Congress exactly what this proposal is, what we expect from it and how it is designed in terms of not having the United States government telling Mexico what to do, but actually listening to Mexico and having Mexico tell us what they need and we can apply that to them.  So I think I’m just going to stop with that, because if you are going to be here for Congressman Cuellar, he is going to be able to tell you a little bit more in detail the political aspects of it. 

But again, from where I was sitting and my conversations with staff and others is that this is a good plan, this is a plan that is needed.  There’s not the customary pushback that I’m certainly used to.  And hopefully we will get this thing through as quickly as we can because Lord knows we need it.  And I think as far as justification -– there’s a question about justification to constituents.  It’s pretty straightforward. 

If you are securing your border from narcotics from coming in, you are also securing it from terrorists and people that aren’t supposed to be here from getting in as well.  And I think that will add some credibility to the whole effort -– and that’s all I have to say.  Thank you.

 Roger Noriega:  Thank you very much, Ted.  We’re going to throw it open to questions.  I have one to start off with for Roberta.  This is a lot of money, but it isn’t a vast sum of money.  And Mexico does, I notice they have a little bit of oil down there and they have their own resources.  So where are the critical inputs in this package as you see it?  What is it that we bring to the table in addition to the buy in and the solidarity that’s represented in this kind of a pact and plan?  And practically, what are the critical inputs as you would see them?

 Roberta Jacobson:  Thank you, Roger.  I think I don’t want to underestimate when I start off answering that question the importance of doing these things together, making this a real partnership.  And that the inputs from the United States, things that are elements in this package, we’ve often been asked that question, aren’t they things that Mexico can do themselves?  Well clearly as I’ve outlined, Mexico has a huge amount of capacity.  It’s a large economy. 

President Calderón is dedicating an increased amount of resources to this fight even while he is devoting an increased amount of resources to economic development, to poverty reduction and obviously just recently and tragically in Tabasco to flood relief and reconstruction and other things like that and numerous hurricanes during this season. 

But I think where the United States really adds value in this package is in the ability to expand very greatly on cooperative efforts that we are already undertaking with specific kinds of equipment, the best available technology, to work with Mexico to increase their own capabilities in ways that increase our ability to work jointly.  Armand talked about this as interoperability. 

In some cases, such as the aircraft that are being purchased for the navy which are particular airframes, not only that Mexico is familiar with in an earlier iteration.  But perhaps most importantly, aircraft that the U.S. Coast Guard is introducing so that they will be able to work together on maritime surveillance and defense.  Or whether it’s information technology database programs, integration of the Migration Institute’s database so that ports of entry and border control information can be sent to and used by other government agencies. 

All of the things that we are going to be working on with the Mexicans help us work together better in operations that may be individual on both sides of the border because of the transnational nature of the crime.  Or maybe information that can be shared with that partner that undertakes a domestic investigation or prosecution.  So what we see are areas of work across the spectrum of national security agencies in Mexico, some of which we’ve worked with for a very long time, others of which might be a little bit new. 

There are areas of the Mexican government which would like to do more work on narcotics and drug detection of cargo that goes through the postal service.  This is an area where we have a great deal of experience, especially post 9/11, post-anthrax scare, and we believe we can bring something to the table.  It’s not necessarily an area we’ve worked in before.  So some of them are very targeted, but areas where we think we can make a difference, we have lessons learned from our own experience that we can bring to the table and an increased ability to work together on the trans-national threats that we face. 

I think that there is a little bit of a misperception, I guess, that has come out about how much of the package, for example, is military, is things going to the army or the navy or the air force in Mexico.  And what I want to stress there is there is a little bit of a disconnect when you look at amounts of money versus sort of line items and engagement and equipment.  Because obviously, aviation and things of that nature are very expensive. 

