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Friday, February 11, 2011

Panama: Political and Economic Conditions and U.S. Relations


Mark P. Sullivan
Specialist in Latin American Affairs

With five successive elected civilian governments, the Central American nation of Panama has made notable political and economic progress since the 1989 U.S. military intervention that ousted the regime of General Manuel Noriega from power. Current President Ricardo Martinelli of the center-right Democratic Change (CD) party was elected in May 2009, defeating the ruling center-left Democratic Revolutionary Party (PRD) in a landslide. Martinelli was inaugurated to a five-year term on July 1, 2009. Martinelli’s s Alliance for Change coalition also captured a majority of seats in Panama’s National Assembly that will increase the chances that the President will be able to secure enough votes to enact his legislative agenda.

A significant challenge facing the Martinelli government has been dealing with the economic fallout stemming from the global economic recession, but while the growth of Panama’s servicebased economy has slowed, it has avoided the economic contraction experienced by many Latin American economies. The Panama Canal expansion project has played a large role in stimulating economic growth. President Martinelli has called for a number of large public infrastructure projects, including a subway for Panama City, and the government has begun to move ahead on some of these projects. In March 2010, President Martinelli secured legislative approval of a tax reform measure that reduces corporate and individual income taxes while raising sales and other taxes that overall is expected to increase government revenue.

The United States has close relations with Panama, stemming in large part from the extensive linkages developed when the canal was under U.S. control and Panama hosted major U.S. military installations. The current relationship is characterized by extensive counternarcotics cooperation, assistance to help Panama assure the security of the Canal, and a proposed bilateral free trade agreement (FTA). U.S. bilateral assistance amounted to a $3.7 million in FY2008, $7.6 million in FY2009, and an estimated $8.7 million in FY2010. The FY2011 request is for $10.6 million. This funding does not include an estimated $11 million Panama received in FY2008 and FY2009 under the Mérida Initiative to assist Mexico and Central American countries in their efforts to combat drug trafficking, gangs, and organized crime; beginning in FY2010, Panama will receive assistance under the successor Central America Regional Security Initiative (CARSI) instead of under the Mérida Initiative.

The United States and Panama signed a proposed bilateral FTA in June 2007, and Panama’s National Assembly overwhelmingly approved the agreement in July 2007. Neither the 110
th nor the 111th Congress considered the agreement. Issues that have raised congressional concern relate to worker rights and to Panama’s bank secrecy laws. On November 30, 2010, Panama and the United States signed a Tax Information Exchange Agreement that had been a prerequisite of some Members of Congress for the consideration of the FTA. In the 112th Congress, S.Res. 20 would express the sense of the Senate that the United States should immediately approve FTAs with Panama, Colombia, and South Korea.

For additional information, see CRS Report RL32540, The Proposed U.S.-Panama Free Trade Agreement, CRS Report R40622, Agriculture in Pending U.S. Free Trade Agreements with Colombia, Panama, and South Korea, CRS Report RL34112, Gangs in Central America, and CRS Report R41215, Latin America and the Caribbean: Illicit Drug Trafficking and U.S. Counterdrug Programs.



Date of Report:
February 2, 2011
Number of Pages: 30
Order Number: RL30981
Price: $29.95

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Monday, February 7, 2011

U.S.-Mexican Security Cooperation: the Mérida Initiative and Beyond

Clare Ribando Seelke
Specialist in Latin American Affairs

Kristin M. Finklea
Analyst in Domestic Security


In recent years, U.S.-Mexican security cooperation has increased significantly, largely as a result of the development and implementation of the Mérida Initiative, a counterdrug and anticrime assistance package for Mexico and Central America that was first proposed in October 2007. With the enactment of the FY2010 Supplemental Appropriations Act (P.L. 111-212) in July 2010, Congress has provided almost $1.8 billion for the Mérida Initiative. Congress provided $248 million of that funding to Central America and included an additional $42 million for Caribbean countries. However, Congress dedicated the vast majority of the funds—roughly $1.5 billion—to support programs in Mexico, with an early emphasis on training and equipping Mexican military and police forces engaged in counterdrug efforts. Escalating drug trafficking-related violence in Mexico has focused congressional attention on the efficacy of U.S-Mexican efforts. Reducing violence associated with organized crime (including drug trafficking), which, by Mexican government estimates, has resulted in more than 34,600 deaths since President Felipe Calderón took office in December 2006, has remained a focus of the Mérida Initiative.

