Again the Ministers of Foreign Affairs of the Americas have gathered together to review progress made with regard to the political, developmental, and security concerns of the region and to set guidelines for future cooperation. We wish to thank President Martín Torrijos, his Government, and the people of Panama for the warm welcome they have extended to us, and for the dedication and efficiency demonstrated in the preparations for the thirty-seventh regular session of this General Assembly. As we approach, in September of this year, the 30th anniversary of the signing of the Torrijos-Carter Treaties, which gave Panama sovereignty over the Canal, we wish to express once more our admiration for the economic, political, and social progress of your country in this new phase in its history.

In delivering my annual report, it is with great satisfaction that I can affirm that today the Americas are experiencing growth with democracy.

The Economic Commission for Latin America and the Caribbean (ECLAC) tells us that in 2006 regional gross domestic product grew 5.3 percent. The fourth consecutive year of growth and the third in which growth exceeded 4 percent. Accumulated growth over the 2003-2007 period will be almost 15 percent. This strong performance is beginning to have an impact on an area of major concern for our Organization: poverty. Also according to ECLAC, in 2006 the number of poor diminished to 205 million and the number of persons living in extreme poverty to 79 million: a considerable improvement on the figures for 2002, when there were 221 million poor and 97 million living in extreme poverty. Consequently, in Latin America and the Caribbean, the number of people living in poverty fell by 16 million and the number of those living in extreme poverty fell by 18 million. From that we can conclude that the past four years were also a period of strong social performance in the region.

Democracy, too, is developing and consolidating its hold on our region. Between November 2005 and December 2006, 36 elections were held in 21 OAS member states, all of them conducted in peace, with massive participation and results accepted by all.

This political stability and the practice of democracy have impacted public opinion in our region. The 2006 edition of the Latinobarómetro Report’s annual regional survey shows that the percentage of the population that considers that “democracy may have its shortcomings, but it is the best form of government” averaged 74 percent over the year, a sharp increase over the 68 percent of the population that felt that way five years earlier. We are beginning to shed the image of political instability and economic weakness that haunted us for decades.

We can assert with pride that the OAS has played its part, too, in both the economic and the political arena, in forging this turnaround. More than that: our Organization has been present and active in all areas in which it was asked to support democratic stability and to help foster economic development.
I personally undertook to support the efforts of Panama, Colombia, and Peru to achieve the signing and then approval of their Free Trade Agreements with the United States. I met on numerous occasions with members of the United States Congress to convey to them the importance of such agreements and the potentially negative consequences of their not being approved. Likewise, I made every effort to stress the importance for Bolivia and Ecuador of renewing the Andean Trade Partnership and Drug Eradication Agreement, not just because of the impact on their economies, but also because of its impact on their political stability. We will continue to work alongside the governments of the region for approval of these treaties and preferences.

I should point out, however, that the approval and renewal of these agreements will probably mark the end of a phase in our regional integration process. Bilateral and regional agreements have been signed in various guises, which constitute enormous progress. However, almost five years have elapsed without further headway being achieved in the Free Trade Area of the Americas Agreement (FTAA) negotiations and, even if the freeze in the Doha Round of trade talks ends, it is unlikely that the stagnation on this issue in our Hemisphere will be overcome. This should be no cause of alarm to anyone; much less a reason to interrupt the integration process. On the contrary, without making the mistake of seeking to impose each of their models on other countries, those countries that form part of subregional integration arrangements should step up their efforts to achieve greater unity.

For that reason, we are paying particular attention to the upcoming Conference on the Caribbean, to be held in Washington in June, followed by the Meeting of the Heads of Government of CARICOM in Barbados, on July 1. We hope that, along with significant progress in forging its unique economy, CARICOM will also shed light on the next steps to be taken toward regional integration. At the same time, we should examine the possibility of convening a Meeting of Ministers of Trade in the OAS framework to review viable alternatives for strengthening hemispheric integration.

Although the threats of conflict and political and economic instability that loomed over the region two years ago when I took on the office of Secretary General have subsided, we have not yet earned the right to be optimistic. Still fresh in our minds are the memories of moments when we thought we had begun to embark on the path to development, only to plunge into crisis. So we have act prudently and focus our attention on the challenges we continue to face.

I would like to single out what I consider to be four of our major challenges: the inequality challenge, the crime challenge, the good governance challenge, and the sustainable growth challenge.