So what we’re talking about in terms of working with the air force in Mexico is eight helicopters, but that’s a lot of money.  On the other hand, what we’re talking about in terms of information technology, database management, training, work with the human rights organizations, anti-corruption efforts, all of that is actually a much greater percentage of this package in terms of our engagement and our interaction.  But it may not be as great a percentage of the package in terms of actual funds, because frankly, you can train a lot more people.  Database management, information technology, just those packages don’t cost the same amount as a brand new helicopter. 

So there’s this unfortunate tendency to look at the packages at the destination of the package and where it will have an impact solely of the dollars allocated to something.  Whereas I think that as we go through our consultations with Congress, and I do want to stress –- I think Ted is right.  What we are hoping is that this is a beginning of a process of a consultation. 

We understand fully Congress’ role in all of this and that’s why the briefings that we did the week the package was announced and the hearings that will be held next week I think are very important parts of that dialogue.  But there I think an opportunity for us to kind of break this open a little bit and have a more satisfying discussion of parts of this package than we’ve been able to up until now.

 Roger Noriega:  Let me ask another quick question, and you don’t have to give a fulsome answer on this, but is there a Mexican component?  For example, in Plan Colombia, I apologize for bringing it up, there was a $1.5 billion initial commitment from the United States, but $7 or $8 billion commitment by the Colombians in integral development and all of that.  And there was a component that was supposed to come from other countries, so a two part question.  Is there a Mexican component discreetly defined and do you expect a third country buy in?  Is Europe going to commit any resources to this?

 Roberta Jacobson:  Thank you.  There is definitely a Mexican component to this and actually some of the speakers have mentioned this and I would not presume to outline the entire government of Mexico’s proposals or efforts in this regard.  But I think we’ve certainly seen and had as part of our discussions with Mexico from the moment that President Calderón took office, he dedicated significantly more resources to this fight.  Even then President Fox had, and I think there were significant resources dedicated by President Fox to these efforts. 

We’ve seen that there has been a little bit of confusion up here in the press on the numbers on this.  The best way I could explain it, and I would certainly leave this up to the Mexican government to clarify if necessary further, but we certainly have seen the figure of $2.5 billion being spent by the Mexican government in their 2007 budget on items that confront counter-narcotics and organized crime. 

That is to say $2.5 billion directed at efforts that basically are, if you will, the mirror image of the United States’ request to Congress.  Focusing on those things that are working towards the same, the Mérida Initiative part that goes to our Congress.  Across their budget spectrum focused on security writ much larger, frankly.  The figure has been said to be over $7 billion.  And we’ve also heard, as I think Armand mentioned, that there has been a 24 percent increase in the Mexican budget devoted to counter-narcotics and organized crime efforts in the first year of the Calderón administration. 

So I think that the Mexican government has definitely expressed willingness to put its own resources towards this task, willingness to sacrifice, frankly, human life to this task.  But in addition, I think there are other measures that the Calderón administration is taking that we have to see as supporting this effort.  Measures such as fiscal reform passed in Congress not that long ago which will increase the country’s ability to get tax revenue and enable it to support these efforts. 

Obviously there are security reforms going through Congress right now.  There is judicial reform that is under active discussion in the Mexican congress and there are significant efforts at poverty reduction and economic development, as Armand outlined, in President Calderón’s national development strategy, all of which I think are part of the larger effort that President Calderón is making in Mexico. 

Because the other thing that I think we haven’t really touched on quite as much is the criminal organizations and the level of violence that we have seen in Mexico makes everything else harder that President Calderón wants to do and that we would like to support.  It makes economic development harder, it makes poverty reduction harder, it makes moving ahead on further democracy initiatives harder. 

So I think that is all part of what the Mexican effort has been and it’s very impressive thus far.  In terms of third country, we’ve not had a lot of formal discussions with third countries yet.  I know, however, that in our conversations both with the EU recently on Latin America and with my own work with the Canadian government, that they have clearly taken note of what the Calderón administration is doing. 