With funding for the original Mérida Initiative technically ending in FY2010 and new initiatives underway for Central America and the Caribbean, the Obama Administration worked with the Mexican government to develop a new four-pillar strategy for U.S.-Mexican security cooperation. That strategy, outlined in the FY2011 budget request, focuses on (1) disrupting organized criminal groups; (2) institutionalizing the rule of law; (3) building a 21
st century border; and (4) building strong and resilient communities. The first two pillars largely build upon existing efforts, whereas pillars three and four broaden the scope of Mérida Initiative programs to include new efforts to facilitate “secure flows” through the U.S.-Mexico border and to improve conditions in violence-prone border cities. The Administration’s FY2011 budget request included $310 million for Mérida programs in Mexico. In the absence of FY2011 appropriations legislation, the 111th Congress passed a series of continuing resolutions (P.L. 111-242 as amended) to fund government programs, with the latest extension set to expire on March 4, 2011. The Continuing Resolution, as amended, continues funding most programs at the FY2010-enacted level, with some exceptions.

The 112
th Congress is likely to continue funding and overseeing the Mérida Initiative, as well as examining the degree to which the U.S. and Mexican governments are fulfilling their pledges to tackle domestic problems contributing to drug trafficking in the region. Congress may also examine the degree to which the Administration’s new strategy for the Mérida Initiative complements other counterdrug and border security efforts. Given current budget constraints, Congress may also debate how best to measure the impact of current and future Mérida Initiative programs. A July 2010 report by the Government Accountability Office (GAO) recommended that the State Department develop better performance measures to track progress under Mérida. Another congressional interest is likely to focus on whether human rights conditions placed on Mérida Initiative funding are appropriate or sufficient.

For related information, see CRS Report R41576, Mexico’s Drug Trafficking Organizations: Source and Scope of the Rising Violence, by June S. Beittel; CRS Report RL32724, Mexico-U.S. Relations: Issues for Congress; CRS Report R41075, Southwest Border Violence: Issues in Identifying and Measuring Spillover Violence.



Date of Report: January 26, 2011
Number of Pages: 40
Order Number: R41349
Price: $29.95

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Latin America and the Caribbean: Illicit Drug Trafficking and U.S. Counterdrug Programs

Clare Ribando Seelke, Coordinator
Specialist in Latin American Affairs

Liana Sun Wyler
Analyst in International Crime and Narcotics

June S. Beittel
Analyst in Latin American Affairs


Drug trafficking is viewed as a primary threat to citizen security and U.S. interests in Latin America and the Caribbean despite decades of anti-drug efforts by the United States and partner governments. The production and trafficking of popular illicit drugs—cocaine, marijuana, opiates, and methamphetamine—generates a multi-billion dollar black market in which Latin American criminal and terrorist organizations thrive. These groups challenge state authority in source and transit countries where governments are often fragile and easily corrupted. Mexican drug trafficking organizations (DTOs) largely control the U.S. illicit drug market and have been identified by the U.S. Department of Justice as the “greatest organized crime threat to the United States.” Drug trafficking-related crime and violence in the region has escalated in recent years, raising the drug issue to the forefront of U.S. foreign policy concerns.

Since the mid-1970s, the U.S. government has invested billions of dollars in anti-drug assistance programs aimed at reducing the flow of Latin American-sourced illicit drugs to the United States. Most of these programs have emphasized supply reduction tools, particularly drug crop eradication and interdiction of illicit narcotics, and have been designed on a bilateral or subregional level. Many would argue that the results of U.S.-led drug control efforts have been mixed. Temporary successes in one country or sub-region have often led traffickers to alter their cultivation patterns, production techniques, and trafficking routes and methods in order to avoid detection. As a result of this so-called “balloon effect,” efforts have done little to reduce the overall availability of illicit drugs in the United States. In addition, some observers assert that certain mainstays of U.S.-funded counterdrug programs, particularly aerial spraying to eradicate drug crops, have had unintended social and economic consequences.