Latin America is, by no means, the poorest continent in the world. Its average income approximates the average for the world and it possesses enough resources to provide a better life for all its children. Nevertheless, approximately 80 million Latin Americans will sleep tonight without having had enough to eat.
Despite the progress I have described here, roughly 40 percent of the population of Latin America is still poor and a very large number of people still live in extreme poverty. This state of affairs is becoming increasingly intolerable, if one considers the inequalities, because as I said, while our region is not the poorest part of the world, it is doubtless the most unequal. Inequality has discriminatory implications as well. A great majority of indigenous people are poor, as are a significant number of persons of African descent. Women head many of the poor households in the region. In Latin America and the Caribbean, color and gender are major determinants of poverty.

That is why fighting poverty continues to be the top priority on the development agenda of hemispheric institutions. In our case, that policy of cooperation focuses on training human resources and strengthening institutions, mainly in the poorer countries and small island economies, which are the most vulnerable to fluctuations in the international economy.

Our Organization and its member states are making countless efforts in the area of cooperation, too numerous to mention. I do, however, believe it is important to recall that, in the framework of the United Nations Stabilization Mission in Haiti, ten countries have security forces helping to maintain peace and security in that sister nation, The Organization of American States maintains a Working Group for monitoring and supporting institutional reconstruction in Haiti and, as part of that effort, has reconstituted the Group of Friends of Haiti in Washington.

A second grave challenge we must face is the unprecedented growth of criminal activity: illicit drug trafficking, trafficking in persons, gangs, urban crime, money laundering, and the numerous other manifestations found today. In some countries in our region, annual homicide rates are the highest in the world and the victims of violence are not counted in the hundreds or thousands, but in tens of thousands. In the 1990s, more than 70 percent of Latin America’s urban population claimed to have been the victim of some type of crime. Although Latin America represents only 8 percent of the world population, it accounts for 75 percent of all kidnappings that occurred worldwide in 2003.

Crime on this scale is a social scourge that not only degrades and does physical and moral harm to people; it is also extremely costly in economic, political terms. The Inter-American Development Bank estimates that it costs approximately US$16.8 billion a year, or 15 percent of Latin America’s GDP. It also poses a challenge to institutions because there are already urban districts and regions within countries in our Hemisphere in which the institutional presence of the state is being challenged by the de facto power of criminal groups.

The expansion of organized crime and drug smuggling can infiltrate the political sphere as well. Thus, attention must be paid to the funding of politics, not just in order to avoid inequalities in our citizens’ participation in elections, but to ensure that crime and politics do not combine into a deadly threat to our democracies; hence also our concern to provide effective protection of freedoms in the face of crime. The assassination of numerous journalists in our region in recent times should draw our attention to organized criminal attacks against those who have the courage to denounce it.

The third challenge we must rise to is making our democracy an effective tool of good governance. To do this, however, we still need to satisfy certain requirements and conditions. First we must be aware that deepening democracy and its institutions are the primary obligations of a democratic government and that, conversely, exclusion or the silencing of opponents, are certain to undermine democracy.

Full democracy presupposes the establishment of a fully tolerant environment, in each country and at the hemispheric level. It is clear that, in each of our countries, there are and should be different schools of thought that should be expressed freely. Equally so, our member states have sovereign freedom to choose their own path to development. They are only committed, in the framework of our Organization, to do so with full respect for the ground rules of democracy. For that diversity to be compatible with the quest for integration and regional cooperation, we must be capable of respecting each country’s decisions and not attempt to impose any one country’s economic, social, or political schemes as if they were the ultimate and only truth.

In recent years, the OAS has paid close attention to electoral processes, because they either did not exist or could not be considered effectively democratic. Now that they are the rule in all the countries, we need to strive even more to forge effective democratic republics, with authentic rule of law and perennial, genuinely respected, public institutions. Development sometimes requires vigorous decisions. In a presidential system, moreover, the politics of the State demands proper leaderships. Nonetheless, we must take care to ensure that such leadership does not replace what is essential to democracy: a republic of laws and institutions.

The core ingredients of a democratic State were set forth in our Inter-American Democratic Charter. They include respect for human rights, freedom of expression, of the press, and of association; political pluralism; transparency, the separation and balance of powers; citizen participation; and the obligation of governments to abide by constitutional provisions and the rule of law. For that reason, the Charter refers to democracy as a right and that is why I have said that it confers both political and civil citizenship, which Government must always respect.