The Calderón administration is reaching out to the Europeans and to the Canadians and others to talk about where they might make a contribution, where they have value added, areas that we may not be working.  We will all be discussing that so that all of the assistance provided is complimentary and all of it will be in support of what the Calderón administration seeks. 

 Roger Noriega:  Great.  Armand wants to comment on this, but I want to throw another curve ball at you.  This debate here could get very tricky and you’ve alluded to that, in our Congress.  We’ve got some folks running for president and using the Congress as a platform for doing that who have not been particularly friendly to Mexico.  And so if this debate gets a little crazy here for want of a fair way of putting it or a more generous way of putting it, can Calderón sustain this at home?  Will he be able to fend off the natural tendencies to sort of say forget this, we’re not going to accept a bunch of conditions, etc.? 

 Armand Peschard:  Now what was I going to say before you raised that question?  Oh yes, the funding.  One of the things that you have to remember is that it’s the Mexican lower house, the Chamber of Deputies that approves the budget on an annual basis.  So they haven’t necessarily, as far as I know, committed to a multi year because they approve the budget on an annual basis. 

So the Calderón administration got a little bit into trouble by alluding to a $7 billion amount because they thought -– you know what, to facilitate the dynamic here in the U.S., let’s just add the $2.4, $2.5 billion over the three year period of the initiative so that we can say that the Mexican government will be putting approximately $7 billion towards the initiative.  Well, if you’re the Mexican congress, you are going to go –- well, that’s nice of them to assume that we’re going to approve the $2.5 over the next two years. 

So the administration got into a little bit of trouble there at home because at the end of the day, these are monies that have to be approved by the Mexican Chamber of Deputies, the Mexican congress.  But if you assume that they will continue funding the $2.5, then yes, you are looking at around a $7 billion, $7.5 billion over a three year period.  But that’s an assumption and that’s the assumption that the Calderón administration got hit with because at the end of the day, it ruffled Mexican congressional feathers for them to make that assumption given that it’s their prerogative to approve the budget on an annual basis. 

The debate in the U.S., your question was over the sensitivities?  I will tell you what, it’s really interesting.  In talking to folks in the Calderón administration, they have made it quite clear that the Mérida initiative is not something that requires congressional approval in Mexico.  Unlike other treaties or types of international agreements that require senate approval, they believe that this initiative is well within the confines of the bilateral and international agreements that they sign. 

So it won’t derail the Calderón administration’s ability to move forward with this initiative.  One of the things that I said in the testimony on October 25th is that the only thing that we’re going to do is that we’re going to end up upping the political price that President Calderón is going to have to pay for this initiative.  Will it derail it?  No, but we are going to end up upping the price for him politically at home when you have a very vocal nationalistic left.  And so it’s going to be, it’s going to make it more difficult for him. 

But I certainly hope, I was encouraged by what I heard at the testimony in the Western Hemisphere Subcommittee.  There does seem to be, I think, across party lines an awareness that this initiative is good for the United States.  I just hope that it doesn’t get caught in presidential politics and it doesn’t end up being used as an electoral wedge issue.  Not that these wedge issues come up close to elections in this country, but it could become yet another wedge issue. 

I think, like I said, if you think about this initiative, about the future and not about today and if you think about the fact that institutional strengthening and judicial reform helping Mexico and the Calderón administration carry out their own judicial reform process.  This is the process that takes years.  This is not a process that you turn the switch on and off. 

I mean, if we want enhanced security to confront the threats of the future, we need to start today helping Mexico undergo that transformation so that we collectively can render the benefits in ten, fifteen, twenty years.  I personally think that we need to have a more balanced approach beyond just our focus on the border.  Because at the end of the day to me, the focus on the border is not very realistic in terms of securing this country. 

I’ll give two examples and then with that I’ll stop.  If you go to Tijuana/San Diego, you really realize how bi-national the region is.  You see cars with Baja California plates in San Diego and you see cars with California plates in Tijuana.  And the flow is just incredible.  Some of the drugs that come into this country are obviously brought in by willing, knowing traffickers who want to make big money. 