The Obama Administration has continued U.S. support for Plan Colombia and the Mérida Initiative, but is gradually broadening the focus of those aid packages to address the societal and institutional effects of the drug trade and related criminality and violence, rather than mainly funding supply control efforts. Newer programs like the Caribbean Basin Security Initiative (CBSI) include more of an emphasis on rule of law, anti-corruption, and community and youth development programs. In order to complement these international efforts, President Obama and his top advisers have acknowledged the role that U.S. drug demand has played in fueling the drug trade in the region and requested increased funding for prevention and treatment programs.

Congress has influenced U.S. drug control policy in Latin America by appropriating certain types and levels of funding for counterdrug assistance programs and conditioning the provision of antidrug funding on the basis of human rights and other reporting requirements. Congress has also sought to ensure that counterdrug programs are implemented in tandem with judicial reform, anti-corruption, and human rights programs. During the 111th Congress, the House passed and the Senate introduced legislation that would have established a commission to review U.S. drug policy in the Western Hemisphere, H.R. 2134 (Engel) and S. 4011 (Menendez). The 111
th Congress also held multiple oversight hearings evaluating drug assistance programs and related domestic initiatives. Congress is likely to maintain an interest in U.S.-funded antidrug efforts in the region, particularly those aimed at reducing drug trafficking-related violence in Mexico and Central America.

This report provides an overview of the drug flows in the Americas and U.S. antidrug assistance programs in the region. It also raises some policy issues for Congress to consider as it exercises oversight of U.S. antidrug programs and policies in the Western Hemisphere.



Date of Report: January 25, 2011
Number of Pages: 39
Order Number: R41215
Price: $29.95

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Thursday, February 3, 2011

Cuba: Issues for the 112th Congress


Mark P. Sullivan
Specialist in Latin American Affairs

Cuba remains a one-party communist state with a poor record on human rights. The country’s political succession in 2006 from the long-ruling Fidel Castro to his brother Raúl was characterized by a remarkable degree of stability. The government of Raúl Castro implemented limited economic policy changes in 2008 and 2009, and in September 2010 began a significant series of reforms to reduce the public sector and increase private enterprise. Few observers expect the government to ease its tight control over the political system, although it has reduced the number of political prisoners over the past several years, including the release of more than 50 since July 2010 after talks with the Cuban Catholic Church.

Since the early 1960s, U.S. policy has consisted largely of isolating Cuba through economic sanctions. A second policy component has consisted of support measures for the Cuban people, including U.S.-sponsored broadcasting and support for human rights activists. In light of Fidel Castro’s departure as head of government, many observers called for a re-examination of policy. Two broad approaches toward Cuba have been at the center of debate. The first would maintain the dual-track policy of isolating the Cuban government while providing support to the Cuban people. The second is aimed at changing attitudes in the Cuban government and society through increased engagement. The Obama Administration has lifted restrictions on family travel and remittances; eased restrictions on telecommunications links with Cuba; restarted semi-annual migration talks; and recently announced further easing of restrictions on educational and religious travel and non-family remittances. The Administration has criticized the government’s repression of dissidents, but it welcomed Cuba’s July 2010 announcement of a prisoner release as a positive sign. The Administration also has called for the release of a U.S. government subcontractor imprisoned since December 2009.

The 111
th Congress took action on several measures that included provisions related to Cuba. In March 2009, Congress approved three provisions in the FY2009 omnibus appropriations measure (P.L. 111-8) that eased sanctions on family travel, travel for the marketing of agricultural and medical goods, and payment terms for U.S. agricultural exports. In December 2009, Congress included a provision in the FY2010 omnibus appropriations legislation (P.L. 111-117) that eased payment terms for U.S. agricultural exports to Cuba during FY2010 by defining the term “payment of cash in advance” more broadly. While Congress did not complete action on any of the FY2011 appropriations measures, it did approve a series of short-term continuing resolutions (P.L. 111-242, as amended), the last of which provided funding for federal agencies through March 4, 2011 under conditions provided in enacted FY2010 appropriations measures. This extended the more restrictive “payment of cash in advance provision” and also continued Cuba broadcasting and democracy funding. Numerous other initiatives were introduced, but not considered, several of which would have eased sanctions on Cuba in various ways.