In my opinion, the Charter also confers social sovereignty, by linking the issues of economic and social development to the stability of democracy. We are therefore discussing, and hopefully soon adopting, an Inter-American Social Charter, which does not aspire to “equal” the Democratic Charter, but effectively to complement the rights it confers.

At the same time, for governments to be effective they must have the tools they need. Many of the problems that beset us – especially the need to reduce inequality and provide better education, health, drinking water, and job opportunities – require that we formulate public policies that can only materialize if states and governments have the material capabilities to implement them.

Some still believe that efficient States can be forged with the meager resources our countries have today. They are wrong: if we want the same social development models that some developed countries have –countries that we point to as models- then we have to be able to spread the wealth and collect tax revenues as they do.

Good governance is also tied to efficiency. Politics and government are increasingly reliant on the knowledge and technology needed to run a state administration efficiently and which therefore must be taught to, and acquired by, those called upon to govern.

None of the challenges I have described can be overcome, however, if we ignore the fourth challenge, which is the challenge of growth. If our countries fail to grow –as they did for the three decades that preceded the present decade- the grave social problems that beset us will only be confronted rhetorically. Despite the recent achievements, our region continues to grow more slowly than other regions in the world. Explanations abound: persistently weak financial sectors that limit lucrative investment opportunities; the lack of a well-established regional energy system capable of dispelling doubts about regular energy supply in many of our countries; the paucity of intraregional trade, exacerbated by trends toward increased protectionism; low levels of savings and investment; the lack of efficient tax systems to enable our countries to raise their currently relatively low tax revenue; and the low level of competitiveness.

We know what we have to do to overcome these hurdles, but the climate of uncertainty sometimes found in our countries does little to help us accomplish our mission. Capital is not exclusively attracted by the prospect of profits. It is also drawn by political security, and certainty in respect of the rules of the game. If those in a position to invest in our region feel threatened by changes in those rules or by phenomena like corruption or crime, they will undoubtedly not do so. We want to attract long-term investment, so we must provide security that our economies are stable because our underlying policies are stable, too.

We are not just talking of any growth: it has to be sustainable growth. We have been blessed with one of the richest endowments of natural resources and biodiversity on the planet, but we are destroying it. According to the FAO, in 2005 nearly 40 million hectares of indigenous forest were cleared in Latin America: the highest rate of deforestation anywhere in the world. And 30 percent of coral reefs – which harbor the highest concentration of marine biodiversity – are severely damaged and in risk of collapsing. These are but two examples of the degradation that threatens us.

The damage is not just material: environmental degradation may end up undermining democratic institutions. It is difficult to sustain a democracy when 140 million people lack adequate access to sanitation services, when 75 million lack safe drinking water, or when 80 million breathe in pollutants at levels considered unacceptable by the World Health Organization.
Driven by the pressing need to generate sustainable forms of growth, this General Assembly will address the issue of energy for sustainable growth. I am sure that, as a result of their deliberations, the distinguished delegations present will reach important conclusions that will guide our region’s efforts in this field in the years to come. So, I will venture to make just a few general reflections that might contribute to that discussion.

First, we have abundant resources with which to rise to the challenge. The United States and Brazil are the world’s leading producers and users of ethanol. Mexico is a top world producer of geothermal energy and Barbados has one of the highest rates of solar energy use for water heating. As for conventional sources of energy, we possess 12.2 percent of the world’s proven oil reserves, and Mexico and Venezuela are among the world’s largest producers. Canada is the world’s fifth largest producer of natural gas, while the United States has the world’s largest coal reserves. Trinidad and Tobago, for its part, is the major foreign supplier of natural gas to the United States. Nevertheless, a good percentage of the countries of the region are facing problems with regard to either the supply of energy sources or the provision of energy itself.

Today, approximately 50 million people in our region lack reliable and affordable access to electricity. This shortage is becoming even more acute, given that, according to Inter-American Bank data, the demand for energy in Latin America will have increased by 75 percent in 2030, by which time generation capacity will have had to increase by 144 percent to satisfy it.