Some of the drugs come in by unsuspecting souls that had their cars repaired in Tijuana, that have U.S. California tags and the cartels are in cahoots with the body shops.  They pack the cars and then this person is caught in the border.  Some are unsuspecting mules, some are willing, active traffickers.  So at the end of the day, you need to start addressing the problem in country as opposed to just in the border, because I don’t think we can stop the flow.  The other is the CTPAT program.  It’s a great program –

 Roger Noriega:  Can you explain what that is, briefly?

 Armand:  It’s a program where companies register to participate in a CTPAT program that enables them access to the fast lanes to expedite the flow of their own merchandise across the border.  It’s a great program, but it’s also not foolproof.  I mean, there have been companies registered under the CTPAT program that the cartels have ultimately used to smuggle drugs into this country.  Ted mentioned the cartels are very resourceful.  There is no question that they are.  If we think that just erecting a wall or measures at the border will help stop the flow of drugs or other trans-national crime, we are really kidding ourselves.  And the future for the United States is in helping to strengthen its own capability to address these issues in country.

 Roger Noriega:  Great, a good place to start with questions.  Over here, against the wall here?  Please, identify yourself.

 James Foley:  Good morning, James Foley, Medill News Service.  I think this question is to Mr. Brennan and to Mr. Charles.  On the one hand, we are hearing some hopeful things with the Calderón administration and also I guess the talk about shoring up the internal institutions in Mexico.  But at the same time, Mr. Brennan, you alluded to the balloon analogy and the fact that this could just be Plan Colombia part two with the flow through Central America and Mexico. 

What can we say, what can we know for sure of specific strategies to try to, like you say, strangulate these cartels in Mexico that are probably, in fact, an extension of Colombia cartels?  And how can we say that okay, we’re going to throw this money at it and then it’s just going to go to Haiti or another country that is going to be the main conduit?

 Robert Charles:  Let me just offer a brief overview on that, and then I’ll let others take the specifics.  Oversight is important, critical.  You have to follow every dollar where it goes.  But if you have a mutual commitment, backing off here twenty paces, I think you have to ask yourself today and as any member of Congress looks at this package, what is the big thing?  What is it that we are investing in here?  Is this just one more foreign aid program that could get reprogrammed? 

I don’t know, funny you should mention Haiti.  I seem to remember another assistant secretary coming to me and asking me to reprogram some money away from a program towards Haiti when we had a Haiti issue.  It happens, you do get re-programmings.  But bottom line – and you do have to follow the dollars.  But I think we are at risk here of seizing defeat from the jaws of victory. 

I think that people who advocate for the long-term, and you’ve got four of them here, are invariably less popular than those who advocate for the short-term, and that goes for Wall Street and it goes for Congressional appropriations and it goes for everything.  But yet you have to listen hard, particularly in patient times, to people who are willing to be patient and think about where those dollars are going to go and whether you’re going to get a return on investment downstream that is substantially greater than what you are going to get in the short term. 

What is the big thing?  The big thing is rule of law.   The big thing is the stabilization of borders, but also of countries, including our own in terms of our future capacity to stand down, to turn down the threat level posed by concentric circles of narcotics related –- I think it is substantially narcotics related in security.  It is very hard to quantify political will, yet if you see it as a leader, you should take advantage of it, you should work with it, you should reinforce it, you should reward it. 

It’s true in our country, it’s true in Mexico, it was true in Colombia.  It was true of President Banzer.  You can pick any country in the world and you can pick any sequence of years and you can find leadership and political will and the total absence of it.  And I think when you find it, you have to reward it, work with it, reinforce it, nurture it, develop it.  Do dollars tell the whole story? 