Congressional interest on Cuba is likely to continue in the 112
th Congress, focused on a number of issues, including U.S. sanctions, the human rights situation, Cuba’s imprisonment of a U.S. government subcontractor, the status of Cuba’s economic reforms, and its offshore oil development. For additional information, see CRS Report RL31139, Cuba: U.S. Restrictions on Travel and Remittances and CRS Report R41522, Cuba’s Offshore Oil Development: Background and U.S. Policy Considerations.


Date of Report: January 28, 2011
Number of Pages: 55
Order Number: R41617
Price: $29.95

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Cuba: U.S. Restrictions on Travel and Remittances

Mark P. Sullivan
Specialist in Latin American Affairs

Restrictions on travel to Cuba have been a key and often contentious component in U.S. efforts to isolate Cuba’s communist government since the early 1960s. Under the George W. Bush Administration, restrictions on travel and on private remittances to Cuba were tightened. In March 2003, the Administration eliminated travel for people-to-people educational exchanges unrelated to academic coursework. In June 2004, the Administration further restricted family and educational travel, eliminated the category of fully-hosted travel, and restricted remittances so that they could only be sent to the remitter’s immediate family. Initially there was mixed reaction to the Administration’s June 2004 tightening of Cuba travel and remittance restrictions, but opposition to the policy grew, especially within the Cuban American community regarding the restrictions on family travel and remittances.

Under the Obama Administration, Congress took action in 2009 to ease some restrictions on travel to Cuba by including two provisions in the FY2009 omnibus appropriations measure (P.L. 111-8), which President Obama signed into law on March 11, 2009. The first provision eased restrictions on family travel, which the Treasury Department implemented by issuing a general license for such travel as it existed prior to the Bush Administration’s tightening of family travel restrictions in 2004. The second provision eased travel restrictions related to the marketing and sale of agricultural and medical goods to Cuba, and required the Treasury Department to issue a general license for such travel. Subsequently, in April 2009, President Obama announced that his Administration would go further and allow unlimited family travel and remittances. Regulations implementing these changes were issued in September 2009. The new regulations also included the authorization of general licenses for travel transactions for telecommunications-related sales and for attendance at professional meetings related to commercial telecommunications.

On January 14, 2011, the Obama Administration announced a series of policy changes further easing restrictions on travel and remittances to Cuba. According to the announcement, the policy changes are to be enacted through modifications to existing regulations and will take effect within 2 weeks. The measures will 1) increase purposeful travel to Cuba related to religious, educational, and journalistic activities; 2) allow any U.S. person to send remittances to non-family members in Cuba and make it easier for religious institutions to send remittances for religious activities; and 3) allow all U.S. international airports to provide services to licensed charter flights to and from Cuba. In most respects, these new measures appear to be similar to policies that were undertaken by the Clinton Administration in 1999, but were subsequently curtailed by the Bush Administration in 2003 and 2004. An exception is the expansion of airports to service licensed flights to and from Cuba.

While numerous other legislative initiatives were introduced in the 111
th Congress that would have lifted or eased U.S. restrictions on travel to Cuba, no action was completed on these measures. The House Agriculture Committee reported out H.R. 4645 (Peterson) in June 2010, a bill that would have lifted all restrictions on travel to Cuba. The House Committee on Foreign Affairs was scheduled to hold a markup of the bill in September 2010, but postponed consideration and no further action was taken. Interest on the issue of Cuba travel restrictions may continue in the 112th Congress, potentially with various legislative initiatives introduced, but in a significantly changed U.S. political environment. (For further information, see CRS Report R40193, Cuba: Issues for the 111th Congress.)


Date of Report: January 18, 2011
Number of Pages: 39
Order Number: RL31139
Price: $29.95

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