The most worrisome prospect is the looming uncertainty in our region regarding the supply of energy resources, especially oil, because, while several of our countries are currently large oil producers, they face grave threats to the efficiency of their industries. In the area of natural gas, Latin American reserves still represent only 4.1 percent of the world’s proven reserves, while the region already consumes 6.8 percent of world output.

In seeking solutions, we must take their environmental impact into consideration. As the United Nations Secretary-General has noted, this is particularly true of climate change, which is directly related to the energy sector. A quarter of the world’s greenhouse gas emissions come from the generation of energy and heat: the fastest-growing of all sources of emission between 1990 and 2002. The island nations of the Caribbean and the Central American nations are among the countries hardest hit by climate change the most vulnerable, given their exposure to hurricanes and tropical storms: a cruel paradox as they bear the least responsibility for climate change.

In light of all these considerations, in my opinion, the region’s energy agenda should focus on at least three options:

Promotion of rational and efficient use of conventional sources of energy, specially oil and gas; second, making use of emissions trading mechanisms, envisaged in the Kyoto Protocol, to attract the investment and technology needed for “clean” industrial production. I should note, here, that the transportation is one of the principal sources of carbon dioxide emissions, so that our coming here, from our countries, to this meeting has left a carbon trail. For that reason, our Organization has pledged to purchase the carbon credits needed to neutralize the emissions generated by all our travel to Panama City. That way, hopefully, the only indelible trail left by this meeting will be policies for sustainable development, not our carbon trail.

Our energy agenda must, in my opinion, include incentives to use alternative and renewable sources of energy. Our region is blessed with a highly diverse set of renewable resources. Their use is no novelty in our Hemisphere and it should pose no great risk or adventure for us to attempt to broaden our energy matrix by tapping those resources. Hydroelectric energy, for instance, is a major component of the region’s energy matrix for many years and it meets 90 percent of all the needs of a country with such a huge demand for energy as Brazil.

I must, in particular, mention nuclear energy. I have already defended our people’s right to research, develop, and produce nuclear energy for peaceful purposes. The electricity generated by nuclear plants does not produce sulphur or mercury emissions; nor does it result in gases that have a greenhouse effect. Moreover, considering current prices of solid fuels, it could become cheaper than that produced from oil or natural gas, or even that produced by solar energy, wind power, or bio-fuels.

I should not conclude my remarks on this topic without mentioning how promising our countries’ joint efforts have been in this area, resulting in various forms of energy integration. We can enhance our nations’ energy security by integrating our infrastructure. Solutions such as the Central American Electric Interconnection System and gas pipelines such as those between Bolivia and Brazil help us to diversify our energy sources and boost our economies. In this connection, allow me to welcome the Petro-Caribe initiative and the bilateral agreement between Brazil and the United States to expand their ethanol output partnership.

The problems facing us are vast and unprecedented. This General Assembly, therefore, will be unlikely to solve them all. Nevertheless, it is a highly encouraging sign that the ministers and highest authorities in our Hemisphere are addressing them and establishing a commitment to press on in the quest for solutions. We need your conviction and your participation to achieve, one day, a comprehensive solution.

As I end this presentation, I wish to thank the delegates to the Permanent Council for their constant concern for, and contributions to, the political and administrative efficiency and effectiveness of our Organization. Likewise, I wish to thank all the staff of the General Secretariat for their selfless and loyal collaboration. And to you, ministers and heads of delegation, I offer my sincere wishes that you embark on a few days of fruitful endeavors, in the hope that, at this thirty-seventh regular session of the General Assembly, we will make the political headway needed to consolidate this moment of growth with democracy in our region.


What better place could there be to rise to this challenge than Panama? Some 100 years ago, intrepid men faced the titanic task of uniting two oceans, thereby transforming Panama into a veritable hub of the human race. However, the Panama Canal was built and inaugurated without being Panamanian. Thirty years ago, President Omar Torrijos once again placed Panama at the center of the world stage, signing the Torrijos Carter treaties, whose anniversary we shall shortly be celebrating.

Mr. President, we are happy to be here, as Panama embarks, one hundred years later, on a huge new venture with the expansion of its Canal. In that colossal endeavor on behalf of your country, we are sure that you can rely on the support of all the Americas, as you did 30 years ago when Panama signed the Treaties. We wish to convey our admiration and enthusiasm and wish you every success as you strive to place Panama, once again, at the center of the world.