You know, we’re allowing ourselves, in a way, to get sucked into a debate about collateral dollar commitments.  How do you quantify the gradual movement toward less corruption at the state level and greater rule of law?  How do you quantify the impact of extraditions that suddenly send a deterrent signal out that didn’t exist before?  How do you quantify the U.S. government cooperation with the Mexican navy in unforeseen future events when our commandant can go down twice in the last couple of months reinforcing to himself and to the Mexicans how vital that relationship is. 

So that when the next Sherman comes along and we’ve got to turn around and immediately bring them to shore or refuel, we’re going to have that relationship.  How do you quantify, other than in hectares, the extraordinary commitment that Mexico actually makes every year in both marijuana eradication by hand, 100,000 guys in the field doing it, or black tar heroin?  We’re not -– it’s like our own budget.  You will hear that our ONDCP produces a budget annually that covers 52 agencies all of which are called drug control agencies. 

Actually, that’s not accurate scoring at all –- it’s a percentage game.  They are taking a piece of our Department of Justice and kind of guessing how much of it goes to counter-narcotics.  Well, you could re-score this thing a hundred times in Mexico and here and come up with different numbers.  It’s not let’s get some collateral, certainly some comparative investment on numbers, but that is really not the big thing.  The big thing is investment in rule of law, commitment, rewarding political will.  And I think it’s there.  That’s the real question that every member of Congress should ask themselves –- is there real political will there down country?  And if there is, what is our moral obligation to support or not support?

 Roger Noriega:  Ted?

 Ted Brennan:  Well, if we speak about specifics, you talked about Plan Colombia, you mentioned this particular proposal and then you threw in the Caribbean –- it’s not just Haiti, it’s a few other places that we can discuss later if you would like.  But as Bobby was saying, there is a matter of political will.  But what these proposals, what these plans or programs have done is have changed the structure by which these countries operate.

If you look at Colombia ten years ago, it’s a totally different place than it is now.  Bobby went through some statistics earlier and how true it is.  I remember the first time I have been to Colombia, I was wearing a flack vest and driving around in armored cars and things like that.  The last time I was there, I was able to walk down the street and get a couple of beers with some friends and not have to worry about being in a FARC camp for the rest of my life. 

So with that, there has also been, the capabilities and the capacity of the Colombians, the Colombian government to address the 40-year-old civil war that had been going on, but also the production, the trans-shipment of drugs to other places, particularly the United States and now unfortunately more and more to Europe.  With this particular proposal, if you look at it, as Roberta said, 60 percent of it is going towards the civil agencies to build their capacity.  To deal not only with the criminals themselves on the street level, but deal with them also on the judicial level. 

And you’re going to see some pretty stark changes in the Mexican judicial system, at least I think and hope, to handle this.  You will start to see better control coming over those communities that are affected by this trafficking.  You talked about the balloon effect.  Well, if you want to stay with that particular description, if you squeeze a balloon like this, of course it’s going to blow up somewhere else. 

But if you squeeze it like this, it’s going to pop, if you put equal pressure on all places.  The idea here is to make the neighborhood unfriendly for the drug traffickers.  It’s already unfriendly in Colombia.  Drug traffickers know that if they are carrying an 8.2 metric ton shipment of cocaine in a submarine, chances are they are going to get found.  And when they are found, they are either going to spend the rest of their lives in prison or somewhere in the bottom of the Pacific Ocean or the Caribbean, as the case may be.  Likewise, you are seeing in Mexico a drastic increase, at least reporting, of record seizures of cocaine. 

So we know that it’s going through Mexico, but that’s because they know Mexico is the soft underbelly of the United States at this moment.  But with this plan, that soft underbelly may not exist for very long and certainly we have the will.  You heard Roberta talk and certainly the Administration has the will.  I think a good many members of Congress have the will to continue on this effort. 

And then perhaps at some point, as I think Ambassador Noriega mentioned, other countries getting involved.  You are seeing an increase in cocaine usage, for example, in Europe.  They are going to get involved at some point.  They are seeing a lot of their cocaine traveling through the Car